PPC rivals awaiting utility’s next pricing move for response

Power utility PPC’s rivals are awaiting the utility’s next pricing-policy move before responding with offers of their own. A specially priced three-month package offered by PPC, the electricity market’s dominant player, to its customers as lockdown relief expires on June 26.

Lower wholesale electricity prices over the past couple of months as well as more efficient facility management by PPC, drastically reducing production from loss-incurring lignite-fired power stations, are two factors expected to enable the utility to keep offering appealing packages to customers, sector experts have told energypress.

An initiative taken by PPC during lockdown to equate usually higher tariff rates for consumption of more than 2,000 kWh with rates for consumption below the aforementioned limit could be an indicator of things to come from the power utility.

The market’s major independent suppliers are believed to have studied all possible scenarios in preparation for their respective responses.

PPC chief executive Giorgos Stassis has made clear the power utility’s intentions to regain part of its lost market share. The utility is expected to target specific customer profiles. In addition, bonus services may also be included in packages.

 

 

 

 

PPC financial results for 2019 seen reflecting moves late last year

Power utility PPC’s financial results for 2019, expected to be released this afternoon, should favorably reflect measures taken by the state-controlled corporation’s administration and the government during the final four months of the previous year, analysts have forecast.

The results, expected once the day’s trading has ended at the Athens bourse, are also expected to include an initial assessment of the impact, so far, of the coronavirus pandemic-induced lockdown on the corporate group.

Also expected is an update on new initiatives, including investment plans, for the rest of 2020, following a forced revision of plans prompted by the pandemic.

PPC’s administration has set an operating profit objective of between 420 and 470 million euros for 2019, up from 150 million euros in 2018.

EBITDA figures of 240 million euros for the fourth quarter of 2019 and 337 million euros for 2019, overall, have been forecast by Pantelakis Securities.

During the final few months of 2019, PPC revised tariffs and abolished NOME auctions, described by company and government officials as a loss-incurring measure for the firm.

PPC expects even greater clarity on its financial standing in the immediate future. The corporation is waiting for more appropriate market conditions to securitize unpaid receivables worth 1.5 billion euros and issue a company bond.

Proceeds from these initiatives are expected to enable PPC to move ahead with an ambitious investment plan.

Independent power suppliers set to raise low-voltage prices

After raising electricity prices in the mid-voltage category, independent suppliers are now set to do likewise for low-voltage electricity, supplied to households and businesses. A first step by one or more suppliers is expected to  swiftly trigger action from the rest.

Virtually all independent suppliers have activated a clause used to cover elevated System Marginal Prices, or wholesale prices. The power utility PPC has already increased its mid-voltage electricity prices.

Higher tariffs at PPC, still the dominant player, have prompted many consumers to switch supplier in recent times, leading to considerable market share losses for the utility.

Though independent suppliers are currently gaining clients from the PPC outflow, they are also keeping a close watch on each other.

Independent suppliers must keep providing incentives to lure PPC customers, and, at the same time, lessen their risks of financial loss.

Lower-cost electricity acquired by independent suppliers at NOME auctions will soon run out. The government recently decided to abolish this procedure, loss-incurring for PPC. Independent suppliers should start being exposed to the wholesale market’s higher prices in January and will be fully exposed by June.

By this stage, the performance of independent suppliers will greatly depend on wholesale electricity market conditions.

If LNG prices remain subdued, a favorable prospect for the SMP, then independent suppliers, despite their increased exposure to the wholesale market’s conditions, will not be forced into loss-incurring deals but, instead, will be in a position to keep competing against PPC for market share gains.

State-controlled PPC has adopted into its business plan the prospect of a market share reduction to levels of around 60 percent or less by June, 2020. Subsequently, independent suppliers will control 40 percent of the retail electricity market, meaning competition between them, rather than against PPC, stands to intensify.

Any agreements reached during negotiations between the government and the European Commission in January will also impact the market.

