Suppliers pressured by partial recovery of public service sums

Distribution network operator DEDDIE/HEDNO has, since April last year, been partially covering monthly public service compensation (YKO) reimbursments entitled by the country’s electricity suppliers, a shortfall putting their budgets under pressure.

This deficit is expected to widen further over the coming months without any specific solution yet in place.

Electricity suppliers are recovering an average of between 60 and 65 percent of amounts they should be receiving, energypress sources have informed.

The public service compensation special account’s revenues have decreased as a result of a drop in wholesale electricity prices and retail electricity tariffs, but outlays subsidizing electricity used by consumers on the country’s non-interconnected islands and by low-income households have remained steady.

The country’s public service compensation special account entered deficit territory for the first time in April last year, and, as a consequence, as foreseen by sector regulations, DEDDIE/HEDNO has, over the past 11 months, been asking electricity retailers to partially cover amounts they should be receiving for public services. This essentially means electricity suppliers are financing public services with their own capital.

Consequently, respective amounts owed to suppliers are adding up to tens of millions of euros, a significant additional burden on their finances.

The public service compensation special account ended 2023 with a deficit of roughly 300 million euros, a level expected to be repeated this year.

The energy ministry is promoting a plan to divide this deficit into three sections so that it may be dealt with over as many years, beginning this year until 2026. The state budget would take on the biggest share, according to this plan, being discussed by the energy and national economy and finance ministries.

 

Net-billing seen replacing net-metering following EC reaction

The energy ministry is believed to be considering to abolish net-metering for self-production and replace it with a net-billing formula following objections raised by the European Commission, promoting the latter approach as most appropriate for self-consumption.

Greece’s ongoing PV support program subsidizes further penetration of net-metering systems in the domestic sector.

The energy ministry, currently examining market details in order to decide on how to react to the Commission’s criticism of the country’s support plan, is likely to abolish net-metering imminently and instead extend net-billing to domestic self-consumption systems with a production capacity of up to 10 KW, as well as commercial and agricultural PVs with capacities of up to 100 KW.

Should this direction be taken, the ongoing PV Stegi support program for roof-mounted PVs will soon be discontinued, March 31 believed to be a date under consideration. It would be followed by the announcement of a corresponding support program based on a net-billing formula.

Both net-metering and net-billing compensate solar-system owners for transferring electricity to the grid when their panels overproduce, but the ways the two systems compensate differs.

Net metering credits equal the retail electricity rate paid by customers for electricity. On the contrary, net billing credits equal the wholesale rate electricity companies pay for electricity.

Brussels has taken the side of protesting suppliers, including in Greece, as, under the net-metering formula, energy offsetting is essentially being conducted at their expense given that excess generation is injected into the grid at nighttime hours of low wholesale prices, well below higher energy prices in the evening hours, when customers meet most their energy needs.

Mytilineos overtakes PPC as leading high-voltage supplier

The Mytilineos group’s Protergia energy supply company has overtaken power utility PPC in the high-voltage category to become the new market leader, in this category, latest data issued by power grid operator IPTO covering January has shown.

Overall, for all categories combined, PPC shed nearly 3 percentage points in January, ending the month with a market share of 52.84 percent, down from 55.62 percent in December.

Protergia gained ground in all categories combined to capture second place in January with a market share of 14.65 percent, up from 9.19 percent in December. This rise has been mainly attributed to Mytilineos group member Aluminium of Greece’s switch from PPC to Protergia.

Heron was ranked third in all categories combined with a market share of 10.64 percent in January, down slightly from 10.76 percent in December.

In the medium-voltage category, PPC’s market share contracted to 34.7 percent in January from 36 percent in December, while Protergia and Heron both achieved gains. Heron’s market share in this category rose from 16.8 percent to 17.4 percent, while Protergia’s market share increased from 16 percent to 17.1 percent.

As for the low-voltage category, PPC shed just a mild fraction of its still-dominant market share, while Protergia was the big gainer, leaping nearly 1.5 percent, from 7.7 percent to 9.1 percent.

Overall electricity demand in Greece rose by 6.62 percent in January, 2024 compared to a year earlier, the IPTO data showed.

Also, renewable energy captured a 50.6 percent share of the country’s energy mix in January, followed by gas-fueled production, providing 41 percent of the month’s total, and hydropower, at 8.4 percent, the data showed.

