The energy ministry is moving ahead with three revisions intended to lighten the burden of electricity bills for most consumers. Two of the changes were included in a draft bill submitted to Parliament late last Friday night, while a third revision has been attached to a RES-sector draft bill forwarded for consultation.
These measures include a new formula changing the way a special levy imposed on electricity producers is calculated. It is planned to now be calculated as 5 percent of the average TTF gas index price, an initiative that should lessen the levy’s cost for electricity companies and, by extension, the cost of electricity for consumers.
This special levy on electricity producers was introduced in November at a fixed rate of 10 euros per MWh.
Also, several low and medium-voltage consumer categories – including industrial consumers and farmers – will be exempted from a public service compensation (YKO) charge included in electricity bills.
In addition, a legislative revision is planned to pave the way for power purchase agreements (PPAs), offering industrial consumers renewable energy supply agreements over long-term periods.
Sliding electricity prices on the energy exchange, since mid-January, and the continuing drop in natural gas prices at the TTF index are creating favorable conditions for lower retail electricity prices.
A first retail market sign of these improved conditions is expected tomorrow, when suppliers post their February prices based on a recently introduced market rule requiring them to announce their prices for each forthcoming month by the 20th of the previous month.
Suppliers are expected to drop their nominal price levels for next month as low as 0.20 to 0.25 euros per KWh, not including anticipated state subsidies.
According to sources, power utility PPC, the dominant market player, is not prepared to drop its retail electricity price so low for next month, but it will offer a significant cut on its January offer.
Once retail electricity prices for February are out, the energy ministry will set subsidies so that finalized retail prices drop to a level of 0.09 euros per KWh.
The day-ahead market’s average price for electricity has set a new low, falling, today, to 58.44 euros per MWh, from 204.40 euros per MWh just days ago. It should be noted that suppliers take into account a broader time period when calculating their prices for each forthcoming month.
The TTF gas index has also plunged in recent weeks to levels of between 55 and 60 euros per MWh, well below levels of 150 euros per MWh in December.
The cost of electricity for Greek households is currently ranked third-highest in Europe, following Portugal and Norway, despite the government’s enormous subsidy support packages, if taking into account the subdued purchasing power of local consumers, a study by ACER, Europe’s Agency for the Cooperation of Energy Regulators, has shown.
The ACER ranking takes into account taxes, surcharges and subsidies. The cost of electricity in Greece has consistently ranked highly in Europe over the years, given the country’s relatively lower income levels.
The enormous amount of electricity subsidies offered to consumers by the Greek government over recent months has not stopped the country’s rise in the rankings. In 2020, electricity cost for households in Greece was Europe’s fifth-highest, after factoring in income levels, but has now risen to third place.
Electricity subsidies offered in Greece are Europe’s highest, as a percentage of GDP, reaching 3.5 percent, the ACER study showed.
The cost of electricity for Athenian households in September remained below the average of 33 European capitals, a latest monthly survey conducted by HEPI, the Household Energy Price Index, has shown.
Athens was ranked 16th in terms of retail electricity cost among the 33 European capitals, but rose to 11th place when purchasing power was taken into account.
Electricity cost increases continued in September in Athens and 12 other European capitals. In Athens, the cost of electricity rose 1.15 percent compared to the previous month.
As for natural gas, the setting is quite different, Athens being the 4th most expensive European capital city, following a 29 percent retail price increase in September compared to August, the third-biggest rise, according to the HEPI survey.
The European Commission has finally decided to adopt state intervention measures in energy markets, mainly electricity, after much delay, essentially accepting the failure of markets to produce desired results, Pantelis Kapros, Professor of Energy Economics at the National Technical University of Athens, has noted in an analysis.
Major energy price increases needed to spread throughout Europe for Brussels to decide to intervene, the energy expert noted.
Fixed price offers and price hedging contracts – which, in many countries, secured, over a considerable period, relatively stable retail electricity prices not reflecting rising electricity prices at energy exchanges – have become impossible to maintain as a result of the extended energy price crisis, the professor pointed out in his analysis.
Consumer prices are now skyrocketing virtually everywhere in Europe, increasing the risk of bankruptcies, a perilous situation that has prompted EU governments to push the European Commission for state intervention proposals, the professor underlined.
