Suppliers skip surcharge payment credit offer for May

Electricity suppliers have ignored a credit option made available by the energy ministry for 30 percent of regulated-charge payments to operators.

A gradual improvement in electricity-bill payment records by consumers, combined with the offer’s credit terms, generally deemed unappealing and risky, appears to have stopped suppliers from taking advantage of the measure.

Not a single electricity supplier chose to utilize the credit offer for April-invoiced  surcharge payments to power grid operator IPTO by a May 15 deadline.

Surcharges included in energy bills are paid by consumers and then relayed by suppliers to operators.

Suppliers showed little interest in the offer a month earlier. Just four suppliers chose to utilize the credit offer for March surcharge payments due in April.

The energy ministry acted swiftly to prepare and introduce this credit offer as a cash-flow relief measure amid fears of major energy-bill payment delays by consumers.

Consumers have improved their energy bill payment records over the past few weeks following a deterioration early in the lockdown. This upward trajectory has so far spared suppliers of cash-flow dramas.

Deferred surcharge payments must be settled four months down the road, along with any other existing obligations, according to the ministry’s credit offer extended to suppliers. They have adopted a cautious stance, fearing debt accumulation.

According to some sources, a number of suppliers have chosen to informally delay their relay of surcharges to the operator rather than take up the credit offer.


Suppliers leaving credit offer on regulated charges for later

Electricity suppliers appear to be leaving a credit-availability option covering 30 percent of regulated-charge payments to operators for tougher times.

Just four suppliers have advantage of the measure since it was introduced by the government about a month ago to ease the pressure on suppliers of payment obligations to power grid operator IPTO, energypress sources informed.

Despite needing to deal with bigger electricity-bill payment delays by customers, suppliers, who depend on these payments to collect surcharges and relay the amounts to operators, have yet to feel extreme cash-flow pressure amid the unfavorable market conditions, market officials explained.

Suppliers are fully aware of the fact that any regulated charges not paid now will need to be settled four months down the road, along with other obligations at the time.

This threat is making suppliers tread carefully at present to avoid an accumulation of future payments too big to handle.

Suppliers must fully cover 70 percent of regulated charges, plus VAT, in order to qualify for the credit offer covering the other 30 percent.

PPC chief supports use of CO2 clause, simplification expected

Power utility PPC’s chief executive Giorgos Stassis has defended the company’s need to maintain a CO2 cost clause included in its electricity bills as protection against emission cost increases, at a meeting with RAE (Regulatory Authority for Energy) officials.

The authority is working on revisions aiming to simplify electricity-bill clauses for greater transparency to household and business consumers.

Numerous complaints have been made by customers feeling confused by the current terms. RAE wants to establish terms enabling clearer price comparisons of supplier terms.

PPC’s right to maintain its CO2 clause has been questioned. At the RAE meeting, held yesterday as part of ongoing public consultation, the power utility’s chief contended creditor banks insist on the measure’s maintenance, adding its cancellation would require further electricity tariff hikes.

RAE may decide to continue permitting CO2 clauses once the target model is introduced, according to sources. If so, the current format will be revised to  offer consumers clarity, the authority has already stressed. Decisions are expected in about two weeks.

PPC counting on three extra revenue sources for financial rebound in 2019

The main power utility PPC will be counting on three sources promising additional revenues worth well over 400 million euros for a return to profit territory in 2019, as was recently forecast by the utility’s CEO Manolis Panagiotakis.

PPC will be spared of its supplier surcharge contribution to the RES special account in 2019 as this obligation has been cancelled for all suppliers. PPC provided 196.3 million euros of supplier surcharges in 2018. In addition to this favorable development for PPC, the power utility also stands to receive 100 million euros in returns from the RES special account, the lion’s share of a 121 million-euro surplus in 2018.

Moving on from the supplier surcharge-related benefits, PPC can look forward to additional revenues of roughly 60 million euros as a result of its decision to reduce a punctuality discount offered to consumers paying their electricity bills on time to 10 percent from 15 percent.

PPC can also anticipate roughly 200 million euros from public service compensation (YKO) returns planned for this year.

On the downside, PPC faces higher CO2 emission right costs. They ranged from 14.48 to 25.57 euros per ton last year and have escalated to levels between 18.94 and 27.53 euros so far this year.



