Electricity suppliers are demanding a further reduction to a price ceiling proposed by RAE, the Regulatory Authority for Energy, for balancing market offers by gas-fueled producers, and, in addition, also want an upper limit of 3.5 euros per MWh imposed on compensation for this service.
This 3.5-euro compensation rate per MWh, which reaches approximately 5 euros per MWh when system-loss charges are added, is one of the highest in Europe, suppliers contend.
Suppliers also want electricity and balancing market cost limits to apply retroactively as of November 1, 2020 with returns of resulting amounts owed by the end of this accounting year.
Non-vertically integrated electricity suppliers have reacted strongly against sharply increased balancing market costs and far higher wholesale electricity prices since the launch of the target model’s new markets several weeks ago.
Three of the country’s non-vertically integrated electricity suppliers took part in public consultation staged by RAE, the Regulatory Authority for Energy, to present their objections and proposals, energypress sources informed. The procedure ended yesterday.
Energy minister Costis Hatzidakis’ recommendations to gas-fueled electricity producers for price restraint in the market have proven to be just partially effective, prompting RAE, the Regulatory Authority for Energy, to forward for public consultation restrictive measures, which, when legislated, will limit the levels of offers by producers in the balancing market.
Balancing market costs have risen sharply over the past six weeks, since the launch of target model markets, leading to elevated wholesale electricity prices that are now being passed on to the retail market, affecting consumers in the mid and low-voltage categories – households and businesses.
Sixth week target model market data made briefly available yesterday by power grid operator IPTO before being swiftly removed from the company website admittedly showed a de-escalation of price levels compared to unrealistically high levels reached in recent weeks, but, on average, these latest levels remained considerably high.
Taking this latest data into consideration, along with sharp price hikes recorded in the day-ahead market, the energy ministry is fully aware of the fact that electricity market prices could spin out of control if action is not taken.
The package of measures forwarded by RAE for public consultation is intended to restore market rationalization. It remains to be seen if these measures will prove effective.
Non vertically integrated electricity suppliers, hit hard by the increase in wholesale prices, are pushing for retroactive implementation of these upcoming restrictions.
RAE, the Regulatory Authority for Energy, will present for public consultation eight electricity supplier switching models used abroad following the rejection of a local version by the Council of State, Greece’s Supreme Administrative Court, and suppliers, energypress sources have informed.
This essentially means the entire process is beginning from scratch.
The models used abroad will be presented along with related proposals for comments and observations by electricity suppliers and any other interested parties, the objective being to reach consensus on a new set of supplier switching rules for the Greek retail electricity market.
Authorities will seek to shape a new model that will clamp down on serial electricity bill dodgers while also enabling free movement of punctual consumers from one supplier to another.
The previous model, adopted on September 1, was rejected late last month after being deemed faulty. It was marred by major obstacles, discouraging consumers to seek optimal solutions.
Contrary to the satisfaction being expressed by natural gas-fueled electricity producers over the target model’s new markets launched three weeks ago, electricity suppliers, especially those not vertically integrated, find themselves having to pay considerably higher prices for their electricity purchases, which has raised sustainability concerns and could also lead to higher electricity costs for consumers.
Balancing market prices have more than quadrupled, reaching levels of as high as 15 euros per MWh, compared to approximately 3 euros per MWh in the market system used prior to the launch of the target model markets.
This drastic increase has raised concerns among suppliers, who fear the higher cost will eventually need to be rolled out to consumers.
The balancing market’s additional cost for suppliers totaled 27 million euros in the first fortnight of November.
The effort to balance the system is costing consumers millions more, overall, suppliers have warned, noting that, contrary to other European markets, initiatives taken to further liberalize the electricity market are raising rather than lowering price levels for consumers in Greece.
RAE, the Regulatory Authority for Energy, is closely monitoring the situation. The authority believes it is still too early to reach any safe conclusions on the balancing market. If, however, the current situation stabilizes into a permanent condition, RAE will intervene with corrective action, it has informed.
Any nervousness felt by producers over the target model’s new markets ahead of their November 1 launch are swiftly being quelled by rational trading results. On the contrary, non-vertically integrated suppliers have experienced cost increases and, as a result, are concerned about their company prospects.
Although it still too early to tell, electricity producers believe day-ahead market prices are reflecting actual conditions, rising with shortages and falling with any oversupply.
Day-ahead market prices began at 60.44 euros per MWh on November 11, fell as low as 41.11 euros per MWh on Saturday and rose to 68.36 euros per MWh for today.
These price levels for the day-ahead market, known as the System Marginal Price under the previous system, are regarded as being at rational levels.
Producers have also expressed satisfaction over the balancing market, a largely unknown entity prior to the target model’s launch. Prices have been high, enabling units with flexibility to ensure solid earnings.
Day-ahead market prices are projected to fall, which would subsequently limit electricity imports and require domestic power stations to operate for longer hours.
Higher earnings for producers mean greater costs for suppliers. Non-integrated suppliers are concerned about their prospects under such conditions.