electricity producers

Producers’ even share of grid-connection costs unchanged

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The energy ministry intends to keep unchanged a formula limiting power grid operator IPTO’s cost coverage of projects connecting electricity producers to the grid to 50 percent of the cost, ministry officials have told energypress.

In doing so, the ministry has backed IPTO following a challenge by RAAEY, the Regulatory Authority for Waste, Energy and Water, over the formula evenly splitting the cost of grid-connection projects between the operator and electricity producers.

IPTO contends the ministry has opted for a 50-50 formula as part of its effort to accelerate RES investments, increase the energy-mix share of renewables, and achieve national energy-transition targets.

The energy ministry plans to implement a stricter cost-control monitoring system for these projects, as they are carried out by the users, themselves. A formula designed to objectively determine the cost of grid-connection projects is expected to be introduced as a key tool in this monitoring plan.

In July, 2022, the government ratified legislation requiring electricity producers to cover 50 percent of the cost of their grid-connection projects.

This 50 percent cost-coverage requirement concerns renewable energy projects, development of transmission lines connecting thermal power plants, energy storage units, as well as high-voltage consumers.

Electricity producers’ payment upper limit now lifted

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Remuneration upper limits imposed on all electricity producers as one of a number of emergency measures implemented by authorities during the energy crisis have just been lifted, effective as of January 1, a move representing a significant step in the wholesale electricity market’s return to normality.

In the retail electricity market, subsidies offered to all consumers during the energy crisis were also lifted with the arrival of the new year.

The government introduced remuneration upper limits for electricity producers on July 7, 2022, at the height of the energy crisis, as a tool for recovering windfall profits, which were injected into the Energy Transition Fund to finance electricity subsidies offered by the state to all consumers.

A preceding remuneration system for electricity producers, introduced as part of the target model, has now been reinstated in place of the upper limits. A marginal price model, it sets payment levels for electricity producers based on the highest-price production unit brought into play every day.

Under the emergency measure imposing remuneration upper limits, all electricity producers, regardless of technology, were subjected to payment restrictions that took into account respective operating costs.

RES facilities faced a remuneration upper limit of 85 euros per MWh, while hydropower units were subjected to a payment limit of 112 euros per MWh. The remuneration upper-limit for natural gas-fueled power stations was revised monthly so that wildly fluctuating factors such as emission right costs and natural gas prices could be factored in.

The next and final step for the wholesale electricity market’s complete return to normality entails lifting an extraordinary levy imposed on natural gas used for electricity production. The energy ministry has noted it intends to proceed with this step early in 2024. However, a legislative revision by the ministry will be needed.

 

DEPA Commercial privatization plan postponed until 2024-25

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Gas company DEPA Commercial’s privatization plan has been postponed until its business plan, which includes an expansion strategy, begin reaping rewards, effectively meaning that no further steps concerning the company’s sale should be  expected before late 2024 or early 2025, Greek privatization fund TAIPED appears to have decided.

Besides taking into consideration the potential of a bigger and broader business plan, TAIPED is also weighing in the impact on its plan to sell its 65 percent stake of DEPA Commercial of a long-running legal dispute between the company and fertilizer industry ELFE. The former is seeking unpaid amounts and the latter claims it has been overcharged for gas supply.

This dispute appears set to enter yet another chapter that is most likely to add between one and two years of legal battle following a decision by the Council of State, Greece’s Supreme Administrative Court, to revert the case to an Athens Appeals Court for retrial.

DEPA Commercial’s expansion policy, which includes a 20 percent stake in the prospective Alexandroupoli FSRU in northeastern Greece as well as electricity production in the same region, promises to greatly broaden its business interests, until recently focused on gas trading activity.

TAIPED’s sale of its 65 percent stake in DEPA Commercial at this stage would deprive the Greek State of benefits in the making, industry experts have noted.

TAIPED has reportedly commissioned Piraeus Bank to reevaluate DEPA Commercial’s broadened business plan and determine when, and to what extent, it should begin maturing and generating added value.

DEPA Commercial tender soon for PV parks totaling 495 MW

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Gas company DEPA Commercial aims to announce, by the end of the year, a tender for the design, procurement and development of its first renewable energy projects, energypress sources have informed.

