NOME

Post-bailout energy sector inspections begin next week

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The first post-bailout era meeting between energy minister Giorgos Stathakis and the country’s creditors, planned for next week, will focus on the progress of main power utility PPC’s bailout-required disinvestment of lignite units; the DEPA gas utility and ELPE (Hellenic Petroleum) privatizations; NOME auctions; and the target model, aiming for market coupling, or harmonization of EU wholesale markets.

According to sources, the meeting will take place some time between next Wednesday and Friday, once technocrats have laid the groundwork on Monday and Tuesday.

Energy-sector fronts are expected to be closely monitored in the post-bailout era, PPC’s sale of lignite units being the most pressing issue at this stage.

China’s CHN Energy, which has joined forces with the Copelouzos group for the sale of lignite units – offered as two respective packages representing 40 percent of the utility’s overall lignite capacity in the north and south – has requested a deadline extension of one or two months for the submission of binding offers. The current deadline expires on October 17.

If granted by the European Commission, the announcement of the sale’s preferred bidder or bidders will be delayed until the first quarter of 2019, instead of the end of this year.

 

RAE to impose NOME auction restrictions to counter abuse

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RAE, the Regulatory Authority for Energy, appears determined to implement measures aimed at limiting NOME auction abuse by market players and accelerating the main power utility PPC’s retail electricity market share contraction for greater market competition.

In its monitoring of NOME auctions and ensuing sales, by participants, of electricity amounts to secondary markets over the past few months, RAE has noticed an accumulation of futures products disproportionate to customer base sizes and growth rates of certain suppliers and traders.

Subsequently, four companies were summoned by RAE to hearings. Three of these testified yesterday.

According to sources, the representatives of all three companies – traders and electricity suppliers holding small market shares – contended that they have not breached any market rules, while also noting NOME auctions have been staged without restrictions, as was requested by the country’s lenders.

These companies will need to follow up arguments offered at their hearings with related documents before RAE decides whether to hand out charges or not.

RAE has not been able to determine the exact amounts of electricity exported from Greece to other European markets, where wholesale prices are relatively higher, but has resorted to various tools monitoring the market and players, analysts noted.

The authority is preparing to introduce specific NOME auction regulations, including restrictions, sources informed.

During the bailout era, which has just ended, lenders, citing free market rules, did not want any restrictions imposed on Greece’s NOME auctions. However, the country’s lenders have, along the way, given RAE some leeway to take corrective action and counter ongoing abusive practices by NOME participants.

NOME auctions were introduced in Greece about two years ago to offer third parties access to PPC’s lower-cost lignite and hydropower sources.

 

 

 

Heightened electricity market reforms period approaching

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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.

PPC, NOME, target model to preoccupy authorities in the post-bailout era

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Commitments and reforms remain pending despite the completion of Greece’s third and final bailout program. A reinforced surveillance mechanism covering not only fiscal, social security and banking matters but also market reform policies, including for the energy sector, will follow the final bailout program, which was completed yesterday, according to an official announcement made by the European Stability Mechanism (ESM), designed to safeguard financial stability in the euro area.

Quarterly surveillance reports will be issued as part of the reinforced effort. These will include assessments of energy sector commitments, including a plan to phase out a RES-supporting supplier surcharge.

Three key energy sector issues will preoccupy authorities in the country’s post-bailout surveillance. The sale procedure and schedule for the main power utility PPC’s disinvestment of lignite-fired power stations and mines, representing 40 percent of the utility’s lignite capacity, will be closely watched.

The role, beyond 2020, of NOME auctions, introduced in Greece two years ago to offer third parties access to PPC’s lower-cost lignite and hydropower sources, will be examined at the end of 2019, once the results of new target-model markets have become clear. Retail electricity market shares will be assessed and a formula will be established to keep the market’s conditions competitive, as was envisioned with the NOME auctions, for the benefit of consumers.

As for the target model, aiming for market coupling, or harmonization of EU wholesale markets, Greece’s lenders have set an April 1, 2019 launch date for the Greek market’s coupling with the Italian and Bulgarian markets. A delay in the introduction of new target-model markets until the summer of 2019 or failure to achieve market coupling before 2020, as has been speculated, would be viewed negatively by the lenders.

 

NOME record price to prompt tariff hikes, exporters unfazed

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The record price level of 48.8 euros per MWh reached at yesterday’s NOME auction will most likely force suppliers to raise prices offered to consumers, market officials agree.

Though this price level does offer local electricity suppliers protection against dangers stemming from rising wholesale electricity prices both in Greece and abroad, it does not provide independent suppliers any leeway to undercut prices offered by the still-dominant main power utility PPC.

The power utility must reduce its retail electricity market share to less than 50 percent by 2020, according to the bailout agreement.

The diminished ability for true competition in Greece’s retail electricity market once again brings to the fore PPC’s 15 percent discount offer for punctual customers, introduced two years ago.

However, unlike previous reactions, the discount’s removal is now not only being called for by independent electricity suppliers but also being considered by PPC.

The power utility’s chief executive Manolis Panagiotakis has not ruled out such a move, while a business plan prepared for PPC by consulting firm McKinsey stresses a need for the client to boost revenues by raising customer tariffs.

Should PPC end or revise downwards its 15 percent discount offer, all suppliers can be expected to respond by increasing their tariff price levels. Over the past couple of years, independent suppliers have had choice but to adjust their tariffs based on standards shaped by PPC’s overaggressive pricing policy.

Besides the role played by local suppliers seeking to cover their domestic market needs, NOME prices were also pushed up yesterday by traders who sought to buy for prospective exports to foreign markets offering considerably higher prices.

Evidently, existing NOME auction regulations are insufficient, as was highlighted by the large quantities acquired yesterday by participants with export activity in mind.

