Extraordinary conditions push SMP as high as €105 per MWh

Extraordinary conditions resulting from coinciding temporary closures of various power facilities, both in Greece and abroad, have pushed up the System Marginal Price, or wholesale electricity, to levels of as much as 105 euros per MWh, as was the case yesterday.

Four domestic gas-fired power stations – Enthes (Elpedison), Heron CC, Lavrio IV and Protergia – were out of order yesterday, for different reasons.

Problems beyond the Greek border have made matters worse. Bulgaria’s 1,000-MW Kozloduy nuclear power plant is currently out of order. The Greek-Bulgarian line serves as a transit route towards North Macedonia as a line linking Bulgaria and North Macedonia is out of order. So, too, is a line linking Greece with Italy.

Power stations that rarely operate, such as an open-cycle Heron unit, needed to be called into action as a result of the problems on these various fronts. Their necessary contributions pushed the SMP to far higher levels.

Three power utility PPC lignite-fired power stations, Agios Dimitrios II and III and Melitis, along with PPC’s gas-fired power stations Aliveri V, Lavrio V, Komotini, Megalopoli V, as well as units run by the independent energy firms Heron, Thisvi and Corinth Power, all needed to be called into action to cover the grid’s needs.

The market appears to have normalized for today. SMP levels are down to relatively satisfactory levels, averaging 44.49 euros per MWh, primarily as a result of significant RES contributions, covering more than 50 percent of the overall demand, 123.993 GWh.

The lignite-fired power stations used yesterday – Agios Dimitrios II and III and Melitis – will remain closed today.

Greek wholesale electricity prices topping European levels

Greek wholesale electricity prices are currently among Europe’s highest, energy exchange data covering the past few days has shown.

On August 11, the System Marginal Price, or wholesale price, in Greece’s day-ahead market reached 52.3 euros per MWh, Europe’s second-highest level following Poland.

On the same day, Germany’s SMP was significantly lower, at 36.3 euros per MWh, the level in Italy was 41.15 euros per MWh, Bulgaria registered 41.17 euros per MWh and Romania 40.82 euros per MWh.

In yesterday’s day-ahead market, Greece’s SMP was 52.3 euros per MWh, once again virtually topping European levels, exceeded only by the Polish price. Elsewhere, Germany registered 35.86 euros per MWh, Italy’s level was 42.96 euros per MWh, Bulgaria registered 39.13 euros per MWh, Romania 38.25 euros per MWh, while Spain and Portugal both registered 39.27 euros per MWh.

Greece’s SMP was once again second-highest, behind Poland, in the day-ahead market for today, registering a level of 42.5 euros per MWh. Germany registered 38.59 euros per MWh, Italy was at 41.34 euros per MWh, the Czech Republic’s level was 39.02 euros per MWh, Bulgaria registered 39.33 euros per MWh, Romania registered 40.14 euros per MWh, while the SMP level in Spain and Portugal was 40.52 euros per MWh.

One PPC rate for consumption above, below 2,000 kWh

Power utility PPC will continue offering a single tariff rate for consumption levels above and below 2,000 kWh per four-month billing period once the utility’s lockdown-related support package expires on June 26, sources have informed.

During lockdown, PPC offered an 8 percent tariff discount for consumption levels of more than 2,000 kWh per four-month billion period. This offer’s resulting tariff rate, 0.11058 euros per kWh, is being kept.

Prior to the lockdown package’s introduction, lasting three months, PPC customers were charge 0.11936 euros per kWh for consumption over 2,000 kWh. The lower rate also applies for consumption levels below 2,000 kWh.

PPC’s new pricing policy, still undisclosed, is also expected to offer benefits to customers paying their electricity bills on time.

The power utility’s independent rivals are offering like-minded packages. For at least one month now, independent suppliers have offered considerable tariff discounts at par with lower nighttime rates. These offers are valid for new customers as long as payment punctuality is maintained.

Energy costs – natural gas and wholesale electricity prices – fell considerably during the lockdown period, providing suppliers leeway for lower-price offers to customers.