During this crisis, electricity markets have failed to achieve consumer prices at levels reflecting the true long-term average cost of electricity, as healthy competition would, the professor noted.
Given the exorbitant natural gas prices at present, green hydrogen would represent a lower-cost alternative, if infrastructure was in place, the professor noted, concluding green transition is the only positive way out of the problem, as has now been recognized by all.
Retail electricity price increases were highest in Athens in August, a monthly 33-city Household Energy Price Index survey conducted by energy research and consultancy firm Vaasaett has shown.
Athens’ retail electricity price increase for August was estimated at 34 percent, a rise that falls to 14 percent if fixed tariffs, far more expensive, are not factored into the calculations.
In Athens, fixed-rate tariffs are priced two to four times higher than floating-rate tariff deals offered by electricity suppliers.
Athens’ 14 percent price increase in August is a more realistic result than the study’s 34 percent rise, which takes into account fixed-rate deals, as virtually all consumers are not favoring fixed-tariff agreements given the far greater cost entailed.
The study bases its results on electricity tariffs offered by respective city market leaders, based on most recent market shares.
Fixed tariff-rate electricity deals are becoming increasingly uncommon, and more expensive, throughout Europe as suppliers are hesitating to offer such deals given the heightened level of market uncertainty.
In Greece, state subsidies are only available for consumers with floating-rate tariff agreements, making fixed tariff-rate deals even less popular.
Household electricity prices in Athens fell by 7 percent in July, month to month, making the Greek capital one of just four European cities to register price reductions last month, a latest monthly survey conducted by HEPI, the Household Energy Price Index, has shown.
Retail electricity prices in Athens dropped to 0.218 euros per KWh, below the European average of 0.284 euros per KWh and slightly above the average retail electricity price for 33 cities included in the study, which ended July at 0.217 euros.
Athens was ranked 21st among the HEPI survey’s 33 participating cities in terms of retail electricity cost.
The Greek government’s electricity subsidy program for June and July exceeded 730 million euros per month and will cost over 1.1 billion euros for August.
Besides Athens, three other European cities experienced retail electricity price reductions in July: Vienna (-20%); Madrid (-12%); and Rome (-10%).
Europe’s highest retail electricity prices were recorded in London (0.630 euros per KWh); Copenhagen (0.530 euros per KWh); Rome (0.459 euros per KWh); Amsterdam (0.419 euros per KWh) and Prague (0.409 euros per KWh).
July’s biggest retail electricity price increases in Europe, according to the HEPI survey, were registered by: Vilnius (44%); Amsterdam (37%); London (25%); and Sofia (24%).
(upd: 12:00) PPC announced its new electricity bill at 0.486 euros/MWh, while other suppliers set their own bills higher.
The minister, Kostas Skrekas, announced that subsidies for energy consumers are going to reach 1.13 billion Euros in August. The goal is to cover up to 90% of the price increase for households, through subsidizing the price with 337 euros/MWh.
Earlier, energypress wrote:
The country’s electricity suppliers are expected to announce today their respective electricity prices for August, power utility PPC’s price level expected to be slightly below 50 cents per KWh and those of all other players slightly above this level, which, in some cases, could exceed 60 cents per KWh, sources have informed.
Suppliers are expected to post their price levels for August on their company websites from 11am onwards. Suppliers had initially been given a 9am deadline but were then offered a two-hour extension to establish greater clarity on the day’s gas prices at the Dutch TTF index.
The level of the government’s electricity subsidies, expected to be announced imminently, is a crucial factor as it will determine the eventual prices to be paid by consumers.
The government has announced it intends to offer subsidies that will lower electricity prices for consumers to pre-crisis levels of around 20 cents per KWh, meaning subsidies are likely to be worth approximately 30 cents per KWh.
Based on new market rules, suppliers must announce, on a monthly basis, their prices for the next month by the 20th day of the preceding month.
Electricity prices for Athenian households dropped 2 percent in June, compared to a month earlier, according to the results of a monthly study conducted by the Household Energy Price Index, covering 33 European cities.
The cost of electricity in Athens in June remained below the European average, according to the study, which ranked the Greek capital in 18th place among the 33 European cities surveyed.
