In particular, the support will be provided horizontally, i.e. to all households and residences (main, country), while it will cover monthly consumptions up to 500 kilowatt hours. The amount of the subsidy will be announced at the beginning of August, when the charges of their variable products for the following month will have been finalized by the suppliers, while the aim is to subsidize the price of electricity for more than 15 cents per megawatt hour. At the same time, the aid to the beneficiaries of the Social Household Tariff will be greater than that for the rest of the household consumers.
According to what the Minister of Environment and Energy Theodoros Skylakakis announced during yesterday’s press conference, the government’s measures will move along three axes.
- The first axis concerns the extraordinary reinstatement of the tax on the production of electricity with natural gas, which will be imposed at least for the months of July and August. The exact amount per thermal megawatt hour will be announced in the coming days as the leadership of the Ministry of Energy said. The special contribution attributable to each Power Generation Unit will be calculated by the National Natural Gas System Operator Anonyme Company (DESFA S.A.).
- The second axis concerns the subsidy to households in August on the “green” and “yellow” tariffs which are floating. The amount of the subsidy will also be known early next month.
- The third and last axis concerns the integration of the European directive in the case of distortions that have endemic characteristics. More specifically, there will be a kind of intervention mechanism from the Greek side in case of market distortion and malfunction. When, in other words, some characteristics appear intermittently, because there is a permanent distortion of the market (a typical example is the current increase in prices) for which there is no sufficient reaction from the European side. This is, in essence, the mechanism that had been used in the past. There will be a request to the European Commission, so that Greece activates the possibility of this provision.
The government decided on the above emergency measures, taking into account the following data:
-The mechanism regarding the ceiling in the electricity production units has expired (June 30, 2024).
-The new European Directive foresees conditions for an emergency mechanism, which are not fulfilled, until following three months and the establishment of a regional or central energy crisis.
-Greece is not responsible for the distortion of the operation of the European market, as electricity prices are not determined by our country.
As PEN Deputy Minister Alexandra Sdoukou pointed out, the current situation concerns a regional energy crisis. “Greece is not in the worst position because, for example, in Romania and Hungary they have more expensive prices than us, but this is not an alibi. That is why we are the first to proceed with measures for the benefit of consumers,” he said, emphasizing at the same time that the government is showing its immediate reflexes so that there are no increases in electricity bills and citizens are burdened.
Long-term support
In the context of the press conference, the initiatives taken by the government (from July 2023 until today) to reduce electricity prices for the benefit of consumers, business-professionals and farmers were presented.
It was pointed out that in January 2024, with the reform of colored tariffs, average prices on green tariffs – where the majority of consumers are – were achieved lower than those of December 2023 (time period with subsidies). Specifically, the weighted average price for January 2024 was 140 euros/MWh.
Then, due to seasonality and the drop in natural gas and pollutant prices, prices moved further downwards (110 euros/MWh, May 2024).
In June, there was some uptick, due to the rise in natural gas prices and pollutant prices. In practice, there was a return to the levels of January 2024. Averaged up to July, the seven-month wholesale price was 130 euros/MWh.
POWER SUPPLY IN THE EVENING HOURS
The domino that raises prices in the country
After July 11th came a combination of prolonged heatwave in Greece, unexpected heatwave across SE Europe, plus increased demand from Ukraine and unabated demand in countries like Hungary to the West. Eastern connections are weaker than in Germany-France, so Austria has 100 euro prices and Hungary 800 euro some times. The two energy systems are being decoupled, so Eastern Europe cannot import cheap energy and it becomes a domino, raising ours as well.
The duration of the phenomenon is already a week and will last a few more days, estimated Mr. Skylakakis “if we look at the market estimates in futures contracts, it will not continue in August. Futures are not always a good forecasting tool, but they are an indication.”
However, the consequences are that we suddenly have a spike close to 200 euros and in the evenings to 650 euros. “They are not exclusively shaped by our own market because we have the same ones in Bulgaria and higher ones in Hungary and Romania. The power flow is usually to import in the evenings from Bulgaria, but now we do small exports to the north and bring in power from Italy,” he commented.
Concluding, the minister said that “the government cannot remain inactive, especially when there are “skyrocketing profits”, i.e. profits that arose not because someone has increased costs, but from the increase in demand and the inability to offer. These “skyrocketing profits” cannot hurt consumers,” he added.
Exemption from retroactive ETMEAR
As the minister revealed, in the case of small and medium enterprises there will be a much more significant relief, as all the obligations for the retroactive ETMEAR liquidations will be covered. The minister clarified that there will be no subsidy to businesses, as for this purpose the approval of the Commission would be needed, since it would be a state aid.
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