EDA THESS: World Environment Day

At the core of EDA THESS development strategy lies the implementation of best practices, in full compliance with the principles of Sustainable Development that are expanded to the whole range of its activities. The Company aims to offer added value to all stakeholders while saving energy resources for the next generations.

Throughout its operation, the Company has highly contributed to the reduction of the greenhouse gas emissions thanks to the development of the natural gas market, the increasing penetration – reaching today 64% penetration in the population of the License areas – and the progressively increasing distribution volumes.

Thessaloniki

On the occasion of the World Environment Day, an event was held in collaboration with the Municipal Authority of Thessaloniki. The key message conveyed during the event was that the extended use of natural gas highly contributes to the reduction of emitted pollutants.

As the General Manager of EDA THESS, Mr Leonidas Bakouras, stated: “Natural gas is showing its potential as it is the dominant transition fuel to achieve decarbonization and it decisively contributes to the objectives set for Energy and Climate by the State. We join our forces, and with a sense of responsibility, we are building a better environment for a sustainable future.

We keep on implementing the development program, in the light of the urgent need to protect the planet, investing in our digital transformation and in technologies that will enable energy transition and will contribute to the net – zero goal.”

In his speech, the Mayor of Thessaloniki, Mr. Konstantinos Zervas, stated:

“The Municipality of Thessaloniki is actively celebrating the World Environment Day. Thessaloniki is the capital of natural gas use. From now on, thanks to sophisticated urban equipment, there will be available data on the air quality of our city, which seems to better than ever”.

Thessaly

Within the same context, the World Environment Day was celebrated in Thessaly in the presence of the Mayor of Larissa, Mr. Apostolos Kalogiannis and the Governor of the Region of Thessaly, Mr. Konstantinos Agorastos, promoting respect for the environment.

The General Manager of EDA THESS, Mr Leonidas Bakouras, stated that “We are hosting this event in collaboration with the Municipal Authority since for EDA THESS, the respect and protection of the environment are two of the main strategic pillars leading to the protection and the reasonable management of resources.

In this context, we have declared the year 2021 as the Year of the ENVIRONMENT, to strengthen the ecological awareness of the citizens and improve quality of life.

EDA THESS is dynamically implementing its ambitious Development Program aiming at the further penetration of natural gas in the areas of License, which will lead to additional reduction in pollutant emissions”.

In his speech, the Governor of the Region of Thessaly, Mr. Konstantinos Agorastos, stated: «On the occasion of the World Environment Day, I would like to underline our successful cooperation with the Gas Distribution Company for the implementation of subsidized programs to incentivize our citizens to transit to the use of natural gas, reduce the heating cost and improve their environmental footprint”.

On his part, the Mayor of Larissa, Mr. Apostolos Kalogiannis, noted:

We are celebrating this day as 77% of our citizens and all municipal buildings and schools in Larissa are supplied with natural gas, which plays a decisive role in the improvement of the city’s air quality. We are cooperating with the Company to increase the percentage of citizens using natural gas, so that the penetration rate reaches even 100%.

EDA THESS honored the World Environment Day in its areas of license, as the General Manager stresses “the implementation of our development strategy is practically contributing to resource saving, to the enhancement of energy efficiency and to the reduction of the environmental impact”.

 

DEPA Infrastructure buyer must also buy Eni 49% in EDA Thess

The winning bidder in a privatization offering gas company DEPA Infrastructure will be obligated to also purchase gas distributor EDA THESS’s 49 percent stake held by Italy’s Eni gas e Luce, wanting to sell, according to an agreement between the two sides, revealed by a European Commission post-bailout surveillance report, the 10th edition, on Greece.

DEPA Infrastructure, EDA THESS’s parent company, holds a 51 percent stake in the gas distributor covering the Thessaloniki and Thessaly areas, while Eni gas e Luce, holding 49 percent, wants to withdraw.

A total of six qualifiers through to the DEPA Infrastructure privatization’s final round have been informed of the condition requiring the eventual DEPA Infrastructure buyer to also purchase Eni gas e Luce’s 49 percent stake in EDA THESS.

Investors have also been informed on, and agreed to, a formula to be applied to evaluate the additional sum that will be required by the DEPA Infrastructure buyer for the 49 percent stake of EDA THESS.

The finalists face a July 15 deadline for binding bids in the DEPA Infrastructure privatization, according to the European Commission report.

Until then, the government has a series of pending issues to resolve, including legislative revisions to unify the asset bases of the DEPA Infrastructure subsidiaries EDA THESS, EDA Attiki, distributing in Athens, and DEDA, covering the rest of Greece.

These legislative revisions will be needed for both the sales of DEPA Infrastructure and Eni gas e Luce’s 49 percent stake in EDA THESS, sources informed.

Legislative revisions to unblock DEPA Infrastructure sale

The energy ministry is planning to soon submit to Parliament legislative revisions designed to resolve pending issues that have held back the final stage of a privatization concerning gas company DEPA Infrastructure, sources have informed. The ministry will aim for the submission of binding offers by July.

Issues that have held back the sale, offering suitors 100 percent of DEPA Infrastructure, include a pending unification of the asset base of DEPA Infrastructure’s trio of EDA gas distribution subsidiaries and the establishment of a sale procedure for Eni Gas e Luce’s 49 percent stake in EDA THESS.

DEPA Infrastructure, EDA THESS’s parent company, holds a 51 percent stake in the gas distributor covering the Thessaloniki and Thessaly areas, while Italy’s Eni gas e Luce, maintaining the management rights with its 49 percent share in the gas distributor, wants to sell its stake.

Eni gas e Luce’s involvement in distribution has remained secondary to retail energy, the company’s primary focus, on an international scale.

The ministry’s anticipated legislative revisions promise to unify the asset bases of EDA Attiki, distributing to the wider Athens area, EDA THESS (Thessaly and Thessaloniki), as well as DEDA, covering the rest of Greece.

