PPC improves payment rate for operator debt, down to €650m

Power utility PPC has increased its rate of payments for debt to operators, reducing the total amount owed from 900 million euros in July, 2019 to approximately 650 million euros at the end of last July, energypress sources have informed.

This debt, owed to power grid operator IPTO, distribution network operator DEDDIE/HEDNO and RES market operator DAPEEP, has fallen at an average of between 22 to 24 million euros per month.

PPC aims to reduce its debt to these operators by a further 100 million euros by the end of the year, which would reduce the figure to 550 million euros.

If the current payment rate is maintained, PPC’s debt to operators may drop to a level of between 260 and 270 million euros by the end of 2021.

The power utility’s improved operator-related debt performance, a turnaround compared to a year earlier, when company officials had warned better days along this front were a long way off, has, by extension, helped DAPEEP improve its payment record to RES producers for their output.

PPC’s annual deficit was at a level of approximately 900 million euros last year.

Cost-reduction initiatives and a suppression of energy commodity prices during the pandemic have helped PPC stabilize its finances.

The utility’s outlays for liquid fuels, natural gas, CO2 rights and electricity purchases fell by 33.7 percent, or 561.3 million euros, in the first half this year compared to the equivalent period a year earlier.

 

Market support measures worth €550m may prove insufficient

A number of electricity market support measures planned by market authorities and firms for the next few months are estimated to be worth 550 million euros, but this may not be enough.

The effectiveness of the measures will depend on the depth and duration of the pandemic-related recession, still in the making.

Should the Greek economy contract by 10 percent this year, as projected by the IMF in a report announced yesterday, and the effects spill over into 2021, as is feared, then the current measures will prove insufficient.

Authorities yesterday announced an initiative offering lighter terms to electricity suppliers for surcharge payments to market operators.

Electricity suppliers will be able to pay 30 percent of their regulated charges marked out for the power grid operator IPTO, distribution operator DEDDIE/HEDNO and RES market operator DAPEEP for the two-month period of April and May over four monthly installments, according to an energy ministry plan. This measure, alone, is estimated to be worth about 200 million euros.

Also, power utility PPC and distribution operator DEDDIE/HEDNO, its subsidiary, appear to have secured European Bank for Reconstruction and Development (EBRD) loans, for next month, totaling between 180 to 200 million euros.

Suppliers offered lighter terms for surcharge commitments

An energy ministry provision promising electricity suppliers supportive terms for surcharge payments to market operators has been included in a wider legislative act facilitating pending and urgent matters linked to various ministries.

Electricity suppliers will be able to pay 30 percent of their regulated charges marked out for the power grid operator IPTO, distribution operator DEDDIE/HEDNO and RES market operator DAPEEP over four monthly installments, according to the energy ministry plan.

A one-month grace period will be offered for the first installment. Suppliers will need to keep servicing the other 70 percent of regulated charges as normal.

The lighter terms are crucial for electricity suppliers, fearing they may not receive a large percentage of regulated surcharges included in electricity bills as a result of rising unpaid receivables.

Over the past few weeks, electricity bill payments have fallen by levels of approximately 30 percent.

Though offering some relief to electricity suppliers, the less demanding terms for their payment of regulated charges will tighten the budgets of market operators and consequently weaken their ability to remunerate conventional and RES electricity producers for output to the grid.

Authorities intend to combat this threat through a security mechanism now being pieced together.

Security fund initially limited to operators, suppliers must wait

A security fund being established by the energy ministry as financial protection for electricity market players from the pandemic’s repercussions will, for the time being, be limited to covering the needs of market operators.

A wider package also including protection for suppliers, as was initially intended, will need to be examined later on as its cost, estimated anywhere between 600 million and one billion euros, is considered too substantial by authorities.

Limiting the security fund’s coverage for market operators will require an amount of between 100 and 200 million euros, it has been estimated.

The security fund’s sum promises to compensate power grid operator IPTO, distribution network operator DEDDIE/HEDNO and RES market operator DAPEEP for regulatory surcharges not expected to be received under the current conditions.

