PPC rivals awaiting utility’s next pricing move for response

Power utility PPC’s rivals are awaiting the utility’s next pricing-policy move before responding with offers of their own. A specially priced three-month package offered by PPC, the electricity market’s dominant player, to its customers as lockdown relief expires on June 26.

Lower wholesale electricity prices over the past couple of months as well as more efficient facility management by PPC, drastically reducing production from loss-incurring lignite-fired power stations, are two factors expected to enable the utility to keep offering appealing packages to customers, sector experts have told energypress.

An initiative taken by PPC during lockdown to equate usually higher tariff rates for consumption of more than 2,000 kWh with rates for consumption below the aforementioned limit could be an indicator of things to come from the power utility.

The market’s major independent suppliers are believed to have studied all possible scenarios in preparation for their respective responses.

PPC chief executive Giorgos Stassis has made clear the power utility’s intentions to regain part of its lost market share. The utility is expected to target specific customer profiles. In addition, bonus services may also be included in packages.

 

 

 

 

PPC tariff hike over 15%, to be partially offset by surcharge cut

Electricity tariffs at power utility PPC, financially pressured and in need of a cash inflow boost, will be increased by over 15 percent and partially offset by a reduction of a RES-supporting ETMEAR surcharge included on electricity bills, the state-controlled corporation’s administration and the energy ministry have decided, reliable sources have informed.

Still a tightly kept secret, the details of PPC’s tricky equation, aiming for a significant increase in revenues while limiting the burden on consumers and also protecting RES production payments, will be presented tomorrow at Greek Parliament’s Committee on Production and Trade.

Besides sizable tariff hikes, PPC’s revised pricing policy is expected to include a clause triggering further tariff increases should CO2 emission right costs escalate in international markets – and vice versa.

In addition, a punctuality discount offered by PPC to customers paying electricity bills on time is expected to be roughly halved from its current level of 10 percent as part of the effort to boost revenues.

Meanwhile, as a means of softening the overall impact on consumers, the RES-supporting ETMEAR surcharge included in electricity bills is expected to be reduced to roughly 17 euros per MWh from the current level of 22.67 euros per MWh, a 25 percent reduction.

Decisions will be made official at a PPC board meeting this Friday and implemented September 1.

PPC seeking ways to fully offset tariff hike, maintain discount

Power utility PPC officials are busy looking for a formula by the end of this working week that could avoid higher overall costs for consumers despite necessary tariff hikes, needed to boost the struggling utility’s revenues.

Various alternatives are being examined ahead of a board meeting scheduled for this Friday, during which PPC’s new electricity pricing policy proposal is expected to be approved.

PPC is looking to fully offset its upcoming tariff hikes through an equivalent reduction of surcharges.

However, the emergence of a number of detrimental factors has made the effort more challenging. For example, the cost of PPC’s rescue plan has risen, the utility’s new chief executive Giorgos Stassis announced just days ago.

PPC is making an effort to maintain a punctuality discount offered to customers paying their electricity bills on time. The utility’s new administration does not want to start its tenure with a measure that would effectively punish reliable customers.

Energy ministry officials contend state-controlled PPC will keep offering a punctuality discount, adding that its size will be determined by the utility.

It could be cut to 5 percent from 10 percent at present, energypress sources informed. The discount was introduced about three years ago at 15 percent before being reduced to 10 percent last spring.

Last week, it was reported that PPC would abolish all or most of its 10 percent discount.

PPC, needing cash inflow, to scrap 10% punctuality discount

Power utility PPC, shaping a more aggressive pricing policy as a result of its need to boost cash inflow, is preparing to abolish most or all of its 10 percent punctuality discount, offered to customers paying their electricity bills on time.

The power utility is also looking to adjust tariffs for various consumption categories, while the implementation of a clause triggering price hikes when CO2 emission right costs exceed certain levels is now seen as a certainty.

State-controlled PPC needs to have finalized its rescue plan by early September, ahead of an upcoming report from Ernst & Young, the utility’s certified auditor, on September 24.

The government wants a reduction of a RES-supporting ETMEAR surcharge included on electricity bills in order to offset electricity price hikes.

PPC’s recently appointed CEO, Giorgos Stassis, who will be officially approved at an extraordinary shareholders’ meeting tomorrow, faces the challenging task of ensuring greater cash inflow for the utility while concurrently reducing surcharges.

Stassis could offer some clarification, during tomorrow’s meeting, on various models being examined by the government.

PPC counting on three extra revenue sources for financial rebound in 2019

The main power utility PPC will be counting on three sources promising additional revenues worth well over 400 million euros for a return to profit territory in 2019, as was recently forecast by the utility’s CEO Manolis Panagiotakis.

PPC will be spared of its supplier surcharge contribution to the RES special account in 2019 as this obligation has been cancelled for all suppliers. PPC provided 196.3 million euros of supplier surcharges in 2018. In addition to this favorable development for PPC, the power utility also stands to receive 100 million euros in returns from the RES special account, the lion’s share of a 121 million-euro surplus in 2018.

