energy crisis

Action to tackle electricity bill evasion, theft, costing plenty

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The energy ministry appears determined to deal with the wider cost and market repercussions caused by strategic electricity bill evaders and electricity theft as it prepares a plan aimed at keeping electricity price levels under control once universal subsidy support for consumers is lifted at the end of the year and indexation clauses are reintroduced by suppliers.

Energy minister Thodoris Skylakakis, a former deputy at the finance ministry, knows well that electricity bill evasion can be likened to tax evasion, as consumers who manage to avoid paying electricity bills, by taking advantage of lax domestic regulations to switch suppliers and leave behind unsettled bills, are ultimately doing so at the cost of punctual consumers, who end up shouldering consequent costs.

Even if a fraction of unpaid receivables owed to electricity suppliers were to be covered, this would help suppliers subdue their tariff levels, market officials pointed out.

Taking all this in mind, the energy ministry is expected to announce tough measures in October, clamping down on serial electricity bill evaders as well as electricity thieves.

Meanwhile, the ministry will also seek to offer reinforced energy-cost support to low-income households as of 2024, when universal energy-crisis aid, in the form of subsidies, will cease to exist and indexation clauses are reactivated by suppliers. Income levels and geographical location are expected to be factored into calculations for support to eligible households.

The ministry’s action plan countering electricity bill evaders, estimated at 30,000, will involve implementing a debt-flagging system similar to one used in the banking sector.

Electricity theft, the other key front that needs to be addressed, cost consumers a total of 789 million euros in 2022, according to recent data.

Milder, lower-cost gas storage measures planned for winter

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This winter season’s Preventive Action Plan for natural gas supply security in Greece is expected to be significantly lower in cost as it will be limited to a basic set of milder precautionary measures, energypress sources have informed.

The Preventive Action Plan will be determined by the outcome of a risk study currently being conducted for the upcoming winter, deputy energy minister Alexandra Sdoukou recently informed.

Though the study’s results are not yet out, it has already become apparent that drastic energy security measures such as those taken for last winter – among them the rental of an additional FSU at the Revythoussa LNG terminal just off Athens – will not be necessary, well-informed sources have contended.

This winter, gas grid operator DESFA, running the Revythoussa LNG terminal, does not intend to hire an additional FSU, which, along with gas-storage facility rentals abroad last winter season by electricity producers operating gas-fueled power stations in Greece, ended up costing 160 million euros.

In the lead-up to last winter, Greece’s gas-fueled electricity producers were required to store natural gas at underground storage units of other EU member states, as domestic gas storage facilities did not suffice to cover precautionary-measure needs.

The country’s electricity producers have, this autumn, remained far more subdued on gas-storage action at facilities in fellow EU member states. Some of Greece’s major electricity producers have reached agreements to use gas storage facilities, primarily in Italy, if needed, sources informed.

Gas amounts involved in these agreements are believed to be well below levels foreseen by EU regulations and RAAEY, the the Regulatory Authority for Waste, Energy and Water.

Last winter, RAAEY, aligning itself with EU Regulations, which require all member states to store gas amounts equivalent to 15 percent of national annual consumption, set a 7.5 TWh storage requirement.

Market officials have expressed concerns as to whether this requirement still needs to be maintained, noting the Revythoussa LNG terminal could cover extraordinary needs through additional LNG shipments.

Levy on gas for power output to be terminated at end of year

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The energy ministry plans to terminate an extraordinary levy that was imposed on natural gas used for electricity generation at the beginning of 2024, along with the termination of other measures implemented in the wholesale and electricity markets during the energy crisis.

A joint ministerial decision issued last spring for subsidy distribution of amounts collected through the extraordinary levy is also set to expire on December 31, 2023.

The joint ministerial decision, which had been signed by then-energy minister Kostas Skrekas and former deputy finance minister Theodoros Skylakakis, now in charge of the country’s energy portfolio, facilitated the collection of funds through the levy on gas used for electricity production in order to contribute to electricity-bill subsidies offered through the Energy Transition Fund.