According to the Greek energy exchange, the System Marginal Price (wholesale electricity price) ended May at 34.27 euros per MWh, down from 65.91 euros per MWh in the equivalent month a year earlier, a 48 percent year-on-year drop.

In May, natural gas-fueled power stations were responsible for 50.1 percent of Greece’s overall electricity generation, and RES facilities contributed 38.54 percent.

PPC’s high-cost lignite-fired power stations, once the country’s dominant generating source, contributed just 3.46 percent in May, an 87 percent year-on-year drop.

 

Natural gas, electricity imports most influential for Greek SMP levels

Natural gas and electricity imports are playing an increasingly important role in shaping System Marginal Prices, or wholesale prices, while the influence of more traditional energy sources is waning, latest monthly data provided by the Greek energy exchange has shown.

Natural gas’s influence on SMP levels grew between January and May this year, compared to other fuels and electricity imports and exports, the data showed.

Throughout the five-month period, natural gas-fueled power stations consistently ranked first in number of hours used for SMP levels, peaking in May with 491 hours. Electricity imports consistently followed as a the second most influential factor for all five months.

Lignite-fired power stations, previously a key factor for SMP levels, are now limited to a marginal role, their lowest contribution, one hour in an entire month, recorded in April, the January-to-May figures showed.

Greece’s international grid interconnections are playing an increasingly influential role in shaping the country’s SMP as well as covering energy demand, the data showed.

Power grid operator IPTO has increased capacities for electricity imports via Greece’s grid interconnections in the north.

Wholesale electricity prices rising, up to €47.30/MWh today

Wholesale electricity prices, determined by the System Marginal Price, are rebounding following a significant drop over the past few weeks.

The rise is being fueled by an anticipated increase in demand. A sidelined 600-MW line linking Greece with Bulgaria, depriving the system of electricity imports via this route, as well as a disruption in operations at an Elpedison power plant in Thessaloniki are two other contributing factors.

In addition, the Revythoussa LNG terminal just off Athens is not under any pressure, a factor subduing gas-fired unit bids and subsequently lowering the SMP.

Based on grid orders placed for today, the SMP has climbed to 47.30 euros per MWh, up from a level of around 30 euros per MWh five days earlier and 14.20 euros per MWh on May 1. Bidding by units has gradually risen since early May.

Demand, today, for domestic consumption and exports is estimated to reach 127 GWh, 40 percent of which is planned to be covered by natural gas-fired power stations, 30 percent by RES and hydropower plants, 23 percent by electricity imports, and 7 percent by lignite-fired power stations.

The SMP level will be determined by gas-fired power stations for 22 hours today, lignite-based generation will shape the price for one hour and imports for the remaining hour.

Mid-voltage battle toughens, reflecting lower wholesale cost

Competition between electricity suppliers has intensified in the mid-voltage category, where lower prices currently reflect a sharp drop in the cost of wholesale electricity and, subsequently, wider profit margins available to suppliers.

Competition has yet to intensify in the household and business markets despite discount packages offered by most electricity suppliers, including the power utility PPC, from the beginning of the coronavirus crisis.

This lack of competition has been attributed to a cautious stance adopted by independent suppliers as they wait to see how much profit margin leeway will be shed by a drop in electricity demand and electricity bill payment delays.

It is a different picture in the mid-voltage category, where suppliers are bombarding both existing and prospective customers with price offers.

Suppliers are spreading the risk of wholesale price fluctuations by diversifying their price offers. They are keeping a close watch on the System Marginal Price, determining wholesale prices.

The course of the SMP in coming days remains unclear. Signs of a possible rebound in wholesale electricity prices have emerged as the SMP is now clearly higher than levels registered last week.

Wholesale electricity prices have mainly fallen as a result of increased contributions to the grid by natural gas-fueled power stations, supplied low-cost LNG, as well as RES units.

 

Wholesale prices slide, demand subdued, LNG abundant

Extremely low wholesale electricity prices are being registered at the energy exchange as a result of lower demand and an incentive for producers to place their units on the Day Ahead Schedule because of an oversupply of low-cost LNG they have needed to use by specific dates.

