electricity suppliers

Suppliers announce smaller-than-expected tariff reductions

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Electricity suppliers have announced smaller-than-expected tariff reductions for June that do not fully reflect a sharp drop of the TTF gas index and deescalated wholesale electricity prices.

These modest tariffs reductions – announced by electricity suppliers on May 20, based on market rules requiring all suppliers to deliver their respective tariffs for each forthcoming month by the 20th of every preceding month – were attributed to two factors, one being the risk entailed, for suppliers, in this pre-notification requirement, valid until the end of September, at least.

Suppliers also decided against greater price reductions as a result of the government’s decision to announce its latest electricity subsidies package for a two-month period, covering May and June, instead of its customary one-month coverage, which would have been limited to May, in anticipation of the general election’s need for an interim government.

Essentially, suppliers have let the government’s electricity subsidies for June do the work for them.

The incumbent center-right New Democracy party is widely expected to seek a majority through a second round of voting seen taking place between one-and-a-half and two months from now, after yesterday’s general election left it several seats short of an outright victory.

Most electricity suppliers announced tariff reductions for June ranging between 0.005 to 0.01 euros per kWh, compared to May, while some suppliers offered reductions of between 0.02 to 0.03 euros per kWh. These reductions include subsidies that had previously been announced by the energy ministry.

 

Brussels approval of support system enables supplier reimbursements

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The European Commission’s approval of an updated Greek energy-sector support system paves the way for the reimbursement of electricity suppliers who have covered, over the past seven months, state subsidies offered on a monthly basis to farmers and small businesses using up to 35 kVA.

The revised support system will also increase its overall budget by 600 million euros for a total of 1.4 billion euros.

The initial version of Greece’s support system, approved by the European Commission late last year, covered the period running from February to November, 2022.

In the case of small businesses using up to 35 kVA, a category numbering approximately 1.25 million businesses, electricity suppliers also needed to use their own company funds to cover state subsidies announced by the energy ministry for December, 2022 and January, 2023. These subsidies were stopped from the following month onwards.

As for state subsidies offered to farmers, electricity suppliers have needed to cover the cost of support for this vocational category over a longer period. Subsidies for farmers have not been interrupted. They have been set at 15 euros per MWh for June.

New residential electricity cost reductions expected for June

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The country’s electricity retailers, preparing to announce their offers for next month on May 20, as required by market rules, are expected to offer a new round of nominal tariff reductions for June, driven lower by a further decline of the TTF index.

The forthcoming month’s highest residential tariffs are likely to range between 0.14 and 0.17 euros per KWh, including the government’s electricity subsidies, usually revised monthly but covering both May and June this time around to avoid any election-related complications. Greece is scheduled to stage a legislative election this Sunday.

Suppliers are expected to reduce their nominal tariffs – not including subsidies – for June between 0.01 and 0.015 euros per KWh. As a result, finalized prices for next month’s residential tariffs may drop by as much as 0.03 euros per KWh.

The country’s electricity retailers are required to announce their nominal tariffs for each forthcoming month by the 20th of each preceding month.

Meanwhile, the government is working on extending emergency energy-crisis measures until September 30. These measures – a wholesale electricity market price cap; suspension of a price adjustment clause concerning electricity tariffs; penalty-free consumer switches from one supplier to another; and monthly supplier tariff announcements 10 days ahead –  were introduced last August and are due to expire July 1.

Supplier switching burdens sector with extra €300-400m in unpaid receivables

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Electricity users switching suppliers and leaving behind unpaid bills have burdened the sector with an additional 300 to 400 million euros in unpaid receivables over the past couple of years, a major issue impacting cash-flow in the sector, a leading official has noted.

Giannis Mitropoulos, general manager at ESPEN, the Greek Energy Suppliers Association, speaking at a news conference, referred to energy supplier Fysiko Aerio as a typical example, noting that 50 percent of the company’s unpaid receivables concern customers who have switched supplier.

Most electricity retailers have seen their unpaid receivables figures roughly double over the past couple of years or so as a result of loosened regulations concerning customer switching.

Back in 2020, the Council of State, the Supreme Administrative Court of Greece, abolished rules restricting customers with outstanding debt from switching suppliers.

The problem for suppliers was further exacerbated by a recent retail market rule, introduced last August, enabling electricity users to switch suppliers as frequently as once a month, without any subsequent penalties.

