Wholesale electricity suppliers should give some of their earnings back to consumers, according to a recommendation by the Regulatory Authority for Energy to the Environment and Energy Ministry.
In line with the prime minister’s proposal to Brussels that is supported by data produced by Athens on Greek market profit margins, RAE has positioned itself in favor of an extraordinary levy being imposed on the profits collected during the energy rate crisis in power production because of the high natural gas prices.
As of this month RAE will be precisely quantifying and cross-checking the profit margins of every production unit per hour and per day, and sharing the data with the ministry and the Prime Minister’s Office.
The soaring profits observed during this energy crisis stem from the way the wholesale markets operate in European Union member-states, with rates determined by the most expensive quantity that enters the system each day. In Greece, for most of each day, the wholesale rate is determined by gas-powered units due to the high dependence of electricity production on natural gas – which accounts for 40% of fuel. However, the same high rate is also used for payments for power from renewable energy sources, as well as hydroelectrics, whose production costs are far lower, and even lignite-powered plants, which the crisis has rendered cheaper than gas-fired units.
The extra cash that unit operators collect thanks to the rise in gas rates ought to return to consumption, RAE argues, mainly referring to the excessive earnings of lignite and hydroelectric facilities; they are far higher than what Public Power Corporation returns to its customers by way of discounts.
Point 4 of Prime Minister Kyriakos Mitsotakis’ proposals to Brussels concerns the setting of a ceiling on the gross profit margins in the wholesale electrical energy market, based on the monitoring of production costs by the market regulators and the levelized cost of energy (LCOE) that production units face.