Suppliers commend power bill subsidies, disapprove DEPA Commercial support

Energy suppliers have commended the government’s subsidy support package for electricity bills, stating the initiative is headed in the right direction, but, on the contrary, disapprove government intervention offering support to state-controlled gas supplier DEPA Commercial that will enable the company to absorb 15 percent of the natural gas cost increase.

This support offered to DEPA Commercial affects competition and the market’s overall functioning, rival gas suppliers protested. “DEPA Commercial may be a state-controlled company but this does not spare the firm from having to comply with free market and competition regulations,” a rival company official remarked. “The government’s move raises competition issues,” the official added.

As for the electricity bill subsidies, these will protect consumers from having to carry the entire burden of the surge in prices, while, on the other hand, suppliers will benefit from some cashflow relief as they will be requiring greater capital amounts at present and in the mid to long term, suppliers added.

 

 

 

Three-part energy crisis plan to begin with €500m in subsidies

A government plan aiming to soften the effects of the energy crisis, which could last well into 2022, will be comprised of three stages, beginning with a 500 million-euro support package including double the amount of previously announced subsidies for electricity, as well as natural gas and heating subsidies.

The plan, whose details are expected to be announced later today, will then continue with a second support package for low-income households around Christmas time.

The third part of the plan, whose details will be announced at a latter date, is expected to entail the establishment of a mechanism absorbing extraordinary energy costs.

For its three-part plan, the government presumes the energy crisis, caused by an unfavorable combination of international factors, will last well into 2022. Some analysts believe the crisis could persist throughout next year.

Consumers throughout Europe are facing exorbitant electricity and natural gas costs that have increased multifold over the past few months.

 

 

Doubled gas prices for winter start, electricity cost soaring

Energy consumers of all categories are heading into the winter season facing doubled natural gas prices compared to a year ago, a growing problem for the government that could have political repercussions.

EU leaders are scrambling for solutions to quell an unfavorable combination of factors in international markets that have sparked this extreme situation, pushing the energy market beyond control.

Indicatively, one of the country’s major natural gas suppliers has just set retail tariffs at around 9 to 9.5 cents per KWh, up from 4.5 cents a year earlier. Things could get worse in the winter.

The situation is also alarming in the electricity market where retail price increases of approximately 40 percent in October could rise by just as much in the next few weeks.

The wholesale electricity price for today is at 178.29 euros per MWh. The November price surge for natural gas futures contracts, up 20 percent in just one day, yesterday, would increase next month’s wholesale electricity prices to levels of 255 euros per MWh if the overall situation remains unchanged.

 

NTUA study surveying energy price effect on green objectives

The European Commission has commissioned the National Technical University of Athens’ E3 Modelling department with the task of examining scenarios on the EU’s ability to achieve ambitious green energy goals in the event that natural gas, fuel and CO2 emission prices remain high.

The NTUA had also been commissioned to conduct research that served as the basis for most of the twelve legislative proposals forwarded by Brussels for its Fit-for-55 climate-change framework, aiming for a 55 percent reduction of carbon emissions by 2030, compared to 1990 levels.

Early findings produced by the latest NTUA survey have shown that the swiftest possible market penetration of renewable energy sources will not cause further problems linked to the higher energy prices at present but, instead, create favorable conditions for a return to market equilibrium, energypress sources informed.

Swifter market entry of RES units and their full induction into the private-sector market as an energy supply base for customers represents a positive response to the higher natural gas prices, Pantelis Kapros, Professor of Energy Economics at NTUA pointed out in a recent article. The impact of a faster RES entry, however, will not be felt immediately but will require two to three years to produce results, he added.

RES operator given control of new Energy Transition Fund

DAPEEP, the RES market operator, whose influence in the energy market is growing, will be given control of the new Energy Transition Fund, a move promising to give the operator a key role in efforts to counter energy cost increases when prices are at exorbitant levels, as is the case at present.

A large percentage of the ETF’s revenues will come from CO2 emission right auctions, staged by DAPEEP.

Through its authority over the new ETF, DAPEEP will be in a position to manage state funds, including, for example, planned subsidies for natural gas bills, expected to be derived from the state budget, at least for the final quarter of 2021, sources informed.

In due course, DAPEEP, through the ETF, will also manage funds to be generated by other prospective green surcharges, including an expected expansion of the carbon emission rights system into transportation and buildings.