The formula of the levy on gas used for electricity production, introduced in November, 2022, was revised in May this year and set at 5 percent of the TTF index, replacing a previous fixed charge of 10 euro per MWh.

Though this revision did reduce the cost of the levy imposed on gas used for electricity production, it has continued distorting the domestic wholesale market, market officials have contended.

As a result, the levy has undermined the competitiveness of domestic gas-fueled power plants compared to counterpart units in neighboring countries, thus limiting their operating hours.

The TTF index, a key benchmark for natural gas prices in the European market, ended August at an average of 34.83 euros per MWh for contracts requiring delivery in September.

 

Two alternatives for DEPA Commercial bourse listing

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Two primary alternatives being considered for the privatization of DEPA Commercial, a process that seems to have regained momentum, seem to be the most probable courses of action, sources have indicated.

Both options being considered would result in DEPA Commercial’s listing on the Athens stock exchange.

Through one of the two possible alternatives, DEPA Commercial’s two shareholders, privatization fund TAIPED, holding a 65 percent stake in the gas company, and Helleniq Energy, formerly named Hellenic Petroleum, would each contribute portions of their equity in DEPA Commercial for its entry into the Athens bourse.

The other alternative being examined would entail the sale of Hellenic Petroleum’s 35 percent stake in DEPA Commercial to the Greek State, which, in turn, would make this equity available on the bourse.

DEPA Commercial’s privatization plan had been put on hold as a result of the energy crisis and an ongoing legal battle between the gas company and fertilizer industry ELFE.

The Greek State has intervened in the gas market, through DEPA Commercial, to implement measures designed to control gas prices and secure energy sufficiency.

DEPA Commercial privatization plan now being reexamined

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Greek privatization fund TAIPED is reconsidering a privatization plan for its 65 percent share of gas company DEPA Commercial after having put the plan on hold as a result of the energy crisis and an ongoing legal battle between the gas company and fertilizer industry ELFE.

The de-escalation of the energy crisis and the renewed possibility of a further sale of Helleniq Energy shares – Helleniq Energy holds a 35 percent stake in DEPA Commercial –  are two key developments that have prompted TAIPED to reexplore the DEPA Commercial privatization.

DEPA Commercial enables the Greek State to intervene effectively, facilitating measures to control gas prices and secure energy sufficiency.

According to sources, the privatization fund is in talks with Helleniq Energy to identify an optimal solution that would maximize value for DEPA Commercial shareholders. Also, it should be noted that Helleniq Energy has made clear its intention to divest from DEPA Commercial.

A bourse listing of a package of DEPA Commercial shares on the Athens stock exchange is seen as the most likely outcome. If so, the Greek State would retain its majority control over DEPA Commercial.

Another option being explored entails TAIPED acquiring Helleniq Energy’s stake in DEPA Commercial and then listing a percentage of the gas company’s shares on the Athens bourse.

The DEPA Commercial board is actively exploring strategies to diversify the gas company’s portfolio and expand its engagement in renewable energy initiatives. Additionally, DEPA Commercial is planning to extend its trading operations to encompass environmentally friendly gases, such as biomethane.

 

Electricity subsidies total €9.2bn over past 2 years

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Electricity consumers in Greece have received over 9.2 billion euros in subsidies over the past two years, the EU’s sixth highest amount, as a percentage of GDP, a support effort that has been instrumental in Greece’s battle to mitigate the impact of rising electricity prices on its population, the energy ministry has informed.

Greece has steadily recorded variable-tariff electricity price levels below the European average, especially since the summer of 2022, when the energy crisis began to take full force, and, subsequently, has ranked as one of Europe’s lowest-cost countries for retail energy, the energy ministry added, referring to regular data published by HEPI, Europe’s Household Energy Price Index.

The government’s electricity subsidies policy has continued to produce tangible results for consumers in Greece, protecting society and the economy, the ministry noted.

A subsidy-funding mechanism withholding windfall earnings of power producers in the wholesale market, and the suspension of indexation clauses in electricity bills, have both been extended until December 31 in order to assess the situation in international energy markets over the coming months and decide accordingly on the necessity of emergency measures, the ministry noted.