This asset base unification concerning the three distributors will lessen DEDA’s cost burden resulting from its network expansion projects as small distribution surcharge hikes by the two other EDA companies will hasten DEDA’s recovery of investment costs.

EP INVESTMENT ADVISORS; FIRST STATE INVESTMENTS (European Diversified Infrastructure Fund II); ITALGAS SpA; KKR (KKR Global Infrastructure Investors III L.P.); MACQUARIE (MEIF 6 DI HOLDINGS); and a consortium comprising SINO-CEE FUND & SHANGHAI DAZHONG PUBLIC UTILITIES (GROUP) Co., Ltd are the qualifiers through to the final round of the DEPA Infrastructure privatization.

RAE incentives-based plan for IPTO as part of new policy for operators

RAE, the Regulatory Authority for Energy, is set to forward a package of incentives for power grid operator IPTO designed to influence the operator’s annual earnings when specific objectives are achieved or missed.

This move by the authority comes as part of its wider effort offering incentives to electricity and gas market operators.

RAE, at its latest board meeting, approved a first set of incentives proposed for IPTO by an external consultant, energypress sources have informed. This set of incentives is expected to be forwarded to IPTO within the next few days for observations and comments.

The regulatory authority is aiming to forward the package of IPTO incentives for public consultation towards the end of this month, before it is endorsed by the board and published in the government gazette by the end of June, and implemented six months later.

The authority is essentially aiming for the package to be implemented by January 1, 2022, as part of a new framework covering 2022 to 2025.

The same external consultant was hired for a similar-minded set of incentives concerning the electricity distribution network operator DEDDIE/HEDNO.

RAE’s chief executive Thanassis Dagoumas recently told a news conference that the authority intends to adopt an incentives-based strategy for all operators with the aim of improving their services.

The authority will intensify its monitoring of operator projects in development and ultimately hand out bonuses or penalties, depending on the degree of progress, he noted.

For the time being, the incentives-based strategy applies for DEDDIE/HEDNO, as well as the gas distribution operators (DEDA, EDA Attiki, EDA THESS), offering extra WACC for the achievement of objectives concerning gas market penetration and distribution cost reduction for consumers.

 

RAE ‘not referring to EDA THESS’ when raising need for closer monitoring

Gas distributor EDA THESS is definitely not one of the sector’s companies the RAE (Regulatory Authority for Energy) chief was referring to when stating that the Greek energy market’s gas and electricity operators require closer monitoring so that consumers can benefit from lower surcharges and improved services, EDA THESS General Manager Leonidas Bakouras has stressed in a swift response to remarks by RAE chief executive Thanassis Dagoumas.

The regulatory authority’s plan includes commissioning certified auditors to inspect the financial data of market operators.

In a written statement, the EDA THESS general manager noted that, through efficient technical and financial management of the distribution networks in the Thessaloniki and Thessaly areas, the company has achieved Greece’s lowest distribution surcharges, since the end of 2016, while distribution surcharge reductions in Thessaloniki and Thessaly for 2021 are at 15 and 22 percent, respectively, compared to 2020.

Distribution surcharge reductions in 2021 for Thessaloniki and Thessaly industrial consumers are even greater, down 45 and 56 percent, respectively, proving that EDA THESS is already contributing to minimizing costs for consumers, Bakouras added.

 

RAE to intensify its operator monitoring, starting with gas

RAE, the Regulatory Authority for Energy, is gearing up to intensify its monitoring of the Greek energy market’s gas and electricity operators with the aim of minimizing operator surcharges for consumers and helping improve operator services, the authority’s chief executive, Thanassis Dagoumas, has told a news conference, reiterating the intention, also stressed during a recent presentation of its annual report.

The regulatory authority’s plan includes commissioning certified auditors to inspect the financial data of market operators.

Gas grid operator DESFA, gas distributors EDA Attiki, EDA THESS and DEDA, as well as the power grid operator IPTO and electricity distribution network operator DEDDIE can, as a result, expected closer inspections.

The authority intends to commence its intensified monitoring effort with the natural gas sector, where numerous new projects are planned for development, in an effort to ensure fair surcharge costs for consumers.

Dagoumas, at the news conference, reiterated that the operators, whose revenues are regulated, cannot enjoy wider profit margins than other market players.

Operators will be offered incentives for swifter completion of projects, which, combined with the stricter monitoring effort, will result in either bonuses or penalties, depending on the degree of progress made, the RAE chief highlighted once again.

RAE intends to introduce incentive-based policies, standard practice around Europe, for all energy market operators active in transmission and distribution.

 

Guaranteed revenues for operators ‘must not breed complacency’

Operators must not become complacent as a result of their guaranteed revenues but, instead, strive to keep improving their services, RAE (Regulatory Authority for Energy) chief executive Thanassis Dagoumas has stressed.

High yields secured by electricity and gas market operators active in Greece’s transmission and distribution networks are breeding complacency and prompting these companies to skip crucial investments needed for upgraded consumer services, the RAE chief has suggested.

The regulatory frameworks these operators are subject to, offering natural monopolies, result in considerable advantages compared to other sectors of the economy, Dagoumas noted.

It must be widely accepted, as a matter of principle, that perpetually high profit margins resulting from activities free of competition, without improved services in return, is not reasonable, the RAE chief noted.

Fair competition is a fundamental component of the EU itself, Dagoumas pointed out.

RAE plans to implement incentives for all operators, not just the electricity distribution network operator DEDDIE/HEDNO, and the gas distributors DEDA, EDA Attiki and EDA THESS, as is the case at present, Dagoumas disclosed.

DEDA, EDA Attiki and EDA THESS have been offered extra WACC returns for meeting gas penetration objectives and reducing overall distribution costs for consumers.

