New minister, just appointed, has issues to resolve in 2021

Kostas Skrekas, just appointed new energy minister as part of the government’s cabinet reshuffle, in place of Costis Hatzidakis, who has headed the ministry for a constructive year and a half, faces a series of pending energy-sector matters that remained unresolved in 2020. They need to be addressed as soon as possible. Developments and conditions this year will be pivotal for these matters.

Skrekas was previously deputy minister for agricultural development and food.

Also in 2021, a year during which takeovers and mergers are seen occurring in the retail electricity and gas markets, rivals will continue battling for market share gains. The target model’s launch two months ago has brought about new conditions, strengthening the positions of vertically integrated suppliers.

The need for a normalization of the target model’s new markets stands as the energy ministry’s most pressing task at present. A sharp rise in wholesale electricity prices as a result of soaring balancing market costs has deeply unsettled the market, impacting the standings of non-vertically integrated suppliers, as well as industrial enterprises and consumers, who face rising bills.

Market coupling with Bulgaria’s day-ahead market, scheduled to take place within the first three months of the new year, is the next step of the target model, a procedure designed to harmonize EU energy markets and promote competition.

New energy-intensive industrial tariffs also need to be set soon. Though essentially a matter concerning state-controlled power utility PPC and Greece’s industrial players, the cost of industrial energy is crucial for Greek industry, carrying particular political and economic weight.

Also, Greece has little time left in its negotiations with Brussels for a framework to offer third parties access to PPC’s lignite-based generation. This issue is no longer as crucial as it once was because the country’s lignite output has been drastically reduced. Even so, it remains important for independent suppliers.

A number of energy-sector privatizations could be completed this year. Gas utility DEPA’s two new entities, DEPA Infrastructure and DEPA Commercial, electricity distribution network operator DEDDIE/HEDNO, and a tender for a tender for the development of an underground natural gas storage facility (UGS) in the almost depleted natural gas field of “South Kavala” in northern Greece are all on this year’s privatization list.

In renewable energy, the ministry needs to take decisions within the first few months to clarify terms regulating the sector. RES investment interest is currently high. Steps still need to be taken in an ongoing effort to simplify RES licensing procedures, while a legal framework must be established for energy storage, offshore wind farms and hydrogen use.

 

Consumers hit with tariff hikes of over 20% in low, mid-voltage

Sharply higher wholesale electricity prices registered over the past five weeks or so in the energy exchange’s new target model markets have, to a great extent, been quietly passed on by suppliers to consumer tariffs in the household, business and industrial categories, without any related announcements  from suppliers.

Price hikes by electricity suppliers have applied to approximately 35 percent of total electricity consumption, during this period, while tariff hikes have exceeded 20 percent in the low and mid-voltage categories.

In the low-voltage category, suppliers have activated clauses enabling tariff increases when wholesale price levels exceed certain levels.

Very few independent electricity suppliers, both vertically integrated and not, carry fixed-tariff agreements in their portfolios, exposing most consumers to wholesale electricity price fluctuations.

On the contrary, power utility PPC, representing roughly 65 percent of overall consumption, does not include wholesale price-related clauses in its supply agreements, meaning its tariffs have remained unchanged over the past few weeks.

Instead, PPC includes clauses linked to emission right prices in international markets. These have remained relatively steady in recent times.

Even if wholesale electricity prices happen to deescalate in the next few weeks, a likely prospect, some latency should be expected in any downward tariff adjustments by suppliers.

Numerous consumers have lodged complaints with RAE, the Regulatory Authority for Energy, over the tariff hikes by suppliers. Complaints by suppliers against energy producers setting excessively high prices in target model markets have also been made.

Target model balancing cost skyrockets, suppliers on edge

Balancing costs in the electricity market have exceeded rational limits, skyrocketing to 57 million euros in the fifth week of the target model after totaling 71 million euros during the model’s first four weeks of operation.

Stubbornly high price levels in the wholesale electricity market have created perilous conditions that could lead non-vertically integrated suppliers to bankruptcy, while consumers, beginning with the mid-voltage category, now face tariff hikes as a consequence.

