An increase in the price per kilowatt-hour, pressure and extra-judicial procedures for the non-payers, as well as a reduction in discounts for employees are included amongst others in the “government’s package to save PPC”.
The government describes pessimistically the situation in PPC, as if it were on the verge of bankruptcy with major implications for the entire Greek economy, while stressing the risk by even talking about defaults towards suppliers and employees if no action is taken.
In particular, it cites the statutory auditor’s report (Ernst & Young) expected on September 24, and argues: “It is imperative that initiatives be taken to avoid serious risks, even for PPC’s survival, after the damaging results in 2018 and 2019 so far. Indeed, the plausible deterioration of the company’s auditor’s (Ernst & Young) warnings about the company’s viability in the report expected on September 24 would lead to dramatic developments that might even include payment default, suspension of share trading, listing PPC’s loans as non-performing, etc., with obviously serious consequences for the economy as a whole. The auditor has already stated in the report on the results of 2018 that there is “substantial uncertainty which may raise significant doubt about the ability of the Company and the Group to continue their operations”.
According to sources from Maximos Mansion, the measure package for “saving PPC” includes, inter alia, returning to businesses amounts due from the past from the Service of General Interest, the repayment of debts by public authorities, the stranglehold on strategic non-payers with extra-judicial procedures, as well as clipping orders (30,000 clerical orders for strategic non-payers in the last two months), and securitization of overdue debt. The Ministry of Environment and Energy will also demand from the EU the abolition of lignite and hydroelectric power auctions (“NOME”), which has led to PPC selling below cost to its competitors, while also seeking to increase its target for electricity. PPC’s retail market share was set at 50%.
Therefore, all parties are encouraged to contribute to the salvation of the business in a balanced way: domestic consumers and professionals via the reduction of the consistency discount, the industry through the carbon dioxide clause, the state by reducing VAT and paying SGIs and PPC competitors, meaning alternative suppliers, with the elimination of NOME.
According to PPC, the business rescue package will include:
* Increase in charge per kilowatt-hour (competitive pricing arm) to boost PPC revenues, completely balanced, nonetheless by the curtailments in VAT and ETMEAR (Special fee for reducing emissions) for the consumers. It is noted that PPC will remain the provider with the lowest fixed end of the market.
* Reduction in consistency discount from 10% to 5%
* Introduction of a CO2 clause for households without a direct impact on PPC accounts.
* Extra 50% discount for individuals on life-support machines, who are beneficiaries of the Social Housing Invoice.
Specifically, PPC’s tariffs are as of September 1 fixed as follows:
– For consumption up to 2000 kWh, the new price is 0.11058 € per kWh from 0.0946, which is the current charge.
– From 2000 kWh, the new price stands at 0.11936 euros per kWh, against today’s 0.10252.
– As for the electricity consumption at night, the new price stands at 0.07897 euros per kilowatt hour compared to today’s 0.0661.
The increases in kilowatt hours range from 16.4% to 19.4% and are fully balance by the curtailments in VAT and ETMEAR, as Minister of Environment and Energy Kostis Hatzidakis claims. The reduction in VAT’S price to 6% from 13% has been decided by the previous government and is already in force, while the ETMEAR reduction is expected to be finalized on Friday and will reportedly be set for home consumption at 17 euros per megawatt hour, compared to the price of 22.67 euros that applies now (25% decrease).
– The measure of consistency discount is not abolished, thought it is limited to 5% from 10% today. It should be noted that the discount was originally set at 15% and has already been reduced to 10% as of 1 April 2019.
– Regarding the CO2 clause, it is noted that PPC has already partially transferred to the Medium Voltage the burdens arising from its obligation to purchase emission allowances for power plants, in particular the ones operating on lignite, which are the most polluting. From now on, the same clause is introduced step by step on Low Voltage tariffs. With the current data on emission allowance prices, there will be no burden on this measure on the total amount paid by households that are customers of PPC.
The current PPC emission allowance burden, which right now for the low voltage stands at 15.68 € per megawatt hour, will constitute the base for calculating the clause.
It should be noted that a corresponding clause related to the fluctuation of wholesale electricity prices (“System Limit Price”) is already included in the tariffs of alternative electricity suppliers.
PPC will also abolish the reductions in CO2 charges for medium voltage (industries and large commercial chains), where the pollutant clause is already in place.
– For individuals on life-support, who are beneficiaries of the Social Housing Tariff (SHT), PPC will provide a 50% discount on competing subsidized electricity costs. It is known that the State subsidizes the tariffs of the SHT beneficiaries from 0.045 to 0.075 euros per kilowatt hour. PPC will provide a further 50% discount on the amount remaining after the subsidy. It is clarified that the measure does not apply to other beneficiaries of SHTs, meaning those who are not on life-support machines
Moreover, as announced, as part of the PPC bailout plan and the measures taken to boost its liquidity, the Ministry of Environment and Energy intends to legislate the limitations in PPC employees’ privilege discounts on the company’s tariffs, which stand to 75% on average.
- Act No 127 / 7.11.1990 by the Council of Ministers and the Corporate Collective Agreement of 31.7.1991 provides that PPC employees enjoy privilege discounts on company invoices reaching an average of 75%.In fact, these discounts are not limited in electricity consumption (competitive tariff part) but are also applied in non-competitive charges (SHT, HBC, Municipality charges etc.)!
- With the new legislation:
a. The discounts of employees in the non-competitive part of tariffs will be completely abolished.
b. The PPC employees’ discount will be reduced to 30% regarding consumption of electricity (competitive tariff side), as is the case for employees in competing electricity companies.
The decision to reduce the privilege discount of employees and retirees is another difficult decision necessary for PPC’s salvation.
We believe that the people of PPC understand better than anyone the very difficult situation the company is in, and are willing to help overcome the crisis. After all, besides them, everyone is invited to back the company up, including consumers and RES producers and competitors. /ibna