Industrial energy cost support activity heightened

Power utility PPC appears to have reached an advanced stage in talks with metal processing company Viohalco, one of Greece’s biggest electricity consumers, for a green-based power purchase agreement (PPA), which, if sealed, would be the power company’s first, sources have informed.

Also, on a wider scale, the Greek government, in response to considerable pressure from industrial associations, is believed to be preparing an energy-cost support package for industrial firms.

This support is expected to be offered in the form of subsidized electricity over a one-year period. A related legislative revision is being prepared. Budget money will be needed to fund this support.

Returning to PPC and Viohalco, the two sides are discussing a long-term supply agreement at a fixed price and have agreed on exclusive electricity supply from specific solar farms for the industrial player, the sources added.

Such an agreement promises to cover the industrial player’s energy needs at a subdued cost.

Manufacturers have been unsettled by expiring and expired electricity supply agreements with PPC, which, for decades, up until the energy crisis, had been able to offer low-cost energy supply deals.

PPC, like all energy suppliers, has been forced to abandon such deals, now unprofitable, and instead turn to PPAs.

Industry concerned over demand response absence from market reforms

Industrial energy consumers are concerned about the absence of any proposal on a demand response system in public consultation being staged by the European Commission on Greece’s electricity market reform plan.

Industrial energy consumers are expected to express their concerns through the procedure.

The only related reference concerns a Manual Frequency Restoration Reserve (MFRR), expected to be launched on a trial run as of February before being adopted a year and a half later.

The industrial sector will be called upon to compete with other reserves, which will make demand response participation an issue, industrial sources fear.

They described the MFRR as extremely insufficient and unable to replace the demand response mechanism, which has compensated major-scale electricity consumers when the TSO asks them to shift their energy usage (lower or stop consumption) during high-demand peak hours, so as to balance the electricity system’s needs.

Given the proposals presented in the public consultation procedure, the demand response system appears headed for a marginal role, the industrial sources noted.

RES investors keen to talk PPAs with suppliers, industry

RES investors, especially from the solar energy field, but also wind energy, are engaging in talks with electricity supply companies and industrial enterprises to establish power purchase agreements (PPAs) for their future or under-construction projects as they anticipate a reduction in capacities at forthcoming RES auctions and even lower tariff prices than the low levels registered at the most recent auction.

This increased focus on PPAs highlights the major shift taking place in green-energy production as fixed tariffs, at auction, are gradually being phased out and the energy-exchange era is taking over.

RES producers need to establish contracts for the sale of their output in order to develop their projects as banks are not willing to finance such investments if potential earnings, at sufficient levels, have not been secured in advance.

No bilateral PPAs have yet been established, but the negotiations are continual and tenacious.

Potential RES producers have – since the previous RES auction – been willing to accept lower prices, proposing levels of as low as 40 euros per MWh attached with demands for shorter contracts, including five-year periods, sources have informed.

Market officials expect PPAs to start emerging over the next six months, noting that banks will play a decisive role in the price levels to be established as their project financing decisions will depend on profit margins presented by investors.

Foreign firms seeking local demand response service roles

Major European companies with considerable interests in energy exchanges abroad are now seeking to represent local industrial producers for demand response services in Greece’s balancing market.

Two major international players, currently assembling new related divisions in Greece, have already approached Greek producers to take on their representation.

Demand response system entry into Greece’s new balancing market is expected to begin within 2021, barring unexpected developments.

Once launched, foreign representatives will be able to assume demand-response, green-aggregator roles in Greece, offering balancing services to the system.

Power grid operator IPTO, in its effort to ensure grid stability, will be able to utilize the flexibility major-scale electricity consumers are capable of offering.

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.

Brussels recognizes EVIKEN case on excess distribution surcharges

An ongoing effort by EVIKEN, the Association of Industrial Energy Consumers, calling for natural gas distribution operators to return excess surcharges to industrial consumers has – for the first time since the case’s launch four years ago – been recognized by the European Commission and included in its latest report on the Greek economy.

RAE, the Regulatory Authority for Energy, will reach a decision imminently, within May, according to the Brussels report.

EVIKEN launched its case in June, 2016. Industrial consumers were charged excess gas distribution surcharges for a 16-month period beginning in August, 2015.

EU law was breached by legislation ratified to enable the excess surcharge, upped to 4 euros per MWh, universally, regardless of company profile. This placed major-scale industrial producers under pressure.

A decision on this overcharging case has remained pending since 2016 despite wide recognition of the violation authorities at all levels, from RAE to the European Commission’s Directorate-General for Energy.

RAE, over an extended period, has needed to respond to rigorous questioning from the DG-Energy on various aspects concerning the matter.

