Suppliers’ cross-checking debt system within first half of 2023

Electricity suppliers are preparing a collective cross-checking debt system for consumers in an effort to prevent further increases in energy debt created by customers switching suppliers and leaving behind unpaid electricity bills.

These customers with arrears are managing to avoid power supply cuts at their properties despite not having settled energy bills with previous suppliers.

The cross-checking system to be applied in the energy sector will be similar to one adopted by the telecommunications sector. A data base will be created, listing consumers with arrears and their overdue energy-bill amounts.

Electricity suppliers involved in the new system’s development estimate that it is still months away from being completed and launched but believe it will be ready for use within the first half of 2023.

The process to establish this new platform is time-consuming as, besides the IT required, approval is also needed from agencies such as the personal data protection authority.

Some suppliers have reported that up to 40 percent of their unpaid receivables have been created by customers switching from one supplier to another.

 

Electricity suppliers fear mass customer shifts with new rules

Electricity suppliers fear new market rules, to be launched tomorrow, could prompt a sharp increase in the number of consumers shifting from one supplier to another, and, while doing so, leaving behind unpaid electricity bills.

Under the current framework, between 20,000 and 30,000 customers are switching suppliers every month, but suppliers fear the new rules, suspending a wholesale price adjustment clause included in electricity bills, could greatly increase these shifts by breeding greater consumer insecurity.

Suppliers will now need to try and forecast energy exchange price levels for ensuing two-month periods, which has raised fears of further price rises as a safety measure for loss avoidance.

Consumers are entitled to change electricity supplier once a month, without any penalties, to secure the best deals in the market.

Electricity suppliers who have been abandoned continue to be deprived of the right to request power cuts for former customers who have left behind unsettled electricity bills.

Overdue electricity bill sums double over 6-month period

The prolonged energy crisis has led to a sharp rise in overdue electricity bills as consumers struggle to meet exorbitant energy costs, amounts owed now double the level compared to six months ago.

According to sector officials, electricity bills overdue for periods of between 45 and 75 days represent the majority of cases. In this category, the rise in overdue electricity bills is close to 400 percent, clearly indicating that an increasing number of households and businesses are finding it extremely difficult to cover energy costs and meet deadlines.

The category of electricity bills overdue for up to 100 days has also experienced an increase, but it is far milder, suggesting that consumers are making every effort to not exceed this period, driven by the fear of electricity supply cuts.

Also highlighting the increased pressure experienced in the market, the number of electricity consumers resorting to a universal supply service covering the power needs of black-listed customers with poor track records exceeded 167,000 in April, increasing by 19,000 since the start of the year.

Unpaid receivables rising, prompting vicious cycle

The level of electricity bill unpaid receivables is rising as a growing number of households and businesses struggle to keep up with extremely higher energy costs, a detrimental factor for the cash flows of suppliers, who, in turn, are finding it increasingly difficult to relay regulated fees – included in electricity bills – to the market operators.

A growing number of consumers are lodging complaints to RAE, the Regulatory Authority for Energy, over exorbitantly priced electricity bills they are encountering.

The government’s electricity subsidies being offered to consumers as energy-crisis support appear to be insufficient.

The vicious circle of events is challenging the energy market as a whole. In an effort to ease the overall pressure, the government intends to ratify legislation for the implementation of a price ceiling in the wholesale electricity market, but not until the European Commission makes an announcement covering the EU, expected next month.

 

 

Retail electricity market pressured, regulatory decisions crucial

The retail electricity market’s future shape very much depends on regulatory decisions and energy market policies that could be implemented, which, if unfavorable, could result in a greatly reduced number of suppliers, authorities have warned.

Suppliers are currently struggling as a result of cash flow issues prompted by delayed consumer payments and the pressure of meeting regulatory fee payments to operators.

Suppliers typically require capital amounts of between 60 and 70 million euros to purchase wholesale energy quantities and cover regulatory costs before receiving payments from consumers.

In comments offered at the recent Power and Gas Forum organized by energypress, Pantelis Biskas, professor at the Aristotle University of Thessaloniki, underlined the electricity market’s adverse conditions, brought about by the energy crisis and exacerbated by Russia’s war on Ukraine.

These adverse conditions are seriously affecting supplier cash flows and could lead to a major contraction of retail electricity suppliers, depending on upcoming policies, the professor noted.