 

Suppliers’ windfall earnings estimated to reach €200m

Electricity supplier windfall earnings between August, 2022 and the end of 2023, the period during which energy-crisis measures were implemented, are expected to reach roughly 200 million euros, RAAEY, the Regulatory Authority for Waste, Energy and Water, has estimated.

The exact sum cannot yet be finalized as a couple more factors still need to be taken into account.

Power utility PPC still needs to provide RAAEY with related figures concerning the final quarter of 2023, while distribution network operator DEDDIE/HEDNO must forward a “normalization coefficient” concerning megawatt-hour rates suppliers are charged each month based on declarations they submit to the energy exchange.

The bigger the normalization coefficient to be forwarded by DEDDIE/HEDNO to RAAEY, the lower the resulting windfall earnings will be.

Suppliers will need to make windfall-return payments over two installments, the first of which will represent 60 percent of their respective amounts.

The sums to be received, it has been decided, will be allocated almost exclusively to partially servicing debt owed by municipal water supply and sewerage companies (DEYA) to power utility PPC.

HEDNO retroactive clearance amounts put suppliers under pressure

The country’s independent electricity suppliers currently face a significant retroactive cost burden after having recently received final clearance requests for settlement of amounts owed to distribution network operator DEDDIE/HEDNO, which, in the case of the larger companies, exceed 10 million euros.

A normalization factor calculated by DEDDIE/HEDNO has resulted in a significant discrepancy between the quantities of electricity paid by suppliers while the normalization factor was applied in the first half of 2022, and the quantities determined now, based on the final settlement.

Additional kilowatt-hours will be charged at wholesale prices of the time, which are exorbitant, given that the energy crisis was at its peak in 2022. As a consequence, this will put some suppliers under financial pressure.

According to supply company officials, delays in the procedure for final settlements, beyond a prescribed one-year deadline, are also causing issues. Cases concerning the first half of 2022 should have been completed by the first half of 2023, they noted.

This delay effectively means that amounts requested cannot be recovered from consumers who actually consumed the energy in question. Moreover, many consumers may have changed supplier in the process.

 

 

Electricity suppliers set to offer new shorter-term fixed tariffs

The majority of the country’s electricity suppliers are reportedly set to announce new fixed tariffs as soon as RAAEY, the Regulatory Authority for Waste, Energy and Water, makes an official announcement, expected today, authorizing 6 and 8-month fixed tariffs, in addition to one-year fixed tariffs already offered through Greece’s recently introduced new tariff system.

In the lead-up to the RAAEY announcement, the energy ministry is expected to clarify, to the authority, details of related ministerial decision that was deemed to contain certain ambiguities.

Competition between suppliers is expected to intensify for fixed tariffs, growing in appeal to consumers who view anticipated rates at levels of as low as 11 cents per KWh over shorter-term periods as an attractive and secure option.

Under the latest revisions, suppliers will be able to include termination clauses in their terms for fixed tariffs.

A color-coded tariff system was introduced in Greece on January 1 to simplify the price-comparing ability of consumers.

Fixed tariffs have been dubbed blue tariffs, while variable tariffs are offered as either yellow or green tariffs, the former representing a lesser risk for suppliers as their levels are set at the end of each month.

Fixed-tariff rivalry intensifying, appealing rates expected

Competition between electricity suppliers is set to intensify in the fixed-tariff category following the energy ministry’s decision to slash the required minimum duration of fixed tariffs to six months from 12 months, as was initially set under the country’s new tariff system, launched January 1.

Suppliers are expected to offer appealing fixed tariffs of 6, 8 and 12 month durations when they announce their latest offers tomorrow. Fixed tariff rates are expected to reach roughly 11 cents per KWh, possibly even lower.

Besides fixed tariffs, or blue tariffs – according to the new color-coded tariff system designed to simplify price-comparing ability – consumers may also choose from variable green tariffs and variable yellow tariffs, the latter representing a lesser risk for suppliers as their levels are set at the end of each month instead of the beginning.

Latest fixed-tariff rates to be announced tomorrow by suppliers are most likely to dominate customer attention as they are expected to be set at levels below those of variable green tariffs, which should range between 12 and 14 cents per KWh, and lower than pre-energy crisis tariffs offered by suppliers.

