Energy crisis: Benefit of 1.1 billion euros to consumers from the ceiling on electricity prices – The Greek plan

Energy crisis: Benefit of 1.1 billion euros to consumers from the ceiling on electricity prices – The Greek plan
Energy crisis: Benefit of 1.1 billion euros to consumers from the ceiling on electricity prices – The Greek plan

Despite its astronomical price jump natural gasin Greece its new prices electricity, that are set from today September 1st in force and will be valid until the end of the month, are expected to be significantly reduced, as they will include State subsidies. At the same time, the financial staff meetings are feverish package that the prime minister will announce at the TIFas its premium is being considered heating oilagainst solutions such as natural gas, and of course, electricity.

At least for domestic consumers September electricity will not be very expensive, at least compared to the astronomical height that the wholesale price has reached on the energy exchange.

However, depending on the company, the fluctuations are large. With the subsidy, the most expensive price will be 34 cents per kilowatt hour, without the consistency discount, while the cheapest, just 2 euro cents. For over 60% of consumers the final price per kilowatt hour will be 15 cents, as in August. Few, however, are familiar with price comparison.

A average monthly charge for a household with a monthly consumption of 400 kilowatt-hours, it will be 60 euros, instead of 312 that he would pay without the subsidy, not counting the regulated charges and the municipal fees reflected in each bill.

The total fund to subsidize electricity bills reached 1.9 billion euros in September, with just under half coming from the surplus profit retention mechanism that has been in place since July.

The concern of all European governments, however, is how long national budgets will hold up if Russia completely shuts off the tap, sending gas prices skyrocketing.

The Minister of Environment and Energy Kostas Skrekas he said: “The limits of the budget are finite, we will exhaust them but Europe must also take measures at last to support the European continent”. SYRIZA criticizes the government because it did not cooperate with the Iberian countries that put a ceiling on the price of natural gas.

The next crucial European appointment is scheduled for September 9so the council of energy ministers.

The government’s proposals to the EU

Over 1.1 billion euros is the consumer benefit from its implementation “ceiling” on compensation prices for power producers, from the start of its implementation until August 21. Of this amount, according to the data available to APE-MPE, the largest amount was contributed by PPC (419 million of which 189.5 million lignite and 156.1 million hydro) and Renewable energy sources (634 million), while the remaining 59 million is the contribution of the other producers.

The performance of the mechanism implemented by the government since July comes to the fore in view of the decisions expected at the EU level to reform the electricity market, as the scenarios under consideration include Greek model. Yesterday, Environment and Energy Minister Kostas Skrekas sent updated data on the mechanism’s performance until August 31 to his EU counterparts, ahead of the meeting of the Council of Energy Ministers on September 9.

It is reminded that:

-In accordance with market model provided for by European legislation, the exchange price is formed based on the price offered by the most expensive unit required every hour to cover the electricity demand. In practice the price is determined by the natural gas units which – due to the jump in the international price of the fuel – are the most expensive. All units (lignite, hydroelectric, RES, etc.) are compensated with the price set by the most expensive unit.

– With the mechanism put in place by the government since July, the price of natural gas was decoupled from the price charged by power producers, which is now determined every month by RAE. Power producers do not collect the prices set in the Energy Exchange but the administratively determined prices which ensure the coverage of costs (which are different by technology) plus a reasonable profit. For September, the prices set are 214.22 euros per megawatt hour for lignite units, 564.18 euros for combined cycle natural gas units, 797.3 euros for open cycle natural gas units, 112 euros for hydroelectric and 85 euros per megawatt hour for RES.

What other scenarios are being considered?

  • THE imposing a ceiling on the price of natural gas intended for power generation according to the standard applied in Spain and Portugal. This solution is accompanied by compensation to power producers for the difference between the ceiling and the actual price of natural gas.
  • THE imposing a single ceiling on the compensation price of power generation units that will result from the average cost of the units, subsidizing those that have a higher cost than the average.
  • Another Greek proposal for the decoupling electricity prices from natural gas prices, submitted by Environment and Energy Minister Kostas Skrekas to the July Council of Energy Ministers, foresees the division of production into two parts: on the one hand, renewable sources, nuclear, high-efficiency cogeneration, hydroelectric and storage, and on the other another the coal (lignite) and natural gas units. The price that consumers will pay, according to this proposal, will result from the weighting of the two “baskets” and according to the analysis of the ministry, it can be up to 45% lower than the price that is currently set on the Stock Exchanges.

So, two of the proposals so far under discussion are of Greek inspiration.

It is recalled that the prime minister Kyriakos Mitsotakis had pointed out as early as March 9 in a letter to the president of the European Commission Ursula von der Leyen the need for immediate and decisive intervention in the natural gas market “to prevent it from bringing additional costs to the lives of the citizens of the European Union, to the economies of the member states and to the successful implementation of the European Green Deal”.

“If we don’t act now, the problem will continue in electricity prices – linked to natural gas prices in wholesale markets – in the coming spring and summer months, putting a huge burden on households and businesses,” he stressed. March the prime minister.

The possibility of imposing a ceiling on the price of natural gas was included in the conclusions of the European Council of March 25, but in practice the European reaction is now expected with a delay of several months. The first step is expected on Friday 9 September at the meeting of the Council of EU Energy Ministers.

Sources: ERT, APE-BE

The article is in Greek

Tags: Energy crisis Benefit billion euros consumers ceiling electricity prices Greek plan

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