Power subsidy to cost some 35 mln euros
The course of prices in the wholesale electricity market is being monitored day by day and hour by hour by officials at the Energy Ministry in order to complete the double exercise of subsidizing the retail price and imposing a tax on the production of natural gas units so as to successfully mitigate the effects of the high fluctuations of the last two weeks.
The decline in recent days in the price of a megawatt-hour has created expectations for some relief in the crucial few days remaining for the formation of the average wholesale price for July.
The pressure on southeastern European markets in the past few days appears to be easing after the restoration of the Austria-Hungary interconnection and the flow of cheap energy from Western Europe, relieving prices across the region and in Greece. This development, combined with the slight decline in demand and the heatwave, as well as the parallel strengthening of renewable production, is expected to lead to a gradual normalization of prices in the wholesale markets, limiting the burden on households, which will not be avoided even with the subsidies.
The ministry’s intention is to keep the prices for household consumption in August at around 15 to 16 cents/KWh in the green and yellow floating tariffs, taking as a basis largest provider (70%) PPC’s green tariff.
In July, PPC’s green tariff for consumption of up to 500 KWh was set at 13.557 cents/KWh, up from 11.898 cents/KWh in June. PPC kept the prices at these levels after a discount of 38% in June and 25% in July. Its tariff will essentially be the Interior Ministry’s tool to hold down prices according to the model followed during the energy crisis.
The ministry’s reasoning basically says that private providers will not risk losing customers by charging high prices that will not be covered by the subsidy and they will, therefore, adjust their tariffs accordingly.
In a first estimate, competent ministry officials calculate that the total cost of subsidies for August’s consumption is around 30-35 million euros and the subsidy per KWh around 3-4 cents, which translates into an increase in PPC’s green tariff to between 16.557 and 17.557 cents, from 13.557 in July.
