Wholesale ascent prompting hefty retail electricity price hikes

The activation, by electricity suppliers, of wholesale cost-related clauses included in their supply agreements is prompting significant retail increases, seen rising, compared to three months earlier, by 40 percent for the medium-voltage category and at least 33 percent for the low-voltage category.

Medium-voltage tariffs, previously at levels ranging between 64 and 65 euros per MWh, have reached 90 euros per MWh, a 40 percent increase, since the wholesale cost-related clauses were triggered by suppliers earlier this year, and are expected to rise further.

In the low-voltage category, concerning households, tariffs have increased from levels ranging between 70 and 90 euros per MWh, depending on the supplier and agreement, and will need to be raised to 120 euros per MWh for the recovery of increased wholesale costs.

Higher wholesale electricity prices have been attributed to a combination of factors, including higher CO2 emission right and natural gas prices, as well as a sharp rise in demand.

The situation is exacerbated during periods when RES output is subdued, prompting record-level price levels in the wholesale electricity market.

Last week, CO2 emission right prices set a new record of 58.25 euros per ton, up from 32 euros per ton in December, an 82 percent increase.

Natural gas prices have hit a 13-year high, TTF contracts reaching 29 euros per MW/h following levels of between 15 and 17 euros per MW/h in spring, a 93 percent increase. In June last year, gas prices had sunk to record-low levels of as low as 4.9 euros per MWh.

Last week, the average clearing price on the energy exchange ranged from 100.33 to 118.56 euros per MWh, up from 63.16 euros per MWh a month earlier.

In June, the average day-ahead market price on the energy exchange was 83.47 euros per MWh, more than double the level of 40.74 euros per MWh a year earlier.

Wholesale price level starts July on high, consumers facing cost hikes

Wholesale price levels, significantly increased in recent months, have begun the month of July at an extremely high level of 105.42 euros per MWh, a level expected to persist in coming weeks, which, if so, will lead to further electricity-cost increases for consumers.

Electricity suppliers have activated wholesale cost-related clauses as protection against higher wholesale price levels. Consumers are expected to encounter electricity cost increases in the next round of billing, expected over the next few weeks.

June’s wholesale price level, which averaged 83.47 euros per MWh, compared to 63.16 euros per MWh in May, will impact the next round of electricity bills for households.

The situation is even worse for medium-voltage consumers as June’s 83.47 euros per MWh average will reach close to 100 euros per MWh once extra costs for suppliers are added.

If current wholesale price levels persist for a further week or two, as sector officials have forecast, then the average price for July is estimated to reach 90 euros per MWh, well above the June average.

This would represent a 40 percent increase in the clearing price level over just three months.

 

 

Combination of events pushing electricity costs higher

Higher-priced electricity, globally, may have arrived to stay given the combination of events such as the sudden rebound of the global economy, which is intensifying demand for fuels, metals and electricity, as well as the European Green Deal, new climate change laws and more ambitious carbon neutrality targets, pushing up CO2 emission right prices.

In Greece, wholesale electricity prices have risen sharply in recent days, to levels above 100 euros per MWh, the heatwave conditions exacerbating the situation. CO2 emission right prices have reached 55 euros per ton, from 32 euros per ton at the beginning of the year. The market clearing price for June is estimated to be 79.33 euros per MWh from 59 euros per MWh in December.

Major electricity suppliers in the Greek market expect the wholesale price to settle at 83-84 euros per MWh in the next month before rising to 85 euros per MWh over the next few months, and reaching 92 euros per MWh towards the end of the year.

Wholesale price clauses included by suppliers in their agreements with consumers for protection against higher prices are well below the aforementioned projections, meaning consumers should soon expect considerably higher electricity costs if these forecasts prove to be accurate.

Even if eventual electricity cost hikes turn out to be milder, RAE, the Regulatory Authority for Energy, and the energy ministry will be bracing for a bigger wave of consumer complaints.