Interview: How EDA THESS achieves growth, reduction of tariffs and returns for shareholders

The main features of EDA THESS’ development program are the increased penetration of natural gas by the network’s expansion and the implementation of reduced tariffs for consumers combined with increased returns for the shareholders, as referred by the General Manager of the Company, Leonidas Bakouras, in his interview on energypress.

(See the full interview with Mr. Bakouras: Interview of the General Manager of EDA THESS, Mr. Leonidas Bakouras, on energypress.gr) 

The reduction of gas distribution tariffs for domestic and industrial consumers is a “result” of the Company’s strategy, with the main pillar being the design for high quality network construction, which is based on techno-economic criteria of efficiency.

It is no coincidence that, in the recent period due to tariff reductions, 20 new energy-intensive industries and large consumers have signed connection contracts to the natural gas network.

At the same time, the investment program of the Company, as approved by the competent Authority for the period 2021-2025, is in progress, in light of the great expectations deriving from the extremely positive results of 2020.

“We have a large Program which was approved at the end of December by the Authority for the period 2021-2025 and implementation of investments has already started in January”, said Mr. Leonidas Bakouras, pointing out that for 2020, 23,000 new connections were acquired, distributed volumes were increased by 10% compared to the previous year of 2019 and natural gas penetration reached 64% in population.

The General Manager of EDA THESS made special reference to CNG technology, which has a dual role, both for the safe and uninterrupted operation of the distribution network in case of any malfunction, and for the natural gas distribution in remote areas. According to him, the Company has supplied new areas with CNG technology, a successful model since it managed to supply even the most remote areas with natural gas.

Referring to the positive financial results of the Company, the distribution of 20 million euros in dividends to the shareholders is expected, and as Leonidas Bakouras characteristically stated: “We achieve return on equity (ROE) of 7.2%, a ratio that showed a four-year high. We are on an upward trajectory, as shareholders are satisfied, consumers are satisfied (since distribution tariffs are reduced), and employees are satisfied. A triptych that contributes to the development of our country, offering a healthy working environment and added value to the place”.

Energy privatization plans delayed by negative conditions

The government has decided to slam the brakes on procedures for major energy-sector privatizations, preferring to defer bidding deadlines as a result of a series of administrative hurdles and external factors, exacerbated by challenges and uncertainties caused by the pandemic over the past year.

Binding-bid deadlines for the sales of two gas utility DEPA offshoots, DEPA Commercial and DEPA Infrastructure, initially planned for this month by privatization fund TAIPED, will now be reset for early autumn, sources have informed.

Lockdown measures have prevented possible buyers from visiting the DEPA Commercial and DEPA Infrastructure headquarters and facilities as part of their due diligence procedures.

In addition, an ongoing legal battle between DEPA Commercial and ELFE (Hellenic Fertilizers and Chemicals) has also unsettled potential buyers. According to sources, investors are demanding protection in the form of guarantees should any court verdict require DEPA Commercial to compensate ELFE over a gas-pricing dispute.

As for issues surrounding the DEPA Infrastructure sale, Italy’s Eni, currently holding a 49 percent stake in EDA THESS, a DEPA Infrastructure subsidiary distributing to the Thessaloniki and Thessaly areas, wants to sell its stake. Officials are now examining a solution that would enable the DEPA Infrastructure privatization to be completed and followed up by the sale of Eni’s 49 percent stake in EDA THESS.

TAIPED’s announcement of second-round qualifiers in a tender offering development and operation of an underground gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala” in northern Greece is expected in April. But the overall procedure will not be completed until next year.

A privatization plan for ELPE (Hellenic Petroleum) has been put on hold given the unfavorable conditions surrounding the global oil industry at present.

DEPA Commercial, Infrastructure sales delayed, new June bids deadline seen

The privatization schedule for gas utility DEPA’s two offshoots, DEPA Commercial and DEPA Infrastructure, appears headed for further delay as a result of four main issues holding back procedures, sources closely monitoring these sales have informed.

The privatization fund TAIPED had initially planned to accept financial offers for DEPA Commercial and DEPA Infrastructure this month but has since unofficially extended these offer deadlines to April. Further revisions cannot be ruled out, the most likely outcome being a deferral of these deadlines to the end of June.

As for the DEPA Commercial sale, lockdown restrictions have made it difficult for potential buyers to visit the company facilities for on-the-spot technical and financial appraisals as well as clarification on vague points. This has delayed the accumulation of information needed by possible buyers for a complete picture on the gas company’s financial standing.

In addition, an ongoing legal battle between DEPA Commercial and ELFE (Hellenic Fertilizers and Chemicals) has also unsettled potential buyers. According to sources, investors are demanding protection in the form of guarantees should any court verdict require DEPA Commercial to compensate ELFE over a gas-pricing dispute.

Two issues are also obstructing the DEPA Infrastructure sale. Firstly, Italy’s Eni, currently holding a 49 percent stake in EDA THESS, a DEPA Infrastructure subsidiary distributing to the Thessaloniki and Thessaly areas, wants to sell its stake. As a result, two options are being examined. One entails DEPA Infrastructure buying Eni’s 49 percent stake in EDA THESS. The other involves incorporating EDA THESS into the DEPA Infrastructure sale.

The other concern holding back proceedings for the DEPA Infrastructure sale has to do with pending appraisals, by the possible buyers, of new distribution network development plans prepared by the gas company’s three distribution subsidiaries, which, besides EDA THESS, include EDA Attiki, covering Athens, and DEDA, covering the rest of Greece. Suitors may require as much as two months to complete their respective appraisals.

Robust EDA THESS results for 2020, profits increased by 3.2%

The results of EDA THESS for the fiscal year 2020, were approved by the BoD of the Company, following a decision taken at the meeting held on 16/02/21.

As stressed by the General Manager, Mr. Leonidas Bakouras, despite the intense instability that prevailed due to the pandemic, EDA THESS recorded strong growth rates for 2020 continuing its successful course.