These new roles promise to further establish the place of DAPEEP in the domestic energy market.

Brussels hesitant on hedging mechanism for energy prices

A Greek proposal for the EU’s adoption of a temporary hedging mechanism as a means of easing the burden of sharply risen energy costs on consumers, to be tabled at a Eurogroup meeting of EU finance ministers today, will be met with hesitancy as the European Commission would not want to bring to the negotiating table issues linked to the Emissions Trading System, fearing any potential need of a compromise with member states opposed to the ETS, such as Poland, well-informed sources anticipate.

The European Commission has fought hard to establish the ETS as a means of combating climate change.

The temporary hedging mechanism would draw funds from the Emissions Trading System’s auctions of CO2 emission rights.

The hedging mechanism was proposed several weeks ago by Greek energy minister Konstantinos Skrekas and will be officially presented by Greek finance minister Hristos Staikouras to his European counterparts at today’s Eurogroup meeting.

The EU finance ministers will be focusing on the alarming increase in energy prices, prompted by a combination of international factors, though finalized decisions at this session are considered unlikely.

EU energy ministers to discuss consumer protection measures

EU energy ministers plan to discuss the alarming increase in energy prices on October 6 at a session expected to take into consideration a proposal made by Greek energy minister Kostas Skrekas for a temporary hedging mechanism that would be linked to the EU’s Emissions Trading System (ETS) as a means of protecting consumers against the overall energy cost ascent, caused by a combination of unfavorable factors, internationally.

Higher energy costs, which have energy consumers, including industrial, bracing for a challenging winter, will also be a key issue at a EU Summit meeting on October 21 and 22.

Natural gas prices yesterday climbed to 85 euros per MWh, several times over levels registered earlier in the year, oil prices exceeded 80 dollars per barrel, and CO2 emission rights, on a record-breaking streak, reached 62 euros per ton.

Besides these price rises, energy sufficiency issues are also beginning to emerge around Europe, as well as in China, for a variety of reasons.

In Greece, the combination of higher prices for primary and secondary materials, greater transportation costs, given the country’s location on the edge of Europe, plus the increase in energy prices, threatens to paralyze the industrial sector.

The country’s energy-intensive consumers are calling for a revision to supply rules. In the domestic retail electricity market, suppliers are being forces to revise prices. Some have so far resisted but are battling against narrowing profit margins. Customer shifts by disgruntled customers are already being observed.

 

State subsidies for electricity bills, additional discounts concealed

Power utility PPC and the country’s independent suppliers are set to include state electricity subsidies into electricity bills in ten days’ time, while, from October 1, they plan to follow up with additional discounts to ease the burden of increased energy costs for consumers.

Electricity suppliers are now finalizing adjustments to their information systems for the inclusion of these state subsidies, worth 9 euros per electricity bill and retroactively effective as of September 1.

However, all suppliers are keeping under wraps the details of their additional discounts to be offered.

Market sources expect suppliers to offer discounts with the intention of retaining customers and also capturing greater retail electricity market shares.

Meanwhile, the energy ministry is expected, any day now, to submit a draft bill to parliament for the establishment of an Energy Transition Fund, its purpose being to gather amounts from CO2 emission right auctions for distribution as electricity-bill subsidies.

As a first step, the Energy Transition Fund is expected to collect between 180 and 200 million euros to support households and businesses in the low-voltage category, all facing additional pressure as a result of the sharp increase in energy costs.

 

 

Natural gas prices double last year’s levels, alarm widespread

Retail gas prices are seen increasing by at least 100 percent in October, compared to a year earlier, the lowest level at present being 40 euros per MWh, double the level of a 20-euro per MWh price in the equivalent month last year.

The situation, caused by an unfavorable combination of factors in international markets, is truly alarming as market officials admit not being able to forecast any limit to the upward trajectory.

Natural gas prices at the pivotal Dutch TTF platform yesterday reached 75 euros per MWh, up from 40 euros per MWh in July, 50 euros per MWh in mid-August and 60 euros per MWh in the first ten days of September.

The price surge appears set to come as a shock for natural gas consumers between October and December. It places many gas companies, especially smaller ones, under extreme pressure, and is a major headache for the government, which could need to deliver a new round of subsidy support measures as a follow-up to initial 150 million-euro support action offered to help consumers combat higher electricity prices.

