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.

 

Eurelectric calls for supplier protection against consumer debt

Sector association Eurelectric, representing the common interests of the electricity industry at a European level, has delivered a list of proposals focused on protecting companies against the pandemic’s financial impact.

The association’s proposals include compensation for suppliers as well as their protection against excessive consumer debt resulting from the crisis.

The association recommends the establishment of state support programs to help consumers cover the costs of outstanding electricity bills.

Eurelectric also calls for a monitoring effort to identify possible energy shortages and lack of personnel at energy companies.

The association wants appropriate measures adopted to counter major financial impact anticipated by energy companies as a result of reduced electricity demand and prices. Government measures supporting energy-transition investment plans of companies have also been requested.

Other Eurelectric recommendations include the establishment of a long-term RES plan offering clarity and security for investors.

The association also points out the need for a mechanism designed to recover excessive debt related to the coronavirus crisis.

 

Top five taking on universal supply service, tender futile

A tender staged by RAE, the Regulatory Authority for Energy, offering electricity suppliers a two-year contract for universal supply service covering the needs of consumers who have been shunned for not being punctual with payments, has failed to produce a result.

Though the outcome of this procedure remains consistent with results of equivalent tenders in previous years, an imminent change of rules will require the electricity market’s top five suppliers, based on market share, to assume the universal supply service.  Higher tariffs are charged.

Until now, power utility PPC, as market leader, was forced to take on the job alone.

A ministerial decision on the rule change is expected to be delivered by deputy energy minister Gerassimos Thomas within the next few days.

The universal electricity supply service’s two-year contract starts on June 23.

Based on market data for April, the Greek retail electricity market’s top five suppliers are: PPC, Protergia, Heron, Elpedison and Watt+Volt. NRG trails slightly behind in sixth place.

Unlike other European markets, where the universal electricity supply service is a desirable venture, and, as a result, warrants competitive procedures, the equivalent service in Greece is typically neglected by suppliers as it has been abused by non-punctual electricity consumers exploiting the service as a safe haven.

PPC chief delivers favorable news on a number of fronts

Power utility PPC, undergoing gradual transformation, expects to have amortized the cost of an initial voluntary exit plan for lignite-unit workers within six months, while amounts owed by the corporation to a series of third parties are being reduced, chief executive Giorgos Stassis informed analysts during a conference call yesterday, following a presentation of first-quarter results.

The cost of an initial voluntary exit package concerning approximately 1,000 PPC employees working at lignite units in northern Greece, is estimated between 30 and 35 million euros.

Stassis offered positive news on a number of fronts, including electricity-bill payments and cash flow, service digitization, securitization of unpaid receivables, and the ongoing implementation of a five-year business plan.

Online payments by customers now represent 30 percent of transactions, an 80 percent increase since the beginning of the lockdown measures, while 18,000 customers per day turn to the corporation’s call center for information, up from 5,000, maximum, prior to the lockdown, the company boss informed.

PPC has chosen the current period to launch its initial voluntary exit plan in order to determine, within the next two-and-a-half months, how many of its 4,000 or so employees working at lignite-fired power stations and mines will take up the offer, offering severance pay totaling 35,000 euros.

State-controlled PPC wants to organize personnel transfers as part of the country’s decabonization process.  Vacant positions will be filled by workers to be transferred from PPC’s Amynteo facilities, planned to shut down in September, and Kardia, whose withdrawal is expected in 2021.

Electricity-bill payments by customers, down 18 percent in March and 14 percent in April, have rebounded to pre-lockdown levels since May, the chief executive informed.

Amounts owed to contractors, suppliers, operators and other third parties have fallen to 650 million euros from 900 million euros, Stassis said.

A small-scale securitization package for unpaid receivables up to 60 days will be offered in June or July, he added.

 

 

PPC determined to stage small-scale securitization in June

Appearing to have avoided the worst in a slowdown of electricity bill payments by customers, power utility PPC, whose revenue figures have gradually recovered to approach pre-pandemic levels, is now striving to offer its first of two securitization packages, a small-scale version concerning unpaid receivables of up to 60 days, in June.

PPC has yet to decide whether this package, which could rake in approximately 200 million euros for the utility, will be offered concurrently with a bigger, higher-risk securitization package containing unpaid receivables of more than 90 days. Its revenue potential for PPC is estimated at 300 million euros.

Regardless of when PPC decides to offer its large-scale securitization package, the smaller version will definitely go ahead as soon as possible, within June, if this is feasible, energypress sources informed.

