EPA

DEPA, Shell agree on road map for EPA, EDA Attiki transfers

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DEPA, the public gas corporation, and Shell have set out a road map for the former’s acquisition of the latter’s 49 percent stake in their joint venture EPA Attiki, the gas supplier covering the wider Athens area, as well as a formula resolving any financial differences between the two, should a disagreement emerge.

The two enterprises, which have commissioned the same evaluator, have agreed on an evaluation process, energypress sources have confirmed.

DEPA and Shell have spent months negotiating the Greek gas utility’s interest to bolster its retail presence in the wider Athens area through an acquisition of Shell’s 49 percent share of EPA Attiki, for supply, as well as a corresponding stake in EDA Attiki, for distribution.

The European Commission has accepted DEPA’s interest to maintain its retail market presence in the wider Athens area.

As for the retail gas market in Greece’s north, an agreement has been reached for DEPA’s retreat, through the gas utility’s full or partial sale of its 51 percent stake in EPA Thessaloniki-Thessaly to Italy’s Eni, currently holding a 49 percent share of this venture.

All the aforementioned matters need to be finalized by the end of March, but evalution details must be settled well in advance.

Energy Minister Giorgos Stathakis has noted that the bailout’s third review agreement offers leeway for alternatives.

In a recent interview, the minister informed that negotiations concerning the energy sector’s privatizations have not concluded. Each case is being treated separately, he noted, adding that proposals for alternatives forwarded by consultants are currently being examined.

Energy sector privatizations are pivotal to the agenda at TAIPED, the state privatization fund. Some of these energy sector sales represent a key part of this year’s privatizations target, aiming for revenues of two billion euros.

 

 

 

Creditors discontent with Greek gas market reforms plan

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A team of creditor representatives appears to have already rejected the country’s proposal regarding the role and participation of DEPA, the Public Gas Corporation, in the natural gas market’s wholesale, retail and distribution domains.

The latest round of discussions on Greece’s bailout-required energy sector reforms commenced in Athens last week, focused on the gas sector. Talks on main power utility PPC’s sale package of lignite units have yet to begin but officials are expected to begin dealing with this front in Brussels today.

A demand by the creditors for the delivery of a completed road map concerning natural gas market reforms by the end of this year has been added to the latest revised bailout agreement. One of the intentions is to eliminate conditions that do not incite competition.

Though the gas market demands made by the creditors have remained vague, the underlying motive is to break DEPA’s omnipresence. At present, DEPA is active at wholesale and retail levels and holds stakes in the EPA and EDA supply and distribution companies.

Shell and ENI, strategic partners in the EPA and EDA companies for wider Athens and Thessaly-Thessaloniki, respectively, are also pushing to restrict DEPA’s widespread market presence, as expressed in letters to energy minister Giorgos Stathakis.

The Greek recommendation, which, for the time being, appears to have been deemed inappropriate by the creditors, proposes maintaining DEPA’s presence in the EPA Attiki and EDA Attiki companies with the existing 51 percent stake.

Greek officials also recommend DEPA’s full withdrawal from EPA Thessaly-Thessaloniki or a drastic reduction of the corporation’s stake in this venture in exchange for an equivalent increase in its share of EDA Thessaly-Thessaloniki.

Greek officials have also proposed abandoning the idea of DEPA’s entry into the retail gas market as an independent corporate unit. DEPA has already revised its corporate charter to cover retail gas and electricity market activities.

Besides the needed gas market reforms, also unsettled are compensation claims made by Shell and ENI for the premature losses of their regional monopolies. Shell, which, as a 49 percent parner in EPA Attiki, had signed an exclusive supply agreement for wider Athens until 2030, has valued the financial cost of the premature end of this agreement at approximately 100 million euros. The amount would be shared with DEPA, holding a 51 percent stake in the venture.

Major natural gas market changes lie ahead

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An energy ministry plan involving the split of DEPA, the Public Gas Corporation, from the regional EPA natural gas supply companies covering the wider Athens area, Thessaloniki and Thessaly regions promises to bring about major changes to the country’s retail gas market.

The plan appears to have already been discussed, at an unofficial level, between Greek energy ministry and European Commission officials. Both sides are confident the revisions being considered are capable of establishing a more competitive Greek gas market, in line with EU directives.