RAE is now expected to calculate the precise excess surcharge amount that needs to be returned by operators to industrial consumers through an offsetting of accounts.

“Our case may have been forgotten if it weren’t for the DG-Energy leadership’s decisive intervention that prompted RAE to overturn all the unsubstantiated legal interpretations by natural gas distribution operators,” noted Antonis Kontoleon, the head official at EVIKEN.

RAE decisions on network fees, industrial sector hike in June

RAE, the Regulatory Authority for Energy, is expected to decide on the levels of regulated charges for gas distribution networks in the wider Athens area, Thessaloniki and the rest of Greece within June, sources have informed.

It is believed that these charges will essentially remain unchanged. A minor reduction could be made.

A decision on a 4-euro per MWh distribution charge set for the industrial sector in the summer of 2015 will be a key a factor in setting the new regulated charges. Action taken by EVIKEN, the Association of Industrial Energy Consumers, against this charge at a European Commission level was successful.

This charge increase was implemented across the board for all industrial consumers, regardless of profile.

RAE is expected to reach a decision this summer on a five-year development plan covering 2019 to 2023 for gas distribution companies. It is waiting for related data from the DEDA and EDA Attikis distributors.

Industrialists reject ministry offer including 10% power tariff hike

Following weeks of negotiations, EVIKEN, the Association of Industrial Energy Consumers, has rejected an economy and development ministry proposal concerning new  industrial consumer terms for electricity supply by the state-controlled main power utility PPC.

The alternate minister of economy and development Stergios Pitsiorlas (photo) proposed extending volume-based electricity discounts as well as punctuality discounts for industrial consumers but incorporated these offers with a 10 percent increase of industrial tariffs.

According to sources, the industrial consumers association made clear it cannot accept a 10 percent electricity tariff hike as it has already been burdened by CO2-related cost increases of 20 percent.

On October 10, Pitsiorlas promised he would deliver an energy cost savings package for industrial consumers within ten days.

This impasse brings the negotiations back to square one. The industrial sector will be hoping RAE, the Regulatory Authority for Energy, eventually looks seriously into charges made by the sector against PPC for discriminatory treatment and be vindicated. At the other end, the government faces the challenge of finding an energy cost solution for industrial enterprises in support of their sustainability.


Brussels forwards list of some 30 questions on Greek CAT proposal

The European Commission has forwarded a list of some 30 questions to Greece’s energy ministry over the country’s permanent CAT remuneration mechanism plan proposed by Athens and currently being examined and discussed by Brussels authorities.

European Commission officials have already met with government and main power utility PPC authorities to discuss details included in the country’s new CAT plan. The European Commission has also invited other interested parties, including industrialists, to Brussels to listen to views and objections concerning the CAT plan. A series of such meetings are expected to begin this week.

The industrial sector has already warned it cannot accept a CAT mechanism that does not incorporate a demand response system, as was reiterated just days ago by Antonis Kontoleon, a leading figure at EVIKEN, the Association of Industrial Energy Consumers, at an IENE (Institute of Energy for Southeast Europe) conference.

The industrial sector has not ruled out legal action if a demand response system is excluded from the CAT mechanism.

Demand response systems enable major industrial enterprises to be compensated when the TSO (ADMIE/IPTO) requests that they shift their energy usage by lowering or stopping consumption during high-demand peak hours so as to balance the electricity system’s needs.

At the other end, state-controlled PPC and the government are looking for a swift Brussels approval of the new CAT mechanism, seen as pivotal for the prospects of PPC’s bailout-required sale of lignite units.

Lignite units are planned to be eligible for CAT remuneration, according to the Greek proposal, thereby ensuring considerable earnings for prospective buyers of the Meliti and Megalopoli lignite-fired power stations included in PPC’s sale package.


Industrialists, PPC question cost impact of gas network expansion

EVIKEN, the Association of Industrial Energy Consumers, and the main power utility PPC have both raised sustainability-related objections to a gas network expansion plan covering 18 municipalities in northern and central Greece, included by gas distributor DEDA in its five-year development plan.

Participating in public consultation staged by DEDA, EVIKEN pointed out that the gas distributor’s five-year plan makes no mention of the impact on distribution network surcharges.

RAE, the Regulatory Authority for Energy, has already endorsed distribution network surcharges for central Greece, a region of heightened industrial activity. The area’s gas network is already developed but will be expanded. RAE will need to ensure that existing network charges are not increased to cover the cost of the network’s expansion, the industrial consumers association stressed in its intervention.

PPC also raised sustainability concerns regarding the gas network’s expansion to previously non-serviced areas.

