NOME

Energy deputy: ‘OTE should serve as an example for PPC’

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The electricity market’s liberalization will help the power utility PPC restructure, as was the case with the Hellenic Telecommunications Organization OTE, the newly elected centre-right New Democracy government’s deputy energy minister Gerassimos Thomas supports.

The official, backed by experience as a deputy at the European Commission’s Directorate-General for Energy, has not specified what action should be taken if PPC’s current bailout-required disinvestment of lignite units fails to deliver.

But he is in favor of a national policy for the energy system’s decarbonization that would take initiatives and move a step ahead of bailout requirements rather than simply observe them.

It remains to be seen if further measures – beyond PPC’s lignite units disinvestment and the NOME auctions – will be needed for the electricity market’s liberalization, Thomas had commented late last year, adding, at the time, that the country has spent the last 8 years relying on the bailout program as its guide. Irrespective of this, the country needs to look at where it is heading and take initiatives as the market is changing completely, he added.

Thomas is a firm supporter of renewable energy and is expected to give priority to this sector.

On the NOME auctions, the official believes that their failure, so far, to break PPC’s market dominance must first be analyzed before any further action is taken.

 

 

PPC forced to sell ‘excessive electricity amounts’ for NOME auctions

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Electricity amounts made available by the power utility PPC for NOME auctions during the first few months of 2019 exceeded the utility’s output generated by lignite and hydropower sources, chief executive Manolis Panagiotakis has told company shareholders.

“In other words, PPC is obligated to provide to third parties electricity quantities that do not only stem from lignite and hydropower sources, but other fuel sources as well, such as natural gas, as well as renewables,” Panagiotakis contended.

Electricity amounts provided by PPC for NOME auction usage in 2018 represented 77 percent of the utility’s total lignite and hydropower production, according to the PPC boss.

This level of commitment is the cause of major losses for PPC, Panagiotakis told shareholders.

NOME auctions were introduced about three years ago as a means of offering independent players access to PPC’s lower-cost lignite and hydropower sources.

Recipients purchase electricity at low prices and then sell abroad, the PPC chief said, adding that electricity demand in Greece fell by 1.2 percent in 2018 compared to the previous year, to 57,122 GWh.

However, overall electricity demand, including exports, rose by 2.2 percent as a result of a 75.2 percent increase in exports – primarily NOME-acquired amounts by third parties –  through northern grid interconnections, Panagiotakis added.

NOME auctions have not helped open up the market to greater competition as PPC’s market share contraction in the retail electricity market dropped to just 81.9 percent in 2018 from 86.7 percent in 2017, the PPC chief noted.

 

NOME starting price rise to at least €56 per MWh expected

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A study prepared by RAE, the Regulatory Authority for Energy, proposes a NOME auction starting price increase to just over 56 euros per MWh, a significant rise from the current level of 36.34 euros per MWh, primarily as a result of a sharp rise in CO2 emission right costs.

The new NOME starting price could even reach as much as 58 euros per MWh if a two-euro lignite surcharge ends up being added. This will be decided by finance minister Euclid Tsakalotos and energy minister Giorgos Stathakis.

RAE has forwarded its NOME study to the two ministers.

CO2 emission right costs have risen from five euros per ton approximately a year-and-a-half ago to 25 euros per ton.

If a ministerial decision is delivered swiftly then a new NOME starting price will apply for the next auction on July 17, to offer participants 500 MWh/h as well as at the ensuing October 16 session offering 767 MWH/h.

NOME auctions were introduced about three years ago as a means of offering independent players access to the main power utility PPC’s lower-cost lignite and hydropower sources.

Sharp rise in NOME starting price, to €55 per MWh from €36, forecast

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The new starting price for the country’s NOME auctions, currently being worked on by RAE, the Regulatory Authority for Energy, based on various data being collected, will increase considerably to a level of about 55 euros per MWh, up from the current price of 36.34 euros per MWh, primarily as a result of the sharp rise in CO2 emission right costs, market sources have projected.

The authority has requested cost-related data from the power utility PPC, to be factored into its NOME starting-price calculations.

RAE takes into account the variable costs of PPC’s lignite-fired power stations and hydropower units as well as the production mix of these two.

The new starting price, expected to be announced within the next few days, will be applied to a NOME auction scheduled for July 17, offering 500 MWh, followed by a session on October 16, to offer 767 MWh.

NOME auctions were introduced about three years ago as a means of offering independent players access to the main power utility PPC’s lower-cost lignite and hydropower sources for more competitive pricing policies.