During this period, the ministry will also establish a suitable framework enabling suppliers to better inform consumers on products, while also promoting transparency and price-comparing ability, it added.

Market’s return to normality to include tariff transparency plan

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RAEEY, the Regulatory Authority for Waste, Energy and Water, is preparing measures for the retail electricity market’s return to normality, scheduled for January 1, following a recent extension of suspended indexation clauses until the end of the year.

More specifically, the authority has two decisions in the pipeline. The first decision pertains to the implementation of tariff transparency labeling. The second decision concerns establishing a framework for the retail electricity market’s return to normality at the beginning of 2024.

The authority plans to introduce the use of specific colors for documents containing pre-contractual information in order to help consumers easily identify categories of supply contracts available on the market and understand their charges. Fixed and variable tariffs, for example, will be associated with documents of specific colors.

The authority recently announced an initial plan including four types of electricity supply products – a variety of variable and fixed tariff options – but RAAEY officials have since clarified it was merely indicative as electricity retailers will retain the autonomy to customize and shape their product offerings according to their preferences.

 

PPC prices up 25% since freeze of indexation clause a year ago

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Though a suspension of electricity-bill indexation clauses that came into effect last August has offered consumers far greater transparency on charges, tariffs offered by power utility PPC, the dominant retail player, have since risen by 25 percent, if not taking into account subsidies offered as energy-crisis support.

The power utility’s tariffs averaged 34.69 cents per KWh over the past twelve months, but would have averaged 27.77 cents per KWh during the period had the indexation clauses remained active, a survey conducted by energypress has shown.

Last August’s suspension of electricity-bill indexation clauses has resulted in higher-priced electricity tariffs at PPC for seven months, compared to the equivalent months a year earlier.

Also, modest reductions were recorded in February, April, May and July, while a more substantial year-to-year reduction of approximately 5 cents per KWh was recorded in August, 2022, when indexation clauses were first suspended.

The energy ministry recently decided to extend the suspension of electricity-bill indexation clauses until December. The suspension was originally due to end September 30.

 

Heating fuel, gasoline subsidies to go, focus on credit rating

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Generous and widespread energy-crisis support measures previously offered by the government to consumers in the form of subsidies for gasoline and heating fuel appear unlikely to be repeated as all moves now being made by the administration and its economic team are wary of the next round of assessments to be delivered by credit rating agencies on the Greek economy come September.

Prime Minister Kyriakos Mitsotakis will be very well aware of this prospect when he launches September’s Thessaloniki International Trade Fair with a keynote speech at the event’s opening.

No matter how much gasoline prices may rise, subsidies should not be expected. “We have exhausted our limits. We are awaiting the investment rating,” Deputy Minister of Development and Investment Nikos Papathanasis noted yesterday, making as clear as possible that widespread support measures are a thing of the past.

The same goes for heating fuel allowances. Last winter, a relatively mild one, they totaled 300 million euros and reached 1.3 million households. The government’s economic team is now examining the prospect of toughening up criteria for this support measure. The range of beneficiaries and heating allowance amount to be offered will depend on the fiscal leeway available in the autumn.

Standard & Poor’s credit rating for Greece stands at BB+ with positive outlook. Moody’s credit rating for Greece was last set at Ba3 with positive outlook. Fitch’s credit rating for Greece was last reported at BB+ with stable outlook. DBRS’s credit rating for Greece is BB (high).

Eurogas: Energy crisis threat not yet over for Europe

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The energy-crisis threat on the continent has not yet passed, despite lower prices, according to Didier Holleaux, chairman of Eurogas and vice-president of France’s Engie, who has warned that the risks will remain for at least the next four winters, and, in doing so, advised authorities, governments and organizations to avoid complacency.

EUROGAS is a European organization involving the participation of a significant number of major energy companies from all over the EU.

Europe managed to overcome the threat of energy shortages last winter, while a sharp fall in natural gas prices over the past six months has provided a welcome respite for consumers.