If the wholesale electricity market continues along its downward trajectory, at levels below 30 euros per MWh, then variable green tariffs to be offered in March should fall even lower than the anticipated 11 cents or so per KWh anticipated for fixed tariffs in February.

Meanwhile, RAAEY, the the Regulatory Authority for Waste, Energy and Water, has set a February 12 date for a hearing concerning energy supplier Fysiko Aerio’s 8-month fixed tariff, offered January 1, when the minimum duration for such tariffs was still 12 months.

Though it is seen as less of an issue now that the ministry has halved the 12-month minimum requirement for fixed tariffs and other suppliers are set to join in with shorter-term fixed tariffs, a fine for Fysiko Aerio has not been ruled out.

PPC dominating low-voltage supply despite greater customer outflow

Power utility PPC remained the dominant low-voltage supplier up until November, 2023, despite shedding an increased number of customers in the three months leading to the year’s second-last month, data published by RAAEY, the Regulatory Authority for Waste, Energy and Water, has shown.

Consumers using a total of 6,500 low-voltage power meters left PPC during the seven-month period from February 1, 2023 to the end of August, but this outflow tripled to 18,500 power meters over the three-month period between September through November.

Independent energy supplier Zenith gained the most customers over the ten-month period from February through November, adding 45,000 customers to its list, 19,300 of these in the latter three months. Fysiko Aerio followed with 18,900 new customers during this ten-month period, while Elpedison was next with 13,200 additions.

Protergia continued to lead the pack among the independent suppliers, boosted by its takeover of Watt & Volt. Combined, the two companies shed a small number of customers in 2023, compared to the previous year.

The country’s universal supply service – or five biggest electricity suppliers, in terms of retail market share, required by law to cover the needs of black-listed consumers who have been shunned by suppliers over payment failures – remained relatively steady in 2023, losing just 1,100 customers. It was ranked seventh, overall.

 

Green tariffs to fall 2-15% in Feb, shorter-term fixed tariffs

Electricity suppliers are expected to announce reduced variable green tariffs later this week ranging between 2 and 15 percent, for February, compared to the current month’s levels.

February’s electricity tariffs, set to be announced by suppliers on Thursday, are projected to range between 12 and 14 cents per KWh, a forecast based on January’s average wholesale electricity price and the assumption that suppliers will maintain their discounts at current rates.

Wholesale gas prices have remained below 30 euros per MWh over the past few weeks, which has resulted in a lower market clearing price for January, compared to December.

Suppliers who had announced variable green tariffs of slightly over 14 cents per KWh for January are expected to lower these tariffs for next month by one or two cents per KWh.

Under the country’s new electricity tariff system, introduced January 1, suppliers are entitled to revise their discounts to variable green tariffs on a monthly basis, at the beginning of each month.

Besides variable green tariffs, the new tariff system also includes variable yellow tariffs, which represent a lesser risk for suppliers as their levels are set at the end of each month, as well as fixed blue tariffs.

The overall offering’s fixed blue tariffs are expected to become more appealing for consumers in February as a result of a revision that will lower their duration to at least six months, down from at least 12 months, as was initially set.

A ministerial decision on this decision is expected today, enabling the revision’s implementation on time for February.

RAAEY working on new version of ‘energy tourism’ restrictions

Residential electricity consumers will be permitted to change as many as three suppliers without having previously settled older energy bills or made installment-based payback arrangements, while business consumers will be set a two-supplier limit, according to a latest third version of upcoming rules intended to prevent consumers from abandoning suppliers despite owing electricity-bill amounts, a phenomenon locally dubbed “energy tourism”.

These limits for residential and business consumers will be applied retroactively, beginning January 1, 2020.

The new rules will also include a debt-flagging system on a collective platform maintained by distribution network operator DEDDIE/HEDNO, so that suppliers may be aware if prospective customers have been on the run.

Also, punctual customers will, as a reward, face less red tape if wanting to switch electricity suppliers.

RAAEY, the Regulatory Authority for Waste, Energy and Water, is now working on the latest revisions to the plan, which, once completed, will be forwarded to the energy ministry for implementation.