Balancing market costs between November 30 and December 6 doubled compared to a week earlier.

Despite energy minister Costis Hatzidakis’ warning of intervention to producers, whose overinflated offers have prompted this ascent, balancing market costs on December 5 and 6 exceeded 20 euros per MWh, well over levels of between 3 and 4 euros per MWh prior to the target model.

The target model, designed to ultimately homogenize EU energy markets into a single unified market, has been pitched by the Greek government as a price-reducing tool.

Though authorities have played down the price ascent of recent weeks, describing it as a nascent target model abnormality that will settle into place and not prompt consumer tariff hikes, suppliers, under severe pressure as a result of sharp cost increases, have called for immediate measures.

Suppliers have warned they will take legal action against all responsible parties in letters forwarded to the RAE, the Regulatory Authority for Energy, the energy ministry and power grid operator IPTO.

RAE held a meeting yesterday with major-scale producers, who defended their actions, according to sources. The authority limited its reaction to proposals, the sources added.

Electricity theft cost gradually shifted to operator DEDDIE

The cost for the market of electricity theft will be gradually shifted to distribution network operator DEDDIE/HEDNO, ridding suppliers and, indirectly, consumers, of this financial burden, according to a new formula for the operator’s required revenue established by RAE, the Regulatory Authority for Energy.

The operator will need to reduce, on an annual basis, its percentage of required revenue covering electricity theft losses until these have been eliminated. If annual electricity theft reduction objectives are not met, then the operator will assume the resulting cost. On the contrary, if these objectives are exceeded, then the operator will keep surplus amounts for the company coffers.

Representing between 4 and 5 percent of overall electricity consumption, electricity theft, a major problem for the Greek market, increased during the recession. The responsibility for its cost had even generated friction between power utility PPC and DEDDIE/HEDNO, the utility’s subsidiary.

New bill arrears rule restricting electricity consumer switches

Several thousand electricity consumers were blocked from switching suppliers in September, a trend that has continued this month, following a rule revision enabling suppliers to stop their customers from switching to rivals if they have not fully settled outstanding energy bills, suppliers have informed energypress.

Distribution network operator DEDDIE/HEDNO implemented the new rule at the beginning of September following a request by RAE, the Regulatory Authority for Energy.

Though suppliers have sought closer monitoring of outstanding electricity bills linked with consumers preparing to switch companies, the new rule’s level of strictness is believed to even be impeding the mobility of punctual consumers with small and unintentional arrears left to pay.

Suppliers are now concerned about the measure’s impact on competition as even the smallest of bureaucratic obstacles can be enough to deter consumers from switching energy companies.

Consumer switches, both from power utility PPC to independent suppliers and from one independent firm to another, are currently high and would be even higher if the new restriction were not imposed, company officials noted.

Suppliers have protested that the rule revision was not preceded by public consultation.

Electricity consumer switches reach 285,000 in first half

A total of 285,000 households switched electricity supplier in the first half of 2020, while less than one in eight have made the shift over the past five years, retail electricity market data made available to energypress has shown.

Since 2015, when the retail electricity market was essentially liberalized, 986,000 consumers of 7.58 million in total have switched electricity suppliers, the data showed.

This slow movement has kept power utility PPC’s retail electricity market share at relatively high levels. The corporation held a 67.61 percent share at the end of August, the data showed.

Customers who have taken the decision to switch to independent suppliers have also displayed strong loyalty. Just 144,000 electricity consumers have moved on for a second time during the five past years, according to the data.

Of the 285,000 consumers who switched suppliers in the first half, 208,000 left PPC, while nearly 35,000 ended up with a universal supply service provided by the market’s top five suppliers, at higher tariff rates, to households and small businesses rejected by their regular suppliers for unpaid bills.

