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variable cost mechanism

Supplier surcharge ‘more than offset by end of variable cost mechanism’

Posted on November 16, 2020November 16, 2020 by admin

State-controlled power utility PPC’s decision to absorb an extraordinary supplier surcharge of 2 euros per MWh, just announced by the government for a one-year period to help the recovery of the RES special account, back in deficit territory, was a pre-calculated move, otherwise this measure would have had major repercussions – both corporate, for the utility, and political.

The Greek State holds a 51 percent stake in PPC, currently benefitting from a recent plunge in wholesale electricity prices that has drastically reduced the utility’s costs and widened its profit margin, as has also been the case for all electricity suppliers.

RES producers, facing an extraordinary 6 percent tax on total revenues for 2020 – also part of the RES special account rescue effort – have hit out against electricity suppliers by contending that they will ultimately benefit from their extraordinary one-year surcharge, expected to cost them a total of 110 million euros for 2021, as a result of the cancellation of a variable cost mechanism, to be abolished as of January 1, 2021.

The cost of the extraordinary surcharge imposed on suppliers for one year will be more than offset by the variable cost mechanism’s cancelation, RES producers contend.

The variable cost mechanism covered by suppliers, worth 130 million euros, annually, will be replaced by the supplier surcharge, to cost 110 million euros, for one year, SPEF, the Hellenic Association of Photovoltaic Energy Producers, noted.

“In effect, then, they [suppliers] are not only returning any of their excessive profits, at the cost of the RES special account, but increasing them as a result of the variable cost mechanism’s cancellation,” SPEF announced.

Echoing these thoughts, ELETAEN, the Greek Wind Energy Association, noted suppliers are being relieved of costs and, as a result, there should be no talk of any additional cost being absorbed. “This cost relief is unfair, wrong and will impact the RES special account,” ELETAEN stated.

Posted in Electricity Tagged eletaen, Independent electricity suppliers, ppc, RES producers, RES special account, SPEF, variable cost mechanism Leave a comment
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