The French model will be used for the liberalization of the Greek electrical energy market, according to a speech by Finance Minister Yanis Varoufakis at the European Business Summit in Brussels on Thursday.
“The government will examine the model of French bilateral contracts in the regulation of the electrical energy production and distribution sector, without privatizing the existing power production company,” Varoufakis said.
This will entail the definitive abandonment of the plan for the so-called Small PPC that the bailout agreement provided for, along with the privatization of the Independent Power Transmission Operator (ADMIE), and the automatic return of the demands that the European Commission expressed in 2008 with its decision for the compulsory provision of access by third parties to lignite as fuel for electricity production.
The project for the creation of a smaller rival to Public Power Corporation by splitting away part of its production plants, network and clientele took into account the country’s compliance with the Commission’s decision and was accepted by Greece’s creditors, provided that PPC would allocate part of its lignite and hydroelectric production to third parties through auction until the completion of the project, along the lines of the French NOME market model.
It is this plan that the government intends to re-examine, according to Varoufakis, although it will not have a transitional character. Instead it will be Athens’s proposal for the full liberalization of the Greek market following the pattern set when Electricite de France’s monopoly was brought to an end, which allowed third parties, mainly industrialists, access to cheap nuclear energy.
One of the problems is that the auctions model provides no incentives for the improvement of the performance of production plants that produce at a high cost the energy which the country consumes and does not allow for genuine production competition that would improve the cost efficiency of the country’s system.