Government looking to expand eligibility for electricity subsidies

Taking into account the rising energy costs and potential repercussions on society, the government is seeking to make revisions that would make more households eligible for subsidized electricity through the Social Residential Tariff (KOT) program.

The administration is looking to loosen KOT-related income and property criteria for the entry of several hundred thousand more households to the program.

The government also aims to increase the KOT subsidy program’s discount rates for electricity, currently ranging between 45 and 60 percent, depending on income levels, property assets and electricity consumption levels.

Under the current criteria, 450,000 households are eligible for electricity subsidies through the KOT program.

Additional funds are believed to be available to make the subsidies available to a greater number of households, but the finances may not suffice to cover the full extent of the expansion sought by the government.

PPC tolerance for high-profile debt over, confiscations on way

Power utility PPC, burdened by unpaid receivables worth 2.7 billion euros, appears to have run out of patience with customers owing sizable electricity bill amounts despite having been assessed as financially capable, if not affluent.

The utility intends to set an example by pushing ahead with a high-profile case involving the owner of a 972 square-meter mansion in Kifissia, an up-market northern suburb of Athens, who will face asset confiscation procedures if a 24,000-euro amount owed to PPC is not settled immediately.

The owner of this property has ignored related court decisions and also applied illegal means to qualify for a subsidized electricity program (KOT) normally reserved for underprivileged households.

The case was disclosed by PPC’s outgoing chief Manolis Panagiotakis in 2017.

An investigation launched by PPC a couple of years ago led to the discovery of many other such cases involving property owners in various up-market parts of Athens who have secured unwarranted electricity bill subsidies and refused to pay bills.

Some 60,000 households are responsible for 800,000 euros of PPC’s unpaid receivables, the newly appointed energy minister Costis Hatzidakis noted recently while presenting his ministry’s program.

 

Consumer surcharge hike for 2019 probably not needed

RAE, the Regulatory Authority for Energy, currently calculating the year’s electricity supply costs associated with operating expenses of diesel-fired power stations on non-interconnected islands and social residential tariffs (KOT), believes an increase of a RES-supporting YKO surcharge paid by consumers through electricity bills will not be needed, initial authority estimates have indicated.

Though DEDDIE/ HEDNO, the Hellenic Electricity Distribution Network Operator, is responsible for delivering these figures to the energy ministry, RAE has begun making calculations of its own for expenses in 2018 and an expenditure projection for 2019.

RAE is seeking to determine if current tariff-related revenues cover electricity supply expenses or, if not, whether additional national budget support will be needed.

Last year, the government ratified legislation permitting subsidized electricity amounts – offered to underprivileged households – of between 40 and 85 million euros, annually, from 2018 to 2022.

Updated RAE data has also shown that the main power utility PPC stands to receive an extra sum of roughly 20 million euros in addition to 375 million euros received for 2014 to 2016. PPC insists it should receive an additional 360 million euros for this period. RAE has rejected the claim and PPC has taken its case to the Council of State, Greece’s Supreme Administrative Court.

RAE is expected to finalize its calculations towards the end of the month.

 

 

One third of PPC’s 7.1m consumers behind on power bill payments

A sweeping campaign launched by the main power utility PPC with the aim of reducing overdue electricity bill amounts owed by consumers through extrajudicial initiatives, power supply cut threats and pressure for monthly installment payback arrangements has reduced the utility’s unpaid receivables sum by approximately 140 million euros during the first seven-month period of 2018.

This result remains unsatisfactory given the alarming size of PPC’s unpaid receivables sum.

A total of 390,000 power-cut orders concerning overdue electricity bills worth a total of 630 million euros needed to be issued by PPC between January and July this year before it could collect the 140 million-euro amount.

A total of 150,000 of these power-cut orders were followed through. Households eligible for subsidized electricity through the Social Residential Tariff (KOT) program may have been among the affected, even though they are normally protected from power supply cuts.

PPC reported an unpaid receivables reduction in its presentation of first-half results, down to 2.399 billion euros on July 31 from 2.536 billion euros at the end of 2017. The amount concerns 2.3 million supply connections, nearly one third of PPC’s 7.1 million in total. Some 1.5 million consumers owe amounts of up to 1,000 euros.