The Company ensured the smooth continuation of all its operations, fully respecting the current legislation and the regulatory framework, while complying with the principles of transparency, impartially and equal treatment of Distribution Users and final consumers.

The results of the Company reflect the achievement of all business objectives throughout the range of its activities. Specifically, in 2020 there was a significant growth of the market, with ~ 23.000 new connections and a penetration rate that exceeds 64% in population of the areas of its License. At the same time, the distributed volumes amounted to 448.4 mil. Nm3 increased by 9.6% compared to 2019. The development program for 2020 amounting to € 36 mil. for the expansion of the distribution network and the supply of all new areas was fully implemented.

As Mr. Bakouras pointed out, the impressive performance of the previous year, is also reflected in the financial results of the Company, as the total revenue exceeded € 62.3 mil. showing an increase of 8.1% compared to 2019.

At the end of the year, earnings before interest, taxes, depreciation, and amortization (EBITDA) amounted to € 43.4 mil. increased by 4.5% compared to the corresponding period of the previous year. At the same time, earnings after taxes (EAT) reached € 20.5 mil., showing an increase of 3.2% compared to the previous year, resulting in the increased profitability for a fourth consecutive year. The Return on Equity (ROE) ratio also showed a four-year high, which amounted to 7.2%.

The strong profitability presented by EDA THESS results in financial efficiency for shareholders, as the distributed dividends are expected to reach € 19.5 mil. increased by 3.2% compared to the dividends distributed in 2019.

Commenting on this, the General Manager stressed that “the results of the previous year are based on the perfect organization and high technical expertise of the management and staff, the strict planning, the discipline for the compliance with schedule and the dedication to goals. Having laid a solid foundation through a long and successful journey, we fully secure the areas of the License. EDA THESS, as a growth lever for the areas where it operates, continues with the same dynamic, the implementation of big investments, contributing to further impetus of the national economy.

Concluding, Mr. Bakouras stressed that the targeting of the development strategy and the long-term investment planning, based on technical and economic criteria, led to the further reduction of the Distribution Tariffs. From January 1st, the weighted average distribution tariff of EDA THESS that has been approved by the Authority shows a further decline of 14.8% in Thessaloniki and 21.9% in Thessaly, compared to the previous regulatory year.

On his part, the Chairman of the BoD, Mr. Ioannis Tsitsopoulos stated that: “In a difficult situation with the pandemic having caused a significant blow to the domestic and international economic and social environment, EDA THESS managed to show amazing adaptation, to continue its dynamic growth and to fully achieve the goals it had set for 2020, while recording a significant increase in all key financial figures for the year 2020. This result adds even more value to the Company’s success. 

Warm congratulations to the General Manager, the executives, and the staff of EDA THESS who with continuous struggle and dedication to the smooth operation and the goals of the Company, have managed to make it a strong Company of high prestige, with international impact and high-performance standards, recognized from the citizens, the companies, the suppliers, the technical world of the country but also from the State itself. 

I wish the positive course of the Company to continue smoothly in 2021. The policy of focusing on innovation, continuous improvement of the quality of our services, investments, and digital transformation, is sure that will bring even more positive results in the future and in the penetration of natural gas for the benefit of local communities and National Economy. The BoD and I personally will continue to stay alert and assist in the continuous growth dynamics of the Company, ensuring with our decisions its positive image and perspective, as well as its competitiveness”.

EDA THESS network expansion lowers distribution cost up to 56%

Gas distributor EDA THESS, covering the Thessaloniki and Thessaly regions, has, besides boosting its total revenue, managed to reduce distribution costs shared by consumers as a result of the company’s swift and well-planned distribution network expansion.

The gas distributor’s household, business and industrial consumers in Thessaloniki and Thessaly are now benefitting from significant distribution cost reductions that have reached as much as 56 percent, as the network expansion is enabling EDA THESS to impose smaller distribution charges on an increased number of consumers.

Since January 1, the company’s distribution costs dropped a further 14.8 percent in Thessaloniki and 21.9 percent in Thessaly, compared to the previous regulatory period.

The company’s industrial consumers have benefited most as their distribution costs have fallen by 45 percent in Thessaloniki and 56 percent in Thessaly, compared to distribution costs up until November, 2020.

“Our job is to distribute gas to as many regions as possible and broaden its use as much as possible,” EDA THESS general manager Leonidas Bakouras told energypress in response to a related question.

Looking ahead to further expansion, EDA THESS has begun implementing a new development plan for 2021 to 2025, estimated to be worth 156 million euros.

SBE, the Federation of Industries of Greece, in a related statement, welcomed this considerable distribution cost reduction.

Major gas distribution tariff cuts a boost for industry

EDA THESS premises in Thessaloniki were visited by the President of the Federation of Industries of Greece (SBE), Mr. Athanasios Savvakis where he was welcomed by the General Manager, Mr. Leonidas Bakouras and executives of the Company.

During the meeting, the General Manager informed about the approved Development Plan 2021-2025 amounting to ~ 156 million € which is already being implemented supporting the development of the areas of responsibility of EDA THESS. As part of this ambitious Program, the Company aims to integrate more and more industries in the gas distribution network. The expansion of natural gas use to energy-intensive production units leads to an increase in their energy efficiency, to a reduction in the energy cost while at the same time environmental performance is improved.

It is worth noting that in 2020, for the region of Thessaloniki the industries MEL SSA, MEVGAL SA, Souroti SA, Roka SA, Onassis SA, B. Maliouris SA and the new gas station using CNG of EKO SA in Thessaloniki signed a connection contract, while for Thessaly the companies HELLENIC DAIRIES SA, AGRODER IKE, VIOLAR SA, CVBTECH HELLAS MIK, D,KISSA BROS & CO OE.

