Power problems ahead?

Senior officials yesterday warned of possible power shortages as of 2005 and said Greece’s antiquated electricity rate structure needed an overhaul. «We are taking very seriously a number of parameters in our planning which make the sufficiency of our electric power system only marginal in 2005,» Deputy Development Minister Giorgos Salagoudis told the «Energy and Development 2004» conference, which is organized in Athens by the Institute of Energy for South East Europe (IENE). «We must all together adapt our energy consumption behavior, make energy savings a way of life and realize that in the next 12 months electricity is not a product that can be wasted,» he said. Salagoudis attributed the problem to, among other things, delays in the required investment in capacity and development of the grid in the last four years, a complete absence of sensitivity toward saving energy, and inadequate management of demand. He said the delays mean that Greece now has to attempt leaps in the direction of deregulation under conditions of limited capacity. Yiannis Paleokrassas, president of the Public Power Corporation (PPC) – still the country’s virtual monopoly producer – described the country’s electricity tariff structure as «paleolithic,» full of cross-subsidies and in violation of competition rules. «It will collapse under free market conditions,» he warned. He said that competition in the power market is still some time away and that deregulation would not lead to lower consumer prices, but this did not mean that it should not be pursued. The delay, he added, is precisely due, in a major part, to PPC’s low rates. «Today’s administratively set rates, which are both highest and lowest, are not compatible with the deregulated market… They create an unbalanced market which leads to either overinvestment or underinvestment, as in California,» Paleokrassas said. He said PPC is interested in investing in power production and transmission in Eastern European countries, the main criterion being the return to investment. The chairman of the Center for Renewable Energy Sources (CRES) Yiannis Agapitidis said the target of achieving a 20 percent share in production from renewable sources by 2010 will not be achieved and urged households, government and industry to embrace energy saving. Public Gas Corporation (DEPA) President Rafail Moysis said the planned deregulation of the natural gas market (on which many hopes rest for the activation of large power producers) could prove premature. He said turning Greece into a junction for the transmission of Caspian natural gas to Western Europe and the entry of Spanish company Gas Natural in DEPA’s share capital offer the company good growth prospects. He predicted that oil prices will not fall suddenly as in previous oil crises. «History will not repeat itself,» Moysis said. Hellenic Petroleum’s Managing Director Petros Kavoulakos said high oil prices no doubt fuel inflation and act as a brake on growth but also lead to investment in exploration for more deposits, new technology and energy savings. Sioufas reassuring Responding to Paleokrassas’s reference to higher electricity rates, Development Minister Dimitris Sioufas later categorically denied the government was planning rate hikes. Ministry sources said deregulation will proceed at the present rates.