Many consumers being pursued by PPC for unpaid power bills have switched suppliers or changed tax file numbers, which has made the chase more difficult. One quarter of PPC’s customers are registered on the company’s books without tax file numbers. It remains unclear how this was achieved.

Numerous households excluded from subsidized power program

Thousands of underprivileged households eligible, until recently, for subsidized lower-cost electricity through the Social Residential Tariff (KOT) program have been left without electricity for periods ranging from hours to days as a result of their failure to submit renewed application forms earlier this year.

Though KOT qualification standards have been toughened up through stricter income and property criteria, prompting KOT disqualification for many previous beneficiaries, numerous households were rejected as they failed to submit new application forms this year by an April 30 deadline.

No official figure has been provided but it is estimated that some 250,000 households have been excluded from the KOT program since the April deadline.  Households still not reinstated have been granted the right to reapply for subsidized electricity between October 30 and November 30.

Previously eligible parties were ousted from the subsidy program during a cross-examination of data maintained at the main power utility PPC and the finance ministry’s Independent Authority for Public Revenue (AADE), which administers income data for the KOT program.

Besides being deprived of a 40 percent electricity tariff discount offered through the program, affected parties have also found themselves unprotected from power supply cuts. KOT households are protected from power cuts.

 

Lenders want full KOT, YKO details for bailout’s 4th review

No pending energy-sector issues stand in the way of the bailout’s third review, now being finalized, but, during the program’s upcoming fourth and final review, the country’s lenders are expected to press for details as a means of preventing a repeat of various energy-sector account deficits, as experienced with the public service compensation (YKO) and Social Residential Tariff (KOT) accounts.

Miscalculations prompted a need for the return of older public service compensation amounts to the main power utility PPC, which had been burdened by these additional costs for years as the fear of political cost had stopped a succession of administrations from making needed adjustments.

According to energypress sources, the lenders have requested, from the Greek government, a full analysis of recent social residential tariff revisions and the impact of these on the public service compensation account.

The government has decided to broaden the coverage of its social residential tariffs,   supporting struggling households with subsidized electricity, to 1.35 million households from a previous total of 680,000.

A small public service compensation account deficit is expected to be produced this year as a result of favorable revisions for consumers. Greek officials argue that public service compensation costs will decline in the near future as a result of the development of the Cyclades and Crete interconnection projects. The lenders want details on these calculations.

Public service compensation surcharges are included on electricity bills to cover elevated electricity generation costs on non-interconnected islands.

 

RAE set for PPC, IPTO, HEDNO decisions following hearings

RAE, the Regulatory Authority for Energy, plans to discuss payment delays by the main power utility PPC towards IPTO, the power grid operator, and HEDNO, the Hellenic Electricity Distribution Network Operator, at a board meeting tomorrow, the aim being to take decisions in the immediate future, energypress sources have informed.

These payment delays, determined following a series of hearings held by RAE, summoning PPC, IPTO and HEDNO officials, were meant to be dealt with far sooner, but understaffing problems at the authority slowed down the process.

Various developments that have taken place in the meantime will be taken into account tomorrow.

RAE’s efforts, on the matter, have focused on an accumulation of overdue amounts owed by PPC to the two operators. The utility has attributed these delays to its poor cashflow, stemming from the mass of unpaid electricity bills by consumers.

RES sector officials have criticized PPC for withholding electricity bill sums received from consumers – meant to be relayed to cover a RES-supporting ETMEAR surcharge, a network surcharge and other obligations – in order to service its own corporate needs.

IPTO is also under the RAE spotlight for not having maintained books to keep a record of revenues and expenses influencing Public Service Compensation (YKO) levels paid by consumers to support electricity generation on the non-interconnected islands as well as the Social Residential Tariff (KOT) program.

During the preceding RAE hearings, IPTO blamed a variety of technical issues and problems for its failure to keep YKO-related books.