Brussels delivers strictest energy-sector report in years

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The European Commission’s latest report on the country’s energy-sector commitments is the strictest to have emerged in recent years and certainly the toughest during the Syriza party’s four-year mandate, now into its final year.

All energy-sector deadlines the country has committed itself to are behind schedule, prompting ambiguities regarding the sector’s course, the report notes. It observes increased delays in the implementation of reforms over the past few months and a slowdown in commitments agreed to at a Eurogroup level.

The report also makes note of the energy-sector challenges to face the country’s next administration. The government has called for snap elections, scheduled to take place on July 7.

Greece is held responsible for main power utility PPC’s delayed disinvestment of lignite units. The report also blames the country for the delayed market coupling procedures with Italy and Bulgaria.

RAE, the Regulatory Authority for Energy, has been held accountable, is blamed for its export restrictions imposed on electricity amounts acquired at Greece’s NOME auctions, as the results of this action are seen as unclear.

The report also calls for PPC to increase electricity tariffs for cost recovery and needed investments.

Also, RES sector procedures are deemed as too complex and time-consuming, a disincentive for investments.

 

Electricity suppliers pressured by rising wholesale prices

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Price levels at yesterday’s NOME auction exceeded all expectations to reach a record high of 58.65 euros per MWh, creating stifling, if not impossible, market conditions for suppliers, as market sources have pointed out.

Current NOME prices, plus existing and prospective surcharges, have now reached levels higher than the retail electricity price for certain consumer groups, such as the mid-voltage category.

Besides independent electricity suppliers, who have depended on NOME auctions for access to lower-cost wholesale electricity purchases, the main power utility PPC’s administration has admitted pricing policy adjustments are necessary for sustainability.

Set to announce its 2018 results next week, state-controlled PPC is incurring losses and will keep facing major financial issues if its tariffs remain subdued, mainly due to government orders ahead of elections.

As for independent electricity suppliers, they are being forced to survive on extremely tight profit margins. Leftover electricity quantities bought at previous auctions for lower prices are still helpful.  But once these amounts are gone, the more recent higher-priced electricity purchases will come into play, making operations less sustainable. The introduction of a CAT surcharge, expected by early 2020, will further increase the burden.

CO2 emission right costs have also been on a sharp upward trajectory, reaching 27.56 euros per ton yesterday.

The week’s average System Marginal Price (SMP), or official wholesale electricity price, is just over 68 euros per MWh, close to the 69 euros per MWh average level in February, when demand peaked as a result of the cold winter weather. Prices are expected to rise as the summer approaches.

 

 

 

Record high NOME auction price seen this Wednesday

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A 355 MWh/h electricity amount to be offered to independent electricity suppliers at this Wednesday’s NOME auction appears unlikely to fully cover current market needs, which can be expected to intensify bidding and drive prices higher.

This is an unfavorable prospect for independent players. The System Marginal Price (SMP), constituting the official wholesale price, is currently unsustainably high, and electricity prices abroad are also elevated, which has made NOME auctions the only remaining option for reasonably priced wholesale electricity. But the prevailing conditions are set to end the promise offered at these auctions.

Making the short-term market prospects worse for independent electricity suppliers, the current NOME auction starting price of 36.5 euros per MWh will be scrapped following Wednesday’s auction. A much higher starting price of about 55 euros per MWh, based on certain calculations, is expected to be set for the session to follow in June.

This is another key factor seen driving NOME auction prices higher on Wednesday. The record level of 54.74 euros per MWh could be broken.

PPC punctuality discount cut promises mild relief for rivals

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A main power utility PPC decision reducing its punctuality discount for customers paying electricity bills on time to 10 percent from 15 percent comes into effect today, promising independent electricity suppliers some relief.

The development has increased the expectations of independent electricity suppliers for market share and revenue gains as PPC’s discount policy revision, effectively a 5 percent price increase, will make rivals more competitive.

Many independent electricity suppliers were recently forced to trigger a tariff-increasing clause due to higher wholesale prices. This has emerged as a major disincentive for consumers considering moves away from PPC, still the dominant supplier.

A plan by authorities to soon return a RES special account surplus for 2018 to suppliers also represents good news for PPC’s rivals. This is made even more favorable for independent suppliers by the abolishment, from the beginning of the year, of a supplier surcharge they have been contributing to the RES account.