 

Ministry proposal seen ending PPC lignite monopoly case

Independent electricity retailers would be entitled to lignite-generated electricity supply from power utility PPC at a predetermined price, definitely not below cost for the utility, in quantities constituting 40 percent of each lignite-fired power station’s production, to be distributed to suppliers in proportion to their respective retail electricity market shares, until 2023, when  lignite-fired units are expected to have been phased out as part of the country’s decarbonization plan, according to a finalized proposal forwarded by the energy ministry to the European Commission’s Directorate-General for Competition a fortnight ago in an effort to resolve a long-running antitrust case.

Energy ministry officials are confident this formula will end the antitrust dispute, now a decade long, concerning’s PPC’s lignite sector monopoly.

Back in 2010, lignite dominated Greece’s energy mix but there is now much less at stake as lignite-fired power stations are being phased out over the next three years.

PPC’s lignite-fired electricity generation dropped 47.8 percent in the first half, diving 70 percent in the second quarter, the utility announced just days ago when presenting its first-half results.

PPC’s lignite-based output totaled 3,000 GWh in the first half and just 756 GWh in the second quarter.

Energy ministry officials believe the Directorate-General for Competition will not resist accepting the Athens proposal as a rejection would take the dispute back to European Court, meaning a case would not be heard any sooner than late-2021. By then, PPC’s lignite-fired power stations Kardia III and IV and Megalopoli III will have all been withdrawn, according to the latest schedule announced by energy minister Costis Hatzidakis earlier this week.

 

PPC, industrial firms begin talks for new supply deals, limits set

Though still at an early stage, talks between power utility PPC and industrial consumers for new electricity supply agreements to become valid once current deals expire at the end of this year, already appear likely to require plenty of negotiating and time if current differences are to be overcome.

PPC has made clear it will not sell electricity at below-cost price levels to any customer. At the other end, industrial enterprises, each negotiating separately with the power utility, insist that a 10 percent price hike agreed to in March, 2019 for a three-year period covering 2018 to 2020 is unjustifiable as electricity production costs have fallen.

Besides price matters, the two sides also disagree on the duration of new deals. Industrialists are pushing for three-year agreements, covering 2021 to 2023, whereas PPC favors a shorter period. Insiders are predicting months of negotiations.

Industrialists are expected to seek quotes from PPC rivals. Vertically integrated energy groups that have secured competitive natural gas prices in recent months are in a position to offer lower electricity tariffs, regardless of fluctuations in the wholesale electricity market.

In July, wholesale electricity prices registered a level of 41.13 euros per MWh, down 34 percent from the equivalent month a year earlier.

Three industrial consumers, the cement producers AGET Heracles and TITAN and Macedonian Paper Mills (MEL), have been involved in talks with independent suppliers for high-voltage contracts.

Flexibility surcharge improper, suppliers complain to Brussels

A CAT surcharge imposed on electricity suppliers to support the flexibility mechanism was adopted without proper consultation via a procedure that was not fully substantiated, ESEPIE, the Hellenic Association of Electricity Trading and Supply Companies, has charged in a letter forwarded to the European Commission’s Directorate-General for Competition and Directorate-General for Energy.

Consultation on the matter lacked a detailed study by power grid operator IPTO on current flexibility needs, the association protested in the letter, forwarded to the Brussels authorities just weeks ahead of the launch of target model markets in Greece.

The flexibility mechanism’s details are based on a study conducted years ago but current flexibility needs concerning production and demand have since changed drastically, the association noted.

A transitional mechanism is not needed given the current conditions in Greece’s energy market, especially if the pandemic-related drop in electricity demand is taken into consideration, ESEPIE noted. State aid or any other form of support for energy producers offering flexibility is unnecessary, the association stressed.

Suppliers have been asked to cover flexibility-related surcharges, beginning August 15, at a rate of approximately 3 euros per MWh. This is burdening their finances, especially in the mid-voltage market, where heightened competition has severely narrowed profit margins.

Flexibility CATs, it should be noted, do not impact independent, vertically integrated suppliers as the corporate groups they belong to collect the flexibility surcharge payments for their production.

Energy companies actually benefit from the surcharge if their retail electricity market shares are smaller than their shares of production. This is not the case for PPC, whose retail market share is considerably bigger than its share of electricity generation.

