Talks on track for NOME plan, headed for summer start

Energy ministry and European Commission officials, in comments to energypress, have expressed confidence that an agreement to institutionalize NOME auctions will be reached during the current round of negotiations concerning Greece’s bailout deal.

A first round of talks between local energy ministry officials and technical members of the country’s creditor representatives involved in this latest review of the Greek bailout program was completed last week in Athens, and an exchange of views has continued via email.

According to sources, the fundamentals concerning the NOME auctions – to provide third parties with access to main power utility PPC’s low-cost lignite and hydropower sources as part of the plan to help break the utility’s virtual monopoly – have been established, while no complications appear to have surfaced in the effort to determine the starting prices of auctions. It is estimated they will be set a few euros below current System Marginal Price (SMP) levels.

Quite crucially, however, the work being done on the NOME plan neither entails an examination of the data and methods being applied by PPC to determine its cost level, nor a look into the expenses declared by the utility, and whether the utility’s ways comply with regulatory and standard European and international practices. These cost levels will help shape auction starting prices. Consequently, a lack of transparency is being maintained. Full transparency is needed if market players are to be able to make sound mid-and-long term strategic decisions.

Despite this drawback, PPC’s rival electricity supply companies, now well into their campaigns in search of greater market shares, are looking forward to an imminent arrival of the NOME auctions. The emerging rival suppliers anticipate that the auctions will lower their electricity cost purchases. They intend to pass on these savings to consumers for more attractive offers in the effort to capture greater market shares while maintaining sustainable profit margins.

Emerging power supply company officials have told energypress that the extent of the price gap between the cost of electricity at the auctions and the SMP will determine how quickly the market will adopt the bailout agreement demand requiring PPC’s market share, now at about 95 percent, to drop to less than 75 percent in the near term and below 50 percent by 2020.

Assuming other major reform issues being negotiated with the lenders will roll smoothly to keep the entire bailout program on track, the NOME auction’s transitionary plan will most likely be tested in the summer, initially offering a relatively small electricity amount of about 200 MW to participants. This amount will be increased if the procedure is deemed successful.