These developments promise some relief for independent electricity suppliers but market problems remain, as was highlighted by officials at last week’s Power and Gas Forum in Athens.

Key concerns include PPC’s lack of a cost-based pricing policy; the distorted implementation of NOME auctions and higher starting prices expected at these as of June; as well as the power utility’s insistence to continue operating two ageing power stations, Amynteo and Kardia, despite the exhaustion of time limits.

Higher wholesale electricity prices appear likely to keep rising in the immediate future as a result of elevated CO2 emission right costs and fuel prices.

 

PPC discount cut offers some relief to independent players

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A main power utility PPC decision reached yesterday for a reduction of its punctuality discount, offered to its consumers paying power bills on time, from 15 percent to 10 percent as April 1, promises to offer some relief to the retail electricity market’s independent suppliers.

Even so, overall market conditions remain challenging for independent players as they have little leeway to undercut PPC’s offers.

Independent suppliers have been forced to activate clauses enabling higher tariffs as a result of increased wholesale costs. But PPC’s discount reduction, to essentially raise its prices by 5 percent, will enable independent players to slightly increase their revenues and make more competitive offers.

Independent players also stand to soon benefit from a return of the RES special account’s surplus in 2018. The abolishment, as of the beginning of this year, of a supplier surcharge paid into the RES special account by suppliers is also a favorable development.

But the good news ends here as independent suppliers face a series of negative factors such as a gradual rise of wholesale electricity prices, prompted by higher CO2 emission right costs, as well as lofty fuel prices.

In addition, amounts of lower-cost electricity offered to independent suppliers through NOME auctions stand to be reduced if PPC’s ongoing sale of lignite units is successfully completed.

New evaluation of PPC lignite units crucial for follow-up sale

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Legal framework provisions enabling lower evaluations of lignite units offered in the main power utility PPC’s bailout-required disinvestment will play a crucial role in the success of a follow-up sale just launched after an initial effort failed to produce results.

Much will depend on how state-controlled PPC’s board will decide to use the evaluation-related framework. The utility’s chief executive Manolis Panagiotakis has warned that investors looking to buy for quick profit within a year or two should look elsewhere.

Despite this tough stance, PPC officials know well that a failure of the latest lignite sale effort to produce a result will increase the likelihood of eventual European Commission pressure for the inclusion of hydropower units into the sale package or lead to greater electricity amounts for independent players through NOME auction, offering access to PPC’s lower-priced hydropower and lignite sources.

The energy ministry is well aware of these dangers and appears determined to push ahead with the current lignite-only disinvestment plan for PPC.

PPC disinvestment flop costly, NOME tally at 115% of output

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Besides generating further pressure for a new, broadened and more generous disinvestment package offering to buyers, the failure of the main power utility PPC’s bailout-required sale of lignite units has also drawn increased attention to the utility’s unrelenting retail market share, another Greek bailout commitment.

A considerably increased electricity amount the power utility must now offer through NOME auctions in 2019 is one direct consequence.

As has already been announced by RAE, the Regulatory Authority for Energy, PPC must offer 1,972 MWh/h to market players over four NOME auctions this year. Previously, 1,444 MWh/h had been scheduled for 2019 but a penalty amount of 528 MWh/h has been added as a result of PPC’s failure to meet its end-of-2018 market share contraction target.

The new NOME tally for 2019, representing 115 percent of the utility’s total lignite and hydropower production, essentially means PPC must not only offer market players its entire lignite and hydropower-based output at prices lower than the System Marginal Price (SMP), or the wholesale price level, but also  purchase a considerable extra electricity amount from the wholesale market, representing 15 percent of its lignite and hydropower-based output, to make up the numbers, before selling this supplementary amount through the NOME auctions.

PPC’s market share at the end of 2018 stood at 80.29 percent, well over the target of 62.24 percent. A 49.24 percent target has been set for the end of 2019.

RAE allotted just 350 MWh/h to last week’s first auction for the year assuming PPC’s disinvestment of lignite units would succeed.

 

NOME starting price set for big hike, new setback for suppliers

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The NOME auction starting price, revised every June by RAE, the Regulatory Authority for Energy, and shaped by a number of key factors, appears set to rise sharply to a level of at least 55 euros per MWh//h from the 36.34 euro per MWh/h set last June, according to pundit calculations.

The revised NOME starting price is expected to apply for the year’s third and fourth sessions scheduled for July 17 (500 MWh/h) and October 16 (767 MWh/h).