Market sentiment will be instrumental in PPC’s decision. Fluctuating stock markets over the past few months have spooked the investment community. Global market indices have been at the mercy of breakthrough prospects for a coronavirus vaccine.

The resulting insecurity is expected to subdue price levels investors will be prepared to offer PPC for its large-scale, higher-risk securitization package. PPC already feels more comfortable about moving ahead with the small-scale securitization package of lower-risk, short-term unpaid receivables, less susceptible to market conditions.

Supplier electricity-bill collections better than expected so far this month

Electricity bill payments have so far been better than expected in May and are on the rise following shock results recorded in previous months, during the full-scale lockdown.

Worst-case supplier revenue scenarios for the month have so far been avoided, but it is still too early to tell as the majority of consumer payments are due at the end of the month.

For the time being, rebounding electricity bill collection records are gradually approaching pre-crisis levels. Electricity bill payments are generally down by about 10 percent at present, compared to a 30 percent slump amid the heart of the lockdown.

Power utility PPC is already improving on its electricity-bill revenue decline of 9 percent in April following a major slump of between 25 to 30 percent in the second half of March.

Electricity bill collection figures at independent electricity suppliers are also moving upwards and are presently about 10 percent below pre-crisis levels, energypress sources informed.

Suppliers with high exposure to business and professional clienteles have been hit especially hard as these consumer groups were grounded during the full-scale lockdown in March and April.

Revenue losses have been milder for suppliers focused more on household consumers. Their revenue losses are in single-digit territory.

The full extent of the pandemic’s damage on electricity supplier revenues will become clearer once the economy is fully relaunched and the government’s support measures reach an end.

An anticipated unemployment spike over the next few months will negatively impact electricity-bill collection records.

Also, a subdued summer for the country’s pivotal tourism industry will hurt electricity supplier revenues, traditionally boosted during the second half of the year as a result of heightened tourism-related business.

Suppliers may end up needing to resort to emergency cash support through low-interest bank loans, support mechanisms and other financial tools if it turns out to be a bleak summer, as is feared.

 

 

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.

 

Natural gas bill payments down 30% in last two months

Natural gas bill payments have plunged by 30 percent over the past two-month period following a milder single-digit decline a month earlier, latest market data has shown.

Consumers have resorted to installment-based payback plans in far greater numbers during this two-month period of deterioration.

Suppliers, fearing a rise in unpaid receivables, are not hesitating to cut gas supply to customers who were already battling against energy debt prior to the pandemic and are now in deeper trouble. However, this supply-cut threat concerns a small percentage of customers.

Gas suppliers have yet to turn to the government for support measures, as was the case in the electricity sector. However, they may end up needing help in the form of low-interest loans, support mechanisms and other financial tools if the country’s tourism industry suffers a major setback this coming summer, as is feared.

Zenith and EPA Attiki (Fysiko Aerio) hold an 85.39 percent overall share of the country’s retail gas markets equipped with distribution networks – wider Athens area, Thessaloniki and Thessaly – data processed by energypress showed. Zenith leads with 46.14 percent and EPA Attiki follows with 39.25 percent.

EPA Thess, a former monopoly covering Thessaloniki and Thessaly, has lost approximately 15 percent of its market share to newly emerged rivals, the data showed. KEN, the biggest gainer, has captured 5.25 percent and is followed by Protergia (3.1%), Elpedison (1.91%), NRG (1.35%), Heron (1.05%), Watt+Volt (0.75%) and EFA (0.76%).

Elefsis Shipyards, owing over €5m to PPC, faces power cut

Power utility PPC, taking supply-cut action against major debtors, appears set to add Elefsis Shipyards, owing the utility over 5 million euros in overdue power bills, to its hit list.

Over the past few years, Elefsis Shipyards has registered for a number of installment-based payback programs offered by PPC but repeatedly failed to meet deadlines. Its debt owed to PPC has continuously increased.

PPC is believed to be moving to forward an electricity-cut order to distribution network operator DEDDIE/HEDNO, against Elefsis Shipyards, within the next few days.

An Elefsis Shipyards restructuring plan envisioned by strategic investor Onex has run into a dead end. The inability of current shareholder Nikos Tavoularis and the investor to agree on a number of issues is a key reason behind the impasse.

Just weeks ago, the government intervened to secure a three-month extension for a recently expired contract between the shipyard and the Hellenic Navy.

This government initiative promises temporary financial relief for Elefsis Shipyards following the main shareholder’s failure to offer consent for the shipyard’s restructuring plan before March 31, which led to the contract’s expiration.