A move by RAE, Regulatory Authority for Energy, on the eve of yesterday’s auction, to summon five suppliers to hearings over NOME export abuse suspicions linked to previous auctions, which could lead to fines, did little, or nothing, to thwart such future intentions at the latest auction.

 

 

 

New energy exchange market, coupling date delays likely

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Greek and Italian officials representing grid operators, regulatory authorities and the energy exchanges of both countries believe targets dates set for the launch of new energy exchange markets and coupling of the Greek and Italian markets are too immediate and not achievable, it was determined at a recent meeting in Athens.

A target model agreement between Greece and the country’s lenders has set April 1, 2019 as the starting date of new energy exchange markets and June 1, 2019 for market coupling of the Greek and Italian markets.

Even if all market regulations, platforms and other details are ready for an April 1 launch of new energy exchange markets, some time would still be needed for real-condition training purposes of participants, officials taking part in the Athens meeting agreed. A launch about two months later, in July, 2019, would be more realistic, they noted. During this period, preparations for Greece’s coupling with the Italian market would be concurrently pushed ahead.

It became apparent at the Athens meeting, staged in July 12, that Italian and other European market officials to be impacted by the Greek-Italian coupling plan are not prepared to move ahead unless systems have previously been tested and operated on a trial basis for a satisfactory period of time. This essentially means that Greece’s coupling plan with the Italian market is not possible any sooner than the end of 2019.

New market conditions concerning the time it will take to implement the target model are expected to be presented at a related local event tomorrow.

It remains unclear how Brussels will react to any schedule revisions beyond Greece’s bailout period, ending next month. Lender representatives showed some flexibility during their most recent visit to Athens as they also acknowledged the initial plan’s dates are premature. At the other end, Greek officials have presented solid proof of a dedicated effort and progress made until now.

The country’s lenders, especially the European Commission, may maintain this more tolerant stance if Greek officials manage to convince that all possible efforts have been made.

Any delays to the new energy exchange market and Greek-Italian coupling dates will create further uncertainty with respect to NOME auction revisions that will enable the incorporation of these auctions into futures markets.

This uncertainty and various other market factors drove prices higher at a NOME auction held yesterday.

 

Five firms to face hearings over NOME export suspicions

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Five power supply firms that had purchased electricity amounts disproportionate to their retail market shares at previous NOME auctions have been summoned to hearings by RAE, the Regulatory Authority for Energy.

The authority reached this decision yesterday, on the eve of today’s latest NOME auction, to determine whether the five firms have acquired electricity amounts bigger than their domestic market needs in order to export excess amounts either directly or indirectly, via traders. If so, fines could be imposed.

Even though export limits implemented in the past have been lifted following a demand by the country’s lenders, RAE continues to view the NOME auctions as a tool for supporting competition and shifting retail electricity market shares from the still-dominant power utility PPC to independent suppliers.

NOME auctions offer third parties access to PPC’s lower-cost lignite and hydropower sources.

“Anybody contravening this principle is breaking the rules and needs to offer explanations,” a RAE official told energypress.

LAGIE, the Electricity Market Operator, has eliminated two firms, OTE and Eunice, from today’s NOME auction for insufficient provision of electricity load data.

Both OTE and Eunice described their eliminations as unfair and declared they would appeal. But LAGIE appears determined to send out a strict message to all participants that NOME irregularities will not be tolerated.

It is believed traders will bid aggressively at today’s auction for electricity amounts to be exported to markets where wholesale electricity prices are higher.

Aggressive bidding by export-minded traders would force local suppliers to purchase NOME electricity amounts at higher prices offering narrower profit margins for supply activity in the local market.

Officials fear the increasing cost of CO2 emission rights and elevated wholesale electricity prices around Europe could also play a role in lifting bidding prices at today’s auction.

A starting price of 36.34 euros per MWh has been set for today’s session, up from the previous level of 32.05 euros per MWh.

A planned phasing out of the auctions in accordance with PPC’s bailout-required disinvestment of lignite units, as well as an uncertainty surrounding the auctions following the target model’s implementation, are other factors expected to impact today’s session and motivate participants to bid hard to acquire the biggest possible electricity amounts.

 

OTE, Eunice removals a wider warning for NOME bidders

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LAGIE, the Electricity Market Operator, has eliminated two firms, OTE and Eunice, from tomorrow’s NOME auction for insufficient provision of electricity load data, sending a wider message to all participants that monitoring rights will be fully resorted to in order to combat various irregularities and problems.

Both OTE and Eunice described their eliminations as unfair and declared they would appeal.

Some pundits believe these eliminations also serve as warnings for traders believed to be preparing to bid aggressively at tomorrow’s auction for electricity amounts to be exported to markets where wholesale electricity prices are higher.

Aggressive bidding by export-minded traders would force local suppliers to purchase NOME electricity amounts at higher prices offering narrower profit margins for supply activity in the local market.

Besides the role of traders, officials also fear prices at tomorrow’s NOME auction could be boosted to higher levels as a result of the increasing cost of CO2 emission rights and elevated wholesale electricity prices around Europe.

A starting price of 36.34 euros per MWh has been set for tomorrow’s auction, up from the previous level of 32.05 euros per MWh.

Thoughts by officials to introduce new measures limiting NOME-acquired electricity exports, a planned phasing out of the auctions in accordance with the main power utility PPC’s bailout-required disinvestment of lignite units, as well as an uncertainty surrounding the auctions following the target model’s implementation, are all factors expected to impact tomorrow’s session.

Some pundits believe participants will stretch themselves to their limits to acquire the biggest possible electricity amounts tomorrow given the tougher, and uncertain,  NOME conditions ahead.

As for industrial consumers, NOME price levels of between 42 and 43 euros per MWh tomorrow will enable independent energy firms to also enter the high-voltage market and supply small-scale customers. If prices rise to levels of around 47 euros per MWh, then the main power utility PPC’s price levels for industrial consumers will remain more competitive.