This would come as a major setback for the country’s independent electricity  suppliers, already facing uncompetitive electricity market conditions in their effort to gain market shares at the cost of the main power utility PPC, still dominating.

Higher NOME auction prices reached at the previous two NOME auctions have severely restricted the ability of independent power suppliers to compete seriously against PPC.

PPC’s tariffs have remained unchanged despite a rise in wholesale prices. The power utility wants to increase its tariffs by introducing a clause enabling hikes if certain CO2 cost upper limits are exceeded and reducing a 15 percent punctuality discount. It remains unknown if and when the government will permit these moves.

The NOME starting price is reset every June following a joint ministerial decision by the energy and finance ministries, based on the results of a RAE study on the matter.

The forward price for CO2 emission rights at the European Energy Exchange and PPC’s cost-related data concerning variable costs are the two main factors taken into account by the energy authority when reviewing the NOME starting price.

 

Export limit among factors seen subduing NOME prices today

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Export limits imposed by RAE, the Regulatory Authority for Energy, on electricity amounts acquired by bidders at NOME auctions are expected to play a fundamental role in subduing prices at today’s first session for the year, despite the relatively modest electricity amount of 350 MWh/h offered and the currently elevated System Marginal Price (SMP), or wholesale, levels.

The new NOME electricity export limits, being implemented for the first time today, will severely limit the ability of players to transmit amounts to regional markets.

Lower price levels in neighboring markets, where SMP levels are currently lower than they are in Greece and are expected to drop further as a result of greater hydropower output generated by heavy rainfall this winter, are also expected to play a role in restricting Greek electricity export activity.

A third factor seen keeping NOME prices low today is the main power utility PPC’s seemingly failed attempt to sell its lignite-fired power stations at Megalopoli and Meliti, a bailout-required disinvestment. If speculation of the sale’s failure is made official, electricity amounts at the ensuing NOME auctions will not be reduced.

Today’s NOME price level stands no chance of reaching the lofty level of 54.74 euros per MWh registered at the previous auction as a result of the three aforementioned factors, pundits have asserted. Instead, they forecast a forty-something price level.

PPC-related penalty added to year’s NOME auction amount

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RAE, the Regulatory Authority for Energy, has decided to increase the overall NOME electricity amount to be offered over four auctions in 2019 by adding 520 MWh/h to the scheduled 1,444 MWh/h tally as a penalty for the main power utility PPC’s failure to reach an end-of-2018 market share contraction target.

The year’s auctions are planned to start with a modest electricity amount of 350 MWh/h at 2019’s opening session, scheduled for February 8, according to a just-released Energy Exchange chart detailing the distribution of amounts over the year’s four auctions.

Authorities are believed to have decided on a small electricity amount for the opening session so as to enable a reduction of bigger amounts set for the year’s three ensuing auctions if PPC’s ongoing bailout-required disinvestment of lignite units succeeds.

Independent suppliers have already reacted against the distribution plan for the year after interpreting this approach as a form of further protection for PPC.

The NOME auctions were introduced over two years ago to offer independent players access to PPC’s lower-cost lignite and hydropower sources as a means of intensifying competition in the retail electricity market, still dominated by the state-controlled power utility.

According to the Energy Exchange chart, 355 MWh/h has been planned for the year’s second NOME auction on April 17, 500 MWh/h is scheduled for a July 17 auction, and 767 MWh/h for 2019’s fourth and final auction on October 16.

NOME export revisions ahead, extra power amounts to be cut

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The energy exchange, understandably in agreement with RAE, the Regulatory Authority for Energy, plans to revise a NOME auction electricity exports measure to secure NOME prices instead of System Marginal Price (SMP) levels for new customers joining independent electricity suppliers during three-month intermediate periods between auctions.

In a related public consultation procedure held over the past few days, suppliers warned a framework of measures planned by authorities would expose them further to SMP levels and prevent suppliers from broadening customer bases between auctions.

Authorities are also examining ways to maintain rights acquired by suppliers and traders for futures products bought at previous auctions.

In its public consultation procedure intervention, ESAI/HAIPP, the Hellenic Association of Independent Power Producers, called for additional measures that could help increase the retail electricity market shares of independent suppliers.

Meanwhile, the energy ministry is planning a legislative revision to abolish a bailout tern requiring the addition of NOME auction electricity amounts in 2019 as a penalty against the main power utility PPC for its failure to meet a market share contraction target set for 2018. This action will be taken assuming PPC sells its Meliti and Megalopoli lgnite-fired power stations included in its bailout-required disinvestment package of lignite units.