Gas company officials insist that, even under such extreme market conditions, gas will remain a lower-cost option compared to heating fuel.

 

PPAs soon as measure against higher industrial energy costs

A model for green-energy power purchase agreements (PPAs) will be preannounced to the European Commission by the end of next week in an effort for a swift approval, energy minister Kostas Skrekas told a news conference yesterday, held for an update on measures being prepared to lessen the burden of increased energy costs for consumers.

The minister offered an update on the green PPA plan when asked about government measures that could protect large enterprises against increased energy costs.

The energy ministry sees the green PPAs as a cost-reduction tool for industrial energy as industrial consumers will be able to cover a significant percentage of their energy needs using RES-based electricity, a lower-cost option. The effort is expected to be based on a Green Pool model.

 

 

Energy bill unpaid receivables set to rebound, survey shows

The level of energy bill unpaid receivables appears destined to rise again, a survey conducted by GSEVEE, the Hellenic Confederation of Professionals, Craftsmen and Merchants, has shown.

According to its results, 16.5 percent of small and medium-sized enterprises have warned they will not be able to meet energy bill demands over the next six months.

This figure is slightly higher than the 15.2 percent of enterprises that have left behind bad debt for energy suppliers, meaning the overall level of unpaid receivables appears headed for a new rise.

The GSEVEE survey reported even more worrying results from the hospitality sector as it showed that roughly one in three eateries, or 30.9 percent, declared they expect to not be able to cover electricity or natural gas bills over the next six months.

Recent energy cost increases by suppliers and the threat of further hikes as a result of a combination of various factors in international markets threaten to place energy consumers under even greater pressure.

The energy cost hikes will have a knock-on effect throughout the market, increasing food, raw material and fuel prices, and, as a result, reducing disposable incomes and making payment of energy bills even more demanding.

The unpaid receivables issue that has troubled the domestic market over the past decade or so of recession had begun easing off prior to the pandemic.

Power utility PPC, holding the lion’s share of the retail electricity market, has carried the heaviest unpaid receivables burden, which, at one point, had even exceeded three billion euros.

 

Net metering upper limit set to be increased to 3 MW

A net metering capacity upper limit of 1 MW will be increased to 3 MW through a ministerial decision expected to be delivered this week.

In addition, through this same decision, a number of revisions will be made to simplify net metering procedures, especially for projects with capacities below 50 KW.

The net-metering capacity increase will enable energy cost reductions for many enterprises, PV company officials have noted.

Logistics centers, airports, hotels, supermarkets and small-scale industries all stand to benefit as such enterprises typically possess abundant spare space that could be utilized for solar energy system installations. They consume considerable amounts of electricity that could be offset through net metering.

The PV company officials informed that many customers who had installed net-metering facilities for up to 1 MW are already expressing interest to invest in capacity boosts, highlighting the market need being satisfied by the upcoming related ministerial decision.

 

Wholesale price level starts July on high, consumers facing cost hikes

Wholesale price levels, significantly increased in recent months, have begun the month of July at an extremely high level of 105.42 euros per MWh, a level expected to persist in coming weeks, which, if so, will lead to further electricity-cost increases for consumers.

Electricity suppliers have activated wholesale cost-related clauses as protection against higher wholesale price levels. Consumers are expected to encounter electricity cost increases in the next round of billing, expected over the next few weeks.

June’s wholesale price level, which averaged 83.47 euros per MWh, compared to 63.16 euros per MWh in May, will impact the next round of electricity bills for households.

The situation is even worse for medium-voltage consumers as June’s 83.47 euros per MWh average will reach close to 100 euros per MWh once extra costs for suppliers are added.

If current wholesale price levels persist for a further week or two, as sector officials have forecast, then the average price for July is estimated to reach 90 euros per MWh, well above the June average.

This would represent a 40 percent increase in the clearing price level over just three months.

 

 

Lower-cost gas may save PPC an estimated €100m this year

The sharp drop in energy product prices, pressured by the coronavirus outbreak and an oil price war between Russia and Saudi Arabia, promises major and unexpected financial relief for power utility PPC.

The plunge of gas prices, alone, should benefit the Greek power utility by an estimated 100 million euros this year – assuming this drop is not ephemeral.

In the first half of 2019, PPC’s total purchasing cost for natural gas reached 222.5 million euros, a 57.1 percent increase.