On May 1, the System Marginal Price, or wholesale electricity price, fell to 14.2 euros per MWh while overall demand was limited to 91.5 GWh.

On the same day, RES units and hydropower facilities covered 43 percent of demand, electricity imports covered 27 percent, and gas-fired units 25.8 percent.

SMP levels were also low in the lead-up to May 1. On April 23, the SMP was 29.5 euros per MWh with demand at 103.5 GWh. On April 25, the SMP slid to 26.5 euros per MWh and demand dropped to 101.5 GWh. On April 30, the SMP rose to 32.1 euros per MWh and demand reached 104.8 GWh.

Yesterday, the SMP was at 31.7 euros per MWh and demand registered at 109 GWh.

The SMP level for today has been forecast to drop to 29.3 euros per MWh with demand unchanged at 109 GWh.

Grid entry adjustment for PPC telethermal-linked lignite units

The energy ministry is set to satisfy a power utility PPC request prioritizing the grid entry of its lignite-based production for telethermal support without factoring in this input to calculations determining the system marginal price, or wholesale price.

This requested procedure already applies for PPC’s compulsory hydropower input and RES units.

Under the current system, state-controlled PPC is incurring losses when entering into the grid lignite-fired units for telethermal needs in the west Macedonia and Megalopoli regions. More specifically, the utility is being forced to not operate its gas-fueled power stations, despite their lower operating costs, prompted by the large reduction in gas prices.

PPC’s LNG purchases, as a result, are not being utilized.

The ministry is now preparing a legislative act for the adjustment. It could apply for a limited amount of time to cover remaining telethermal needs in the post-winter season.

Independent producers have reacted against the plan. Some producers appear determined to take the issue to the EU competition authority, noting priority rule exemptions can only be made for RES, Combined Cooling, Heat and Power (CCHP) and hydropower units.

 

Natural gas, LNG, CO2 right, wholesale power prices down

Besides lower oil prices in international markets over the past few days as a result of the coronavirus spread and price war between Saudi Arabia and Russia, energy commodities across the board are under great pressure, which has led to price reductions for natural gas, CO2 emission rights and electricity.

Lower oil and gas prices are offering relief for the economy and enterprises. However, there are two sides to this story, positive and negative. On the one hand, the price drops are creating opportunities for suppliers and consumers, while, on the other, natural gas futures indicate a decline until the end of the third quarter this year, meaning markets anticipate a downward trajectory in Chinese consumption and no sign of an economic rebound until at least September.

Prices at the Dutch trading platform TTF, a key index for LNG, slid to a three-month low on Monday, registering 8.627 dollars per MMBTU, before edging up to 8.993 dollars per MMBTU yesterday. This index has fallen 39.4 percent since the end of December’s three-month peak of 14.2 dollars per MMBTU.

Besides shaping LNG prices, according to new pricing formulas adopted at Gazprom, the TTF also greatly influences the rise of Russian pipeline gas.

CO2 emission right prices have fallen by 13.6 percent between December and early February, from 26.74 euros per ton to 23.11 euros per ton. A slight rise has been registered this week, to 23.25 euros per ton on Monday and 24.07 euros per ton on Tuesday. Lower prices on this front are favorable for lignite-fired power stations as well as energy-intensive industries.

Prices have also fallen in Greece’s wholesale electricity market. In the day-ahead market, the System Marginal Price (SMP) fell from 49.2 euros per MWh on Friday to 41.42 euros per MWh on Monday before edging up to 43.12 euros per MWh yesterday. A rise to 50.44 euros per MWh is expected today.

 

Independent players want clauses for cost factors other than the SMP

Supplier cost clauses should not be limited to the System Marginal Price (SMP) as various other wholesale market factors influencing the overall cost should also be taken into account, independent electricity suppliers have agreed in a related public consultation procedure completed yesterday.

Previously, RAE, the Regulatory Authority for Energy, proposed the implementation of a standardized SMP as the only permissible clause, the objective being to simplify consumer price comparisons of supplier offers.