As specified in Greece’s revised bailout agreement, the country’s lenders have requested a natural gas market road map by the end of this year to offer guidance for the removal of factors currently subduing market competition.

The role of DEPA in the future will be addressed at an upcoming general shareholders’ meeting on July 31.

A highly ranked energy ministry official contacted by energypress noted that two scenarios are possible. One entails DEPA’s step back from the retail market by becoming a minority shareholder in the EPA supply companies. The corporation currently holds 51 percent stakes in the country’s EPA supply companies, while Shell and Eni hold 49 percent stakes. The ministry does not appear keen to adopt this plan. The other scenario, believed to be prefered by the ministry, entails DEPA’s complete withdrawal from the Thessaly and Thessaloniki EPA supply companies combined with the corporation’s continued presence in EPA Attiki, covering the wider Athens area, without any changes to the 51 percent stake currently held in this venture.

The ministry’s overall aim is to establish a situation through which DEPA may operate in a competitive wholesale market while also maintaining its presence in a competitive retail environment, according to the ministry source contacted by energypress.

“A final decision on DEPA’s withdrawal from the EPA supply companies has yet to be reached,” the source noted, adding that Greek officials had more time ahead, until Christmas, to deliver a road map detailing the future of Greece’s natural gas market.

 

DEPA plans to stay with EPA Attiki, leave other retail interests

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The board at DEPA, the Public Gas Corporation, facing pressure from the country’s lenders to relinquish part of its dominant control of the local natural gas market, is believed to be preparing a list of proposals, to be forwarded to the government by the end of this month, that will include a plan for its continued role in the EPA Attiki and EDA Attiki supply companies, with the respective current stakes intact, and either a complete withdrawal from the EPA Thessalia and EPA Thessaloniki companies, or a drastic reduction in these combined with increased stakes in the EDA Thessalia-Thessaloniki ventures.

Though the gas market reform demands included in the revised bailout are not specific, the country’s lenders are pressuring for an end to DEPA’s widespread market presence.

The corporation is currently engaged in wholesale and retail gas supply, maintains 51 percent stakes in all of the country’s regional EPA gas supply companies, and also enjoys interests in EDA, the gas distribution company.

The country’s lenders, as noted in the revised bailout, are expecting a gas market road map by the end of the year with plans aiming to tackle issues that are obstructing competition in the natural gas market. The country’s lenders will have the final say in the reforms.

Shell requests compensation for gas monopoly termination

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Shell, a 49 percent shareholder of gas supplier EPA Attiki, covering the wider Athens area, has, in a letter forwarded to energy minister Giorgos Stathakis last week, officially demanded compensation from the Greek State for the premature loss of its monopoly, energypress sources have informed.

In the letter, Shell has requested a meeting with the energy minister to discuss the issue, while the multinational has evaluated the loss of its regional monopoly, originally agreed to last until 2030, at approximately 100 million euros. Shell would be entitled to roughly half this amount as state-controlled DEPA, the public gas corporation, holds a 51 percent share of EPA Attiki.

Shell, in the letter, also enquires about a conflict of interest concerning DEPA, which, as a result of the natural gas market’s new framework, is, concurrently, the majority shareholder of EPA Attiki, its supplier, and competitor. State-controlled DEPA revised its charter to enter the retail gas and electricity markets.

Shell has asked the energy minister for DEPA’s immediate withdrawal from the retail gas market in the wider Athens area.

Eni, the holder of 49 percent stakes in the Thessaly and Thessaloniki EPA supply companies, has forwarded a similar demand to the ministry for these regional markets.

In comments to energypress, DEPA officials contended that no laws, at a European level, support such a claim.

Even so, on a recent trip to Rome, Stathakis, the Greek energy minister, is believed to have requested the Italian government’s support for a delayed withdrawal of DEPA from the EPA Thessaly and Thessaloniki ventures, sources have informed.

For quite some time now, both Shell and Eni have been presenting their case to DEPA, the Greek government, as well as the country’s lender institutions, contending that their venture partner cannot also be a competitor in the same market or a supplier for the EPA companies.

Ministry officials have questioned figures provided by Shell, noting that the effort to determine whether the multinational is entitled to compensation is complex and, if so, what this value gap could be worth.