 

Growing number of consumers switching to blue, yellow tariffs

The number of low-voltage electricity consumers agreeing to switch from special green tariffs to variable yellow tariffs and fixed blue tariffs has increased since the country’s new tariff system was introduced January 1.

In the lead-up to the new tariff system’s launch, consumers had until December 31 to express specific tariff preferences or be automatically transferred, by their supplier, to the special green tariff on the changeover date.

Electricity suppliers have intensified their promotional efforts, mostly through call centers, in an effort to convince consumers to switch to either yellow or blue tariffs.

This overall activity has increased competition between suppliers, as had been intended by the energy ministry when it drew up the new tariff plan.

Some 20 percent of consumers have now switched to either yellow or blue tariffs.

Though yellow and green tariffs are both variable tariffs, the former represent a lesser risk for suppliers, as their levels are set at the end of each month.

On the contrary, suppliers set their green tariff levels at the beginning of each month, and, as a result, gamble on wholesale electricity price levels for the month ahead.

Simpler supplier switching limited to punctual consumers

The energy ministry, preparing action to simplify the consumer-switching procedure from one electricity supplier to another by limiting bureaucracy as a means of boosting mobility and competition, intends to reserve this convenience for customers without arrears.

On the contrary, customers owing electricity-bill amounts will continue to face all existing bureaucracy should they wish to change supplier.

Limitations making transfers to other electricity suppliers difficult will apply to all consumers with arrears, not just those marked out on an upcoming and collective debt-flagging system for all suppliers to see.

The ministry needs to strike a right balance between freedom and constraint as too much leeway for consumers could prompt a further increase in the number of consumers abandoning suppliers despite owing electricity-bill amounts, a phenomenon locally dubbed “energy tourism”.

As part of the wider effort to boost mobility and competition, authorities have just launched a price-comparison chart listing new variable tariffs, dubbed green tariffs, offered by all suppliers as of January 1. These tariffs will be revised by all suppliers monthly, at the beginning of each month.  (https://invoices.rae.gr/oikiako/)

Ministry to limit red tape for consumers changing supplier

The energy ministry is seeking to simplify the procedure for consumer switches from one electricity supplier to another by limiting bureaucracy as a means of boosting mobility and competition.

The ministry is looking to reduce the amount of paperwork consumers are required to sign when entering into contract with suppliers, including authorizations, affidavits, as well as fine print added to contracts by legal offices representing suppliers.

Much work is needed as the effort is still at a preliminary stage. The ministry needs to tread carefully to prevent any side affects. It must strike a right balance between freedom and constraint as too much leeway for consumers could prompt a further increase in the number of consumers abandoning suppliers despite owing electricity-bill amounts, a phenomenon locally dubbed “energy tourism”.

To combat this trend, the ministry is preparing to introduce a debt-flagging system that would help protect suppliers against runaway consumers.

Looser electricity market rules implemented over the past couple of years have resulted in a sharp rise of unpaid receivables, up 500 million euros over the past year.

Under the new collective debt-flagging data system, consumers owing amounts to previous suppliers will be marked out for all suppliers to see.

 

RAAEY to provide suppliers with green tariff guidelines

RAAEY, the Regulatory Authority for Waste, Energy and Water, has decided to prepare guidelines on new green tariffs, set to be introduced January 1, for the country’s electricity suppliers in order to clear up certain ambiguities that have arisen.

Electricity supply company representatives raised a series of questions regarding the implementation of new tariffs during a teleconference with RAAEY yesterday. Energy ministry officials also took part.

One of the ambiguities identified during yesterday’s session concerns the type of discounts electricity retailers will be permitted to offer to consumers and the timing of their announcements.

Another issue raised by suppliers during yesterday’s teleconference concerns how tariff charges will be required to be imposed should customers with existing supply agreements request to continue with their existing agreements as of January, 2024, when the green tariffs will be introduced.

The new green tariff will be introduced January 1 and be implemented automatically, for all consumers, unless they formally object and choose variable tariffs, dubbed yellow tariffs.

 

New green tariffs, arriving January 1, at normal levels

New green tariffs set to be introduced January 1, when universal subsidies for electricity bills will be lifted, are at normal price levels, tariff announcements made by suppliers on Friday have indicated.

However, unfavorable price developments in international markets would push up these price levels along with Greece’s day-ahead market price levels.