 

Gas, CO2 costs, up over 50%, increasing electricity prices

The pandemic’s gradual remission and tougher climate-change policies have ushered in a period of elevated electricity price levels, both in Greece and internationally, expected to be prolonged, according to many analysts.

Suppliers, one after another, are increasing prices for household and business consumption, passing on to consumers additional costs encountered in the wholesale market through the activation of price-related clauses.

According to Greek energy exchange data, day-ahead market prices currently range between 78 and 80 euros per MWh, nearly double the level of 45 euros per MWh at the beginning of the year.

Similar price increases of about 50 percent have also been recorded in markets abroad during the first half of the year.

Electricity producers operating natural-gas fueled power stations have been impacted by higher gas prices, data provided by the Dutch trading platform TTF has highlighted.

Electricity producers also face considerably higher CO2 emission right prices, currently ranging between 52 and 55 euros per ton from 32 to 34 euros per MWh early this year.

According to many analysts, CO2 emission right prices will continue rising in the years to come and may have doubled by 2030.

Higher natural gas and CO2 emission right prices are impacting electricity producers generating through natural gas-fired power stations. They are required to pay for CO2 emission rights, one-third of levels imposed on lignite-based producers.

Experts agree that toughening EU climate-change measures, to be followed by corresponding US polices, will keep driving energy commodities higher, noting that oil and gas price rises will be subdued as low-cost, cleaner forms of energy further penetrate markets.

 

RAE summons suppliers for use of cost-increasing clauses

RAE, the Regulatory Authority for Energy, has summoned electricity suppliers to offer explanations on their decisions to trigger, in recent times, clauses that have significantly increased electricity costs for consumers in the low and medium-voltage categories without any prior notice.

The country’s independent suppliers have activated wholesale price-related activated clauses, protecting them against wholesale cost increases, while power utility PPC, more recently, has taken unprecedented action by triggering a CO2 emission rights cost-related clause incorporated into its agreements with customers.

Consumers across the board have lodged numerous complaints, prompting RAE to take action. The authority will stage meetings with suppliers to examine if irregularities exist or whether consumers have been misled.

This series of meetings is expected to begin next Thursday with PPC, whose administration will need to justify its pricing policy. Meetings with independent players are expected to follow.

RAE will request detailed market data from all suppliers concerning the clauses they have implemented and also examine whether these initiatives are lawful or not.

The authority will aim to clarify what actions suppliers are permitted to take so that consumers may benefit from clearer pricing policies.

PPC triggering carbon cost clause as CO2 right prices soar

Higher wholesale electricity and carbon emission right prices are applying sustained pressure on the electricity market, forcing suppliers to continue activating related clauses incorporated into customer supply terms.

Over the next 12 months, wholesale electricity price levels are forecast to rise to 89 euros per MWh in the low-voltage category and roughly 79-80 euros per MWh in the medium-voltage category.

In response to an ongoing surge in CO2 emission right prices, power utility PPC recently decided to finally activate a CO2-related clause after holding back for months. The move is seen increasing the cost of PPC’s electricity bills to be issued in May by two to three euros, sources told energypress.

CO2 emission right prices reached a new record level of more than 52 euros per MWh yesterday, rising by nearly 3 percent in a day. They have approximately doubled over the past six months and registered a 23 percent increase in the last month, alone.

In February, PPC had announced it would not trigger a CO2-related clause for low-voltage supply, but has now been forced to do so as a result of this persisting rise in price levels.

The more recent rise in CO2 emission right prices has been attributed to several factors, including a gradual rise in consumption levels as the European economy begins to recover, weather conditions, and a new, more ambitious, EU carbon emission reduction target, set last month, of at last 55 percent by 2030.

Wholesale prices in Greece well over European average in 3Q

Wholesale electricity prices in Greece during the third quarter of 2020 were three times over the €16/MWh European average, based on the Nord Pool power exchange, a European Commission report covering European electricity markets for this period has shown.