 

Suppliers want IPTO to take on part of €45m retroactive charge

Electricity suppliers, reacting to a 45 million-euro retroactive charge handed out by power grid operator IPTO for account discrepancies between November, 2019 and May, 2020, want the operator to accept responsibility for part of this cost and also expect the energy ministry to intervene.

Suppliers have asked for legislative and regulatory initiatives to offer greater transparency in calculations of various market-related accounts.

The operator has already delivered the resulting charges to suppliers, prompting their irritation.

The share of the 45 million-euro total cost for suppliers is proportional to their retail electricity market shares, meaning power utility PPC, the dominant player, has been asked to cover the greatest amount.

IPTO’s retroactive charge resulted from account miscalculations, by the operator, that did not factor in a part of RES output, specifically PV production in the low-voltage category.

The issue has also caused accounting confusion for suppliers, whose financial results for the months of November and December, 2019 – both included in IPTO’s discrepancy calculations – have already been finalized and published.

Entities such as IPTO ought to provide reassurances and solutions, not create ambiguities and problems, suppliers, bracing for further pandemic-related challenges as of September, have complained.

The ministry should intervene and offer market stability if the operator is unable to do so, suppliers asserted.

Electricity consumer complaint and query calls total 3.6m in ’19

Electricity suppliers received a total of 3.6 million query and complaint calls from customers in 2019, RAE, the Regulatory Authority for Energy, acting within the framework of its market monitoring role, has determined after requesting such data from suppliers.

The data reflects the heightened level of competition in Greece’s retail electricity market.

Most of these customer calls had to do with disputed billing procedures and clarification. A total of 92.24 percent of calls were made by customers already committed to supply contracts.

More than half of the 3.6 million calls by customers, or 2.02 million, representing 56.19 percent, were received by power utility PPC, the retail electricity market’s dominant player, holding an 84.44 percent share of the market.

The other 43.81 percent of calls, 1.58 million in total, were shared by the country’s independent suppliers, recipients, primarily, of pre-contractual queries by consumers researching market offers ahead of their choices.

Electricity supplier switching by consumers up 89% in 2019

Consumers switching electricity suppliers increased sharply by 89 percent in 2019, a report by RAE, the Regulatory Authority for Energy, has shown.

A total of 576,436 consumers, 8.5 percent of the 6,783,075 consumers in total, switched suppliers in 2019, up from 4.51 percent in 2018, the report showed.

This sharp rise in consumer switches was attributed to growing consumer confidence in independent electricity suppliers as well as the effectiveness of discounts and various other offers made available by these suppliers to attract customers. Put simply, competition in the Greek electricity market appears to be intensifying.

Household electricity consumers showed the greatest degree of mobility, followed by mid and high-voltage consumers, or businesses and industrial consumers, the RAE report observed.

In the mid-voltage category, 834 business and industrial consumers of 9,071 in total, or 9.19 percent, switched electricity suppliers in 2019, according to the report.

Despite the increased customer mobility, power utility PPC remained dominant in 2019, supplying electricity to 5,694,627 consumers, or 83.95 percent of the 6,783,075 in total, the report showed. In terms of consumption, PPC held a 71.13 percent share, supplying 27.7 million MWh last year.

Independent supplier Protergia, a member of the Mytilineos group, was ranked second in terms of total number of customers in 2019, supplying to 181,232 customers, the report noted.

Elpedison was ranked third with 171,143 customers, followed by Heron (140,812), Watt & Volt (127,364), Zenith (73,968), Volton (69,688), NRG (52,961), Fysiko Aerio (39,881), Volterra (35,748) and KEN (33,997).

A total of 24 independent suppliers are active in Greece’s electricity market.

Industrial consumers preparing to leave long-time supplier PPC

Three of eight industrial groups traditionally supplied high-voltage power by power utility PPC and holding contracts that expire at the end of this year are involved in advanced talks with domestic independent suppliers for new supply contracts, energypress sources have informed.

PPC dominates the high-voltage electricity market with a 97 percent share, but this figure could drop considerably if industrial consumers reach agreements with new suppliers.

