budget

No sum for energy-crisis support in 2024 draft budget

Posted on by admin

Consumers face a challenging winter in terms of energy costs, as indicated by a number of revisions included in the 2024 draft budget, just submitted to Parliament.

Besides the absence of horizontal energy-support measures, the budget draft does not provide for any special reserve that would cover energy-crisis situations.

Fiscal concerns expressed by the European Commission, pressure by the ECB for an end to generous support that is cancelling out monetary policy, as well as the normalization of energy market conditions are key factors behind these budget restrictions for energy consumers, who were offered substantial support in 2022 and 2023.

A senior member of the government’s economic staff, responding to questions during a briefing yesterday on budget figures, admitted that no energy-related safety cushion for consumers was included in the country’s financial package for 2024. However, the official did point out that corresponding action would be taken to meet any potential needs, should they arise.

This essentially means that certain support measures offered last winter would only be recalled if deemed necessary, to avoid burdening the budget in advance.

For the time being, the only emergency amount included in the draft budget is a 600 million-euro sum for natural disasters.

Contrary to last winter, the draft budget for 2024 does not include any sum for heating fuel subsidies. If any support, on this front, is eventually offered to consumers, it would result from initiatives taken by refineries. Clarity is expected around mid-October, when the heating-fuel trading season commences.

Also, horizontal electricity subsidies, for all consumers, will cease to apply as of January, when electricity suppliers will be introducing new pricing policies, to include indexation clauses or similar pricing tools.

Horizontal support for natural gas purchases also appears set to be scrapped as of January, given the gas market’s currently subdued prices.

The absence of any reserve amount for potential energy crises stands as the draft budget’s fourth major energy-related change, compared to last winter. If needs do arise, they will seemingly be dealt with via the Energy Transition Fund, not the budget.

Lower wholesale prices drive down February subsidy requirement

Posted on by admin

Electricity subsidies for low-voltage, household consumption in February will be set at between 5 and 6 cents per KWh, offered by the government to ensure retail power prices are contained at a level of between 14 and 16 cents per KWh.

Energy minister Kostas Skrekas is expected to announce February’s subsidy level during the week, possibly tomorrow.

This subsidy handout, far smaller compared to the previous month, and the lowest since the start of the government’s new subsidy strategy – launched last August with levels revised monthly based on nominal retail tariffs announced by suppliers for each forthcoming month by the 20th of each preceding month – has been made possible by lower wholesale electricity prices.

This price dip comes as great relief for the Energy Transition Fund, financially supporting the electricity subsidies offered to consumers, and the state budget, chipping in whenever required.

Power utility PPC, the dominant retail player whose monthly nominal tariffs subsequently shape electricity subsidies set by the state, has just announced a nominal tariff rate of 19.9 cents per KWh for monthly household electricity consumption of up to 500 KWh in February, 60 percent below the utility’s nominal retail price for January.

As a result, subsidies of between 5 and 6 cents per KWh will suffice to keep retail tariffs at 14 to 16 cents per KWh, the government’s target. Subsidies of 34 cents per KWh were needed in January to contain tariffs at the government’s desired level.

Money to be drawn from the ETF money for February’s subsidy effort should not exceed 60 to 70 million euros, well below the sum of 800 million euros required for January.

November electricity prices, out tomorrow, down 15-20%

Posted on by admin

The country’s electricity suppliers, now finalizing their pricing policies for next month, are expected to announce, tomorrow, reduced tariffs for November, down by 15 to 20 percent compared to the current month’s levels, sources have informed.

Based on new law, suppliers are required to announce their electricity prices for the forthcoming month by the 20th of each preceding month.

Supplier tariffs, sources informed, should range between 0.45 to 0.50 euros per MWh, which, if confirmed, will result in a reduction of between 15 and 20 percent, compared to October’s prices.

The government’s level of subsidy support for electricity bills next month has yet to be announced. Given the current de-escalation in electricity prices, the government may choose to only rely on the Energy Transition Fund for next month’s subsidies and not use any budget money for this purpose, sources said.

