The electricity subsidy shock

The electricity subsidy shock

A significant rise in the price of electricity announced by state-controlled Public Power Corporation (PPC) for September forced the government to raise its electricity subsidy for September to 1.9 billion euros, from €1.1 billion in August.

The subsidy level inevitably follows the PPC’s pricing policy, since it is the dominant player in the market, with 63% of consumers choosing it.

While PPC had the lowest price of all electricity providers in August (€0.48 per kilowatt-hour) it raised its September price to €0.788 for those consuming up to 500kWh per month and €0.80 for heavier consumers. 

In order to stick to its commitment for an actual charge to consumers between €0.14-0.17 per kWh the government had to adjust its subsidy level accordingly, raising it by over 72%.

A positive effect of this policy is that, for some lucky consumers, bills this month may come very low, even negative, just for the power consumption part, before other charges are factored in.

Critics of the government’s calculation of the subsidy say that it puts a heavy burden on the budget and, therefore, on taxpayers, gives a wrong impression to consumers about the real cost of electricity and does not provide enough of an incentive to providers to cut prices or, at least, contain them.

Among the consumers set to benefit the most are those who signed up with electricity provided Heron’s generous pricing program. At €0.75 per kilowatt-hour, it also provides, like some of its competitors, a 20% discount to those who pay their bills on time, thus lowering for them the price to €0.60/kWh. When the state subsidy kicks in, customers will pay just €0.111/kWh and the really good payers will be charged a negative rate (-€0.039/kWh). The discount will be credited in the bill after the one in September.

After deducting the subsidy, customers of provider Fysiko Aerio will pay €0.04/kWh and half that if they pay on time. Elpedison’s rate falls to €0.044/kWh, Zenith’s to €0.048/kWh, Elin’s to €0.06 and NRG’s to €0.109. PPC, as we have mentioned, has the highest net rate, at €0.149 and €0.161 for heavy consumers, followed by Watt+Volt (€0.145) and Protergia (€0.131).

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