Industrial consumers rebated for gas network usage surcharge

RAE, the Regulatory Authority for Energy, has delivered an official decision vindicating the industrial sector, after a four year wait, in a dispute concerning temporary natural gas distribution surcharges imposed on consumers by ordering offsetting measures leading to rebates for the period in question, between August 14, 2015 to December 1, 2016.

EVIKEN, the Association of Industrial Energy Consumers, challenged the introduction of this temporary gas distribution surcharge for industrial gas consumers, deemed as a breach of EU rules. It burdened industrial gas consumers at a rate of 4 euros per MWh.

Industrial consumers will receive rebates, based on a specific formula, covering the aforementioned period, according to the RAE decision, published in the government gazette yesterday.

According to industrial sector estimates, the surcharge sum to be returned to industrial consumers is estimated between 2.5 million and thee million euros. The rebate may be distributed in installments over a period of up to five years.

This surcharge did not reflect the costs of operators, arrived as a disproportionate cost for certain consumer categories using the network, and should have been determined and introduced by RAE, not through a legislative procedure, EVIKEN argued in its case before being vindicated by RAE as well as the European Commission’s Directorate-General for Energy.

Discrepancies observed exceeded 100 percent for most energy-intensive industrial enterprises.

The industrial sector will not tolerate any breach of EU rules concerning the new market’s framework, Antonis Kontoleon, the head official at EVIKEN, stressed.

Brussels’ Directorate-General for Energy had supported EVIKEN on all aspects of the dispute through a surveillance report delivered in November, essentially preannouncing the RAE decision.

 

 

 

Flexibility surcharge improper, suppliers complain to Brussels

A CAT surcharge imposed on electricity suppliers to support the flexibility mechanism was adopted without proper consultation via a procedure that was not fully substantiated, ESEPIE, the Hellenic Association of Electricity Trading and Supply Companies, has charged in a letter forwarded to the European Commission’s Directorate-General for Competition and Directorate-General for Energy.

Consultation on the matter lacked a detailed study by power grid operator IPTO on current flexibility needs, the association protested in the letter, forwarded to the Brussels authorities just weeks ahead of the launch of target model markets in Greece.

The flexibility mechanism’s details are based on a study conducted years ago but current flexibility needs concerning production and demand have since changed drastically, the association noted.

A transitional mechanism is not needed given the current conditions in Greece’s energy market, especially if the pandemic-related drop in electricity demand is taken into consideration, ESEPIE noted. State aid or any other form of support for energy producers offering flexibility is unnecessary, the association stressed.

Suppliers have been asked to cover flexibility-related surcharges, beginning August 15, at a rate of approximately 3 euros per MWh. This is burdening their finances, especially in the mid-voltage market, where heightened competition has severely narrowed profit margins.

Flexibility CATs, it should be noted, do not impact independent, vertically integrated suppliers as the corporate groups they belong to collect the flexibility surcharge payments for their production.

Energy companies actually benefit from the surcharge if their retail electricity market shares are smaller than their shares of production. This is not the case for PPC, whose retail market share is considerably bigger than its share of electricity generation.

 

Brussels recognizes EVIKEN case on excess distribution surcharges

An ongoing effort by EVIKEN, the Association of Industrial Energy Consumers, calling for natural gas distribution operators to return excess surcharges to industrial consumers has – for the first time since the case’s launch four years ago – been recognized by the European Commission and included in its latest report on the Greek economy.

RAE, the Regulatory Authority for Energy, will reach a decision imminently, within May, according to the Brussels report.

EVIKEN launched its case in June, 2016. Industrial consumers were charged excess gas distribution surcharges for a 16-month period beginning in August, 2015.

EU law was breached by legislation ratified to enable the excess surcharge, upped to 4 euros per MWh, universally, regardless of company profile. This placed major-scale industrial producers under pressure.

A decision on this overcharging case has remained pending since 2016 despite wide recognition of the violation authorities at all levels, from RAE to the European Commission’s Directorate-General for Energy.

RAE, over an extended period, has needed to respond to rigorous questioning from the DG-Energy on various aspects concerning the matter.

RAE is now expected to calculate the precise excess surcharge amount that needs to be returned by operators to industrial consumers through an offsetting of accounts.

“Our case may have been forgotten if it weren’t for the DG-Energy leadership’s decisive intervention that prompted RAE to overturn all the unsubstantiated legal interpretations by natural gas distribution operators,” noted Antonis Kontoleon, the head official at EVIKEN.