The tender will concern two projects totaling 495 MW, most of this capacity, 400 MW, for solar energy farms in Kozani, northern Greece, plus 95 MW for solar energy farms in Viotia, slightly northwest of the wider Athens area.

DEPA Commercial, which has shaped a new company strategy striving for vertical integration by also becoming an electricity producer, last year acquired New Spesconcept, holding a 222-MW RES portfolio, and North Solar, possessing a RES portfolio of 500 MW.

Besides its entry into the RES sector, with prospective solar energy projects totaling approximately 730 MW, DEPA Commercial also intends to partner with power utility PPC and the Copelouzos group in a new 840-MW combined-cycle power plant being planned for development in Komotini, northeastern Greece.

Also, DEPA Commercial, as part of its new strategy, has undertaken initiatives to expand its wholesale trading activity in foreign markets. This effort has significantly intensified over the past two years.

At present, DEPA Commercial is active in the Austrian, Hungarian, Romanian and Italian markets and has signed agreements to supply gas to Moldova and Albania.

DEPA Commercial, it should be noted, is the first Greek gas company to have become a member of the Hungarian Energy Exchange (CEEGEX).

The Hungarian market represents a pivotal gas trading hub in central Europe and is also located at the northern end of the prospective Vertical Corridor, a route running from Greece to Bulgaria, Romania and Hungary that will be created by interconnecting the transmission systems of these four countries to enable two-way transport of fuel between south and north.

PPC’s share of electricity production slides to 37%

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Power utility PPC’s share of electricity production fell sharply to 37 percent in the first half of the year, a 6 percent drop compared to a year earlier.

The company’s administration, which has just presented the energy group’s first-half results, mainly attributed this contraction to reduced output at its natural gas-fueled power stations, driven lower by a slump in PPC’s high-voltage market share, down from 90.1 percent to 53.8 percent over the past year.

During this period, three major industrial consumers, Aluminium of Greece, Helleniq Energy, formerly named Hellenic Petroleum (ELPE), and metal processing company Viohalko, ended supply deals with PPC and established new agreements with rival producers.

However, Viohalko, one of Greece’s biggest electricity consumers, will reestablish an association with PPC in 2025, when a green-energy power purchase agreement (PPA) between the two is set to commence.

PPC believes it can regain, over the next few years, some of the high-voltage market share it has shed by offering industrial consumers competitively-priced green energy.

This is a key reason behind PPC’s current push towards developing a sizeable RES portfolio, whose target for 2026 has been set at 5 GW.

 

RES sector now main Energy Transition Fund contributor

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The de-escalation of natural gas prices has drastically diminished the level of contributions made by power generation technologies to the Energy Transition Fund, virtually all input now provided by the RES sector, RAAEY, the Regulatory Authority for Waste, Energy and Water, has determined following an assessment of data concerning a related earnings recovery mechanism.

This recovery mechanism has essentially stopped functioning as, in recent months, the average wholesale price in the electricity market has fallen below upper limits set for electricity production technologies.

Since its introduction in the wholesale electricity market last July, the earnings recovery mechanism has so far amassed 3.2 billion euros, of which 2.1 billion euros have been provided by the RES sector.

More recently, over the past five months, a period during which energy prices have been on a downward trajectory, amounts injected into the Energy Transition Fund have shrunk. During this five-month period, a total of 374 million euros have been recovered for the Energy Transition Fund, of which 320 million euros has stemmed from the RES sector.

Power producers and suppliers have, for some time now, been calling for an end to emergency measures applied in the electricity market last summer. They contend that price caps per technology are no longer needed as energy prices have fallen. Maintaining these measures under the current conditions is only leading to market distortions, they support.

Energy sector well prepared for interim government

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The ruling center-right New Democracy party, widely expected to seek a majority vote in a second round of voting seen taking place between one-and-a-half and two months from now, has left the energy sector in an orderly state with no significant pending issues requiring any immediate political decisions during the interim period, when a caretaker administration will govern the country.

Indicatively, the interim government’s energy ministry will assume stable operating frameworks, valid until the end of September, for the wholesale and retail electricity markets following pre-election extensions, by a few months, to emergency measures introduced to counter energy crisis effects.

This means that, until a new government is sworn in, a price adjustment clause for electricity tariffs will remain suspended, electricity subsidies will most likely be continued, and price caps on the wholesale market’s day-ahead and intraday markets will remain intact.

