RAE, the Regulatory Authority for Energy, appears set to adopt changes proposed by electricity market players for the authority’s package concerning new electricity bill pricing rules, including an appeal by suppliers urging the authority to avoid imposing a 30 percent limit on a clause enabling them to increase or decrease prices in accordance with wholesale price swings.
The authority’s proposal for this 30 percent limit, announced on July 16, prompted considerable reaction from electricity suppliers, who warned it would stifle competition, adding the Greek energy exchange does not possess tools that can offset wholesale-related cost.
Electricity suppliers have incorporated clauses into their electricity bills enabling price adjustments in accordance with wholesale price level increases or decreases.
The imposition of a 30 percent limit, up or down, would inflict even greater financial pain on smaller electricity suppliers, protesting market players warned.
RAE’s revised rules, seeking to offer consumers greater electricity-bill clarity and price-comparing ability, will be forwarded for a follow-up consultation procedure, possibly as early as this Friday. Otherwise, the procedure is seen commencing within August.
RES market operator DAPEEP has published a list of the energy mixes of energy suppliers for 2020, showing which companies are pursuing the most eco-friendly policies.
The operator, in publishing the list, noted that electricity suppliers are obligated to supply consumers with information on their energy sources for the previous year, in clear and comparable fashion, as well as information on the environmental impact of their choices, or CO2 emission levels concerning electricity generation they market.
A series of electricity bill-clause revisions proposed by RAE, the Regulatory Authority for Energy, seeking greater clarity and price-comparing ability for consumers, have already prompted negative reaction from suppliers, expected to lodge their complaints, in writing, to the authority by Thursday.
In recent months, suppliers have been forced to activate electricity bill clauses as they have battled to cope with the impact of sharply increased natural gas prices in international markets as well as higher carbon emission right costs, all of which has led to elevated costs for consumers.
The authority has proposed a 30 percent limit on clause-related increases and decreases; the termination of fixed costs, noting that, unlike tariffs, directly comparable, fixed costs tend to cause consumer confusion as they can run for one-month or four-month periods; the termination of an early-withdrawal clause, which would stimulate greater consumer mobility; as well as electricity supply price inspections every three months, the objective being to counter temporary below-cost offers extended by some suppliers to lure customers.
In comments to energypress, supplier representatives contended that RAE’s proposed measures would stifle competition and restrict the shaping of offers made to consumers.
RAE is seeking to standardize electricity-bill offers, which would eliminate any leeway available to suppliers for flexibility in their offers, especially when concerning fixed costs, some supplier representatives stressed.
RES investors, especially from the solar energy field, but also wind energy, are engaging in talks with electricity supply companies and industrial enterprises to establish power purchase agreements (PPAs) for their future or under-construction projects as they anticipate a reduction in capacities at forthcoming RES auctions and even lower tariff prices than the low levels registered at the most recent auction.
This increased focus on PPAs highlights the major shift taking place in green-energy production as fixed tariffs, at auction, are gradually being phased out and the energy-exchange era is taking over.
RES producers need to establish contracts for the sale of their output in order to develop their projects as banks are not willing to finance such investments if potential earnings, at sufficient levels, have not been secured in advance.
No bilateral PPAs have yet been established, but the negotiations are continual and tenacious.
Potential RES producers have – since the previous RES auction – been willing to accept lower prices, proposing levels of as low as 40 euros per MWh attached with demands for shorter contracts, including five-year periods, sources have informed.
Market officials expect PPAs to start emerging over the next six months, noting that banks will play a decisive role in the price levels to be established as their project financing decisions will depend on profit margins presented by investors.
A new target model formula calculating discrepancy cost is proving effective as, in most cases, it is impacting the finances of electricity producers and suppliers when they deviate from distribution orders and loading plans, power grid operator IPTO has noted.
As a result, the discrepancy cost formula should, for the time being, continue to apply for both electricity producers and suppliers as it appears to be offering a balancing incentive, the operator has recommended.
IPTO’s proposal has been forwarded to public consultation, taking place until May 7, for a scheduled reassessment of factors concerning non-compliance charges following the target model’s recent launch.
Electricity suppliers will have the right to prevent consumers from switching supplier if owing two or more overdue power bills without having registered for any installment-based payback plan, according to a proposal forwarded by RAE, the Regulatory Authority for Energy, following two rounds of public consultation on the matter.
Suppliers will have the right to submit power supply cut requests to the distribution network operator DEDDIE/HEDNO for consumers owing at least two months of overdue and unattended power bills, according to the RAE proposal, which has received the backing of all electricity suppliers.