Greece’s electricity subsidy program has helped contain energy costs in Athens to levels lower than many other European cities, the HEPI results highlighted.
The cost of electricity for households in Greece last month averaged 0.233 euros per kWh, below the EU-27 average of 0.2708 euros per kWh and the average of 0.256 euros per kWh for the 33 European cities included in the HEPI survey.
Helsinki and Tallinn recorded the biggest electricity price increases in June, up 14 percent, month to month, the HEPI survey showed. Minsk, Paris and Stockholm followed with 5 percent increases. Rome was next with a 4 percent increase. Riga and London recorded 2 percent increases.
On the contrary, Amsterdam recorded the biggest electricity price reduction in June, down 11 percent, followed by Berlin (7%), Oslo (4%), Vienna (3%) and Athens (2%), the HEPI figures showed.
An Athens Court of First Instance decision delivered yesterday, temporarily exempting only vulnerable households from electricity-bill increases triggered by a power utility PPC wholesale-price clause included in the company’s bills, comes as a firm warning that subdues the hopes of consumers believing they could get away with unpaid energy bills.
Two consumer protection groups, Ekpoizo and Inka, had filed a case requesting a temporary suspension of electricity supply cut orders in cases concerning consumers who refuse to pay increased energy costs resulting from PPC’s wholesale-price clause in electricity bills.
According to the Athens court’s decision, vulnerable households will not face electricity supply cuts until the issue has been finalized through a Supreme Court decision at a latter date.
Individuals with serious health issues, households under the energy-poverty line, as well as elderly citizens aged 70 and above were already treated with greater tolerance prior to yesterday’s court decision.
The verdict eases authority fears of a rise in a movement of consumers not willing to cooperate, or fully cooperate, on energy-bill costs, a danger that could eventually create systemic problems in the energy market.
The cost of electricity for households in Athens increased by 13 percent in May, compared to the previous month, but prices in the Greek capital remain among Europe’s lowest, according to a monthly study conducted by the Household Energy Price Index, covering 33 European cities.
Ljubljana registered the biggest electricity price increase for households in May, up 29 percent, followed by Riga (26%), Dublin (18%), Athens (13%) and Prague (6%).
In terms of electricity price levels in May, Athens was ranked 16th among the 33 cities on the HEPI list, with a price of 0.2377 euros per KWh, below the EU-27 average of 0.2717 euroe per KWh.
The cost of electricity in London in May was 0.4975 euros per KWh, followed by Rome (0.4932 euros per KWh), Copenhagen (0.4871 euros per KWh) and Vienna (0.4744 euros per KWh).
Athens’ relatively lower price in May was attributed to the government’s subsidy policy, while the 13 percent price increase in May resulted from a reduction of subsidies in May compared to April as a result of a de-escalation in wholesale electricity prices.
The Greek government’s subsidy package for June will be worth slightly less than that of May.
The number of electricity consumers applying for installment-based settlement of electricity bills has doubled over the past four months, market officials have informed.
Households are now needing to deal with electricity bills representing the late-winter period of what was a long winter. Low temperatures persisted throughout March, prompting high electricity consumption levels amid a market of exorbitant tariff levels.
Independent electricity suppliers are reported to be offering troubled consumers installment-based payback arrangements of between three to five monthly installments.
Power utility PPC is offering customers monthly installment payback plans over as many as 24 months, depending on the amount owed.
Greek State electricity subsidies offered to consumers in January improved the country’s energy-cost ranking in Europe by 20 places, lowering its ranking to 22nd, following a top-three ranking a month earlier, according to lists published by ACER, Europe’s Agency for the Cooperation of Energy Regulators as well as the Austrian and Hungarian regulatory authorities for energy.
Electricity bill costs in Greece last month would have been 40 percent higher without the support of state subsidies, it has been estimated.
Greece’s average price for a kilowatt hour in January, 18.5 cents, following state subsidies, would have reached a level of 25 to 26 cents without the state’s subsidy support.
Electricity prices in the German capital Berlin were Europe’s highest in January, increasing 38 percent in a month to 50 cents per kWh. London was ranked second with 47.11 cents per kWh, followed by Copenhagen, at 46.69 cents per kWh.