Local retail electricity prices register EU’s 4th biggest dip

Retail electricity prices in Greece registered the EU’s fourth largest reduction in the first half of 2019, compared to the equivalent period a year earlier, falling by 1.3 percent, latest Eurostat data has shown, primarily as a result of more aggressive discount policies by independent suppliers for households and enterprises.

Denmark was ranked first with a 4.3 percent price fall, followed by Portugal with a 4.1 percent drop, and Poland, where retail electricity prices slid 3.1 percent.

The average EU price rose by one cent. The Netherlands posted the biggest price increase, averaging 20.3 percent. Cyprus followed with a 16.4 percent increase, Lithuania was next on the list with an average price hike of 14.4 percent and the Czech Republic was fourth with a 12 percent price increase.

Retail electricity prices in the Greek market are among the EU-28’s lowest, the Eurostat data showed. Greece was ranked 18th in this category with an average tariff price per KWh of 0.16 euro. Germany is the most expensive with an average tariff price per KWh of 0.30 euro. The EU average is 0.21 euro and the Eurozone average 0.22 euro, according to the Eurostat data.

Despite the more aggressive pricing policies of independent suppliers in Greece, power utility PPC maintained its dominant position with a retail market share ranging between 77 and 80 percent during the first half. PPC not only avoided dropping its prices but reduced a punctuality discount offered to customers paying their electricity bills on time.

Electricity prices in Greece and other EU member states could have been lower if it were not for the considerably sized surcharges and taxes added to electricity bills, Eurostat noted. Over one-third of total electricity costs go to state coffers and electricity transmission and distribution network operators, Eurostat added.

Ministry to make net metering revisions for greater appeal

Increased RES self-production and net metering appears to be a leading priority for the energy ministry, committed to an increase of the country’s renewable energy capacity, which, besides the development of major facilities, also depends on the installation of RES systems at as many domestic and business units as possible.

As part of the overall effort, the energy ministry has decided to make drastic changes to the existing net metering support mechanism, the objective being to make it more appealing for consumers as potential RES producers, energypress sources have informed.

One of the ideas being considered by officials at this stage is to enable prosumers (producer-consumer) to sell excess electricity production to the grid at a price level equivalent to the System Marginal Price (SMP), the wholesale price.

Another thought is to replace the current net metering billing period, covering three years, with a system offering instantaneous calculations.

Such revisions, compatible with EU directives, are already being adopted by other EU member states. Their implementation in Greece is expected to offer household and business electricity consumers further incentive to install RES systems, primarily solar panels, on roofs and rooftops.

Irrespective of the prospective support mechanism changes, net metering has already become a more attractive prospect for consumers as a result of power utility PPC’s recent electricity tariff hikes, which have considerably shortened the recouping period for net metering installation costs.

PPC collapse fears, hikes send 60,000 away in September

Abounding recent fears of a company collapse and higher electricity prices at the power utility PPC have driven an increased number of customers away to rival suppliers.

Approximately 60,000 PPC customers abandoned the utility in September, sharply up from 37,000 in August, energypress sources have informed.

This trend is further emphasized when compared to overall industry figures presented by RAE, the Regulatory Authority for Energy, at the recent Thessaloniki International Fair.

A total of 226,394 consumers switched electricity suppliers in the first half of the year, an average of roughly 37,700 per month, according to the RAE figures. Though the authority’s figures represent the overall shift concerning all suppliers, September’s loss of customers at PPC was undoubtedly considerable.

This period of customer losses at PPC coincided with intensified  promotional campaigns and discount offers from independent suppliers, their objective being to capture as big a share as possible of customers leaving the utility.

Despite last summer’s wave of unsettling sustainability news on PPC, certain pundits believe the millions of customers still with the utility will not easily part as many of the independent suppliers have yet to convince on the benefits of their offers.

