Suppliers demand cost consideration ahead of extraordinary tax

Electricity suppliers facing an extraordinary tax of 90 percent on windfall earnings between August and November argue the energy ministry, engineering the tax, should take into account hefty costs they have been prepared to shoulder as a means of subduing retail price levels for consumers.

The energy ministry, currently finalizing a formula for this tax, insists electricity suppliers have benefited from excessive earnings, especially in September and October, implying suppliers overpriced their electricity during this two-month period.

Suppliers, on the other hand, contend they are forced to purchase electricity in advance to protect themselves against fluctuating prices and are engaging in hedging activities as a result of being required, by law, to announce their retail prices for upcoming months by the 20th of each preceding month.

Hedging, as well as other business costs, should be taken into account before the extraordinary tax is imposed, electricity retailers have stressed.

PPC considering CO2 right cost risk hedging, arrears securitization

The main power utility PPC plans to adopt risk hedging practices in order to limit the uncompensated impact of fluctuating international CO2 emission right prices, which, in recent times, have risen to levels representing a considerable part of the utility’s overall electricity production cost.

PPC’s first quarter results, posted this week, showed that its CO2 emission right costs increased by 22.9 percent despite an 18.5 percent reduction of lignite-based electricity production and a 54.5 percent hydropower output increase.

Earlier this week, PPC’s board decided to set up a specialized team to systematically monitor the European market, buy CO2 emission rights at relatively lower prices and utilize resulting reserves to cover needs when price levels are high, PPC’s boss Manolis Panagiotakis has informed.

PPC is also considering the prospect of securitizing amounts owed by customers as a means of creating an additional cash flow source. Consultants hired by PPC have already conducted an unpaid receivables management study.