Though independent suppliers do not want their supply term clauses limited to the SMP, they acknowledge this factor remains relevant under the current system, ending mid-way through 2020 with the arrival of the target model.

Suppliers believe some time will be needed for observations concerning the SMP’s replacement, including day-ahead market prices.

Also, the target model’s new markets will bring about significant supply cost changes that cannot be calculated at present, suppliers noted in the public consultation procedure.

Though PPC has asked that its contribution to the public consultation procedure not be published, the utility’s opposition to the cancellation of a CO2-related clause it applies is already widely known.

Authority wants to end virtually all power bill price clauses

RAE, the Regulatory Authority for Energy, has prepared a plan aiming to abolish all price-related clauses included in electricity bills except for one linked with fluctuations of the System Marginal Price (SMP), or the wholesale electricity price, sources have informed.

The overall objective of this plan, which could be forwarded for public consultation within the next few days, is to offer full transparency to consumers on procedures determining their electricity bill costs.

An existing clause enabling electricity suppliers to revise prices in accordance with CO2 emission cost levels would need to be abolished if the plan is implemented. Power utility PPC has already triggered this clause in reaction to rising CO2-related costs.

The existing SMP clause, currently triggered by all suppliers except for PPC, will be subject to strict rules, enabling consumers to know the cost of their bills with simplicity and precision by  factoring the SMP price into a formula for an immediate result, according to the RAE plan.

The complexity of the current billing system makes it difficult for consumers to make safe comparisons of supplier offers.

Higher-cost lignite sidelining gas units a Greek market paradox

Greece’s wholesale electricity market is still adjusting as, despite sharp rises in CO2 emission right costs, lignite continues to play a leading market role. Contributions from lower-cost gas-fueled generators remain subdued.

A recent drop in temperatures around the country has led to wholesale electricity market demand peaks of more than 7,500 MW since the beginning of December, up from previous demand peaks ranging from 6,000 to 6,100 MW.

According to the energy exchange’s day-ahead market data, virtually all of the power utility’s coal generators are contributing to distribution without operating at full capacity. Instead, they are running at minimum levels. This is reducing the need for gas-fueled generators.

Yesterday, PPC’s Agios Dimitrios III, IV and V, Kardia III and IV, Amynteo I and Meliti all operated at minimum levels, while the contribution of gas-fueled generators was kept to a minimum. Sidelined units included Heron, ENTHES, Aliveri and Komotini, while Protergia and Korinthos Power units contributed only during peak demand hours.

The picture for today remains unchanged with the System Marginal Price (SMP), representing the wholesale price, at 63 euros per MWh, as was the case yesterday. Before the recent increase in demand, SMP levels ranged between 50 and 55 euros per MWh.

Power grid operator IPTO, offering an explanation for the ongoing dominance of coal over gas, despite the rising demand in the wholesale market, noted that turning off and withdrawing a lignite-fired power station – except for telethermal units – costs more than leaving a gas-fired power station sidelined without distribution input.

For PPC, the objective is to maintain the SMP at low levels as the utility is required to purchase energy from the pool given its big market share in supply and smaller share in production.

Suppliers face tougher times, NOME benefits ending

The termination of NOME auctions in Greece leaves independent suppliers with enough lower-cost wholesale electricity to fully cover their needs until the end of the year but the subsequent gradual change of market conditions can be expected to begin taking effect as of January when the suppliers start being exposed to the wholesale market.

By March, 2020, suppliers will be fully exposed to the System Marginal Price (SMP), practically meaning the sector’s course will depend on the course of the wholesale market.

If LNG prices remain low to contain the SMP level, then independent retail electricity suppliers should avoid losses despite their wholesale market exposure and, as a result, will be able to compete against the power utility PPC for market share gains.

For many companies, as much as 50 percent of their profitability has been derived from trading lower-cost NOME electricity, primarily as an export product to neighboring markets. In certain cases, significant profits earned through this trading activity enabled aggressive pricing policies in the domestic market, especially the mid-voltage category.

