Electricity suppliers fear a single variable tariff formula to be introduced by the energy ministry in January for all suppliers to apply before setting respective tariff levels depending on their profit-margin strategies, may create more problems than it could solve.

The ministry believes the introduction of a single variable tariff formula will intensify competition, helping subdue prices, and also help consumers make direct price comparisons, not possible amid the vagueness of the current system.

According to the plan, all electricity consumers will be automatically transferred to the new single variable tariff as of January 1, for 12 months, unless they opt, prior to this date, for any other supply deals offered by suppliers.

Barring unexpected developments, a relevant legislative revision will most likely be submitted to Parliament this week.

According to the plan, suppliers will announce variable tariffs on a monthly basis, at the beginning of each month. These tariffs will fluctuate, reflecting average wholesale electricity price levels of the previous month.

The single variable tariff formula will include a mechanism correcting high prices, through lower and upper limits set by suppliers.

However, market sources have expressed concerns, noting that, to hedge limits, suppliers will have to increase their own margins, which risks making them uncompetitive.