In an effort to combat the problem, ESPEN is working on a collective data base that will enable suppliers to monitor the track records of any prospective new customers. The association intends to launch the monitoring system in about a year’s time. The telecommunications sector has already adopted such a protection tool.

 

Suppliers’ windfall earnings recovery formula before vote

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The energy ministry is striving to soon issue – definitely ahead of the country’s May 21 legislative election – a joint ministerial decision, along with the finance ministry, providing the details of formula for the recovery of windfall profits earned by electricity suppliers over a five-month period from August to December in 2022.

A joint ministerial decision is needed so that the recovery mechanism, legislated by the energy ministry last November, can be implemented.

The energy and finance ministries have finalized their text co-authored for the joint ministerial decision, which includes a supplier earnings cap of 25 euros per MWh, sources informed.

This earnings cap, to subject any excess amounts earned by electricity suppliers to the windfall recovery mechanism, was adopted by the two ministries following a proposal made by RAAEY, the Regulatory Authority for Waste, Energy and Water.

Once the overall procedure leading to the introduction of the recovery mechanism has been completed, no political decisions will be needed for its extension into 2023 as the measure will have been largely standardized. Its implementation ahead of the May 21 legislative election promises to safeguard the measure should the election fail to produce a new government.

Two-month subsidy plan for possible election impasse

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The energy ministry, until now announcing and revising, on a monthly basis, electricity subsidies provided to consumers, is examining the possibility of announcing such support for two months, covering May and June, as consumer protection against any possible sharp energy price rises during the period following the country’s May 21 legislative election, should it fail to produce a new government.

If so, a caretaker government will be sworn in to serve for an interim period of one to one-and-a-half months.

At this point, the energy ministry wants to confirm the availability of funds needed to cover two months of electricity subsidies before it makes an official announcement for May and June.

An announcement on a double dose of electricity subsidies could be made by energy minister Kostas Skrekas tomorrow.

The subsidy level to be offered for May is expected to be below the April level, which was set at 15 euros per MWh (0.015 euros per KWh).

The country’s electricity suppliers announced slightly reduced nominal tariffs (before subsidies) for May on April 20. Suppliers are required to announce their nominal tariffs for each forthcoming month by the 20th of every preceding month.

Lower electricity tariffs mean the government can contribute less subsidies to maintain finalized electricity costs at a level it desires.

 

New offers not posted by 20th of each month ‘not permitted’

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RAE, the Regulatory Authority for Energy, seeking to restore order in the retail electricity market, has briefed suppliers that they cannot launch any new offers to consumers if these have not been announced by the 20th of each month, for each forthcoming month, as required by recently introduced rules.

The authority, in a document forwarded to all the country’s suppliers, has stressed that all offers intended for each forthcoming month must be announced by the 20th of each preceding month. No additional offers are permitted beyond this date, RAE underlined.

Although rules on this requirement were introduced approximately nine months ago, suppliers, in more recent times, have tended to wait for power utility PPC, the dominant market player, as well as for fellow independent suppliers, to announce their offers for each forthcoming month before adjusting accordingly with delayed offers of their own, as late as the next day.

Suppliers have been found to offer below-cost tariffs as temporary pullers aimed at luring new customers before adjusting these offers to regular rates.

In additional action, RAE also plans to develop a series of new price-related measures, including a price-comparison tool, a retail monitoring tool, a new data base, an energy-savings platform offering households tips, as well as a RAE online platform offering consumers advice over tariff disputes with suppliers.

 

 

RAAEY proposes €25/MWh cap for supplier windfall earnings

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RAAEY, the Regulatory Authority for Waste, Energy and Water, has proposed setting an earnings rate limit of 25 euros per MWh for electricity suppliers, meaning anything above this level would be regarded as windfall earnings and need to be recovered by the state.

This limit is the final pending detail in the energy ministry’s new formula for calculating windfall earnings concerning electricity suppliers.

Once finalized, the formula will be applied to supplier earnings covering a five-month period from August to December in 2022.

It remains unclear when this windfall earnings recovery mechanism will be implemented. The energy and finance ministries still need to issue a related ministerial decision. Also, the current pre-election period ahead of next month’s general elections may delay the plan.

The 25 euros per MWh limit proposed by RAAEY takes into account overall supply sector averages for operating costs, bad debt provisions, and a reasonable profit margin.

Suppliers will be expected to return 60 percent of any windfall earnings resulting from the formula as an initial payment before returning the other 40 percent at a latter date.

