Grid operators reap high fees
Consumer interest in electricity bills may have focused on the price per kilowatt-hour, which is being reduced by the decline of natural gas rates, but there is also the invisible side of bills, which is quietly showing serious hikes and is not affected by the favorable global rate drop.
These hikes concern the regulated charges as reflected in the bill form, which are common to all providers and regard network and transmission system usage fees, public utility service charges and ETMEAR charges (the former RES fee).
The network charges are adjusted every four years based on the investment programs of the operators (ADMIE and DEDDIE) in electricity bills, and DESFA and DEDA (after the merger of EDA THESS., EDA Attica and DEDA) in natural gas bills.
They operate in the monopoly markets of electricity and natural gas grids at zero risk of competition and enjoy an annual regulated income which should cover their investments and a reasonable return on capital, the famous weighted average cost of capital (WACC).
The amount of the WACC essentially defines the maximum profitability of the managers, and for this reason, in recent years, it has been a bone of contention between the operators and the competent watchdog, RAAEY, which must approve it, with the main criteria being the lowest possible burden on consumers and ensuring the smooth implementation of investment programs and the sustainability of companies.
High investments also means claiming a high WACC and this is well known by the foreign shareholders who control the Greek energy networks (State Grid by ADMIE, Macquarie by DEDDIE, Snam’s consortium by DESFA and Italgas by DEDA) and plan mammoth investment programs with the needs of the energy transition.
Moreover, in the shareholder agreements they signed when they bought the Greek networks, they have secured conditions for the distribution of profits at a rate of 50%, while in some cases this rate reaches 94%!
The RAAEY has often cut down the projects of operators that it either did not consider necessary or considered the cost/benefit ratio was disproportionate for the consumer, while sometimes it has come into open public conflict with them.