The Hellenic Navy contract extension will enable the shipyard to cover 70 percent of salaries to its 600 or so employees on the payroll during the current quarter but solutions for various creditors, including PPC, have yet to be found.

Independent supplier revenues plunge, tariff cuts not possible

Independent electricity suppliers, pressured by lower revenue figures and increased bad-debt risk as consumers, mainly businesses, struggle to pay their bills, have not been able to offer tariff reductions in response to the dramatic drop in the cost of electricity production brought about by lower natural gas prices.

The System Marginal Price, reflecting, to a certain degree, the cost of electricity, averaged 28 euros per MWh in April, down from 62.4 euros a year earlier.

This sharp drop has been attributed to the increased grid participation of natural gas-fired power stations, using low-cost LNG, as well as renewable energy units.

On the downside for independent suppliers, electricity demand fell by 14 percent in April, further aggravating their cash flow predicament.

Electricity bill payments have dropped considerably amid the lockdown, falling by as much as 50 percent in April, suppliers have informed.

Power utility PPC, which has traditionally battled bad-debt problems, is the least affected, its electricity bill collections falling by approximately 25 percent. This has been attributed to the company’s client base, comprised mostly of households and high-voltage consumers.

On the contrary, independent suppliers, suffering far sharper revenue drops, serve many small and mid-size businesses, badly affected by the lockdown.

Households have consumed greater amounts of electricity during the lockdown and generally serviced their bills.

It is feared some 100,000 enterprises may go out of business in the next few weeks. This would be a major setback for independent electricity suppliers.

 

PPC collection record improves in April, market still uneasy

Power utility PPC’s reduced electricity bill payment collection record appears to be flattening at a rate of about 10 percent, April data has shown, compared to a far sharper drop of 20 to 25 percent in March.

Though these latest figures, still unofficial, are not a cause for celebration, they do represent a major improvement compared to the activity freeze experienced during the first three or so weeks of the lockdown, initiated in March.

PPC had yet to introduce its payment by telephone service, vital for pensioners trapped at home and unfamiliar with online procedures.

Energy sector officials fear consumers will prioritize other pending matters and leave electricity bill payments for later on once the gradual lifting of restrictive measures begins on Monday. The month of May promises to be crucial for PPC’s electricity bill collection record.

Independent electricity suppliers, who weathered electricity bill collection reductions ranging from 20 to 35 percent in March, are also hoping for payment improvements in the immediate future.

However, like PPC, their fear of retailers going out of business and leaving behind bad debt is a headache. The picture should become clearer as of Monday, when businesses of certain categories will be free to reopen.

Suppliers dread bad debt of permanent business closures

Electricity and gas suppliers, fearing a new wave of bad debt that could balloon should retailers and enterprises currently in lockdown fail to reopen, have expressed their concerns to deputy energy minister Gerassimos Thomas in a virtual conference.

Consumers of all categories, including households, have increasingly struggled to pay their energy bills during the coronavirus pandemic. Overdue energy bills have increased by levels ranging from 20 to 35 percent, according to data forwarded by suppliers to RAE, the Regulatory Authority for Energy, and the energy ministry.

Besides fearing an eventual financial collapse of many retailers and businesses amid a protracted lockdown, authorities suspect some survivors could opt to relaunch their businesses under new tax file numbers in an effort to escape accumulated energy bill debt obligations.

The energy ministry is now seeking to establish a clearer picture on the energy bill collection records of suppliers as a means of shaping appropriate cash flow support measures.

A ministerial decision offsetting debt between energy suppliers and market operators will soon be signed, Thomas, the deputy energy minister, informed.

PPC financial results for 2019 seen reflecting moves late last year

Power utility PPC’s financial results for 2019, expected to be released this afternoon, should favorably reflect measures taken by the state-controlled corporation’s administration and the government during the final four months of the previous year, analysts have forecast.

The results, expected once the day’s trading has ended at the Athens bourse, are also expected to include an initial assessment of the impact, so far, of the coronavirus pandemic-induced lockdown on the corporate group.

Also expected is an update on new initiatives, including investment plans, for the rest of 2020, following a forced revision of plans prompted by the pandemic.

PPC’s administration has set an operating profit objective of between 420 and 470 million euros for 2019, up from 150 million euros in 2018.

EBITDA figures of 240 million euros for the fourth quarter of 2019 and 337 million euros for 2019, overall, have been forecast by Pantelakis Securities.

