Why did wholesale prices increase in the Greek electricity market?
The increase recorded in wholesale prices in Greece is due to a combination of events. These include:
• The long-lasting heatwave in Greece, which was expected, but above normal levels,
• The heat wave of unexpected duration from Ukraine to Greece, worse than that of Greece,
• Increased demand from Ukraine as the Russians continue to destroy the electrical infrastructure.
• The non-expansion of the increased demand that has been created, especially in Hungary to the West. Due to weak connections to the West (eg, Austria-Hungary connection), we are being fed Hungarian prices while we are regarding 1,000 km away. Austria, however, which is next door has spectacularly lower prices, because it has exported as much as it can export to Hungary and its prices have been decoupled.
How are the wholesale prices of electricity in Greece affected by the corresponding prices of other European countries? Does this only happen when wholesale prices go up or when they go down?
Wholesale prices are mainly influenced by the interconnected Balkan countries, which are not well connected to the rest of (Central) Europe. This happens both when prices rise and when prices fall. In particular, interconnections affect demand and supply. And we seek to have connections – we have improved them – for the most efficient operation of the system. This means, however, that there may be periods when energy is leaving abroad and prices are driven up by demand abroad, and vice versa, periods when prices are driven down by the supply of cheap energy coming in abroad. The above refer to wholesale prices. Added to these are the charges related – mainly – to the cost of operating the networks and the social services we offer, either with low charges for the vulnerable or with very large amounts of subsidies for electricity in Crete and the islands, through the YKOs. These amounts, when the interconnections are completed, will be decisively reduced.
Why did retail electricity prices increase in July?
Retail prices follow, with a delay, wholesale prices, which increased for the reasons we mentioned above. The government, however, showed immediate reflexes, taking measures to ensure that consumers do not see increases in their August bills.
When will retail electricity prices return to seasonally normal levels?
The drop in retail prices is a function of the type of invoice. It is immediate in the yellows, with a lag of at least one month in the greens, while the blues are not affected during the duration of the relevant contracts. August futures prices, i.e. market estimates for future prices, show a de-escalation of wholesale prices for Greece.
Will these increases in consumer bills be a frequent occurrence in the future?
We are taking measures so that this phenomenon is not frequent. In this direction, we are adopting policies to further increase the penetration of RES, install electricity storage stations, strengthen interconnections, in order to avoid the need to operate expensive thermal units that raise the cost of electricity. The Government has proven, time and time once more, that when there is a need it intervenes and helps consumers, even though the European tools are extremely limited and the European commitments are strict. This is what we did now with the extraordinary measures we announced for energy costs.
Is there any special provision, on the part of the government, so that consumers can cope with the increased costs?
Through an amount collected from the special levy on electricity producers in favor of the Energy Transition Fund, electricity consumers who are contracted to fluctuating electricity tariffs and are affected by the upcoming sharp rise in next month’s tariffs will be subsidized for August. The consumption limit of the subsidy for domestic consumers will be 500 kilowatt hours (kWh) per month. The announcements on the perimeter of the beneficiaries and the exact amount of the subsidy in Euro/MWh for each category will be made immediately following the announcement of the final prices of the special tariff (green) in the first days of August.
Will you take measures to help farmers financially?
We have already instituted the GAIA tariff, which applies to the owners of rural electricity connections. Through this, they gain access to low electricity prices, in the long term, for a period of 10 years. After the latest developments, not a single farmer should be left outside of GAIA until the end of July. They guarantee pre-crisis prices for all their electricity for two years.
Have you considered the fact that the increase in electricity prices will also affect product prices? What are you going to do regarding it?
We consider the increases of the last month to be a transitory phenomenon, which does not have a significant effect on production costs, such that it would justify any concern regarding a rise in inflation. Inflation has been contained globally in recent times.
Will the government take measures to deal with energy costs, which will concern businesses? What initiatives will the government take so that small and medium-sized enterprises do not return the huge amounts of ETMEAR?
A very important measure that we are taking for the benefit of businesses concerns the fact that there will be no refund of any kind in relation to ETMEAR. This backlog will not be resolved at the expense of SMEs, since it is not their fault that its implementation has been delayed. Therefore, there will be no retroactive effect. Decision, with a benefit of hundreds of millions of euros for small and medium-sized businesses.
What benefit will consumers see on their bills from the measures taken and by when?
These days the measures are being quantified so that the exact benefit for consumers can be derived. They will see the benefit from the next electricity bill (August bill).
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