Waiting for the new power rates

The government is allowing power suppliers in Greece to see whether Moscow will continue to supply gas to Europe after the completion of planned maintenance works on the Nord Stream 1 pipeline on July 21, and then announce their electricity tariffs for August.

The sudden decision by Energy Minister Kostas Skrekas to freeze the timetable for announcing prices was made when he realized that providers would announce very high rates, incorporating the uncertainty regarding Vladmir Putin’s intentions regarding the European market supply. At the same time, the decision highlighted on the one hand the weaknesses of the mechanism created by the government to lighten electricity bills, and on the other hand the immaturity of the Greek energy market.

According to this mechanism, which also provides for the abolition of the adjustment clause, providers are obliged to announce the price per kilowatt-hour at which they will charge their customers one month in advance, making a prediction of how the rates of electricity of gas will average. In this context, on Sunday, July 10, providers should have to announce the price per KWh for August.

As the uncertainty over whether or not Nord Stream 1 will restart has sent gas prices skyrocketing, and by extension the wholesale price of electricity, alarming messages from providers have started arriving at the Energy Ministry. The prices they would announce ranged from 0.55-0.60 euros/KWh, compared to €0.32-0.35/KWh in July, with the adjustment clause.

According to information, even PPC, which traditionally takes on the role of safe haven in crisis situations, has informed the ministry that under the current circumstances it cannot lower prices. In fact, given that the changes were made in a very short period of time, it did not have time – just like everyone else – to make any risk hedging moves.

With this data, it was proposed that the ministry allow the announcement of prices after July 21, when Moscow’s plans will be clearer.