At the same time, Mr. Bakouras pointed out that the critical decline of distribution tariffs derives from the development planning, consistent and full implementation of an integrated strategy with profitable investments, based on technical and economic criteria. From the 1st of January the weighted average distribution tariff of EDA THESS that has been approved by the Authority shows a further decline of 14.8% in Thessaloniki and 21.9% in Thessaly, compared to the previous regulatory period.

Even more impressive is the reduction for the industrial consumers, who now enjoy reduced distribution tariffs by 45% in Thessaloniki and 56% in Thessaly compared to the distribution tariff applied in the previous regulatory period.

For his part, Mr. Savvakis expressed his satisfaction for the shaping of distribution prices at lower levels. He stressed that such a development is quite positive for the productive base and acts as an accelerator in attracting new investments, turning the region into an investment hub. By this way, the interest of investors for the development of companies in the industrial sector is mobilized, as a healthier, more flexible, and competitive environment with low energy costs is established. In this direction, EDA THESS through targeted investments, further strengthens the perspective of infrastructure development both in Northern Greece and in other areas of its License.

In line with the National Plan for Energy and Climate objectives, EDA THESS achieves the increase of natural gas penetration, contributing to the boost of the productive restructuring.

RAE approval of gas distributor tariffs paves way for DEPA Infrastructure sale

RAE, the Regulatory Authority for Energy, has approved tariffs for gas utility DEPA’s distribution companies EDA Attiki, covering the wider Athens area, EDA Thess, covering Thessaloniki and Thessaly, and DEDA, covering the rest of Greece, a move that paves the way for the sale of DEPA Infrastructure, one of DEPA’s new entities established for the utility’s privatization procedure.

DEPA Infrastructure is now the parent company of the three distribution firms.

RAE examined tariff-related data submitted by the gas distributors before giving the green light.

The authority hesitated to deliver a decision on distributor tariffs over concerns that connection term discounts offered by the distributors could be regarded as a form of state aid.

RAE also appears to have approved revisions made by the distribution companies to their five-year development plans from 2020 to 2024 after making slight alterations.

The revisions by the gas distributors concern the entry of certain areas to networks as well as more rational use of CNG solutions.

The regulatory authority’s approval of the tariffs, development plans of the distribution companies, and their connection term incentives were all a prerequisite for the continuation of the DEPA Infrastructure sale.

RAE set to permit gas link fee discounts after initial hesitation

Following initial hesitation, RAE, the Regulatory Authority for Energy, appears set to permit distribution network connection fee discounts offered by natural gas distributors to attract new customer. But this approval will only apply to areas where gas market penetration levels remain low.

RAE has hesitated to approve such discounts offered by gas utility DEPA’s subsidiaries EDA Attiki, EDA Thess and DEDA – the three gas distributors covering the wider Athens area, Thessaloniki-Thessaly and rest of Greece, respectively – fearing the special offers could be regarded as a form of state aid by the European Commission’s competition officials.

However, DEPA Infrastructure, a new DEPA entity now controlling these three gas distribution subsidiaries, recently warned that RAE’s delays are undermining its privatization procedure. This warning was highlighted in a letter to the authority that was also shared with privatization fund TAIPED and the energy ministry.

RAE’s delay in endorsing EDA tariffs for 2019 to 2022 has consequently also placed the gas company’s development plan in turmoil, DEPA Infrastructure pointed out in the letter.

RAE has overcome its concerns and is now preparing to endorse the tariffs. The authority will also permit connection fee discounts in areas where natural gas market penetration levels do not exceed 25 percent.

In areas where natural gas market penetration levels are exceeded but not greater than 75 percent, RAE will permit connection fee discounts of up to 90 percent in 2022, 80 percent in 2023, 70 percent in 2024 and 60 percent in 2025.

The authority will not endorse any connection fee discounts for municipalities where natural gas market penetration levels exceed 75 percent.

 

RAE issues undermining DEPA Infrastructure privatization

Delays, instability and flawed intervention by RAE, the Regulatory Authority for Energy, on important operating issues concerning gas utility DEPA’s subsidiaries EDA Attiki, EDA Thess and DEDA – the three distributors covering the wider Athens area, Thessaloniki-Thessaly and rest of Greece, respectively – are undermining the privatization procedure for DEPA Infrastructure, a new DEPA entity placed for sale, DEPA Infrastructure has warned in a letter to the authority.

In the letter, also forwarded to privatization fund TAIPED and the energy ministry, DEPA Infrastructure complains of a RAE delay in endorsing EDA tariffs for 2019 to 2022, which has consequently placed the gas company’s development plan in turmoil.

Besides not having reached a decision on gas distribution pricing policy, the authority has changed the WACC level three times since last year, including recently, which has negatively impacted the yields of DEPA subsidiary investments, sources noted.

Also, RAE regards initiatives taken by the three gas distributors to attract more consumers to the natural gas market as a form of state aid, DEPA Infrastructure protests in the letter, referring to distribution network connection fee discounts offered by the distributors, as well as subsidy support for natural gas system installations.

Any moves to curb these initiatives promoting gas usage would derail the natural gas sector’s energy-mix penetration target for 2030, as specified in the National Energy and Climate Plan, DEPA Infrastructure contends.

These unfavorable conditions threaten to delay the DEPA Infrastructure privatization, company sources stressed.

The sale procedure’s video data room is still lacking vital information for prospective bidders, who could begin seeing the DEPA Infrastructure privatization as a high-risk investment, the sources noted, adding that WACC level reductions will ultimately reduce the market value of DEPA Infrastructure and the subsidiaries.

Gas distributors want surcharge rebate decision cancelled

Gas distributors DEDA, EDA Thess and EDA Attiki will seek the nullification of a decision by RAE, the Regulatory Authority for Energy, requiring them to gradually reimburse industrial enterprises for increased network surcharges  between August 14, 2015 and December 1, 2016.

The RAE ruling was delivered following a complaint by EVIKEN, the Association of Industrial Energy Consumers.

The amount that needs to be returned by the three distributors to energy-intensive industries is estimated to be between 2.5 and three million euros.