European contracts at the Dutch TTF hub are currently being established at levels of between 20 and 30 euros per MWh, just a fraction of last August’s peak of 340 euros per MWh, prompted by a drastic cutback in supply of Russian pipeline gas.

Over the past year, EU officials have adopted a series of measures to reduce natural gas prices. Holleaux, in comments to Natural Gas World, warned that last year’s unusually mild winter was the catalyst behind the price reductions.

He acknowledged the European Commission’s gas storage requirements for EU member states also played a role in subduing prices in Europe, adding, however, that current prices remain considerably higher than levels that were regarded as normal prior to the pandemic.

Emergency measures extended by 3 months over price fears

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Unsettling energy price forecasts have prompted the energy ministry to extend the country’s emergency measures by a further three months, meaning they will now remain valid until December 31, to protect consumers against any new upward price trajectory.

The energy ministry reached a decision last Friday to extend the emergency measures – namely a price cap imposed on the wholesale electricity market and a suspension of indexation clauses usually included in electricity bills. Both measures, introduced a year ago, were due to expire on October 1.

The energy ministry wants the financial support of the Energy Transition Fund, in order to provide electricity subsidies to consumers should the energy crisis flare up again.

Such Energy Transition Fund support would not be possible if the existing price cap in the wholesale electricity market were to be lifted, as any price levels over the cap would remain in the market and not be diverted into the Energy Transition Fund to cover electricity subsidy needs.

Since its introduction last July, the price cap on the wholesale electricity market has so far raised over 3.3 billion euros for electricity bill subsidies, the energy ministry pointed out in its announcement of the decision to extend the country’s emergency measures.

Highlighting concerns of possible energy price rises ahead, German electricity forward contracts for the fourth quarter of 2023 and the first quarter of 2024 have been set at 123 and 146 euros per MWh, respectively.

As for France, one of Europe’s other major energy markets, forward contracts for Q3 2023 and Q1 2024 were set at 155 and 218 euros per MWh, respectively.

Emergency measures may be extended until January

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The energy ministry, now expected to reach a decision on when to terminate the country’s extraordinary energy-crisis measures for the electricity market by August 15, is, according to ministry sources, considering extending the measures until December 31, which means new supplier tariffs being prepared would not come into effect any sooner than January 1, 2024.

Until recently, the ministry was seen preparing to lift the emergency measures on September 30, but an extension of two or three months is now considered possible.

A most recent Eurogroup announcement, issued on July 13, left open the possibility of a more gradual withdrawal of the emergency measures, noting they should be terminated “as soon as possible in 2023 and 2024”.

It was the first time 2024 has been mentioned in an official EU text as a possible withdrawal year for the emergency measures, presumably following requests by some member states.

Low-income household, non-payer measures in the making

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The government plans to soon announce new electricity market measures addressing two extremes, low-income households requiring support and strategic non-payers fleeing from their obligations.

Prime Minister Kyriakos Mitsotakis, who discussed measures concerning both issues during a recent meeting at the energy ministry, is expected to announce new measures at September’s Thessaloniki International Fair.

Low-income households are expected to be offered further protection against high energy costs, while strategic non-payers exploiting market rule loopholes to switch suppliers despite owing amounts to previous suppliers will face tougher rules.

The support measures for low-income households will include energy-cost relief for large families, while the government’s toughened stance against strategic non-payers will include rewards for punctual payers.

The country’s electricity suppliers have been burdened with an estimated 500 million euros in bad debt over the past year, alone, as a result of the actions of strategic non-payers.

Their ability to avoid payments was greatly assisted by a decision issued by the Council of State, Greece’s supreme administrative court, in 2016. The court annulled a market rule requiring consumers to settle outstanding amounts owed to suppliers before switching.

The pursuits of strategic non-payers were further assisted approximately a year ago when the government, in its package of energy crisis measures, included a revision permitting consumers to switch suppliers without incurring penalties for premature withdrawals from contracts.