 

 

 

 

Mass electricity exports feared as latest NOME auction approaches

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Excessively high wholesale electricity prices in regional markets surrounding and directly impacting the Greek market will most likely offer traders major export opportunities for electricity amounts purchased at local NOME auctions, organizers suspect.

This is one of the main reasons why the country’s independent retail electricity suppliers, especially those with wide customer bases and a greater need for lower-cost wholesale electricity, fear auction prices at this Wednesday’s NOME session will be driven up to levels that will dig deeply into profit margins.

RAE, the Regulatory Authority for Energy, appears to be preparing to monitor the situation in an effort to counter abusive behavior by auction participants.

According to sources, RAE has good reason to believe that certain players are planning to bid very aggressively in an effort to secure electricity amounts for export.

RAE has already forwarded related letters to suppliers and traders who took part in the previous NOME auction to examine their use of electricity amounts acquired at previous auctions.

The authority may decide to stage hearings if unjustifiably large NOME electricity quantities are seen exported to foreign markets following Wednesday’s session.

NOME auctions were introduced in Greece roughly two years ago to offer independent players access to the main power utility PPC’s lower-cost lignite and hydrocarbon sources, the objective being to increase price-related competition in the country’s retail market.

Export limits for NOME-acquired electricity amounts have been lifted, enabling players to move freely. Even so, RAE maintains the right to conduct investigations and impose fines if it determines abusive behavior by participants.

A total of 400 MWh/h will be offered at the July 18 auction, whose starting price has been increased to 36.34 euros per MWh.

Besides the influence of regional markets and export opportunities, pundits also expect aggressive bidding this Wednesday as a result of the uncertainty concerning electricity amounts to be offered at future NOME auctions, planned to be phased out as PPC’s bailout-required disinvestment of lignite units progresses.

Many electricity suppliers are expected to bid for the biggest possible quantities at Wednesday’s auction to gain leeway for competitive offers to customers.

Wholesale electricity prices around Europe are also being pushed up by rising fuel and CO2 emission right costs, another factor that could motivate local traders to export bigger amounts.

 

Suppliers fear record prices at next week’s NOME auction

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Prices at next week’s NOME auction, the third for the year, scheduled for July 18, are forecast to reach unfavorably high levels, even record levels, for independent electricity suppliers despite the considerable quantity of 400 MWh/h planned to be offered, a key factor being rising wholesale electricity prices around Europe, still only partially reflected in the Greek market.

CO2 emission right costs are on an upward trajectory and could rise further, pundits believe, while oil and natural gas price levels have remained steadily high.

These factors have driven up prices of forward contracts in Germany, setting the European beat, as well as regional markets directly influencing local conditions, namely Hungary, the base shaping price levels of interconnected Balkan countries leading to Greece, and Italy, a main market sharing a grid interconnection with Greece.

Prices of forward contracts for August are higher than those of July, even though higher consumption levels are traditionally recorded in July.

Forward contracts for this year’s fourth quarter and all of 2019 are rising in value at a rate that is greater than price increases being recorded on a daily basis in the spot market, traders have pointed out.

Besides these external factors, other Greek market concerns are also believed to be motivating firms for aggressive bids at next week’s auction. The currently bigger NOME auction amounts are set to shrink at the end of the year. The amount of electricity to be offered at future auctions once the main power utility PPC’s bailout-required sale of lignite units has been completed remains unclear. This is expected to motivate auction participants to bid hard next week and secure electricity amounts covering future needs.

It also remains uncertain whether NOME-related electricity exports will be permitted in the future. This factor should also motivate suppliers to buy large quantities now.

The NOME starting price has been increased to 36.36 euros per MW/h, from 32.05 euros per MW/h, as of next week’s auction.

Price levels at the previous NOME auction reached 42.05 euros per MW/h. Extremely high NOME auction prices reached late in 2017, up to 45.2 euros per MW/h, no longer seem outrageous, given the current market conditions, and will soon be sorely missed, one pundit stressed.

 

 

 

Motor Oil buys 90% of NRG, more takeovers, mergers seen

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Motor Oil Hellas has reached a takeover agreement with independent power supplier NRG, one of the retail electricity market’s smaller players, entailing the acquisition of a 90 percent stake, the energy group has announced.

The acquisition will enable Motor Oil Hellas to enter Greece’s retail electricity market and broaden its overall presence in the country’s energy sector.

Motor Oil Hellas, a leading player in the globalized refining sector, operates one of the world’s most sophisticated and versatile refineries (Nelson Complexity Index, 11.54) and possesses a highly competent and insightful management team with a proven ability to seize opportunities in the wider energy sector.

Besides its key refining role, the group, which has continuously bolstered its portfolio, is also active in the aviation fuel, natural gas and oil exploration and production sectors.

Since its listing on the Athens bourse in 2001, Motor Oil has invested a total of 1.3 billion euros to increase production and bolster its refining infrastructure.

NRG, which grew out of the Handris energy group, began operating in 2012 and is regarded as being one of the most specialized electricity trading firms in southeast Europe.

NRG posted a total turnover of 86 million euros in 2017, up from 48.5 million euros in 2016 and 16.5 million euros in 2015. Its clientele is comprised of business groups, small to medium-sized businesses and a solid share of household consumers.

“Today is a special day for NRG and its people. I am particularly satisfied with the Motor Oil group’s vote of confidence in NRG,” noted Alexandros Handris, the chief executive at NRG. “NRG is now stronger than ever before,” he added.

The takeover deal is seen representing the first act of more acquisitions of smaller power supply companies by bigger players, as well as mergers. At least one of the country’s three vertically integrated energy firms is believed to be finalizing another takeover deal.

These developments highlight the uncertainty that has crept into Greece’s retail electricity market, especially since the increase of wholesale prices, which, combined with the imminent reduction of electricity amounts to be offered at forthcoming NOME auctions, has greatly narrowed profit margins. The main power utility PPC’s ongoing dominance has not enabled smaller suppliers to penetrate.

