RAE, the Regulatory Authority for Energy, has summoned power utility PPC and six independent electricity suppliers to hearings for explanations on overdue surcharge amounts they have yet to transfer to three market operators.
The authority had initially requested related data and explanations from suppliers and has now taken a further step by deciding to stage hearings for PPC and two other suppliers, followed by supplementary hearings involving a further four suppliers.
The three market operators, power grid operator IPTO, distribution network operator DEDDIE/HEDNO and RES market operator DAPEEP, will also be called upon by the authority to offer data on the overdue surcharge transfers by suppliers.
According to sources, RAE authorities are examining a variety of surcharges, including network transmission, distribution network and RES-supporting ETMEAR surcharges, up until October, 2020.
These surcharges, included in electricity bills and paid by consumers as part of their electricity bills, must then be handed over by suppliers to respective operators within a specific time period.
Conditions have recently deteriorated for electricity suppliers, primarily as a result of considerably higher wholesale costs since November’s launch of the target model’s new markets.
Electricity suppliers contend that amounts owed to them by the operators outweigh their unpaid surcharges and, as a result, want accounts offset. RAE has rejected this request.
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.
Power utility PPC may seek a loan from the European Bank for Reconstruction and Development (EBRD) worth between 100 and 200 million euros to cover extraordinary needs seen emerging for both the utility and its subsidiary firm DEDDIE/HEDNO, the distribution network operator, as a result of the pandemic and consequent recession, still in the making.
The extent of the pandemic-related recession cannot yet be determined. Financial support from the EBRD, which has extended loans to PPC in the past, would bolster the power corporation’s cash flow and also provide a safety net for its subsidiary during these uncertain times.
PPC fears the distribution operator’s earnings, resulting from surcharges included in electricity bills, will drop by approximately 30 percent. A growing number of consumers are not meeting payment deadlines for electricity bills.
PPC is also preparing to launch a securitization initiative for unpaid receivables.
An energy ministry provision promising electricity suppliers supportive terms for surcharge payments to market operators has been included in a wider legislative act facilitating pending and urgent matters linked to various ministries.
Electricity suppliers will be able to pay 30 percent of their regulated charges marked out for the power grid operator IPTO, distribution operator DEDDIE/HEDNO and RES market operator DAPEEP over four monthly installments, according to the energy ministry plan.
A one-month grace period will be offered for the first installment. Suppliers will need to keep servicing the other 70 percent of regulated charges as normal.
The lighter terms are crucial for electricity suppliers, fearing they may not receive a large percentage of regulated surcharges included in electricity bills as a result of rising unpaid receivables.
Over the past few weeks, electricity bill payments have fallen by levels of approximately 30 percent.
Though offering some relief to electricity suppliers, the less demanding terms for their payment of regulated charges will tighten the budgets of market operators and consequently weaken their ability to remunerate conventional and RES electricity producers for output to the grid.
Authorities intend to combat this threat through a security mechanism now being pieced together.
Electricity suppliers have expressed concern over a plan announced by DAPEEP, the RES market operator, to continue imposing a RES-supporting surcharge on suppliers throughout 2020.
The extended implementation of this surcharge, whose calculations are based on the average variable costs of thermal stations, is expected to contribute 130.92 million euros into the RES special account.
The projected figure is well over a 96.8 million-euro amount paid by electricity suppliers through this surcharge in 2019.
The original plan entailed eliminating the surcharge immediately following the target model’s launch, scheduled for June 30, but now headed for a delay as a result of the coronavirus pandemic’s wider impact on markets.
The 130.92 million-euro sum expected to be raised by the surcharge in 2020 will be invaluable for the RES special account given the reductions of CO2 emission right prices, electricity demand and wholesale electricity prices.
An end-of-year RES special account deficit of 40 million euros has been projected, including the 130 million-euro surcharge contribution in 2020.
The government is currently battling to establish a security fund as liquidity protection for suppliers, impacted by falling electricity bill collections amid this latest crisis.
