Power utility PPC’s solid market share, especially in the high-voltage category, is once again being scrutinized by European Commission officials as part of Brussels’ ninth post-bailout review.
According to sources, European Commission authorities are seeking explanations from Greek officials for the state-controlled power utility’s unabating market share in the high-voltage category.
Brussels officials appear to be holding PPC responsible for selling specially priced industrial electricity at extremely low levels. Industrial consumers, also contacted by European Commission officials as part of the review, have attributed their customer loyalty to a lack of competition in Greece’s industrial electricity market.
PPC has held on to virtually all of its industrial customers, except for AGET (Heracles General Cement Corporation). MEL (Macedonia Paper Mills) abandoned PPC for a short period but has since returned.
Brussels officials are also believed to have questioned PPC’s electricity price levels in the low and medium-voltage categories, suggesting that these, too, are low.
It remains to be seen if this overall probing by the European Commission will develop into any form of official pressure.
Just days ago, energy minister Kostas Skrekas reached an agreement with the European Commission to end a long-running anti-trust case against PPC by agreeing to gradually end the utility’s monopoly of lignite-based electricity production. Despite the development, a number of Brussels officials appear to be keeping PPC in the frame.
Industrial electricity consumers of the high and mid-voltage categories are securing lower-cost agreements with independent suppliers, while energy-intensive consumers, currently negotiating with power utility PPC for new tariffs to take effect January 1, are pushing for better deals.
These developments are reshuffling the industrial electricity market, previously dominated by PPC.
Independent energy company Heron and Macedonia Paper Mills (MEL) recently announced an electricity supply agreement that includes a package of services for energy efficiency, electromobility and RES coverage of the producer’s energy needs.
Cement producer Heracles had previously reached an electricity supply agreement with Protergia, a member of the Mytilineos group, paving the way for further agreements between producers and independent suppliers.
These developments have had a wider knock-on effect, including for mid-voltage supply, as demonstrated by an agreement between energy supplier NRG, a member of the Motor Oil group, with the country’s other cement producing giant, Titan.
Following losses in 2018 and 2019, PPC is believed to be turning its focus on more profitable sectors and is no longer interested in maintaining a high share of the industrial electricity market – both high and mid-voltage.
Though still at an early stage, talks between power utility PPC and industrial consumers for new electricity supply agreements to become valid once current deals expire at the end of this year, already appear likely to require plenty of negotiating and time if current differences are to be overcome.
PPC has made clear it will not sell electricity at below-cost price levels to any customer. At the other end, industrial enterprises, each negotiating separately with the power utility, insist that a 10 percent price hike agreed to in March, 2019 for a three-year period covering 2018 to 2020 is unjustifiable as electricity production costs have fallen.
Besides price matters, the two sides also disagree on the duration of new deals. Industrialists are pushing for three-year agreements, covering 2021 to 2023, whereas PPC favors a shorter period. Insiders are predicting months of negotiations.
Industrialists are expected to seek quotes from PPC rivals. Vertically integrated energy groups that have secured competitive natural gas prices in recent months are in a position to offer lower electricity tariffs, regardless of fluctuations in the wholesale electricity market.
In July, wholesale electricity prices registered a level of 41.13 euros per MWh, down 34 percent from the equivalent month a year earlier.
Three industrial consumers, the cement producers AGET Heracles and TITAN and Macedonian Paper Mills (MEL), have been involved in talks with independent suppliers for high-voltage contracts.
Three of eight industrial groups traditionally supplied high-voltage power by power utility PPC and holding contracts that expire at the end of this year are involved in advanced talks with domestic independent suppliers for new supply contracts, energypress sources have informed.
PPC dominates the high-voltage electricity market with a 97 percent share, but this figure could drop considerably if industrial consumers reach agreements with new suppliers.
Leading cement producers AGET Heracles and TITAN, as well as Macedonian Paper Mills (MEL), are the three industrial consumers involved in talks with independent suppliers for high-voltage contracts, the sources noted.
All three have never before held contracts with any other electricity supplier, but their shifts away from PPC, probably not concurrently, now appear highly probable. Such a development would signal the start of competition in Greece’s high-voltage electricity market.
Lower wholesale prices, which have widened profit margins, as well as lower natural gas prices lowering generation costs at gas-fired power stations operated by independent producers, are key factors behind the likely shifts of industrial consumers to independent suppliers.
Industrial producers, gearing up for the post-coronavirus era, are seeking lower energy costs but are not satisfied with the tariff levels offered by PPC, market officials have noted.