The report also traces the market’s 3Q rebound following a heavy slump in the preceding quarter.

Average prices rebounded at a slower pace in southeast Europe, compared to other regions, before reaching pre-pandemic levels in September as a result of weak demand and high production of wind energy and hydropower facilities, according to the Brussels report.

The average price in the third quarter rose by 43 percent, against 2Q, to €43/MWh, and was 30 percent lower, annually.

European price shifts in August moved in coordination, while the price gap between Greece and the European average narrowed significantly in 3Q as a result of the use of lignite-fired units and weak demand.

This gap vanished in September as a result of stronger wind energy output, which exceeded one TWh for the first time. As a result, prices in the region were between €46 and €47/MWh in September.

As for energy-mix developments, lignite-based production in Greece experienced a decreased share, captured by natural gas-fueled output.

In southeast Europe, the lignite-based output share contracted to 29 percent in 3Q from 35 percent in the equivalent period a year earlier; the gas-fueled sector’s production share rose to 20 percent from 18 percent; and the RES sector’s share of the energy mix increased to 34 percent from 30 percent.

Household electricity tariffs in Greece averaged €16.54/MWh (not including taxes and surcharges), while the country’s average for industrial tariffs was €10.62/MWh, the report showed.

Household electricity cost down 4.4% in April, SMP clause off

Household electricity prices fell by 4.4 percent in April, a drop attributed to power utility PPC’s slightly reduced market share in the low-voltage market as well as an unprecedented fall of wholesale electricity prices levels, from 43 to 28 euros per MWh.

The plunge of wholesale electricity prices, determined by the System Marginal Price (SMP), prompted independent suppliers to deactivate an electricity-bill clause triggered when wholesale electricity prices exceed certain levels.

The reduced cost of electricity for households in April was reflected by the electricity price index, calculated by Greek electricity market price-comparison site allazorevma.gr.

Household electricity offers by independent suppliers ranged from 68.80 to 80.30 euros per MWh in April, the average being 75.52 euros per MWh, a 5 percent reduction.

Independent supplier revenues plunge, tariff cuts not possible

Independent electricity suppliers, pressured by lower revenue figures and increased bad-debt risk as consumers, mainly businesses, struggle to pay their bills, have not been able to offer tariff reductions in response to the dramatic drop in the cost of electricity production brought about by lower natural gas prices.

The System Marginal Price, reflecting, to a certain degree, the cost of electricity, averaged 28 euros per MWh in April, down from 62.4 euros a year earlier.

This sharp drop has been attributed to the increased grid participation of natural gas-fired power stations, using low-cost LNG, as well as renewable energy units.

On the downside for independent suppliers, electricity demand fell by 14 percent in April, further aggravating their cash flow predicament.

Electricity bill payments have dropped considerably amid the lockdown, falling by as much as 50 percent in April, suppliers have informed.

Power utility PPC, which has traditionally battled bad-debt problems, is the least affected, its electricity bill collections falling by approximately 25 percent. This has been attributed to the company’s client base, comprised mostly of households and high-voltage consumers.

On the contrary, independent suppliers, suffering far sharper revenue drops, serve many small and mid-size businesses, badly affected by the lockdown.

Households have consumed greater amounts of electricity during the lockdown and generally serviced their bills.

It is feared some 100,000 enterprises may go out of business in the next few weeks. This would be a major setback for independent electricity suppliers.

 

Local retail electricity prices register EU’s 4th biggest dip

Retail electricity prices in Greece registered the EU’s fourth largest reduction in the first half of 2019, compared to the equivalent period a year earlier, falling by 1.3 percent, latest Eurostat data has shown, primarily as a result of more aggressive discount policies by independent suppliers for households and enterprises.

Denmark was ranked first with a 4.3 percent price fall, followed by Portugal with a 4.1 percent drop, and Poland, where retail electricity prices slid 3.1 percent.