Moving on from the supplier surcharge-related benefits, PPC can look forward to additional revenues of roughly 60 million euros as a result of its decision to reduce a punctuality discount offered to consumers paying their electricity bills on time to 10 percent from 15 percent.

PPC can also anticipate roughly 200 million euros from public service compensation (YKO) returns planned for this year.

On the downside, PPC faces higher CO2 emission right costs. They ranged from 14.48 to 25.57 euros per ton last year and have escalated to levels between 18.94 and 27.53 euros so far this year.

 

 

PPC relying on three big cash injections, one already through

The Greek State’s discount-securing prepayment of a 550.7 million-euro sum to the main power utility PPC for the year’s electricity consumption by all national, regional and local government authorities, made on March 7 following a finance ministry order, according to local media, is the first of three cash injections expected to offer major financial relief to the power utility.

PPC is planning to securitize unpaid receivables, which will be offered as collateral for two bond issues, being organized by Deutsche Bank and Finacity. These are expected to raise at least 300 million euros.

The power utility has also relaunched an older quest for the return of a public service compensation (YKO) amount worth about 700 million euros and concerning the year 2011. PPC had been lawfully deprived of this amount but insists it was treated unfairly. The power utility has begun related talks with RAE, the Regulatory Authority for Energy, already believed to be tilting towards PPC, and the government. This effort could bring the national budget into the picture for a lump sum payment to PPC.

As for the 550.7 million-euro prepayment already received by PPC for the Greek State’s overall electricity needs in 2019, the utility intends to use about 150 million of this amount to help service a 350 million-euro bond payment maturing at the end of April, chief executive Manolis Panagiotakis has informed. The remaining 200 million-euro amount is expected to be covered through bank loans.

PPC punctuality discount cut promises mild relief for rivals

A main power utility PPC decision reducing its punctuality discount for customers paying electricity bills on time to 10 percent from 15 percent comes into effect today, promising independent electricity suppliers some relief.

The development has increased the expectations of independent electricity suppliers for market share and revenue gains as PPC’s discount policy revision, effectively a 5 percent price increase, will make rivals more competitive.

Many independent electricity suppliers were recently forced to trigger a tariff-increasing clause due to higher wholesale prices. This has emerged as a major disincentive for consumers considering moves away from PPC, still the dominant supplier.

A plan by authorities to soon return a RES special account surplus for 2018 to suppliers also represents good news for PPC’s rivals. This is made even more favorable for independent suppliers by the abolishment, from the beginning of the year, of a supplier surcharge they have been contributing to the RES account.

These developments promise some relief for independent electricity suppliers but market problems remain, as was highlighted by officials at last week’s Power and Gas Forum in Athens.

Key concerns include PPC’s lack of a cost-based pricing policy; the distorted implementation of NOME auctions and higher starting prices expected at these as of June; as well as the power utility’s insistence to continue operating two ageing power stations, Amynteo and Kardia, despite the exhaustion of time limits.

Higher wholesale electricity prices appear likely to keep rising in the immediate future as a result of elevated CO2 emission right costs and fuel prices.

 

PPC set to cut 15% punctuality discount to 10%, €60m boost expected

PPC appears to have decided to reduce a 15 percent discount offered over the past two-and-a-half years to customers paying electricity bills on time to 10 percent for an annual revenue boost estimated at 60 million euros, energypress sources have informed.

The state-controlled power utility is keen to send out favorable news to investors before heading to capital markets. Ideally, PPC would want to reach out to capital markets this month but the energy ministry is mindful of endorsing any tariff hikes ahead of elections, due later this year.

Besides the punctuality discount reduction, PPC also wants to introduce a CO2 -related clause enabling electricity tariff hikes when emission costs reach certain levels.

The power utility’s chief executive Manolis Panagiotakis, who, earlier this week, stressed the corporation’s need for a return to profitability, has yet to be given the green light for the CO2 clause measure by energy minister Giorgos Stathakis, currently weighing its political cost.

PPC’s decision to cut its punctuality discount to 10 percent carries risk as it could prompt the departure of reliable customers to other suppliers.

 

 

PPC looking to soon halve its 15% punctuality discount

The main power utility PPC is examining the prospect of reducing its 15 percent discount offered to customers for punctual payments of electricity bills in an effort to improve profit figures, especially its debt/EBITDA ratio, and secure loans at lower interest rates for new investments and company restructuring plans.

PPC appears to have informed the energy ministry of a plan to reduce this punctuality discount by half or even more to a level of around 6 or 7 percent.

The state-controlled power utility’s plan would need to be endorsed by the energy ministry. This could be tricky given the country’s gradual approach to the next elections. The government’s four-year mandate ends in October.

