Industrial sector needs delayed demand response mechanism

The country’s energy-intensive industrial enterprises are keen to accept a solution that would also offer independent electricity suppliers access to power utility PPC’s lignite-based generation, acknowledging that delays in the government’s ongoing negotiations with the European Commission on across-the-board lignite issues will consequently delay Brussels’ approval of Greece’s request for an extension of the demand response mechanism, a key energy-saving tool for the industrial sector, and threaten the sustainability of a number of producers.

EVIKEN, the Association of Industrial Energy Consumers, recently informed the energy ministry of its position in writing.

Greece’s lignite-issue negotiations with the European Commission have dragged on for some time. Athens has received a list of new questions after responding to a dense set of previous questions.

The government’s proposal for an extension of the demand response mechanism was forwarded to Brussels late December following lengthy consultation with European Commission officials to ensure its details would be aligned with Brussels’ directives.

Even so, Greece’s industrial enterprises have been left without the support of demand response mechanism since February 7. Worse still, a new measure promising to reduce the cost, for industry, of a RES-supporting ETMEAR surcharge, has yet to be implemented.

As a result, certain industrial sectors, namely steel and cement, have slid further in terms of competitiveness while, in some cases, sustainability and job maintenance are also at stake.

Pundits believe Brussels has bundled together all of Athens’ pending energy sector issues.

Electricity suppliers financially pressured by coronavirus crisis

Electricity suppliers are feeling the financial effects of the coronavirus crisis, threatening to increase the level of electricity bill arrears amid reduced consumption and lower sales.

Consumers are now contacting suppliers to request installment-based payment arrangements, or, worse still, expressing an inability to meet electricity bill payments, energypress has been informed.

Retailers and small businesses whose operations are being stifled by the coronavirus lockdown are particularly feeling the pressure.

Electricity suppliers maintaining a dominant mid-voltage customer base are very concerned as the coronavirus spread has already begun inflicting financial damage on sectors such as tourism, hotels and restaurants, all expected to be particularly affected by the ongoing crisis.

Retailers, too – except for supermarket chains, registering rising sales figures – are also under severe pressure. Their position will deteriorate further as a result of a government decision temporarily shutting down most shops as of today.

Electricity suppliers are more or less helpless at present. Distribution network operator DEDDIE/HEDNO would not execute any electricity-cut orders amid these extraordinary conditions.

Subsequently, suppliers are calling for a delay of their payments to operators such as power grid operator IPTO, DEDDIE, and RES market operator DAPEEP for network usage fees, a RES-supporting ETMEAR surcharge and other such obligations.

 

Second electricity bill surcharge cut in two months imminent

Electricity consumers can expect a second cost reduction in two months, a public service compensation (YKO) surcharge cut for nighttime electricity consumption, once a wide-reaching energy ministry draft bill is ratified.

The bill will cover the electricity market’s further liberalization, power utility PPC’s modernization, gas utility DEPA’s privatization and RES sector support.

This latest electricity surcharge cost reduction follows a RES-supporting ETMEAR surcharge rate cut in September.

Public service compensation surcharge rates concerning nighttime electricity usage will be reduced for consumption levels exceeding 1,600 kWh. This cut promises to ease electricity-based heating costs for households this coming winter.

The energy ministry intends to decide on the extent of the surcharge reduction once the aforementioned draft bill has been ratified.

YKO surcharge costs concerning nighttime electricity consumption increased for households at the beginning of 2018 when a low flat-rate formula was replaced by one gradually increasing the surcharge rate in accordance with usage levels, as is the case for daytime consumption.

RAE, the Regulatory Authority for Energy, has proposed an YKO surcharge rate reduction from 0.085 euro to 0.03 euro per kWh for nighttime consumption of over 2,000 kWh and a cut from 0.05 euro to 0.015 euro per kWh for consumption levels between 1,600 and 2,000 kWh.

YKO rates for nighttime electricity consumption have been equated with daytime rates since January 1, 2018. These are 0.00690 euro per kWh for electricity consumption between 0 and 1,600 kWh, 0.05 euro for consumption between 1,601 and 2,000 kWh and 0.085 euro for consumption of 2,001 KWh and over.

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

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

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

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

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

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

ETMEAR cut for households to impact other consumer groups

The energy ministry’s need to urgently reduce a RES-supporting ETMEAR surcharge – for households – included on electricity bills as a means of partially offsetting imminent tariff hikes at financially pressured power utility PPC has raised questions as to how the measure will affect other consumer groups.