Adjustment period for return to normalized power market

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The energy ministry appears to have reached a decision to not extend the duration of emergency measures for the retail and wholesale electricity markets beyond a September 30 expiry date, but an adjustment period smoothening the return to normalized market conditions seems likely, energypress sources have informed.

An announcement on details concerning the termination of emergency measures, introduced last summer, is expected to be made today during Prime Minister Kyriakos Mitsotakis’ scheduled visit to the energy ministry.

Electricity supplier calls for a short adjustment period, during which consumers would be informed on new products and tariffs, appear to have been heeded at the energy ministry.

The ministry is now expected to proceed with a legislative revision that will set out the transition towards normalized retail market conditions, including the reactivation of indexation clauses in electricity bills.

Transitional tariffs are expected to be a fundamental part of the return to normalized market conditions. The legislative revision is also seen shortening the notification period suppliers will be required to offer customers on forthcoming changes from 60 days to 30 days.

As a result, given the anticipated end of emergency measures on September 30, suppliers will need to inform customers on prospective electricity tariff and product changes by August 31, not July 31.

Transitional post-crisis period of variable tariffs considered

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The energy ministry is examining the prospect of bridging, over a two to three-month adjustment period, the country’s return to a normalized electricity market, once emergency measures that were introduced early in the energy crisis are eventually lifted, most probably on September 30.

The ministry is considering to introduce transitional tariffs for this adjustment period, which would begin October 1, in the form of variable tariffs whose price levels would be announced by suppliers on the 1st of each month.

The proposed adjustment period would offer consumers a smoother crossover from the current setting of emergency measures – they include a suspension of indexation clauses – to normalized market conditions as it would result in a supplier tariff-setting procedure that is similar to the current system.

Monthly tariff announcements by electricity suppliers would be made at the beginning of each month, compared to the 20th of each previous month, as is the case at present.

An adjustment period would provide suppliers additional time to finalize their post-crisis tariffs, while also giving electricity users sufficient time to choose supplier and product once the transition period has ended.

Details concerning a pricing formula that could be applied during the transition period have not been released.

 

New minister aims to clamp down on supply switchers with debt

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Electricity market rules will be revised to stop consumers from manipulating legal inadequacies in order to avoid servicing bills, the reelected conservative New Democracy party government’s newly appointed energy minister Theodoros Skylakakis has indicated in his policy statement, presented during a three-day parliamentary debate.

A considerable number of low-voltage energy consumers are capitalizing on the liberty offered by an existing rule that enables them to switch to other suppliers without having settled previous power bills.

Unpaid receivables are estimated to have ballooned to approximately 500 million euros during the energy crisis.

Three years ago, the Council of State, Greece’s supreme administrative court, cancelled a ministerial decision that forbade energy users from switching to other suppliers if they had not settled previous electricity bills, either through full payment or commitment to installments.

In addition, penalties for consumers switching suppliers prematurely, before the expiration of supply agreements, were abolished last year.

These developments have prevented suppliers from being able to order supply cuts, through the market operator, for departing consumers leaving behind unsettled power bills.

RAAEY, the Regulatory Authority for Waste, Energy and Water, had put through consultation, three years ago, a debt-flagging proposal that was not adopted. Under that plan, consumers failing to meet extended, follow-up deadlines for unpaid electricity bills would have been subject to supply cuts and stopped from switching suppliers.

DESFA gas auctions pivotal for winter’s storage requirements

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Gas grid operator DESFA’s annual gas auctions, taking place today to offer capacities at the grid’s entry and exit points, will play a pivotal role in clarifying and determining to what extent Greece could reduce gas quantities that will need to be stored away at Italian and Bulgarian facilities between November and March for energy security next winter.

The outcome of the auctions will shape Greece’s negotiating position in talks with the European Commission for the country’s gas storage needs.

If the vacant grid capacity left over from today’s auction process is small, then Greece will seek a smaller gas-storage requirement from Brussels authorities.

Greece’s gas storage requirement last winter was limited to 1.14 TWh, based on the country’s vacant capacity at the Nea Mesimvria grid entry point, in the north.