 

 

No major tariff changes seen for May, support maintained

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Next month’s retail electricity tariffs, due to be announced tomorrow by the country’s suppliers, are expected to remain largely unchanged compared to the previous month as a result of low prices at the TTF index and relative stability at the energy exchange.

By law, introduced last summer, all suppliers are required to announce their nominal tariffs for each forthcoming month by the 20th of each preceding month.

If the forecasts for May price levels are confirmed, nominal tariffs – not including subsidies – offered by suppliers will range between 0.105 and 0.1995 euros per KWh.

If the energy ministry decides to subsidize electricity bills for yet another month, as it has done throughout the energy crisis, then households can expect finalized retail prices to range between 0.09 and 0.1845 euros per KWh.

Though energy prices have deescalated considerably since the start of the energy crisis, authorities are expected to keep offering support to consumers until the end of the year.

The energy ministry has just launched an online platform, e-katanalotis, on which electricity users may check tariffs offered by suppliers.

GO certificate fee up tenfold in a year, suppliers paying dearly

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Demand for green-energy Guarantees of Origin, EU certification enabling end consumers, including domestic consumers, to track the origins of electricity they consume, has grown significantly over recent months, leading to a shortage of GO certificates and price rises several times over levels recorded a year earlier.

With the GO deadline for electricity usage in 2022 expiring today, a number of companies have scrambled to cover their basket of green-energy products last year, and needed to spend significantly increased amounts.

Around this time last year, suppliers in Greece could secure green-energy certificates at a price of between 0.30 and 0.55 euros per MWh, but prices have soared tenfold over the past twelve months to levels of between 4 and 6 euros per MWh at present, market sources have informed.

Demand for GO certificates grew considerably around Europe in 2022, leading to a shortage in Greece as a first round of auctions for domestic GOs has yet to take place following the establishment, last summer, of a new trading system for the acquisition of GO certificates in Greece.

The Guarantee of Origin (GO) is the main and only electricity tracking instrument in Europe that gives electricity consumers the power to actively choose sustainable power production over fossil-fuel based electricity and hence send market signals about their demand.

 

Revised universal electricity supply service, after general elections

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The energy ministry is considering to revise the country’s universal electricity supply service, which covers the needs of black-listed consumers who have been shunned by suppliers over payment failures, deeming changes are necessary as reliance on this service, up 12 percent this year alone, has grown considerably over recent years.

Provided collectively – by law – by the electricity market’s top five suppliers, based on market share, the universal electricity supply service has grown to become the country’s sixth-largest electricity supplier, serving over 210,000 power meters, up from roughly 22,500 a decade ago, Vassilis Zouvias, Director of Regulatory Affairs at energy company NRG, highlighted during last week’s 4th Power & Gas Forum in Athens.

Just 9 percent of consumers using the universal electricity supply service pay their energy bills on time, while over 60 percent end up not paying their bills at all, the official noted.

Also speaking at last week’s forum, Dimitris Tsalemis, Director General for Energy at the energy ministry, noted these figures do not reflect the goals of the universal electricity supply service, adding “something needs to be done.”

New energy ministry proposals will aim to reshape the universal electricity supply service so that it offers attractive tariffs for participating suppliers through a competitive procedure organized by RAE, the Regulatory Authority for Energy, rather than administratively by the energy ministry, Tsalemis pointed out.

However, changes to the universal electricity supply service would previously require revising the retail electricity market code and, therefore, a legislative amendment, expected to take place following the forthcoming general elections, to be held in May, according to a latest update offered just days ago by Prime Minister Kyriakos Mitsotakis.

 

 

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.

April electricity tariffs to fall by at least 2 cents per KWh

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Electricity supplier tariffs for April, due, by law, to be announced by midnight, will be at least 2 cents per KWh below levels set for March, while a number of independent suppliers may even offer greater reductions of as much as 5 cents per KWh, sources have informed.

Recently introduced law requires the country’s electricity suppliers to announce their retail tariffs for each forthcoming month by the 20th of every preceding month.

The anticipated tariff reductions for April will not result in lower energy costs for users, but the government, which has been providing subsidies – through the Energy Transition Fund – during the energy crisis to maintain residential tariffs at between 15 and 16 cents per KWh, will be able to decrease its outlay on subsidies while keeping tariffs at the desired level.

