Suppliers, covering December subsidies, face greater pressure

Increasing wholesale electricity prices, appearing likely to rise to levels of between 330 and 340 euros per MWh in in January, according to energy exchange indications, threaten to place increased pressure on both consumers and electricity suppliers.

Suppliers are reaching cash-flow limits as they have been forced to temporarily cover December’s electricity-bill subsidies offered by the government to consumers before they are compensated in June next year.

The government has so far covered subsidies offered to households for the months of September, October and November this year, leaving December’s subsidy cost for suppliers, until they are compensated midway through 2022.

Given December’s increased electricity consumption, suppliers estimate they will need to temporarily cover between 40 and 45 percent of the government’s four-month subsidy program cost for consumers.

This increased pressure is seen as a major threat for energy market stability if some of the suppliers, already struggling with narrower profit margins in the energy crisis, are unable to cope with yet another burden.

Given the persistence of higher energy prices, the government is believed to preparing further subsidy support, under revised terms, for household consumers in the first quarter of 2022.