An exception offered by the European Commission to EU member states with a shortage of gas storage facilities, such as Greece, enables storage requirements to be kept at 15 percent of the average consumption level over the past five years.

 

Suppliers preparing offers for new market conditions

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The retail electricity market’s imminent new reality, to be established once emergency measures have been terminated, will bring about a new generation of tariff offers which suppliers have been working on feverishly over recent months.

These can be grouped in three categories offering cost-plus variable tariffs, a variety of packages based on indexation clauses, as well as fixed tariffs for short-term periods, usually one or three months long.

Emergency energy market measures, introduced last year to help combat the effects of the energy crisis, will be lifted either October 1, according to plans by authorities, or December 1, as many suppliers are seeking an extension to prepare for new market conditions that will no longer offer consumers subsidy support.

Electricity suppliers will look to establish tariff-related that are as simple as possible for consumers to understand, the intention being to facilitate sales of offers.

Marketing and sales departments at energy companies are currently working overtime to prepare new electricity supply packages, hoping the energy ministry will heed their calls for a two-month extension before emergency measures are lifted.

Suppliers have made clear their concerns over how long it will take consumers to adjust to the new market conditions without subsidy support.

 

 

Indexation clause set to remain suspended for 2 extra months

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The energy ministry appears to be receptive to a request made by a number of electricity suppliers for a short extension of emergency measures introduced to the retail electricity market during the early stages of the energy crisis.

Suppliers have called for an extension of emergency measures as an adjustment period for a return to normalized tariffs.

The ministry, energypress sources have informed, seems set to keep indexation clauses in electricity bills suspended for a further two months. This means they would be reactivated on December 1 rather than October 1, as was originally planned.

On the contrary, the ministry does not look like it will extend emergency measures that had been introduced to the wholesale electricity market, unless the energy crisis flares up again and leads to skyrocketing natural gas prices, as was the case for several months last year.

If electricity prices, greatly influenced by natural gas prices, remain steady until the end of September, then a current price cap imposed on the wholesale electricity market’s day-ahead and intraday markets will be terminated as of October 1.

RAAEY scrutinizing post-crisis electricity supplier terms

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RAAEY, the Regulatory Authority for Waste, Energy and Water, is holding a series of one-on-one meetings with all the country’s electricity suppliers in an effort to ensure that market rules are adhered to once emergency measures, including a suspension of indexation clauses, are lifted.

Besides proper implementation of indexation clauses, the authority also aims to prevent the reintroduction, by electricity suppliers, of penalties for premature customer withdrawals from floating-tariff supply agreements.

The inclusion of any clause for such penalties in floating-tariff supply agreements once the country’s emergency measures – introduced to help combat the effects of the energy crisis – have expired would be viewed as an abusive practice by RAAEY.

Also, floating-tariff supply agreements to apply as of October 1, when Greece’s emergency measures are expected to be lifted, must not include paper invoice charges, which are not permitted, or any price-adjustment mechanisms beyond the basic formula aligned with the wholesale market.

 

EU member states not ready to abandon emergency measures

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Most, if not all, EU member states are troubled by a European Commission decision reached earlier this month to not permit extensions of emergency energy-crisis measures beyond March, 2024, as they still do not feel secure enough to be left without market protection, despite the drop in natural gas prices at the TTF index to relatively normal levels.

A number of EU member states, among them Spain, Portugal and Romania, have already decided to extend their emergency measures until the end of 2023. Greece has extended its emergency measures until September.

Meanwhile, European energy companies are applying pressure on their respective governments, as well as the EU’s leadership, to lift the range of energy-crisis protection measures introduced over the past year to year-and-a-half in order to rid themselves of market distortions and side effects.

Electricity companies feel that prices have returned to satisfactory levels and are convinced measures such as a price cap on the remuneration of electricity producers are now proving detrimental.

EU member states are not expected to reach any new decisions during summer but will reassess their respective situations as of September. Their governments generally believe energy prices remain susceptible to the slightest of market adversities, as was the case recently, towards mid-June.