In the liquid fuels category, PPC’s purchase expenses were also elevated, reaching 319.7 million euros, as a result of higher prices paid for mazut and diesel used by the utility at power stations on non-interconnected islands. To the delight of PPC, mazut and diesel prices are also tumbling.

Electricity tariff hikes made by PPC last September as well as a revised payback plan offering consumers greater incentive to service electricity-bill arrears through monthly installments are both producing favorable results.

A series of memorandums of cooperation, such as an agreement signed this week with Germany’s RWE, all promising dynamic penetration into Greece’s renewable energy market, offer further potential for PPC.

However, the power utility still faces an uphill struggle along its road to recovery. PPC’s financial results for 2019 will be announced in April.

 

Major-scale consumers to benefit most from energy VAT rate cut

A rate cut for VAT imposed on electricity and natural gas, down to 6 percent from 13 percent, announced yesterday by Prime Minister Alexis Tsipras, stands to primarily benefit major-scale consumers and will pass as a minor cost reduction for most households, energy supply firm officials have determined.

Households consuming higher energy amounts and industrial firms can expect a noticeable cost reduction, officials commented, while pointing out that businesses will mostly see a cash-flow improvement as their VAT inflow and outflow is offset.

The measure’s impact on main power utility PPC customers paying their electricity bills on time will be minimal as the VAT cut will more or less balance out higher costs prompted by a recent company decision to reduce the utility’s punctuality discount to 10 percent from 15 percent.

Given the Greek electricity market’s annual turnover, totaling an estimated 5.4 billion euros, the VAT reduction promises electricity consumers annual savings of about 270 million euros. As for the natural gas market, the tax cut is expected to offer household consumers annual savings of between 12 and 14 million euros.

It remains to be seen if this VAT rate cut can lead to any improvement of energy bill payment records, especially at PPC, facing a massive unpaid receivables problem. Sector officials are doubtful as the tax revision offers minimal energy cost savings for household consumers.

PPC’s introduction of its 15 percent punctuality discount in July, 2017, a measure that emerged as a far greater incentive than the just-announced VAT rate cut, did not improve the power utility’s collection record.

Industry, seeking clarity, demands two-year electricity tariff deals with PPC

The country’s energy-intensive industrial sector is demanding two-year electricity tariff agreements, until the end of 2020, with the main power utility PPC, for greater clarity and stability concerning energy costs to be faced next year.

Shorter-term energy cost planning threatens the sustainability of enterprises in certain sub-sectors, industrialists have warned, adding that energy-cost support for the industrial sector, playing a vital role in Greece’s economic recovery effort, is essential.

Local industrial enterprises, appearing united and adamant, are refusing to sign PPC electricity tariff agreements limited to 2018 and insist on two-year deals.

Separate CO2 emission right cost payments, as is the arrangement at present, would be accepted, industrial sector officials have indicated.

An existing demand response mechanism (interruptability) – compensating major-scale consumers, such as industrial enterprises, when the TSO (IPTO) asks them to shift their energy usage (lower or stop consumption) during high-demand peak hours, so as to balance the electricity system needs – expires in 2019 but the new market conditions to be shaped by a succeeding permanent CAT mechanism remain unclear.

EVIKEN, the Association of Industrial Energy Consumers, has urged energy minister Giorgos Stathakis to seek European Commission approval for a continuation of the demand response mechanism in tandem with the permanent CAT mechanism.

 

One in two units in key industrial zone rate energy costs as main problem

Nearly one in two, or 48 percent, of industrial units operating in Oinofyta, a key industrial zone northeast of Athens, consider the cost of energy as being their main business obstacle, a study conducted by market research company MRB on behalf of SEV, the Hellenic Association of Industrialists, has shown.

Oinofyta, home, until recently, to 380 small and medium-sized industries, has been hit particularly hard by the country’s ongoing economic crisis.

The cost of energy is presented as a lesser problem by industrial enterprises operating in other parts of Greece. A total of 34.5 percent of respondents in northern Greece named the energy cost factor as their main obstacle, while the figure was slightly higher, 36.1 percent, on the islands.

Small industrial units listed energy costs as their fifth biggest obstacle, while medium-sized operations ranked energy costs as their fourth biggest problem.

A total of 680 enterprises of all sizes taking part in the MRB study were asked to rate the difficulties caused by 13 pre-selected obstacles in their daily operations.