Given Friday’s announcements by electricity suppliers, new green tariffs would, in most cases, be lower than their basic products offered in December, if Νovember’s market clearing price of 105.4 euros per MWh were to remain unchanged, energypress research on the new green tariffs has shown.

Electricity retailers have warned green tariffs will likely cost more than variable tariffs, categorized as “yellow” tariffs, and are already encouraging customers to choose variable tariffs as a lower-cost option.

The new green tariff will be introduced January 1 and be implemented automatically, for all consumers, unless they formally object and choose the variable yellow tariffs.

Suppliers set to announce green tariff formulas today

The country’s electricity suppliers are expected to announce today their formulas for green tariffs, being introduced as of January 1, when energy-crisis measures will be lifted, as well as their basic supply charges.

Suppliers will factor in discounts and profit margins to their green-tariff formulas by the end of December so that they may be able to announce their finalized green tariffs by January 1.

Consumers will be able to make green-tariff level comparisons by viewing a price chart to be uploaded by RAAEY, the Regulatory Authority for Waste, Energy and Water, on its website. This chart will be updated monthly.

As of tonight, electricity suppliers will need to post, at highly viewable website positions, their formulas for the new green tariff, accompanied by prices of the following basic rates: The basic supply price, to remain fixed for a six-month period, from January to June, 2024; upper and lower price limits, as well as an “A” factor, adjusting the effect of the average market clearing price and, into which, each company will incorporate its risk margin.

The task is extremely challenging, one company official has pointed out, explaining that, in order to arrive at a final formula, his company needed to compare countless combinations of the aforementioned factors.

Electricity retailers, warning green tariffs will cost more than variable tariff, categorized as “yellow” tariffs, are already encouraging customers to choose variable tariffs as a lower-cost option.

The new green tariff will be introduced January 1 and be implemented automatically, for all consumers, unless they formally object and choose the variable yellow tariffs.

 

Suppliers recommend variable tariffs as lower-cost option

Local electricity retails are encouraging customers to choose variable tariffs, categorized as “yellow” tariffs, as a lower-cost option, instead of a new green tariff that will be introduced January 1 and be implemented automatically, for all consumers, unless they formally object and choose the variable yellow tariffs.

Suppliers have just begun informing customers, in writing, on new electricity tariffs to come into effect January 1, when subsidized electricity, a measure introduced during the energy crisis, will no longer be offered.

Legal representatives of supply companies contend variable yellow-category tariffs will be cheaper than the new green tariffs set to be introduced, adding that the variable tariffs come with safety measures preventing extreme price fluctuations.

 

RAAEY to introduce energy ombudsman for complaints

RAAEY, the Regulatory Authority for Waste, Energy and Water, plans to introduce an energy ombudsman by the end of the year, energypress sources have informed, in response to a stream of customer electricity-bill complaints received in 2022, amidst the energy crisis. A large number of these complaints have not been addressed.

RAE will introduce an energy ombudsman, free of charge with swift action intended, in an effort to empower consumers and enhance transparency in the energy market.

Under the new plan, customers who remain dissatisfied by how their energy suppliers handle complaints will either be able to submit their complaints to RAAEY’s energy ombudsman or take legal action.

RAAEY signed up with a special registry for agencies offering alternative dispute resolution services a month ago as part of its preparations for the energy ombudsman service.

 

Higher green energy tariffs feared in post-crisis period

Consumers switching to green energy tariffs to be offered by suppliers as of the beginning of 2024 face the risk of being trapped in increasing electricity charges over an extended period, energy company officials have projected.

Given the formula to be applied for these special green-energy tariffs, it would be reasonable to expect them to rise in cost once energy-crisis measures are lifted at the end of the year.

Suppliers generally agree that a considerable number of consumers will switch to this special tariff, some putting the proportion at a dominant proportion of over 80 percent of their customers.

If it does prove to be more expensive than other available tariff options, customers will need a few months to realize and confirm this greater cost increase plus even more time to switch to lower-cost supply agreements.

Stricter switching, power theft rules headed for Parliament

The energy ministry plans to submit a draft bill of retail electricity market revisions to Parliament next week. The bill contains stricter rules aiming to prevent consumers with unpaid electricity bills from switching suppliers and counter electricity theft.