The average EU price rose by one cent. The Netherlands posted the biggest price increase, averaging 20.3 percent. Cyprus followed with a 16.4 percent increase, Lithuania was next on the list with an average price hike of 14.4 percent and the Czech Republic was fourth with a 12 percent price increase.

Retail electricity prices in the Greek market are among the EU-28’s lowest, the Eurostat data showed. Greece was ranked 18th in this category with an average tariff price per KWh of 0.16 euro. Germany is the most expensive with an average tariff price per KWh of 0.30 euro. The EU average is 0.21 euro and the Eurozone average 0.22 euro, according to the Eurostat data.

Despite the more aggressive pricing policies of independent suppliers in Greece, power utility PPC maintained its dominant position with a retail market share ranging between 77 and 80 percent during the first half. PPC not only avoided dropping its prices but reduced a punctuality discount offered to customers paying their electricity bills on time.

Electricity prices in Greece and other EU member states could have been lower if it were not for the considerably sized surcharges and taxes added to electricity bills, Eurostat noted. Over one-third of total electricity costs go to state coffers and electricity transmission and distribution network operators, Eurostat added.

New minister set to present PPC recovery plan details

Hydropower units belonging to the power utility PPC will not be sold; NOME auctions will be abandoned; and electricity costs for consumers will not rise, the newly appointed energy minister Costis Hatzidakis is expected to announce later today when the New Democracy party presents its wider  policy program.

The minister is also expected to present details of a plan to seek strategic investment into distribution network DEDDIE once control of the network is transferred from PPC to the subsidiary with the permission of creditor banks.

Prime Minister-elect Kyriakos Mitsotakis is expected to make a general announcement on this network sale plan before his energy minister follows up with further details. The procedure will offer full protection for PPC’s interests, including compensation for the sale, the government officials are expected to stress.

The minister’s plan for an end of NOME auctions, launched about three years ago to offer independent parties access to the power utility’s lower-priced lignite and hydropower sources, was approved by the country’s lenders last week at a meeting between the two sides in Athens.

A transition plan leading to the launch of the target model, to offer market coupling, or harmonization of EU wholesale markets, is expected to be reached between the minister and the lenders when they next return to Athens for official talks in September. The transition plan will be designed to ensure that supply markets remain fully operational ahead of the target model’s launch.

The energy minister’s promise of no electricity cost increases for consumers will be accompanied by details of the state-controlled power utility’s more ruthless handling of unpaid receivables owed by consumers believed to be able, even affluent, but unwilling to cover their power bill debts. PPC is under financial pressure.

The government intends to reshape PPC along the lines of the transformation of telecommunications company OTE, a corporation in which the Greek State now holds just 5 percent, Deutsche Telekom being the main shareholder with a 45 percent stake.

Besides preventing a systemic crisis posed by PPC’s current financial woes, a rebound by the power utility would also send out a positive message for the Greek market to domestic and foreign institutional investors.

 

 

 

Fixed electricity tariff option for consumers being prepared by RAE

RAE, the Regulatory Authority for Energy, is preparing to present, any day now, proposals whose implementation will require the country’s retail electricity suppliers to offer consumers the choice of fixed tariffs as an alternative to flexible tariffs linked to clauses permitting revisions in line with cost shifts.

The authority is making final touches to new electricity supply terms to be forwarded for a public consultation procedure that may begin next week.

RAE was prompted to reach a decision requiring all electricity suppliers to offer fixed tariffs as an electricity-bill option following numerous complaints by customers facing inflated power costs as a result of decisions by retail electricity suppliers to trigger clauses enabling tariff hikes as a means of covering elevated wholesale prices.

This clause, one of numerous agreement terms presented to customers, has caught most consumers by surprise.

According to the RAE plan, consumers will be offered a choice between fixed electricity tariffs,  presumably at relatively higher prices and for a specific period of time, and flexible tariffs, initially lower but carrying fluctuation risk.