Market analysts are projecting further electricity price reductions until the end of the year as a result of a drop in TTF natural gas prices. The Dutch index has fallen by 66 percent since an August 26 peak of 349.90 euros per MWh, reaching 116.45 euros per MWh yesterday.

The EU’s overachievement of gas storage levels, now averaging 91 percent of capacity, as well as an abundance of LNG supply to Europe, are key factors that have driven down the TTF.

 

Budget support not needed for November electricity subsidies

Posted on by admin

The state budget’s participation in monthly electricity subsidies is being further reduced, freeing funds for intervention to lower auto diesel and heating fuel price levels. Budget money for October’s electricity subsidies totaled 100 million euros, but this figure is likely to drop considerably or even be eliminated for November.

The recovery of electricity producer windfall earnings, along with CO2 emission right auction revenues are expected to suffice for the government’s electricity subsidies to be offered to households and businesses in November.

If market conditions do not change drastically over the next few days, retail electricity price levels for November, to be announced by suppliers this Thursday – by law – are expected to be significantly lower compared to October prices.

Over the past week, energy exchange electricity prices, on a downward trajectory more recently, averaged 257 euros per MWh. The October average is currently at 270 euros per MWh, a 34 percent drop from September’s average of 410 euros per MWh.

Wholesale electricity prices seem likely to fall further. For the first time in months, wholesale electricity prices are below 200 euros per MWh, dropping to 166 euros per MWh yesterday.

 

Budget spending on subsidies tightened for rest of year, 2023

Posted on by admin

The state budget’s capacity for electricity and gas subsidies is set to tighten as the government is determined to limit their total cost for 2022 to 1.8 billion euros, after having already spent 1.3 billion euros this year.

Government support measures worth 1.1 billion euros for October include no more than 100 million euros in budget money, slashed from 600 million euros in September.

The government plans to limit its budget allocations for electricity and gas subsidies to a total of 500 million euros from now until the end of the year, or between 160 and 170 million euros per month. The same level of budget spending on energy subsidies is expected in 2023.

A draft budget for 2023, to be submitted to parliament in the first week of October, includes an extraordinary amount to help get the country through the year’s difficult first few months of winter and early-autumn weather.

According to sources, this extraordinary amount will total between 400 and 500 million euros, or 80 to 90 million euros per month, clearly not enough if Russia’s war in Ukraine and the energy exchange turbulence continue.

All will depend on how international gas prices develop. Gas futures for 2023 were at 169 euros last week, 200 euros a few days ago, and 188 euros yesterday. Prices have been fluctuating between 20 and 40 euros per day.

 

 

September electricity subsidies to be doubled to nearly €2bn

Posted on by admin

The government intends to absorb the greatest part of electricity price increases for September through subsidies expected to reach nearly two billion euros for the month, a support package seen subduing retail tariffs at 0.15 euro per KWh, the level of retail electricity prices in August.

This latest monthly subsidy amount is nearly double the 1.136 billion euros the government needed to commit for August to fight escalating energy costs.

Electricity retailers announced higher tariffs for September a couple of days ago, but the latest subsidies are expected to keep prices virtually unchanged for household consumers. The cost of electricity for businesses, however, is seen doubling next month.

Electricity subsidies for September will need to increase sharply to a level of 0.60 euro per KWh, up from 0.337 euro per KWh in August, a 70 percent increase.

Approximately 900 million euros of the government’s two billion-euro subsidy package for September will be covered through the state budget, while the other 1.1 billion euros will hail from the Energy Transition Fund, which gathers CO2 emission right auction revenues, RES special account surpluses and windfall profit taxes imposed on electricity producers.

New subsidy sources needed, energy prices seen persisting

Posted on by admin

Energy prices are forecast to remain elevated and turbulent for at least another year or so, until early 2023, according to a number of market reports, including one by the European Commission, which means that the government faces the challenge of finding new support fund sources for consumers and businesses, scrambling to meet exorbitant energy prices brought about by the energy crisis.

Until now, the government has relied on Energy Transition Fund money generated by carbon emission right auctions to offer consumers subsidies, but will need to resort to the state budget should this money eventually run out.

Finance minister Christos Staikouras made this need clear in an interview with Greek media outlet Real. “The finance ministry may now possibly need to make available funds from the state budget, not the Energy Transition Fund, for adverse scenarios in the second half of 2022, in order to subsidize households and businesses,” the minister noted.