Also, HEDNO, the electricity operator responsible for the non-interconnected islands, was summoned by RAE, during the hearings, to explain why it has not complied with sector regulations to prevent PPC from taking inappropriate action. Island-based RES producers have criticized PPC for unlawfully ofsetting ETMEAR-related sums and not relaying these to HEDNO, as it should.

 

 

Tariff discounts of up to 70% offered by new electricity subsidies program

The energy ministry has announced a revised Social Residential Tariff (KOT) program offering low-income households electricity tariff discounts of as much as 70 percent.

The ministry, in a statement released yesterday, described the initiative as “yet another intervention aiming to tackle energy poverty, especially for the country’s most vulnerable citizens.”

Two categories have been established for the new program. One will include households eligible for social solidarity welfare funds (KEA), to be offered electricity tariff discounts of 7.5 cents per KWh, reducing the regular rate of approximately 13 cents per KWh to 5 cents per KWh, a 70 percent discount.

The second category, to group households eligible for the government’s recently announced social dividends, will offer discounts of 4.5 euros per MWh. This represents a discount of approximately 35 percent.

In its announcement, the ministry noted the criteria to be applied for eligibility will not only include household income levels but property ownership as well. The intention is to maximize the new plan’s level of fairness and sustainability.

 

 

Funding of broader subsidized electricity plan still unclear

A government plan to make available lower-cost electricity, through the Social Residential Tariff (KOT) program, to the country’s 1.35 million households eligible for recently announced social dividends has raised questions as to how this widened coverage can be funded.

The energy ministry has indicated the new and revised KOT plan will exclude less desperate households and multi-member families possessing property in order to avoid any fiscal impact. The results of this approach remain to be seen.

Approximately 680,000 households are currently eligible for KOT support, a figure that roughly represents  just half the number expected to benefit under the revised plan.

In the past, KOT coverage expansions for households in need have inevitably led to hikes of an YKO surcharge imposed on electricity bills to support subsidized electricity offers as well as higher-cost power generation on Greece’s non-interconnected islands.

It also remains unclear how the reduced cash inflow of a government plan to exempt households receiving social solidarity welfare funds (KEA) from network usage and distribution surcharges will be covered. At present, 300,000 households receive KEA support but the number is rising. According to the government plan, this group will be offered electricity tariff discounts of 7.5 cents per KWh, reducing the regular rate of approximately 13 cents per KWh to about 5 cents per KWh.

Under the new plan, KOT-eligible households – the biggest sub-group of underprivileged households, numbering 1.35 million in total, as mentioned above – will be offered tariff discounts of 4.5 cents per KWh, which, once deducted from the regular tariff rate of approximately 13 cents per KWh, will establish a reduced price of around 8.5 cents per KWh, representing a 35 percent discount.

Independent suppliers are not expected to see any market opportunities in the expanded KOT plan as KOT-eligible households include consumers who often fail to service their electricity bills.

According to data reported last month by PPC chief executive Manolis Panagiotakis, over 340,000 KOT-eligible households being supplied by the utility have fallen behind on electricity bill payments worth a total of 350 million euros.

 

Stronger energy poverty support measures on the way

The energy ministry plans to announce, over the next few days, a series of revised measures aiming to offer additional energy poverty support.

This package is expected to include revisions to the Public Service Compensation (YKO) formula, preventing excessive tariff charges for high electricity consumption levels; a revised Social Residential Tariff (KOT) offering subsidies for lower-cost electricity to underpriviledged households; as well as funds to finance reconnection costs for struggling households whose electricity supply has been cut.

The ministry has been working on various measures for quite some time now but has held on to announce them all as one package.

The new Public Service Compensation (YKO) formula is intended to rectify distortions caused by the current plan. Its four existing consumption-based tariff categories are expected to be reduced to three. The imposition of higher tariffs will be limited to additional consumption amounts exceeding upper limits. At present, higher tariffs are applied to entire consumption amounts.

The current formula’s main problem concerns the 0-1,600 KWh category, which applies to nearly 95 percent of consumers. As a result of last winter’s particularly cold weather, consumption levels registered by most households exceeded the 1,600 KWh category. The next highest category’s tariff was applied to calculated the entire consumption amount. Under the new formula, higher tariff charges will apply only to consumption amounts exceeding upper limits of previous categories.