RAE is expected to approve DEDA’s five-year development plan by October 10, when the gas distributor, a wholly-owned subsidiary of DEPA, the public gas corporation, plans to proceed with tenders for the development of the natural gas networks.

The DEDA tenders are planned to cover all development aspects of the projects, including procurement, project management and construction. A total of 11 or 12 tenders are being planned.


Industry refusing to sign new high-voltage PPC agreements

Citing unfavorable conditions and pending issues, the country’s high-voltage industrial consumers are refusing to sign new electricity supply agreements with the main power utility PPC following an invitation extended by the latter to all industries in late July.

High-voltage consumers argue the power utility has refrained from staging tariff negotiations of any substance with industries.

Also, a variety of issues remain unresolved, such as settlement of time frames for peak-hour electricity, the duration of new contracts, and the details of a formula determining cost-offsetting amounts for major-scale industrial firms, sector officials have pointed out.

Industrialists are pushing for high-voltage electricity supply contracts along the lines of favorable arrangements offered by PPC, until 2020, to ATEbank – formerly known as the Agricultural Bank of Greece and now taken over by the Piraeus Bank – and Larco, the troubled state-controlled general mining and nickel producer.

PPC agreed to offer Larco an 11 percent discount for punctual payment of its electricity bills as well as a 21 percent volume-related discount despite the enterprise’s major struggle to keep up with electricity bills. Larco is believed to owe PPC around 250 million euros.

High-voltage industries also noted PPC is offering equal, if not better, terms to consumers in the mid-voltage category, where competition exists.


Heightened electricity market reforms period approaching

A period of heightened electricity market reform activity is expected as of next month due to tight deadlines and the insistence of the country’s lenders for a target model launch by April, 2019. New market codes will need to be established for the target model, aiming to harmonize EU electricity markets.

RAE, the Regulatory Authority for Energy, is moving to stage a public consultation procedure for the establishment of codes concerning the futures market, it has become known in the marketplace.

Greece’s industrial sector, which has already intervened publically and forwarded a related letter to the European Commission, is urging for the establishment of a competitive energy market based on European standards.

The industrial sector has set as a paramount objective the opening up of the energy market for a greater level of competition. The NOME auctions, introduced in Greece roughly two years ago to offer third parties access to the main power utility PPC’s lower-cost lignite and hydropower sources, have not succeeded as appropriate conditions were not established, according to industrial consumers, who consider PPC partially responsible.

The maintenance of a mandatory pool, which has enabled PPC to shape electricity prices in both the wholesale and retail markets, has been a key factor behind the failure, industrialists have asserted.

As a result, the industrial sector believes the codes to be implemented for the futures market will be crucial. Industrialists are expected to forward three key proposals to RAE’s public consultation procedure.

According to sources, one of these will entail requiring PPC to satisfy a lower limit of production sales to third parties in the futures market. Industrialists will also request the exclusion of PPC’s trading division from futures markets products offered by the utility’s production division as this is expected to restrict PPC’s retail market dominance and lead to a market share contraction, not achieved by the NOME auctions. Industrialists are also expected to request a term preventing PPC from having access to futures markets products linked with lignite units included in the utility’s bailout-required lignite disinvestment.

Industrialists troubled by PPC delays for new tariff agreements

Industrial electricity consumers are troubled by their delayed negotiations with the main power utility PPC for new high-voltage tariff agreements concerning the current year.

PPC had offered a two-month extension of existing industrial tariff agreements to cover January and February but a further two months, covering tariffs for March and April, are now needed, sources stressed.

Electricity tariff negotiations between PPC and industrial firms have been held up by the power utility’s focus on a bailout-required disinvestment of lignite units.

A first round of talks between PPC and major-scale industrial consumers has been completed.

According to a PPC decision, new tariff agreements, including discounts, will need to be approved at PPC’s general shareholders’ meeting. This meeting has been delayed as decisions concerning the power utility’s sale package of lignite units, representing 40 percent of lignite capacity, will be incorporated into the session.

At this stage, PPC’s general shareholders’ meeting is not expected to be staged any sooner than late April or early May.

Industrial consumers are dissatisfied by PPC’s decision to take the high-voltage tariff agreements to the shareholders’ meeting. Certain industrial sources noted that this course to be followed violates a sector code specifying that tariffs should be determined by respective consumer profiles and negotiations alone.

Demand response mechanism extension bid sent to Brussels

Greek authorities forwarded an application yesterday to Brussels seeking a three-year extension of the country’s demand response mechanism (interruptability), set to expire on September 30, sources have informed.

Industrial sector officials had grown increasingly restless in the lead-up as they had anticipated swifter action from the Greek government.

