RAE, the Regulatory Authority for Energy, looking for ways to ease the cashflow pressure felt by electricity suppliers in the energy crisis, is considering to reduce the level of guarantees they need to forward to the country’s operators – power grid operator IPTO, RES market operator DAPEEP, and distribution network operator DEDDIE/HEDNO – by revising a formula that determines these guarantee amounts.
However, certain independent, non-vertically integrated electricity suppliers remain apprehensive, fearing such a move could ultimately further increase the market strength of bigger rivals and push smaller players further aside.
At this stage, RAE is involved in talks with the market operators in an effort to determine if leeway exists for a reduction of the guarantees provided by suppliers.
RAE’s Aggeliki Mourtzikou, Director of the Wholesale Energy Markets Department, told the recent energypress Power and Gas Forum that the authority is moving carefully so that any intervention does not result in the creation of deficit figures whose side effects in the market could outweigh any short-term benefits concerning supplier cashflows.
The number of consumers seeking installment-based payment arrangements for energy bills has risen sharply, severely impacting the cashflow of suppliers.
A series of problems, especially disproportionately high and inelastic operator guarantee costs, are keeping independent suppliers out of non-interconnected island electricity markets, sources have informed.
DEDDIE/HEDNO, the electricity operator responsible for the islands, demands extremely lofty guarantees that are imposed at a standard level, a stark contrast to the flexible guarantees formula applied by IPTO, the power grid operator covering the mainland.
IPTO offers electricity suppliers guarantee reductions based on certain criteria such as number of years in business, solvency levels and number of customers.
As a result, the IPTO guarantee payment expected from PPC, the main power utility, ends up being approximately 20 percent of the total amount, while independent suppliers, smaller and newer, are expected to cover between 60 and 70 percent of the full guarantee amount.
On the contrary, flat guarantee amounts are demanded by DEDDIE/HEDNO on the islands, which leads to disproportionate amounts. For example, IPTO guarantee costs for suppliers serving 50,000 customers work out to costing no more than 3.5 million euros whereas DEDDIE/HEDNO guarantee costs for suppliers serving 5,000 customers on any of the non-interconnected islands reach 3 million euros.
Such conditions create barriers for suppliers aiming to enter electricity markets on non-interconnected islands, despite claims by authorities that these markets have opened for all.