As a first step, DEDA, EDA Thess and EDA Attiki will apply for the RAE decision to be nullified and, if unsuccessful, will then resort to legal action, including at the Council of State, Greece’s Supreme Administrative Court.

A bill ratified in 2015 enabled the gas distributors to impose a temporary network surcharge of 4 euros per MWh, prompting a reaction from energy-intensive industries.

EVIKEN argued that the increase in distribution charges did not reflect the costs of each distributor, was a disproportionate burden for certain categories of network users, while adding that distribution charges should be set by RAE, not through legislation.

According to the RAE decision, the gas distributors will need to introduce measures reimbursing industrial consumers for higher network surcharge payments over the aforementioned 16-month period. Payment of the reimbursements, to be determined by a specific formula, will be possible through installments over a period of as long as five years, according to the RAE decision.

Clearer framework needed for new gas distribution networks

RAE, the Regulatory Authority for Energy, has identified the need for clear-cut, objective terms, based on technocratic criteria, for an improved strategy to help take natural gas to regions around the country without distribution network access at present.

Approval procedures for development plans submitted by gas distribution companies are currently in progress, and, in addition, the distribution sector is being restructured.

The energy ministry has made clear it wants a consistent and modern framework to facilitate the development of new distribution networks in as many parts of Greece as possible, a government objective.

Gas sector conditions also need to be made as clear as possible ahead of the privatization of DEPA Infrastructure, owning gas distributor EDA Attiki, servicing the wider Athens area; 51 percent of EDA Thess, covering the Thessaloniki area; and DEDA, distributing to all other regions not serviced by the two aforementioned firms.

RAE is now preparing a new framework concerning the appraisal and approval of development plans by gas distribution companies, as well as a formula for their earnings.

 

 

 

RAE’s WACC reduction for operators ultimately neutralized

A recent decision by RAE, the Regulatory Authority for Energy, reducing the WACC rate amid a fixed four-year period for energy market operators, as a result of the government’s corporate tax reduction from 29 to 24 percent, is ultimately expected to be neutralized as the authority has asked operators to submit updated data based on latest market conditions, including borrowing costs, all factors applied by the authority to its WACC formula.

Gas grid operator DESFA, power grid operator IPTO, as well as the country’s gas distributors EDA Attiki, EDA Thess and DEDA, initially reacted against RAE’s intention to reduce the WACC rate, determining earnings, within the preset four-year period. It is supposed to be adjusted every four years.

However, RAE’s latest call for updated data from operators and distributors, effectively promising to offset any WACC rate adjustment, has been well received.

 

DEDA to challenge RAE removal of 8 cities from 5-year development plan

Gas distributor DEDA is examining legal options in order to challenge a decision by RAE, the Regulatory Authority for Energy, to remove the entire Peloponnese and the provincial cities of Veria and Giannitsa from the distributor’s five-year development plan covering 2020 to 2024.

The authority excluded these areas as estimated completion dates for projects exceeded deadlines by more than 18 months.

At the very least, DEDA is expected to ask RAE to reconsider its decisions and request further details concerning the exclusion of a total of eight cities from its five-year development plan.

Besides Veria and Giannitsa, both in the north, RAE removed six Peloponnesian towns, Tripoli, Corinth, Argos, Nafplio, Kalamata and Sparti, from DEDA’s development plan.

DEDA, now under the wings of DEPA Infrastructure, a new entity formed by gas utility DEPA ahead of its privatization, covers areas not served by EDA Attiki (wider Athens) and EDA Thess (Thessaloniki and Thessaly).

It remains unclear whether DEDA will publish the shortened five-year plan in the government gazette. Failure to do so would delay procedures for the remainder of projects on the list, including the setting of customer tariffs. The company’s administration wants to avoid such delays.

 

Energy firms react against RAE plan for WACC reduction

The prospect of upcoming WACC level reductions reportedly planned by RAE, the Regulatory Authority for Energy, for gas grid operator DESFA, power grid operator IPTO, as well as the country’s gas distributors EDA Attiki, EDA Thess, DEDA and their parent company DEPA, the gas utility, has unsettled the administrations of all these companies.

Though RAE has not yet reached a decision on the matter, the aforementioned energy companies understand the authority is working to soon lower their WACC levels as a follow-up adjustment to the government’s business tax rate reduction, from 29 to 24 percent.

RAE has endorsed the current WACC levels for a four-year period. A revision at this point would cancel out this endorsement.

The energy companies will push for a delay of any WACC rate revisions until the four-year period has expired, it is believed.

DESFA officials have already pointed out a need for stability and predictability, also stressing the company has invested heavily in the operator during a difficult period for the country.

DEPA’s gas distribution companies fear a WACC revision may negatively impact an ongoing privatization procedure for DEPA Infrastructure, a new DEPA entity established for the privatization.

DEPA and its associated firms have warned DEPA Infrastructure would become a less attractive prospect for nine candidates who have expressed first-round interest, while a revision before the WACC level’s four-year period has been completed could be interpreted as a signal of uncertainty by investors.

DEPA Infrastructure yield, 8.2% + 1.5%, a drawcard for bidders

Though not yet officially announced, a new annual regulated yield for distribution network operators, now set, represents one of the strongest drawcards for the sale of DEPA Infrastructure, a new entity established by gas utility DEPA for privatization.

Prospective bidders engaged in preliminary contact with authorities linked to the DEPA Infrastructure sale ahead of a February 14 deadline for non-binding expression of interest have been told the WACC figure has been set at 8.2 percent plus a 1.5 percent premium if certain investment objectives are achieved.

These objectives include swift network development in areas covered by gas distributor EDA, achievement of pipeline addition goals, specified in kilometers, as well as the development of projects not included in DEPA Infrastructure’s initial development plan.

Prospective participants, including funds, will enter this privatization procedure knowing their investment’s potential yield can reach 9.7 percent, far higher than WACC performances enjoyed by network operators in central Europe.

