Power rate hike may be put off

Gov't asks country’s creditors for extension to deadline for liberalization of electricity billing By Chryssa Liaggou

The government has asked the country’s creditors for an extension to the deadline for the liberalization of electricity rates, according to sources, as it realizes it will be impossible for consumers to cope with the rate increase that Public Power Corporation (PPC) has applied for, even with the reduced hike that the Regulatory Authority for Energy (RAE) has proposed.

The government’s main argument in its request is many consumers’ inability to pay their electricity bills even at the existing rates. This is based on the fact that PPC has seen its rate of bad loans grow by 140.3 percent to 134 million euros in the first nine months of 2012 from the same period in 2011, a figure which is expected to increase further.

An additional argument is domestic consumers’ unpaid debts to PPC, which amount to 700 million euros, combined with supply cuts that according to PPC data have reached up 30,000 per month.

The agreement that Athens has signed with its creditors – the European Union, the European Central Bank and the International Monetary Fund – provides for the low-voltage rate to fully reflect the cost of electricity production by July 2013. The government is also permitted to impose the rate hike in three installments: in January, March and May.

The Energy Ministry, which has the responsibility of fulfilling this commitment, has realized that the original plan to reduce the first installment of the hike to the lowest possible level would only offer consumers short-term relief, as in the next five months a major increase would become inevitable. Therefore the target for a small increase in January has been abandoned and replaced by a request for an extension to the deadline for harmonization with the relevant EU directive and the agreement with the country’s creditors for the liberalization of rates for at least one year.

Such a move would render the transition from regulated rates to cost-benefit rates smoother for consumers and secure an adequate cash inflow for PPC. RAE has proposed an average increase of 13 percent for the year’s first half, compared with the 25 percent PPC had asked for. The ministry must decide by December 31.