wholesale market clause

Indexation clause termination leads to higher nominal prices

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Though consumers have benefited from tolerable electricity tariffs over the last six months, courtesy of subsidies, the termination of indexation clauses in electricity bills has led to inflated nominal charges as tariffs incorporate the risk suppliers need to take when predicting the next month’s wholesale price levels ten days in advance.

New market rules introduced last August require suppliers to set and announce their electricity tariffs for each forthcoming month by the 20th of the preceding month.

The risk faced by suppliers through this new retail electricity market model has driven their nominal tariffs 20 percent higher, on average, compared to the previous system of floating tariffs with indexation clauses, triggered whenever wholesale prices exceeded certain limits.

Had the indexation clauses been maintained, power utility PPC, the dominant market player, would have recorded an average nominal retail price of 40.86 cents per KWh for the past six months, 28 percent below its average of 52.25 cents per KWh under the new system requiring the company to forecast wholesale price levels for each forthcoming month.

Market officials, including ESPEN, the Greek Energy Suppliers Association, had warned the new market model requiring wholesale electricity price forecasting would push up nominal retail prices, especially during times of market volatility, as is the case at present.

 

Wholesale-price clause verdict quells energy-bill rebellion hopes

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An Athens Court of First Instance decision delivered yesterday, temporarily exempting only vulnerable households from electricity-bill increases triggered by a power utility PPC wholesale-price clause included in the company’s bills, comes as a firm warning that subdues the hopes of consumers believing they could get away with unpaid energy bills.

Two consumer protection groups, Ekpoizo and Inka, had filed a case requesting a temporary suspension of electricity supply cut orders in cases concerning consumers who refuse to pay increased energy costs resulting from PPC’s wholesale-price clause in electricity bills.

According to the Athens court’s decision, vulnerable households will not face electricity supply cuts until the issue has been finalized through a Supreme Court decision at a latter date.

Individuals with serious health issues, households under the energy-poverty line, as well as elderly citizens aged 70 and above were already treated with greater tolerance prior to yesterday’s court decision.

The verdict eases authority fears of a rise in a movement of consumers not willing to cooperate, or fully cooperate, on energy-bill costs, a danger that could eventually create systemic problems in the energy market.

Court deciding on disputed wholesale-price clause payments

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An Athens Court of First Instance is expected to deliver a decision today on a request made by two consumer protection groups, Ekpoizo and Inka, for a temporary suspension of electricity supply cut orders in the case of consumers refusing to pay increased energy costs resulting from a wholesale-price clause included in power utility PPC’s electricity bills.

The consumer groups have asked for a suspension of electricity supply cuts until July 6, when a new hearing over the dispute is scheduled to take place.

If the Court of First Instance approves the request made by the two consumer protection groups, then the plaintiffs, who took collective legal action through the consumer groups, will not need to pay additional amounts triggered by the clause.

If the court rules in favor of PPC, consumers refusing to cover the additional amount resulting from the wholesale-price clause will be responsible for paying an accumulated amount plus interest.

Wholesale ascent prompting hefty retail electricity price hikes

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The activation, by electricity suppliers, of wholesale cost-related clauses included in their supply agreements is prompting significant retail increases, seen rising, compared to three months earlier, by 40 percent for the medium-voltage category and at least 33 percent for the low-voltage category.

Medium-voltage tariffs, previously at levels ranging between 64 and 65 euros per MWh, have reached 90 euros per MWh, a 40 percent increase, since the wholesale cost-related clauses were triggered by suppliers earlier this year, and are expected to rise further.

In the low-voltage category, concerning households, tariffs have increased from levels ranging between 70 and 90 euros per MWh, depending on the supplier and agreement, and will need to be raised to 120 euros per MWh for the recovery of increased wholesale costs.

Higher wholesale electricity prices have been attributed to a combination of factors, including higher CO2 emission right and natural gas prices, as well as a sharp rise in demand.

