Supplier guarantees proposed by IPTO ‘needless, excessive’

Electricity suppliers have expressed reservations about a power grid operator IPTO report calling for the payment of guarantees by all parties registered with ESMIE, Greece’s electricity transmission system, to fulfill obligations, describing these guarantees as needless and excessive.

The operator’s report was put forth for consultation by RAE, the Regulatory Authority for Energy, prompting responses from ESEPIE, the Hellenic Association of Electricity Trading and Supply Companies, and three energy suppliers, the power utility PPC, Heron and Protergia.

The IPTO call for guarantees would excessively burden ESMIE members and create serious cashflow problems in the mid to long term, the association and suppliers noted in their responses.

Contrary to formulas used for IPTO and the Energy Exchange, a financial danger coefficient was not applied to the calculations determining the ESMIE member guarantees, the association and suppliers pointed out.

In addition, the IPTO report also calls for a monthly system-use charge imposed on suppliers to be doubled and paid in advance.

The report also proposes a revision to the formula determining penalties for delayed guarantee payments. ESEPIE described the IPTO proposal for a penalty charge of 1,000 euros per month as erroneous, instead offering its support for the current formula, increasing penalty payments for delays by 0.1 percent per day.

RAE has yet to take a position on the IPTO report’s proposals.

Electricity suppliers financially pressured by coronavirus crisis

Electricity suppliers are feeling the financial effects of the coronavirus crisis, threatening to increase the level of electricity bill arrears amid reduced consumption and lower sales.

Consumers are now contacting suppliers to request installment-based payment arrangements, or, worse still, expressing an inability to meet electricity bill payments, energypress has been informed.

Retailers and small businesses whose operations are being stifled by the coronavirus lockdown are particularly feeling the pressure.

Electricity suppliers maintaining a dominant mid-voltage customer base are very concerned as the coronavirus spread has already begun inflicting financial damage on sectors such as tourism, hotels and restaurants, all expected to be particularly affected by the ongoing crisis.

Retailers, too – except for supermarket chains, registering rising sales figures – are also under severe pressure. Their position will deteriorate further as a result of a government decision temporarily shutting down most shops as of today.

Electricity suppliers are more or less helpless at present. Distribution network operator DEDDIE/HEDNO would not execute any electricity-cut orders amid these extraordinary conditions.

Subsequently, suppliers are calling for a delay of their payments to operators such as power grid operator IPTO, DEDDIE, and RES market operator DAPEEP for network usage fees, a RES-supporting ETMEAR surcharge and other such obligations.

 

DEDDIE to recover €115m network revenue shortfall, authority notes

Distribution network operator DEDDIE/HEDNO’s expected revenues for the past few years have fallen short of forecasts by an accumulated amount of 115 million euros as a result of subdued electricity demand amid the Greek recession, authorities have noted.

Given the fact that operators cannot suffer losses of regulated amounts, this 115 million-euro amount shortfall will need to be recovered by DEDDIE through network tariffs to be set by RAE, the Regulatory Authority for Energy, for the next few years.

The tariff’s implementation will be spread over time to avoid overburdening consumers, sources informed.

DEDDIE’s robust financial standing is essential for the electricity network’s operation, development and maintenance.

The operator’s role is also of pivotal importance for the country’s energy transition, placing emphasis on renewable energy and decentralized production, explained RAE official Nektaria Karakatsani.

Independent suppliers fined for delayed surcharge handovers

RAE, the Regulatory Authority for Energy, has imposed fines on six of seven independent electricity suppliers questioned by the authority for failing to hand over regulated surcharges included in electricity bills to grid operators.

The six independent suppliers were handed fines ranging from tens of thousands to hundreds of thousands of euros for not relaying surcharge amounts to the IPTO and DEDDIE/HEDNO grid operators.

These surcharges include network transmission and distribution usage fees as well as RES-supporting ETMEAR payments made by consumers through electricity bills.

In their defense, suppliers argued that they chose to not relay collected surcharge amounts to the grid operators to offset greater amounts owed to them by the operators, including anticipated returns from the RES special account surplus for 2018. RAE refused to accept this argument.