Besides increased wholesale prices, suppliers have also faced elevated CO2 emission costs.

PPC price hikes planned to be offset by lower surcharges

Finalized pricing policy revision decisions expected next week from the energy ministry for the state-controlled power utility PPC  should include reductions of RES-supporting ETMEAR and public service compensation (YKO) surcharges included in electricity bills, the objective being to soften price hikes planned by PPC.

ETMEAR and YKO surcharge reductions would also lower prices offered by the country’s independent electricity suppliers.

The energy ministry is awaiting the results of a study by RAE, the Regulatory Authority for Energy, on YKO and ETMEAR levels before it reaches PPC pricing policy decisions.

In comments offered yesterday, energy minister Giorgos Stathakis assured changes would not increase the overall cost of electricity bills.

The energy minister was prompted to offer consumers this assurance following a call by PPC’s chief executive Manolis Panagiotakis for the implementation of a CO2 emission rights cost clause – it would increase tariffs if CO2 costs exceed certain levels – as well as the reduction of a 15 percent discount currently offered to PPC consumers paying their electricity bills on time.

Low-cost electricity in Greece elevated by taxes, surcharges

The cost of electricity for households in Greece has increased by 15.3 percent, year-on-year, primarily as a result of taxes and various surcharges, first-half data released by Eurostat, the EU’s statistical service, has shown.

The tariff for household electricity consumption in the 1,000-2,500 KWh category rose to 0.1914 euros per KWh from 0.166 euros per KWh in the first half of 2017, placing Greece in 17th place on an EU household electricity cost list, the EU data showed.

Without taxes and surcharges, the actual cost of electricity in Greece fell by 2.1 percent, to 0.1175 euros per KWh from 0.12 euros.

Given these figures, not including taxes and surcharges, households consuming 2,500 KWh of electricity in the first half of this year would have have paid 293.75 euros, or  6.5 euros less than a 300.25-euro amount covering last year’s first half.

However, as a result of these taxes and surcharges, any household registering such a consumption level ended up paying 70 euros more for electricity in this year’s first half – or 485 euros compared to 415 euros in the first half last year.

The cost of electricity in Greece is among Europe’s lowest but consumers end up paying hefty amounts, given income levels, as a result of taxes and surcharges.

Electricity bill surcharges – regardless of the supplier – include municipal, property and ERT state radio and TV fees that represent approximately 20 percent of power bill sums.

EVIKEN protests CO2 cost treatment of major consumers

EVIKEN, the Association of Industrial Energy Consumers, has filed a complaint to RAE, Greece’s Regulatory Authority for Energy, claiming discriminatory treatment of high-voltage electricity consumers by the main power utility PPC over CO2 emission right costs.

High-voltage industrial electricity consumers shoulder the full extent of CO2 emission right cost increases as these costs are included on their electricity bills as separate surcharges. On the contrary, all other consumers enjoy steady tariff levels as CO2-related charges are not included on their bills. EVIKEN has requested an explanation for this conflicting billing approach.

It is estimated that PPC’s decision to absorb higher CO2 emission costs for all other consumer categories is costing the state-controlled power utility additional costs worth between 430 and 440 million euros per year.

EVIKEN also filed a second complaint to RAE requesting an examination of lower mid-voltage tariffs for industrial consumers sharing the same energy profiles as high-voltage consumers. Mid-voltage tariffs are lower by as much as five euros per MWh compared to tariffs paid by high-voltage consumers sharing identical energy profiles.

 

 

Higher CO2 emission right costs impacting electricity prices

Projected electricity tariff increases due to a sharp rise in CO2 emission right costs are already impacting the Greek electricity market. For the time being, price hikes are being imposed on large-scale energy-intensive commercial consumers in the low-voltage category and medium-voltage customers.

The main power utilty PPC has increased its CO2 emission right costs surcharge by almost five times, from approximately 2.5 euros per MWh last year to just under 12 euros per MWWh at present.