Lower wholesale electricity prices and a current de-escalation of natural gas prices in international markets are the key reasons behind the anticipated reduction in electricity tariffs.

Intraday market electricity prices during the first half of March were approximately 20 percent less than a month earlier and nearly 55 percent below prices recorded in December.

Windfall tax formula chosen for electricity suppliers

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The energy ministry has decided on a universal profit margin to be applied to all  electricity suppliers, along with individualized cost calculations for a windfall tax formula, proposed by RAE, the Regulatory Authority for Energy, covering earnings from August through October in 2022.

Several cost factors will be taken into account when calculating sums to be subject to the extraordinary windfall tax, including operating costs, bad debt resulting from unpaid power bills, and the burden of hedging – for companies that engage in hedging.

The difference between nominal tariffs charged by suppliers each month and their respective average cost of acquiring electricity from the domestic wholesale market, including balancing costs, will be calculated. Then, a reasonable margin of activity will be deducted from the amount.

The resulting figure, in euros per MWh, will be used to calculate each company’s increased cash flow from supply of electricity to customers. Excess revenues will be determined from these increased inflows by subtracting each company’s hedging cost for the month.

Once the windfall amounts have been calculated, electricity suppliers will need to make immediate payments covering 60 percent of their respective totals, while the other 40 percent will be expected at a latter date.

Suppliers, traders reject PPC lignite power packages for ’23

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Energy retailers and traders have shunned lignite-fired electricity packages offered by power utility PPC through the energy exchange for the first, second and third quarters of 2023, as part of an antitrust agreement between Greece and the European Commission, energypress sources have informed.

Commenting on the lack of interest in these packages, market analysts noted they were not surprised given the high risk involved and the financial pressure felt by energy retailers as a result of the energy crisis.

The agreement, designed to end PPC’s monopoly in the lignite sector, required the power utility to offer, by October 31, lignite-fired electricity packages for Q1, Q2 and Q3 in 2023, their quantities representing 40 percent of lignite electricity production in the corresponding quarters this year.

According to the agreement, shaped by a legislative revision brought forward by the energy ministry, PPC must also offer lignite-fired electricity packages for Q4 next year by January 31, 2023.

Greece has submitted a request to the European Commission to have the antitrust agreement abolished. If not scrapped, the measure appears set for major revisions.

Unpaid power bills rise in absence of consumer supplier switch restrictions

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Electricity retailers are facing a growing amount of overdue electricity bills, prompted by higher energy prices and the absence of market rules that could prevent consumers with energy bill arrears from switching suppliers.

Suppliers lost the right to order power supply cuts for customers switching suppliers and leaving behind unpaid amounts following a decision delivered by the Council of State, Greece’s Supreme Administrative Court, approximately two years ago.

Higher energy prices have made it increasingly difficult for households and businesses to keep up with their energy bill payments, suppliers have noted, adding they are offering installment-based payment options in an effort to minimize unpaid receivables.

Since the supreme court’s decision two years ago, RAE, the Regulatory Authority for Energy, has proposed a framework offering protection to suppliers but the energy ministry has yet to take any legislative action. Next year is an election year in Greece.

In addition, last July, the ministry abolished a penalty for early withdrawals by customers from their agreements with electricity companies, the objective of this initiative being to pressure suppliers to lower their electricity price offers. Instead, it has enabled strategic defaulters to freely switch power suppliers, leaving behind unpaid amounts.

‘Windfall tax must take into account month’s likely losses’

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Electricity suppliers are reacting against a new windfall profit tax, to be applied on a quarterly basis without taking into account end-of-year financial figures and possible losses.

Many of the country’s electricity suppliers have forwarded financial data such as volume sales, customer arrears and bad debt expected by RAE, the Regulatory Authority for Energy, still awaiting data from the remainder of suppliers before it establishes a profit margin recommendation, linked to a new windfall tax. The authority plans to forwards its proposal to the energy ministry next week.

RAE will take into account the financial data forwarded by suppliers to establish a windfall tax rate for an initial first three-month period, covering August 1 to October 31.

According to the new tax measure, suppliers will need to pay 60 percent of any resulting windfall profit tax by December 23, meaning the measure’s details will need to be finalized within the next two weeks.

Some of the country’s electricity suppliers could incur operating losses in December as a result of rising wholesale electricity prices and a recently introduced rule requiring them to announce their prices for each ensuing month by the 20th of the preceding month.