 

 

 

NOME auction starting price set to rise to €36.30 euros per MWh

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A RAE (Regulatory Authority for Energy) study concerning the starting price of the country’s next NOME auction, scheduled for July, proposes an increase to 36.30 euros per MWh from the current level of 32.05 per MWh, according to sources.

Energy minister Giorgos Stathakis, who has already received the study, plans to soon sign a related joint ministerial decision before it is also endorsed by the finance ministry and the revised starting price is officially announced ahead of next month’s NOME auction.

NOME auctions were introduced in Greece nearly two years ago to offer third parties access to the main power utility PPC’s lower-cost lignite and hydropower sources.

The authority’s starting-price hike proposal resulted from an increase in the price of CO2 emission rights at the European energy exchange as well as PPC cost-related data concerning its lignite and hydropower-based output.

The new NOME starting price level is expected to apply for the forthcoming NOME auction, planned for July 18, and all ensuing sessions until the procedure is reviewed in June next year.

Officials agree the expected starting price increase will not impact the market as closing prices at previous NOME auctions rose well above starting price levels, and, most importantly, market data indicates wholesale electricity prices are on the rise, both locally and internationally.

The closing price at the most recent NOME auction reached 42.05 euros per MWh.

 

 

Exporters turn north, Greece-Italy link closed for maintenance

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The Greece-Italy electricity interconnection, closed over the past week for maintenance work, has transformed market conditions for local traders as the Italian market, normally offering alluring prices for exports during considerable parts of the day, is currently not accessible.

Over the past year or so, electricity amounts acquired at Greek NOME auctions and left unabsorbed by the local market have been exported to Italy.

As a result of the temporary block towards the Italian market, Greek electricity exports can currently only be channeled through gateways in the country’s north, as has been highlighted by a sharp increase of exports through this region.

Prior to the commencement of maintenance work on the power cable interconnecting Greece and Italy, electricity exports to the north were usually limited to no more than 1,000 MW per day. Over the past week, this figure has risen sharply to levels exceeding 9,000 MW.

Under normal circumstances, Greece’s interconnections in the north are primarily used for electricity imports which are then either absorbed by the local grid or relayed to Italy, Greece serving as a transit zone.

Wholesale electricity prices in neighboring markets north of Greece are generally lower than those available in Greece and Italy.

The increased electricity export activity presently witnessed through the country’s north once again highlights that electricity amounts acquired at local NOME auctions are not being used to intensify domestic market competition, as was intended by authorities, but, instead, greatly exploited by traders for export opportunities.

Lenders propose NOME auction lignite phase out by April, 2019

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A NOME auctions adjustment proposal prepared by the country’s lenders and forwarded to Greek government officials recommends a phase out of lignite production contributions to the sessions by April, 2019 and a small increase of hydropower input.

Greek energy minister Giorgos Stathakis is scheduled to meet with troika officials this Wednesday.

The lignite phase-out proposal is based on the condition that the main power utility PPC’s bailout-required disinvestment of lignite power stations and mines, representing 40 percent of the utility’s lignite capacity, will be completed as envisioned and on schedule.

A road map proposed by the lenders would require an announcement of an international tender offering PPC’s lignite assets within May.

If this part of the procedure is staged as planned, then a certain penalty expected to be imposed on PPC, following a June review, for its failure to meet bailout-required retail electricity market share contraction targets will be halved.

PPC’s market share has dropped to 82 percent, behind schedule, and needs to fall to 62.24 percent by the end of the year, an objective already ruled out as impossible.

Another road map condition requires the announcement of a preferred bidder by this coming September.

Also, sales and purchase agreements for two lignite packages to be offered, one carrying assets in the north and the other assets in the south, will need to be signed by October.

New owners will need to complete payments and take over the assets for sale by February, 2019, according to the road map.

In addition, a futures market for energy products will need to begin operating by April, 2019.

Greek government officials do not appear to oppose these conditions. If all goes according to plan, legislation for the new NOME model could be prepared within the first fortnight of June.

The prospective end of lignite-dominated NOME auctions is expected to have a huge impact on market conditions, especially non-vertically integrated smaller independent suppliers.

The first NOME session following the lignite units sale will probably be staged in April, 2019. It appears that, by then, the NOME auctions will be left with hydropower-sourced electricity, which currently represents 6 percent of the total NOME offering to auction participants.

Since their introduction to the Greek market about a year and a half ago, NOME auctions may have generated higher price levels than those needed by independent suppliers to compete more fiercely against PPC, the dominant player but, even so, price levels have clearly remained below System Marginal Price (SMP) levels, offering some degree of security to independent suppliers.

A number of pundits believe the increased retail market pressure to be faced by smaller suppliers will lead to takeovers and mergers.

 

Gas market, NOME, supplier surcharge bailout’s remaining energy issues

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The country’s NOME auctions will not be changed so as to adjust to the main power utility PPC’s hydropower output, energy mnister Giorgos Stathakis has made clear ahead of next week’s arrival to Athens by the troika for another round of bailout negotiations.

Though the issue has already been tabled at a technical level, the Greek side has rejected throughts by Brussels technocrats to increase the role of hydropower output at the NOME auctions. They are held with the aim of opening up the retail electricity market and offering third parties access to PPC’s lower-cost lignite and hydropower sources.

On the contrary, talks between the government and lenders concerning RES sector funding, the opening up of the natural gas market and privatization of DEPA, the public gas corporation, remain unsettled.

The government will enter next week’s talks with the aim of replacing the RES-supporting supplier surcharge no sooner than 2019. No further supplier surcharge changes are planned for this year following a recent decision reducing this charge by 35 percent, according to the ministry.

The introduction of so-called green certificates in 2019, through the energy exchange, is currently being examined. Suppliers will purchase green certificates, which will constitute competitive forms of compensation for RES producers.