 

Suppliers warn against overregulated new framework for electricity market

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Emergency measures adopted early during the energy crisis to help consumers deal with higher prices should not be replaced by an overregulated new framework, scheduled to be implemented October 1, electricity retailers have urged in a consultation procedure staged by RAAEY, the Regulatory Authority for Waste, Energy and Water.

Highlighting the sense of urgency already felt by electricity retailers ahead of the introduction of a new set of rules, 14 market players, a big turnout for the local sector’s standards, have participated in the authority’s consultation procedure, offering comments on the market’s new set of rules to apply as of October 1, when the existing emergency measures, introduced in August, 2022, will have just been lifted.

Electricity suppliers fear that once lifted, on September 30, the existing measures could be replaced by a new set of emergency measures coming in disguise as a new framework for the electricity market.

EU adopts Greek proposals for price protection, flexibility

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The Energy Council of EU energy ministers, which convened yesterday, has adopted two Greek proposals, a mechanism offering protection against energy price increases as well as a flexibility mechanism for gas-fueled power plants, the Greek energy ministry has announced.

The price protection mechanism, supported by Greece, Spain and allies, on the matter, represents the continuation of a windfall earnings recovery mechanism in the wholesale electricity market. If triggered, amounts collected through the mechanism would be used to subsidize consumer electricity bills.

This mechanism had been adopted by the European Commission last year, based on a Greek model, before it was applied by member states with some variation.

Also, within the framework of the EU’s capacity availability mechanisms, energy ministers included a provision allowing availability-related fees for gas-fueled power stations if they meet required technical specifications. This provision will enable a flexibility mechanism to be applied.

Natural gas price spike prompts new market alert

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News that the Netherlands intends to soon stop production at Groningen, one of Europe’s largest gas fields, as a result of earthquake-related risks, pushed gas prices up by 28 percent yesterday, not surprising, as Groningen is a key gas source for countries in Europe’s west.

The development has made even more urgent the intention of Greece and Spain, along with other EU member states, to reestablish a common front as protection against the outbreak of any new energy crisis.

This group plans to request the continuation of a windfall earnings recovery mechanism in the wholesale electricity market when EU energy ministers meet on Monday to discuss a new structure for the bloc’s energy market.

The Dutch TTF benchmark has risen 113 percent over the past 15 days, from 23 euros per MWh to 49 euros per MWh yesterday, before easing off to 39 euros per MWh.

A temporary disruption of operations at some of Norway’s gas fields has unsettled European markets. Though production at these Norwegian gas fields will soon be normalized, the Netherlands have yet to reach a final decision on the country’s Groningen gas field. However, it is expected to continue producing should a new energy crisis hit Europe or if its upcoming winter is a cold one.

At this stage, ambiguity prevails as it remains unclear if Europe’s natural gas market finds itself at the onset of a new upward trajectory.

A sudden increase in LNG demand in Asia as a result of China’s post-pandemic return to full production is another major concern for European energy market players. Such a development promises to escalate prices.

 

RAAEY introducing four new retail electricity tariff options

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A currently suspended indexation clause included in electricity bills for households and businesses will be replaced by a new framework offering consumers four different types of tariffs as of October 1.

RAAEY, the Regulatory Authority for Waste, Energy and Water, has just forwarded the revised framework for consultation, a procedure to be completed on June 19.

Adjustments to the current plan could be made if any proposals made by participants promise improvement.

The country’s emergency energy-crisis measures adopted for the wholesale and retail electricity markets, including the suspension of an indexation clause included in electricity bills with variable tariffs, expire on September 30.

One of the emergency measures, which was introduced last August, has required power suppliers to announce their respective tariffs for each forthcoming month by the 20th of every preceding month. This measure was intended to intensify competition between electricity retailers.

As of October 1, consumers will be able to choose from four types of electricity supply products, including two with variable tariffs, whose levels will be determined by a formula factoring in wholesale market price levels, according to the RAAEY plan.

One of the four new products proposed by RAAEY offers consumers fixed tariffs for a set period. Another offers variable tariffs to be adjusted on the 1st of each month. The choices will also include a dynamic variable tariffs offer for consumers who have installed smart meters.