Overall, on a national level, the country’s inconsistent tax framework was listed as the main problem by 64.9 percent of respondents. It was followed by law excess and the vague institutional framework (46.8%); legal system delays (45.7%); lack of credit access/high borrowing costs (44.7%); lack of financing and investment incentives (41.2%); and high energy costs (34.5%).

RAE expected to reach decision today on fuel price ceilings

RAE, Greece’s Regulatory Authority for Energy, is examining data provided by the General Secretariat for Commerce to decide if price ceilings will need to be imposed on liquid fuels in order to protect consumers from extraordinarily high price levels observed around the country this summer, especially on islands.

Over the past three days, RAE officials have been examining the details of a 30-page study focused on over-inflated fuel prices to decide if current price levels, which in some cases have exceeded two euros per liter for unleaded gasoline, are justified.

Transportation costs, wholesale and retail fuel market profit margins, fuel price comparisons around the country, fuel tax levels, as well as other factors influencing price levels, both domestically and internationally, are all being examined at RAE.

The authority is seen reaching a decision on the matter today, which is then expected to be forwarded to the Ministry of Economy and Development as a policy proposal, energypress sources informed.

According to unconfirmed reports, extraordinary price-control measures, most probably in the form of fuel price ceilings, will be imposed on certain island markets.

If introduced, these fuel price ceilings will be valid for an initial two-month period and then be revised weekly, sources noted.

Local industrial energy costs 30% higher, authorities tell

Elevated energy costs faced by Greek industry, currently 30 percent over levels in other European countries, stand as a key deterrent for the sector’s level of competitiveness, the head official of Business Europe, a leading advocate for growth and competitiveness at a European level, pointed out at a meeting in Athens yesterday.

The group’s head official Gerhard Koch raised this issue at a meeting in the Greek capital. He and fellow group members were invited by SEV, the Hellenic Association of Industrialists.

Though Greece’s industrial sector is Europe’s hardest hit in terms of energy costs, the issue also concerns the continent on a wider scale as energy costs are as much as double those of rivals, including the US, according to Alexandre Affre, Business Europe’s Director of Industrial Affairs.

High subsidy costs and tax levels are the key factors behind Europe’s elevated energy costs, the group’s officials pointed out.

Electricity production costs differ very little within the EU, according to the Business Europe officials, who cited varying tax levels and subsidies as key factors behind the energy cost differences between EU member states.

The cost of RES support mechanisms – some of these are extremely costly – chosen by EU member states is another factor behind the resulting high energy costs around Europe, which is why the EU is pressuring member states to reform markets, the objective being to limit the impact on energy price levels, Affre noted.

The intergration and harmonization of EU energy markets, a delayed process, promises to further reduce energy costs in Europe, the Business Europe officials supported.

 

 

 

EVIKEN: Target model reforms to nurture market distortions

EVIKEN, the Association of Industrial Energy Consumers, has expressed deep concerns felt by the country’s industrial energy consumers, as well as outright opposition, over regulation changes being prepared as part of the target model.

The association, in a letter contributed to a public consultation procedure staged by LAGIE, the Electricity Market Operator, has listed a series of key concerns, underlining that the revisions being planned would continue to nurture market distortions, maintain obstacles disenabling true regional market interconnections, and, ultimately, increase energy costs for consumers, a prospect that threatens to affect the industrial sector’s level of competitiveness.

The target model process aims to harmonize the electricity wholesale market with EU standards.

In the lead-up to the reforms, the industrial sector has anticipated the establishment of a truly competitive energy market, along the lines of other EU member state markets.

In comments to energypress, one industrial sector official noted that the planned reforms would increase energy costs and create a new high-cost market in which competitive industrial production cannot exist, adding that, if implemented, the measures will help establish an oligopoly.

Besides expressing its opposition to the planned reforms in the letter forwarded to LAGIE, the industrial energy consumers association has also informed the European Commission of its concerns.

Imminent energy exchange to aim for three main objectives

The establishment of a local energy exchange, being incorporated into an imminent draft bill carrying various bailout requirements, will aim to achieve three main objectives.

The first of these will be to harmonize the Greek energy market with all European markets. A second objective will aim for greater competition and transparency, which should offer households and enterprises lower energy costs. A third objective will be to offer energy supply security to the country’s energy mix through diversified energy sources, including greater renewable energy participation.