According to the energy minister, the RES sector is driving down wholesale electricity prices and, therefore, this effort needs to be paid for by suppliers.

The energy ministry has ruled out any chance of a RES-supporting ETMEAR surcharge increase on consumer bills.

As for the natural gas market, DEPA and Shell have reached an agreement on the former’s acquisition of a 49 percent stake held by Shell in their EPA Attiki supply venture covering the wider Athens market. DEPA already holds a 51 percent stake.

Also, Italy’s Eni, currently holding a 49 percent stake in EPA Thessaloniki-Thessaly, will gain full control of this supply venture following a deal with DEPA, until now the majority partner with a 51 percent stake.

An agreement between the government and lenders on DEPA’s privatization is pending but may now proceed following the aforementioned developments. The energy ministry has prepared a proposal entailing the formation of a holding company, part of which will be eligible for a bourse listing.

According to the plan, the holding company will include three subsidiaries, one responsible for the DEPA networks, a second for commercial affairs, and a third for international natural gas projects. A strategic investor will be able to enter the subsidiaries, especially the one controlling commercial matters.

It is unclear what amount this model could inject into the country’s privatization coffer. The higher-than-expected sale price achieved just weeks ago for a 66 percent stake of DESFA, the natural gas grid operator, which fetched 535 million euros, well over a budgeted amount of 400 million euros, has provided the energy ministry with more negotiating space concerning its DEPA sale plan. TAIPED, the state privatization fund, expects 250 million euros from this sale.

 

NOME auction lignite exclusion ominous for smaller players

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The country’s smaller, non-vertically integrated independent electricity suppliers stand to face increased retail market pressure that could lead to takeovers and mergers given the anticipated end of lignite’s input to NOME auctions early in 2019.

NOME auctions will be reshaped if all goes acording to plan with the upcoming bailout-required sale of main power utility PPC lignite units, representing 40 percent of the utility’s lignite capacity.

The energy ministry and the country’s lenders are believed to have already reached an agreement on the future shape of NOME auctions as a follow-up plan to the PPC sale of lignite units, energypress has been informed.

If the sale of PPC lignite units is completed as planned and their new owners begin operating the units early in 2019, lignite will be excluded from ensuing NOME auctions.

The first post-sale NOME session will probably be staged in April, 2019. It appears that, by then, the NOME auctions will be left with hydropower-sourced electricity, which currently represents 6 percent of the total NOME offering to auction participants. This is expected to bring about significant market changes and difficulties for suppliers, especially the smaller players.

Since their introduction to the Greek market about a year and a half ago, NOME auctions may have generated higher price levels than those needed by independent suppliers to compete more fiercely against PPC, the dominant player. Even so, NOME price levels have clearly remained below System Marginal Price (SMP) levels, offering some degree of security to independent suppliers.

NOME auctions offer independent players access to PPC’s lower-cost lignite and hydropower sources.

Bigger hydropower role in new NOME model sought by troika

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The country’s lenders are pushing for a more prominent role of hydropower sources in the NOME auctions – whose terms are set to be revised – but, on the other hand, the institutions seem willing to accept an overall reduction of electricity amounts offered to traders at the auctions, according to energypress sources.

Greek government officials and the lenders have already agreed to revise electricity amounts offered at the NOME auctions once the main power utility PPC’s bailout-required disinvestment of lignite units has been completed.

According to third-review bailout terms, the negotiating sides will need to assess the results of NOME auctions in the first year. Evidently, the conclusions will highlight a need for further action.

Introduced in late 2016 to offer independent traders access to PPC lower-cost lignite and hydrocarbon sources, the NOME auctions have yet to make impact of any considerable magnitude on the market. PPC remains the dominant retail electricity market player with a market share of approximately 85 percent.

Government officials are determined to keep the hydropower front out of the negotiations.

However, energy ministry officials and the lenders appear to agree that a new NOME framework, to be built from scratch, is needed.

The two sides have been locked in continual negotiations over the past few weeks, seeking to resolve pending energy-sector issues. Besides seeking to reshape the NOME auctions, the officials are also working on replacing a RES-supporting supplier surcharge with a new model, as of 2019. The future role of DEPA, the public gas corporation, in Greece’s natural gas market is another major pending issue.

 

 

 

 

 

Conditions in Italy, Balkans seen subduing NOME prices

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Electricity suppliers taking part in this Wednesday’s second NOME auction for the year believe that appropriate conditions exist for a subdued price in the 30-something euros per MWh range, but unusual factors that would drive the price level to at least 40 euros per MW, which the suppliers hope will be avoided, cannot be ruled out.

The price at the year’s first NOME session reached 41.45 euros per MWh, while the price at the closing sesson for 2017 rose to 45.2 euros per MWh.

Current market conditions in Italy, the Balkans and central Europe – regions to which local NOME participants expect to export some electricity amounts to, permitted by the current NOME rules – are expected to help subdue prices at this Wednesday’s auction.

Normally, electricity prices are not elevated during summer periods, as is reflected by futures contracts covering the next three months.

The large electricity amount to be offered at the April 18 NOME auction, totaling 400 MW/h, is also expected to help keep bidding prices lower. The same amount is also planned for the next session, scheduled for June 18.

In addition, certain suppliers currently hold leftover NOME-related electricity amounts that have remained untilized. Consequent expenses, such as mandatory deposit payments for unused amounts and fines if this non-utilization period exceeds two months, push suppliers to sell excess amounts in the secondary market, even at below-purchase prices.

On the other hand, demand and prices could be driven higher on Wednesday if participants fear limited NOME amounts at future sessions, assuming all proceeds smoothly with the main power utility PPC’s bailout-required disinvestment of lignite units and, as a result, the government reaches an agreement with the lenders for reduced NOME amounts at future auctions.