Although Greece’s electricity market continues to be troubled by serious structural issues, leading to wholesale prices well above those of other European countries, domestic retail electricity prices remained 25 percent below January’s EU average of 26.07 cents, based on figures of 33 cities, and the EU-27 average of 24.67 cents.
However, overall amounts spent by the Greek state and consumers to cover electricity bills are among Europe’s highest.
As for the natural gas market, Greece’s retail price for households was one of the lowest in Europe in January, despite a 25 percent increase in January.
Subsidies offered by the Greek State for household and business electricity bills will be trimmed for the month of February as a result of a slight de-escalation in wholesale electricity prices, authorities have decided.
According to sources, wholesale electricity prices are forecast to average approximately 225 euros per MWh in February, slightly below the average of 235 euros per MWh in December.
Household electricity subsidies for February will once again be inversely related to consumption level, the upper limit for subsidies unchanged at 300 kWh per month. Consumption above this level will not be subsidized.
In January, the first 150 kWh of household consumption was offered 160 euros in subsidies, while consumption between 151 and 300 kWh was subsidized with 120-euro amounts.
As was the case in January, household electricity subsidies in February will be limited to primary residences.
For a second consecutive month, businesses will be offered electricity subsidies at a universal rate, slightly below January’s level of 65 euros per MWh.
The government’s electricity bill subsidies in 2022 will exceed a total value of 1.5 billion euros and, besides households and small businesses, also include medium and high-voltage consumers, according to sources.
Government officials, including energy minister Kostas Skrekas, the energy ministry’s secretary-general Alexandra Sdoukou, deputy finance minister Theodoros Skylakakis, RES market operator DAPEEP’s chief executive Giannis Giarentis and Regulatory Authority of Energy (RAE) chief executive Athanasios Dagoumas, have just held a meeting in search of measures offering protection to consumers against exorbitant energy prices, expected to remain elevated in the first few months of the year.
Final details on the new subsidy package for electricity bills are expected to be set within the coming days before it is announced during the first week of January by the energy and finance ministries.
The plan is expected to include a mechanism automatically calculating subsidies for retail electricity, over a one or two-month period, when wholesale electricity prices exceed a certain level.
Besides offering consumers some energy-crisis relief, the support package’s aim will be to help enterprises avoid increasing prices of products and services, which would prompt inflationary pressure, should energy prices not de-escalate in the coming months.
Cretan electricity demand through the island’s grid interconnection with the Peloponnese has fallen to its lowest level since the line’s recent launch as electricity currently costs less to generate at the island’s diesel-fueled facilities than to bring in from the mainland through the interconnection.
Cretan electricity demand through the Crete-Peloponnese interconnection fell to approximately 18 GWh in November, the lowest since the line’s launch several months ago, according to data provided by power grid operator IPTO in a monthly report.
Demand for electricity through the mainland link was well above this level in preceding months. In July, when the interconnection was launched, demand reached 48 GWh, rose to 64.6 GWh in August, peaked at 65.2 GWh in September and eased to 50 GWh in October before plummeting to November’s level of 18 GWh.
Electricity prices on the mainland are the main reason behind this sharp decline, a bigger factor than the demand drop following the tourism-related peak, market officials noted.
Diesel prices have risen only mildly compared to the skyrocketing wholesale natural gas prices of recent months that have prompted an electricity price surge as about half the country’s electricity is generated at natural gas-fueled power stations.
The potential benefits of Crete’s grid interconnection with the mainland cannot be disputed in the long term, when RES units are expected to dominate generation and energy storage capacity will have grown, the officials pointed out.
The continuing rise of natural gas prices, prompting higher electricity prices around Europe as Russia holds back on full supply to the continent over its Nord Stream 2 certification dispute with the EU and the European Commission appears to have run out of possible remedies, threatens to push electricity prices even higher in January, by as much as 15 percent.
Any government support through energy subsidies seems futile under these continually worsening market conditions.
A typical household consumer who was charged a tariff rate of 24.5 cents per KWh in December will, under the current conditions, face a tariff level of 28.4 cents in January, a 16 percent increase.
At the Greek energy exchange, wholesale electricity prices yesterday settled at an exorbitant level just short of 416 euros per MWh, after peaking at 542 euros per MWh for an hour, a rise prompted by Monday’s wholesale natural gas price of 146 euros per MWh.