The new market conditions will make electricity export activity more challenging as earnings will be lower. Greater exposure to SMP risk will create problems. The triggering of SMP clauses will require consumers to pay greater amounts and independent suppliers will be less competitive against PPC.

An increase of the SMP level would put some suppliers who have offered relatively low-cost mid-voltage supply contracts in the unpleasant position of needing to maintain supply to customers at below-cost levels. Mid-voltage prices offered by independent suppliers have risen in recent times but are still below those of PPC.

The tougher conditions amid a fluid market of more than 20 retail suppliers in electricity and gas – of which no more than 12 hold market shares of consideration – promise to narrow down the field.

Three takeover and merger agreements have already been reached over the past year or so, beginning with Motor Oil’s acquisition of NRG, followed by a transfer of Green’s client list to Heron, and, just days ago, Volton’s acquisition of KEN.

 

 

 

Sharp rise in wholesale, CO2 right costs behind tariff hikes

Increased System Marginal Prices (SMP), or wholesale electricity prices, and CO2 emission right costs are key factors behind the power utility PPC’s substantially higher operating costs, negative impact on the corporation’s financial results, and the resulting need to increase electricity tariffs, the utility’s new chief executive Giorgos Stassis is expected to underline at a board meeting tomorrow.

PPC’s pricing strategy and policy is shaped by a series of factors concerning the overall production and trade cost estimates of the vertically integrated company, the chief executive’s address is expected to stress.

The wholesale electricity price average for 2019 is estimated at 67.15 euros per MWh, up from 60.33 euros per MWh in 2018 and 54.70 euros per MWh in 2017, according to official industry data. A further rise, to 70.33 euros per MWh, is expected in 2020.

The CO2 emission right cost average for 2019 is projected to be 25.70 euros per MWh, a sharp rise from 14.68 euros per MWh in 2018 and 5.84 euros per MWh in 2017, according to the industry data. This cost is expected to escalate further, to 30.25 euros per MWh, in 2020.

Cost of green energy continuing decline, industry data shows

RES auction prices have dropped considerably, both for solar and wind energy, driving green energy prices to levels below the System Marginal Price (SMP) for longer periods, the results of the latest auction, staged on Monday, have confirmed following similar results in 2018.

A price level of 78.42 euros per MWh for output by solar facilities with capacities of less than 1 MW at the RES auction in July, 2018 was less than the SMP for 2.9 percent of the total time elapsed until that stage in the year.

Six months later, at a RES auction in December, 2018, the price for this category dropped to 66.66 euros per MWh and was lower than the SMP for 32.2 percent of the year’s total time.

The trend is similar in the wind energy sector. In the category for wind energy facilities with capacities of between 3 and 50 MW, the RES auction price fell from 69.53 euros per MWh to 58.58 euros per MWh between July and December in 2018. The SMP was greater than auction prices for 19.7 and 59.2 percent of the time, respectively.

Record high NOME auction price seen this Wednesday

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.

CO2 emission right, LNG spot market and wholesale prices all rising

A series of energy exchange price rises over the past few days has increased electricity production costs, a development expected to impact wholesale prices both in Greece and abroad.

A rise in natural gas price rises, particularly LNG spot markets, ranks as the sector’s biggest price-related development. This rise was prompted by price hikes at the British and Dutch gas hubs following reduced inflow from the Norwegian pipeline.

Higher European prices have also led to LNG price increases in Asia, up by 10 cents to 4.5 dollars per MMBTU for orders to be delivered in May.

Even so, it should be noted that LNG prices have remained below the 5-dollar level, an all-time low.

Many companies and production terminals have begun maintenance work at facilities now that the winter season has passed.

Besides natural gas prices, CO2 emission rights have once again hit an upward trajectory. Last week, price levels exceeded the 24-euro per ton level, reaching 24.53 euros per ton on Friday, but eased slightly yesterday to 24.25 euros per ton. Industrial enterprises are stocking up on CO2 emission rights, fearing a further escalation in prices.