Also, the Energy Transition Fund will continue being supported by an extended mechanism recovering windfall profits earned by electricity producers.

Electricity producers disagree with the current windfall profit recovery system, implemented universally for all electricity generation technologies, an approach causing a series of distortions, noting an alternative way should be considered. The Energy Transition Fund is currently being exclusively financed by RES producers.

However, Greece, in one important pending issue, needs to renegotiate with the European Commission for a more realistic gas storage requirement. The current requirement, a 7.5 TWh quantity, planned to be stored away at Bulgarian and Italian facilities ahead of next winter, is excessive and costly.

Time to lift energy crisis measures, market players tell Power & Gas forum

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Extraordinary measures implemented during the energy crisis must now be lifted as they are hampering competition and leading to increased costs for producers and suppliers, energy company representatives stressed during yesterday’s opening day of the Power & Gas Forum in Athens, an event organized by energypress.

Producers and suppliers highlighted that extraordinary measures were introduced as temporary intervention and need to be lifted as they violate the market’s ability to function normally, are affecting competition and also harming market clarity.

Energy firms are operating amid a heavily regulated market with strong state intervention, Dimitris Christou, Director of Legal and Regulatory Affairs at energy supplier Zenith, told the the Power & Gas Forum.

Anastasios Lostarakos, General Manager of energy retailer NRG, echoed these thoughts, telling the forum that extraordinary measures adopted by EU member states to address adverse energy market conditions in 2021 and 2022 should be lifted as soon as possible as the way out of the energy crisis has already begun.

Suppliers spared of €10/MWh cost on electricity producers

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Electricity suppliers will no longer be factoring into their tariffs a special surcharge of 10 euros per MWh on natural gas used for generation purposes following a recent revision to this extraordinary measure.

The country’s power retailers are currently working on their tariffs for April, due to be announced on Monday, based on a recent law requiring suppliers to announce price levels for every forthcoming month by the 20th of each preceding month.

Though the aforementioned flat-rate surcharge no longer applies, electricity producers have not been entirely spared of special contributions. An amendment that came into effect this month now requires electricity producers to contribute to the state a monthly surcharge that is equivalent to 5 percent of the TTF natural gas index.

The now-terminated special surcharge of 10 euros per MWh on natural gas used by producers for generation purposes is estimated to have increased retail electricity bills by 18 to 20 euros per MWh.

Though the eventual cost – for consumers – of the new TTF-based surcharge remains unknown, it will definitely be lower than costs resulting from the flat-rate formula. Lower TTF levels will mean lower related costs for electricity producers, which, by extension, will enable suppliers to offer reduced retail prices.

Suppliers are expected to announce reduced tariffs for April on the 20th of this month as wholesale electricity prices and the TTF index have been on  downward trajectories.

Independent suppliers are forecast to offer tariffs of around 0.20 euros per kWh, a reduction of 0.02 to 0.03 euros per kWh compared to levels for March. Power utility PPC may lower its prices below 0.20 euros per kWh, according to unconfirmed reports.

These lower prices will essentially not offer reduced prices for consumers, but the government’s subsidy support policy, keeping retail power prices at levels of between 14 to 16 cents per KWh, will cost the administration less.

 

Windfall tax sum for electricity producers trimmed to €340m

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A sum of just over 340 million euros stands to be collected by the State through an extraordinary 90 percent windfall tax imposed on electricity producers for excess earnings between October, 2021 and June, 2022, RAE, the Regulatory Authority for Energy, has been informed following processing of all related data by chartered accountants.

This amount is less than an initial sum of 373.5 million euros that had been estimated, based on an inspection of preliminary data.

Most of this 33.5 million-euro discrepancy concerns power utility PPC, which will be required to pay a windfall tax that is 31 million euros less than an initial estimate of 276 million euros, now reduced to 245 million euros for this company.

The country’s privately run electricity producers, Mytilineos, Elpedison and Heron, will need to pay an additional sum of 1.2 million euros for this windfall tax, based on the processing of finalized data.

The extraordinary tax measure imposed on electricity producers for the aforementioned nine-month period will, based on current market conditions, not need to be extended.

A major de-escalation in wholesale electricity prices over recent months has greatly reduced revenues amassed by electricity producers and also lessened subsidy support needs for residential electricity consumption.