 

PPC bond issue in January after rescue package measures

Power utility PPC will delay a planned bond issue until early next year, most probably within January, once a series of rescue-plan measures have been implemented, energypress sources have informed.

Though current market conditions are ideal, as highlighted by the 10-year Greek Govt bond yield of between 1.5 and 1.7 percent, the power utility’s board would rather wait for the implementation of all measures included in its rescue package before proceeding with a bond issue in pursuit of low-cost capital from international markets.

A series of measures intended to bolster PPC will have been taken by early next year. PPC’s first-half results, expected along with a report by the power utility’s certified auditor Ernst & Young on September 24, will include all measures deemed necessary for the corporation’s restructuring.

The energy ministry is soon expected to take legislative action enabling public service compensation returns of approximately 200 million euros to PPC for 2011 as well as the termination of NOME auctions in October or November, a favorable prospect for PPC, which has been obligated to offer below-cost wholesale electricity to rivals through the auctions over the past few years.

Also, between October and December, PPC plans to securitize unpaid receivables concerning electricity bills overdue by at least 60 days to draw capital from foreign funds.

Furthermore, consulting firm McKinsey is expected to have delivered an updated business plan for PPC by the end of December.

All these initiatives, along with electricity tariff hikes, will be included in PPC’s bond issue prospectus to make the utility’s growth prospects as convincing as possible.

PPC tariffs higher, consumer mobility still low, study highlights

Low-voltage electricity tariffs offered by independent suppliers for households and businesses are as much as 27 percent lower than those of power utility PPC, according to a study conducted by RAE, the Regulatory Authority for Energy, following the utility’s recent pricing policy adjustments.

The RAE study compared the low-voltage tariff rates offered by PPC and 16 independent suppliers in the 0-2,000 KWh consumption category over a four-month period.

PPC’s tariff rate in September was 89.89 euros per MWh, while the lowest rate in the market was 72.80 euros per MWh, according to the RAE study.

The majority of independent suppliers offered tariffs between 81.45 and 81.90 euros per MWh, the study found.

It also highlighted the difficulties in reducing PPC’s retail market share, consumer apprehension for switches to other suppliers listed among the key factors.

Though Greece’s electricity market was liberalized back in 2008, PPC maintains a 73.52 percent share of total consumption in the low and mid-voltage categories and 88.25 percent overall.

A total of 25 independent suppliers have emerged over the past 11 years but consumer mobility has remained low.

Just 3.35 percent, or 226,779 of the country’s 6.76 million low and mid-voltage consumers (not including the islands) switched electricity suppliers in the first half of 2019, according to the RAE study.

Its results were presented at the 84th Thessaloniki International Fair by Evaggelia Gotzou, director of RAE’s consumer, environment and retail markets protection department.

 

Households, businesses to cover bulk of PPC rescue plan’s cost

Households and businesses using low and medium-voltage electricity will shoulder most of the weight of a rescue plan prepared for troubled power utility PPC as these consumer groups  will end up covering 350 million of 490 million euros in additional revenues to be generated by the plan’s revised pricing policy.

Of this 350 million-euro amount to be covered by households and businesses, 250 million will stem from tariff hikes; 68 million will result from a punctuality discount reduction for low-voltage consumers; 16 million from a punctuality discount cut for medium-voltage consumers; and 16 million euros from the termination of a punctuality discount offered for CO2 emission right costs in the medium-voltage category.

PPC’s electricity tariff hikes, just introduced, include a 16.8 increase to 0.11 euro per kWh for consumption up to 2,000 kWh. A 16.5 percent tariff hike has been imposed on consumption of 2,000 kWh and over, taking the rate to 0.11946 euro per kWh.  Nighttime tariff rates have been increased by 19.4 percent to 0.07897 euro per kWh.

A RES-supporting ETMEAR surcharge included on electricity bills has been reduced by 25 percent to 0.017 euros for low-voltage household consumers to partially offset the tariff hikes.