The establishment of an energy exchange has been incorporated into the Target Model, a process entailing the electricity wholesale market’s harmonisation with EU law.

The energy exchange promises to bridge Greece’s day-ahead market with the Italian and Bulgarian markets, as well as those of other neighboring EU member states, depending on their degree of readiness.

The Target Model is expected to significantly bolster the industrial sector as, on the one hand, energy costs are expected to drop, and, on the other, industrial enterprises will be able to participate in the energy market and establish supply deals with electricity producers. This will provide industrial enterprises with full control over their long-term energy costs.

 

PM pledges €100m, annually, for industrial unit energy upgrades

Prime Minister Alexis Tsipras, speaking yesterday at a Federation of Industries of Northern Greece (SBBE) annual meeting, noted that 100 million euros of an additional 300 million euros expected to become available to Greece as of 2019 for public investments would go towards supporting energy upgrades at energy-intensive industrial units.

The government was promised additional public investment funds in exchange for the latest round of measures added to the Greek bailout agreement.

These energy upgrades will lead to energy cost savings for industrial enterprises and lower production costs, Tsipras told the SBBE audience.

Tsipras described the high energy costs faced by manufacturers as a “thorny” issue, while noting that his government has taken certain steps to combat the issue.

He made reference to the abolition of the special consumption tax (EFK) tax imposed on natural gas used for electricity generation; an EFK reduction for natural gas used in industrial production; as well as the implementation of the demand response mechanism (interruptability). This mechanism enables major industrial enterprises to be compensated when the TSO (IPTO) requests that they shift their energy usage by lowering or stopping consumption during high-demand peak hours so as to balance the electricity system needs.

Reform needs, not additional taxes, Mytilineos stresses

The European Commission needs to intervene more firmly on the Greek bailout program and apply pressure on the government for further reforms needed by the economy instead of tax increases, as is being demanded by the IMF, Evangelos Mytilineos, the chief executive officer at the Mytilineos corporate group, has told Euractiv, a news portal focused on European news.

Mytilineos believes that the European Commission is not applying as much pressure as it should to stop tax increases and instead shift the focus to structural reforms.

“Unfortunately, the bailout agreement is being driven by taxes. The IMF’s position on increasing taxes has dominated over reforms, which Greece’s public administration is continuing to strongly object to without an interest to alter decades-old habits,” Mytilineos noted. “The European Commission has a role to play here, which it is currently not playing, and this is to push for further structural reforms.”

Following a turbulent year in 2015, the Greek government has had no choice but to learn fast from mistakes, Mytilineos believes. “Any government, whether left-wing or right-wing, needs to comply with regulations if it wants the country to remain a member of the EU,” Mytilineos said. “There is not much leeway for maneuvering.”

The need for structural reforms was also highlighted in the latest Economic Cooperation and Development (OECD) report on Greece, released last week.

Energy sector reforms included in Greece’s first bailout agreement back in 2010, intended to generate competition in the electricity market and limit monopolies, have been severely delayed. However, there has ben no holding back on taxes imposed on energy. They have risen dramatically during the bailout era. Taxes imposed on natural gas consumed by the industrial sector amount to 40 percent.

“How can a Greek industrial enterprise remain competitive when tax levels in other countries, both within and beyond the EU, are 5%, 8%, 10%, 12%,” Mytilineos questioned.

The European Commission has set itself the objective of reviving the continent’s industrial sector, which it aspires will represent 20 percent of European GDP by 2020, from 15 percent at present.

This seems like a utopian target, especially if applied to countries such as Greece, where the industrial sector represents just nine percent of the country’s GDP and energy costs remain high despite the plunge in international crude oil prices.

Asked to comment on unchanging electricity prices in the local market, Mytilineos attributed the case to the structures of Greece’s economy and, especially, the energy sector. However, the corporate head said he expects to see gradual benefits for consumers within the next few months from the developing competition between main power utility PPC and privately run suppliers.

At present, PPC controls 94 percent of the local electricity market while several independent enterprises share the remainder.

Mytilineos would like to see a fall in electricity prices. Aluminium of Greece, a member of his corporate group, ranks as PPC’s largest power consumer and requires about five to six percent of the country’s total electricity production to operate.