Electricity suppliers dread new round of unpaid receivables

A rising wave of overdue electricity bills, highlighted by a sharp rise in the number of applications lodged by consumers for installment-based payments, is generating anxiety in the energy market as consumers face steep energy cost increases and suppliers battle against tightened cashflows while fearing a reemergence of unpaid receivables.

Consumers are now feeling the accumulative effect of an energy crisis that has lasted seven months and deteriorated since Russia’s recent invasion of Ukraine.

Consumer applications for installment-based payments have risen by more than 200 percent since September, 2021, generating fears of a new round of unpaid receivables, which would have a wider impact on the energy market’s stability.

The extent of the problem will become clearer in April when electricity bills are issued for consumption in March, a month during which wholesale electricity prices have skyrocketed to levels of approximately 300 euros per MWh as Russia’s war on Ukraine rages.

Many energy consumers who have so far managed to remain punctual with their payments could struggle to meet risen energy costs, energy company officials have informed energypress.

Prior to the energy crisis, the country’s annual electricity consumption of 55 TWh cost a total of nearly 3 billion euros, based on an average wholesale electricity price of 50 euros per MWh, several times below the current level of roughly 300 euros per MWh. If sustained throughout 2022, this price level would result in a national electricity bill of nearly 14 billion euros for the year.

RAE to publish lists of suppliers not owing surcharges, sector reacts

RAE, the Regulatory Authority for Energy, has informed the country’s electricity suppliers it plans to start publishing monthly reports listing suppliers who do not owe electricity-bill surcharge amounts to operators as well as suppliers who owe such amounts but have reached settlement arrangements through installment programs.

Electricity suppliers were informed of this initiative, based on a RAE board decision reached on February 10, in a letter forwarded by the authority.

Through this initiative, RAE aims to pressure electricity suppliers into relaying electricity-bill surcharges to operators on time.

A number of electricity suppliers have fallen behind on these surcharge relays, which highlights the growing pressure faced by the energy market, as a whole, amid the energy crisis. Cashflow has tightened up for suppliers, facing steep wholesale prices, and an increased number of consumers are struggling to meet energy bills.

The situation has officials worried that a new wave of unpaid receivables is in development.

Certain electricity suppliers and market officials have reacted against the RAE measure, noting it will create far bigger problems rather than the ones it seeks to resolve.

 

Electricity market unprotected from consumers with arrears

The country’s electricity market has been left without rules preventing consumers with power bill arrears from switching suppliers as a deliberate tactic to avoid payments.

A regulatory framework that would prevent consumers with arrears from switching suppliers has yet to be ratified, despite many months of deliberation.

Also, suppliers are now unable to request electricity supply interruptions for departing customers with arrears as a result of a revision made earlier this month to a related online platform managed by distribution network operator DEDDIE/HEDNO.

Sector officials have warned the absence of regulations offering suppliers protection against consumers with arrears could lead to a drastic increase in the number of consumers switching from one supplier to another, without repercussions, as a means of avoiding payments.

The energy ministry, which has hesitated to act, has been in possession of a related proposal from RAE, the Regulatory Authority for Energy, for several months now, following three rounds of consultation staged by the authority, the most recent round held eight months ago.

New warning from operator, owed over €120m by suppliers

Distribution network operator DEDDIE/HEDNO is preparing to reiterate a warning to RAE, the Regulatory Authority for Energy, highlighting unpaid receivables owed to the operator by the country’s electricity suppliers, owing, according to sources, more than 120 million euros.

The operator is expected to deliver a letter to the authority within the next few days that will provide details on respective amounts owed by suppliers, identify suppliers who are allegedly breaching payment rules on a regular basis, and also inform on the action the operator is preparing to take.

This latest warning from DEDDIE/HEDNO will be the second to be delivered to RAE this month. The operator had issued a first warning last October, while the issue was still nascent.

According to market regulations, RAE has the power to remove suppliers from the country’s registry of suppliers if they do not meet their financial obligations.

Smaller suppliers could find themselves in trouble as January’s further increase in electricity price levels could prompt a greater number of payment delays by consumers and, by extension, payments of surcharges by suppliers to operators.

At present, suppliers, both vertically integrated and not, are under cash-flow pressure as they anxiously await electricity bill payments by consumers.