Suppliers have announced retail electricity prices ranging from 28 to 38 cents per KWh for December. Those pursuing more aggressive pricing policies stand to incur losses this month as a result of the latest rise in energy prices.

 

Suppliers want power cuts for roving consumers with arrears

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Electricity suppliers are pressuring authorities for measures protecting them against energy-bill debt left behind by consumers switching to other suppliers.

Two industry associations, ESAI/HAIPP, the Hellenic Association of Independent Power Producers, and ESPEN, the Greek Energy Suppliers Association, are believed to have forwarded proposals to the energy ministry for measures protecting electricity suppliers against consumers on the run.

The energy ministry launched a related consultation procedure approximately one month ago.

According to sources, electricity suppliers want the energy ministry to establish a law permitting them to cut power supply to customers who have switched to other suppliers for up to 90 days following their respective moves, if they still owe amounts to previous suppliers.

This rule would require consumers who have switched suppliers, leaving behind outstanding electricity bill amounts, to settle arrears within a 90-day period, either through full payments or installments, or have their electricity supply cut.

Electricity suppliers have been under increased pressure as a result of a growing amount of unpaid electricity bills during the energy crisis as well as the absence of rules countering consumers who rove from one supplier to another as a means of avoiding electricity-bill payments.

Suppliers face December losses as wholesale power prices rise

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The great risk and uncertainty faced by electricity suppliers on a monthly basis as a result of being required to forecast wholesale prices for each forthcoming month in order to calculate and announce their respective retail prices for the one-month period has come to the fore.

At present, the overwhelming majority of electricity retail prices set for December by the country’s suppliers are below wholesale price levels expected for the rest of the month as a result of a price surge over the past few days, meaning suppliers stand to incur losses this month.

Under recently introduced rules, electricity suppliers in Greece are required to announce their respective retail prices for each forthcoming month by the 20th of the preceding month.

Suppliers had also faced unfavorable market conditions in August, when the pricing rule was introduced. However, losses incurred that month were smaller than those expected in December.

Just three electricity suppliers have announced December retail prices that stand a chance of being above the month’s wholesale price levels, now expected to reach levels of about 385 euros per MWh.

Month-to-month pricing obligation resulting in market ‘regression’

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A leading Greek energy market authority has expressed strong reservations about the financial repercussions of a new pricing model imposed last July on electricity suppliers, concluding the new system will ultimately result in market regression, while also questioning the new system’s legal standing.

These reservations and concerns were expressed by Miltos Aslanoglou, general manager of ESPEN, the Greek Energy Suppliers Association, at the 2nd Energy Law Forum.

Under new market rules, electricity suppliers in Greece are required to announce each forthcoming month’s electricity prices by the 20th of the preceding month.

Measures decided on by authorities for implementation should be thoroughly designed to be effective under various conditions, not just specific circumstances, the ESPEN official stressed.

Had the pricing mechanism been introduced sooner, such as last April, when electricity prices were surging, the country’s electricity suppliers would most probably have been threatened by bankruptcy or even gone out of business, Aslanoglou contended.

Windfall earnings of suppliers, he noted, have created a strange combination where suppliers are spending funds from the previous month to service their portfolios for the next month at a time when market prices have fallen below projected levels.

Such a combination of events can only be circumstantial, the ESPEN official noted, pointing out windfall profits should be limited but based on the financial statements of companies, not pricing regulations.

 

 

Consumer moves to new suppliers down 20% in October

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Consumer switches from one electricity supplier to another dropped by 20 percent in October, compared to the equivalent month a year earlier, latest data made available to energypress has shown.

Just over 80,000 consumers switched electricity suppliers in October, down from approximately 100,000 in the same month a year earlier.

The number of consumers who changed supplier in October was also lower compared to September this year, when 93,500 consumers shifted, a month-to-month drop of nearly 14 percent.

For the 10-month period between January to October, consumer shifts were up marginally, 2.5 percent, compared to the equivalent period a year earlier.

These latest figures indicate consumers are increasingly hesitant to move from one supplier to another, following more liberal behavior in the past.

Under recently introduced new rules, suppliers are required to announce prices for each forthcoming month by the 20th of the preceding month.

Monthly revisions of offers appear to be subduing the mobility of consumers, apprehensive of price changes from month to month.

December power prices to fall 20%, windfall tax ‘lacks clarity’

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Most of the country’s electricity suppliers are preparing to announce December retail electricity prices of between 32 and 35 cents per MWh, down 20 percent compared to November, a reflection of lower natural gas prices at the Dutch TTF hub in recent weeks.