 

Electricity demand down for sixth successive month

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Electricity demand in the household, professional, business and industrial categories fell for a sixth successive month in December, sliding by a record 13.69 percent, overall, compared to the corresponding month a year earlier, while, on an annual basis, demand fell by 3.55 percent last year compared to 2021.

Consumer behavior has changed considerably during the energy crisis, higher energy costs forcing users to cut back on energy consumption.

In November, electricity demand fell by 9.96 percent compared to the same month in 2021, October’s fall was 8.26 percent, September demand fell by 4.26 percent, the decline in August was 12.71 percent, and July’s drop was 11.24 percent.

Households and businesses recorded the biggest reductions in electricity demand last month, this being 15.61 percent compared to December, 2021, while high-voltage consumers used 1.51 percent less electricity.

As expected, the reduction in electricity demand prompted a drop in electricity generation in 2022, down 3.08 percent on 2021. Conventional facilities reduced their generation by 12.57 percent, but renewable energy production rose by 14.32 percent compared to the previous year.

Electricity producers react against tax on windfall profit

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Electricity producers have reacted against an extraordinary 90 percent retroactive tax on windfall profits from October, 2021 to June, 2022, opposing the logic behind the measure, not its resulting sums. Some producers claim the initiative amounts to confiscation and appear to be preparing for legal action.

Dinos Benroubi, president of ESAI, the Hellenic Association of Independent Power Producers, told the recent Renewable & Storage Forum, an event staged by energypress, the measure punishes anybody who makes money without taking into account how this money is made. He described the government measure as “confiscation”.

Electricity producers contend they have not been taken by surprise as the sums to be paid had, more or less, been anticipated and budgeted.

Even so, some company representatives told energypress they will react to the plan, while others seem to be preparing legal challenges.

The retroactive tax is expected to raise 373.55 million euros, of which a sum estimated between 260 and 270 million euros concerns power utility PPC, the dominant market player. The majority of the remaining 100 or so million euros, or 70 to 80 million euros, concerns the country’s four independent power producers, while renewable energy producers will be responsible for the rest.

Extraordinary tax on producer windfall profits to raise €460m

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A new joint ministerial decision by the finance and energy ministers has introduced a formula for a temporary extraordinary tax on windfall earnings accumulated by vertically integrated energy groups during the nine-month period between October, 2021 and June, 2022.

The windfall tax, whose coefficient has been set at 90 percent, is expected to result in a collection of approximately 460 million euros.

The joint ministerial decision, published in the government gazette, overcomes a delay in the delivery of certified data by a certified accountant to RAE, the Regulatory Authority of Energy, as was foreseen in the original joint ministerial decision. It enables preliminary calculation by RAE, based on the uncertified data, so that a provisional extraordinary levy can be paid immediately by all electricity producers.

Specific amounts, and any corrections needed, will be calculated at a latter date, based on data that will have been certified.

Brussels placing energy crisis hopes on windfall profits tax

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The European Commission is placing its hopes on greater revenues to be generated by a windfall profits tax on refineries, wholesale gas companies and electricity producers as a solution to get the EU through the energy crisis.

According to the plan, the EU-27 will use these increased tax collections to subsidize, as widely and as generously as possible, electricity bills of European households and businesses.

Thoughts of imposing a price cap on natural gas from all sources, including Russia, have been abandoned, following objections raised by many EU member states at a recent meeting of EU energy ministers.

The windfall profits tax on oil, gas, coal and refining companies, to be announced today by European Commission president Ursula von der Leyen, could reach as high as 33 percent, according to Bloomberg. Drafts of this extraordinary tax measure do not include its tax rate.

 

RAE approves energy crisis plans for winter sufficiency

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The board at RAE, the Regulatory Authority for Energy, has approved preventive action and risk preparedness plans for the country’s electricity sector, two tools shaped in response to soaring gas and electricity prices, breaking records, in the energy crisis.

Though it is generally hoped they will be needless, the two tools could prove useful during what is expected to be a challenging winter throughout Europe, including Greece.

The preventive action plan was approved by RAE following certain revisions to the initial plan, concerning gas reserve requirements.

According to the plan, a new floating storage unit installed in June at the LNG terminal on the islet Revythoussa, just off Athens, will maintain 0.57 TWH in strategic reserves for electricity production, while 1.14 TWh in gas supplier reserves will be stored at an Italian storage facility.