PPC unpaid receivables down €100m in ’21, support a priority

Power utility PPC’s forthcoming financial results for 2021 will include a 100 million-euro reduction of unpaid receivables, compared to the previous year, according to energypress sources. The reduction concerns older overdue amounts, the sources added.

Despite this improvement in 2021, the ongoing energy crisis, which emerged late last year, in September, will make the current year challenging for energy consumers if price levels remain high.

PPC intends to place great attention to customer support in 2022, including maintenance of its discount policy, to help consumers overcome extremely higher electricity prices, company officials have stressed.

Consumers have been under increased pressure to meet the demands of energy bills since the outbreak of the energy crisis last September.

Unlike its rivals, PPC also offers discounts for monthly electricity consumption levels in excess of 300 kWh.

Electricity market pressured, new unpaid receivable fears

Electricity suppliers fear the emergence of a new wave of unpaid receivables over the next couple of months as an increasing number of consumers, pressured by sharply higher energy prices, are applying for installment-based payback arrangements and delaying payments.

A clearer picture on the energy crisis’ impact on the unpaid receivables figures of suppliers will emerge by the end of February, when payment records for consumption over the four-month period covering October to January will have been established.

Government compensation payments to suppliers for electricity subsidies offered to consumers, in an effort to ease the cost burden, have been slow, which, combined with delayed payments of electricity bills by consumers, has led to a cash-flow squeeze for suppliers.

Many consumers in both the household and business categories, whose energy costs this January roughly doubled compared to a year ago, are only partially covering electricity bill amounts. Energy costs for bakeries, specifically, have increased more than fivefold compared to a year earlier.

Energy bill pay arrangements double, renewing debt fears

The number of energy bill settlement arrangements has doubled, compared to just months ago, as thousands of consumers face growing pressure resulting from a relentless price surge over the past five months.

Electricity and natural gas bills including consumption for December, a month of record price levels since the start of the energy crisis, are now being received by households and businesses through the post and via emails.

Consumers, needing to dig a lot deeper into their pockets to cover more-than-double energy costs, as well as suppliers, forced to deal with tightened cash flow, are all feeling the strain.

State subsidies promise some relief for consumers and suppliers but the support is simply not enough to help them through the crisis.

Officials are concerned the situation could prompt a new wave of unpaid receivables, this time including the natural gas sector, not just electricity, which would trigger a destabilizing knock-on effect throughout the energy sector.

Measure to spare suppliers of interest payments to operators

A legislative revision prepared by the energy ministry will be designed to spare suppliers of having to pay interest on overdue amounts owed to operators as a result of unpaid receivables.

Suppliers will only need to pay interest on overdue amounts owed to operators in cases where court verdicts have ruled for the inclusion of interest payments.

The amendment concerns payments by power suppliers to power grid operator IPTO, distribution network operator DEDDIE/HEDNO and DAPEEP, the RES market operator.

 

Energy suppliers prepared to offer customers debt settlement options

Electricity and natural gas suppliers, anticipating that customers may struggle to cover exorbitant energy bill costs amid the current energy crisis, are adapting to the conditions and appear prepared to offer personalized debt settlement options to customers despite facing cash-flow issues of their own.

Suppliers are preparing to offer customized monthly installment options to customers, based on their financial profiles, energypress understands.

According to electricity market officials, payment records by customers remain unaffected for the time being, despite the sharp increase in tariffs.

Energy suppliers have faced growing cash-flow pressure as a result of rising wholesale prices, to unprecedented levels.

The energy ministry has announced support packages for electricity suppliers, expected by the end of the year.

Fears of energy market unpaid receivables rebound growing

Government as well as electricity and natural gas company officials appear increasingly concerned about a rebound in unpaid receivables at energy firms as a result of exorbitant energy price increases faced by consumers.

The scale of the ongoing energy crisis plus the inability of analysts to make confident price projections has government officials scrambling for solutions, including through EU action, that could lessen the energy cost burden for consumers and protect supplier cash flow.

During a meeting yesterday with European Commission Vice-President Margaritis Schinas, Greek Prime Minister Kyriakos Mitsotakis reiterated a European Commission proposal for revisions that could enable energy bill payments through installments.

According to sources, the Greek government could insist on a proposal made by energy minister Kostas Skrekas for the establishment of an EU transitional compensation fund, supported by CO2 emission right revenues, distributing amounts to member states as energy-crisis aid.