Taking into account the amount of processing time needed at the European Commission in the past, as well as August’s summer slowdown, a delay can be expected. An extended demand response mechanism will most probably not be implemented until 2018, assuming the Greek application is endorsed in Brussels.

The demand response mechanism enables major industrial enterprises to be compensated when the TSO (ADMIE/IPTO) requests that they shift their energy usage by lowering or stopping consumption during high-demand peak hours so as to balance the electricity system’s needs.

Industrial sector officials, in a letter forwarded to the energy ministry early in July, noted, amongst other issues, that the demand response mechanism needs to keep operating independently until market reforms are completed and a new permanent mechanism securing equal participation covering demand is implemented.


‘Interruptability’ extension bid not submitted, industry edgy

Main power utility PPC’s mine in Amynteo, affected by a landslide a fornight ago, will not be taking part in the upcoming demand response mechanism (interruptability) auction, as had been expected, energypress sources have informed. This development will reduce the auction’s demand level by 45 MW.

The next demand response mechanism auction, through which the power grid operator IPTO will offer capacities of 750 MW and 900 MW over two sessions during one day, is scheduled to take place this coming Tuesday.

The operator has announced that three enterprises, Halyvourgiki, Greece’s oldest company in the steel industry, Halyvourgia Elefsinas, and Athens airport, are not entitled to participate.

Though participants are looking forward to the next demand response mechanism auction, offering energy savings, industrialists have expressed growing concern over the past few days as, according to sources, Greek government officials have yet to submit an official application to the European Commission seeking an extension of the measure.

The demand response mechanism, enabling major industrial enterprises to be compensated when the TSO (ADMIE/IPTO) requests that they shift their energy usage by lowering or stopping consumption during high-demand peak hours so as to balance the electricity system needs, is due to expire in November.

Industrial figures are counting on the government’s pledge for the measure’s extension. Otherwise their respective industrial enterprises will face steep energy cost increases.

Greek government officials need to take into account the customary slowdown of procedures at the European Commission during the summer months. Swift and immediate action is needed as the end of the measure’s validity, four months away, is closer than the time period suggests, indusrialists have warned.


Flexibility capacity cuts seen for temporary CAT mechanism

A flexibility study prepared by power grid operator IPTO and delivered to RAE, the Regulatory Authority for Energy, limits flexibility provisions to electricity production units that are capable of entering the system within three hours of notification by the operator, according to energypress sources.

More specifically, the annual flexibility needs have been calculated at 3,500 MW for 2017, 2018 and 2019, the first three years of a ten year-period examined in the study. This comes as a reduction compared to the temporary CAT mechanism that expired in April and was based on annual flexibility needs of 5,000 MW.

The significant reduction of flexibility capacity and provisions indicates that the amount of CATs to be offered as part of the new temporary flexibility mechanism to be proposed by RAE and implemented, assuming the European Commission offers its approval, until the target model is introduced, will be reduced.

Proceedings at auctions, required by related new European Commission regulations, will determine which units stand to benefit as well as the amounts to be received by units offering flexibility.

Given the new standards proposed by the IPTO study, it remains unknown whether main power utility PPC’s hydropower stations will be able to qualify into the category of units offering flexibility services.

RAE plans to soon announce the new temporary CAT mechanism and offer pre-notification of the permanent mechanism, which, according to the bailout, must be announced by the end of June. At this stage, it does not appear that the permanent mechanism’s announcement can be made any earlier than mid-July. The pre-notification of the permanent CAT mechanism and the announcement of the temporary system are expected to be jointly announced.

A vague picture also prevails for the demand response mechanism (interruptability), directly linked to the CAT mechanism. Though the energy minister Giorgos Stathakis and Prime Minister Alexis Tsipras have both promised Greece will submit a seperate application for a three-year extension to the current mechanism that expires in October, the European Commission’s DG Comp, according to sources, is seeking to have the demand response mechanism incorporated into the temporary CAT mechanism as it believes flexibility is not only restricted to electricity production units but can also include consumers.

Greek industrialists have made clear to Greek government officials that the demand response mechanism is essential if energy-intensive producers are to remain competitive.

The demand response mechanism (interruptability) enables major industrial enterprises to be compensated when the TSO (IPTO) asks them to shift their energy usage (lower or stop consumption) during high-demand peak hours, so as to balance the electricity system needs.


PM pledges €100m, annually, for industrial unit energy upgrades

Prime Minister Alexis Tsipras, speaking yesterday at a Federation of Industries of Northern Greece (SBBE) annual meeting, noted that 100 million euros of an additional 300 million euros expected to become available to Greece as of 2019 for public investments would go towards supporting energy upgrades at energy-intensive industrial units.

The government was promised additional public investment funds in exchange for the latest round of measures added to the Greek bailout agreement.