During the final few months of 2019, PPC revised tariffs and abolished NOME auctions, described by company and government officials as a loss-incurring measure for the firm.

PPC expects even greater clarity on its financial standing in the immediate future. The corporation is waiting for more appropriate market conditions to securitize unpaid receivables worth 1.5 billion euros and issue a company bond.

Proceeds from these initiatives are expected to enable PPC to move ahead with an ambitious investment plan.

Operator executing electricity cut orders, bad debt swell feared

Distribution network operator DEDDIE/HEDNO has begun executing electricity supply cut orders forwarded by suppliers, especially independent players, moving to protect themselves against a rise in unpaid receivables and potential bad debt.

Many consumers not keeping up with their electricity bill obligations are believed to be financially capable but unwilling to pay. They are suspected of exploiting the pandemic’s extraordinary conditions as their consumption patterns do not reflect those of struggling households.

Over the past few weeks, electricity bill collection figures have fallen by levels of approximately 30 percent, prompting independent suppliers to act now rather than later.

Discount rates and tariff reductions are being offered to customers as support against the lockdown’s stifling effects but electricity bill payment delays cannot be tolerated, company officials have noted.

DEDDIE technicians attempting to execute electricity supply cut orders are in some cases facing resistance, even violent behavior, from disgruntled consumers, it has been reported.

 

 

 

 

PPC eagerly awaiting right time to launch securitization plan

Power utility PPC is ready to pounce on the first opportunity it will get to launch its securitization plan for unpaid receivables owed by customers.

Extraordinary market conditions resulting from the coronavirus pandemic’s wider impact have delayed the plan, whose various technical details and negotiations with investors have been completed.

The terms of the securitization effort would be too costly for PPC if the utility were to launch the plan under the present conditions.

PPC’s electricity bill collections have dropped by a level estimated between 25 and 30 percent over the past 20 days, latest company data has indicated.

However, the extent of the coronavirus-related impact on this reduction in electricity bill payments is unclear as Hellenic Post (ELTA) has experienced delays in posting hundreds of thousands of bills to customers during this same period.

A clearer picture on the pandemic’s impact on PPC’s unpaid receivables is expected towards the end of this month.

RAE, the Regulatory Authority for Energy, and the energy ministry have both requested updated collection figures from all the country’s power supply companies.

E-billing registration, offering discount, on the rise at PPC

Power utility PPC’s revised discount policy, which includes a five-euro cut on e-bills, is proving popular among customers, registering for online billing at an average of 4,000 per day.

The discount offer, which also features lower tariffs and free fixed costs, applies for both new and existing customers.

Customer online payments have increased by 30 percent since the offer was introduced.

The changing mindset of many PPC customers – households and businesses – is establishing a modernized, online customer base for the utility’s future operations once the coronavirus crisis has been resolved.

PPC stands to benefit from considerable postage and printing cost savings as a result of the growing willingness of customers to conduct their electricity billing transactions online.

However, the diminishing ability of customers to pay their electricity bills amid the coronavirus lockdown, financially impacting the masses, remains a concern for PPC as well as the country’s independent electricity suppliers.

Energy minister Costis Hatzidakis made note of this troubling trend last week.

Electricity bill payment collections at most suppliers fell by levels of between 25 and 30 percent over the past ten days, market sources have informed. This trend is expected to last about three months, the projected duration of the coronavirus adversity.

Sidelined consumers using universal electricity supply up 511%

The number of users of a universal electricity supply service introduced almost a decade ago to cover the electricity needs of consumers shunned by suppliers for repeatedly failing to meet electricity bill payments increased by over 500 percent between late 2017 and the end of 2019, a RAE (Regulatory Authority for Energy) report commissioned by the energy ministry has shown.

The total number of the universal electricity supply service’s users grew from 22,127 in December, 2017 to 34,591 a year later, a 56 percent increase, before surging to 135,278 in December, 2019, a 511 percent increase.

The number of domestic users of the universal electricity supply service increased by approximately 38 percent between June, 2018 and June, 2019, rising from 20,423 users 28,252.

Non-household consumers using the service increased by roughly 16 percent during the aforementioned period, from 12,447 to 14,468.

Unpaid receivables by consumers using the universal electricity supply service, offered to sidelined customers at elevated tariffs, surged 511 percent between 2013 and 2016, from 5.6 million euros to 36.9 million euros, the RAE report showed.