A debt-flagging system to blacklist customers behind on at least two electricity bills will also be incorporated into the measure as a collective system accessible by all suppliers and the distribution network operator.
In the event that consumers with overdue electricity bills register for installment-based payback plans with their supplier, then move to a new supplier but stop servicing the payback program, the previous supplier will have the right to request power supply stoppages, even for pending amounts as little as 50 euros, sources informed.
RAE will now need to relay its proposal to the energy ministry for a ministerial decision enabling a revision of the country’s electricity supply code.
RAE, the Regulatory Authority for Energy, has adopted, to great degree, proposals made by electricity suppliers intended to restrict supplier switching by consumers seeking to prevent payment of electricity-bill debt.
Following a first round of public consultation, the authority staged a supplementary round, publishing its resulting proposals for an end to such consumer switching practices.
RAE has proposed the imposition of upper limits on electricity-bill amounts owed by consumers, which, if exceeded, would prevent them from switching suppliers.
For low-voltage category household consumers, the upper limit proposed by RAE is 150 euros per four-month billing period. For businesses, also in the low-voltage category, the authority has proposed an upper limit of 200 euros per four-month billing period. A 1,000-euro upper limit on electricity bill amounts owed per four months has been proposed for medium-voltage consumers.
Consumers whose unpaid power bills exceed these upper limits would either need to settle their energy debt or commit to installment-based payback programs in order to switch supplier.
RAE has also proposed a debt-flagging system that would be collectively used by suppliers to blacklist consumers behind on electricity bills. The authority proposes a rating system that would grade consumers seeking to switch suppliers as “red” if near or over the aforementioned upper limits or “green” if energy debt settlement agreements have been reached.
Power supply cut measures have also been proposed by RAE for consumers owing electricity bill amounts.
The authority has proposed that these measures be implemented for a one-year period before being reassessed.
RAE, the Regulatory Authority for Energy, has requested power grid operator IPTO to calculate the financial impact of balancing market distortion costs since November’s launch of new target model markets.
RAE has since decided to impose restrictions on balancing market offers. These are expected to be published in the government gazette today or tomorrow, enabling their implementation three days after the date of publication.
RAE estimates it will have implemented the balancing market restrictions by the end of this week.
It remains to be seen if RAE’s request towards IPTO for a measure of the higher balancing market costs incurred by suppliers will result in retroactive returns for affected parties dating back to the early-November launch of the target model.
Non-vertically integrated electricity suppliers, severely impacted by the increased balancing market costs that resulted in higher wholesale market prices, are demanding retroactive rebates.
Balancing market costs remained elevated last week despite the introduction of a first round of balancing market restrictions decided on by RAE, the Regulatory Authority for Energy.
The total balancing cost was 9.82 euros per MWh between January 25 and 31, slightly lower than the level of 10.82 euros per MWh registered between January 18 and 24, according to data provided by IPTO, the power grid operator.
Non-vertically integrated electricity suppliers, impacted by wholesale electricity price increases resulting from higher balancing costs since November’s launch of new target model markets, insist that decisions eventual taken by RAE for returns to suppliers of excessive balancing costs need to be retroactively enforced.
RAE has promised to examine this demand but the decision it could take remains unclear.
It should be pointed out that the recently appointed energy minister Kostas Skrekas generally does not favor retroactive enforcement of energy-sector decisions.
At least one non-vertically integrated supplier appears to have taken extrajudicial action against IPTO, overseeing the balancing market, making note of this market’s distortions and the operator’s responsibility.
Electricity suppliers have been unsettled by new RES-supporting ETMEAR surcharge conditions requiring them to apply new rates to medium-voltage customers retroactively, as of January 1, 2019.
There has been much mobility in the medium-voltage market as customers have often switched suppliers. The new retroactive requirement has caused confusion as medium-voltage customers may no longer be with the suppliers they were at in 2019, and, furthermore, being enterprises, they may even no longer exist. The obligations of suppliers remain unclear for such cases.
The ETMEAR surcharge framework has just been implemented after being postponed on a number of occasions.
A small number of enterprises will be required to pay smaller ETMEAR amounts, while most will need to pay higher amounts.
Certain industrial enterprises will be charged a reduced rate, 15 percent of the average ETMEAR figure, set at 17 euros per MWh.
The new ETMEAR surcharge for medium-voltage consumers belonging to other business categories, the overwhelming majority, including hotels, retail chains, banks, and low-intensity industries, is 17 euros per MWh, up from the previous rate of 9 euros per MWh. This increased rate will apply retroactively as of January 1, 2019.
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.