The Prime Minister suggested this proposal during his meeting with the European Commission deputy, who did not offer a direct response but indicated that a European solution would be sought during an EU summit scheduled for next week, sources said.

Support for energy consumers would also help the finances of suppliers, who, as a result, would be in a better position to offer energy bill payments through installments.

 

Energy bill unpaid receivables set to rebound, survey shows

The level of energy bill unpaid receivables appears destined to rise again, a survey conducted by GSEVEE, the Hellenic Confederation of Professionals, Craftsmen and Merchants, has shown.

According to its results, 16.5 percent of small and medium-sized enterprises have warned they will not be able to meet energy bill demands over the next six months.

This figure is slightly higher than the 15.2 percent of enterprises that have left behind bad debt for energy suppliers, meaning the overall level of unpaid receivables appears headed for a new rise.

The GSEVEE survey reported even more worrying results from the hospitality sector as it showed that roughly one in three eateries, or 30.9 percent, declared they expect to not be able to cover electricity or natural gas bills over the next six months.

Recent energy cost increases by suppliers and the threat of further hikes as a result of a combination of various factors in international markets threaten to place energy consumers under even greater pressure.

The energy cost hikes will have a knock-on effect throughout the market, increasing food, raw material and fuel prices, and, as a result, reducing disposable incomes and making payment of energy bills even more demanding.

The unpaid receivables issue that has troubled the domestic market over the past decade or so of recession had begun easing off prior to the pandemic.

Power utility PPC, holding the lion’s share of the retail electricity market, has carried the heaviest unpaid receivables burden, which, at one point, had even exceeded three billion euros.

 

PPC set to sign securitization agreement with Pimco

Power utility PPC is set to sign a large-scale securitization agreement with international investment company Pimco for unpaid receivables of over 90 days.

PPC will receive approximately 200 million euros of 300 million in total, sources said.

This securitization package was preceded by a small-scale agreement with JP Morgan late last year for unpaid receivables of up to 60 days. PPC received 150 million euros in a deal worth a total of 200 million euros.

PPC and Pimco have both approved this latest securitization agreement, a 14,000-page text, with just their signatures pending, the sources informed.

The 350 million-euro sum coming from PPC’s two securitization agreements, along with 775 million euros raised by the corporation through two recent bond issues, represents major cash flow relief worth 1.2 billion euros that promises to facilitate the utility’s upcoming investments and cover operating costs.

In addition, funds to come from the anticipated privatization, in the second half, of a 49 percent stake in PPC subsidiary DEDDIE/HEDNO, the distribution network operator, promise to further boost the power utility’s investment ability.

Suppliers want greater clarity on new customer switching rules

Electricity suppliers have agreed, in principle, on new rules proposed by RAE, the Regulatory Authority for Energy, for customer switching, but demand greater clarity on a rule concerning the imposition of an upper limit on outstanding bills owed by customers seeking to switch suppliers.

Seven suppliers – power utility PPC, Protergia (Mytilineos Group), Heron, Elpedison, Volterra, Zenith and Fysiko Aerio/Hellenic Energy Company – and two associations – ESPEN (Greek Energy Suppliers Association), ESEPIE (Hellenic Association of Electricity Trading & Supply Companies) – took part in second-round public consultation staged by RAE, requesting views on three topics.

Preparations for the introduction of a debt-flagging system – the public consultation procedure’s second topic – offering general protection to suppliers by informing and preparing them on the track records of incoming customers, are headed in the right direction, participants agreed.

They also backed a RAE proposal that would permit suppliers to request electricity supply cuts from distribution network operator DEDDIE/HEDNO for exiting customers who have not settled outstanding electricity bills.

This measure promises to contribute to more effective management of electricity-bill debt and support supplier receivables, participants pointed out.

RAE, in its proposals, sets a six-month limit for suppliers to take action against customers once they have switched companies.

RAE proposes electricity supplier switching measures

RAE, the Regulatory Authority for Energy, has adopted, to great degree, proposals made by electricity suppliers intended to restrict supplier switching by consumers seeking to prevent payment of electricity-bill debt.

Following a first round of public consultation, the authority staged a supplementary round, publishing its resulting proposals for an end to such consumer switching practices.

