ECONOMY

Greeks pay dearly for natural gas, while electricity rates keep rising

Greek consumers pay the third most expensive natural gas in the European Union, but also have the fourth cheapest electricity despite suffering the second highest rate hike in the bloc, according to data released on Monday by Eurostat on the second half of last year.

Still, the low power rates in Greek households do not reflect the actual production cost, as in other EU countries where competition functions and rates are freely determined by the market. Greek market rates are regulated in the context of a social policy that governments exercise, but this is about to end on July 1 with the liberalization dictated by the country’s agreement with its creditors.

In the context of the transition to a liberalized market, Greek consumers have endured a hike that amounts to 9.2 percent in rates since January, with another increase expected in early July. Rates will then be freely determined based on production costs, which will entail significant increases, both due to the fuel mix used for electricity production that is constantly moving away from cheap lignite and toward imported natural gas, and to the very expensive renewable energy sources. Distortions in the operation of the market also raise production costs.

Greek consumers are already finding it hard to pay their electricity bills even though the rates are lower than in the rest of the EU. Consumer debts to electricity giant Public Power Corporation (PPC) have reached 1.2 billion euros, with more and more consumers asking for payment schemes that PPC officials expect to reach 1 million until the end of the year, from 800,000 today.

The average price of electrical energy in the EU stood at 19.70 euros per 100 kilowatt/hours, while in Greece it amounted to just 14.20 euros/100 kWh. In terms of purchasing power standards, Greece has the fifth smallest rate at 15.7 PPS/100 kWh, with the highest recorded in Cyprus: 32.9 PPS/100 kWh. The highest natural gas prices were recorded in Sweden (12.7 euros/100 kWh), in Denmark (10.8 euros/100 kWh) and in Greece (10.2 euros/100 kWh). In terms of purchasing power, Greece’s was the second highest at (11.3 PPS/100 kWh) behind Bulgaria’s (12.3 PPS/100 kWh).

The high natural gas prices in Greece are due to the costly procurement from the country’s main supplier, Gazprom, and the monopolistic structure of the local market.