Ministry officials contend that a value gap may not necessarily emerge if Greek public spending, in the past, on the development of gas networks and other infrastructure outlays is taken into account. Also, the EPA Attiki aand EPA Thessaly- Thessaloniki companies have received capital returns in the past, ministry officials have noted.

 

Lenders to refocus on DEPA split from gas supply firms

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The country’s lenders are set to retable a demand calling for the withdrawal of DEPA, the Public Gas Corporation, from urban natural gas supply networks, especially its involvement in the EPA supply firms.

According to energypress sources, European Commission officials taking part in energy-sctor talks as part of the negotiations aiming to conclude the bailout’s second review will demand a time frame detailing DEPA’s withdrawal from natural gas supply activities as part of a wider package of gas market reforms.

The DEPA issue had been focused on at the beginning of talks concerning the ongoing second review of the Greek bailout but was put on hold when it was decided to introduce a road map by autumn this year.

Requiring approval by KYSOIP, the Government Council for Economic Policy, this road map is expected to determine all revisions that will need to be made by 2020 in order to achieve two objectives. The first is to fully liberalize Greece’s natural gas market and generate vibrant competition. The other aim is to help broaden the use of natural gas and expand the distribution network to more regions around the country.

These gas market revisions were placed aside for months as the lenders and Greek government officials focused on electricity market reforms, such as the NOME auctions and a plan to sell PPC production units.

Energypress sources informed that the gas sector issues will be retackled with the return of the lenders to Athens tomorrow for the resumption of negotiations concerning the second review. It is now several months behind schedule.

 

 

 

EPA Attiki preparing to offer combined power and gas packages

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EPA Attiki, a subsidiary of DEPA, the Public Gas Corporation, is gearing up for the full liberalization of Greece’s gas market, to take effect next January, which will enable households to choose gas suppliers.

Gas market reforms already implemented currently allow industrial enterprises and major-scale businesses to select their gas suppliers. Industrial clients were left free to choose gas suppliers at the beginning of 2016, while major-scale business customers were offered this right at the beginning of this year.

EPA Attiki plans to offer household customers combined electricity-and-gas energy packages.

The company is now working its way through licensing procedures that will enable it to begin operating in the electricity market, already fully liberalized, as an independent supplier, without partners.

Originally founded by parent company DEPA as a supply subsidiary covering the wider Athens area, EPA Attiki has now gained independence amid the gas market reforms.

EPA Attiki’s initial objective, in its new life, is to enter the retail electricity market and follow up the entry by improving its services in anticipation of intensifying competition.

Interestingly, in its new role, EPA Attiki will compete against DEPA’s other EPA subsidiaries, initially established to supply gas to regions besides Athens, as well as its parent company DEPA, which still holds 51 percent stakes in the country’s existing EPA firms.

 

RAE endorses lower natural gas tariff levels

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RAE, the Regulatory Authority for Energy, has just announced its approval of lower natural gas tariffs for small-scale consumers, including households, in the wider Athens, Thessaloniki and Thessaly regions.

In some cases, the reductions are greater than the reduction to the special consumption tax (EFK).

RAE took into account the operating costs of the three regional EPA supply companies covering the wider Athens, Thessaloniki and Thessaly regions, it announced.

The authority based its calculations on an international formula, while also factoring in the local market’s particularities.

All consumers will have access to more than one gas supplier as of January, 2018, meaning that competition will intensify in the sector.

 

 

Shell, Eni likely to push for monopoly loss compensation

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Shell and Eni, 49 percent shareholders in the country’s three EPA gas supply companies covering the wider Athens area, Thessaloniki and Thessaly, are likely to push for a meeting with energy minister Giorgos Stathakis over the premature ends of their respective regional monopolies. If so, the likelihood of the two companies demanding compensation payments is highly probable.

Both Shell and Eni have kept their intentions on the issue under wraps. However, they are expected to start opening up after assessing this year’s supply surcharges, forwarded just days ago by RAE, the Regulatory Authority for Energy.

The proceedings of a prospective meeting with the energy minister will determine whether Shell and Eni will freeze any thoughts for demands or pursue legal action. In the past, Shell had estimated the cost of the premature end to its regional monopoly at almost 100 million euros.

At this stage, further pressure by Shell and Eni for compensation payments seems likeliest. The recently replaced energy minister Panos Skourletis had ruled out the possibility of any payments to the two companies.