Prior to the PPC-related development, the implementation of a new Brussels-endorsed ETMEAR distribution plan stipulating how this surcharge will be distributed among various consumer groups, has remained pending.

According to the plan, aligned to EU directives and approved by the European Commission, favorable revisions, or ETMEAR reductions, are limited to energy-intensive industrial enterprises.

A single ETMEAR rate was expected to be applied uniformly for all other consumer categories, but certain sub-categories offered favorable surcharge rates until 2014 were expected to possibly benefit from reductions amid a transition period, according to the Brussels-approved plan.

These groups, including medium-voltage consumers, hotels and farmers, expected to cover at least 20 percent of the surcharge, according to the plan, could now end up missing out on surcharge reductions.

 

 

 

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

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

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

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

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

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

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

Additional cash needs at PPC to end up burdening consumers

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

 

 

RES producers seen carrying weight of electricity tariff hike

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

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

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

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

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

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

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

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

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

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

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

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

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

 

 

‘Interest on surcharge transfer delays to operators must stop’

Power utility PPC’s outgoing chief executive Manolis Panagiotakis has requested a legislative revision that would stop interest charges from being added to overdue regulatory surcharge payments owed by the utility to the IPTO and DAPEEP operators.

This measure would apply to sums concerning RES-supporting ETMEAR surcharges and other regulatory charges imposed on electricity bills that have yet to be paid by consumers.

During a recent meeting with the new energy minister Costis Hatzidakis, the outgoing PPC boss – who submitted his resignation from the state-controlled power utility shortly after the July 7 election – proposed a series of measures that he believes are required to help normalize the electricity market and also offer financial relief to PPC, under financial pressure.

Speaking to reporters following the meeting, Panagiotakis refused to disclose the entirety of proposals he made to the energy ministry, noting he would elaborate on these when the time is right.

The power utility’s chief described as unjustified the interest charges imposed on PPC for its delayed transfer to operators of surcharge amounts not yet paid by consumers.

Independent electricity suppliers have also asked authorities to intervene on the matter.

Independent suppliers fined for delayed surcharge handovers

RAE, the Regulatory Authority for Energy, has imposed fines on six of seven independent electricity suppliers questioned by the authority for failing to hand over regulated surcharges included in electricity bills to grid operators.

The six independent suppliers were handed fines ranging from tens of thousands to hundreds of thousands of euros for not relaying surcharge amounts to the IPTO and DEDDIE/HEDNO grid operators.

These surcharges include network transmission and distribution usage fees as well as RES-supporting ETMEAR payments made by consumers through electricity bills.

In their defense, suppliers argued that they chose to not relay collected surcharge amounts to the grid operators to offset greater amounts owed to them by the operators, including anticipated returns from the RES special account surplus for 2018. RAE refused to accept this argument.

As for the main power utility PPC, which has delayed relaying to operators enormous surcharge sums worth millions, it had been summoned to a preceding hearing, about a year ago, by RAE and fined 2.8 million euros.

The surcharge amounts owed by the country’s independent electricity suppliers to the grid operators constitute just a tiny fraction of amounts owed by PPC.

 

 

Brussels opposes minister’s interest in RES surcharge cut

A European Commission report emerging as part of Greece’s second post-bailout review opposes any changes to a RES-supporting ETMEAR surcharge paid by all electricity consumers through electricity bills as a result of growing delays in payments to renewable energy producers for their output.

Two months earlier, energy minister Giorgos Stathakis commissioned RAE, the Regulatory Authority for Energy, to examine the feasibility of an ETMEAR surcharge reduction.

The minister was looking for a way to offset possible electricity tariff hikes at the main power utility PPC, which has expressed an interest to adopt a CO2-related clause enabling price hikes whenever emission right costs exceed certain levels.

Earlier this week, Stathakis was more opposed than ever before to any tariff hikes at state-controlled PPC. The power utility ought to look into other revenue-boosting solutions, such as an intensified collection effort for its unpaid receivables, the minister noted.

In its report, the European Commission expressed great concern over PPC’s long-term financial standing. The power utility faces a 350 million-euro bond payment at the end of April.

Plans by PPC to head to capital markets now appear doubtful. The power utility was initially planning to offer investors a new company bond in February before opting for March.