Greek, Italian PMs to reiterate call for EU price cap on wholesale gas

The leaders of Greece and Italy will once again call for an EU-wide cap on wholesale gas prices, this time as an even more urgent measure given Russia’s latest gas-supply cuts to Europe, at a summit of EU leaders beginning today.

However, it remains unclear if Greek prime minister Kyriakos Mitsotakis and his Italian counterpart Mario Draghi can convince fellow EU member state leaders to join them for a wider European front favoring the cap.

The two leaders will not be entering the summit talks with high expectations as their cause has not been included on the summit’s agenda of topics to be discussed. Even so, the cap issue is expected to be discussed tomorrow, given the latest surge in energy prices.

The Greek and Italian leaders are expected to highlight the alarming rise of natural gas over the past ten days, up 50 percent, as well as yesterday’s dire warning by Fatih Birol, executive director of the International Energy Agency, telling Europe to prepare for a full disruption of Russian natural gas.

Mitsotakis, the Greek leader, had also called for a cap on wholesale gas prices in March.

Authorities in Italy, one of Europe’s most dependent countries on Russian energy sources, have announced that they are examining an emergency plan, including electricity and gas use restrictions for households, businesses and industry, if Gazprom does not resume regular gas supply to the country, cut by half just days ago.

Slovakia has also reported receiving less than half of the usual volumes. France has informed it had received no Russian gas from Germany since mid-June, but the country is getting supplies from elsewhere.

Bulgaria, Denmark, Finland, the Netherlands and Poland have already had their Russian gas deliveries suspended after refusing a demand to pay in Russian roubles.

 

Wholesale price adjustment clause set for suspension

The government is moving ahead with a plan to suspend a wholesale price-related adjustment clause included in electricity bills, to follow the ratification of a RES draft bill that includes an order for temporary implementation of a mechanism  enabling partial returns of day-ahead market earnings through a wholesale electricity market cap.

According to energypress sources, energy minister Kostas Skrekas appears to have accepted a RAE proposal calling for the suspension, as of July 1, of a wholesale price adjustment clause included in electricity bills.

The energy minister is expected to suspend the clause for a total of 11 months, from July 1 to June 1, 2023, through an energy supply code revision.

Electricity prices for consumers will be controlled through a combination of wholesale market intervention (caps on producer earnings) and subsidy support.

According to the plan, electricity suppliers, as of July 1, will have the choice of offering three types of tariffs: fixed; flexible with upper and lower limits; and flexible without upper and lower limits.

Brussels approves wholesale price formula, producer caps

A government package containing a new formula for the country’s wholesale electricity price along with caps for each of the four electricity generating technologies (hydropower, renewables, gas and lignite) has been approved by the European Commission, paving the way towards its implementation as of July 1, sources have informed energypress.

Once a related draft bill, submitted to parliament last Friday, is ratified, a ministerial decision detailing the price caps per technology will be published at the end of this week or early next week. It is eagerly awaited by market participants.

According to sources, the cap on hydropower facilities is expected to be set relatively higher than initially thought, at 110 euros per MWh, well over the initial expectation of between 80 to 90 euros per MWh.

The price cap on renewables is expected to be set at 85 euros per MWh. Natural gas-fueled power stations are seen taking on a cap of between 230 and 240 euros per MWh.

Power utility PPC’s lignite-fired power stations will be set a cap of no less than 200 euros per MWh.

The mechanism’s operation will be assumed by EnExClear, the day-ahead market’s clearing authority, which will report, on a daily basis, to RAE, the Regulatory Authority for Energy, and DAPEEP, the RES market operator.

Cap for electricity generation technologies by end of June

A ministerial decision for price caps to be applied to respective electricity generation technologies is expected by the end of the month, on time for their introduction, planned for July 1.

In the lead-up, within the next few days, authorities are expected to deliver a legislative revision carrying the details of a remuneration mechanism for electricity producers.

The cap on hydropower facilities is expected to be set at a relatively high level, ranging from 100 to 120 euros per MWh, well above initial estimates between 80 and 90 euros per MWh, according to energypress sources.

As for the RES sector, the price cap is expected to be set somewhere between 80 and 90 euros per MWh.

A cap of between 220 and 230 euros per MWh is expected to be set for natural gas-fueled power stations.

Energy production technology price caps being finalized

Government officials are finalizing decisions for respective price caps to be applied to electricity generation technologies ahead of the introduction, on July 1, of a compensation mechanism for electricity producers.

Power utility PPC’s hydropower facilities are expected to play a key role in the effort. Windfall profits to be deducted from hydropower unit earnings promise to contribute greatly to the Energy Transition Fund, and, by extension, maximize the level of subsidies offered to consumers.

Officials are taking careful steps so that PPC can keep being able to offer discounts and fixed tariffs to customers and avoid falling into loss-incurring territory.

The cap on hydropower facilities is expected to be set at a relatively high level, ranging from 100 to 120 euros per MWh, well above initial estimates between 80 and 90 euros per MWh, according to figures mentioned by sources.

As for the RES sector, the price cap is expected to be set somewhere between 80 and 90 euros per MWh.

According to energypress sources, the European Commission’s approval of the compensation mechanism for electricity producers is expected imminently. It will be given a 12-month duration.

 

Retail, wholesale measures for crisis’ new support package

The government’s latest energy-crisis support measures, whose fundamentals were announced yesterday by Prime Minister Kyriakos Mitsotakis, will take immediate effect, beginning with subsidies for consumption in May and June. Details are expected to be announced by government officials early today.

These subsidies, according to sources, will be combined with a price cap in the wholesale electricity market as of July, as negotiations with the European Commission are ongoing and Brussels approval is needed, as was the case with Spain and Portugal.

The new subsidies are expected to absorb approximately 50 percent of electricity cost increases for households, while, combined with July’s anticipated price cap in the wholesale market, the support package will absorb between 70 and 80 percent of energy cost increases for households, businesses and farmers, according to government calculations.

The support package for households will, as has been the case over the past few months, continue subsidizing up to 300 kilowatt hours per month, but subsidy levels will fall from 72 euros a month in April to a monthly level of between 55 and 60 euros, which, in terms of energy-cost increase absorption, works out to the same percentage as the average electricity price ended lower in April compared to the previous month.

Based on this reasoning, May and June subsidies for businesses will also be slightly lower than the level of 130 euros per MWh offered in April.

The new support package will also subsidize monthly consumption exceeding 300 KWh at a rate of 10 cents per KWh for all households, not just principle residencies, as was the case with previous packages.

The wholesale electricity market price cap to be implemented is expected to keep the average price at a level of approximately 100 euros per MWh.