The problem is affecting all of Europe, the energy price surge continuing around the continent. The EU has maintained a relatively passive stance despite Europe’s rising energy poverty. In Greece, the threat of a new round of unpaid receivables for suppliers is intensifying. This would be a destabilizing development for the market.
Government officials estimate that a wholesale natural gas price average of 70 euros per MWh in 2022, up from 20 euros per MWh in 2020, a year of lockdowns, would deprive the GDP of more than four billion euros. This figure could double if current conditions are sustained.
The energy market faces an extended period of fluctuating electricity prices and adverse market conditions that will require ongoing subsidy support for consumers over the next decade, government officials have noted.
The finance and energy ministries are working together on the establishment of a subsidy-support mechanism as electricity-bill aid for vulnerable households and, possibly, enterprises, until 2030.
Officials from these ministries attributed the precarious situation to delayed RES penetration and a lack of energy storage development in previous years, noting, as an example, the delayed underground natural gas storage facility (UGS) at the almost depleted natural gas field of “South Kavala” in the Aegean Sea’s north, whose utilization would subdue energy price increases.
The acceleration in the installation of RES units and energy storage systems has become a leading priority for the government.
Increasing wholesale electricity prices, appearing likely to rise to levels of between 330 and 340 euros per MWh in in January, according to energy exchange indications, threaten to place increased pressure on both consumers and electricity suppliers.
Suppliers are reaching cash-flow limits as they have been forced to temporarily cover December’s electricity-bill subsidies offered by the government to consumers before they are compensated in June next year.
The government has so far covered subsidies offered to households for the months of September, October and November this year, leaving December’s subsidy cost for suppliers, until they are compensated midway through 2022.
Given December’s increased electricity consumption, suppliers estimate they will need to temporarily cover between 40 and 45 percent of the government’s four-month subsidy program cost for consumers.
This increased pressure is seen as a major threat for energy market stability if some of the suppliers, already struggling with narrower profit margins in the energy crisis, are unable to cope with yet another burden.
Given the persistence of higher energy prices, the government is believed to preparing further subsidy support, under revised terms, for household consumers in the first quarter of 2022.
CO2 emission right prices are soaring, breaking one record after another to exceed levels of 81 euros per ton and looking likely to rise even higher, which comes as a new round of upward pressure for household and business electricity bills, already severely impacted by the surge in natural gas prices.
CO2 emission right prices have now doubled since April, when prices were at levels of about 40 euros per ton.
CO2 emission right prices are now approaching the levels reached by natural gas on the Dutch TTF platform, seen reaching levels of between 80 and 90 euros per MWh in the short term.
Though electricity price levels have slightly deescalated so far in December, to 217.26 euros per MWh from 230 euros per MWh five days earlier, will make little difference to retail prices, analysts have noted.
Energy company officials believe a a drop in electricity prices is possible in spring, but not all the way down to pre-energy crisis levels.
These officials are also anticipating energy crises to become a regular occurrence that will keep pressuring households and businesses.
Wholesale electricity prices averaged 233.80 euros per MWh in November, up 18 percent compared to the previous month’s average of 198.32 euros per MWh, energy exchange data has shown, a rise expected to trigger a new round of price rises in the retail electricity market.
Wholesale electricity prices have remained high so far this month, but a slight de-escalation has been experienced compared to November’s levels.
The average day-ahead market price average for today is 216.18 euros per MWh, slightly below the average of 226 euros per MWh for the first six days of the month.
Elsewhere in Europe, even higher prices have been registered, reaching levels of nearly 300 euros per MWh in some parts of the continent.
The Greek government’s decision to offer subsidies worth 39 euros per month promises to offer some relief for household consumers.
Responding to wholesale electricity price rises registered in October, the energy ministry decided to increase its subsidy offer to cover wholesale price levels as high 220 euros per MWh.
The government has not ruled out the possibility of further increasing its subsidy package, if deemed necessary.
In addition, the administration is also working on a mechanism that will be designed to intervene automatically to increase subsidy levels, taking into account wholesale electricity price levels and the RES special account surplus.
Electricity suppliers are following up their delivery of greatly increased energy bills to household customers with telephone calls offering installment-based payment terms as a preemptive move to avoid a new wave of unpaid receivables amid the energy crisis and loss of customers.