As for the main power utility PPC, which has delayed relaying to operators enormous surcharge sums worth millions, it had been summoned to a preceding hearing, about a year ago, by RAE and fined 2.8 million euros.

The surcharge amounts owed by the country’s independent electricity suppliers to the grid operators constitute just a tiny fraction of amounts owed by PPC.

 

 

Network charges prepayment a cash flow concern for suppliers

A market regulation requiring independent electricity suppliers to prepay network charges to operators ahead of respective incoming payments from  consumers through their electricity bills is proving to be a major cash flow issue for suppliers.

According to current regulations, independent electricity suppliers need to provide operators their network charges, for each month of consumption,  within 45-day periods, despite receiving respective sums by consumers, through electricity bills, over periods lasting as many as 80 days.

Independent suppliers have requested a 30-day extension to this 45-day period so that their cash inflow and outflow concerning network charges may coincide.

This uncoordinated inflow and outflow of network surcharges is forcing electricity suppliers to commit large amounts of capital for coverage of cash flow gaps created by the early payment demands they face.

Independent suppliers commanding bigger market shares and enjoying greater growth are being forced to commit more considerable amounts for this purpose. These surcharge payments do not carry any profit margins for independent suppliers.

 

Minor hikes, decreases seen for network surcharge revisions

Network usage and distribution fees appearing as surcharges on electricity bills are set for mild increases and decreases, depending on respective consumer categories, but average levels will remain unchanged, energypress sources have informed.

These revised fees, channelled to IPTO, the power grid operator, and HEDNO, the Hellenic Electricity Distribution Network Operator, are expected to be made by RAE, the Regulatory Authority for Energy, within the next few days before coming into effect a month later for a four-year period.

The imminent surcharge revisions will follow the recent approval of IPTO’s ten-year development plan covering 2018 to 2027.

It includes a commitment by the operator to complete Crete’s small-scale submarine cable interconnection by 2020, according to energypress sources. The third phase of the Cyclades interconnection is now also due to be completed in 2020 after authorities decided to hasten the project’s development by two years.

The endorsement of IPTO’s ten-year development plan was a prerequisite for RAE to proceed with its network usage and distribution surcharge revisions as the development costs of projects are a major factor in these calculations.

The HEDNO-related reductions will cover a wider gamut of consumers, sources informed.

 

IPTO pressured to hasten interconnections, reduce fees

IPTO, the power grid operator, currently preparing to submit its updated 10-year investment plan, covering 2019 to 2028, to local authorities around March, is believed to be facing pressure to deliver a more ambitious interconnections program and also reduce its network usage charges.

IPTO’s new network usage charges, which will apply for a four-year period, should be slightly reduced, given the current shape of certain factors, including the country’s investment risk factor, relatively better than in 2014, when network usage charges were last reset, for 2014 to 2017.

However, the preferences of SGCC, the State Grid Corporation of China, a strategic partner of IPTO since early last summer, following its acquisition of a 24 percent stake in the Greek grid operator, will also need to be taken into account. SGCC officials have already begun pushing for an increased rate of return (WACC) on the Chinese firm’s investment.

IPTO has avoided including in its business plan certain interconnection projects that still need to be developed but is expected to face pressure to incorporate one of these, such as the fourth stage of the Cyclades interconnection, or the Dodecanese interconnection. On the other hand, the cost of developing such interconnections at a swifter pace will need to be factored into the operator’s calculations determining the level of network usage tariffs to be paid by consumers.

Authorities are believed to be examining the prospect of establishing a special category for the island interconnection projects which would enable these to first be developed and launched before the operator begins retrieving costs.

Such a solution would prevent consumers from having to pay in advance. Instead, consumers would begin paying increased network usage fees once projects have been completed but, by that stage, the Public Service Compensation (YKO) surcharge, subsidizing high-cost electricity production on Greece’s non-interconnected islands, will have been drastically reduced, offsetting the network usage hike.

The interconnection projects promise to greatly reduce the cost of generating electricity on the islands. High-cost local plants are now being used on the non-interconnected islands.