This higher yield offering has generated all-round optimism for a solid turnout by participants Friday week.

Potential bidders, so far, are believed to include Greek gas grid operator DESFA, France’s Engie, Italy’s Italgas and Germany’s Eon.

Besides European operators, the privatization is also expected to attract a number of funds, seen partnering with operators for the sale’s second round of binding bids.

DEPA Infrastructure has taken under its wings DEPA’s interests in the distribution networks of wider Athens (EDA Attiki), Thessaloniki and Thessalia (EDA Thess) and the rest of Greece (DEDA).

 

Italgas eyeing Eni’s 49% stake in EDA Thess, DEPA networks

Italgas, Italy’s biggest natural gas distributor, appears to have reached a preliminary agreement to acquire fellow Italian company Eni gas e luce’s 49 percent stake and management rights in EDA Thess, covering the Thessaloniki and Thessaly areas.

Though Eni maintains a favorable view of its business interests in EDA Thess, the retail-focused company’s involvement in networks is not its main international activity. EDA Thess is the sole gas distribution company in Eni’s portfolio.

Privatization procedures at Greek gas utility DEPA appear to have hastened the development. DEPA’s 51 percent stake in EDA Thess is set to be transferred to DEPA Infrastructure, one of two new entities, along with DEPA Trade, to emerge from a DEPA split ahead of the gas utility’s privatization.

The government is moving to privatize the Greek State’s prospective 65 percent in DEPA Infrastructure. The entire company may be sold if Hellenic Petroleum (ELPE), a 35 percent shareholder, joins this privatization.

Italgas is preparing to participate in the DEPA Infrastructure tender once it has acquired – if all goes well – Eni’s stake in EDA Thess, sources informed.

Eni gas e luce is awaiting Greek market developments and will then examine its options concerning the EDA Thess stake, including a possible sale, company officials have responded to media questions, without confirming any finalized deal.

Speaking to Reuters last week, Italgas chief Paolo Gallo informed the company intends to finalize a merger and acquisition agreement by the end of the year, or, possibly, in the first quarter of 2020.

 

Country’s gas distributors striving to meet terms to secure licenses

The country’s three gas distribution companies exclusively covering the Greek market are preparing dossiers including investment plans to be submitted to RAE, the Regulatory Authority for Energy, in efforts to secure operating licenses, yet to be officially granted.

The three natural gas distributors are EDA Attiki, covering the wider Athens area, EDA Thess, serving the Thessaloniki area, and DEDA, covering the rest of Greece.

The three companies, undergoing separate licencing procedures, each need to prove that they are capable of developing investment plans previously submitted.

The authority wants to avoid any overambitious – and ultimately unachievable – network planning by the three distributors to prevent obstructing other investors who could be interested in developing networks.

Distribution companies will risk losing their regional licenses if they do not develop networks as planned.

EDA Thess, sporting a reliable track record, is believed to have made the most progress of the three distributors in its preparation of a five-year plan. EDA Attiki, according to statements made by company officials, is reworking its five-year investment plan, while DEDA, operating in a far wider area, has catching up to do.

DEPA, Eni to sign deal today, Shell selling its stake for €150m

Months-long negotiations between DEPA, the public gas corporation, and Italy’s Eni for the latter’s full acquisition of the EPA Thessaloniki-Thessaly gas supply company, commercially dubbed Zenith, are expected to be completed today with the signing of a finalized agreement.

Until now, DEPA has held a 51 percent stake in this venture and Eni the other 49 percent. No changes are expected to be made to the EDA Thessaloniki-Thessaly gas distribution company. DEPA and Eni will retain their respective 51 and 49 percent stakes in this venture.

Not unintentionally, the timing of the deal’s anticipated completion coincides with a meeting in Athens today between energy minister Giorgos Stathakis and the country’s lender representatives. Greek officials are keen to send a signal to the troika that pending bailout issues at the energy ministry are being settled.

DEPA also appears to have been reached an agreement with Shell to acquire the latter’s 49 percent share of the EPA Attiki gas supply and EDA Attiki gas distribution companies covering the wider Athens area. DEPA currently holds 51 percent shares in these ventures. The two sides held marathon talks yesterday. Pending issues appear to have been settled while, according to sources, the agreement is worth 150 million euros.

The government and lenders still need to agree on the resulting market structure following these rearrangements before a DEPA-Shell deal can be officially announced. DEPA would fully control EPA and EDA Attiki and hold a majority stake in EDA Thessaloniki-Thessaly.

The finalization of DEPA’s future roles in all the aforementioned ventures will enable officials to begin discussing and implementing the gas utility’s privatization model. This sale is planned to offer investors a 65 percent stake.

A meeting today to involve Stathakis, the energy minister, finance minister Euclid Tsakalotos and the lenders will indicate whether a Greek proposal for the DEPA privatization stands a chance of being accepted.

An alternative DEPA privatization plan prepared by the energy minister entails the establishment of a holding company to serve as an umbrella for three new subsidiaries respectively covering commercial, distribution and international projects divisions.

A number of local officials have questioned whether this plan can raise the privatization funds expected from DEPA as the proposal, restricting investors to a minority stake of DEPA’s networks, is seen as unattractive.

A second idea has also been tabled. It entails the establishment of two subsidiaries, one representing DEPA’s networks and the other the firm’s commercial division, without a holding company. Each subsidiary would be sold separately to represent a 65 percent privatization. This proposal recognizes that the gas networks and commerce are two different markets. Some investors may focus on the networks and others on the commercial side.

Apart from the privatization model that needs to be adopted for DEPA, ELPE (Hellenic Petroleum), which holds a 35 percent stake of this gas utility, also needs to make its position clear.

ELPE officials have told energypress that retaining a minority role in DEPA is pointless for the enterprise, while suggesting ELPE would withdraw from its DEPA interests if the price is right.