In 2001, Shell and ENI secured distribution and trading rights for 30 years in their respective markets. These arrangements were nullified as a result of bailout-required natural gas market reforms.

Shell holds a 49 percent stake in the EPA supply company serving the wider Athens region and ENI holds 49 percent stakes in the Thessaly and Thessaloniki EPA supply companies. DEPA, the Public Power Corporation, holds 51 percent stakes in all three EPA companies.

As of next week, gas consumers will begin receiving bills featuring new tariffs comprised of three fees, one concerning trading costs and the other two transmission and distribution costs. The new tally, including taxes, amounts to 5.3 cents per KWh, down from 5.5 cents per KWh in December.

Compared to the current heating fuel price – 8.9 cents per KWh or one euro per liter – the cost of natural gas is roughly 40 percent lower.

 

 

 

RAE sets new household tariffs, EPA gas suppliers to examine

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RAE, the Regulatory Authority for Energy, has set new household tariffs to be charged by the country’s three EPA distribution companies covering the wider Athens area, Thessaloniki and Thessaly, while these new tariffs may have already been received by the respective administrations, energypress sources have informed.

These new tariffs, determined by RAE after the authority factored in data provided by the three EPA companies, will apply for households until the end of 2017, when pricing regulations will be lifted.

The sources noted that the new tariffs set by RAE could lead to price reductions for households beyond the price cuts expected as a result of a drop in the special consumption tax at the beginning of this year.

The new tariffs will determine the future actions to be taken by the EPA company shareholders over the premature ends to their regional monopolies. Legal action may be taken against the Greek State if the tariff levels are deemed unsatisfactory.

Shell holds a 49 percent stake in the EPA supply company serving the wider Athens region, and ENI, holding 49 percent stakes in the Thessaly and Thessaloniki EPA supply companies. DEPA, the Public Power Corporation, holds 51 percent stakes in all three EPA companies.

In 2001, Shell and ENI secured distribution and trading rights for 30 years in their respective markets. These arrangements were nullified as a result of bailout-required natural gas market reforms.

RAE has already set distribution tariffs. The trading tariffs just determined will enable Shell and ENI to estimate the cost of the premature ends to their regional monopolies.

The recently replaced energy minister Panos Skourletis had ruled out the possibility of any compensation payments for Shell and ENI. However, but this position has yet to be reiterated by his successor Giorgos Stathakis.

 

 

 

RAE decision on natural gas tariffs expected this week

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RAE, the Regulatory Authority for Energy, is expected to announce its decision on new gas supply tariffs for 2017 within the current week. This news is crucial as it will determine whether ENI and Shell, holders of 49 percent stakes in three EPA gas supply companies covering the wider Athens area, Thesaloniki and Thessaly, will take legal action against the Greek State in response to premature ends of their regional monopolies.

If ENI and Shell deem the new gas supply tariffs as satisfactory then they will forget about the legal action they have contemplated taking. If not, then legal action by both can be expected. The two companies may also make one final attempt to gain compensation money.

RAE has already endorsed distribution tariffs and now needs to approve trading tariffs, which will enable Shell and ENI to assess the financial damage caused by the premature ends of their regional monopolies.

In 2001, Shell and ENI secured trading rights for 30 years in their respective markets. These arrangements were nullified as a result of bailout-required natural gas market reforms.

The recently replaced energy minister Panos Skourletis has made clear that the Greek State will not offer any compensation payments to Shell and ENI. His successor Giorgos Stathakis has obviously yet to examine the matter.

DEPA, the Public Gas Corporation, holds 51 percent stakes in all three EPA gas supply companies.

New gas distributor EDA THESS planning network expansion in north

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The newly formed EDA THESS gas distribution company, to serve the wider Thessaloniki and Thessaly regions, plans to invest roughly 90.7 million euros over the five-year period covering 2017 to 2021 in order to develop infrastructure facilitating natural gas supply to all the cities and towns in both regions, a leading company official has told energypress.

EDA THESS was established following the required division of distribution and supply activities at Greece’s three exisiting EPA gas supply companies.

Leonidas Bakouras, the deputy general manager at EDA THESS, told energypress that new natural gas networks measuring over 438 kilometers in length and budgeted at more than 90.7 million euros will be constructed in new and existing regions of Thessaloniki and Thessaly.