According to the bailout term, RAE – this month – was supposed to add approximately 520 MWh/h to 2019’s NOME electricity amount of 1,444 MWh/h. Instead, 520 MWh/h now appears set to be reduced from the year’s NOME tally.

The government and country’s lenders have agreed on a reduction of the NOME auction tally from 22 percent of total consumption to 13 percent if the ongoing sale effort for these two lignite units is completed.

 

 

Electricity suppliers facing challenges despite good news

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Despite certain favorable developments emerging for the country’s independent electricity suppliers in 2019, such as the abolishment of a RES-supporting supplier surcharge and the main power utility PPC’s plan to reduce a 15 percent discount offered to punctual customers, independent suppliers face challenging times as a result of a gradual rise of the system marginal price (SMP), or wholesale electricity prices, driven up by increased CO2 emission right and fuel costs, as well as the diminished role of NOME auctions.

NOME auctions will become a less effective source for lower-cost electricity as amounts to be offered to participants will be greatly reduced, starting prices will be sharply higher, and electricity export restrictions planned by RAE, the Regulatory Authority for Energy, promise to confine the quests of players for new customers in other markets.

RAE has planned a 1,444 MWh/h electricity amount offering through NOME auctions in 2019. According to sources, the prospect of an additional 520 MWh/h offering, as a penalty against PPC for its failure to meet a market share contraction target set for 2018, will be dropped as the power utility is now downsizing its assets through a bailout-required disinvestment of lignite units.

Instead, the 1,444 MWh/h NOME amount allotted by RAE for 2019 is expected to be reduced by approximately 520 MWh/h, presuming the PPC disinvestment effort goes according to plan.

Should PPC successfully sell its Meliti and Megalopoli lignite-fired power stations, both part of the lignite disinvestment package, then the country’s electricity amount to be offered through NOME auctions in 2019 will be reduced to represent 13 percent of total consumption, from the previous level of 22 percent, according to a bailout term. This would reduce the NOME amount for 2019 to approximately 920 MWh/h.

NOME auction rescheduled for February 8 amid pending issues

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RAE, the Regulatory Authority for Energy, has rescheduled the country’s first NOME auction for the year from January 23 to February 8, a key reason being to enable additional time for the introduction of a measure intended to restrict exports of electricity amounts acquired at the auctions.

The Energy Exchange, participating in a public consultation procedure concerning the matter, needs to submit supplementary observations on the export-limiting measure before the plan is implemented on time for the auction in February. A short follow-up public consultation procedure will need to be wedged into the process.

The anticipated outcome of the main power utility PPC’s bailout-required disinvestment of lignite units is another reason for the auction’s rescheduling. Just days remain before the sale’s January 23 deadline for binding bids expires, unless an extension is granted, which could be necessary as a result of various unresolved matters.

The disinvestment’s outcome will determine whether an additional 520 MWh/h electricity amount is added, as a penalty, to the year’s NOME auction total of 1,444 MWh/h because of PPC’s failure to reach a retail electricity market share contraction target of 62.24 percent set for the end of 2018. The end-of-2019 target imposed on PPC is 49.24 percent.

RAE will need to decide, by the end of this month, on how penalty electricity amounts will be distributed to the year’s NOME auctions.

Small offering for next NOME auction prompts reaction

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Electricity market players, especially vertically integrated companies, have raised objections to a subdued electricity amount of 240 MWh/h decided on by RAE, the Regulatory Authority for Energy, for the year’s first NOME auction, scheduled for January 23, as well as the failure, so far, by authorities to decide on export restrictions concerning electricity amounts acquired at these auctions.

The complaints were expressed in a letter forwarded by ESAI/HAIPP (Hellenic Association of Independent Power Producers) to RAE, energypress has been informed.

RAE plans to reserve bigger electricity amounts for later in the year, including 604 MWh/h for the year’s final NOME auction, expected in October. The authority is obviously holding back as it awaits the outcome of the main power utility PPC’s bailout-required sale of lignite units, now in progress.

Independent electricity suppliers fear the small quantity decided on for the year’s opening session, combined with Greece’s elevated System Marginal Price (SMP) and higher wholesale electricity prices in Europe, will intensify bidding competition and prompt further NOME price hikes on January 23.

NOME auctions were introduced in Greece over two years ago to offer independent players access to PPC’s lower-cost lignite and hydropower sources for more competitive pricing policies.