Tougher terms are being prepared for the universal electricity supply service. RAE has proposed a three-month limit. No specific limit has existed until now. This has been exploited by a considerable number of electricity bill dodgers, or consumers deemed capable, even affluent, but unwilling to service accumulating electricity bills.

Natural gas market to also get universal supply service

The energy ministry plans to soon introduce a universal supply service for Greece’s natural gas market, guaranteeing troubled consumers a supplier, at a higher cost, should they be rejected by their regular supplier for not paying energy bills.

Authorities want to introduce a universal supply service for the natural gas sector as a result of the increased number of natural gas consumers.

A universal supply service is already offered for the electricity market’s low-voltage category, but tougher terms are soon expected to be introduced as a growing number of consumers have exploited its loose terms, including no time limit, and kept ignoring electricity bills. Authorities are now considering imposing a time limit of between two and three months.

Approximately 135,000 electricity consumers deemed financially capable of meeting the cost of their energy bills are believed to be exploiting the universal supply service at present.

Under the universal supply service’s new terms, energy supply will be swiftly disrupted if electricity or gas consumers fail to pay bills.

The correction by authorities is expected to make the universal supply service a more appealing prospect for electricity suppliers and intensify bidding at related tenders staged by RAE, the Regulatory Authority for Energy, for the service.

Should tenders fail to attract a supplier, then the five biggest suppliers will need to step in and provide the service.

PPC’s bigger debtors ignoring improved payback terms

Some 140,000 electricity consumers owing power utility PPC a total amount of 230 million euros agreed to payback arrangements through monthly installments between October 1, when improved terms were introduced by the utility, and mid-February.

PPC’s administration regards this as a satisfactory reaction but bigger debtors remain a concern. The power utility has yet to elicit a response from consumers owing considerable amounts.

Latest data has shown that just 5 percent of consumers owing amounts greater than 10,000 euros signed up for payback arrangements between October 1 and mid-February.

The majority of consumers in this category are high-income earners refusing to cooperate for debt settlement, according to PPC, preparing a new crackdown.

On the contrary, consumers owing PPC mid-level debt amounts of between 1,000 and 3,000 euros appear far more willing to deal with their electricity bill debts, 39 percent agreeing to payback terms since October 1.

The response from customers owing between 500 and 1,000 euros was similar. A total of 39 percent belonging to this category registered for payback agreements during the same period.

The revised terms introduced by PPC on October 1 require a lower deposit payment for payback-plan eligibility and offer up to 24 monthly installments.

PPC bond issue seen late in 2020, securitization sooner

Power utility PPC intends to seriously consider a bond issue towards the end of the year, once it expects to have further improved the company’s profile and credit rating, banking sector sources believe.

Although very low interest rates at present and the country’s better image have improved foreign market bond-issue prospects for Greek enterprises, PPC will prefer to hold on a little longer, the sources added.

The power utility can afford to wait as conditions are continuing to develop in favor of PPC, banking officials told energypress. Last November, S&P upgraded the power utility’s credit rating to B- from CCC+. PPC’s borrowing cost is currently approximately 5 percent.

Moreover, major debt payments are not due until 2021 and the utility is planning to launch 60 and 90-day securitization packages for unpaid receivables, whose incoming revenue should suffice for the time being.

PPC also plans to stage an Investor Day event in London late this month during which the corporation’s administration will present business plan details to foreign analysts, the objective being to further improve the utility’s image and generate new share purchases. Also, the company is scheduled to post its financial results for 2019 in April.

PPC’s capitalization has steadied at a level of approximately one billion euros for a share value of 4.14 euros yesterday. This stability is a positive development, the banking officials stressed.

PPC securitization to start with 60-day receivables in March

Power utility PPC is preparing to issue two securitization packages of unpaid receivables totaling 1.5 billion euros, beginning with a package of 60-day receivables, whose agreement with investors is expected to be finalized by the end of March.

PPC is currently in talks with investors who will provide conditional funding in exchange for the packages.

A second securitization package carrying 90-day receivables needs more work. PPC is awaiting data that is required before it can commence talks with investors. Though this securitization procedure could also be completed by the end of the first quarter, finalization in April cannot be ruled out.

PPC is hoping to collect a sum of between 350 and 400 million euros for its two securitization packages carrying unpaid receivables of 1.5 billion euros.

The amount to be collected promises to offer the power utility a cash flow boost that will help fund the company’s investment plan.

Deutsche Bank and Finacity Corporation are organizing the two securitization procedures, sources informed.