Responding to a question on whether he considers Greece as being detached from the European energy sector’s wider developments, Mytilineos noted that gradual change was now occurring. DEPA, the Public Gas Corporation, is no longer the country’s exclusive natural gas importer as M&M, a member of the Mytilineos group, has now also entered the market. Also, new electricity interconnections with neighboring countries are being developed to increase Greece’s options.

EU policies increasing energy costs, EVIKEN tells Sefcovic

EU energy policies being implemented in Greece are increasing energy costs and blocking the liberalization of markets as a result of consequent market distortions, officials of EVIKEN, the Association of Industrial Energy Consumers, contended during a meeting in Athens yesterday with Maros Sefcovic, the European Commission vice president responsible for Energy Union.

The industrial consumer association representatives, who were joined at the meeting by members of SEV, the Hellenic Association of Industrialists, did not hesitate to frame the EU, noting that, in some cases, these unfavorable market developments are being tolerated by the European Commission.

The EVIKEN officials submitted a series of demands aimed at countering the market distortions, including the implementation of bilateral agreements and a decrease of natural gas distribution fee costs.

As for the electricity market, EVIKEN demands included an immediate start in the transition towards the target model, exemption of surcharges imposed on imported electricity, and interconnection upgrades.

For the natural gas market, EVIKEN demanded the cancellation of a distribution fee hike, the exclusion of EPA gas supply companies from gas auctions for as long as they remain subsidiaries of DEPA, the Public Gas Corporation, a doubling of the gas amounts auctioned, a reduction to the special consumption tax (EFK) imposed on gas, and reinforced and upgraded interconnections linking Greece, Bulgaria, and Romania.

Sefcovic, who was in Athens as part of a tour of European capitals to check on energy union progress of EU member states, also held separate meetings with Prime Minister Alexis Tsipras, energy minister Panos Skourletis, and other local officials.

OECD report calls for local energy network privatizations

Greece’s energy-sector privatizations – meaning the networks – need to be swiftened, state-controlled monopolies must be restricted, and markets that essentially remain closed need to be liberalized to reduce natural gas and electricity costs, currently among the costliest in the world, the Organization for Economic Cooperation and Development (OECD) has proposed to the Greek government.

A new OECD economic survey on Greece, presented yesterday to Prime Minister Alexis Tsipras by the organization’s secretary-general Angel Gurria, highlights the various chronic issues that continue to mainly affect the country’s electricity market and, to a lesser degree, the natural gas market.

Cross subsidization, the practice of charging higher prices to one group of consumers in order to subsidize lower prices for others, is proving detrimental in the electricity market as many consumer categories of the main power utility PPC are still being weighed down by the approach. This is limiting competition and increasing prices, especially for the industrial sector, the report notes.

In a list of 27 countries, Greece ranked seventh in terms of natural gas costs for the industrial sector. Greece ranked fifteen places above the average price. As for industrial electricity, Greece ranked as the tenth costliest in a list of 29 countries, five places above the average level.

High energy costs are making Greek exports less competitive, the OECD report points out.

Boosting the independence of network operators is another crucial matter that needs to be looked at, the report notes.

Increased contribution of renewable energy (RES) electricity production to the grid would also boost Greek competitiveness, according to the report. The RES share of local power production increased from just five percent in 1990 to 23 percent in 2013, the report observed.

Energy ministry forming committee to look at industrial energy costs

The Enviroment and Energy Ministry is assembling a committee to be charged with examining energy cost issues concerning Greece’s industrial sector, according to energypress sources.

The ministry’s initiative to form the committee follows a recent meeting between energy minister Panos Skourletis with representatives from EVIKEN, the Association of Industrial Energy Consumers, during which the sector’s energy cost problems were presented by industrialists.

According to EVIKEN, prospective supply agreements to be reached between industrial enterprises and PPC, the main power utility, or DEPA, the Public Gas Corporation, may offer favorable energy-cost results, but these benefits risk being offset by various regulated charges and heavy taxes imposed on energy, making the sector non-competitive.

The industrial sector wants the various regulated charges to be restricted, if not abolished, as it believes they do not offer considerable revenues to the state but, even so, significantly reduce Greek industry’s level of competitiveness and lead to job losses, ultimately affecting state revenues and contributions to social security funds.

The industrial sector is placing particular emphasis on the need to reduce the RES-supporting ETMEAR surcharge imposed on electricity bills, as well as a lignite-related surcharge, based on EU guidelines concerning state aid for energy-intensive industries.