Leading cement producers AGET Heracles and TITAN, as well as Macedonian Paper Mills (MEL), are the three industrial consumers involved in talks with independent suppliers for high-voltage contracts, the sources noted.

All three have never before held contracts with any other electricity supplier, but their shifts away from PPC, probably not concurrently, now appear highly probable. Such a development would signal the start of competition in Greece’s high-voltage electricity market.

Lower wholesale prices, which have widened profit margins, as well as lower natural gas prices lowering generation costs at gas-fired power stations operated by independent producers, are key factors behind the likely shifts of industrial consumers to independent suppliers.

Industrial producers, gearing up for the post-coronavirus era, are seeking lower energy costs but are not satisfied with the tariff levels offered by PPC, market officials have noted.

Consumer shifts between independent suppliers at 30%

Roughly 30 percent of electricity consumers shifting from one electricity supplier to another are not moving away from the power utility PPC, as was usually the case up until just a few months ago, but from one independent supplier to another, a reflection of a further increase in competition, to the benefit of consumers, latest market data has shown.

Besides price offers, consumers are now also taking into consideration other factors such as supplier reliability, service standards and provision of supplementary services when choosing suppliers. This broader consideration is seen as a sign of the electricity market’s growing maturity.

Independent suppliers now face bigger bad debt figures as a result of an increase in unpaid receivables prompted by a number of factors, including business closures, consumer departures despite unpaid electricity bills, payment defaults, as well as tax file number changes by consumers seeking escape.

The scale of this undesirable situation for independent suppliers is nowhere near that of the enormous collection problem faced by PPC.

However, the bad debt problem highlights that independent suppliers, as a consequence of their efforts to boost market shares, are now dealing with a growing number of unreliable consumers. It also underlines the market’s tightened cash flow, especially in the business sector, as a result of the pandemic and recession.

Suppliers retroactively charged €45m for IPTO discrepancies

Power grid operator IPTO has retroactively charged electricity suppliers a total amount of approximately 45 million euros for account discrepancies between November, 2019 and April, 2020.

These retroactive charges have annoyed suppliers who have informed the energy ministry’s leadership about the issue and are expecting its intervention for a solution, sources said.

The retroactive charges for each supplier have been calculated in accordance with market shares, meaning power utility PPC, still the dominant retail player, is responsible for the lion’s share of the 45 million-euro amount.

Suppliers and sector associations are preparing to challenge IPTO’s retroactive charges for the six-month period by contending they result from miscalculations that have not factored in RES production, specifically that of roof-mounted solar panels.

The additional retroactive charges are particularly burdensome for medium-voltage traders as profit margins in this sector are extremely narrow and the competition is intense.

The development has caused confusion as financial results for November and December, 2019, two of the six months included in IPTO’s discrepancy calculations, have already been finalized and published.

“Such practices deprive companies of the ability to plan policies and also create business uncertainties in a sector that needs to operate with absolute reliability as it is directly related to millions of consumers,” a top official at one of the independent suppliers told energypress.

 

 

Suppliers resort to legal action against RAE over price clauses

Electricity suppliers may have adjusted price-related clauses included in their electricity bills following a request by RAE, the Regulatory Authority for Energy, seeking greater price-comparing clarity for consumers, but some of these suppliers, who consider the authority’s initiative to be an intrusion into corporate pricing policy matters, have chosen to take legal action against the authority.

RAE had asked for a standardized adjustment from electricity suppliers by June 14, but they responded with loose individual interpretations of the guidelines before many resorted to legal action.

When forwarding its clause-adjustment request to suppliers, RAE also asked the energy ministry to adopt its guidelines for official incorporation into the electricity market’s regulations.

According to sources, the energy ministry does not intend to adopt RAE’s recommendations and, instead, has asked the authority to reconsider its guidelines.

Electricity suppliers include clauses in their supply agreements with consumers that enable price revisions to cover cost increases.

Many consumers have complained about the price-related clauses, noting they are included in fine print and confusing.

 

 

One PPC rate for consumption above, below 2,000 kWh

Power utility PPC will continue offering a single tariff rate for consumption levels above and below 2,000 kWh per four-month billing period once the utility’s lockdown-related support package expires on June 26, sources have informed.

