European Directorate for Competition

DG Comp investigation of PPC suggests pricing manipulation

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An ongoing investigation by the European Commission’s Directorate General for Competition, launched about a month ago by a raid of the main power utility PPC’s headquarters and focused on methods applied by the utility to determine its wholesale electricity prices, appears to be edging towards preliminary findings.

The probe by DG Comp officials, according to energypress sources, is investigating PPC’s ability to pursue an aggressive pricing policy. The utility’s suspected pricing manipulation and use of lignite-fired and hydropower stations to keep wholesale prices at artificially low levels are being investigated.

The DG Comp team’s early findings suggest that PPC, citing technical reasons, is deviating the System Marginal Price (SMP), used to set wholesale prices, away from actual energy costs, sources informed.

Having already determined the susceptibility of wholesale prices to market abuse practices, DG Comp inspectors are believed to be preparing a response.

The resulting market conditions are making it difficult for independent players to position themselves competitively in the daily electricity market.

Despite the suggestion that preliminary findings may be emerging, more time will be needed for concrete results as the investigation is said to be very complex procedure. It had been recently suggested that preliminary findings could be delivered by the summer, but this now seems highly unlikely. The probe, certain insiders believe, will take a long time to complete.

Subsequently, the fear of penalties will loom over PPC as the country’s lenders apply pressure for measures including the sale of production units owned by the utility.

Certain officials in Brussels appear to be linking the DG Comp probe with a bailout plan entailing the privatization of PPC’s 17 percent, despite the fact that the two cases are not directly related.

Given PPC’s troubled financial position at present, any resulting penalties could prove devastating for the utility. In this event, the sale of PPC production units could be resorted to as a compromise deal.

DG Comp, backed by ongoing probe, holds key to PPC developments

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Developments linked to an ongoing investigation by the European Commission’s Directorate General for Competition of the main power utility PPC, prompted by market abuse suspicions, could prove devastating for the utility if preliminary findings are confirmed.

The DG Comp is expected to summon PPC – and, possibly, its subsidiary IPTO, the power grid operator – to present its defense against the findings. This procedure may require the delivery of statements as well as hearings.

Besides hefty penalties, PPC could be forced to sell a considerable proprtion of its production units if the market abuse suspicions are proven true. Such an outcome would contravene the utility’s plans for a milder, more controlled surrender of its persisting market dominance.

The penalties, determined by EU electricity market regulations, would also be multiplied in accordance with the duration of violations committed. Ultimately, the prospective penalties could reach as much as ten percent of the corporation’s annual turnover.

Given PPC’s currently anemic financial condition, burdened by a poor cash flow as a result of a substantial unpaid receivables figure, a penalty of large proportions would certainly prove devastating for the utility. To put it frankly, PPC would be forced to sell company units to cover the penalty’s cost.

The threat of such penalties bolsters the European Commission’s negotiating position in the effort to break PPC’s market dominance. Despite a bailout-related need to reduce its electricity market share to less than 50 percent by 2020, the utility has, so far, maintained a sturdy market share. It currently stands at nearly 90 percent, supported by a series of discount offers introduced last summer.

DG Comp tight-lipped on PPC, IPTO probe, findings rumored

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A team of European Directorate for Competition officials investigating the main power utility PPC and power grid operator IPTO, a subsidiary, following concurrent raids made a fortnight ago at the Athens headquarters of both corporations, will continue conducting its probes for as long as it takes to gather needed data, officials at the Brussels-based authority have informed energypress.

The DG Comp officials noted that the duration of the investigation, sparked by an undisclosed market abuse complaint, would greatly depend on the level of cooperation shown by PPC and IPTO officials.

Though the DG Comp officials, reiterating a related European Commission announcement, told energypress that the probe will not necessarily lead to unfavorable results for PPC and IPTO, it is widely suspected that crucial, possibly damning, findings may have already been made by the investigative team.

If so, this could spark significant energy-sector developments that could influence and even overshadow the concurrent energy-sector bailout negotiations that recommenced yesterday following the return of creditor representatives to Athens to continue working on the second review’s conclusion.

The DG Comp officials refused to confirm any findings and are also remaining tight-lipped on the market data details being investigated. They also refused to offer any details as to when the raid of PPC and IPTO, staged on February 14, began being planned. However, the DG Comp officials did note that further announcements on the matter could be made in the immediate future.

Wider speculation on the source and content of the complaint – or, possibly, sources and complaints – that sparked the DG Comp raid has been rife.

The DG Comp investigators and local energy market authorities are working closely on the matter, the DG Comp officials noted.

 

 

 

 

Brussels PPC probe, following market abuse protests, widens

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An ongoing investigation of the main power utility PPC and its subsidiary IPTO, the power grid operator, by a team of European Directorate for Competition officials has widened and includes the participation of the Greek competition committee.

The European Directorate for Competition officials raided the headquarters of both corporations yesterday to collect data following a complaint by an undisclosed source over PPC ongoing abuse of its dominant market position.

It is known that the European Directorate for Competition has received numerous complaints, over an extended period, concerning Greece’s electricity market and PPC’s behavior.

The current investigation was probably sparked by an older complaint as some of the data being examined stretches back to 2010. Developments during the recent energy crisis presumably also drew Brussels’ attention and may have pushed the DG Comp to its limits. Moves made by IPTO during the energy crisis were particularly troubling. These included energy leaks from Bulgaria, bad planning and the existence of low prices in the wholesale electricity market despite shortages.

For some time now, the European Directorate for Competition has also received complaints from industrial consumers over PPC’s handling of industrial tariffs.

Issues concerning the investigative team are believed to include whether PPC has systematically overstated the capacity of its lignite-fired power stations as part of an effort to maintain its market control.

Investigators are also said to be looking at whether PPC has been using its hydropower stations to lower the System Marginal Price (SMP), which determines the wholesale price.

 

 

 

Brussels team raids PPC, IPTO offices after abuse complaint

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A team of some twenty European Directorate for Competition officials raided the main power utility PPC’s Athens headquarters as well as those of the utility’s subsidiary IPTO , the power grid operator, at midday yesterday following a complaint by an undisclosed source over the utility’s ongoing abuse of its dominant market position, especially during the recent energy crisis.

The Brussels squad entered the PPC and IPTO headquarters concurrently without any prior notice in order to collect data concerning the utility’s shaping of wholesale electricity prices – the System Marginal Price (SMP) – the impact on these price levels by PPC’s lignite-fired power stations and hydropower units, and PPC’s decision-making criteria when choosing to connect these units to the grid.

No further information has been given on the data gathered during the raids at the PPC and IPTO buildings. The inspection could be extended by a few days.

The complaint made to the Brussels authority by the undisclosed source condemned PPC for manipulating the SMP level during the energy crisis.

Highlighting its determination to act, the Brussels squad did not let yesterday’s board meeting at PPC foil its intention to raid the utility headquarters.

The timing of the Brussels team’s raids coincides with new pressure being applied by the country’s lenders on the Greek government to sell a 17 percent stake of PPC that is controlled by the Greek State. The raids also coincide with the revival of a conflict in the local market about electricity prices and cost. Just days ago, PPC’s chief executive, Manolis Panagiotakis, criticized rival independent electricity suppliers for manipulating prices during the recent energy crisis. He had also condemned the independent suppliers last November, in Brussels, contending they had deliberately subdued price levels at the inaugural NOME auction, staged in late October.