 

PCC’s more favorable payback plan registering with customers

Power utility PPC has expressed satisfaction over the results of its recently revised payback system concerning unpaid receivables, a more appealing scheme with lower deposit demands for ensuing installment-based settlement of arrears.

In the final quarter of 2019, the new payback system, launched October 1, drew approximately 110,000 customers who agreed to terms for settlement of an overall sum worth 155 million euros.

Debtors qualify for the new payback plan by providing deposits representing up to 20 percent of their arrears, compared to deposits of between 40 and 50 percent demanded until the end of last September. A 30 percent deposit is required if customers prefer to settle debt over a greater number of installments.

Stricter monitoring of strategic debtors, or customers deemed able but unwilling to service unsettled amounts, has also helped improve the power utility’s collection record for its increased unpaid receivables, now stabilized at 2.7 billion euros, according to state-controlled PPC.

Highlighting its tougher approach, PPC has issued 55,000 electricity supply cut orders to distribution network operator DEDDIE/HEDNO over the past four-month period.

An overall improvement in customer punctuality concerning electricity bill payments has been discerned since the new collection measures came into effect, the utility has noted.

The collection of 155 million euros through the payback plan promises to offer PPC a considerable cash-flow boost. An even bigger boost is expected from the prospective securitization of unpaid receivables worth 1.5 billion euros, a plan that could be carried out within the first quarter of 2020 through two separate packages.

 

PPC aiming for €650m EBITDA in 2020, seen as a pivotal year

Power utility PPC’s administration is aiming for a return to profitability in 2020, the objective, numerically, being to generate an EBITDA figure of between 650 and 700 million euros.

The company’s chief executive Giorgos Stassis presented PPC’s goals and challenges during a presentation, late in 2019, of a business and strategic plan for 2020, seen as a landmark year by the corporation’s leadership.

Within the next few days, PPC is expected to receive a 200 million-euro amount stemming from arrears linked to public service compensation in previous years. This amount, alone, promises to offer a considerable boost to PPC’s cash flow and operating profit.

Within the first quarter, PPC plans to stage a forum for investors and analysts during which the company business plan, objectives until 2024, as well as a restructuring plan will be presented in detail.

The PPC board may decide to proceed with an international bond issue during this period, once market conditions and reactions have been appraised. However, Stassis, the CEO, has clarified there is no great need to take such action fill any financial gap.

PPC is expected to securitize unpaid receivables worth 1.5 billion euros during the first quarter of 2020.

The company also intends to reshape its profile as perceived by customers. New products combining electricity and natural gas, as well as products reflecting household and business needs, will soon be marketed, possibly within the first two months of the year, sources informed.

The company’s transformation for a green-energy focus is one of PPC’s biggest challenges. As part of this effort, a series of partnerships with private-sector firms entailing joint RES investments are expected to be announced. Talks with ten investors have already taken place, the PPC boss noted during his presentation of the business plan.

PPC’s signing of a memorandum of cooperation with Masdar Taaleri Generation (MTG) for the development of wind and solar energy projects is expected to be followed by more initiatives.

Also, PPC will launch its decarbonization plan in 2020 with the withdrawal of its Amynteo I and II lignite-fired power stations.

The state-controlled power utility is also expected to announce details concerning the sale of a 49 percent stake in distribution network operator DEDDIE/HEDNO, a subsidiary firm. This privatization is seen generating major investment interest. Digitization of the country’s networks and installation of smart meters have fallen well behind schedule.

 

Ministry plans legal protection for PPC securitization plan

An energy ministry draft bill concerning power utility PPC’s restructuring, forwarded for public consultation yesterday, includes terms offering the utility legal protection for its plan to securitize unpaid receivables.

The terms are designed to counter various arguments that could be raised by defendants, including breach of personal data, through the European Commission’s General Data Protection Regulation (GDPR).

PPC is planning to securitize unpaid receivables for sale to funds. The protection terms are intended to quell any fears of prospective buyers.

Prospective buyers are currently conducting due diligence via PPC’s data room. A large number of funds are believed to be interest in the power utility’s sale of securitized unpaid receivables, sources informed.

PPC has toughened its stance against debtors believed to be capable but unwilling to cover their electricity bill arrears, the objective being to present prospective buyers an improved collection record.

Investors are expected to submit offers to PPC once all data has been fully analyzed. It will then be up to the power utility to decide if it will go ahead with its securitization effort.

According to an early plan, two respective packages containing 60 and 90-day packages of unpaid receivables worth a total of between one and 1.5 billion euros could be offered to investors.