The Thessaloniki wider region’s network is planned to measure 254 kilometers and worth 58.6 million euros. The Thessaly gas network project, budgeted at 32.1 million euros, is planned to measure a total of 184 kilometers.

EDA THESS plans to supply remote areas located beyond networks with CNG (compressed natural gas). Compressor stations have already been installed for the Thessaloniki and Thessaly networks by DEPA (Public Gas Corporation), which holds 51 percent stakes in the EPA companies, as well as private-sector suppliers.

EDA THESS plans to soon submit its investment plan to RAE, the Regulatory Authority for Energy, for approval and licensing.

 

Lenders pressuring DEPA to leave retail natural gas market

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DEPA, the Public Gas Corporation, an energy-sector issue in the bailout’s current second review, is being pressured by the lenders to withdraw from Greece’s retail natural gas market, a development that would destabilize the corporation’s future and the prospect of widened natural gas use around Greece.

Thought this latest request is not a bailout prior action, government officials fear the lenders will apply relentless pressure.

Already forced to increase its gas release, the proportion of low-priced natural gas offered by DEPA through its annual auctions as a means of generating market competition, the corporation is under pressure to abandon its 51 percent stakes in Greece’s three existing regional EPA gas supply companies covering the wider Athens area, Thessaloniki and Thessalia, without compensation. This would effectively leave DEPA out of the retail market.

The lenders, especially the European Commisson, represented by its Senior Economist for Greece, Carlo Viviani, want DEPA to abandon its retail role as of January 1, 2017, when distribution and retail activities of gas companies in the country’s natural gas market need to be split. Sources said the lenders are pushing for this move to further liberalize the gas market.

Shell holds a 49% stake in the EPA supply company serving the wider Athens region, while the Italian multinational Eni holds 49% stakes in the Thessaloniki and Thessalia ventures.

This demand will surely prompt major legal issues as the public utility is being asked to abandon assets without any form of compensation. The prospect of expanding Greece’s natural gas network to parts of the country without access is also expected to be set back. The country’s role in prospective international gas transmission projects, through DEPA, would also be affected if the gas company’s role is diminished.

Regardless of this latest request by the lenders, DEPA needs to split its retail and distribution divisions at an administrative level.

 

RAE response to EPA gas supply tariff plan may spark legal action

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The country’s three regional EPA natural gas supply companies covering the wider Athens area, Thessaly and Thessaloniki have submitted their tariff proposals for 2017 to RAE, the Regulatory Authority for Energy, and are now awaiting its response, expected around mid-November, which will shape their future moves, including whether legal action will be taken against against the Greek State for damages.

These tariff proposals concern smaller-scale industrial consumers as the EPA companies will decide for themselves on the tariff levels to be offered to major-scale industrial consumers.

The RAE decision will influence whether the EPA company foreign shareholders, Shell and Eni, will take legal action against the Greek State seeking compensation for the premature end to their regional monopolies, carried out as part of Greece’s gas market reforms. Shell and Eni had signed contracts promising them exclusive regional supply rights over an extended period.

DEPA, Greece’s Public Gas Corporation, holds majority 51 percent stakes in all three EPA gas supply companies. Shell holds a 49% stake in EPA Attica, covering the wider Athens region, while the Italian multinational Eni holds 49% stakes in the Thessaly and Thessaloniki ventures.

Shell and Eni have been considering taking legal action since 2014, when the plan to disrupt their monopolies was first tabled.

All non-household customers, regardless of natural gas consumption levels, will have the right to freely choose suppliers as of January 1, 2017. The retail natural gas market will be fully liberalized a year later, on January 1, 2018, when households will also be entitled to choose their respective supplier.

The country’s three major independent electricity suppliers, Protergia, Elpedison and Heron, are expected to also enter the natural gas retail market in 2018, once it is fully liberalized.

Besides the tariff level issue, the EPA supply companies are also concerned about the WACC (Weighted Average Cost of Capital) figure of 9.23 percent already set by RAE. EPA company officials have remarked that this figure neither reflects the level of risk entailed in the Greek market nor the limited penetration of natural gas.

Also, sector officials have pointed out that the 9.23 percent figure is insufficient as major investments of the past have yet to be amortized, while it fails to offer incentive for further expansion of the network into new areas.

