The Ministry of Environment and Energy does not intend to intervene in distortions seen in the power market since the implementation of the Target Model on November 1 and in open negotiations between PPC with industrial companies on tariffs which theoretically expires on February 28.
Energy Ministry sources say that RAE, which is responsible for monitoring the energy market, "is doing an excellent job" and that market distortions seen in recent months are teething problems that also occurred in other countries.
The same sources stress that PPC is responsible for decisions it makes with industrial companies. The state, they point out, as a key shareholder of PPC, of course wants the company to do well, but on the other hand it also wants to take a series of measures to help in a transparent way the productive base of the country.
As it became known yesterday, measures being considered by the ministry include a strategy for bilateral RES and consumer contracts with special emphasis on productive sectors of the country, such as industry, tourism and catering where energy costs exceed 20% of production or operating costs. According to the data so far, such a mechanism should be created in a way that will be transparent and fully compatible with the requirements of the EU, and could be put into operation by 2022. The broader objective of the ministry is for electricity prices for industry, and other productive sectors, to reach levels seen in other corresponding European markets.
According to yesterday's RAE announcement, the decisions of the Regulatory Authority to amend the Balancing Market Regulation with the adoption of measures aimed at the smooth operation of the market and the promotion of effective competition in it apply as of February 13. Therefore, the participants in the Balancing Market should duly take into account the start of application of the provisions of the above decision in the bidding process from today, 12 February 2021.
It is reminded that the cost of the Balancing Market, followed an upward trend that reached the highest prices in the week 30.11.2020 - 06.12.2020, as RAE reports "at unacceptable levels (…) at 36 € / MWh, when the first four weeks of operation of the Balancing Market the amount of the Increase Account 3 (LP-3) amounted to approximately 5, 12, 16 and 17 € / MWh respectively, without the corrective settlements ".
RAE acknowledges that there is an issue of abusive behavior in the balancing market and states that the measures it promotes "combine the dual objective of functioning, with restoring conditions of proper operation and competition."
However, the Union of Industrial Energy Consumers characterizes the RAE measures as being insufficient, noting that the Regulatory Authority itself admits failures in the planning. Regarding the measures that ministry is supposed to examine for the bilateral contracts of RES industries, EVIKEN has not taken an official position, however, market sources note that even if such a measure worked, it would probably provide a solution from 2023-2024. However, the problem remains today, in 2021 and 2022, when under the current conditions industries in the country will be forced to close down.
According to these sources, if the government and RAE do not make substantial efforts to consolidate the electricity market, then the only solution is to appeal to the European Commission's Directorate-General for Competition.
Speaking to Business Daily, EVIKEN President Antonis Kontoleon notes that the RAE decisions taken on January 14 do not only fail to reduce market distortions but continue to push prices higher, reaching up to 15-16 Euros / MWh. As he notes, when there is a shallow market, without competition, such issues will arise. "When after January 15, when RAE announced the measures, the prices rose due to the behaviors of the participants, it means that we have an oligopoly", he emphasizes.
Commenting on the issue of industry participation in the balancing market, he notes that the design of this market mechanism includes participation from producers and the demand side, but IPTO, despite the public consultation last September, has not yet announced the results nor has it completed the relevant institutional framework. "Why are we talking about entering the industries that participate in interruptibility and not completing the institutional framework so that the demand side enters as a whole?" He wonders. Respectively, as he underlines, traders do not enter the balancing market either, resulting in only producers participating in the market.
Referring to the outstanding PPC tariff issue, he notes that to date there is no official information from the company about negotiations ending at the end of February. As he points out, there maybe market talk that existing contracts will be unofficially extended until talks wind up, but the issue remains that PPC in the letter sent to the industries said that it reserves the right to take retroactively action as of Jan 1, when an agreement is reached, in what would be serious blow to industrial companies.