During lockdown, PPC offered an 8 percent tariff discount for consumption levels of more than 2,000 kWh per four-month billion period. This offer’s resulting tariff rate, 0.11058 euros per kWh, is being kept.

Prior to the lockdown package’s introduction, lasting three months, PPC customers were charge 0.11936 euros per kWh for consumption over 2,000 kWh. The lower rate also applies for consumption levels below 2,000 kWh.

PPC’s new pricing policy, still undisclosed, is also expected to offer benefits to customers paying their electricity bills on time.

The power utility’s independent rivals are offering like-minded packages. For at least one month now, independent suppliers have offered considerable tariff discounts at par with lower nighttime rates. These offers are valid for new customers as long as payment punctuality is maintained.

Energy costs – natural gas and wholesale electricity prices – fell considerably during the lockdown period, providing suppliers leeway for lower-price offers to customers.

According to the Greek energy exchange, the System Marginal Price (wholesale electricity price) ended May at 34.27 euros per MWh, down from 65.91 euros per MWh in the equivalent month a year earlier, a 48 percent year-on-year drop.

In May, natural gas-fueled power stations were responsible for 50.1 percent of Greece’s overall electricity generation, and RES facilities contributed 38.54 percent.

PPC’s high-cost lignite-fired power stations, once the country’s dominant generating source, contributed just 3.46 percent in May, an 87 percent year-on-year drop.

 

Eurelectric calls for supplier protection against consumer debt

Sector association Eurelectric, representing the common interests of the electricity industry at a European level, has delivered a list of proposals focused on protecting companies against the pandemic’s financial impact.

The association’s proposals include compensation for suppliers as well as their protection against excessive consumer debt resulting from the crisis.

The association recommends the establishment of state support programs to help consumers cover the costs of outstanding electricity bills.

Eurelectric also calls for a monitoring effort to identify possible energy shortages and lack of personnel at energy companies.

The association wants appropriate measures adopted to counter major financial impact anticipated by energy companies as a result of reduced electricity demand and prices. Government measures supporting energy-transition investment plans of companies have also been requested.

Other Eurelectric recommendations include the establishment of a long-term RES plan offering clarity and security for investors.

The association also points out the need for a mechanism designed to recover excessive debt related to the coronavirus crisis.

 

Suppliers seen loosely interpreting RAE clause adjustment request

Electricity suppliers, set to disclose adjustments to price-related clauses included in electricity bills, are expected to offer loose interpretations rather than strictly comply with  related guidelines offered by RAE, the Regulatory Authority for Energy.

Suppliers, who were given a June 14 deadline to make clause adjustments as a means of simplifying electricity-bill cost analysis and offer comparisons for consumers, have been highly critical of the authority’s guidelines, describing them as an intrusion and restriction on pricing policy.

Some suppliers have even threatened to take legal action against RAE, but this is not possible as the authority’s initiative is a proposal not an order.

Even so, suppliers need to present revisions, based on their respective interpretations of the RAE guidelines that will somehow reflect the proposals. Otherwise, consumers who are aware of the authority’s guidelines could turn against suppliers and file official complaints.

Suppliers, through their interpretations, will, without a doubt, seek leeway that could enable their commercial departments to attract customers.

RAE has asked suppliers to adopt standardized price-related clauses.

Suppliers have reassured they will deliver adjustments in accordance with the RAE recommendations but do not believe the overall effort will improve the ability of consumers to compare competing offers.

PPC rivals awaiting utility’s next pricing move for response

Power utility PPC’s rivals are awaiting the utility’s next pricing-policy move before responding with offers of their own. A specially priced three-month package offered by PPC, the electricity market’s dominant player, to its customers as lockdown relief expires on June 26.

Lower wholesale electricity prices over the past couple of months as well as more efficient facility management by PPC, drastically reducing production from loss-incurring lignite-fired power stations, are two factors expected to enable the utility to keep offering appealing packages to customers, sector experts have told energypress.