EPA Attica to offer €50m in subsidies for gas installations

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EPA Attica, the gas distribution company covering the wider Athens area, plans to offer a subsidy program worth five million euros per year, or 50 million euros over the next ten years, for private gas system installations.

According to energypress sources, the subsidy amount works out to 1,500 euros per apartment block or 700 euros per house.

EPA Attica has asked RAE, the Regulatory Authority for Energy, to incorporate part of the subsidy’s cost into tariffs, but it still remains unclear how this could be arranged.

The issue is connected to RAE’s recent endorsement of distribution fees concerning natural gas networks of the wider Athens area, Thessaloniki, Thessaly and the remainder of Greece.

Market officials expect RAE to endorse trading prices for 2017 before company strategies are determined. Traders are expected to submit their proposals late this month and a response from the authority is expected within November.

Shell, which holds a 49 percent stake in EPA Attica, and ENI, also a 49 percent shareholder of the EPA supply companies covering Thessaloniki and Thessaly, will be waiting for RAE’s decisions before they decide whether to seek compensation from the Greek State for the premature end to their respective regional monopolies. DEPA, the Public Gas Corporation, controlled by the Greek State with a 65 percent stake, holds majority 51 percent stakes in all three EPA gas supply companies.

As part of the country’s gas market reforms in progress, all non-household gas consumers will be free to choose suppliers as of January 1, 2017. Household will be abe to do so a year later.

A WACC (Weighted Average Cost of Capital) figure of 9.23 percent determined by RAE has prompted a negative reaction from the EPA gas supply companies. EPA Attica officials have noted that the figure neither reflects the Greek market’s level of risk nor the limited penetration of gas in the Greek market. Shell and ENI will need to decide on whether such a WACC rate is satisfactory for new investments concerning the network’s expansion to new areas.

EPA supply firms setting plans following RAE fee decisions

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The country’s three EPA gas supply companies covering the markets of wider Athens, Thessaloniki and Thessalia have reacted negatively to a WACC (Weighted Average Cost of Capital) figure of 9.23 percent and the level of network usage fees, both determined by RAE, the Regulatory Authority for Energy.

Officials representing EPA Athens told energypress that the 9.23 percent WACC figure is unsatisfactory as older major network development investments have yet to be amortized.

The reaction was slightly more positive at EPA Thessaloniki and Thessalia, where highly-ranked officials described RAE’s WACC figure as low while offering potential for significant expansion in the years to come.

The EPA companies are currently putting together their respective business plans to map their future courses.

EPA Thessaloniki and Thessalia noted the main objective of their business plans will be to expand networks, connections and sales levels, whereas EPA Athens will focus on increasing the number of connections at the existing network covering the capital’s wider area.

As of January 1, 2017, distribution and commercial activities in Greece’s natural gas sector will be divided in an effort to generate competition.

 

 

Gas distribution fees set, competition to intensify

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Greece’s new natural gas distribution fee system, still officially unannounced,  has been finalized by RAE, the Regulatory Authority for Energy, setting the scene for full division of distribution and supply activities in the sector as of January 1, intended to help liberalize the market.

RAE set new distribution tariffs for four Greek natural gas market regions carved out – wider Athens, Thessalia, Thessaloniki, rest of Greece – after requesting additional data from DEPA, the Public Gas Corporation, and three EPA supply companies, still regional monopolies controlled by DEPA with respective 51 percent stakes. The tariffs, determined by one formula for all, differ for all four regions.

According to sources, energy and capacity fees are charged separately, while four consumer categories have been established – household, commercial, major-scale non-commercial consumers, and industrial.

The new distribution tariffs will come into effect as soon as they are endorsed. Consumers, especially industrial customers, are eagerly awaiting the new distribution fee levels. Local authorities recently introduced a hefty transitional price hike from 0.8 euros per Mwh to 4 euros per Mwh for all consumer categories without applying any specific formula to calculate the price level.

The transitional natural gas distribution fee of 4 euros per Mwh, implemented despite opposition from RAE, was originally planned to remain valid until last June but has been stretched out.

The country’s natural gas market is expected to be further liberalized at the beginning of next year as, besides industrial consumers, enterprises with major gas consumption levels are expected to gradually enter free markets, which is expected to generate competition in the current regional monopolies.