Some suppliers are set to go as low as just over 30 cents per MWh, the lowest retail power prices have been since August, when new rules were introduced requiring suppliers to announce prices for each forthcoming month by the 20th of the preceding month.

Given this requirement, helping consumers make price comparisons, suppliers must announce their December prices by midnight Sunday.

The anticipated price reduction will not result in lower prices for consumers. But the state, subduing the cost of retail electricity at 15 to 16 cents per KWh through subsidies, will benefit as it will be able to maintain this desired price level by contributing less.

Like in November, no state budget money will be needed for energy subsidies offered by the government, meaning it will have some leeway to subsidize other sectors, most probably auto fuel, once again on the rise.

On another front, suppliers have expressed complaints about a new windfall profit tax, set to be introduced over successive three-month periods, beginning with August to October. Suppliers protest the initiative’s formula lacks clarity and has increased the complexity of cost calculations.

Power suppliers windfall profit recovery plan proceeding

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The energy ministry has just submitted to parliament an amendment for a mechanism designed to recover windfall earnings gained by electricity suppliers, initially from August 1 to October 31 this year.

The mechanism will be implemented repeatedly over additional three-month periods for as long as it is needed.

A universal windfall earnings level will be set as a benchmark. Earnings exceeding or falling below this level from month to month will be offset for each three-month period, according to the plan.

Electricity suppliers found to have benefited from windfall earnings will need to swiftly return 60 percent of amounts determined by the new formula, while payment of the remaining 40 percent will be expected at latter dates.

For the measure’s initial three-month period, electricity suppliers will need to return 60 percent of windfall earnings by December 23.

The energy ministry notes it has taken into account concerns raised by suppliers over factors shaping actual cost of electricity supply.

 

Suppliers to set lower December prices, leeway for auto fuel subsidies

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Electricity suppliers are set to announce their lowest retail prices since the introduction of new pricing rules last August when they announce this coming December’s prices on November 20, barring unexpected market developments over the coming days.

The new rules require electricity suppliers to announce each forthcoming month’s prices by the 20th of the preceding month.

Retail electricity prices in November fell to less than 40 cents per KWh for the category concerning low-voltage consumption of up to 500 KWh per month, a bracket carrying the bulk of consumers. December’s prices are expected to fall even lower, to less than 35 cents per KWh.

This price reduction will not result in any benefits for consumers. But the state, keeping the cost of retail electricity at 15 to 16 cents per KWh, will benefit as it will be able to maintain this desired price level through smaller contributions.

Like in November, no state budget money will be needed for energy subsidies offered by the government, meaning it will have some leeway to subsidize other sectors, most probably auto fuel, once again on the rise.

Electricity subsidies will be entirely covered by windfall earnings of electricity producers injected into the Energy Transition Fund.

Electricity subsidies for December are expected to be trimmed to around 19 to 20 cents per KWh, which, under current conditions, would keep retail electricity prices at 15 to 16 cents per KWh.

 

 

Suppliers demand cost consideration ahead of extraordinary tax

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Electricity suppliers facing an extraordinary tax of 90 percent on windfall earnings between August and November argue the energy ministry, engineering the tax, should take into account hefty costs they have been prepared to shoulder as a means of subduing retail price levels for consumers.

The energy ministry, currently finalizing a formula for this tax, insists electricity suppliers have benefited from excessive earnings, especially in September and October, implying suppliers overpriced their electricity during this two-month period.

Suppliers, on the other hand, contend they are forced to purchase electricity in advance to protect themselves against fluctuating prices and are engaging in hedging activities as a result of being required, by law, to announce their retail prices for upcoming months by the 20th of each preceding month.

Hedging, as well as other business costs, should be taken into account before the extraordinary tax is imposed, electricity retailers have stressed.

Power suppliers oppose ‘faulty’ tax plan for windfall earnings

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Electricity suppliers have reacted against a formula the energy ministry appears to have settled with for an extraordinary 90 percent tax on windfall earnings.

Officials at electricity supply companies, contacted by enegypress, described the formula likely to be adopted by the energy ministry as hastily prepared with shortcomings, especially its dimension concerning the setting, universally, of reasonable price levels to be used to calculate windfall earnings.

A reasonable universal price level cannot be set as electricity supply companies each have unique profiles and different pricing policies, company representatives pointed out.