Six independent electricity suppliers handed fines, some of these hefty, about a year ago by RAE, the Regulatory Authority for Energy, for not relaying various customer-paid regulated surcharges to power grid operator IPTO and distribution network operator DEDDIE/HEDNO, are presenting their cases to the authority in a bid to have their fines removed.
RAE imposed the fines, ranging from tens of thousands to hundreds of thousands of euros, after concluding that the electricity suppliers had not passed on to the operators a variety of surcharge amounts collected from customers such as a transmission network surcharge, a distribution network surcharge and a RES-supporting ETMEAR surcharge.
Once collected as part of electricity bill payments, these surcharge amounts need to be relayed to the operators by a certain date.
The independent suppliers have mainly contended they are owed bigger amounts by the operators, and, as a result, have taken the initiative to implement what they see as an informal offsetting arrangement.
RAE has refused to accept this argument but things have changed following a related legislative revision made by the government. It remains to be seen if RAE will revise its decisions and remove the fines imposed on the independent suppliers.
Power utility PPC, owing hundreds of millions of euros to the operators and handled as a separate case, was handed a fine of approximately 2.8 million euros about two years ago.
The surcharge amounts owed by the independent suppliers to operators represent just a fraction of the equivalent amount owed by PPC.
PPC’s surcharge payment delays of sizable amounts to operators are, in turn, making it difficult for operators to meet payments for producers.
Updated electricity distribution and transmission surcharges included in electricity bills as revenue for operators will remain virtually unchanged in 2020, RAE, the Regulatory Authority for Energy, has decided.
The updated surcharges, to take effect March 1, will bring about small changes for certain consumer categories – slight reductions for high-voltage consumers and modest increases for low-voltage consumers.
Electricity distribution and transmission surcharges serve as respective revenue for DEDDIE/HEDNO, the distribution network operator, and power grid operator IPTO.
DEDDIE/HEDNO will receive part of a 115 million-euro amount owed by the system for previous years, according to sources. The operator received a 15 million-euro partial payment in 2019. Total recovery of the amount is planned over a five-year period, through electricity-bill surcharges.
The unpaid amount resulted from a dip in electricity demand amid the Greek economic crisis, which subdued surcharge revenues for the operator.
Power utility PPC’s outgoing chief executive Manolis Panagiotakis has requested a legislative revision that would stop interest charges from being added to overdue regulatory surcharge payments owed by the utility to the IPTO and DAPEEP operators.
This measure would apply to sums concerning RES-supporting ETMEAR surcharges and other regulatory charges imposed on electricity bills that have yet to be paid by consumers.
During a recent meeting with the new energy minister Costis Hatzidakis, the outgoing PPC boss – who submitted his resignation from the state-controlled power utility shortly after the July 7 election – proposed a series of measures that he believes are required to help normalize the electricity market and also offer financial relief to PPC, under financial pressure.
Speaking to reporters following the meeting, Panagiotakis refused to disclose the entirety of proposals he made to the energy ministry, noting he would elaborate on these when the time is right.
The power utility’s chief described as unjustified the interest charges imposed on PPC for its delayed transfer to operators of surcharge amounts not yet paid by consumers.
Independent electricity suppliers have also asked authorities to intervene on the matter.
Various mandatory surcharges imposed on power bills are increasing electricity supply prices by as much as 40 percent and consequently stifling competition, it has been determined from information forwarded by suppliers to RAE, the Regulatory Authority for Energy, as part of an investigation of the retail electricity market launched by the authority.
RAE has requested electricity suppliers to provide details on all components determining their respective pricing policies, discount offers, promotional efforts, as well as updates on their current financial standings, number of customers, unpaid receivables and other factors.
The authority intends to examine pricing policy factors and the sustainability of all electricity suppliers.
The data provided by one supplier showed that its initial electricity supply cost average of 49 euros per MWh in 2017 ended up reaching just under 69 euros with the inclusion of various surcharges.
Besides CAT and supplier surcharges, a series of various other unclear surcharges are added to supply costs.
These additional surcharges are seriously impeding the efforts of independent suppliers to offer attractive pricing policies that could heighten competition and accelerate their market share gains, market officials have stressed.