Competition in the natural gas market is expected to peak at the beginning of 2018 when supply for households is fully liberalized. As a result, the EPA supply companies currently maintaining regional monopolies will enter each other’s markets.

 

 

Natural gas prices set to hit three-year low this autumn

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Gas-fueled electricity producers, households and industrial consumers in Greece can expect some favourable news this autumn with the price of natural gas, determined by oil prices registered during the preceding six-month period, set to drop to a three-year low.

Natural gas import prices for the three-month period covering January to March, at 15.6, 14.3 and 15.6 euros per megawatt hour, according to RAE, the Regulatory Authority for Energy, were the lowest registered since April in 2013. These, along with natural gas prices of the preceding three-month period covering October to December in 2015, which ranged between 18.6 and 19 euros per megawatt hour, also relatively low, will be factored into the formula to provide gas prices for this coming autumn.

Besides the lower international oil prices and subsequent drop in natural gas prices, DEPA, the Public Gas Corporation, also took a series of initiatives that improved its terms with suppliers and import prices.

Drivers whose vehicles run on LNG also stand to benefit from the upcoming lower natural gas prices.

Yesterday, in its presentation of first half results, ELPE (Hellenic Petroleum) – the company has interests in electricity production and also holds a 35 percent stake in DEPA – reported a significant increase in natural gas demand, up 46 percent in this year’s first half and 82 percent for the second quarter. This surge in demand was primarily attributed to an increase in natural gas orders by electricity producers.

ELPE, in its financial results, reported a second-quarter natural gas sale increase at DEPA, to 855 Nm3 from 469 Nm3 (1,771 Nm3 from 1,217 Nm3 over the first half) as well as a 68 percent EBITDA increase in the first half, to 121 million euros.

The anticipated drop in natural gas prices is expected to generate higher orders from the country’s EPA regional gas supply companies and industrial consumers. Both registered demand drops in the first half of 2016.

 

 

 

 

RAE decision pending for gas market’s liberalization

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Greece’s three exisiting regional EPA natural gas supply companies covering the markets of wider Athens, Thessaloniki and Thessalia, are preparing to launch aggressive marketing campaigns that will seek to attract customers through utilization of the reduced special consumption tax (EFK) imposed on natural gas and the resulting comparative advantage over heating fuel.

“Prices for households will be the lowest offered in recent years and will not be comparable to those of heating fuel,” one EPA company official noted.

The three EPA companies are also preparing to separate their trading and distribution activities, based on new legal framework for the sector.

Although the EPA companies have prepared for the change, the issue remains pending from a regulatory perspective as RAE, the Regulatory Authority for Energy, has yet to reach required legal and operational decisions on the trade and distribution split.

RAE needs to approve a formula determining distribution network usage costs submitted by the three EPA natural gas supply companies.

The time-related pressure is beginning to intensify as the country’s natural gas market will need to operate based on the new regulations as of January 1, 2017.

Besides being needed for the natural gas market to operate in its new liberalized form, RAE’s decision is also crucial for supply companies and the pricing policies they will pursue.

EPA Attiki’s talks for power market entry ‘still preliminary’

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The gas supply company EPA Attiki, covering the wider Athens area, has held talks with all local electricity market players, to establish partnerships for combined gas-and-electricity package offers to consumers, but they remain at a preliminary stage, an EPA Attiki official has informed.

“We have held discussion with all of the market players but, at this stage, don’t have anything yet,” the EPA Attiki official noted. “These talks will have matured a year-and-a-half from now, when the gas market for supply to households is liberalized on January 1, 2018,” the official added.

Talks, at this stage, are being held on equal terms with all market players, the EPA Attiki official contended, who denied any preferences.

ELPE (Hellenic Petroleum) holds a stake in DEPA, the Public Gas Corporation, which, in turn, holds a 51 percent equity share of EPA Attiki.

The potential moves at EPA Attiki will depend on market conditions and the maneuvering of rival firms, the EPA Attiki official said. “If others choose to enter our territory we will examine how to respond,” the official said.

EPA Attiki ranks as a prime candidate to also move into Greece’s retail electricity market as it already backed by an extensive network of representatives and a considerable client base.

EPA Attiki is interested in further developing its gas network in the eastern part of wider of Athens, which has developed considerably over the past decade or so, primarily as a result of the Athens International Airport’s relocation to the area.