RAAEY, in its plan forwarded for consultation, has noted that penalties for premature departures by customers cannot be incorporated into supply agreements with variable tariffs as they would represent an “abusive” practice.

Europe falling behind North America in energy transition race

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Despite taking the initiative, back in 2010, for action against the climate crisis, Europe has since lost plenty of ground and now lags behind North America in the energy transition race as a result of a lack of measures and incentives to attract related investments.

Evangelos Mytilineos, president and CEO at the Mytilineos group, as well as president of Eurometaux, Europe’s association for non-ferrous metals producers and recyclers, has pointed out this widening gap that separates Europe and North America.

The USA is subsidizing the cost of energy transition projects at a level of 20 percent, while Canada’s subsidy support reaches 30 percent.

Such investment support for energy transition projects is sorely lacking in Europe, more focused on setting goals and proposing actions such as the Critical Raw Material Act, intended to ensure the EU’s access to a secure, diversified, affordable and sustainable supply of critical raw materials.

Europe’s approach is failing to attract investors, and, even more crucially, energy-intensive industries, Mytilineos pointed out. Many are relocating their headquarters to Asia and the USA.

Energy cost is a key factor behind such decisions. Even now, natural gas prices in the EU, which have de-escalated, remain five times higher than in the USA.

Europe was particularly fortunate last winter as a result of lower temperatures, energy savings, the absence of China from markets, and restricted energy demand in the Far East. However, this fortune has begun changing as energy prices in the Far East are now beginning to exceed European prices. LNG tankers are heading back to Asia in increasing numbers.

The Mytilineos group’s chief forecast the USA would recover from the energy crisis sooner than Europe. Canada, also recovering faster, recently lured the Mytilineos group for a 1.16 billion-euro solar energy portfolio acquisition.

Delayed European decisions, held back by greater bureaucracy and the time-consuming need for approvals by all member states, will leave the continent well behind North America in the energy transition race, Mytilineos noted.

RES sector now main Energy Transition Fund contributor

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The de-escalation of natural gas prices has drastically diminished the level of contributions made by power generation technologies to the Energy Transition Fund, virtually all input now provided by the RES sector, RAAEY, the Regulatory Authority for Waste, Energy and Water, has determined following an assessment of data concerning a related earnings recovery mechanism.

This recovery mechanism has essentially stopped functioning as, in recent months, the average wholesale price in the electricity market has fallen below upper limits set for electricity production technologies.

Since its introduction in the wholesale electricity market last July, the earnings recovery mechanism has so far amassed 3.2 billion euros, of which 2.1 billion euros have been provided by the RES sector.

More recently, over the past five months, a period during which energy prices have been on a downward trajectory, amounts injected into the Energy Transition Fund have shrunk. During this five-month period, a total of 374 million euros have been recovered for the Energy Transition Fund, of which 320 million euros has stemmed from the RES sector.

Power producers and suppliers have, for some time now, been calling for an end to emergency measures applied in the electricity market last summer. They contend that price caps per technology are no longer needed as energy prices have fallen. Maintaining these measures under the current conditions is only leading to market distortions, they support.

Further energy-crisis alleviation projected by EC report

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The European Commission has projected a further de-escalation of the energy crisis for the rest of the year in its assessment of the impact of measures on Greece’s GDP.

This observation has been included in a post-program surveillance report covering the state of the Greek economy and its developments, just published along with a package of recommendations in the so-called European Semester, part of the EU’s economic governance framework.

Given the rapid decline in energy prices since autumn 2022, expenditure on energy-crisis measures is now expected to be significantly lower than expected, Brussels noted in its report.

The overall cost of energy-crisis measures implemented in autumn, 2022 represented 5.8 percent of GDP, but is now estimated to drop to 0.9 percent of GDP as a result of reduced energy prices, according to the report.

The net cost of energy measures is expected to fall to 0.2 percent of GDP, revised downwards since a 0.5 percent forecast projected last autumn, as a result of a new solidarity levy imposed on refineries.