These suppliers, mostly companies that are part of vertically integrated energy groups, are contacting customers who have received monthly electricity bills at unprecedented levels of 200 euros or more, still not overdue, to offer installment-based terms, energypress understands, following feedback from consumers.
Customers are being offered a choice in the number of installments they prefer for their payback programs, while some suppliers are also offering interest-free credit card payments, energypress was informed.
The ongoing surge in wholesale electricity prices, now over 204 euros per MWh, a new record level, has astonished even the most seasoned company managers.
“The day-ahead market price surge to such levels has prompted great uncertainty as to what lies ahead,” one highly ranked official at a vertically integrated energy group told energypress
Responding to the wholesale market’s latest record-breaking level, an official at another energy group active in production and supply told energypress that suppliers are now recalculating their pricing policies from scratch.
Without a doubt, the electricity supply market has entered unchartered territory as the upward trajectory in prices, sparked by an unfavorable combination in international markets, appears to be unstoppable.
Company officials have admitted they have no choice but to pass on the majority of the price increase to their customers.
Some companies are cutting back on big discount offers extended to attract customers.
The energy ministry is preparing to increase an electricity-cost subsidy package to between 280 and 300 million euros, from a 200 million-euro sum announced last month by Prime Minister Kyriakos Mitsotakis at the Thessaloniki International Fair, as a result of the continuing surge in energy costs, which, if not combated, could have political ramifications.
The ministry’s response comes following the announcement of September’s increase in the wholesale electricity price average, the latest in a series of monthly rises. Wholesale electricity prices averaged 134.73 euros per MWh in September, up from 121.72 euros per MWh in August and 101.86 euros per MWh in July, all well over the January average of 52.52 euros per MWh.
Finalized decisions on the subsidy support package have yet to be taken but officials have already agreed to draw the amount to be provided to consumers from the Energy Transition Fund.
The expected subsidy increase for electricity consumption would result in support worth between 40 and 45 euros per MWh, instead of 30 euros per MWh, effectively resulting in a monthly electricity bill reduction of 14 to 15 euros for consumers.
The government is also looking to subsidize natural gas bills through an additional support package expected to be worth roughly 150 million euros. Retail natural gas prices have risen by approximately 500 percent since the beginning of the year.
Energy consumers of all categories are heading into the winter season facing doubled natural gas prices compared to a year ago, a growing problem for the government that could have political repercussions.
EU leaders are scrambling for solutions to quell an unfavorable combination of factors in international markets that have sparked this extreme situation, pushing the energy market beyond control.
Indicatively, one of the country’s major natural gas suppliers has just set retail tariffs at around 9 to 9.5 cents per KWh, up from 4.5 cents a year earlier. Things could get worse in the winter.
The situation is also alarming in the electricity market where retail price increases of approximately 40 percent in October could rise by just as much in the next few weeks.
The wholesale electricity price for today is at 178.29 euros per MWh. The November price surge for natural gas futures contracts, up 20 percent in just one day, yesterday, would increase next month’s wholesale electricity prices to levels of 255 euros per MWh if the overall situation remains unchanged.
A Greek proposal for the EU’s adoption of a temporary hedging mechanism as a means of easing the burden of sharply risen energy costs on consumers, to be tabled at a Eurogroup meeting of EU finance ministers today, will be met with hesitancy as the European Commission would not want to bring to the negotiating table issues linked to the Emissions Trading System, fearing any potential need of a compromise with member states opposed to the ETS, such as Poland, well-informed sources anticipate.
The European Commission has fought hard to establish the ETS as a means of combating climate change.
The temporary hedging mechanism would draw funds from the Emissions Trading System’s auctions of CO2 emission rights.
The hedging mechanism was proposed several weeks ago by Greek energy minister Konstantinos Skrekas and will be officially presented by Greek finance minister Hristos Staikouras to his European counterparts at today’s Eurogroup meeting.
The EU finance ministers will be focusing on the alarming increase in energy prices, prompted by a combination of international factors, though finalized decisions at this session are considered unlikely.
The European Commission is pressing for an antidote to counter the sharp rise in electricity prices around Europe, fearing a prolonged period of escalated prices could spark a new wave of Euroscepticism that would put EU citizens at odds with the continent’s energy transition plan, a key Brussels climate-action strategy.