The aforementioned rate revisions, along with a VAT reduction from 13 to 6 percent on electricity bills, will result in annual electricity cost increases of between 30 and 60 euros for consumers requiring 3,300 kWh.

Sharp rise in wholesale, CO2 right costs behind tariff hikes

Increased System Marginal Prices (SMP), or wholesale electricity prices, and CO2 emission right costs are key factors behind the power utility PPC’s substantially higher operating costs, negative impact on the corporation’s financial results, and the resulting need to increase electricity tariffs, the utility’s new chief executive Giorgos Stassis is expected to underline at a board meeting tomorrow.

PPC’s pricing strategy and policy is shaped by a series of factors concerning the overall production and trade cost estimates of the vertically integrated company, the chief executive’s address is expected to stress.

The wholesale electricity price average for 2019 is estimated at 67.15 euros per MWh, up from 60.33 euros per MWh in 2018 and 54.70 euros per MWh in 2017, according to official industry data. A further rise, to 70.33 euros per MWh, is expected in 2020.

The CO2 emission right cost average for 2019 is projected to be 25.70 euros per MWh, a sharp rise from 14.68 euros per MWh in 2018 and 5.84 euros per MWh in 2017, according to the industry data. This cost is expected to escalate further, to 30.25 euros per MWh, in 2020.

Independent suppliers adjusting policies in view of PPC hikes

The country’s independent electricity suppliers, sensing opportunity for retail market share gains amid greater competition as a result of power utility PPC’s imminent tariff hikes, are looking at making price adjustments to capitalize on these changes.

The upcoming electricity tariff hikes by PPC, still the dominant player, will bring to an end distorted market conditions prompted by the utility’s refusal to adjust its pricing policy to considerably higher wholesale electricity costs.

Though the final price comparisons of packages – including surcharges and taxes – to be offered by suppliers will ultimately differ very little, as PPC intends to partially offset its tariff hikes with surcharge reductions, the independent suppliers will be keen to focus on tariff prices, specifically, and take advantage of the power utility’s hefty tariff increases.

PPC’s tariff hikes will range from 21.5 to 24.5 percent. This promises considerable leeway for independent suppliers to shape more aggressive pricing policies in the retail battle against the power utility.

PPC’s anticipated adoption of a clause triggering further tariff hikes should CO2 emission right costs exceed certain levels, and vice versa, is another favorable development for the independent suppliers as the stigma associated with their preceding implementation of this measure will be diluted.

The ambiguous immediate future of NOME auctions is a negative factor that spoils the otherwise favorable scene for independent suppliers. This ambiguity injects an element of risk to the plans of independent players for pricing policy adjustments.

It remains unclear if the year’s final NOME auction, scheduled for October, will take place. Energy minister Costis Hatzidakis has noted he intends to negotiate the  termination of NOME auctions with the European Commission.

State-controlled PPC would prefer that the October session does not take place, whereas independent suppliers see this disputed session as one more opportunity to stock up on lower-cost wholesale electricity, even at higher starting prices, for a certain period, which would further boost their level of competitiveness.

 

PPC tariff hike over 15%, to be partially offset by surcharge cut

Electricity tariffs at power utility PPC, financially pressured and in need of a cash inflow boost, will be increased by over 15 percent and partially offset by a reduction of a RES-supporting ETMEAR surcharge included on electricity bills, the state-controlled corporation’s administration and the energy ministry have decided, reliable sources have informed.

Still a tightly kept secret, the details of PPC’s tricky equation, aiming for a significant increase in revenues while limiting the burden on consumers and also protecting RES production payments, will be presented tomorrow at Greek Parliament’s Committee on Production and Trade.

Besides sizable tariff hikes, PPC’s revised pricing policy is expected to include a clause triggering further tariff increases should CO2 emission right costs escalate in international markets – and vice versa.