According to energypress sources, households can expect to save approximately 50 euros during the entire winter season.

The Public Service Compensation (YKO) surcharge is imposed on electricity bills to primarily subsidize high-cost electricity production on Greece’s non-interconnected islands and also support the Social Residential Tariff (KOT) program.

Under the new measures, struggling households eligible for the KOT program will be offered tariff discounts of as much as 70 percent. Property and income criteria are used to select eligible parties. Bank deposits, bonds and shares are now also expected to be taken into account under the revised KOT system.

As for electricity reconnections concerning underpriviledged households, the energy ministry will offer a ten million-euro sum enabling consumers to reconnect and be offered a second chance to service outstanding electricity bill amounts.

 

 

Property upper limit proposal for subsidized electricity too low

The energy ministry is considering increasing a property value upper limit prerequisite for households wishing to qualify for the Social Residential Tariff (KOT) program, offering subsidies for lower-cost electricity.

A property value upper limit of 150,000 euros proposed by energy minister Giorgos Stathakis in parliament last week is now regarded as being too low and, as a result, could be raised to a level of between 190,000 and 200,000 euros, energypress sources have informed.

This elevated upper limit criterion would enable more households to qualify for the KOT program.

Calculations made at the energy ministry have indicated that implementing the minister’s initial proposal would eliminate 20 percent, or 340,000, of prospective new beneficiaries.

According to the existing KOT program criteria, households, besides the property ownership factor, must also meet an income criterion requiring annual family incomes to not exceed upper limits that range between 12,000 euros and 23,500 euros, depending on the number of children.

Individuals who have been unemployed for periods of at least six months and whose annual family incomes do not exceed 12,000 euros are also entitled to electricity subsidies. So, too, are handicapped persons whose family incomes total no more than 23,500 euros per year. The KOT program is also available for persons dependent on domestic use of medical equipment if their family incomes do not exceed 30,000 euros per year.

 

IEA, Brussels pushing for end to subsidized electricity program

The International Energy Agency (IEA), in its latest report on Greece, presented today, has proposed the elimination of energy sector subsidies such as the Social Residential Tariff (KOT) program offering subsidized, lower-cost electricity for underpriviledged households.

The IEA report also includes a proposal from the European Commission for the elimination of the social residential tariff program for electricity, according to the energy ministry’s secretary general Mihalis Veriopoulos. Greece, along with Italy and Spain, facing equivalent demands, all oppose the proposal, he added.

Veriopoulos informed that an agreement has been reached for the KOT program’s elimination in ten years, not five, as was originally proposed.

The IEA’s executive director Fatih Birol, noted, during the report’s presentation, that support for vulnerable social groups should not be provided through subsidized electricity tariffs but alternative tools instead, possibly tax-based.

“The subsidization of tariffs is not an appropriate method for reducing energy poverty,” noted Birol, who added that energy prices in Greece, compared to other countries, stand at average levels, both for electricity and natural gas.

KOT subsidies in Greece are accumulated through a surcharge imposed on electricity bills.

Greece, like all other IEA members, is examined every five years, Birol noted, adding that major achievements have been made while exceptional work is in progress.

The IEA head cited the high penetration rate of the RES sector, especially the PV sub-sector, in the Greek energy market, as well as the progress being made in the energy security domain through the construction of new pipelines such as the TAP gas infrastructure project.

The IEA head avoided expressing any specific views on matters such as an ongoing bailout-required procedure to lead to the sale of main power utility PPC units, or the utility’s hydropower monopoly.

Greece remains focused on its strategic objectives aiming for energy sector reforms and the RES sector’s market share increase, while the country intends to implement the Paris climate agreement, Greek energy minister Giorgos Stathakis stressed.

 

 

Greater discounts, stricter checks in making for social tariffs program

Many thousands of the 680,000 or so current beneficiaries being supplied subsidized discount electricity through a Social Residential Tariff (KOT) program are expected to no longer be eligible once new income and property ownership criteria come into effect.

