By Haris Fludopoulos
Despite the fact that wholesale electricity is running at extremely low levels in the month of April, it is highly doubtful that this reduction will be passed on to consumers through the green tariffs to be announced next week for May. And this is because, as happened with the April tariffs, for the May tariffs, the suppliers are asked to pay the additional cap for the electricity thefts and network losses of 2021 and 2022, which are significantly increased compared to the initial ones calculations of DEDDIE. This cost is expected to be passed on to consumers by distributing any benefit recorded in the wholesale market.
More specifically, the average wholesale electricity price for the month of April is so far at extremely low levels. According to the data available so far, the average wholesale price of electricity in April is 57.16 euros/MWh, about 10 euros lower than the cost of the wholesale purchase in the month of March.
However, it remains extremely doubtful whether this significant reduction of up to 15% will be passed on to the retail prices of the green tariffs that will be announced by suppliers on May 1, as happens every month. It is recalled that something similar had also happened with the tariffs for the month of April: that is to say, while the wholesale price of March was significantly lower than in February (67.5 euros/MWh against 73.61 euros/MWh), however, the prices announced by the providers were stable or slightly increased. The reason for this increase was the cap of 500 to 600 million euros that supply companies are required to pay to DEDDIE for blackouts and technical losses of the network for the year 2021. In order to cover this cost, suppliers transferred to consumers the extra amounts resulting in increases instead of decreases.
The same is expected to happen with the May tariffs. It is typical that the bills that the suppliers are asked to pay translate into several tens of millions of euros for each company. These accounts relate to previous years (the amounts for 2022 are expected to arrive soon) as DEDDIE needed more than two years to clear the relevant costs.
Why are there additional costs that are effectively passed on to consumers? In essence, it is the famous normalization factor that calculates the index of losses and rheumatic thefts and which was originally calculated at 13%. However, based on the latest changes in the legislation from 2017, DEDDIE is given the possibility to put a multiplier on the percentage it had foreseen (13%) so that if it finds that the amount is higher, it can retroactively collect the extra amounts. For the year 2021 the percentage of rheumatic thefts and technical losses was estimated at 18% which is one of the highest percentages in the world. This high percentage of technical losses are asked to be shouldered by the consumers, as a result of which the benefits of the reduction in wholesale electricity prices are distributed.
Finally, it is recalled that in April the green tariffs announced averaged 11.29 cents/KWh with prices starting at 9.06 cents/KWh and reaching up to 14.8 cents/KWh. Accordingly, in March the average green tariffs were at 10.6 cents/KWh, while in February the average was at 13.3 cents/KWh. power outages and network losses.