Allegations of market manipulation and doubled CO2 emission right prices since the beginning of the year, at 59.43 euros per ton yesterday, have reinforced the overall reaction against the EU’s energy policy, placing governments under pressure and fueling unrest.
With fears growing of a resurgence in France’s yellow vest movement, the European Commission is seeking to convince citizens that the Emissions Trading System (ETS), a cornerstone of the EU’s green-energy transition policy, is not the cause of the electricity price rises, instead laying the blame on natural gas and fossil fuels.
European Commission president Ursula von der Leyen, in her State of the Union Address, delivered yesterday, was clearly distressed by the situation, offering strong support for the European Green Deal. But, judging by the overall response, she has not appeased the concerns about rising energy prices.
The president’s thinking was reiterated by her deputy Frans Timmermans, in charge of the European Commission’s climate action portfolio, according to whom, only one-fifth of the electricity price increases can be attributed to the elevated CO2 emission rights prices.
Electricity suppliers have questioned the sufficiency of a 150 million-euro amount to be made available by the government through a new Energy Transition Fund as support for households and businesses to combat increased energy costs.
The doubts were raised during an energy ministry meeting yesterday involving the country’s electricity suppliers, facing pricing-policy pressure – especially the non-vertically integrated – as a result of elevated wholesale electricity prices that have been driven considerably higher by a combination of factors in international markets.
According to Greek energy exchange data, the day-ahead market price average for today is 172.27 euros per MWh, while the day’s maximum price level in this wholesale market exceeds 200 euros per MWh.
The subsidy plan’s calculations are based on wholesale electricity prices ranging between 117 and 120 euros per MWh.
Energy markets throughout Europe are being severely impacted by the price surge. In the UK, for example, wholesale electricity prices have risen as high as 400 euros per MWh following colder weather and higher energy demand.
Independent electricity suppliers, especially the non-vertically integrated, have expressed strong disapproval of the manner in which the government presented a subsidy plan aiming to offer energy-cost relief to consumers, noting the presentation of the measures offered promotional support to state-controlled power utility PPC, the market’s dominant supplier.
The complaints, which focused on the subsidy plan’s presentation, not the actual measure, were expressed at a meeting yesterday between energy minister Kostas Skrekas and representatives of the country’s electricity suppliers.
During the government’s presentation of subsidies to be offered to counter rising electricity costs – wholesale and retail – pushed up by a combination of unfavorable factors in international markets, attention was also placed on an additional discount to be offered by PPC, to supplement the subsidies.
Independent suppliers perceived this latter detail as inappropriate market intervention by the government and an effort to give PPC a competitive edge over rival suppliers.
At the meeting, the energy minister called upon electricity suppliers to contribute to the energy-cost containment effort by utilizing the subsidy plan and offering discounts. Independent suppliers stressed they are currently operating with the slightest of profit margins.
The subsidies, to offer suppliers 30 euros per MWh, will be distributed by November, the minister informed.
Vertically integrated independent suppliers, which now have a clearer picture on PPC’s latest pricing policy, have already begun shaping strategies of their own, sources informed.
Independent suppliers are set to offer discounts and tariff reductions to consumers, their effort focusing on consumption levels ranging between 300 and 600 kWh, not covered by state subsidies, according to latest updates.
Independent suppliers are awaiting the outcome of a meeting today involving energy minister Kostas Skrekas, during which state-controlled power utility PPC’s discount strategy will be clarified, before they take specific decisions, including for the consumption category of up to 300 kWh, applying to the majority of households.
Besides an across-the-board discount of 30 percent for all consumers, including the category up to 300 kWh, PPC has also promised an additional discount of between 3 and 4 percent for the 301-600 kWh category.
It still remains unclear how much the price gap between PPC and independent consumers offering lower tariff prices could be narrowed by this move.
Independent suppliers know well that they will need to keep offering lower tariffs than PPC, the dominant player, to remain competitive.
The government plans to adopt an Energy Transition Fund to offer electricity subsidies to households and small and medium-sized enterprises, heating fuel subsidies, and a range of other initiatives as a tool to contain the surge in wholesale energy costs, prompted by a combination of factors in international markets.