Though the European Commission has already provided permission for the implementation of NOME-electricity export restrictions, RAE has yet to reach a decision, despite launching a public consultation procedure on the matter prior to the previous session late last year.

RAE has divided 1,444 MWh/h into four NOME auctions for 2019. The amount represents 22 percent of the country’s total electricity consumption, as stipulated in the bailout agreement, plus 171 MWh/h, the remainder of a penalty addition prompted by PPC’s failure to reach a market share contraction target set for the first half of 2018.

If all goes well with PPC’s sale of the Megolopoli and Meliti power stations included in its bailout-required investment of lignite assets, then the NOME amount will be reduced to represent 13 percent of Greece’s total electricity consumption.

PPC was well over a 62.24 percent market share contraction target set for the end of 2018 and needs to reduce its share to 49.24 percent by the end of this year.

 

PPC’s lignite units sale to determine NOME auction amounts in 2019

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The outcome of the main power utility PPC’s bailout-required sale of lignite units, representing 40 percent of its overall lignite capacity, is expected to determine the electricity amounts to be offered to independent suppliers through the country’s NOME auctions in 2019.

The electricity amount to be offered at NOME auctions, introduced in Greece over two years ago to offer independent players access to PPC’s lower-cost lignite and hydropower sources, is planned to be reduced from 22 percent of overall supply to 13 percent once the sales of PPC’s Megalopoli and Meliti lignite-fired power stations have been completed, according to a bailout agreement term.

A penalty term – requiring extra electricity amounts at the NOME auctions – imposed by the country’s lenders in the event that PPC falls short of its market share contraction targets will be abolished once shareholder purchase agreements for Megalopoli and Meliti have been signed with the prospective buyers.

Authorities have already decide to halve the quantity of this penalty but it remains to be seen if this initiative will be followed through as a result of a new deadline extension been rumored for binding bids in the Megalopoli and Meliti unit sales.

PPC faced a retail electricity market share contraction target of 62.24 percent by the end of 2018, which it missed by a great margin, while the target for the end of 2019 has been set at 49.24 percent.

The first NOME auction for 2019 has been scheduled for mid-January but the session could be deferred until more clarity has been achieved on matters concerning the lignite unit sales.

A 171 MWh/h penalty amount – left over from last year – will need to be added to the electricity amount RAE (Regulatory Authority for Energy) will decide to offer suppliers at the year’s first NOME auction.

Meanwhile, RAE has yet to announce its decisions on export limit measures to be set for electricity amounts acquired at the NOME auctions.

 

 

NOME electricity export limit to be introduced for next auction

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RAE, the Regulatory Authority for Energy, is believed to be close to finalizing the details of an electricity export restriction on NOME-acquired amounts following the eventual approval by the European Commission.

The measure’s finalized shape is expected within the next few days, which should provide ample time for its implementation ahead of the next NOME auction, expected early in 2019.

The European Commission, in a letter forwarded to RAE late November, had left open the possibility of electricity export-restricting measures, but, at the same time, reminded of EU law forbidding the obstruction of trade.

Brussels ended up permitting the export restriction as part of a wider effort aiming to further intensify competition in Greece’s retail electricity market.

Driven by considerably higher wholesale electricity prices promised in other EU markets, Greek NOME auction participants, especially traders, have been exporting amounts acquired at these local sessions.

NOME auctions were introduced in Greece over two years ago to offer independent players access to the main power utility PPC’s lower-cost lignite and hydropower sources for more competitive pricing policies.

Considerably higher NOME prices generated at various auctions prompted RAE to investigate the matter.

A NOME electricity export limit plan presented by RAE in October proposed restrictions for all firms with respective levels determined by the amount of consumption represented in the retail market. Any electricity amounts found to exceed these export limits would be priced at the System Marginal Price (SMP), or wholesale price, not relatively lower prices secured at auctions, according to the RAE proposal.

 

 

Independent firms, facing tight conditions, turn to hike clause

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Many, if not most, independent electricity suppliers, moving to counter stifling market conditions caused by higher wholesale prices that are severely narrowing profit margins, have begun activating a System Marginal Price (SMP) clause for proportionate upward adjustments of charges in an effort to remain sustainable.

SMP, or wholesale price, levels of up to 55 and 60 euros pr MWh are regarded as an upper limit before the clause, included in supplier agreements but not resorted to until now, is activated. In recent times, however, the SMP has consistently stood at over 65 euros per MWh.