RAE has proposed the imposition of upper limits on electricity-bill amounts owed by consumers, which, if exceeded, would prevent them from switching suppliers.

For low-voltage category household consumers, the upper limit proposed by RAE is 150 euros per four-month billing period. For businesses, also in the low-voltage category, the authority has proposed an upper limit of 200 euros per four-month billing period. A 1,000-euro upper limit on electricity bill amounts owed per four months has been proposed for medium-voltage consumers.

Consumers whose unpaid power bills exceed these upper limits would either need to settle their energy debt or commit to installment-based payback programs in order to switch supplier.

RAE has also proposed a debt-flagging system that would be collectively used by suppliers to blacklist consumers behind on electricity bills. The authority proposes a rating system that would grade consumers seeking to switch suppliers as “red” if near or over the aforementioned upper limits or “green” if energy debt settlement agreements have been reached.

Power supply cut measures have also been proposed by RAE for consumers owing electricity bill amounts.

The authority has proposed that these measures be implemented for a one-year period before being reassessed.

PPC’s new business plan aims to quadruple EBITDA over 3 yrs

Power utility PPC’s new business plan covering 2021 to 2023 will strive to quadruple the corporation’s EBITDA figure concerning retail activity to 466 million euros from 104 million euros in 2019 through measures focused on maintaining and rewarding a quality customer base in the low-voltage category, company officials have announced.

PPC, which has just presented its three-year business plan to over 200 analysts and investors at PPC Investor Day 2020, projects a customer base contraction from 6.1 million last September to 4.7 million over the next three years, resulting in a retail market share drop to 54 percent from 64 percent at present.

PPC will seek to control the outflow of customers switching to rival suppliers by holding on to the cream of the crop. The utility will also seek to recapture positive-rated customers who have switched to rival suppliers in recent years.

The utility wants to increase its percentage of positive-rated low-voltage customers to 58 percent in 2023 from 48 percent at present. This goal will be driven by loyalty benefits and discounts specially adjusted to consumption profiles.

The corporation also aims to increase e-billing to represent 42 percent of customers in 2023 from just 10 percent at present. However, the utility will not abandon its network of conventional retail outlets. On the contrary, the company to increase its network of 110 outlets to 150 by 2023, all revamped and equipped with high-tech equipment, including automated payment machines.

PPC will also strive to decrease its unpaid receivables from 2.7 billion euros to 2.2 billion euros by 2023, its securitization packages and tougher collection campaigns being the key tools behind this objective.

 

 

Supplier switching model from scratch, 8 foreign models to be discussed

RAE, the Regulatory Authority for Energy, will present for public consultation eight electricity supplier switching models used abroad following the rejection of a local version by the Council of State, Greece’s Supreme Administrative Court, and suppliers, energypress sources have informed.

This essentially means the entire process is beginning from scratch.

The models used abroad will be presented along with related proposals for comments and observations by electricity suppliers and any other interested parties, the objective being to reach consensus on a new set of supplier switching rules for the Greek retail electricity market.

Authorities will seek to shape a new model that will clamp down on serial electricity bill dodgers while also enabling free movement of punctual consumers from one supplier to another.

The previous model, adopted on September 1, was rejected late last month after being deemed faulty. It was marred by major obstacles, discouraging consumers to seek optimal solutions.

 

PPC to announce initial €150m securitization collection

Power utility PPC is expected to announce, within the next fortnight, a 150 million-euro collection from a small-scale securitization agreement reached with JP Morgan last summer, promising some cash-flow security for the corporation.

PPC and JP Morgan still need to finalize certain procedural matters before the payment can be made.

This initial 150 million-euro collection represents 75 percent of a 200 million-euro total amount PPC anticipates from the small-scale securitization package, concerning unpaid receivables of up to 60 days.

Given its short-term span, this agreement, a non-recourse agreement not requiring PPC to provide guarantees, is rated as a low-risk securitization package.

If the debt collection firms – Qualco and law offices – commissioned to collect unpaid receivables from PPC customers on behalf of the utility fail to do so, then JP Morgan, which has purchased related bonds, or senior notes, will incur corresponding losses.

PPC has also signed a securitization package with Pimco for longer-term unpaid receivables of over 90 days, from which the utility expects to collect part of a 300 million-euro total in December or January and the remainder at a latter date.