In addition, a punctuality discount offered by PPC to customers paying electricity bills on time is expected to be roughly halved from its current level of 10 percent as part of the effort to boost revenues.

Meanwhile, as a means of softening the overall impact on consumers, the RES-supporting ETMEAR surcharge included in electricity bills is expected to be reduced to roughly 17 euros per MWh from the current level of 22.67 euros per MWh, a 25 percent reduction.

Decisions will be made official at a PPC board meeting this Friday and implemented September 1.

PPC seeking ways to fully offset tariff hike, maintain discount

Power utility PPC officials are busy looking for a formula by the end of this working week that could avoid higher overall costs for consumers despite necessary tariff hikes, needed to boost the struggling utility’s revenues.

Various alternatives are being examined ahead of a board meeting scheduled for this Friday, during which PPC’s new electricity pricing policy proposal is expected to be approved.

PPC is looking to fully offset its upcoming tariff hikes through an equivalent reduction of surcharges.

However, the emergence of a number of detrimental factors has made the effort more challenging. For example, the cost of PPC’s rescue plan has risen, the utility’s new chief executive Giorgos Stassis announced just days ago.

PPC is making an effort to maintain a punctuality discount offered to customers paying their electricity bills on time. The utility’s new administration does not want to start its tenure with a measure that would effectively punish reliable customers.

Energy ministry officials contend state-controlled PPC will keep offering a punctuality discount, adding that its size will be determined by the utility.

It could be cut to 5 percent from 10 percent at present, energypress sources informed. The discount was introduced about three years ago at 15 percent before being reduced to 10 percent last spring.

Last week, it was reported that PPC would abolish all or most of its 10 percent discount.

Additional cash needs at PPC to end up burdening consumers

Power utility PPC requires a cash injection of between 800 and 900 million euros, considerably higher than an initial estimate of 750 million euros, to stabilize its troubled finances, the corporation’s new chief executive Giorgos Stassis indicated yesterday.

This increases the likelihood of measures that could burden consumers by as much 150 million euros.

The termination of PPC’s 10 percent punctuality discount benefiting about four million consumers – of the utility’s seven million in total –  paying their electricity bills on time is seen as one definite source for this needed amount. The discount’s cancellation will increase PPC’s annual turnover by roughly 150 million euros, it is estimated.

Officials at state-controlled PPC and the energy ministry have been looking for a formula that could neutralize the overall cost-effect for consumers. But yesterday’s revelation by the new CEO of even greater cash needs at the utility suggests this will be difficult to accomplish.

Electricity tariff increases combined with a reduction of a RES-supporting ETMEAR surcharge included on power bills will not work given PPC’s need of 800 to 900 million euros.

The urgency of the financial situation at PPC, Greece’s biggest corporation and the backbone of the country’s energy system, requires swift action. Tariff revision decisions will be finalized on August 30 and implemented as of September 1, according to sources.

 

PPC, needing cash inflow, to scrap 10% punctuality discount

Power utility PPC, shaping a more aggressive pricing policy as a result of its need to boost cash inflow, is preparing to abolish most or all of its 10 percent punctuality discount, offered to customers paying their electricity bills on time.

The power utility is also looking to adjust tariffs for various consumption categories, while the implementation of a clause triggering price hikes when CO2 emission right costs exceed certain levels is now seen as a certainty.

State-controlled PPC needs to have finalized its rescue plan by early September, ahead of an upcoming report from Ernst & Young, the utility’s certified auditor, on September 24.

The government wants a reduction of a RES-supporting ETMEAR surcharge included on electricity bills in order to offset electricity price hikes.

PPC’s recently appointed CEO, Giorgos Stassis, who will be officially approved at an extraordinary shareholders’ meeting tomorrow, faces the challenging task of ensuring greater cash inflow for the utility while concurrently reducing surcharges.

Stassis could offer some clarification, during tomorrow’s meeting, on various models being examined by the government.

