Supply is OK, but rates are rallying
European and Greek authorities are anxiously watching energy prices, as the worst of the European crisis, in fall 2022, may be history, but rates remain significantly higher than the pre-crisis period and the energy market remains volatile.
Wholesale electricity prices have fallen from 227 euros per megawatt-hour in 2022 to €100/MWh and retail rates fell by 34%, but remain 58% more expensive than in 2021 and twice as much as in 2019 – the last “normal” year.
Nevertheless, conditions in the international energy market just before winter portend a costly season for households and force the government to have second thoughts on heating oil subsidies.
Based on current data, heating oil will debut on October 15 at €1.45 per liter, with market players seeing the price even reaching €1.60/liter if the global rally of crude oil continues.
Last year heating oil launched at a price of €1.37-1.41/liter after the government subsidy of €0.25 at the pump and the €0.075 discount by refineries. For this winter, the government has not announced a subsidy at the pump, neither have refiners – for now at least – announced any discounts, though they are reportedly considering them.
A total of €237 million will be allocated this year to heating allowance beneficiaries, against €280 million last year.
Following the global price rally, the government is said to be reviewing its stance toward the pump subsidy and will reinstate it if heating oil averages at €1.60-1.70/liter.
Consumers of natural gas, however, will pay at least 64% less to heat their homes this year than they would pay for heating oil. The data so far on the average price of natural gas on the domestic market put it at €0.080 per kilowatt-hour; the equivalent heating oil rate is at €0.135/KWh (at €1.45/liter).
The average electricity price after the subsidy of 1.5 cents/KWh the Energy Ministry announced, is set for October at around 14.5 cents/KWh. Depending on prices, the horizontal subsidy may not be abolished at end-2023.
