Big CO2 cost drop for PPC mid, high-voltage consumers, clause abolished

Power utility PPC’s abolishment of a CO2 emissions cost clause concerning its mid and high-voltage consumers, a long-standing demand by EVIKEN, the Association of Industrial Energy Consumers, has resulted in a considerable reduction of CO2-related costs for these consumer categories.

CO2-related costs for mid and high-voltage consumers fell sharply to 6 euros per MWh in April, down from levels of 13.40 euros per MWh in January, 13.56 euros per MWh in February and 11.14 euros per MWh in March. CO2 emission costs have dropped considerably, internationally, in recent times.

The CO2 cost level is expected to remain unchanged for May as lignite-based generation has been restricted.

 

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.

 

Additional energy costs a big concern for mid-voltage manufacturers

CO2 emission cost charges have developed into a major concern for mid-voltage manufacturers following recent market changes such as electricity tariff hikes and a reduced punctuality discount, offered when bills are paid on time.

The operating details of a CO2 emission cost adjustment mechanism, prompting charges that do not reflect actual costs, are seen as the main problem by manufacturers.

These charges are revised when CO2 emission right cost increases are greater than 10 percent and remain unchanged when the emission charge change is less than 10 percent.

As a result, the current system is leading to charges that do not reflect actual costs.

Electricity tariff changes for medium-voltage manufacturers, especially the termination of a CO2 emission cost discount, have increased their energy costs by 11 to 12 percent, making them less competitive.

The majority of these manufacturers are exporters and risk losing foreign markets, which would decrease production levels and place jobs at risk.

The issue is a concern for some 30 Greek manufacturers employing thousands and needing to overcome energy costs that represent between 30 and 40 percent of total production cost.

“Authorities need to understand that a measure prompting 10 percent electricity price increases or decreases is of little significance to an enterprise whose electricity cost represents just 2 percent of production cost, for example, but, on the other hand, is huge for an enterprise whose electricity cost represents 40 percent of production cost,” a leading industrialist told energypress.

Mid-voltage consumers startled by 21% rise in electricity cost

Mid-voltage enterprises, primarily manufacturers, have been unsettled by the prospect of electricity cost increases of 21 percent as a result of power utility PPC’s revised pricing policy. Some of these consumers have already received notification of the hikes.

PPC’s tariff hikes have yet to be officially announced. According to sources, mid-voltage tariffs will be increased by 11 percent, which will be further burdened by a reduction of a punctuality discount, from 15 percent to 5 percent.

According to sources, mid-voltage consumers could also lose volume-based discounts currently available.

PPC’s pricing policy revisions coincide with a government plan to abolish NOME auctions, a setback for electricity retailers seeking lower-cost electricity, and, by extension, mid-voltage consumers looking to suppress their energy costs.

Suppliers set to lose ground in tougher mid-voltage market

Independent electricity suppliers are under pressure to increase mid-voltage tariffs on existing customer agreements as a result of rising wholesale electricity costs and higher NOME auction prices.

Market conditions have become increasingly unfavorable for independent suppliers over the past few months and are expected to become even more challenging following the record wholesale electricity price levels struck at the latest NOME auction on Wednesday.

Overall conditions are tightening up the electricity market’s mid-voltage category rather than opening it up to greater competition. Until now, independent suppliers had achieved solid market share gains in this category but could start surrendering ground.

NOME auction wholesale electricity prices reached nearly 55 euros per MWh at this week’s session. Additional costs of 10 euros per MWh take the total to 65 euros per MWh, a loss-incurring level for most existing mid-voltage supply agreements offered by independent players.

Major-scale customers who opt to return to the main power utility PPC should expect higher electricity price levels than those offered a year ago as a result of the sharp increase in CO2 emission right costs.

PPC has increased a CO2-related surcharge included on mid-voltage supply agreements from roughly 2.5 euros per MWh last year to slightly over 15 euros per MWh at present. It appears this surcharge will also be added to household agreements at the beginning of 2019.

Suppliers forced to mildly increase their mid-voltage tariffs

Independent electricity suppliers, pressured by market conditions to renegotiate their mid-voltage tariff levels have, in many cases, already proceeded with mild price increases as a result of particularly low offers made last year in an effort to lure customers.

Mid-voltage tariff offers by independent suppliers, originally well under 60 euros per MWh, are now close to 60 euros per MWh, energypress has been informed.

Independent suppliers have been forced to renegotiate their mid-voltage tariff prices as a result of high bidding at the most recent NOME auction, which boosted purchase prices and drastically reduced profit margins for suppliers.

In addition, the System Marginal Price (SMP), serving as the wholesale price, has remained high, as is also the case in neighboring countries, from where electricity imports would be possible should prices be right.

The announcement of tariff increases has unsettled mid-voltage consumers who, as a result, are expected to seek lower prices from rival suppliers.

The main power utility PPC could benefit from the current situation if its pricing policy remains unchanged.

As for low-voltage tariffs, concerning households and enterprises, suppliers are making concentrated efforts to achieve market share gains and implementing promotional campaigns. PPC’s future moves concerning a 15 percent discount it has offered to punctual customers since the summer of 2016 will be a crucial factor.

It remains to be seen how long the utility can keep incurring losses as a result of its effort to cling on to customers. According to a bailout term, the utility’s electricity market share must contract to less than 50 percent by 2020.