Though independent suppliers do not calculate CO2 emission right costs as a separate surcharge, they have been forced to adjust prices offered to existing mid-voltage customers, lifting overall electricity costs to levels of at least 62 euros per MWh.

Prices have surged to even higher levels of over 70 euros per MWh for large-scale commercial consumers in the low-voltage category.

These price levels would have been even higher had independent suppliers not purchased lower-priced electricity amounts at NOME auctions.

The system marginal price (SMP), or wholesale electricity price, has risen to levels of over 70 euros per MWh, a significant increase compared to just a few months ago.

Ir remains unknown how suppliers plan to shape pricing policies for low-voltage household, commercial and professional consumers, representing a big part of the market.

Power price hikes between 2005 and 2014, not 2005 and 2016, PPC reacts

The cost of electricity in Greece has increased by 150 percent for households and 44 percent for businesses between 2005 and 2014, not between 2005 and 2016, as claimed in a Bank of Greece report released this week, the state-controlled main power utility PPC has reacted.

Greece’s governing Syriza-led coalition was first elected into power in January, 2015.

Electricity prices in Greece have not increased but instead fallen since 2015 as a result of a 15 percent discount offered by PPC to punctual customers, the power utility stressed in its announcement. Newly arrived rival independent electricity suppliers needing to remain competitive were forced to follow suit.

PPC introduced its 15 percent discount approximately two years ago while holding a 95 percent share of the country’s retail electricity market. Since then, the still-dominant utility’s market share has contracted only slightly and remains well over 80 percent.

The Bank of Greece is an important body influencing the country’s economic activity, PPC noted, while adding that PPC was forced to intervene and highlight inaccuracies in its latest energy-sector report.

Tax, closed market driving up power cost, central bank notes

The cost of electricity in Greece has increased by 150 percent for households and 44 percent for businesses over the past 11 years as a result of sharp tax increases, especially since 2010, and the main power utility PPC’s ongoing dominance, which has slowed down the development of market competition in the energy sector, a Bank of Greece report has noted.

Though still below the EU average, the cost of electricity for households in Greece reached 0.17 euros per KWh in 2016 from 0.07 euros per KWh in 2005, a significant increase that has further impacted the cost of living n Greece, the central bank’s report noted.

The industrial sector has also had to shoulder heavier energy costs between 2005 and 2016, the report added. The cost of electricity for the sector has risen from 0.06 euros per KWh in 2005 to 0.09 euros per KWh in 2016, a 44 percent increase, over the EU average increase, the Bank of Greece report pointed out. This has served as a disincentive for production-related investments in Greece and contributed to the deterioration of the country’s competitiveness, the report noted.

A lack of competition, both in production and supply, has affected the Greek market by limiting consumer choices for lower prices and better services, the report noted.

PPC, the main power utility, continues to dominate electricity production in Greece and represents 79 percent of installed capacity and roughly 75 percent of thermal electricity generation, the Bank of Greece report informed.

PPC’s retail electricity market share also remains particularly high despite a modest drop following market reforms implemented in 2013, the reported added. The main power utility’s retail electricity market share stood at 88 percent at the end of 2016, while the biggest market share of 17 other suppliers also active in this market was 2.9 percent, the Bank of Greece report underlined.

PPC’s market share is the biggest held by any European power utility, including utilities operating in less liberalized electricity markets such as those of Spain, Portugal and Romania, the report added.

Certain consumer groups such as farmers, major-scale industrial firms and public sector enterprises, which make up a significant share of PPC’s customer base, have no incentive to switch electricity suppliers as they enjoy low-price tariffs offered by the power utility.

Energy-sector tax revenues in Greece rose to nearly 5.5 billion euros in 2016 from 2.5 billion euros in 2005 and about 4 billion euros in 2010, the report noted. Given the country’s fiscal adjustment objectives and revenue targets, no energy sector tax revisions are expected any time soon, it added.