PPC chief informs Brussels of crucial factors in lignite units sale

The main power utility PPC’s chief executive Manolis Panagiotakis has provided the European Commission with a series of a factors he sees as crucial to the success of the utility’s follow-up sale attempt of lignite units following a failed initial effort.

EU law limiting investment activity of non-EU investors is indirectly yet quite clearly presented as an obstacle that should not restrict the PPC sale, the utility’s chief official pointed out in his letter, forwarded to Brussels competition and energy authorities.

According to Panagiotakis, Russian, Chinese and American players of repute have obtained the sale’s necessary data and are considering participating in the sale. The relaunch of the sale, a bailout requirement, is expected to feature improved terms for investors.

The PPC boss also lists CAT remuneration eligibility for the lignite-fired power stations included in the sale package as pivotal.

Staff reductions at the Megalopoli and Meliti power stations, both believed to be loss-incurring, are also crucial for the sale, according to the PPC chief. A voluntary exit plan offered by PPC is currently in progress and leading to payroll cost reductions, he informed. Savings at the Megalopoli plant are expected to reach approximately 25 million euros a year, Panagiotakis noted in his letter.

An existing lignite supply agreement between PPC and the license holder of Ahlada, a mine feeding PPC’s nearby Meliti lignite-fired power station in northern Greece, remains a problem as it does not secure price and quantity stability, the utility boss also pointed out, adding that legal pressure is being applied on the license holder.

The lack of a clear-cut national energy plan, or, more specifically, the ambiguity surrounding the future of the country’s lignite-fired power stations, is another issue that troubled investors in the previous sale effort, Panagiotakis noted.

Greek energy planning studies indicate the need for lignite-related output in the medium term, but at levels clearly below current levels, the PPC boss supported.

 

 

New Athens-Brussels standoff in Crete-Athens link talks

Two teams of Greek energy ministry and European Commission Directorate-General for Energy technocrats have reached an impasse in negotiations held to resolve a dispute concerning control of the Crete-Athens grid link, planned as a segment of the wider Greek, Cypriot and Israeli interconnection.

The failure of the two teams to reach an agreement, needed to prevent a looming energy sufficiency threat on Crete as of 2020, will now elevate the negotiations to a higher political level for direct talks between Greece’s energy minister Giorgos Stathakis and European Commissioner for Climate Action and Energy Miguel Arias Canete.

Earlier this week, Canete made clear Greece will not be granted any further deadline extensions beyond December 31, 2019 for diesel-fueled power stations operating on Crete.

Commenting yesterday, Klaus-Dieter Borchardt, Director at the European Commission’s Directorate B on the Internal Energy Market, declared all negotiating efforts at the current level of talks have now been exhausted.

Greek power grid operator IPTO and Euroasia Interconnector, a consortium of Cypriot interests heading the Greek, Cypriot and Israeli PCI-status interconnection project, have fought for control of the Crete-Athens segment.

The European Commission this week declared that Euroasia Interconnector, the project promoter of the wider Greek, Cypriot and Israeli link, also remains in charge of the Crete-Athens segment. RAE, Greece’s Regulatory Authority for Energy, has placed an SPV named Ariadne, an IPTO subsidiary, at this segment’s helm.

DG Energy expresses concerns over more ambitious RES target

Despite agreeing to an even more ambitious RES energy mix target of 32 percent, compared to the European Commission’s 30 percent, by 2030 at an EU energy ministers meeting in Luxembourg three months ago, Greece’s energy minister Giorgos Stathakis has yet to specify on policies that will need to be adopted.

EU member states need to submit their plans by the end of December and concerns in Brussels are growing.

Just days ago, at a meeting between national representatives and Directorate-General for Energy officials, a number of EU member countries, including Greece, were told that they have yet to set clear plans on policies needed for the more ambitious RES target. National representatives were asked to apply greater pressure on their governments.

The Greek energy ministry’s secretary general Mihalis Veriopoulos has, for quite some time now, assembled a special committee to focus on the issue but has not followed up with a public consultation procedure with industry figures as has been expected.

DESFA buyers agreement soon, RAE certification the sale’s final step

An endorsement by the European Commission’s Directorate-General for Energy of the winning bidding scheme’s offer in an international tender offering a 66 percent stake of DESFA, Greece’s natural gas grid operator, paves the way for the signing of a shareholders agreement, which, according to sources, could take place by the end of this week at the state privatization fund TAIPED’s Athens headquarters.