New PPC board, approved this week, needs to move fast

Power utility PPC’s shareholders will approve the corporation’s new CEO, Giorgos Stassis this Thursday, initiating a crucial period for the struggling corporation, Greece’s biggest, in need of life-saving measures from the state-controlled company’s administration and government.

The details of PPC’s rescue plan must be finalized by September 15, ahead of a report from Ernst & Young, the utility’s certified auditor, expected on September 24. The report will feature observations on the utility’s first-half results. In the lead-up, PPC needs to convince of its potential for a rebound to avoid further unfavorable news from the auditor.

Details of measures aiming to accumulate a sum of 750 million euros for PPC have yet to be finalized, sources informed.

The measures will include an electricity tariff increase as well as the endorsement of a clause triggering hikes when CO2 emission right levels exceed upper limits.

The government wants to offset the tariff hike, expected to be about 10 percent, with a reduction of a RES-supporting ETMEAR surcharge included on electricity bills.

PPC is also expected to securitize unpaid receivables of between 1.5 to 1.7 billion euros, the target being to rake in 400 million euros. The first of two securitization packages is expected to be issued in September or October.

PPC is also anticipating 195 million euros in public service compensation (YKO) returns for 2011. A legislative amendment enabling RAE, Regulatory Authority for Energy, to proceed with the details is needed. Also, the government must decide whether the national budget or electricity consumers will cover the cost of this measure.

 

 

 

RES producers seen carrying weight of electricity tariff hike

Renewable energy producers appear the likeliest market group to be affected by a government plan for electricity tariff hikes at the state-controlled power utility PPC, needed to boost revenues at the struggling utility, as, to protect consumers, these hikes will need to be offset by a reduction of a RES-supporting ETMEAR surcharge included on electricity bills.

All calculations strongly suggest that no other combination than a reduction of the ETMEAR surcharge is possible to avoid higher electricity prices for consumers.

Officials are scrambling for a finalized formula ahead of a September 24 report by Ernst & Young, PPC’s certified auditor, to avoid further bad news on the power utility’s condition.

Officials at the energy ministry, working on the plan daily, see a negative outcome for RES producers as the least detrimental alternative because they constitute a minority group of far less political cost compared to the country’s millions of electricity consumers.

PPC’s new boss faces tough sprint until September 24

Power utility PPC’s newly appointed chief executive Giorgos Stassis, preparing to officially assume his post on August 22, faces an enormous task comprised of a series of hurdles that will need to be cleared by September 24, when Ernst & Young, the utility’s certified auditor, is due to issue a new report on the utility’s financial standing.

Much will need to be accomplished over this one-month dash if the auditor is to leave out from the report unsettling news on the power utility’s sustainability.

The new PPC boss will need to strike a fine balance in order to increase electricity tariffs, needed to boost the utility’s revenues, without burdening consumers, the idea being to offset these tariff hikes by reducing a RES-supporting ETMEAR surcharge included on electricity bills. However, this could prove tricky as renewable energy producers, too, must not be affected.

It remains to be seen if the collective cash inflow of the upcoming measures will be enough to stabilize PPC.

State-controlled PPC is anticipating a series of cash injections endorsed by the government, including a 190 million-euro return for public service compensation (YKO) concerning 2011.

Also, PPC also intends to securitize unpaid receivables worth 2.7 billion euros. This securitization plan, shaped by PPC’s previous administration, could lead to collections of between 400 and 500 million euros, but they are not expected to start coming in until October.

The electricity tariff increase, which could be around 10 percent, would boost PPC’s annual turnover of 4.7 billion euros by 450 million euros. The hike will most likely be implemented in September, meaning just 110 million of this amount would be injected into PPC’s coffers by the end of this year.

 

 

Minister’s PPC rescue plan aims to inject €500m into utility

Power utility PPC stands to gain financial support worth an estimated 500 million euros from a series of measures announced in Parliament yesterday by the newly appointed energy minister Costis Hatzidakis, the aim of his measures being to ensure the utility’s sustainability.

