Companies flock back to PPC

Medium-voltage enterprises are flocking back to Public Power Corporation (PPC) due to the high electricity rates in the market.

That is the client category that alternative power suppliers specifically targeted when the energy market opened up, thanks to its high profit margins. The competition later focused on attractive offer and discount packages, with a fierce rivalry among market players, but this has now been damaged by the rate rally.

What the market had until recently began to sense has now been confirmed by the first-half financial results PPC released last week: For the first time PPC’s market share in medium-voltage businesses has reversed course to post an increase by about five percentage points compared to the first half of 2020: In January-June 2021 PPC’s mean share in the medium-voltage market climbed to 35.3% from 30.5% a year earlier.

The reversal of that course becomes even more significance when compared with the rapid decline of its overall market share, amounting to some 17 percentage points in 2020: The utility’s share in the Greek electricity market slid from 52.6% in 2019 to just 35.7% at end-2020.

The reason for that development in the medium-voltage market is the high wholesale rates, that have been automatically passed on to the corporations through the floating electricity rates: The lower the rate a company secured last year, when thanks to the competitive prices competition was intense, the greater the cost difference has been this year. Sources say that it was those corporations which were the first to break their contracts and seek another supplier.

The average rates in medium-voltage clients’ contracts ranged last year around 60-70 euros per megawatt-hour, while they now stand as high as €100/MWh. The trend of medium-voltage clients shifting back to PPC and the mobility between private suppliers appears to have continued over the third quarter of the year.

Whether that picture ends up having a positive impact on PPC will depend on the contracts it signs and on the course of rates.