The news of an imminent securitization payment for PPC comes at a time when the company share has enjoyed major gains. PPC’s share has risen 278 percent since a low last March.

Forthcoming results for the nine-month period, as well as news on the company’s solar energy projects and new business plan for 2021-2023 should provide a further boost.

New installment-based debt settlement offer at PPC

Power utility PPC debtors could be given another chance to service electricity bill arrears through an installment-based payback program as a result of a wider debt-payment plan just forwarded by the government for consultation.

Besides PPC customers, authorities also intend to make this payback offer available to debtors owing amounts to a range of other entities, including banks, social security funds and the tax department.

An online registration process is being planned for applications.

However, interested parties will need to accept the lifting of banking and tax secrecy terms to become eligible for the payback plan.

This condition will be set so that authorities can cross-examine personal assets, both in Greece and abroad, to avoid attracting, to the program, individuals deemed as financially capable but unwilling to fully honor payback program commitments, as has been the case all too often in previous efforts.

Many such individuals have exploited previous PPC payback programs by registering, paying deposits and, in some cases, early installments, to protect themselves from immediate power supply cut threats, before disappearing from the picture.

PPC’s debtors, including businesses, owe the utility unpaid receivables worth 2.7 billion euros. Over 580,000 financially capable but unwilling customers, or strategic electricity bill dodgers, as they are commonly referred to locally, owe PPC an estimated sum of 545 million euros.

In addition, 895,000 customers who have switched from PPC to other electricity suppliers have left behind electricity-bill arrears estimated at one billion euros.

 

 

PPC writes off €1.7bn in customer debt as uncollectible

Power utility PPC has written off, as uncollectible accounts, 1.7 billion euros in unpaid receivables accumulated over the past decade or so by household, business and industrial customers.

This sum represents over 60 percent of PPC’s unpaid receivables total, estimated to be worth 2.7 billion euros.

The 1.7 billion-euro amount written off by PPC concerns customer debt that is at least five years old. Many enterprises with electricity bill arrears owed to PPC are no longer in business.

Though PPC is clearing its books of these uncollectible accounts to financially restructure, the debt, owed by customers does cease to exist.

Debt collection firms that recently took on the task of managing PPC’s unpaid receivables will continue to pursue customers with arrears, despite subdued expectations of success.

These collection firms will be focusing their efforts on more recent unpaid receivables estimated to total as much as one billion euros.

PPC, according to data released last year that has changed little, estimates that over 580,000 financially able customers are deliberately dodging electricity bill payments totaling 545 million euros and overdue for more than six months. Overall, PPC estimates this category of customers to total 1,477,000, owing over 1.5 billion euros.

Also, the corporation estimates that a further 895,000 customers have switched suppliers, leaving PPC with a total of one billion euros in of unpaid receivables.

PPP recently reached securitization package agreements with JP Morgan and PIMCO, the former for unpaid receivables overdue by up to 60 days and the latter for unpaid receivables overdue by more than 90 days.

Supply cut orders on the rise, suppliers toughening stance

Electricity suppliers forwarded 360,644 supply cut orders to the distribution network operator DEDDIE/HEDNO in 2019, most of these presumably targeting regular electricity bill dodgers. A total of 227,418 orders were executed, indicating the operator has toughened its stance, data released by RAE, the Regulatory Authority for Energy, has shown.

Nearly half of these consumers, or 111,298, who had their electricity supply cut by DEDDIE/HEDNO rushed to either fully settle amounts owed or register for installment-based payback programs in order to be reconnected to the network by the operator.

Subsequently, a considerable number of consumers, 116,120 in total, were left without electricity. 

Some of the electricity supply cut orders forwarded by suppliers to the distribution network operator may have been initiated by consumers no longer wishing to be serviced for a variety of reasons, including vacant property. The number of such cases was not specified in the RAE report.

Interestingly, suppliers submitted a total of 310,333 requests to cease representing consumers in 2019. Of these, 280,962 were executed by the operator.

Suppliers made these representation-ending requests in response to delays by the operator to execute supply cut orders for unpaid bills. As a result, unreliable and unwanted consumers were transferred to the country’s universal supply service, offering higher-priced electricity supply as a last resort.

PPC nears €350m deal for second securitization package

Power utility PPC is moving fast towards an agreement with a major financial services player for a second securitization package carrying unpaid receivables overdue by more than 90 days.

