Funding of broader subsidized electricity plan still unclear

A government plan to make available lower-cost electricity, through the Social Residential Tariff (KOT) program, to the country’s 1.35 million households eligible for recently announced social dividends has raised questions as to how this widened coverage can be funded.

The energy ministry has indicated the new and revised KOT plan will exclude less desperate households and multi-member families possessing property in order to avoid any fiscal impact. The results of this approach remain to be seen.

Approximately 680,000 households are currently eligible for KOT support, a figure that roughly represents  just half the number expected to benefit under the revised plan.

In the past, KOT coverage expansions for households in need have inevitably led to hikes of an YKO surcharge imposed on electricity bills to support subsidized electricity offers as well as higher-cost power generation on Greece’s non-interconnected islands.

It also remains unclear how the reduced cash inflow of a government plan to exempt households receiving social solidarity welfare funds (KEA) from network usage and distribution surcharges will be covered. At present, 300,000 households receive KEA support but the number is rising. According to the government plan, this group will be offered electricity tariff discounts of 7.5 cents per KWh, reducing the regular rate of approximately 13 cents per KWh to about 5 cents per KWh.

Under the new plan, KOT-eligible households – the biggest sub-group of underprivileged households, numbering 1.35 million in total, as mentioned above – will be offered tariff discounts of 4.5 cents per KWh, which, once deducted from the regular tariff rate of approximately 13 cents per KWh, will establish a reduced price of around 8.5 cents per KWh, representing a 35 percent discount.

Independent suppliers are not expected to see any market opportunities in the expanded KOT plan as KOT-eligible households include consumers who often fail to service their electricity bills.

According to data reported last month by PPC chief executive Manolis Panagiotakis, over 340,000 KOT-eligible households being supplied by the utility have fallen behind on electricity bill payments worth a total of 350 million euros.