Consumers will not be able to move away from their electricity supplier if the supplier is the third power retailer at which they have accumulated overdue energy bills within a five-year period beginning January 1, 2020, according to the draft bill.

This obstacle will be combined with a debt-flagging system prepared by RAAEY, the Regulatory Authority for Waste, Energy and Water, energy minister Thodoris Skylakakis informed suppliers just days ago.

The retail electricity market revisions also include a single variable tariff formula that all electricity retailers will need to adopt and include in their tariff packages offered to customers as of January 1, 2024.

Speaking yesterday at the 27th National Energy Conference “Energy + Development”, an event organized by IENE, the Institute of Energy for Southeast Europe, the energy minister spoke of the very high cost to the system caused by electricity theft, estimating its cost at 400 million euros per year.

Rules against electricity thieves will become a lot stricter, while complicit electricians will have their professional licenses revoked, according to the new rules.

Power suppliers’ association holds crucial talks with ministry

ESPEN, the Greek Energy Suppliers Association, will push for swift government action that would finalize a series of pending electricity market measures at a meeting today with the energy ministry’s leadership.

The association, determined to reduce high unpaid receivables faced by electricity suppliers, is awaiting stricter user rules, including a time limit, for the country’s universal electricity supply service. It is offered as a last-resort solution by the country’s top five suppliers, based on market share, to black-listed household and business consumers who have been shunned by suppliers over payment failures.

ESPEN also wants the ministry to push through with plans designed to prevent consumers with unpaid electricity bills from switching suppliers without restriction.

The talks between the two sides will also include implementation details on the new retail electricity market rules, planned to come into effect January 1.

The revisions include the end of a freeze on indexation clauses, green tariffs, and a single variable tariff formula aiming to simplify price comparisons for consumers.

A legislative revision covering these revisions has been ratified in Greek Parliament, but a ministerial revision is still needed. It is expected to be delivered within the next few days, sources informed.

Electricity suppliers want clarity as they will need to inform customers of  upcoming market rule changes by December 1.

 

 

RAAEY plan tackling consumer switching set for consultation

A proposal prepared by RAAEY, the Regulatory Authority for Waste, Energy and Water, for revisions to Article 42 of the retail electricity market’s supply code as a means of countering supplier switches by debt-escaping consumers, while, at the same time, providing greater switching flexibility to punctual customers, is expected to be forwarded for consultation this week.

The adoption of a debt-flagging system as a collective data base identifying non-punctual customers for all suppliers to see is a key aspect of the new strategy. Unpaid receivables owed by roving consumers exploiting lax rules have risen to alarming levels.

The debt-flagging system will be color-based. Consumers with unsettled bills will appear highlighted in red in the system’s collective data base after have received a final warning on such action from their supplier, who, following this step, will be entitled to request supply cuts from the grid operator if overdue amounts remain unsettled or an installment-based payment schedules has not been established.

According to the RAAEY proposal, suppliers will maintain the right to redden former customers on the run for up to three months after they have fled to rival suppliers, but electricity-cut rights of suppliers against former customers will expire 12 months following their departures.

Electricity market measures to be announced next Wednesday

Energy minister Thodoris Skylakakis plans to announce, on November 1, details of imminent energy-cost measures intended to subdue retail electricity prices by intensifying competition through a single variable-tariff formula for all suppliers, who will remain free to set profit margins in accordance with their pricing policies, while also offering selective subsidy support to low-income households.

The single variable-tariff formula for all suppliers is also intended to offer consumers greater clarity by improving their price-comparing ability.

The ministry, expected to submit to parliament an amendment for the single variable-tariff formula any day now, believes its package of new measures, planned to be implemented January 1 in place of energy-crisis measures that included universal electricity subsidies and a freeze on indexation clauses, will help contain energy costs, despite the reactivation of indexation clauses and the widening Middle East conflict.

According to the plan, all electricity consumers will be automatically transferred to the new single variable tariff as of January 1, for 12 months, unless they opt, prior to this date, for any other supply deals offered by suppliers.

Electricity suppliers, convinced the single variable-tariff formula will not enable them to mitigate risk and also breach EU market rules, are already calling for changes to the plan.

In response, the ministry has noted suppliers will be free to set profit margin levels as they please. It has also pointed to a recent EU report highlighting the need for greater transparency in the Greek energy market.