ELPE is interested in the natural gas market but only as a majority shareholder with managerial control, the officials explained.

 

 

 

Record numbers of households switching to natural gas

The number of new gas supply contracts has surged to unanticipated levels amid a widening field of players looking forward to the Greek gas market’s full liberalization as of January 1.

At EDA Attiki, distributing to the wider Athens area, new household supply contracts from the beginning of the year until last week, prior to the completion of a ten-month period, exceeded 18,800, up from 17,500 for the nine-month period. The market data suggests this gas supplier’s growth rate for new household contracts is increasing at a rate of 1,000 per month, meaning EDA Attiki’s latest target of 20,000 new contracts, following an upward revision, could be exceeded.

The 18,800 new household gas supply contracts established at EDA Attiki so far this year represent more than double last year’s amount and are 57 percent higher than the initial target set for the year. Quite impressively, 8,100, or 43 percent of these new supply contracts were established during the less active summer period, from June through August.

Likewise, the growth rate for new gas supply contracts established at EDA Thes, established to serve the wider Thessaloniki and Thessaly regions, has been just as robust. This supplier’s number of contracts exceeded 9,200 by early September, 3,350 of these established during the summer.

The first-half results at EDA Thess, announced prior to these latest figures, showed that the firm’s new gas supply connections grew to 5,837, up from 3,642 last year, a 60 percent increase. The total number of contracts grew to 300,587 from 285,992 last year.

Though, until recent years, higher heating fuel prices were the main driving force behind new household gas supply contracts, a legal framework revision enabling flat owners to break away from collective apartment block heating system agreements without the majority’s consent is the key factor behind the more recent household shifts from heating fuel to natural gas.

EDA Attiki estimates that it has amassed over 10,000 new gas supply contracts as a result of this legal revision.

A decision by market authorities to lift surcharge fees previously imposed on new gas supply connections, as well as the availability of subsidy programs, have also provided impetus to the shift.

Of course, the lower cost of natural gas compared to heating fuel has remained a factor. Data for early October showed natural gas is 37.5 percent cheaper than heating fuel, while its cost can reach as much as 50 percent less for household cooking and hot water needs.

 

EDA THESS placing emphasis on CNG for market growth

The recently formed gas distribution company EDA THESS, established to serve the wider Thessaloniki and Thessaly regions, is placing emphasis on CNG (compressed natural gas) development to initially cover areas detached from the grid, general manager Leonidas Bakouras noted yesterday in his presentation of the enterprise’s five-year development plan, covering 2017 to 2021, at the Athens Energy Gas Forum, organized by TEE, the Technical Chamber of Greece.

These areas, in Greece’s midlands and north, may be supplied CNG through the development of networks beyond compressor stations, Bakouras informed.

A supply capacity of between 70,000 and 100,000 cubic meters will be aimed for during the first few years and could grow to 500,000 to 600,000 cubic meters, annually, as a result of local network development.

EDA THESS aims to supply CNG to these detached areas as a means of facilitating a natural gas penetration plan before developing networks, if sustainability is assured.

 

 

 

 

EDA THESS gains praise for impressive impact on gas market

The recently formed gas distribution company EDA THESS, established to serve the wider Thessaloniki and Thessaly regions, is swiftly emerging as a formidable market player providing the most attractive offers and enjoying rapid growth and robust financial results. Business and political figures, including local authorities, visiting the company’s booth at the ongoing Thessaloniki International Fair all agreed that the company has made an impressive market entry.

Aiming to increase natural gas’s market penetration, EDA THESS was launched as a fully independent natural gas network operator for the wider Thessaloniki and Thessaly regions on December 30, 2016.

The company’s impressive strategic planning promises to ensure sustained growth in the future, pundits believe.

Since the launch of their development 16 years ago, the natural gas networks of Thessaloniki and Thessaly have attracted 54 percent of the total population in these regions, well above levels reached by other European countries. In France and Germany, for example, the gas market’s penetration has not yet reached 50 percent.

EDA THESS aims to increase this gas market penetration level to 58 percent by 2021.

Despite having to deal with adjusting to a new market framework, EDA THESS managed to increase its new connections by 60.3 percent in the first half of 2017, compared to the equivalent period a year earlier. Also in the first half this year, the company registered a 28 percent increase in the amount of natural gas distributed.

The company, according to its development strategy, plans to invest 97 million euros on network and infrastructure development between 2017 and 2021, the objective being to increase the network’s coverage by 20 percent through extensions of existing lines as well as development of new ones. The initiave aims to attract a further 61,000 households to the gas network operated by EDA THESS.

New gas distributor EDA THESS planning network expansion in north

The newly formed EDA THESS gas distribution company, to serve the wider Thessaloniki and Thessaly regions, plans to invest roughly 90.7 million euros over the five-year period covering 2017 to 2021 in order to develop infrastructure facilitating natural gas supply to all the cities and towns in both regions, a leading company official has told energypress.

EDA THESS was established following the required division of distribution and supply activities at Greece’s three exisiting EPA gas supply companies.

Leonidas Bakouras, the deputy general manager at EDA THESS, told energypress that new natural gas networks measuring over 438 kilometers in length and budgeted at more than 90.7 million euros will be constructed in new and existing regions of Thessaloniki and Thessaly.

The Thessaloniki wider region’s network is planned to measure 254 kilometers and worth 58.6 million euros. The Thessaly gas network project, budgeted at 32.1 million euros, is planned to measure a total of 184 kilometers.

EDA THESS plans to supply remote areas located beyond networks with CNG (compressed natural gas). Compressor stations have already been installed for the Thessaloniki and Thessaly networks by DEPA (Public Gas Corporation), which holds 51 percent stakes in the EPA companies, as well as private-sector suppliers.

EDA THESS plans to soon submit its investment plan to RAE, the Regulatory Authority for Energy, for approval and licensing.