Trying to save troubled PPC without hitting households

Public Power Corporation (PPC) customers will know on Friday whether the financially troubled utility will charge them more to make up for what its new chief executive has described as a “dramatic” cash shortfall.

The utility’s new management, led by Georgios Stassis, former CEO of Italian energy giant Enel’s Romanian subsidiary, and officials from the Energy Ministry are working at a breakneck pace to find the formula to reduce the company’s threatening shortfall with minimal impact on consumers.

Stassis has said that the shortfall is expected to be higher than the previous management’s estimate of 750 million euros, exceeding 800 million.

The measures, which must be readied by Tuesday to be sent to the shareholders ahead of their extraordinary meeting of August 30, are absolutely necessary to convince the certified accountants, who must sign off on the company’s financial statement for the first half of 2019, to not declare the company as essentially insolvent.

This could have significant domino effects, both on the company itself and its lenders.

In the previous six-monthly financial statement, released last April, the accountants had written that the company’s financial situation was compromising its chances of survival.

The great challenge for the management, and the government, is to find the 800 million euros without shifting the burden to households.

The government is vowing that households won’t suffer. The solution will be to charge higher prices to large industrial consumers of electricity.

Proposals being floated include a carbon dioxide emissions charge. There is also a proposal to further reduce the discount given to customers who pay their bills on time.

The discount, even as reduced from 15 to 10 percent by the previous government, still costs the company 200 million annually. This measure, however, would also affect households.

The solution, for some government officials, is to reduce the levies for certain public services included in electricity bills, such as charges for local authorities and state broadcaster ERT.

Another cut would concern the special charge for the reduction of pollutants, which is essentially an incentive to switch to renewable energy sources.

But this would require a separate legislation and Energy Minister Kostis Hatzidakis is expected to introduce an amendment to that effect Tuesday.