Greater discounts as well as stricter qualification criteria and checks are being shaped at present at the energy ministry.

Energy ministry officials, in comments offered yesterday, said the new plan would offer greater focus on undepriveledged households. Besides income levels, property holdings as well as other assets, including bank deposits, will also be taken into account when determining KOT eligibility.

The KOT revisions are expected to be attached to a draft bill concerning the establishment of energy communities, offering decentralized, locally generated energy solutions. This bill is expected to soon be submitted to Greek Parliament.

The current KOT program offers eligible parties discounts of as much as 42 percent on regular main power utility PPC tariffs.

A proposal forwarded to the energy ministry last summer by RAE, the Regulatory Authority for Energy, recommends four discount levels of 20 percent, 40 percent, 60 percent and 80 percent. These could be offered based on criteria to be determined by the ministry.

Current beneficiaries expected to be disqualified from the KOT plan include affluent individuals who have found ways to sneak into and exploit the welfare program intended for needy households, as well as parties declaring low incomes but possessing sizeable property and bank deposit assets.

Details have yet to be released on the income and asset levels beneficiaries will need to satisfy in order to qualify for the revised KOT plan.

 

Electricity discount criteria for low-income groups changing

The energy ministry is working on revising property and income criteria applied to determine the eligibility of underpriviledged households for electricity tariff discounts, and levels, offered through the Social Residential Tariff (KOT) program.

RAE, the Regulatory Authority for Energy, has proposed discounts of 20%, 40%, 60% and 80%, depending on property ownership and income levels.

Certain households currently benefiting from the KOT program’s discounts will be disqualified while others will be added once the changes being prepared start taking effect over the next few weeks. The revised criteria are expected to be finalized by the end of September.

As part of the process, authorities are examining whether property owned by KOT applicants is contributing to their income levels. If not, then this criterion is not expected to hamper their discount applications.

The top-level 80 percent discount will be made available to numerous households living below the poverty line.

The overall KOT-related monitoring effort is being intensified to exclude less troubled, and in some cases, affluent households benefiting from electricity tariff discounts.

The KOT program’s cost is seen rising from its current annual amount of roughly 80 million euros to 100 million euros.

This electricity tariff discount program is financed by Public Service Compensation (YKO) surcharges included on electricity bills. The surcharges are also used to fund high-cost electricity generation at units operating on the country’s non-interconnected islands.

RAE has proposed that part of the total YKO cost be funded directly through the state budget. There has been no further news on this prospect.

RAE decision on YKO returns for PPC could prevent hikes

A decision reached last Friday by RAE, the Regulatory Authority for Energy, to limit the main power utility PPC’s Public Service Compensation (YKO) retroactive return, covering 2012 to 2014, to 360 million euros, well under the 735 million euros demanded by the utility, means that electricity consumers may not face any YKO surcharge hikes on their electricity bills.

The balancing out and settlement of older YKO-related amounts was added as a condition to the most recent bailout revision.

A number of other related issues will need to be settled if YKO surcharges for electricity consumers are to be avoided.

Firstly, the finance ministry must approve a request for special consumption tax (EFK) returns to PPC concerning fuel supply to power generation units operating on Greece’s non-interconnected islands. The finance ministry would need to deduct this amount from the national budget and seek an equivalent amount to cover the monetary gap.

Should local authorities manage to find the needed amount, it will need to be endorsed by the country’s lenders.

Also, if an YKO hike for consumers is to be avoided, PPC will need to accept RAE’s decision offering the utility a reduced public service compensation retroactive amount. PPC has made clear its intention to legally challenge any decision that does not satify its claim for 735 million euros. Any legal battle will inevitably complicate matters and lead to an ordeal impacting the RAE decision, and, subsequently, the public service compensation amounts that will need to be imposed on electricity bills.

The YKO surcharge is paid by consumers to primarily subsidize high-cost electricity production on Greece’s non-interconnected islands and also support the Social Residential Tariff (KOT) program offering underpriviledged households subsidies for lower-cost electricity.