An all-European investment team comprising Italy’s Snam, Spain’s Enagás Internacional and Belgium’s Fluxys emerged as the tender’s winning bidder last summer with a 535 million-euro offer.

Once the shareholders agreement has been signed, RAE, Greece’s Regulatory Authority for Energy, will need to offer its certification for the new owners. This step, the last in the overall sale procedure, is expected soon.

This privatization effort, which has so far lasted over five years, was launched in 2013 with an unfinished initial tender won by Azerbaijan’s Socar.

The Greek State, offering 31 percent of DESFA’s 66 percent being sold, stands to receive 251.3 million euros of the 535 million-euro total. ELPE (Hellenic Petroleum), selling the other 35 percent, will receive 283.7 million euros.

The Snam-Enagás-Fluxys team will be entitled to appoint six of the new DESFA board’s eleven members, the Greek State, to hold a 34 percent stake of the gas grid operator, will be given three board seats, while a further two board members will be appointed based on agreements between the Greek State and the investors.

The Greek State, which will reserve the right to appoint the board’s president, will also hold veto rights for matters such as capital increases and international projects.

The incoming investment team will not be permitted to operate other rival ventures in Greece, will be expected to carry out a 330 million-euro investment program, and will not be able to transfer shares to third parties during the first two-year period and until the investment program has been completed.

 

DG Energy boss in Athens to inspect on reforms, wider EU commitments

Klaus-Dieter Borchardt, Director of the European Commission’s Directorate-General for Energy, is currently in Athens for a series of meetings with local authorities to inspect on energy-sector reforms included in the bailout agreement, and, beyond the Greek progam, ensure the country is on the right track for EU energy policy commitments leading to the European energy market’s unification, as presented in the target model.

The DG Energy top official’s two-day agenda, concluding today, includes meetings with officials at IPTO, the power grid operator, RAE, Regulatory Authority for Energy, the main power utility PPC, and the Athens Energy Exchange.

Borchard is focused on ensuring the country’s ongoing and prospective energy-sector reforms will be implemented following the Greek program’s conclusion next month, according to certain local officials who have held talks with the visiting authority.

The DG Energy boss also appears to be applying pressure for the maintenance of schedules, by all local energy institutions, as presented in a binding road map resulting from the country’s EU membership, which stretches beyond the Greek bailout agreement.

Prior to his arrival in Athens, Borchard was in Bulgaria.

 

Six steps to DESFA sale completion, expected towards end of year

The sale agreement for DESFA, the natural gas grid operator, is expected to be completed towards the end of the year, pundits believe, enabling the international tender’s winning bidder – a consortium comprised of Italy’s Snam, Spain’s Enagás Internacional and Belgium’s Fluxys – to take control of a 66 percent stake acquired for 535 million euros.

Until then, six steps are needed. The first of these was taken yesterday at an ELPE (Hellenic Petroleum) meeting, during which company shareholders approved the firm’s 35 percent stake of DESFA contributed to the sale. TAIPED, the state privatization fund, offered the other 31 percent on behalf of the Greek State.

The second step will entail the submission of the sale’s dossier to Greece’s Court of Auditors with all documents translated into Greek. This step is expected to be taken within May, sources informed. The Court of Auditors should offer its approval in June or July, which would enable the deal to be finalized by the end of December.

Then, for the third step, a share purchase agreement (SPA) needs to be signed by the buying consortium and TAIPED. This will be immediately followed by RAE (Regulatory Authority for Energy) certification of DESFA with the new owners on board. The certification process will essentially provide RAE with the opportunity to inspect the incoming consortium’s members for any irregularities.

This part of the overall process should be completed swiftly. It proved more complicated in the recent sale of a 24 percent of IPTO, the power grid operator, to China’s SGCC, as the incoming strategic investor was a non-EU firm.

The fifth step, once the new-look DESFA has been certified by RAE, will involve submitting the sale’s dossier to the European Commission’s Directorate General for Competition and Directorate General for Energy. The former will need to endorse the sale and the latter must provide certification.

Once these five steps have been taken, TAIPED and the three-member consortium will be able to sign a finalized agreement for the transfer of a 66 percent stake of DESFA to the strategic investors and a concurrent payment of 535 million euros to TAIPED.

As all three consortium members are European firms, the overall process is expected to proceed swiftly, pundits anticipate.

The DESFA board will not be permitted to contact the buyers and inform on any company activities until the sale has been completed.