Next Wednesday’s announcements by the energy minister will also include details on a new debt-flagging system designed to contain the high level of unpaid receivables in the country’s electricity market. The minister’s package of measures is also expected to contain an action plan addressing electricity theft.

Suppliers fear single variable tariff formula complications

Electricity suppliers fear a single variable tariff formula to be introduced by the energy ministry in January for all suppliers to apply before setting respective tariff levels depending on their profit-margin strategies, may create more problems than it could solve.

The ministry believes the introduction of a single variable tariff formula will intensify competition, helping subdue prices, and also help consumers make direct price comparisons, not possible amid the vagueness of the current system.

According to the plan, all electricity consumers will be automatically transferred to the new single variable tariff as of January 1, for 12 months, unless they opt, prior to this date, for any other supply deals offered by suppliers.

Barring unexpected developments, a relevant legislative revision will most likely be submitted to Parliament this week.

According to the plan, suppliers will announce variable tariffs on a monthly basis, at the beginning of each month. These tariffs will fluctuate, reflecting average wholesale electricity price levels of the previous month.

The single variable tariff formula will include a mechanism correcting high prices, through lower and upper limits set by suppliers.

However, market sources have expressed concerns, noting that, to hedge limits, suppliers will have to increase their own margins, which risks making them uncompetitive.

Power suppliers project sharp price rises if conditions persist

Domestic electricity prices will inevitably rise by up to 15 percent as of January – when energy-crisis measures are planned to be lifted, reactivating indexation clauses – if current unfavorable international trends continue, local electricity market officials has projected.

Upward trajectories of natural gas and CO2 emission right prices, as well as the danger of a further rise in already-elevated interest rates, are worrisome factors whose combined effect could push up electricity prices, one official pointed out.

In Greece, wholesale electricity prices have soared by 80 percent over the past three days. On Sunday, wholesale electricity was priced at 93.49 euros per MWh, rose to 127.75 euros per MWh yesterday, before reaching 168.43 euros per MWh today.

Worse still, these wholesale electricity prices have yet to factor in October’s sharp rise in the price of natural gas, up approximately 30 to 35 percent in the first half of the month, to a peak of 56 euros per MWh, as Greece’s wholesale electricity market factors in gas prices from a month earlier.

Natural gas holds the dominant share of Greece’s energy mix, at 43.35 percent, followed by renewables, well below with a 21.37 percent share.

Though still well below last year’s astronomical price levels, natural gas prices of as low as 30 euros per MWh, recorded early this month, now seem to be a thing of the past.

The Israel-Gaza war and threat of a wider conflict in the Middle East – a negative development that has already disrupted operations at Israel’s Tamar gas field, from where gas quantities are delivered to Egypt and processed into LNG for export to Europe – is already impacting prices.

Price levels have been hit even harder by last week’s discovery of damage to the Estonian-Finnish Baltic-connector gas pipeline and telecommunications cable.

As for CO2 emission right prices, they have skyrocketed to levels 500 percent higher than pre-energy crisis levels, reaching approximately 90 euros per ton and, according to analysts, are projected to remain elevated over the next three years.

RAAEY proposal adopted for suppliers’ windfall profit tax

The energy ministry has decided on a formula for a windfall profit tax on electricity suppliers concerning earnings between August, 2022 and June, 2023, adopting a recommendation by RAAEY, the Regulatory Authority for Waste, Energy and Water, that sets a price level of 25 euros per MWh, across the board, for all suppliers, as a fair price, energypress sources have informed.

A related ministerial decision could be issued within October. Once published, RAAEY will be able to officially commence calculating  windfall profits earned by electricity suppliers during the 11-month period.

The windfall tax formula will most likely be applied over three segments. The first would cover a five-month period from August to December, 2022, while two three-month segments, running from January to March, 2023 and April to June, 2023, would follow.

The tax measure could also be applied over one eleven-month period, but this is unlikely as such an option would require a legislative revision.

The choice of method applied will influence the level of windfall profits recovered. If applied over one eleven-month period, the measure would rake in approximately 250 million euros from all electricity suppliers.

If broken up into three segments it would result in a collection of roughly 275 million euros from all electricity suppliers.

