Reforms are coming in the energy market

Reforms are coming in the energy market

Athens, August 13, 2015/ Independent Balkan News Agency

By Spiros Sideris

From January 1, 2020, no electricity supplier must hold share over 50% of the retail market, according to the draft law “Ratification Schedule Contract Financial Assistance from the European Stability Mechanism and arrangements for the implementation of the Financing Agreement”.

The tool to make this reform in retail, will be the “NOME” type of auctions, which should be in place by October this year.

That is, under the “NOME” procedure, PPC should start from October to sell to private competitors, through auctions, quantities of its lignite and hydropower produced by its factories, in order for PPC to stop monopolising lignite and hydroelectric, in order to limit the monopoly and give space to competition.

There are four steps to be followed:

  1. In September 2015, the Greek authorities should discuss with the European Commission in designing the auction system “NOME”, aiming to reduce by 25% the retail and wholesale market shares of PPC and to fall below 50% by 2020.
  2. The prices at which the auctions will be conducted should cover the costs of PPC of electricity production and fully comply with EU rules.
  3. If it is not possible to reach agreement on “NOME” by the end of October 2015, then the Greek authorities should agree with the institutions on structural measures to be adopted promptly, and will lead to the same results as mentioned above, concerning market shares and timelines.
  4. In any case, by 2020 no power company will be able to produce or import, directly or indirectly, more than 50% of the total electricity generated and imported in Greece.

Finally, by January 1, 2019, the Competition Commission will assess the opportunity to fulfill this objective if it finds a failure to deliver, propose appropriate measures in the best interests of the end consumer, and if a company does not comply with the measure or measures that have been imposed in accordance with the above, the Competition Committee will impose a fine of at least 5% and maximum 10% of the company’s annual turnover in the previous year.

For the Independent Transmission Operator (ITSO), it is mentioned that its fixed rates (networks, lines) will remain by 100% in “mother company” PPC, and will be transferred to a new company, totally independent from PPC only the management of the power system. In this company will be eligible to participate private capital, funds, insurance funds, etc.

However as of October 2015, the authorities will take irreversible measures (including the announcement of the date for the submission of binding offers) for the privatisation of the electricity transmission business, ITSO, unless an alternative plan is proposed, with equivalent measures, in terms of competition and investment prospects, according to the best European practices and in agreement with the institutions to achieve the full ownership separation from PPC. For this purpose, it is noted that the authorities sent their first proposal to institutions this August.

Full liberalisation of the Gas Market from 2018

By 30 May 2016, DEPA SA and EPA Attica, Thessaloniki and Thessaly are required to submit for approval the separation of their accounting activities on the Energy Regulatory Authority, which must decide about it within three months from the time of submission.

The full liberalisation of the gas market is provided by 2018. The aim is to separate the marketing activity from the management of city networks, so that other players can enter the market.

According to what is stated in the draft law, the objective is to enable consumers henceforth to freely choose a supplier and to reduce energy costs, and for this reason, until January 1, 2017, the three PSC are required to proceed with the functional separation of the activity of distribution network of Attica, Thessaloniki and Thessaly from their other activities. However, it is noted that the PSC could be transformed into Gas Distribution Company (EDA), in the share capital of which will be involve both PSCs in proportion to their shares.

The distribution networks constructed within the Greek territory either from DEPA or from EPA Attica, Thessaloniki and Thessaly, remain the exclusive property of DEPA.

Finally, it is noted that until November 2015, the government will introduce legislation to implement the outstanding recommendations of the OECD concerning fuel marketing authorisations.

It is also made known with the draft law that in October will take place a review of the energy taxation, the financial and operational independence of the energy regulator will be reinforced, the Directive 27/2012 on energy efficiency will be transposed, while as of December 2015 authorities will adopt a new framework to support renewable energy, utilising in the best possible way the EU funds, the official international financing and private financing.

Furthermore, a new plan will be adopted for the upgrading of electricity networks, to improve performance, enhance interoperability and reduce costs for consumers.

As stated: “authorities will make use of technical assistance for the planning of the new framework for renewable energy sources and energy efficiency”.