NOME auctions were introduced in Greece about a year and a half ago to offer independent players access to the state-controlled PPC’s lower-cost lignite and hydropower sources.

 

 

Ailing ELTA, eyeing electricity market entry, warned of risks

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ELTA, Hellenic Post, making plans to enter the retail electricity market as a move that could generated additional, and needed, revenue from an alternative source, has been warned by the country’s new super privatization fund, now controlling the enterprise, that such an initiative carries considerable risk, which could lead to repercussions if the endeavor is not successful.

The fund, in a report listing business proposals for ELTA, makes clear that the country’s retail electricity market offer opportunities as a result of its liberalized conditions, lower wholesale electricity prices, and NOME auctions as lower-cost purchase platforms for suppliers. However, the fund also warns of a high risk entailed as a result of price fluctuations and electricity bill collection difficulties.

Struggling to remain afloat, ELTA, cannot affort to make any wrong moves. The Greek State’s 90 percent stake in the enterprise is now controlled by the privatization fund. Eurobank holds the firm’s other 10 percent.

ELTA, already covering its own energy needs through electricity amount purchases at previous NOME auctions – introduced late in 2016 to offer suppliers access to the main power utility PPC’s low-cost lignite and hydropower sources – is now preparing to utilize its extensive nationwide retail network for a wider entry into the electricity market in 2018, according to sources.

The firm aims to sell an electricity amount of 72,500 MWh in 2018, including to company employees and associates, which could provide revenues of 20 million euros.

At present, ELTA employs 6,418 persons, operates 690 retail outlets, 694 agencies, 81 distribution centers as well as 10 processing units around Greece. It posted a turonover figure of 311.8 million euros last year, down 40 percent from 521.1 million euros posted in 2010, when the recession had just begun to impact the country. Profit fell from 3.2 million euros to just 400,000 euros last year.

Lower international prices prompt decline in electricity exports

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Latest market data released by LAGIE, the Electricity Market Operator, for January has confirmed a reduced interest, observed recently, for electricity exports through the country’s interconnections.

Electricity exports from Greece to neighboring countries fell considerably in January compared to December as well as January last year, both in terms of daily averages and monthly totals.

The subdued electricity export activity can be attributed to the electricity price drop in international markets.

This explains why local traders seeking export opportunities expressed little interest in the year’s first NOME auction, staged earlier this month.

 

 

 

Gov’t to seek milder PPC market share reduction targets

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The energy ministry will seek to soften the main power utility PPC’s bailout-required retail electricity market share contraction targets as part of upcoming negotiations for the program’s fourth review, energypress sources have informed.

A joint appraisal, by the Greek government and country’s lenders, detailing the impact on the local retail electricity market of NOME auctions is, according to third review terms, expected to be finalized by the end of this month.

The appraisal can be expected to render the NOME auctions – introduced nearly a year and a half ago to offer independent suppliers access to PPC’s low-cost hydropower and lignite sources – as an ineffective tool. PPC’s retail market share has shed just a few percentage points and remains dominant at 85 percent.

The power utility’s resilience is expected to trigger new developments and demands for additional measures, by the lenders, concerning the effort to reduce PPC’s market share.

Given the government’s intention to try and soften PPC’s market share contraction targets, fierce negotiations can be expected.

 

Latest NOME price, slightly lower, helpful but not enough

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The NOME auction price established at yesterday’s first session of the year, down slightly to 41.45 euros per MWh from 45.20 euros per MWh reached at the previous session last October, promises some help for independent electricity suppliers but is not enough to generate major impetus in the effort being made to  open up the country’s retail electricity market, auction participants have generally agreed in comments offered to energypress.

Though still relatively high, the latest NOME auction price set yesterday, in what was the year’s first of four sessions, will offer some leeway for independent electricity suppliers, especially those active in the mid-voltage category, who, in recent times, have battled amid loss-incurring market conditions.

However, the 41.45 euros per MWh price set yesterday offers independent suppliers minimal leeway to shape attractive pricing policies that could help them gain part of the lion’s share maintained by PPC, the main power utility.

Even so, given the sizeable electricity amounts to be offered at three NOME auctions to follow this year, yesterday’s session represents a promising start.

A total of 400 MW/h was offered yesterday. Equivalent amounts will also be offered at two ensuing auctions, scheduled for April 18 and June 18, while a larger amount of 511 MW/h is planned for the year’s final session, scheduled for October 17.

Protergia was the biggest buyer at yesterday’s session, purchasing 90 MWh/h, energypress was informed. Heron followed with 60 MWh/h, NRG was third with 55 MWh/h, Elpedison ranked fourth with 40 MWh/h, ELTA was next with 40 MWh/h, Watt + Volt bought 35 MWh/h, KEN acquired 20 MWh/h, Volterra bought 13 MWh/h, Volton bought 10 MWh/h, EPA Attiki acquired 10 MWh/h, and Zenith bought 5 MWh/h.

NOME price dips to 41.45 euros per MWh at year’s first auction

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The price level of the year’s first of four NOME auctions, staged today, reached 41.45 euros per MWh, under the level of 45.20 euros per MWh at the previous session, last October.

It will be interesting to see what kind of market policies independent electricity suppliers will pursue following today’s result. Though a price drop, compared to the previous session, was achieved, suppliers were probably hoping for an even lower level, which would have provided additional pricing policy leeway in their efforts to capture a sizeable chunk of main power utility PPC’s dominant retail electricity market share.

Today’s session began with strong bidding that lifted the price level to 40.45 euros per MWh just over an hour into the auction.

A total of 400 MW/h was offered at today’s auction. Equivalent amounts will also be offered at the two ensuing auctions, scheduled for April 18 and June 18, while a larger amount of 511 MW/h is planned for the year’s final session, scheduled for October 17, bringing the year’s total offering to 1,711 MW/h.