The minister’s restructuring plan for PPC, under severe financial pressure, includes an electricity tariff increase that is expected to boost the company’s annual earnings by roughly 200 million euros. This tariff hike, expected to be a single-digit rise, will not burden consumers, the minister pledged, as it will be neutralized by an equivalent reduction of a RES-supporting ETMEAR surcharge included on electricity bills. A 10 percent discount for punctual electricity payments will remain intact.

The government’s support plan for PPC also includes a cash injection of approximately 200 million euros for public service compensation (YKO) returns linked to previous years.

The sale of a minority stake of network operator DEDDIE/HEDNO, a PPC subsidiary, to a strategic investor is also a part of the minister’s plan.

A voluntary exit plan will seek to reduce the company’s payroll, now 16,000 strong, by 2,000 workers. It will target staff members who have qualified for pension rights but have chosen to keep working.

Also, NOME auctions, which, so far, have set back PPC by some 600 million euros since their introduction about three years ago, will be abandoned. The auctions have offered PPC rivals lignite and hydropower electricity generated by the power utility at below-cost prices.

Greater pressure will also be placed on PPC customers dodging electricity bill payments despite believed to be capable of covering required amounts. A mere 60,000 customers owe PPC approximately 800,000 euros, Hatzidakis, the energy minister, reiterated yesterday. PPC’s unpaid receivables figure has reached 2.7 billion euros.

Many aspects of the minister’s speech yesterday echoed proposals included in an older plan by McKinsey. The consulting firm was commissioned by PPC but its proposals have yet to be implemented. Plan features included a call for an operating profit improvement of 500 million euros over a five-year period, a voluntary exit plan for 2,000 persons, as well as tariff hikes.

 

 

EC: PPC tariff hikes needed for cost recovery, competition

The still-dominant main power utility PPC needs to increase electricity tariffs to improve cost recovery and its financial standing and also enable rivals to make market share gains, the European Commission has noted in its third post-bailout report on the Greek economy.

The report questions how long PPC can maintain its company size based on its current pricing policy.

It also condemns PPC’s lower-priced tariffs for underprivileged households, noting these are leading to market distortions.

The Brussels report salutes PPC’s recent decision to reduce its punctuality discount for consumers paying their electricity bills on time, noting this decision will boost the utility’s earnings and help open up the market for competitors.

It also makes note of a 20 percent increase in unpaid electricity bills by PPC customers switching suppliers.

RAE pushing ahead with fixed tariff option plan, consumers irate

RAE, the Regulatory Authority for Energy, is preparing to deliver, for public consultation, a plan whose implementation will require the country’s retail electricity suppliers to offer consumers fixed tariffs as an alternative to existing flexible tariffs adjusted by a clause permitting revisions during market cost shifts.

A growing number of consumers have filed complaints in recent times in reaction to higher-than-expected tariffs resulting from decisions by electricity suppliers to trigger price-adjusting clauses as a means of covering elevated wholesale electricity prices, including higher CO2 emisson right costs.

The tariff-revising clause has caused confusion among consumers, caught unaware as to when and under what conditions suppliers may trigger it. Consumers have also complained about the clause being hidden in fine print and for not being notified.

Until recently, independent suppliers had opted to absorb rising wholesale electricity costs for many months before finally triggering the clause at the risk of losing customers.

RAE’s plan proposes the inclusion of fixed tariffs as a customer choice for a one-year period, presumably at relatively higher prices.

Ministry seeking overall balance in PPC pricing policy revisions

State-controlled main power utility PPC’s new tariffs package been prepared by the energy ministry includes a CO2-related clause enabling price hikes whenever this emissions right cost exceeds a certain level, as well as reductions of RES-supporting ETMEAR and public service compensation (YKO) surcharges paid by consumers through electricity bills, sources have informed.