The situation is exacerbated during periods when RES output is subdued, prompting record-level price levels in the wholesale electricity market.

Last week, CO2 emission right prices set a new record of 58.25 euros per ton, up from 32 euros per ton in December, an 82 percent increase.

Natural gas prices have hit a 13-year high, TTF contracts reaching 29 euros per MW/h following levels of between 15 and 17 euros per MW/h in spring, a 93 percent increase. In June last year, gas prices had sunk to record-low levels of as low as 4.9 euros per MWh.

Last week, the average clearing price on the energy exchange ranged from 100.33 to 118.56 euros per MWh, up from 63.16 euros per MWh a month earlier.

In June, the average day-ahead market price on the energy exchange was 83.47 euros per MWh, more than double the level of 40.74 euros per MWh a year earlier.

RAE effort for universal supplier cost-clause policy facing delay

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RAE, the Regulatory Authority for Energy, working on a universal cost-clause policy for all electricity suppliers, to offer consumers greater electricity-bill transparency and price-comparing ability, has extended, until the end of June, a deadline it set for suppliers to deliver related market data details concerning all of 2020 and 2021, until the present.

Independent suppliers, who recently triggered wholesale price-related clauses in electricity bills to protect themselves against elevated wholesale prices, were questioned by the authority and then requested, as early as a month ago, to produce related data but have failed to deliver, instead calling for more time.

Power utility PPC was the first supplier to be summoned for questioning over its decision to trigger a CO2 cost-related clause incorporated into its electricity bills.

RAE had initially planned to stage a public consultation procedure for a universal clause policy within July, after examining the data provided by suppliers, but this plan will now be delayed.

Given the fact that overall business activity slows down severely during the August holiday period, RAE’s proposal is now not expected to be forwarded for consultation any sooner than September.

Taking into account supplier objections expected to surface during the procedure, the new cost-clause policy cannot be expected to be implemented before October.

Consumer complaints over sharp electricity cost increases and lack of transparency in electricity billing have risen considerably in recent times.

Wholesale prices up nearly 20% in first 5 months, retail levels impacted

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Wholesale electricity market prices rose by nearly 20 percent in the first five months of the year, official market data provided by power grid operator IPTO has shown.

These wholesale price increases directly impact retail price levels for consumers who have opted for floating-tariff supply agreements linked to wholesale price-related clauses.

The overall cost of electricity in the wholesale market rose 19.1 percent between January and May, from 64.111 euros per MWh to 76.373 euros per MWh.

Electricity prices in the day-ahead and intraday markets rose by 14.1 percent between January and May, from 55.612 euros per MWh to 63.499 euros per MWh, the data showed.

Discrepancy cost nearly doubled during this period, rising from 0.836 euros per MWh to 1.643 euros per MWh.

Power utility PPC, which, until now, has incorporated CO2-price clauses into its electricity bills, has announced it will adopt wholesale price-related clauses in August.

PPC adopting wholesale market clause along with 30% discount

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Power utility PPC is preparing to replace its CO2 emission right price-related clause with one linked to wholesale electricity market price levels, which, combined with a 30 percent discount, to be applied as an offsetting tool, is ultimately expected to result in a slight overall reduction in electricity bill costs for consumers.

PPC’s new pricing system, set to be implemented on August 5, was adopted following pressure from RAE, the Regulatory Authority for Energy, in its effort to enhance the price-comparing ability of consumers.

Until now, PPC has been the only supplier using a CO2-related clause in its pricing system. All other suppliers have incorporated a wholesale market-related clause into their supply agreements, as protection against increased wholesale costs.

The power utility triggered its CO2-related clause in May in response to rallying CO2 emission right prices, which resulted in electricity bill increases of between 5 and 6 percent for consumers.

This percentage increase in the cost of PPC’s electricity bills is expected to be lowered as a result of the switch to a wholesale market clause and the accompanying 30 percent discount.