However, the plan is non-binding as these gas reserves may also be stored at other facilities if preferred by players, who are required to maintain strategic gas reserves.

 

Electricity producers windfall tax now imminent

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Joint ministerial decisions needed by the finance and energy ministries for the implementation of a 90 percent windfall tax on recent extraordinary gains achieved by vertically integrated electricity producers are set to be signed by the two ministries, energy minister Kostas Skrekas has told a news conference.

RAE, the Regulatory Authority for Energy, has delivered its report for electricity producer earnings covering a six-month period from October, 2021 to March, 2022, to be subject to the new windfall tax.

As for a second period to be subject to this extraordinary tax, a three-month term covering April to June this year, RAE has requested further details from the energy groups on discounts offered as well as returns linked to bilateral agreements. These details will be delivered to RAE once they have been approved by a certified public accountant.

 

Electricity producer price cap mechanism launched Friday

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A price-cap mechanism for electricity producer payments is set to be launched this Friday and is expected to generate approximately 580 million euros for the Energy Transition Fund in July, a sum to be utilized for subsidizing consumer electricity bills.

Of this sum, 150 million euros will be derived from natural gas and lignite-fired power stations as well as power utility PPC’s hydropower facilities, while the other 380 million euros will stem from the RES sector.

Most of July’s funds to be provided by the RES sector will not be newly generated money as RES units had already refunded money to the RES special account and its surpluses were then injected into the Energy Transition Fund. Under the new system, these amounts will be directly injected into the Energy Transition Fund.

Through the new mechanism, PPC’s hydropower facilities will be paid 112 euros per MWh and all RES units will be remunerated at a rate of 85 euros per MWh. The remuneration rates for natural gas and lignite-fueled power stations will be determined every month based on a series of factors. For the mechanism’s first month, natural gas-fueled power stations will receive 253.99 euros per MWh for their output and lignite-fired power stations will receive 206.72 euros per MWh.

 

New electricity market model launched, PPC role pivotal

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A new model for the country’s electricity market, intended to contain soaring prices brought about by the energy crisis, comes into effect today with the introduction, as a first step, of price caps in the wholesale market, setting remuneration upper limits for electricity producers of all categories.

A ministerial decision expected imminently, possibly today, will set upper limits of 112 euros per MWh for hydropower facilities, 85 euros per MWh for renewables, 253.98 euros per MWh for natural gas-fueled power stations and 206.71 euros per MWh for lignite-fired power stations. These limits will remain valid for the first one-month period, starting today.

Any discrepancy between these upper limits and the average price of the day-ahead market will be transferred to the Energy Transition Fund for subsidy support.

The government hopes its plan will subdue electricity prices to levels of between 20 and 30 percent higher than last summer.

Calculations for a finalized electricity price per KWh, following the deduction of subsidies, will be based on state-controlled power utility PPC’s new price list. The government, guided by the utility’s new price list, will set a single price for all suppliers. The level at which PPC will set the bar remains to be seen. The company’s market dominance will set a standard for the entire market.

Though not yet confirmed, it is believed PPC will announce, by July 10, a nominal price of between 460 and 490 euros per MWh, meaning 46-49 cents per KWh.

PPC and all other players are abandoning a 30 percent discount offered to customers. PPC’s subsidies for hydropower and lignite units will now end up with the State, which is assuming the discount-policy role.

Windfall profit tax collection from September, two stages

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A tax on windfall profits earned by vertically integrated energy groups since the beginning of the energy crisis will be applied over two stages, the first covering the period between October, 2021 and March, 2022, and the second between April and June.

RAE, the Regulatory Authority for Energy, has already begun working on details concerning the first period, but more processing is needed before the windfall profit tax, set at 90 percent, can be imposed.

Also, a ministerial decision from the energy and finance ministries, required by a legislative revision concerning the windfall profits, is still pending. It will specify amounts to be taxed.

Tax collections through this extraordinary measure, to help fund support for consumers through the energy crisis, are not expected to begin until September.

 

Brussels approves wholesale price formula, producer caps

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A government package containing a new formula for the country’s wholesale electricity price along with caps for each of the four electricity generating technologies (hydropower, renewables, gas and lignite) has been approved by the European Commission, paving the way towards its implementation as of July 1, sources have informed energypress.