These energy upgrades will lead to energy cost savings for industrial enterprises and lower production costs, Tsipras told the SBBE audience.

Tsipras described the high energy costs faced by manufacturers as a “thorny” issue, while noting that his government has taken certain steps to combat the issue.

He made reference to the abolition of the special consumption tax (EFK) tax imposed on natural gas used for electricity generation; an EFK reduction for natural gas used in industrial production; as well as the implementation of the demand response mechanism (interruptability). This mechanism enables major industrial enterprises to be compensated when the TSO (IPTO) requests that they shift their energy usage by lowering or stopping consumption during high-demand peak hours so as to balance the electricity system needs.

EVIKEN officials discuss industrial issues with minister

Energy-intensive industrial enterprise concerns were discussed at a meeting yesterday between EVIKEN (the Association of Industrial Energy Consumers) officials and energy minister Giorgos Stathakis.

The approaching ends of existing industrial electricity supply deals established between industrial firms and the main power utility PPC and the current cost-saving demand response mechanism have generated unease amid industrial-sector ranks.

The current demand response mechanism (interruptability), enabling major industrial enterprises to be compensated when the TSO (ADMIE) asks them to shift their energy usage (lower or stop consumption) during high-demand peak hours, so as to balance the electricity system needs, is due to expire in November.

At yesterday’s meeting, EVIKEN officials expressed their concerns over the demand response mechanism’s approaching end, fearing electricity cost increases that would negatively impact the industrial sector’s level of competitiveness.

Official market data indicates that manufacturers, battling amid the persisting Greek recession, are showing signs of recovery.

EVIKEN is expected to release an announcement today detailing its views and objectives for the near future, including details of its propoal forwarded to the energy minister for the demand response mechanism. A reaction by the association to the government’s agreement with the country’s lenders on the Greek bailout’s second review, announced yesterday, is also expected to be included in the EVIKEN announcement.

Legislation for a permanent demand response mechanism is not expected to have been ratified by November, when the current system expires.

Even so, EVIKEN officials emerged feeling confident of positive measures being taken following their meeting with the energy minister yesterday. The session was more constructive than previous meetings, industrial sources informed.

The uncertainty felt by industrial enterprises over future electricity supply deals with PPC was also stressed during the meeting.

The energy minister promised that a finalized plan for revisions to a RES-supporting ETMEAR surcharge would soon be announced. Upper limits for ETMEAR payments made by energy-intensive enterprises are expected to be set. This is expected to reduce surcharge-related costs for various industrial sectors.

IPTO seeking penalty claims for ‘demand response failings’

The power grid operator IPTO is seeking penalty payments from industrial producers committed to the demand response mechanism, offering lower electricity tariffs for flexibility, over claims that they failed to comply with electricity usage reduction orders issued by the operator during the energy crisis in January.

According to regulations, penalties for such infringements range between 60 and 110 percent of compensation amounts offered to demand response mechanism participants over three-month periods.

RAE, the Regulatory Authority for Energy, which has been informed of the operator’s complaints and pursuit of penalty claims, acknowledges that certain industrial producers did not honor their obligations.

Some of the industrial producers believed to have failed to meet demand response mechanism requirements have, until now, refused to pay fines and, instead, are reacting against the IPTO complaints.

These industrial producers have apparently returned penalty invoices issued by the operator worth a total of 2.1 million euros.

At this stage, IPTO is examining whether the industrial producer rejections are justified. If so, the invoices will be cancelled. If not, the operator will insist on being paid the specified penalty amounts.

The demand response mechanism enables major industrial enterprises to benefit from electricity cost savings in exchange for shifting energy usage to off-peak hours whenever required by the operator.


Major industrial firms demand power term revisions from PPC

A number of major industrial enterprises are seeking revisions to their electricity supply agreements with main power utility PPC, an anticipated move following a recent tariff agreement between Aluminium of Greece and the utility following years of disputes, including legal action.

The requests were expressed through letters demanding equivalent terms to those offered by PPC to Aluminium of Greece.

The industrial producers, hailing from the cement, steel and aluminium sectors, want their agreements with PPC to be extended until 2020, as is the case with Aluminium of Greece, for some mid-term planning stability.

The industrial producers are also demanding a 25 percent discount, as major-scale clients, and a further 15 percent discount as a bonus for punctual payment of electricity bills. At present, PPC’s high-voltage clients are offered a 5 percent discount for payments on time.

The industrial firms are also demanding a special 8 percent discount offered to Aluminium of Greece, based on its consumer profile.