In any case, there are parameters in the equation that decisively shape the cost of each kilowatt-hour for supply companies, beyond what is objectively derived from the wholesale market.

The most decisive parameter is hedging, which supply companies are obliged to engage in when announcing price lists each month. Vertically integrated companies hedge mainly by locking in gas prices which they pay, regardless of whether prices subsequently fall or rise, while independent suppliers hedge by locking in prices and quantities of electricity from producers or international exchanges.

The energy ministry plans to bring to parliament, by the end of this month, an amendment for windfall earnings benefitting suppliers between last August and the current month.

 

Extraordinary tax on power supplier windfall earnings

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The energy ministry is preparing an amendment for an extraordinary tax of 90 percent on any windfall earnings gained by electricity suppliers since August, which it expects to submit to parliament by the end of November, sources have informed.

This extraordinary tax will be imposed on any windfall earnings made by electricity suppliers between August, 2022 and November, 2022.

Excess earnings will be calculated based on a reasonable monthly electricity supply price to be set for all companies. Earnings exceeding or not reaching resulting levels from month to month will be offset and the net sum will be subject to the 90 percent windfall tax.

This measure comes in addition to a number of other extraordinary tax measures introduced in the energy sector as the government seeks to raise revenues to ensure the continuation of electricity bill subsidies and safeguard state budget resources.

Officials are already moving ahead with another extraordinary tax of 90 percent on windfall earnings of electricity producers between October, 2021 and April, 2022, the aim of this measure being to raise 460 million euros.

Minor retail electricity market share changes in target model era

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The domestic introduction, just under two years ago, of the target model, aiming to integrate the wholesale electricity markets of all EU member states, has brought about little change in the market shares of suppliers.

Power utility PPC’s retail market share has contracted by just over 4 percent, from 66.33 percent in November, 2020, to 62.01 percent in September, 2022, a loss unequally divided between independent suppliers.

In September, 2022, PPC’s retail market share fell to 62.01 percent from 64.41 percent a month earlier, while, during the same period, the collective market share of independent suppliers increased from 35.59 percent to 37.99 percent.

During this one-month period, HERON rose to second place among the independent electricity suppliers with a market share of 6.8 percent, behind Protergia, a member of the Mytilineos group, whose market share rose to 8.65 percent in September from 7.2 percent in August.

Elpedison dropped to third place among the independent suppliers with a 6.54 percent share in September, a marginal rise from 6.49 percent in August.

NRG, which is ranked fourth among the independent suppliers, also experienced a marginal increase in its market share to 4.76 percent from 4.7 percent, as did fifth-placed Aerio Attikis, reaching 2.34 percent from 2.13 percent.

Debate, amid the energy crisis, is still going strong about the rules for consumer switches from one electricity supplier to another. An increased number of consumers are leaving behind unpaid electricity bills when switching suppliers, fresh market data has shown, prompting a supplier association to call for restrictions.

ESPEN wants power supply cuts for consumers on the move

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ESPEN, the Greek Energy Suppliers Association, wants power supply cuts for consumers with unpaid power bills even if they have moved to a new supplier, citing serious energy-related debt issues caused by consumers shifts from one supplier to another to avoid settlement of unpaid bills.

According to sources, suppliers have experienced soaring unpaid receivables in recent times, consumers taking advantage of flexible market terms enabling shifts from one supplier to another, even with unpaid bills. Under the current rules, suppliers cannot order supply cuts to consumers with arrears.

More than 50 percent of unpaid receivables concerns customers who have switched electricity suppliers, according to market estimates.

Working groups to seek solutions for electricity bill payment evasion

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Working groups formed by the energy ministry and RAE, the Regulatory Authority for Energy, to discuss measures aiming to prevent electricity consumers from switching suppliers, leaving behind unpaid power bills in the process, and also to stop consumers from exploiting a universal electricity supply service, covering the needs of black-listed consumers reported by suppliers for electricity-bill payment failures, will be discussed at a teleconference today.

A decision leading to the formation of these working groups to resolve the two issues was reached in late September at a meeting involving the energy ministry, RAE, and all the country’s electricity suppliers.

Recent market data showed an increasing trend in the number of households resorting to the universal electricity supply service.

It is provided by the country’s five biggest electricity suppliers, in terms of retail market share, who share the pool of old and new unwanted customers and provide the universal supply service, at a higher tariff.