 

 

 

 

Industrial ETMEAR plan sent to Brussels, minister informs

A Greek proposal for RES-supporting ETMEAR surcharge model adjustments has been delivered to European Commission authorities, including the Directorate General for Energy, the country’s energy minister Giorgos Stathakis has informed industrialists, according to energpress sources.

Details of the adjustments, based on EU directives, include a request for the endorsement of a reduced ETMEAR surcharge for selected industrial sub-sectors, measuring 15 percent of the average surcharge level valid for all consumers.

The ETMEAR surcharge imposed on industrial enterprises is a key matter for energy-intensive producers. Last month, industrialists forwarded a letter to the energy minister warning of the industrial sector’s extreme concerns over energy costs and level of competitiveness. Time is running out, industrialists warned, fearing soaring energy costs.

Lower ETMEAR surcharge costs enjoyed by energy-intensive industries face the danger of being classified as illegal state aid if the adjustment plan is not endorsed in Brussels by January, 2019.

In addition, other support systems for selected industrial enterprises, such as a mechanism offsetting CO2 emission right costs, as well as the demand response mechanism (interruptability) could be blocked, industrialists have warned.

According to the Greek proposal, the ETMEAR surcharge for electro-intensity enterprises, defined as those whose electricity costs exceed 20 percent of gross added value, will be set at a maximum of 0.5 percent of their gross added value. Steel and cement producers may utilize this term as an energy-cost relief measure.

Energy-intensive enterprises whose electricity costs are less than 20 percent of their gross added value will be responsible for ETMEAR costs of no more than 4 percent of their gross added value, according to the adjusted terms. Few enterprises are expected to qualify for this category.

A minimum ETMEAR price of 0.3 euros per MWh will be offered for certain sectors such as the steel and aluminium industries, according to the plan.

The adjustments also include favorable terms for other sectors. ETMEAR levels for farmers, hospitals, ministries and public buildings will be set at 50 percent of the average surcharge level. A 30 percent level will be set for tram and railway companies. Lignite mining companies will be charged 20 percent of the ETMEAR average.

 

 

 

New wave of RES investments on way, DG Energy official tells

A new wave of green energy investments throughout Europe, to be propelled by ambitious emission targets set by the European Commission, is on the way, Gerasimos Thomas, a highly ranked DG Energy official, has told a conference in Delphi, central Greece.

European Commission targets aiming for a 30 percent RES share of Europe’s energy mix by 2030 and 50 percent by 2050 are expected to provide the impetus for this wave of investments, the DG Comp official informed.

The RES sector is expected to attract a significant share of private-sector investments in the coming years, while RES auctions have already begun reducing prices, Thomas noted.

New types of investments and investors, including institutional investors and pension funds, as well as related bond market initiatives, can be expected, the DG Energy official told the conference.

In 2017, green energy investments surpassed petroleum and natural gas-related investments for the first time, a trend expected to continue in the years to come, Thomas stated.

Besides the RES production domain, a surge of related investments concerning transmission, industry, networks, digitization and building environmental upgrades, is also expected, he noted.

 

Brussels rejects Amynteo time extension, upgrade now urgent

The European Commission appears to have rejected a Greek request for an operating hours extension of the main power utility PPC’s Amynteo lignite-fired power station, making the need to environmentally upgrade the facility extremely urgent.

Both the power utility and energy ministry are believed to have already accepted this position, according to energypress sources.

The Directorate-General for the Environment, in particular, has opposed a second request  made by Greek authorities, following an unsuccessful initial effort, calling for an extension of the ageing Amynteo facility’s remaining lifespan from 19,500 operating hours to 32,000.

A more positive stance on the prospect by the Directorate-General for Energy had raised the hopes of Greek officials, but it now appears the environmental authority’s position on the matter has prevailed.

This development means that PPC will need to act fast until the end of 2018 for a financing solution and assignment of the unit’s environmental upgrade so that the power plant can continue operating and, furthermore, ensure that the provincial city of Amynteo, in the country’s north, is not left without a telethermal facility as of 2019. Telethermal technology would cover the heating needs of Amynteo’s 10,000 or so inhabitants at an exceptionally low cost.

The Mytilineos group, GEK-TERNA, and the Copelouzos group, backed by China’s Shenhua, have all submitted upgrade proposals for the Amynteo facility.

As was disclosed yesterday by energypress, the energy ministry’s upgrade decision will be based on a series of critertia, key factors being the project’s assured financing as well as  assurance of low-cost electricity for major energy-intensive industries as a means of boosting their level of competitveness.