Pending revision stopping supplier surcharge returns

A decision by the energy ministry to return a supplier surcharge amount worth approximately 120 million euros to electricity suppliers as a result of a RES special account surplus in 2018 has yet to be executed because a legislative revision needed following a RES market operator name change from LAGIE to DAPEEP has yet to drafted and ratified.

These surcharge returns to suppliers are not expected to happen any time soon and will most certainly not be incorporated into first-half financial figures, according to sources.

As the dominant electricity retailer, the main power utility PPC expects to receive the bulk of this total, estimated at 100 million euros.

A law enabling the surcharge return to suppliers was ratified before the name change at the RES market operator and does not include its new title as DAPEEP.

RAE, the Regulatory Authority for Energy, has refused to take any steps unless this complication is resolved.

The surcharge returns to be returned to suppliers for 2018 total 121.12 million euros following the deduction of a 70 million-euro safety reserve required by law.

Calculations also still need to be made concerning pending smaller amounts of previous years.

The overall delay has further unsettled RES producers, experiencing increased payment delays for their output since last summer.

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.


Energy Exchange prompts 62.23% supplier surcharge reduction

The establishment of the Greek Energy Exchange has led to a significant 62.23 percent reduction of the supplier surcharge, related budget data covering June 19 to June 30, has shown.

The figures are based on supplier operating costs for 2018 submitted by the Greek Energy Exchange to RAE, the Regulatory Authority for Energy, which has yet to offer its endorsement.

The supplier surcharge reduction is expected to be revised to 55.16 percent once other regulations are imposed.

The Greek Energy Exchange is expected to make corrections, if needed, following RAE’s approval of the figures.

Gas market, NOME, supplier surcharge bailout’s remaining energy issues

The country’s NOME auctions will not be changed so as to adjust to the main power utility PPC’s hydropower output, energy mnister Giorgos Stathakis has made clear ahead of next week’s arrival to Athens by the troika for another round of bailout negotiations.

Though the issue has already been tabled at a technical level, the Greek side has rejected throughts by Brussels technocrats to increase the role of hydropower output at the NOME auctions. They are held with the aim of opening up the retail electricity market and offering third parties access to PPC’s lower-cost lignite and hydropower sources.

On the contrary, talks between the government and lenders concerning RES sector funding, the opening up of the natural gas market and privatization of DEPA, the public gas corporation, remain unsettled.

The government will enter next week’s talks with the aim of replacing the RES-supporting supplier surcharge no sooner than 2019. No further supplier surcharge changes are planned for this year following a recent decision reducing this charge by 35 percent, according to the ministry.

The introduction of so-called green certificates in 2019, through the energy exchange, is currently being examined. Suppliers will purchase green certificates, which will constitute competitive forms of compensation for RES producers.

According to the energy minister, the RES sector is driving down wholesale electricity prices and, therefore, this effort needs to be paid for by suppliers.

The energy ministry has ruled out any chance of a RES-supporting ETMEAR surcharge increase on consumer bills.

As for the natural gas market, DEPA and Shell have reached an agreement on the former’s acquisition of a 49 percent stake held by Shell in their EPA Attiki supply venture covering the wider Athens market. DEPA already holds a 51 percent stake.

Also, Italy’s Eni, currently holding a 49 percent stake in EPA Thessaloniki-Thessaly, will gain full control of this supply venture following a deal with DEPA, until now the majority partner with a 51 percent stake.

An agreement between the government and lenders on DEPA’s privatization is pending but may now proceed following the aforementioned developments. The energy ministry has prepared a proposal entailing the formation of a holding company, part of which will be eligible for a bourse listing.

According to the plan, the holding company will include three subsidiaries, one responsible for the DEPA networks, a second for commercial affairs, and a third for international natural gas projects. A strategic investor will be able to enter the subsidiaries, especially the one controlling commercial matters.

It is unclear what amount this model could inject into the country’s privatization coffer. The higher-than-expected sale price achieved just weeks ago for a 66 percent stake of DESFA, the natural gas grid operator, which fetched 535 million euros, well over a budgeted amount of 400 million euros, has provided the energy ministry with more negotiating space concerning its DEPA sale plan. TAIPED, the state privatization fund, expects 250 million euros from this sale.