Officials representing these industrial producers had attended a recent extraordinary shareholders meeting held by PPC to approve the new terms offered to Aluminium of Greece. These officials asked to be informed of the details, a move that strongly suggested they would follow up with demands for improved terms.

PPC officials have responded by noting that the case of Aluminium of Greece is extraordinary. Even so, the industrial producers appear determined to take the matter all the way.

Industry requests ‘disruption management’ measure extension

EVIKEN, the Association of Industrial Energy Consumers, has forwarded a written request to the energy ministry seeking an extension to the energy cost-saving “disruption management” mechanism, expiring in slightly less than a year.

The European Commission has just endorsed an equivalent German “demand response” plan, bringing the issue to the fore. The German system will be valid until July, 2022.

Greece’s industrial sector has highlighted that the measure’s extension is essential to prevent a void that could prompt unpredictable repercussions for Greek industry, already lacking a competitive edge in terms of energy costs.

The ‘disruption management’ mechanism enables major industrial enterprises to benefit from electricity cost savings in exchange for shifting energy usage to off-peak hours whenever required by the operator.

The government’s new Environment and Energy Minister Giorgos Stathakis, appointed last Friday, will be the recipient of the request, forwarded to his predecessor Panos Skourletis, who now heads the Ministry of Interior Affairs.

As one of its arguments, EVIKEN, in its request, noted that Greece’s ‘disruption’ mechanism was approved back in October, 2014, but not implemented until March, 2016. It expires on October 15, 2017.

The association noted that the Greek mechanism was endorsed by Brussels for a maximum period of three years, a time period that cannot be fully utilized as a result of the delay, caused by a lack of framework.


Industrialists call for return of excessive gas distribution fee

Energy-intensive industrial enterprises are calling for a return of amounts paid from August, 2015 to the present day as a result of a sharp natural gas distribution surcharge hike, from 1.5 euros to 4 euros per MWh, which resulted from Greece’s third bailout agreement.

The surcharge hike had sparked a strong reaction from EVIKEN, the Association of Industrial Energy Consumers, which, through a series of announcements and letters, condemned the move as one made to finance the compensation of the country’s three EPA gas supply companies for the premature end to their regional monopolies.

A new policy decided on by RAE, the Regulatory Authority for Energy, will reduce the gas distribution surcharge for energy-intensive industries to levels below the 1.5 euros per MWh charged prior to the sharp hike.

Certain industrial enterprises are now calling for a retroactive return of excessive amounts – the difference between the 4 euros per MWh charged and the new RAE-endorsed rate – paid since August, 2015.

Officials at these industrial enterprises believe cross subsidization practices have taken place during this period, noting that the excessive amounts should be offset.

Besides the number of industrial enterprises seeking returns, EVIKEN has also prepared a statement backing the demand.

PPC, Aluminium of Greece deal well received in industrial sector

Main power utility PPC’s shareholder approval yesterday of an electricity tariff agreement reached between the corporation and electro-intensive industrial consumer Aluminium of Greece, following a long-running dispute that has included legal battles, has resonated positively throughout the industrial sector.

Besides bringing an end to the power utility’s dispute with one of the country’s biggest industrial players, the agreement also highlights PPC’s willingness to accept a long-standing Aluminium of Greece demand for a long-term industrial electricity tariff agreement, rather than a two-year deal, as has been the case until now. In doing so, the power utility will now need to also be prepared to offer long-term tariff agreements to other industrial corporations.

Based on comments made by PPC boss Manolis Panagiotakis, the utility appears ready to renegotiate new industrial power supply deals with customers beyond 2017, when agreements expire. Some customers could make moves before the end of 2017.

PPC’s recognition of the particular electricity needs of Aluminium of Greece helped the two sides reach a deal. Other industrial players are not expected to demand equivalent terms but, instead, aspects of this deal, including improved tariff levels.



Industry requires long-term energy deals for investments

In more recent times, Greek industry has managed to make a series of energy cost gains following years of disputes prompted by what was a chaotic and unprepared liberalization of the high-voltage electricity market in the years following the millennium. The recent gains have generated some optimism in the sector.

However, the industrial sector has suffered numerous closures amid the country’s deep and extended recession. More still needs to be done in terms of industrial energy costs.

Constructive measures must be taken amid these adverse conditions to encourage industrial investments and revive Greek industry, until a few years ago the country’s biggest provider of jobs.

Industrial sector officials believe the lack of consistency and predictability of energy costs is a key factor behind the absence of industrial investments. Long-term industrial investments requiring years, if not decades, for returns on investment cannot be made amid an environment of unpredictable energy costs, let alone the prevailing instability in tax and labour costs, sector officials contend.