Though these regulatory charge revisions promise to bring about surcharge changes for PPC’s entire client base, numbering approximately 7.2 million, the energy ministry, mindful of upcoming elections, due later this year, is aiming for a balance that will not affect the overall electricity-bill amounts paid by consumers.

The revisions could be implemented in March in a bid to bolster PPC’s financial standing ahead of a prospective 350 million-euro bond issue.

As part of the upcoming revisions, PPC also plans to reduce a 15 percent discount offered to punctual customers to 10 percent, sources added.

PPC, requiring cash injections, reiterates need for tariff hikes

The main power utility PPC, facing relentless pressure ahead of an international bond payment obligation worth 350 million euros in May, is using every available opportunity to reiterate its need for electricity tariff hikes.

Commenting yesterday on PPC’s refinancing needs for the current year, PPC officials indicated the utility would need to resort to existing cash reserves to service the maturing international bond if it fails to access capital markets by May. Pundits have interpreted this as an indirect reference to the need for tariff hikes.

A month earlier, PPC’s chief executive Manolis Panagiotakis linked the utility’s need for tariff increases with an effort to improve its finances before heading to capital markets.

Energy minister Giorgos Stathakis, mindful of upcoming elections, has strongly rejected any tariff hike plans by the state-controlled power utility, but appears more lenient towards a reduction of a 15 percent discount offered to customers paying their electricity bills on time.

If PPC ends up not increasing its electricity tariffs, as appears most probable, it will need to postpone a planned bond issue. Despite this threat, an international road show intended for this issue’s promotion may be launched next month, PPC officials informed yesterday.

PPC has faced sharply increased operating costs over the past year or so. Wholesale electricity prices have reached levels of more than 80 euros per MWh, up from 53 euros last year. This includes the cost of CO2 emission rights purchased by PPC for its lignite-fired power stations, which have skyrocketed to 25 euros per ton from just 5 euros per ton in 2017.

‘PPC tariff hikes needed to carry out investment plan’

The main power utility PPC needs to improve its profit performance in order to carry out an investment program this year of equal worth to last year’s, chief executive Manolis Panagiotakis stressed yesterday at a company event for the New Year, noting tariff increases currently represent the only available source for an increase in profitability.

“As a result of its scale and role played in the Greek economy and society, PPC is expected to also factor into its decisions and actions data and aspects that are unimaginable for other enterprises active in a competitive environment with a goal to achieve profits,” Panagiotakis remarked. “Subsequently, PPC has absorbed over one billion euros in costs without relaying even a small fraction of these to consumers. On the contrary, PPC has reduced tariffs through a 15 percent [punctuality] discount,” he continued.

Taking advice from a business and strategic plan prepared by consulting firm McKinsey, PPC also plans to utilize its enormous property portfolio for increased revenues through the establishment of a real estate company, the power utility’s boss informed during yesterday’s event.

 

Power consumers to be given fixed or flexible tariffs choice

The country’s retail electricity suppliers will be obligated to also offer consumers the choice of fixed tariffs as an alternative to flexible tariffs linked to clauses permitting revisions in line with cost shifts, including system marginal price (SMP) or CO2 emisson cost fluctuations, according to a plan being prepared by RAE, Regulatory Authority for Energy.

According to the RAE plan, consumers will be offered a choice between fixed electricity tariffs, presumambly at relatively higher prices and for a specific period of time, and flexible tariffs, initially lower but carrying fluctuation risk.

RAE decided to take action as a result of cost-related clauses introduced by electricity suppliers for protection against rising costs. Certain independent suppliers have already triggered clauses to combat sharp wholesale price increases.

The authority plans to soon launch a public consultation procedure ahead of regulation changes intended to make more transparent the pricing policies of all electricity suppliers, from the main power utility PPC to the independent electricity suppliers.

RAE also plans to reduce the public service compensation (YKO) rate imposed on nighttime electricity consumption.