A decision by RAE, the Regulatory Authority for Energy, to set uniform rules for gas distribution companies in matters concerning the development of CNG technology for supply to remote regions not connected to the national grid could lead to the introduction of a public service compensation (YKO) surcharge on retail natural gas bills to help cover related costs.

The need for a clearer framework resulted from European Commission directives concerning state aid concerns.

Authorities are determined to avoid a repeat of events in the electricity sector, where the introduction of high-cost electrification solutions for remote areas, originally intended as temporary plans, ended up being permanent.

The public service compensation surcharge on electricity bills is used to subsidize high-cost electricity generation on Greece’s non-interconnected islands and offer lower-cost electricity for underprivileged households.

RAE has approved five-year development plans submitted by gas distribution companies but, in doing so, demanded revisions requiring a switch to pipeline gas supply for cities where CNG supply was originally intended.

Until now, additional installation and operating costs for CNG facilities have been recovered by gas distribution companies, themselves.

Though bigger companies with a wide customer base have the ability to spread out this cost for minimal impact on consumers, smaller players with not so many customers cannot rely on such a cost recovery solution.

The new framework is expected to soon be forwarded by the energy ministry to Brussels for approval that would enable its implementation by 2022.