Traders who had acquired electricity amounts at previous NOME auctions without having a local client base to service were excluded from today’s auction. These traders had bought electricity amounts with an intention to export.

The NOME auctions were introduced slightly over a year ago to offer independent suppliers access to PPC’s low-cost lignite and hydropower sources.

 

 

 

 

Lower price level expected at tomorrow’s NOME auction

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Prevailing conditions ahead of tomorrow’s first of four NOME auctions to be staged in 2018 suggest prices will be lower than the level of 45.20 euros per MWh reached at the most recent session, last October.

The 400 MWh/h electricity amount to be offered tomorrow and certainty of sizeable quantities to be offered at ensuing sessions this year; the increased difficulty of exporting electricity due to a price drop in other European markets; as well as an overall acceptance by independent suppliers that continued price levels of around 45 euros per MEh would threaten their sustainability, are three key factors seen subduing bidding tomorrow.

On the other hand, however, all participants want to secure electricity amounts to cover current supply needs as well as possible increases. At previous auctions, certain major players did not acquire amounts reflecting their market presence. Also, a number of new players, such as the EPA gas supply companies seeking to also enter the retail electricity market, will require amounts. The impact of traders on tomorrow’s auction remains unclear. Restriction proposals concerning their export trading activities have been loosened while current loopholes enable traders without a single customer in the domestic market to participate in the NOME auctions.

Over the past few days, independent suppliers have been busy shaping their strategies for tomorrow’s auction.

A bidding war leading to increased price levels would severely limit the ability of independent suppliers to offer attractive electricity packages undercutting offers made by the main power utility PPC.

Since July, 2016, when PPC decided to offer punctual customers a 15 percent discount on electricity bills, independent players have been forced to offer similar packages, often beyond their limits. Independent players may face lower operating costs than PPC but their budgets include major outlays for sales network development and other investment costs.

A total of 1,711 MWH/h will be offered at the four NOME auctions planned for 2018. This amount includes a 594-MWh/h penalty quantity resulting from PPC’s failure to reduce its retail electricity market share to 75.24 percent by the end of 2017. The utility ended last year well over this level, registering an 85.34 percent market share.

The 1,711 MWH/h planned to be offered in 2018 represents 19 percent of the previous year’s total electricity consumption.

The first, second and third NOME auctions this year – scheduled for February 7, April 18 and June 18 – will each offer participants 400 MW/h, while a 511-MW/h electricity amount will be offered at the final session, scheduled for October 17.

The NOME auctions were introduced slightly over a year ago to offer independent suppliers access to PPC’s low-cost lignite and hydropower sources.

Exclusive traders to be barred from NOME auctions

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NOME auction decisions reached by RAE, the Regulatory Authority for Energy, and conditions set through a legislative revision which, admittedly, lacks full clarity, have introduced a series of restrictions whose basic objective is to limit the utilization of low-cost electricity obtained at the NOME auctions by traders exporting to foreign markets.

Final decisions on the distribution of electricity amounts to be offered through the year’s four NOME auctions, as well as conditions that need to be met by participating suppliers, are now in the making.

The RAE decisions, which differ to a LAGIE (Electricity Market Operator) plan recently forwarded for public consultation, will be implemented at the year’s first auction to be staged on February 7.

According to the terms, suppliers who took part in previous NOME auctions will need to prove that that they have supplied electricity to consumers – even just one – for an uninterrupted period of at least one month. Otherwise, firms will not be eligible to take part in the next session. This term effectively excludes traders from the NOME auctions.

Newcomers to the NOME auctions will need to present extensive, and convincing, business plans to qualify for participation. If these plans are not approved, interested parties will not be permitted to take part.

LAGIE has been tasked with examining all suppliers for correlations between electricity amounts purchased at NOME auctions, respective retail market shares, as well as electricity export amounts. The operator’s findings will be relayed to RAE.

A total of 1,711 MWH/h will be offered at the four NOME auctions planned for 2018. This amount includes a 594-MWh/h penalty quantity resulting from the main power utility PPC’s failure to reduce its retail electricity market share to 75.24 percent by the end of 2017. The utility ended last year well over this level, registering an 85.34 percent market share.

The first, second and third NOME auctions this year – scheduled for February 7, April 18 and June 18 – will each offer participants 400 MW/h, while a 511-MW/h electricity amount will be offered at the final session, scheduled for October 17. However, these amounts could be revised following a review of the NOME auctions in June.

The 1,711 MWH/h currently planned to be offered in 2018 represents 19 percent of electricity consumption in the previous year. This quota will rise to 22 percent in 2019.

According to the bailout terms, PPC will need to reduce its retail electricity market share to 62.24 percent by the end of 2018 and 49.24 percent by the end of 2019.

The NOME auctions were introduced slightly over a year ago to offer independent suppliers access to PPC’s low-cost lignite and hydropower sources.

Market troubled by NOME term proposals, still vague

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It remains unclear whether certain electricity export restrictions will be imposed on participants of the year’s first of four NOME auctions, whose new date has just been been rescheduled for February 7 from January 17, new terms forwarded for public consultation by LAGIE, the Electricity Market Operator, have indicated.

According to pundits, the new terms proposed by LAGIE would introduce some sort of monitoring system, but, beyond that, no export limits are specified.

A related legislative amendment delivered by the energy ministry to parliament, and ratified, is vague.

According to market pundits, the only certainty promised by LAGIE’s terms is an immediate elimination of export restrictions previously set by RAE, the Regulatory Authority for Energy.

For the most recent NOME auction, held in October, RAE introduced a term that required participants to have supplied at least 30 percent of electricity amounts purchased at preceding auctions to the domestic market in order to qualify for the session. RAE had also set terms for 2018, increasing this domestic supply quota to 50 percent as a prerequisite for participating in auctions during the first half and 70 percent for auctions in the second half of the year. According to these RAE terms, newcomers faced lighter conditions and could have qualified for NOME auctions throughout 2018 having domestically supplied 30 percent of their auction electricity purchases.