PPC public service return for 2011 from 2020 national budget

Posted on by admin

The government has decided to cover a power utility PPC a public service compensation (YKO) payment of 195 million euros, endorsed by RAE, the Regulatory Authority for Energy, through the 2020 national budget, energypress sources have informed.

Though this solution, agreed to by energy minister Costis Hatzidakis and the finance ministry, does not promise instant relief for state-controlled PPC, burdened by poor finances, it does secure a prospective cash influx that will be taken into account by Ernst & Young, the utility’s certified auditor, scheduled to deliver a report on the Greek power utility on September 24.

This amount is expected to contribute to a sum of over 800 million euros needed by PPC over the next 12 months, according to new chief executive Giorgos Stassis.

RAE’s initial calculations for PPC’s 2011 public service compensation resulted in a sum of 160 million euros before this amount was revised to 195 million euros. PPC originally sought a sum of between 650 and 700 million euros before settling for RAE’s far lower figure.

Gov’t must decide if budget, consumers will cover PPC public service return

Posted on by admin

The newly elected conservative New Democracy government will need to decide whether a considerable public service compensation (YKO) return to the power utility PPC for 2011, believed to have been officially set at 195 million euros, will be covered by consumers, through electricity bill surcharges, or the national budget.

Though the PPC administration has questioned the amount set by RAE, the Regulatory Authority for Energy, believing it should be greater, it hopes the payment will be made soon, once Parliament resumes full operations, as the cash injection would offer some relief for the power utility’s struggling finances.

PPC previously demanded a sum of between 650 and 700 million euros for 2011.

A RAE letter forwarded to the energy ministry provided a public service compensation estimate of between 160 and 200 million euros for PPC, but, according to sources, the authority has already calculated a precise amount of 195 million euros, which it believes is fair.

A legislative revision is needed before the payment process can proceed as, based on existing law, the case for PPC’s public service compensation claim concerning 2011 is closed, RAE has informed the energy ministry in a letter.

The previous Syriza government did not submit the required amendment to Greek Parliament.

Budget’s energy privatization revenues seen as unrealistic

Posted on by admin

The national budget’s privatization revenue forecasts for 2018, submitted to Greek Parliament yesterday, are best-case scenarios, if not theoretical or groundless, especially in the case of the energy sector, pundits overwhelmingly agree.

The plan includes revenues in 2018 from three highly complex privatizations, DEPA (Public Gas Corporation), ELPE (Hellenic Petroleum) and PPC (main power utility). Not one of these privatizations is expected to be completed in 2018, even if launched very soon.

Even so, the budget plan anticipates 500 million euros from the sale of a 35 percent of ELPE, 250 million euros from the sale of DEPA’s 65 percent, and 100 million euros from the sale of PPC’s 17 percent.

Essentially, the inclusion of these privatizations in the 2018 budget amounts to nothing more than an attempt by the government to convince the country’s lenders that it is not obstructing procedures at TAIPED, the state privatization fund.

It is commonly known that the sale of PPC’s 17 percent, currently controlled by TAIPED, cannot proceed unless matters concerning the bailout-required sale of a package representing 40 percent of the power utility’s lignite capacity are cleared up.

The PPC lignite units to be placed for sale first need to be split from PPC so that the utility’s new market value may be calculated before the corporation’s 17 percent can be defined and placed for sale.

The sale procedure offering PPC lignite units is scheduled to begin in June. This, too, is seen as a best-case scenario, even if Genop, PPC’s union group, does not fight a battle against the lignite unit sale plan.

The budget plan’s DEPA and ELPE privatizations within 2018 are equally unrealistic. DEPA’s 65 percent cannot be privatized unless a bailout requirement calling for the gas utility’s reduced presence in the Greek gas market is first sorted out. At present DEPA is dominant in both the wholesale and retail natural gas markets.

The picture at ELPE will require at least the first half of 2018 to clear up. It will take consultants hired by TAIPED to assess strategic options concerning the sale of a 35 percent ELPE stake about six months to arrive to any conclusions.