Once a related draft bill, submitted to parliament last Friday, is ratified, a ministerial decision detailing the price caps per technology will be published at the end of this week or early next week. It is eagerly awaited by market participants.

According to sources, the cap on hydropower facilities is expected to be set relatively higher than initially thought, at 110 euros per MWh, well over the initial expectation of between 80 to 90 euros per MWh.

The price cap on renewables is expected to be set at 85 euros per MWh. Natural gas-fueled power stations are seen taking on a cap of between 230 and 240 euros per MWh.

Power utility PPC’s lignite-fired power stations will be set a cap of no less than 200 euros per MWh.

The mechanism’s operation will be assumed by EnExClear, the day-ahead market’s clearing authority, which will report, on a daily basis, to RAE, the Regulatory Authority for Energy, and DAPEEP, the RES market operator.

Cap for electricity generation technologies by end of June

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A ministerial decision for price caps to be applied to respective electricity generation technologies is expected by the end of the month, on time for their introduction, planned for July 1.

In the lead-up, within the next few days, authorities are expected to deliver a legislative revision carrying the details of a remuneration mechanism for electricity producers.

The cap on hydropower facilities is expected to be set at a relatively high level, ranging from 100 to 120 euros per MWh, well above initial estimates between 80 and 90 euros per MWh, according to energypress sources.

As for the RES sector, the price cap is expected to be set somewhere between 80 and 90 euros per MWh.

A cap of between 220 and 230 euros per MWh is expected to be set for natural gas-fueled power stations.

Tool sought to stop producer electricity market manipulation

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RAE, the Regulatory Authority for Energy, is looking to introduce a mechanism designed to detect and stop, preventively, actions by electricity producers intended to manipulate the market.

This prospective mechanism is expected to identify the actions of players big enough to influence the market and will also be used for any future energy crises with the aim of swiftly returning any windfall profits earned by electricity producers to the market.

RAE has commissioned ECCO International, a global energy consulting and software company headed by Dr. Alex Papalexopoulos, for a related study examining possible ways in which such a safety tool could be implemented in wholesale electricity markets.

Such preventive tools already exist in the US, Canada and Australia, countries with developed energy markets.

Energy production technology price caps being finalized

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Government officials are finalizing decisions for respective price caps to be applied to electricity generation technologies ahead of the introduction, on July 1, of a compensation mechanism for electricity producers.

Power utility PPC’s hydropower facilities are expected to play a key role in the effort. Windfall profits to be deducted from hydropower unit earnings promise to contribute greatly to the Energy Transition Fund, and, by extension, maximize the level of subsidies offered to consumers.

Officials are taking careful steps so that PPC can keep being able to offer discounts and fixed tariffs to customers and avoid falling into loss-incurring territory.

The cap on hydropower facilities is expected to be set at a relatively high level, ranging from 100 to 120 euros per MWh, well above initial estimates between 80 and 90 euros per MWh, according to figures mentioned by sources.

As for the RES sector, the price cap is expected to be set somewhere between 80 and 90 euros per MWh.

According to energypress sources, the European Commission’s approval of the compensation mechanism for electricity producers is expected imminently. It will be given a 12-month duration.

 

Energy companies must now reshape commercial policies

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Energy companies will need to reshape their commercial policies as a result of yesterday’s ratification of legislation for extraordinary contributions including a mechanism, effective as of July 1, for collection of windfall profits earned by energy producers.

Though the extraordinary contributions energy companies will need to hand over to the state will be far lower than originally planned, the sum, estimated at between 300 and 400 million euros over a nine-month period, will, nevertheless, result in an outflow of earnings to be used by the government for support of its subsidies offered to consumers.

This sum to result from the tax concerns windfall profits earned from October, 2021.

Vertically integrated energy groups will now need to reassess their commercial policies, including discounts, fixed tariffs, installment-based payment arrangements for overdue energy bills, and punctual-customer bonuses, as the new measures will narrow their profit margins.

The windfall profit tax will be set at 90 percent while a price cap is planned to be imposed in the wholesale electricity market. The level at which this price cap is to be set remains unclear.

 

Producers want discount, fixed tariffs cost deducted from tax

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Electricity producers have called for their total cost of discounts and fixed electricity tariffs offered in the market to be deducted from an extraordinary 90 percent tax to be imposed on energy-crisis windfall profits, rather than a deduction of just a percentage of this total cost, as is currently planned.