Until now, independent suppliers have hesitated to activate this SMP clause fearing negative customer reactions, but market conditions have tightened up too much for it to be neglected.

The still-dominant main power utility PPC is continuing to offer customers a 15 percent discount for punctual electricity bill payments.

Besides the higher SMP levels, independent suppliers have had to absorb elevated prices at recent NOME auctions – these were introduced about two years ago with the intention of making lower-cost electricity available to emerging players – and have also faced difficulties importing lower-priced electricity from abroad.

Independent electricity suppliers fear 2019 could be their most difficult year yet since emerging relatively recently. A supplier surcharge is set to be lifted but all other market conditions are seen as unfavorable.

 

Brussels appears prepared to accept NOME exports limit plan

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The European Commission appears to be showing an increasing understanding for the need by RAE, the Regulatory Authority for Energy, to impose export limits on electricity amounts acquired at NOME auctions, energypress sources have informed.

RAE officials, now preparing the authority’s NOME terms revision plan to be submitted to Brussels for authorization, are in regular contact with European Commission officials for guidance.

RAE is aiming for its revised terms to be implemented in time for Greece’s next NOME auction, which may take place during the first quarter of 2019. A date has yet to be set.

The authority wants to limit NOME electricity exports being carried out by traders and suppliers in Greece, exploiting considerably higher wholesale electricity prices in other EU regions.

NOME auctions were introduced in Greece over two years ago to offer independent energy firms access to PPC’s lower-cost lignite and hydropower sources. The NOME-related exports are depriving local players of favorably priced electricity amounts for Greece’s retail electricity market.

Brussels, citing the EU’s free trade principles, expressed some hesitation over the export limit plan in a letter forwarded to RAE late last month, but also indicated it would be open to measures.

Brussels opposes Greek export limit plan for NOME electricity

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The European Commission has expressed its opposition to a plan by RAE, Regulatory Authority for Energy, aiming to limit exports of electricity amounts acquired at Greece’s NOME auctions – following an energy exchange recommendation in a public consultation procedure – but notes certain exceptions would be permitted, in a letter forwarded to the authority.

Brussels reminds RAE restricting free trade is forbidden by the EU, while adding European courts have made clear that, besides certain quantitative restrictions, trade restrictions implemented as official state policy are not permitted.

Greek authorities have been asked to prove if the NOME export limits being contemplated could qualify as exceptions.

RAE, in related talks expected soon with European Commission authorities, intends to highlight the need for NOME export limits and will be hoping for an agreement ahead of the first auction in 2019.

The Brussels letter’s first part focuses on EU concerns over China’s presence in the Greek energy market.

 

 

Traders appeal to Brussels over NOME export limit proposal

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Energy firms primarily active in transboundary electricity trade are seeking European Commission support in an effort to prevent the adoption, in Greece, of restrictions – including indirect measures – on exports of electricity amounts secured at local NOME auctions.

Traders were prompted into action by a Greek Energy Exchange proposal forwarded to a public consultation procedure staged by RAE, the Regulatory Authority for Energy, calling for NOME-related electricity exports to be sold at just under the System Marginal Price (SMP), or wholesale price, rather than lower prices secured at the auctions.

NOME auctions were introduced about two years ago to offer independent energy firms access to the main power utility PPC’s lower-cost lignite and hydrocarbon sources as a means of breaking the utility’s retail electricity market dominance.

In their appeal, export-minded traders have cited the EU’s free-trade principle as their main argument. It is not yet clear how the European Commission could respond.

 

 

 

Suppliers set to lose ground in tougher mid-voltage market

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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.

Independent players more reliant on NOME auctions

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Electricity suppliers operating in the Greek retail market are increasingly dependent on NOME auctions as a result of narrowed profit margins that have prevented independent players from adopting more aggressive pricing policies for market share gains, a RAE (Regulatory Authority for Energy) official has underlined.

According to data presented by Vassilis Zouvias, head of the authority’s wholesale energy markets monitoring division, the net profit margin for retail electricity suppliers was restricted to 1.5 euros per MWh in 2017.

“Taking into account the operating costs of independent electricity suppliers, which reached 8 euros per MWh in 2017, the net profit margin for the year was 1.5 euros per MWh,” Zouvias pointed out at an industry event in Thessaloniki.

Worse still, conditions for independent players operating in the retail electricity market have become even more challenging in 2018 as a result of higher bidding levels generated at NOME auctions, including yesterday’s session.