Less than a month ago, PPC reached a 260 million-euro agreement with JP Morgan for a smaller-scale securitization package of unpaid electricity bills overdue by up to 60 days.

According to sources, PPC’s chief executive Giorgos Stassis has called for an extraordinary board meeting to seek approval of an offer made by a major international financial player for the larger-scale securitization package.

If this offer is approved by the board, PPC stands to receive approximately 350 million euros with an interest rate of around 5 percent. This interest rate is higher than the 3.5 percent rate attached to the preceding securitization deal as a result of the higher risk entailed.

PPC’s ability to attract yet another major financial player reflects the growing faith been placed by the investment community in the power utility, especially its ability to collect unpaid receivables.

The two securitization packages promise considerable cash inflow for PPC. Half the amount to be received through the first securitization package will be used to service debt.

 

Consumer shifts between independent suppliers at 30%

Roughly 30 percent of electricity consumers shifting from one electricity supplier to another are not moving away from the power utility PPC, as was usually the case up until just a few months ago, but from one independent supplier to another, a reflection of a further increase in competition, to the benefit of consumers, latest market data has shown.

Besides price offers, consumers are now also taking into consideration other factors such as supplier reliability, service standards and provision of supplementary services when choosing suppliers. This broader consideration is seen as a sign of the electricity market’s growing maturity.

Independent suppliers now face bigger bad debt figures as a result of an increase in unpaid receivables prompted by a number of factors, including business closures, consumer departures despite unpaid electricity bills, payment defaults, as well as tax file number changes by consumers seeking escape.

The scale of this undesirable situation for independent suppliers is nowhere near that of the enormous collection problem faced by PPC.

However, the bad debt problem highlights that independent suppliers, as a consequence of their efforts to boost market shares, are now dealing with a growing number of unreliable consumers. It also underlines the market’s tightened cash flow, especially in the business sector, as a result of the pandemic and recession.

PPC, heavyweight firm close to big-scale securitization deal

Power utility PPC is believed to be making sound progress in its negotiations with a financial world heavyweight for an agreement on a securitization package carrying unpaid receivables overdue by at least 90 days, making it a high-risk venture, energypress sources have informed.

A deal is believed to be imminent and could be presented to the PPC board next week, the sources noted, adding that an agreement will definitely be finalized within July.

These talks follow PPC’s recent agreement with JP Morgan for an initial, smaller-scale, lower-risk securitization package carrying unpaid receivables of up to 60 days.

PPC secured a cash injection of approximately 250 million euros through this agreement and an interest rate of 3.5 percent, regarded extremely favorable.

The higher risk entailed in the forthcoming securitization package is expected to lead to a considerably higher interest rate than the figure agreed to between PPC and JP Morgan.

Even so, the overall securitization procedure indicates that PPC’s credibility is gradually being restored as major players are showing greater faith in the utility’s ability to handle its unpaid receivables.

Both the previous securitization agreement and the one currently in the making are non-recourse agreements not requiring PPC to provide guarantees.

Debt collection services firm Qualco and legal firms hired by PPC will continue handling the collection effort.

PPC aims to receive approximately 300 million euros for the second securitization package.

Besides the absence of guarantees, the securitization agreements represent yet another source of funding for PPC that is not added to the company’s debt figure.

JP Morgan awarded PPC’s small securitization package

US investment bank JP Morgan has been awarded power utility PPC’s smaller of two securitization packages, carrying unpaid receivables of up to 60 days, after submitting the strongest offer to a tender at a rate of 3.5 percent.

This agreement, expected to be endorsed by PPC’s board today, represents the first, and simpler, step of the utility’s securitization plan, to be followed by a bigger-scale effort in September for unpaid receivables of at least 90 days. PPC expects an interest rate of more than 7 percent for this second package, carrying higher risk.

PPC’s securitization plan reflects the corporation’s ongoing effort to gradually regain its credibility. Offering unpaid receivables packages for cash injections would have seemed unimaginable a year ago.

The deal with JP Morgan is a non-recourse agreement, meaning PPC will not need to offer guarantees.

If companies (Qualco, legal firms) that have taken on the task of collecting unpaid receivables from PPC customers, on behalf of the utility, do not succeed, then JP Morgan, as buyer of securitization titles, will incur losses to the extent of the failure.