As part of the network extension plan, EPA Attiki has already submitted an application to utilize new EU strategic framework funding money. If these funds are made available, EPA Attiki anticipates that investments worth 30 million euros will be unlocked.

Consumers to ultimately ‘benefit from gas market liberalization’

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The liberalization of Greece’s gas market promises to offer benefits to consumers, Leonidas Bakouras, deputy director of the EPA gas supply companies covering Thessaloniki and Thessalia, told an an energy conference in Athens today.

Commenting on the market penetration of natural gas in Thessaloniki, Bakouras – who delievered a speech at a conference organized by TEE, the Technical Chamber of Greece, titled “Energy Market: Unlocking Greece’s Economic Potential” – said 53 percent of the city is now using natural gas, while 85 industrial enterprises, 350 hospitals, and all of the northern city’schools are also connected to the gas network. Bakouras said new connections were being made at a rate of about 600 a month.

The cost of natural gas this year is 26 percent lower, on average, while price levels are continuing to fall, Bakouras said.

“The lower the price of natural gas imported by DEPA (Public Gas Corporation), the lower prices will be for consumers,” the EPA Thessaloniki and Thessalia official explained.

 

Athens gas supply company cuts prices by 6% for March

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Natural gas tariffs to be charged by EPA Attiki, supplying the wider Athens area, for March will be six percent lower than they were in January, according to energypress sources.

The price drop amounts to 20 percent if calculated year-on-year, from this March to March last year.

EPA Attiki will reduce its natural gas price level to 5.4 cents per KWh – or 0.05379 euros per KWh to be precise – for March following revised wholesale rates offered by DEPA, the Public Gas Corporation.

The new price will apply to all consumer categories. Consumers can expect to see the new rates on their next gas bills, to be received in April.

The industrial sector stands to benefit most from this latest price reduction, while households will gain to a lesser extent, as the new rate drop comes at a time when the warmer spring weather is set to arrive.

DEPA is expected to proceed with further price cuts over the next few months, as long as international gas prices remain low and the euro-dollar exchange rate remains stable.

The latest DEPA price reduction is the corporation’s third successive rate drop over the past year. DEPA reduced its gas prices by three percent for a four-month period early in 2015, while a 2.9 percent reduction followed for the ensuing four-month period before this latest drop. The total reduction over the 12-month period amounts to 9.1 percent. DEPA resets its prices every four months.

 

 

Natural gas price reductions expected in February

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A new wave of reduced natural gas prices is expected in February. The extent of the reduction will depend on the pricing data to be sent next week by DEPA, the Public Gas Corporation, to the country’s three regional EPA gas supply companies covering the wider Athens area, Thessaloniki, and Thessalia.

This promises to be the first reduction this year. Last year, EPA Attiki, covering the capital and supplying a total of 320,000 customers, managed to reduce household tariffs by 18 percent throughout the winter season.

The latest reduction is attributed to the significant drop in oil prices. In Greece, natural gas prices are pegged to oil prices.

As is customary, the industrial sector stands to benefit most from the drop in oil prices. The gas auctions staged for major-scale consumers are a key reason why the industrial sector will benefit more than households. Besides the lower international prices, EPA will also roll over to its customers the reduced prices it secured at the recent gas auction staged by DEPA.

Until just a few weeks ago, natural gas prices for heating purposes were 30 percent lower than heating fuel and 70 percent lower than electricity.

EPA Attiki’s mumber of customers increased by 42 percent last year as a result of the lower natural gas prices, compared to heating fuel costs. This increase would have been far greater had the elections not intervened. They subdued the response of consumers for a program subsidizing heating system conversions to gas.

Procedures to end the regional monopolies enjoyed by the three EPA gas supply companies, as part of the gas market’s reforms, are progressing smoothly. A plan to separate control of the distribution network and supply is also being implemented. The three EPA companies are scheduled to soon submit their new tariffs to RAE, the Regulatory Authority for Energy, which are expected to be approved around the middle of the year.

It is common secret that Shell, which holds a 49 percent stake in EPA Attiki, is not satisfied by the gas market reforms intended to open up the market to competition. It is looking for a way out of the Greek market and is expected to sell its stake in EPA Attiki. DEPA and Eni are among the possible buyers.