The Mytilineos corporate group’s Amynteo upgrade proposal, forwarded just days ago by chief executive Evangelos Mytilineos, entails a 110 million-euro revamp and lifespan extension to 2030 in exchange for a favorable long-term electricity supply agreement concerning the group’s Aluminium of Greece industrial enterprise. This proposal called for electricity absorption of between 300 and 400 MW per year, from the unit’s total capacity of 600 MW. Mytilineos left open the possibility of other industrial enterprises also taking part in the agreement. The Viohalco industrial group is believed to be interested in such a project, but the prospect remains unconfirmed.

GEK-TERNA had forwarded its environmental upgrade proposal to the energy ministry in October in exchange for favorable electricity tariffs.

The Copelouzos group and China’s Shenhua have proposed upgrading the lignite-fired facility in exchange for a stake of the facility.

 

 

 

Flexibility mechanism delayed by insufficient market reforms

The delivery of the country’s new flexibility remuneration mechanism plan by local authorities to the European Commission has been postponed until March, meaning its implementation, intended to compensate electricity producers for flexibility-related output, will be delayed accordingly, energypress sources have informed.

This rescheduling, included as a term in the bailout’s just completed third review, has been attributed to the lack of progress in local electricty market reforms.

Market reforms are expected as prior actions by the European Commission’s Directorate-General for Competition and Directorate-General for Energy before any remuneration mechanism may be applied to cover additional needs.

Officials in Brussels have obviously identified delays concerning electricity market reforms and, as a result, opted to delay the new flexibility remuneration mechanism’s introduction.

This delay will place even greater sustainability pressure on the country’s gas-fired electricity producers, left without CAT payments since April, and also pose a threat for the country’s energy supply security, especially amid the forthcoming winter period.

RAE, the Regulatory Authority for Energy, recently staged a public consultation process to shape the new flexibility mechanism’s details. It will be based on an annual auction procedure, as required by European law.

The plan entails offering producers three-hour-notice flexibility compensation for a maximum of 4,263 MW through one auction in 2018, not two as was initially considered.

Also, the starting remuneration price at flexibility mechanism auctions will be set at 30,000 euros per MW of output, slightly higher than the originally planned level of 25,000 euros per MW.

Hydropower and natural gas-fired electricity producers as well as Combined Heat and Power High Performance (CHP) stations will be entitled to take part in flexibility mechanism auctions. CHP units will have the right to seek payment for any output not remunerated through existing RES payment mechanisms.

Also, gas-fired electricity producing units will need to be able to run on alternative fuel (diesel) or possess natural gas reserves to be eligible for the flexibility mechanism’s auctions. This essentially means producers will need to hold additional supply contracts or be able to cover the cost of temporary LNG storage solutions, either directly or indirectly, as was proposed by DEPA, the public gas corporation.

PPC lignite sale list seems near, leading EC officials to visit

Upcoming concurrent visits to Athens by two leading European Commission officials have raised speculation of a finalized plan for the main power utility PPC’s bailout-required sale of lignite units representing 40 percent of the utility’s lignite capacity.

Two leading European Commission officials, Maros Sefcovic, vice president responsible for Energy Union, and Dominique Ristori, director-geneal of the Directorate-General for Energy, will both in Athens at the same time.

It is believed that a finalized plan detailing the content of PPC’s lignite sale package could be endorsed today during an Athens-Brussels teleconference, currently being held almost on a daily basis. An announcement is possible today or tomorrow.

Officially, Sefcovic’s visit is being presented as part of the official’s second tour of European capitals for matters concerning Energy Union. Ristori, on the other hand, is heading energy-sector bailout negotiations.

Besides PPC’s Meliti unit, Megalopoli III and IV are also expected to be included on the finalized PPC sale list, which will undergo a market test, measuring the level of investor interest, this month.

Finalization of PPC’s sale list would complete the most fundamental part of Greece’s energy-sector negotiations with the counry’s lenders.

Sefcovic, during his Athens visit, is scheduled to meet with energy minister Giorgos Stathakis to discuss Energy Union issues, including an implementation package. It includes aspects concerning supply security; creation of regional markets; promotion of interconnection and pipeline projects; a long-term energy plan; incorporation of more RES units into electricity systems; as well as a decarbonization strategy. The further liberalization of energy markets is also on Sefcovic’s agenda.

Besides the energy minister, Sefcovic is also scheduled to meet with main opposition New Democracy party leader Kyriakos Mitsotakis.