The level of uncertainty concerning energy costs, especially, will have fully returned by the end of 2017 when the “disruption management” plan – enabling energy cost savings for major-scale industry in exchange for shifting energy usage to off-peak hours whenever required by the power grid operator – is scheduled to expire. Also, electricity supplier surcharges are expected to be rolled over to consumers.

These two developments, alone, are expected to increase industrial energy costs by 11 to 20 euros per Mwh, sector officials estimate, which would once again place in doubt the hard-fought competitive edge gained in recent times by the industrial sector for improved electricity costs.

Industry needs steady, long-term agreements that will pave the way for investments. If investments are not being made at present, this is because energy cost agreements are limited to two-year periods while government measures taken for the industrial sector are short-term, according to one industrial sector official.


NOME participants to disclose plans at RAE information day

RAE, the Regulatory Authority for Energy, will today stage an information day on terms and conditions prepared by LAGIE, the Electricity Market Operator, for the upcoming NOME auctions. Interested parties will have an opportunity to voice their opinions. The session will provide a clear indication as to their positions and intentions.

The NOME terms are currently making their way through public consultation procedures, given a deadline extention until September 9.

NOME auctions are intended to provide third parties with access to main power utility PPC’s low-cost lignite and hydropower sources as a measure to break the utility’s dominance.

Industrial enterprises are not permitted to take part in the NOME auctions. Many industrial firms, which have established power supply companies to gain access to the NOME auctions, object to one specific term that could prevent their access to the procedure. This term states that electricity suppliers must represent at least one of five supply categories whose monthly consumption needs to amount to at least 60 percent of the monthly consumption of customers represented.

According to energypress sources, industrial enterprises will react against the inclusion of this term as it restricts new suppliers and creates conditions of unfair competition.


EVIKEN reacts to law barring industry from NOME auctions

EVIKEN, the Association of Industrial Energy Consumers, in a letter forwarded to the Greek government, has strongly protested against a decision that excludes industrial units from taking part in the upcoming NOME auctions. The association is also expected to take the matter to the country’s international creditors.

The NOME auctions, due to begin in September, will provide third parties with access to main power utility PPC’s low-cost lignite and hydropower sources as part of the bailout-related obligations intended to break the utility’s dominance.

In its letter to the government, EVIKEN contends that recent legislation’s exclusion of industrial units holding electricity supply permits from NOME auctions creates unfair competition in the electricity market. The law provides regulatory intervention that prevents fair trade practices, the association argues.

In the same letter, EVIKEN notes that the NOME-related objectives of reducing PPC’s market dominance cannot be achieved if industrial units are not offered access to the auctions without restrictions.

Major industrial enterprises such as cement producer Titan already hold electricity supply permits, while others, including copper, aluminum and cable producer Viohalko and textile company Epilektos, soon expected their permits to be issued.

A wider reaction from industries can be expected if the NOME participation restrictions imposed are not lifted.

PPC shunning mine cost-cut potential, professional advice

The participation of main power utility PPC’s lignite mines in the “disruption management” plan’s two recent auctions prompted a reaction from disgruntled industrialists as a result of the limited capacity amount that was left over for industrial enterprises, and the consequent flattening of prices caused by the utility’s involvement in the auction process.

PPC’s decision to seek “disruption” plan capacities through the auctions linked to the “disruption management” plan – introduced to enable energy cost savings for major-scale industry in exchange for shifting energy usage to off-peak hours whenever required by the operator – clearly indicated that the utility is not at all interested in reducing its operating costs.

PPC submitted bids worth 5 euros per MW at these auctions, a long way off the nearest bid of 1,000 euros per MW.

PPC’s complete disinterest for more efficient cost-related management of its mines was made all too clear at the “disruption” plan auctions. The approach, however, did not come as a surprise for energy market officials who have closely monitored how PPC has managed its mines over the years. The strategy has been to bloat expenses with disregard for the effects on operating costs.

A cost study conducted by the multinational professional services company Ernst & Young noted that PPC’s mines paid 78.2 million euros for 924,288 MWh of electricity supply in 2012, or an average supply price of 84.6 euros per MWh. The study stressed that the utility’s mines, as a high-voltage electricity consumer, had the potential to pay 65 euros per MWh, or 23.1 percent less. This, alone, would have saved the mines 18 million euros in operating costs.


Industrial group wants PPC barred from ‘disruption’ plan auctions

EVIKEN, the Association of Industrial Energy Consumers, has forwarded a letter to leading local energy-sector authorities calling for main power utility PPC to be excluded from the “disruption management” plan’s auctions, protesting that the utility’s participation is having major negative impact on negotiations between PPC and industrial energy-intensive enterprises for individual tariff agreements.