KOT program revisions being planned to make more households eligible and also increase discounts will increase the cost of this subsidy program for non-eligible households by 150 million euros, RAE has estimated. The country’s lenders may consider this amount to be excessive and intervene to demand a reduction or even cancellation.

RAE public service compensation decision by Monday

RAE (Regulatory Authority for Energy) officials did not reach a final decision at a meeting yesterday on the authority’s proposal for revisions to the country’s Public Service Compensation (YKO) system, a bailout requirement. A decision is expected by Monday, the latest.

As part of the proposal, to be delivered to the energy ministry for endorsement, RAE also needs to deliver a decision on a main power utility PPC request for retroactive YKO returns from 2012 to 2014.

The amount to be endorsed for PPC is expected to end up being between 370 million and 400 million euros, well under the 735 million euros requested by the utility. PPC, which stands to receive the amount over a five-year period, is expected to strongly challenge such a payment decision.

Once RAE has forwarded its decision, the energy ministry will then need to make a final decision in autumn in preparation for legislative ratification, based on an agreement with the country’s lenders.

Revisions to the current formula determining YKO payments by consumers through an electricity bill surcharge are also expected, the objective being to offer a fairer overall system.

The YKO surcharge is paid by consumers to primarily subsidize high-cost electricity production on Greece’s non-interconnected islands.

RAE is also working on revisions to the Social Residential Tariff (KOT) program. Approximately 15 percent of households currently eligible for lower-cost electricity through this subsidies program are expected to no longer qualify once the revisions are made.

 

 

Public service compensation, subsidized power decisions on way

RAE, the Regulatory Authority for Energy, is expected to deliver its finalized proposal on the country’s revised Public Service Compensation (YKO) system, a bailout requirement, within the next few days. The energy ministry will then need to endorse the plan in autumn.

RAE held a meeting on the issue yesterday and will follow-up with an additional session today.

The main power utility PPC is expected to receive a Public Service Compensation (YKO) amount concerning 2012 to 2015 of between 370 million and 400 million euros, which is about half the 740 million euros initially demanded by the utility. PPC, which stands to receive the amount over a five-year period, is expected to legally challenge such a payment decision, meaning the YKO ordeal could be prolonged.

Revisions to the current formula determining YKO payments are also expected. Based on the current formula, for example, consumers who use 2,200 KWh of electricity during any four-month billion period are charged YKO on the entire amount rather than separate rates for the first 2,000 KWh and the exceess 200 KWh amount. Revisions to the current formula will lead to YKO account shortages. The rate imposed on consumption levels of either less than 2,000 KWh of over 3,000 KWh will need to be increased to offset this anticipated shortage.

The YKO surcharge is paid by consumers through electricity bills, primarily to subsidize high-cost electricity production on Greece’s non-interconnected islands.

RAE is also working on revisions to the Social Residential Tariff (KOT) program. Approximately 15 percent of households currently eligible for lower-cost electricity through this subsidies program are expected to no longer qualify once the revisions are made.

 

Car value a key criterion for lower-cost electricity applicants

The market value of cars owned by individuals and households applying for lower-cost electricity through the subsidized Social Residential Tariff (KOT) program will be factored in as a key criterion to determine whether they are eligible.

An upper limit in the value of respective car models owned by applicants will be included in KOT criteria revisions currently being prepared by RAE, the Regulatory Authority for Energy, for delivery to the energy ministry, energypress has been informed.

The car value factor will stand as a first-round test for KOT applicants. If passed, individuals seeking lower-cost electricity, reserved for the underprivileged but exploited by certain less needy households, will be subject to further criteria that already exist but may be slightly revised. These include income levels and property ownership.

Lower income groups are expected to be offered electricity discounts, protection from electricity supply cuts, as well as exemption from public service compensation (YKO) surcharges that are normally imposed on electricity bills, all as part of the government’s intention to offer energy cost relief to underprivileged households.

Electricity bill discounts are expected to reach as much as 90 percent of total amounts, depending on income levels, for a certain quantity of kilowatt hours required to cover basic needs.

RAE is striving to have the cost of this effort funded by the national budget rather than consumers, via the YKO surcharges included on their electricity bills.