Non-vertically integrated electricity suppliers

Suppliers request revisions to alleviate cash-flow pressure

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Electricity suppliers, facing steep and lasting wholesale electricity cost increases, which have resulted in cash-flow issues, are seeking revisions that could alleviate the pressure, in recommendations submitted to RAE, the Regulatory Authority for Energy.

Rising wholesale electricity costs have created major cash flow problems for non-vertically integrated electricity suppliers as they are being forced to pay increasing amounts for electricity and related guarantees ahead of payments, to them, by consumers.

Consumers have also felt the pinch as suppliers, seeking protection against the rising wholesale prices, have activated wholesale cost-related clauses incorporated into their supply agreements.

Solutions for both sides seem elusive at present as market forecasts do not see any price de-escalation ahead, only further increases.

In one of the recommendations forwarded to RAE, suppliers called for their cash collateral payments made to the Hellenic Energy Exchange, as a form of guarantee, to be replaced by letters of guarantee representing equivalent amounts.

Suppliers have also requested a reexamination of the clearing price and payment formula in the day-ahead and intraday markets.

They also requested extensions for surcharge payments to power grid operator IPTO and the distribution network operator DEDDIE/HEDNO.

 

Retroactive enforcement of balancing market rules sought

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Non-vertically integrated electricity suppliers are seeking retroactive implementation of measures introduced recently by RAE, the Regulatory Authority for Energy, to contain balancing market prices at rational levels.

Balancing market costs rose sharply in the weeks following November’s launch of new target model markets, prompting an escalation of wholesale electricity prices that severely increased the purchasing costs of non-vertically integrated electricity suppliers.

These suppliers are now determined to seek returns from RAE and power grid operator IPTO for additional outlays prompted by flaws in balancing market rules that were not detected until after the launch of new markets.

A set of new rules just introduced by RAE constitute recognition by the authority of the abusive behavior practiced by producers prior to the intervention, the suppliers contend.

Non-vertically integrated electricity suppliers are pushing for even stronger measures. They believe the new rules rely too much on the goodwill and cooperation of producers, still able to return to irrational behavior and consequently threaten the sustainability of firms and financially pressure consumers.

On the same wavelength, EVIKEN, the Association of Industrial Energy Consumers, has criticized RAE for backing away from its own proposals, noting industrial energy costs currently depend on whether balancing market participants will exercise pricing restraint.

Suppliers, alarmed by higher balancing market cost, respond

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Non-vertically integrated electricity suppliers, badly hit by sharply increased balancing market prices, as much as five times higher than pre-target model levels, will hold a virtual meeting today with officials at the European Commission’s Directorate-General for Competition to point out the target model’s negative impact on electricity market competition.

Power grid operator IPTO and RAE, the Regulatory Authority for Energy, have taken action and market officials are awaiting results.

Last Friday, RAE’s leadership held a series of meetings with supply company representatives.

Some non-vertically integrated suppliers have already taken legal action while others are expected to follow suit.

RAE had initially received requests by suppliers for temporary measures entailing an immediate suspension of their balancing market financial obligations. The authority did not respond, prompting suppliers to lodge a complaint with RAE against IPTO for a breach of obligations.

Suppliers, through their complaint, are demanding revisions from IPTO, with retroactive effect, as well as the imposition of a fine on the operator that corresponds to the losses incurred by non-vertically integrated suppliers since the target model’s launch of new markets over a month ago.