An initiative taken by PPC during lockdown to equate usually higher tariff rates for consumption of more than 2,000 kWh with rates for consumption below the aforementioned limit could be an indicator of things to come from the power utility.

The market’s major independent suppliers are believed to have studied all possible scenarios in preparation for their respective responses.

PPC chief executive Giorgos Stassis has made clear the power utility’s intentions to regain part of its lost market share. The utility is expected to target specific customer profiles. In addition, bonus services may also be included in packages.

 

 

 

 

Broader offsetting eligibility for operator, energy firm accounts

The energy ministry intends to maximize the eligibility and coverage of an imminent plan designed to offset unsettled accounts between market operators and energy producers or suppliers.

A related ministerial decision is expected to be delivered by the energy ministry within the next fortnight.

The energy ministry’s upcoming measure, seen as crucial cash-flow support for energy-sector companies amid extraordinary times, will seek to make eligible – for offsetting – as many categories as is legally possible.

This essentially means that the offsetting plan’s terms to be included in the ministerial decision will be far more relaxed than those of a proposal delivered just days ago by RAE, the Regulatory Authority for Energy.

The energy ministry accepts a number of the observations made by RAE but is proceeding with its own appraisal and terms, sources informed.

Household electricity cost down 4.4% in April, SMP clause off

Household electricity prices fell by 4.4 percent in April, a drop attributed to power utility PPC’s slightly reduced market share in the low-voltage market as well as an unprecedented fall of wholesale electricity prices levels, from 43 to 28 euros per MWh.

The plunge of wholesale electricity prices, determined by the System Marginal Price (SMP), prompted independent suppliers to deactivate an electricity-bill clause triggered when wholesale electricity prices exceed certain levels.

The reduced cost of electricity for households in April was reflected by the electricity price index, calculated by Greek electricity market price-comparison site allazorevma.gr.

Household electricity offers by independent suppliers ranged from 68.80 to 80.30 euros per MWh in April, the average being 75.52 euros per MWh, a 5 percent reduction.

Pricing, distribution pending in PPC lignite access case

Despite definite progress confirmed in a latest Brussels report, Greece still needs to resolve two pending issues concerning pricing and distribution in a long-running antitrust case with the European Commission over state-controlled power utility PPC’s lignite monopoly, which Brussels demands must be opened up to third parties.

Brussels insists on the sale of tailor-made electricity packages to electricity suppliers and industrial enterprises, adjusted accordingly to meet their respective needs. Pricing details must also be worked out.

The antitrust case has dragged on over the past decade or so. The European Commission wants it closed by the end of this year.

In the lead-up, a market test needs to be staged with the participation of all interested parties, the intention being to test in practice the proposal described in the Brussels report.

The plan envisions a mechanism designed to offer PPC’s rivals access to a share of the utility’s lignite-based generation. The extent of this access will be correlated with the progress of the power utility’s decarbonization effort.

Transparent, competitive procedures, as well as lignite access to smaller-scale suppliers, must be assured, the Brussels report notes.

The Greek government and the European Commission are currently discussing the market test’s details.

 

Suppliers skip surcharge payment credit offer for May

Electricity suppliers have ignored a credit option made available by the energy ministry for 30 percent of regulated-charge payments to operators.

A gradual improvement in electricity-bill payment records by consumers, combined with the offer’s credit terms, generally deemed unappealing and risky, appears to have stopped suppliers from taking advantage of the measure.

Not a single electricity supplier chose to utilize the credit offer for April-invoiced  surcharge payments to power grid operator IPTO by a May 15 deadline.

Surcharges included in energy bills are paid by consumers and then relayed by suppliers to operators.

Suppliers showed little interest in the offer a month earlier. Just four suppliers chose to utilize the credit offer for March surcharge payments due in April.

The energy ministry acted swiftly to prepare and introduce this credit offer as a cash-flow relief measure amid fears of major energy-bill payment delays by consumers.

Consumers have improved their energy bill payment records over the past few weeks following a deterioration early in the lockdown. This upward trajectory has so far spared suppliers of cash-flow dramas.