Revised export limits will need to be legislated as the monitoring system, alone, is not expected to prove effective, pundits insist.

Besides the confusion caused by the proposed monitoring system’s lack of clarity, independent electricity suppliers have also reacted against a condition requiring them to submit business plans to market authorities for appraisal, despite a lack of familiarity by the latter of respective company strategies and challenges. This requirement promises to add to the difficulties faced by independent electricity suppliers, seeking to forge appropriate policies for survival in a tough market.

According to the new NOME terms proposed by LAGIE, all electricity suppliers will need to accompany registry applications with annual retail electricity market penetration plans, including targets for each quarter of the year. Other application requirements include rundowns of how NOME electricity amounts will be used by suppliers as well as substantiated analyses of economic benefits to be offered to electricity consumers.

LAGIE has also proposed offering independent electricity suppliers an additional 594 MWh/h at the next NOME auction, on top of the original electricity amount of 1,126 MWh/h, as the main power utility PPC’s market share did not drop to a bailout target figure of 75.24 percent by the end of 2017. It ended the year at 85.34 percent.

LAGIE’s public consultation procedure is scheduled to conclude on January 24.

 

 

NOME participants fear high prices again at next auction

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The majority of market players preparing to take part in the country’s next NOME auction, expected to take place within the next two to three weeks after an intial January 17 date was postponed, fear auction electricity prices will again surge to levels of around 45.2 euros per MWh reached at the previous session, last October, and consequently negatively impact their business plans, they have admitted in comments to energypress.

These participants fear limited electricity amounts to be offered at the next NOME auction will generate intensified bidding and drive up prices.

New electricity market players hailing from the natural gas market and possessing insufficient electricity amounts from previous NOME auctions are expected to add to the bidding competition. These newer players need to acquire additional electricity amounts to cover their dynamic entries into the electricity market.

The specific date of the next NOME auction, the first of four planned to take place this year, will be included in a multi-bill of bailout prior actions, expected to be ratified in Greek parliament today.

The upcoming NOME auction was delayed so that authorities could revise terms for participants, who will need to cover supply quotas for the domestic market. Separate conditions will apply for older and newer electricity market suppliers. Newer players will be offered greater leniency.

These revised terms will undergo a short consultation process, to last a few days, before RAE, the Regulatory Authority for Energy, makes a final decision to implement the required changes. LAGIE, the Electricity Market Operator, will then officially announce the revised terms.

The terms will need to be swiftly implemented as deliveries of electricity purchases made at the next auction must begin no later than March 1.

NOME auctions were introduced in Greece a little over a year ago to offer independent suppliers access to the main power utility PPC’s lower-cost lignite and hydropower sources.

 

 

Looser NOME terms included in multi-bill’s prior actions

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A multi-bill comprised of bailout prior actions, expected to be submitted to Greek parliament today for approval, will include looser conditions and obligations for NOME auction participants, who had reacted against previous stricter terms and also expressed discontent over the possibility of a major delay in the staging of the year’s first auction.

According to sources, the looser terms will enable first-time participants to submit business plans to a local market authority three days ahead of NOME sessions. The submission of business plans will be optional for participants who have taken part in previous NOME sessions. However, older participants will need to submit electricity supply schedules, indicating the existence of customers.

The latest NOME term revisions included in the multi-bill, to replace previous revisions, are expected to offer traders more lenient electricity export limits as the previous terms were deemed to contravene EU law.

Older participants have expressed concern over the possibility of a major delay in the staging of the year’s first of four NOME auctions. These traders fear electricity amounts acquired at previous sessions will run out and disenable them to service clients holding supply agreements for specific periods.

Besides the NOME term revisions, the multi-bill will also include an annual revision concerning the Public Service Compensation (YKO) mechanism.

The energy ministry has informed that agreements were reached with the country’s lenders earlier this week on details concerning the public service compensation, Social Residential Tariff (KOT) program, and a RES-supporting ETMEAR surcharge reduction.

PPC, defying bailout terms, makes new gains in December

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The main power utility PPC, already behind on its bailout-required retail electricity market share contraction targets, appears to have gained over one percentage point in December, rising to 85.4 percent from 84.21 percent in November, energypress sources have informed.

The power utility has gained more than two percentage points over the past couple of months. Sources explained that this rise was not only generated by increased customer electricity consumption levels amid the winter season but also by the return of some 70,000 customers to PPC.

PPC’s retail electricity market share, according to bailout terms, was expected to fall to a level of 75.24 percent by the end of 2017, before dropping further, to less than 50 percent by 2020.

State-controlled PPC’s failure to reach its end-of-2017 target ultimately means the government and country have failed to achieve a bailout obligation.

Commenting on the development, sector officials contended that PPC’s resistance against NOME auctions has proven successful so far.

Introduced a little over a year ago as a tool to open up the market by offering independent suppliers access to PPC’s low-cost lignite and hydropower sources, the NOME auctions, alone, do not suffice. Admittedly, without them, independent suppliers would have been driven to the ground given the increased level of wholesale electricity prices.

Higher-than-expected prices generated at the NOME auctions have left little leeway for independent suppliers to pursue attractive pricing policies.

A PPC decision, in the summer of 2016, to offer punctual customers a 15 percent discount has been a key factor in confining the market share growth of competitors, who have been forced to offer similar discounts without necessarily being in a position to do so.

Independent suppliers contend with lower operating expenses than PPC but, on the other hand, face high sales network development and investment costs.

Essentially, PPC has opted to incur losses, reflected in the company’s results, as a means of subduing the development of independent suppliers. This strategy appears to have proven effective so far, but the consequences of the power utility’s failure to reach the bailout targets remain to be seen. The government, ultimately responsible for carrying out Greece’s program, will have some explaining to do to the lenders.