‘Red status’ after two unpaid bills for debt-flagging system

A debt-flagging system being prepared by the energy ministry for the retail electricity market as a means of countering roving consumers who switch suppliers and escape from unsettled electricity bills would relegate consumers with two successive unpaid bills into a red zone, entitling suppliers to take action by requesting power supply cuts from the operator, the ministry appears to have decided.

Energy minister Thodoris Skylakakis held a meeting yesterday with officials from RAAEY, the Regulatory Authority for Waste, Energy and Water, and distribution network operator DEDDIE/HEDNO to discuss details of the debt-flagging system.

Consumers in the red-zone category would only be allowed to switch suppliers if their existing supplier refrains from disrupting their power supply.

Also, consumers would be removed from the red-zone category if they settle overdue amounts or begin servicing them through installment-based payback plans, according to the ministry’s plan.

The ministry is striving to finalize the plan’s shape as soon as possible as it aims to present it within October.

Over 30,000 consumers are believed to owe electricity-bill amounts to more than one supplier, according to ministry estimates.

Unpaid receivables, market officials estimate, have ballooned to approximately one billion euros. The sum has risen sharply since July, 2022, when consumers were given the freedom to switch suppliers even if owing amounts to previous suppliers.

Debt-flagging system needs more work, ministry decides

A debt-flagging system being prepared by the energy ministry for the retail electricity market as a means of countering roving consumers who switch suppliers and escape from unsettled electricity bills requires further development, the ministry has decided.

Details still needed to finalize the plan, part of wider revisions to the supply code, will be discussed at an energy ministry meeting on Thursday to involve representatives of RAAEY, the Regulatory Authority for Waste, Energy and Water, and distribution network operator DEDDIE/HEDNO, to manage the debt-flagging system.

DEDDIE/HEDNO has requested a limit to its responsibility for the system as the operator will have no way of cross-examining the validity of data posted by suppliers. This is one of the draft’s needed improvements that will be discussed at Thursday’s meeting.

The aim is to establish clear-cut rules on customer switching in order to protect suppliers, hit by a sharp rise in bad debt. Customer credibility will be signified through a color-based ranking system.

An additional meeting could be required next week. The energy ministry wants all revisions finalized within the next couple of weeks so that it can present an upgraded supply code before the end of October.

RAAEY demands notification on upcoming billing changes

Preparations by RAAEY, the Regulatory Authority for Waste, Energy and Water, for the retail electricity market’s return to post-crisis normality include a framework with rules requiring suppliers to fully inform consumers, both households and businesses, on changes that will be brought about to their supply agreements by the reactivation of indexation clauses as of January 1.

Suppliers will need to pre-notify consumers by November 1 on terms set to be introduced, including any revisions to older terms. Indexation clauses were suspended in August, 2022, when energy-crisis measures were introduced.

The RAAEY framework will also include a new tariffs sub-category for mixed products, or tariffs that will remain fixed for monthly consumption levels up to a certain limit before becoming variable from this limit upwards.

Debt-flagging system for electricity market ‘imminent’

A debt-flagging system to be made available to electricity suppliers as part of an effort to counter serial electricity-bill defaulters could be ready imminently, within the next month or two, officials at distribution network operator DEDDIE/HEDNO and RAAEY, the Regulatory Authority for Waste, Energy and Water, agreed during a meeting on Wednesday that included electricity supplier representatives as observers.

RAAEY presented a comprehensive plan for the development of a debt-flagging system, which DEDDIE/HEDNO officials ascertained could be ready for launch one to two months from now, sources informed.

However, DEDDIE/HEDNO clarified that it cannot take any responsibility for data to be posted on the debt-flagging system as it has no way of verifying its validity, the sources added.

As this data will be provided by electricity suppliers, establishing a transparent formula is crucial to ensure the operator will not be held accountable in the event that a consumer is erroneously marked as delinquent in the system due to a supplier’s mistake, and, as a result, suffers unjust repercussions without actually having outstanding debts.

Electricity suppliers are facing a surge in bad debts resulting from customers who opt to switch companies and leave behind unpaid bills, while just one in ten non-punctual consumers who have been blacklisted by suppliers and subsequently resorted to the country’s universal electricity supply service – offered, by law, by the top five suppliers – are paying fees for this service.