NOME auctions were introduced in Greece over two years ago as a medium offering independent firms access to main power utility PPC’s lower-cost lignite and hydropower sources.

NOME auction postponement sought for export rules clarity

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ESEPIE, the Hellenic Association of Electricity Trading & Supply Companies, has demanded clarification, during the current day, of vague NOME auction electricity amount export rules or a postponement of tomorrow’s scheduled session.

This demand by ESEPIE, representing traders and non-vertically integrated electricity suppliers, comes as an addition to an energy exchange proposal for the establishment of a mechanism that would introduce NOME-related electricity export disincentives. This latter proposal is now undergoing public consultation.

ESEPIE is pressuring RAE, the Regulatory Authority for Energy, for a clear-cut response as to whether and when the energy exchange’s export disincentives mechanism can be expected, and, in addition, if it would apply for futures products.

Many suppliers are exporting over 20 percent of electricity amounts  traded, while some are exporting as much as 80 percent.

Tomorrow’s NOME auction is planned to offer a total electricity amount of 683 MWh. Of this, 172 MWh has been added as a result of Greece’s failure to reach bailout-required targets in the retail electricity market, still dominated by the main power utility PPC.

Reserved hopes of NOME price containment this Wednesday

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New NOME auction-related export disincentives are expected to subdue – at the next session, this Wednesday – the aggressive approaches of certain auction participants buying considerable electricity amounts with the intention to export to higher-price markets.

However, expectations of the measure’s effectiveness remain reserved as other factors could still drive up prices and once again deprive independent electricity suppliers of lower-cost wholesale electricity as a tool to compete against the main power utility PPC in the retail market.

Wholesale electricity prices are currently flying high in European markets but Greece’s SMP, relatively lower at levels of around 70 euros per MWh, has only partially reflected this trend.

Market fears fueled by rising CO2 emission right prices could prompt aggressive bidding among auction participants this Wednesday.

Such factors have raised fears of a repeat, if not deterioration, of results at Greece’s previous auction, which generated a record price level of 48.8 euros per MWh, approximately 3.5 euros over the previous record set at the end of 2017.

Costlier wholesale price mulled for exported NOME electricity

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NOME auction participants will not face any quantitative or post-purchase usage restrictions concerning electricity amounts bought at auctions but will need to cover a higher System Marginal Price (SMP), the official electricity wholesale price, for amounts found to have been exported by follow-up checks, according to a proposal expected to soon be forwarded by LAGIE, the Electricity Market Operator.

It is believed that the European Commission, which has objected to the imposition of export limits on NOME amounts, would endorse such a plan.

Certain electricity suppliers, especially traders possessing supply licenses but no – or virtually no – customer bases, have been buying considerable amounts of lower-priced electricity at NOME auctions for export, a practice offering wide profit margins given the higher electricity prices secured abroad.

Such export-minded participants are pushing NOME auction prices higher for independent suppliers seeking lower-cost wholesale electricity prices at the auctions to compete against the still-dominant power utility PPC in the Greek market.

PPC faces retail electricity market share contraction targets of 62.24 percent by the end of 2018 and 49.24 percent by the end of 2019. The power utility’s market share, which has contracted at a slower-than-required rate, remains at a level of around 80 percent. The issue is expected to be tabled for discussion by lender technocrats, now back in Athens.

Higher CO2 emission right costs impacting electricity prices

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Projected electricity tariff increases due to a sharp rise in CO2 emission right costs are already impacting the Greek electricity market. For the time being, price hikes are being imposed on large-scale energy-intensive commercial consumers in the low-voltage category and medium-voltage customers.

The main power utilty PPC has increased its CO2 emission right costs surcharge by almost five times, from approximately 2.5 euros per MWh last year to just under 12 euros per MWWh at present.

Though independent suppliers do not calculate CO2 emission right costs as a separate surcharge, they have been forced to adjust prices offered to existing mid-voltage customers, lifting overall electricity costs to levels of at least 62 euros per MWh.

Prices have surged to even higher levels of over 70 euros per MWh for large-scale commercial consumers in the low-voltage category.

These price levels would have been even higher had independent suppliers not purchased lower-priced electricity amounts at NOME auctions.

The system marginal price (SMP), or wholesale electricity price, has risen to levels of over 70 euros per MWh, a significant increase compared to just a few months ago.

Ir remains unknown how suppliers plan to shape pricing policies for low-voltage household, commercial and professional consumers, representing a big part of the market.