Consumer electricity bill payments, which include regulatory surcharges, are projected to fall by approximately 30 percent over the next two to three months.

 

 

Electricity suppliers financially pressured by coronavirus crisis

Electricity suppliers are feeling the financial effects of the coronavirus crisis, threatening to increase the level of electricity bill arrears amid reduced consumption and lower sales.

Consumers are now contacting suppliers to request installment-based payment arrangements, or, worse still, expressing an inability to meet electricity bill payments, energypress has been informed.

Retailers and small businesses whose operations are being stifled by the coronavirus lockdown are particularly feeling the pressure.

Electricity suppliers maintaining a dominant mid-voltage customer base are very concerned as the coronavirus spread has already begun inflicting financial damage on sectors such as tourism, hotels and restaurants, all expected to be particularly affected by the ongoing crisis.

Retailers, too – except for supermarket chains, registering rising sales figures – are also under severe pressure. Their position will deteriorate further as a result of a government decision temporarily shutting down most shops as of today.

Electricity suppliers are more or less helpless at present. Distribution network operator DEDDIE/HEDNO would not execute any electricity-cut orders amid these extraordinary conditions.

Subsequently, suppliers are calling for a delay of their payments to operators such as power grid operator IPTO, DEDDIE, and RES market operator DAPEEP for network usage fees, a RES-supporting ETMEAR surcharge and other such obligations.

 

New RES support system facing issues ahead of launch

A new RES market support system, FOSETEK, appears unlikely to be launched on its imminent October 1 scheduled starting date as too many issues remain unresolved for the little time remaining.

In an announcement, RES market operator DAPEEP has noted that a 15-day document processing period is required from the date of applications before RES facility owners can be summoned to sign new support agreements. The system’s launch date is now just one week away.

Under the new system, RES producers operating through Feed-in Premiums (FIP) and possessing facilities with capacities of more than 3 MW in wind energy or over 500 KW in solar energy are obligated to participate in the day-ahead market. So, too, are operators with RES stations over 20 years old – primarily wind energy – and tariff agreements set to expire.

RES producers with FIP agreements have not been paid since July 1 and are currently unable to issue invoices for electricity produced and provided to the grid as a result of the changing support system.

 

Solar parks of 400 KW and over subject to target model terms

The EU plans to reduce a level committing solar power parks to target model terms  to 400 KW from 500 KW as of January 1, 2020, a development that promises to directly impact investor plans. Related Greek legislation will need to be ratified by the start of next year.

As a result, DAPEEP, the renewable energy market operator, will endorse operating aid contracts, reinforcing fixed prices, for new solar energy parks of up to 400 KW, while ventures with capacities over this level must hold feed-in premium contracts.

Target model obligations for holders of feed-in premium contracts require their participation in day-ahead markets – for matters concerning energy, not price – and the balancing market, which carries a discrepancy cost for investors.

According to sources, an EU decision has also been reached that will enable member states to continue offering existing and approved RES support systems for a two-year period beyond 2020, in 2021 and 2022.

Pending revision stopping supplier surcharge returns

A decision by the energy ministry to return a supplier surcharge amount worth approximately 120 million euros to electricity suppliers as a result of a RES special account surplus in 2018 has yet to be executed because a legislative revision needed following a RES market operator name change from LAGIE to DAPEEP has yet to drafted and ratified.

These surcharge returns to suppliers are not expected to happen any time soon and will most certainly not be incorporated into first-half financial figures, according to sources.

As the dominant electricity retailer, the main power utility PPC expects to receive the bulk of this total, estimated at 100 million euros.

A law enabling the surcharge return to suppliers was ratified before the name change at the RES market operator and does not include its new title as DAPEEP.

RAE, the Regulatory Authority for Energy, has refused to take any steps unless this complication is resolved.

The surcharge returns to be returned to suppliers for 2018 total 121.12 million euros following the deduction of a 70 million-euro safety reserve required by law.

Calculations also still need to be made concerning pending smaller amounts of previous years.

The overall delay has further unsettled RES producers, experiencing increased payment delays for their output since last summer.