Just days ago, PPC undermined the recently introduced “disruption management” plan’s second auction session by submitting extremely low offers intended to flatten the session, sparking protest by disgruntled energy-intensive industry officials.

The “disruption management” plan is intended to enable energy cost savings for major-scale industry in exchange for shifting energy usage to off-peak hours whenever required by the operator. If the plan fails to sufficiently reduce energy costs for industrial enterprises, then the latter can be expected to reassess their positions on the tariff negotiations with PPC.

It is believed that a number of major-scale industrial enterprises that have already signed new tariff agreements with PPC are reexamining their respective deals.

The EVIKEN letter calls for PPC’s exclusion from the “disruption management” plan’s auctions even if a ministerial decision needs to be signed to accomplish this. The association, in the letter, recalled recent remarks made by energy minister Panos Skourletis, who described the “disruption” plan as a tool to help offset the elimination of a 20 percent electricity discount offered to industrial consumers. The offer ended at the end of 2015.

The EVIKEN letter was sent to Skourletis, deputy industry minister Theodora Tzagri, RAE (Regulatory Authority for Energy) chairman Nikos Boulaxis, and PPC’s chief executive Manolis Panagiotakis.


PPC undermines ‘disruption’ auction with flattening bids

Yesterday, while the energy minister Panos Skourletis was trumpeting the “disruption management” plan – enabling energy cost savings for major-scale industry in exchange for shifting energy usage to off-peak hours whenever required by the operator – as a beneficial pricing tool policy for the industrial sector, the main power utility PPC was undermining the recently introduced initiative’s second auction session by submitting extremely low offers intended to flatten the session, disgruntled energy-intensive industry officials have protested.

In comments offered to energypress, industrial sector officials expressed their discontent, adding that the events at yesterday’s auction could have a domino effect and negatively impact negotiations between PPC and industrial enterprises for new tariff deals.

Detailed data provided by IPTO, the power grid operator, for yesterday’s auction showed that PPC’s five mines were the first to submit offers, at a level of five euros per MWh. Market officials condemned PPC’s behavior as undesirable and provocative, noting that the utility’s sole intention was to keep prices low and not be credited with money from the process.

Interestingly, yesterday’s session for short-term agreements ended up offering subsidized support to PPC’s mines while excluding bids from active major factories and industries such as Corinth Pipeworks from the process and offering smaller-than-expected capacities to others. A total of 15 offers totaling 137.6 MW were not accepted.

The situation was worse for longer-term agreements. A total of 34 offers totaling 175.1 MW were left out, including Solk, MEL (Macedonian Paper Mills), and Halkor.

Prices for short-term agreements reached 30,000 euros per MWh and a total capacity of 650 MW was provided to Titan Cement, Sidenor, Sovel, PPC, Iraklis, Epilektos, MEL, Yioula, Fibran, Halyps, Hellenic Halyvourgia, ELPE (Hellenic Petroleum), and Larco.

In the longer-term agreement category, the auction’s price level reached 21,900 euros per MWh and a total capacity of 850 MW was provided to Titan Cement, Aluminium of Greece, Sidenor, Sovel, PPC, Epilektos, Yioula, Halyps, Hellenic Halyvourgia, ELPE (Hellenic Petroleum), and Larco.




EU policies increasing energy costs, EVIKEN tells Sefcovic

EU energy policies being implemented in Greece are increasing energy costs and blocking the liberalization of markets as a result of consequent market distortions, officials of EVIKEN, the Association of Industrial Energy Consumers, contended during a meeting in Athens yesterday with Maros Sefcovic, the European Commission vice president responsible for Energy Union.

The industrial consumer association representatives, who were joined at the meeting by members of SEV, the Hellenic Association of Industrialists, did not hesitate to frame the EU, noting that, in some cases, these unfavorable market developments are being tolerated by the European Commission.

The EVIKEN officials submitted a series of demands aimed at countering the market distortions, including the implementation of bilateral agreements and a decrease of natural gas distribution fee costs.

As for the electricity market, EVIKEN demands included an immediate start in the transition towards the target model, exemption of surcharges imposed on imported electricity, and interconnection upgrades.

For the natural gas market, EVIKEN demanded the cancellation of a distribution fee hike, the exclusion of EPA gas supply companies from gas auctions for as long as they remain subsidiaries of DEPA, the Public Gas Corporation, a doubling of the gas amounts auctioned, a reduction to the special consumption tax (EFK) imposed on gas, and reinforced and upgraded interconnections linking Greece, Bulgaria, and Romania.

Sefcovic, who was in Athens as part of a tour of European capitals to check on energy union progress of EU member states, also held separate meetings with Prime Minister Alexis Tsipras, energy minister Panos Skourletis, and other local officials.