Deferred surcharge payments must be settled four months down the road, along with any other existing obligations, according to the ministry’s credit offer extended to suppliers. They have adopted a cautious stance, fearing debt accumulation.

According to some sources, a number of suppliers have chosen to informally delay their relay of surcharges to the operator rather than take up the credit offer.

 

Supplier electricity-bill collections better than expected so far this month

Electricity bill payments have so far been better than expected in May and are on the rise following shock results recorded in previous months, during the full-scale lockdown.

Worst-case supplier revenue scenarios for the month have so far been avoided, but it is still too early to tell as the majority of consumer payments are due at the end of the month.

For the time being, rebounding electricity bill collection records are gradually approaching pre-crisis levels. Electricity bill payments are generally down by about 10 percent at present, compared to a 30 percent slump amid the heart of the lockdown.

Power utility PPC is already improving on its electricity-bill revenue decline of 9 percent in April following a major slump of between 25 to 30 percent in the second half of March.

Electricity bill collection figures at independent electricity suppliers are also moving upwards and are presently about 10 percent below pre-crisis levels, energypress sources informed.

Suppliers with high exposure to business and professional clienteles have been hit especially hard as these consumer groups were grounded during the full-scale lockdown in March and April.

Revenue losses have been milder for suppliers focused more on household consumers. Their revenue losses are in single-digit territory.

The full extent of the pandemic’s damage on electricity supplier revenues will become clearer once the economy is fully relaunched and the government’s support measures reach an end.

An anticipated unemployment spike over the next few months will negatively impact electricity-bill collection records.

Also, a subdued summer for the country’s pivotal tourism industry will hurt electricity supplier revenues, traditionally boosted during the second half of the year as a result of heightened tourism-related business.

Suppliers may end up needing to resort to emergency cash support through low-interest bank loans, support mechanisms and other financial tools if it turns out to be a bleak summer, as is feared.

 

 

Mid-voltage battle toughens, reflecting lower wholesale cost

Competition between electricity suppliers has intensified in the mid-voltage category, where lower prices currently reflect a sharp drop in the cost of wholesale electricity and, subsequently, wider profit margins available to suppliers.

Competition has yet to intensify in the household and business markets despite discount packages offered by most electricity suppliers, including the power utility PPC, from the beginning of the coronavirus crisis.

This lack of competition has been attributed to a cautious stance adopted by independent suppliers as they wait to see how much profit margin leeway will be shed by a drop in electricity demand and electricity bill payment delays.

It is a different picture in the mid-voltage category, where suppliers are bombarding both existing and prospective customers with price offers.

Suppliers are spreading the risk of wholesale price fluctuations by diversifying their price offers. They are keeping a close watch on the System Marginal Price, determining wholesale prices.

The course of the SMP in coming days remains unclear. Signs of a possible rebound in wholesale electricity prices have emerged as the SMP is now clearly higher than levels registered last week.

Wholesale electricity prices have mainly fallen as a result of increased contributions to the grid by natural gas-fueled power stations, supplied low-cost LNG, as well as RES units.

 

Suppliers also given lignite access by DG-Comp agreement

The Greek government and European Commission’s Directorate-General for Competition appear close to reaching an agreement that would give the country’s independent electricity suppliers access to state-controlled power utility PPC’s lignite-based production through a transitional mechanism running until 2023, when most of the utility’s lignite units are expected to cease operating.

This prospect comes hot on the heels of an agreement between Athens and Brussels enabling extensions of Greece’s demand response mechanism and transitory flexibility remuneration mechanism (TFRM).

PPC has monopolized Greece’s lignite sources and generation, but an agreement offering lignite access for all would open the door for independent suppliers as well as industry.

For quite some time, the DG-Comp has criticized PPC for not complying with a European Court decision requiring lignite access to third parties.

Settlement of the lignite dispute would leave just one pending energy-sector matter, the target model’s implementation.

Talks between Athens and Brussels on Greece’s energy sector matters have dragged on for at least seven months.

Athens and Brussels also appear to have drawn closer for an agreement on how lignite-based electricity will be priced.