If the total cost of discounts and fixed electricity tariffs is not deducted from the extraordinary tax, introduced to help fund energy-crisis support measures, then it makes no sense for producers to keep offering discounts, company officials argue.

Heavy taxation after having offered discounts and low fixed tariffs is pointless, especially amid a period of energy crisis, they added.

In other parts of Europe, producers are being offered incentives to maintain tariffs at fixed levels as this approach offers protection at a turbulent time for electricity prices.

The extraordinary measure is planned to tax windfall profits earned by electricity producers between October, 2021 and March, 2022.

 

 

Electricity producer tax for windfall profits in parliament

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A draft bill proposing an extraordinary 90 percent tax on windfall profits earned by electricity producers – primarily operators of natural gas-fueled power stations – as a result of sharply higher natural gas prices over the past nine-month period, has been submitted to parliament for discussion and ratification following talks on the matter between the finance and energy ministries.

The draft bill is planned to legislate this extraordinary tax as well as a formula to be used for calculating respective company amounts to be taxed.

Discounts offered by companies to customers will be reduced from sums to be taxed, along with any returns resulting from bilateral contracts.

Once the draft bill is legislated, RAE, the Regulatory Authority for Energy, will calculate amounts for each company to be subject to the extraordinary tax.

According to a related report prepared by RAE and delivered to the government and parliament, power utility PPC represents 729.91 million euros of the market’s total of 927.44 million euros in windfall profits amassed over a six-month period between October, 2021 and March, 2022.

The country’s independent producers, Mytilineos, Elpedison and Heron, along with RES producers participating in the market, represent the remaining 197.53 million euros in windfall profits, the RAE report determined.

RAE proposes €67m return from power producers to suppliers

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RAE, the Regulatory Authority for Energy, has proposed a legislative revision that would facilitate a return of 67 million euros, by electricity producers – expect RES producers – to suppliers, an amount representing unpaid balancing-market earnings between November, 2020 and February, 2021, during the launch of the target model.

The amounts that would be returned to suppliers concern two categories, companies that had passed on excessive costs to customers, as well as companies that had not passed on excessive costs to their customers.

According to information obtained by energypress, two retailers, power utility PPC and Volterra, had not passed on excessive costs to their customers. In this case, money to be returned will go straight into the company coffers of these two firms.

Returns for companies that had passed on excessive costs to customers will be injected into the Energy Transition Fund as support for subsidies offered to consumers.

 

 

Electricity producers’ excess profit €600m, net sum €200m

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Excess profits earned by electricity producers during the ongoing energy crisis’ period between October, 2021 and March, 2022 reached 600 million euros, an 80 percent share of this amount gained by power utility PPC, the dominant player, an inquiry held by RAE, the Regulatory Authority for Energy, has found.

The findings of this report, forwarded to energy minister Kostas Skrekas last Friday, concern vertically integrated energy groups active in electricity production and supply.

Most of these excess profits have been utilized by energy companies to support their pricing policies in avoidance of even further price rises, the RAE reported has noted.

Sector officials have estimated the sum of excess profits channeled by energy companies for pricing-policy support at 400 million euros, meaning the net amount of excess earnings is 200 million euros.

Energy companies have offered discounts and subdued, as much as possible, retail prices with these excess profits.

The government has announced it will impose a 90 percent tax rate on excess profits, but details of this plan remain unclear.

Funds to be collected by the state will be used to support ongoing subsidies offered to consumers.

Electricity market players greet support package with relief

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The country’s electricity suppliers have welcomed energy-crisis support measures announced by the government late last week with relief as well as some uncertainty, especially concerning an existing wholesale price clause included in electricity bills and whether it will continue to apply or be suspended.

The support package has been embraced by the sector as it promises to offer electricity suppliers cash-flow relief, especially non-vertically integrated companies or energy companies generating limited quantities, through production-cost protection measures and lower electricity purchase costs for energy retailers.

Energy company fears of a rise in unpaid receivables as a result of increased difficulties faced by consumers to service electricity bills have also been appeased by a new round of subsidies included in the government support package.

The energy crisis of the past ten months has resulted in a domino effect spreading debt throughout the entire electricity market, including amounts owed to operators, as energy company have struggled to deliver regulated fees.