The power utility is also looking forward to the swift establishment of legal framework enabling the adoption of a CO2 emission right costs-related clause designed to increase electricity tariffs when CO2 costs exceed a certain limit and vice versa.

PPC has already reduced its net debt level and significantly restricted operating costs but revenue figures still need to be improved.

An improved debt/EBITDA ratio is necessary if PPC is to seek loans at competitive rates.

NOME record price to prompt tariff hikes, exporters unfazed

The record price level of 48.8 euros per MWh reached at yesterday’s NOME auction will most likely force suppliers to raise prices offered to consumers, market officials agree.

Though this price level does offer local electricity suppliers protection against dangers stemming from rising wholesale electricity prices both in Greece and abroad, it does not provide independent suppliers any leeway to undercut prices offered by the still-dominant main power utility PPC.

The power utility must reduce its retail electricity market share to less than 50 percent by 2020, according to the bailout agreement.

The diminished ability for true competition in Greece’s retail electricity market once again brings to the fore PPC’s 15 percent discount offer for punctual customers, introduced two years ago.

However, unlike previous reactions, the discount’s removal is now not only being called for by independent electricity suppliers but also being considered by PPC.

The power utility’s chief executive Manolis Panagiotakis has not ruled out such a move, while a business plan prepared for PPC by consulting firm McKinsey stresses a need for the client to boost revenues by raising customer tariffs.

Should PPC end or revise downwards its 15 percent discount offer, all suppliers can be expected to respond by increasing their tariff price levels. Over the past couple of years, independent suppliers have had choice but to adjust their tariffs based on standards shaped by PPC’s overaggressive pricing policy.

Besides the role played by local suppliers seeking to cover their domestic market needs, NOME prices were also pushed up yesterday by traders who sought to buy for prospective exports to foreign markets offering considerably higher prices.

Evidently, existing NOME auction regulations are insufficient, as was highlighted by the large quantities acquired yesterday by participants with export activity in mind.

A move by RAE, Regulatory Authority for Energy, on the eve of yesterday’s auction, to summon five suppliers to hearings over NOME export abuse suspicions linked to previous auctions, which could lead to fines, did little, or nothing, to thwart such future intentions at the latest auction.

 

 

 

PPC boss backs 15% discount, supplier surcharge decisions

The main power utility PPC’s chief executive Manolis Panagiotakis  yesterday condemned critics of his decisions to offer punctual customers a 15 percent discount on electricity bills and not relay a supplier surcharge to authorities.

The utility head, speaking at a company event for staff members to usher in the new year, noted that the wider criticism of PPC’s discount offer, a move that has offered relief to thousands of households, was ludicrous, while adding that PPC’s refusal to pass on a supplier surcharge has helped the utility avoid electricity tariff increases.

Panagiotakis also noted that PPC should be given more time for its bailout-required market share contraction targets.

The chief official promised staff members that pay cuts would be avoided, adding that the utility needs to acquire operational independence regarding hirings and remuneration packages offered.

Commenting on the bailout-required sale of lignite units representing 40 percent of PPC’s lignite capacity, Panagiotakis said the company must work at transforming this demand from a disadvantage to an opportunity. He stressed the need for the achievement of solid sale prices of lignite units as relief for the power utility’s coffers.

Panagiotakis also admitted that not all was being done to help resolve PPC’s unpaid receivables problem, suggesting the collection effort would soon intensify to limit debt owed to the company.

 

 

 

 

Regional electricity discounts offered to sweeten lignite unit sales

The energy ministry plans to offer electricity tariff discounts of 30 percent to households based in lignite-active areas through an amendment to a draft bill recently submitted to parliament for the establishment of energy communities, promising decentralized, locally generated energy solutions.

Though the discount is being presented as a form of compensation to communities for the environmental impact of lignite mining activity and electricity generation over many years, it will essentially be offered to offset the threat of job losses that may result from the bailout-required sale package of main power utility PPC lignite units.

Prime Minister Alexis Tsipras had promised tariff discounts for local households in lignite areas last summer, during an official visit to Kozani, in the country’s north.

At the time, regional authorities had requested a 30 percent electricity discount for households and a 50 percent disount for enterprises.

It remains unclear how this measure, originally valued at 25 milion euros per year, will be funded. Its cost will rise further if the discount also applies to communities in Megalopoli, Greece’s south. Two PPC units in Megalopoli have also been included in the bailout-required sell-off.

 

Public sector firms offered 6% discount for bill prepayments

A multi-bill comprised of bailout prior actions, submitted to Greek Parliament yesterday for approval, includes an article offering public sector firms and agencies the ability to prepay electricity bills for a year’s worth of consumption in exchange for a 6 percent discount. The objective of this measure is to reduce state expenditure.

State-controlled PPC has already been given permission to offer 6 percent discounts for annual prepayments of electricity bills as an additional offer to a 15 percent discount offered to customers for punctual payments.