CO2 emission right prices last dropped to below 20 euros per ton on February 26 before exceeding this benchmark throughout March, the month’s peak being 23.18 euros per ton.

These developments are expected to impact wholesale electricity prices. The average System Marginal Price (SMP) in Greece was 69 euros per MWh in February and remained at elevated levels in March. The SMP level reached 71.6 euros per MWh last Friday but has eased to less than 70 euros over the past couple of days, according to day-ahead market data.

 

Fixed electricity tariff option for consumers being prepared by RAE

RAE, the Regulatory Authority for Energy, is preparing to present, any day now, proposals whose implementation will require the country’s retail electricity suppliers to offer consumers the choice of fixed tariffs as an alternative to flexible tariffs linked to clauses permitting revisions in line with cost shifts.

The authority is making final touches to new electricity supply terms to be forwarded for a public consultation procedure that may begin next week.

RAE was prompted to reach a decision requiring all electricity suppliers to offer fixed tariffs as an electricity-bill option following numerous complaints by customers facing inflated power costs as a result of decisions by retail electricity suppliers to trigger clauses enabling tariff hikes as a means of covering elevated wholesale prices.

This clause, one of numerous agreement terms presented to customers, has caught most consumers by surprise.

According to the RAE plan, consumers will be offered a choice between fixed electricity tariffs,  presumably at relatively higher prices and for a specific period of time, and flexible tariffs, initially lower but carrying fluctuation risk.

Besides increased wholesale prices, suppliers have also faced elevated CO2 emission costs.

Export limit among factors seen subduing NOME prices today

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.

Power consumers to be given fixed or flexible tariffs choice

The country’s retail electricity suppliers will be obligated to also offer consumers the choice of fixed tariffs as an alternative to flexible tariffs linked to clauses permitting revisions in line with cost shifts, including system marginal price (SMP) or CO2 emisson cost fluctuations, according to a plan being prepared by RAE, Regulatory Authority for Energy.

According to the RAE plan, consumers will be offered a choice between fixed electricity tariffs, presumambly at relatively higher prices and for a specific period of time, and flexible tariffs, initially lower but carrying fluctuation risk.

RAE decided to take action as a result of cost-related clauses introduced by electricity suppliers for protection against rising costs. Certain independent suppliers have already triggered clauses to combat sharp wholesale price increases.

The authority plans to soon launch a public consultation procedure ahead of regulation changes intended to make more transparent the pricing policies of all electricity suppliers, from the main power utility PPC to the independent electricity suppliers.

RAE also plans to reduce the public service compensation (YKO) rate imposed on nighttime electricity consumption.

 

NOME export revisions ahead, extra power amounts to be cut

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.

 

 

RAE inspecting legality of supplier clauses in fine print

RAE, the Regulatory Authority for Energy, is examining the legality of terms relegated to fine print in agreements offered by independent electricity suppliers.

A System Marginal Price (SMP) clause facilitating price hikes in the event that wholesale electricity prices exceed certain levels is a key concern.

The authority was prompted to conduct its inspection after the main power utility PPC announced its intention to follow suit and also implement clauses of its own concerning SMP and CO2 emission right price shifts.

Consumers have lodged complaints arguing such clauses remain vague,  making it unclear as to when they can be rightfully applied. Also, consumers argue they should not have to remain aware of the possibility of tariff shifts in their electricity supply agreements.

RAE is concerned electricity suppliers may be using such terms as a pretext for price hikes. The transparency of such moves is in question.

The energy authority has yet to reach any conclusions or decisions but an outcome is believed to be near.

RAE is also examining the lawfulness of a one euro print-and-mail surcharge just introduced by PPC for all of its electricity bills delivered through the conventional postage system.

The authority appears to share consumer group views seeing this new PPC surcharge as a mere electricity bill hike rather than an incentive for a switch to e-billing.

RAE has yet to also decide on this matter but authority officials have already suggested PPC should not have introduced the charge but, instead, deducted a one-euro amount from electricity bills of consumers opting for e-bills.

Electricity suppliers facing challenges despite good news

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 electricity export limit to be introduced for next auction

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

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.