ECONOMY

Troika turns up heat on energy

The country’s creditors have rejected Greece’s plan for necessary changes to the electricity market, and, in an effort to press for changes that have remained at the implementation stage for over two years, they have threatened to classify as state subsidies funds given to power production units since 2005 in the context of the mechanism to ensure power sufficiency.

The European Commission, European Central Bank and International Monetary Fund realized that the funds paid to power producers through that mechanism, which pays power plants for their capacity to offer sufficiency and flexibility to the grid, were particularly high at the time of the first bailout agreement in 2010 and had demanded an adjustment back then.

The Regulatory Authority for Energy (RAE) proceeded to an initial adjustment of that mechanism in a temporary fashion, applying from July 2013 to December 31, 2014, the date when the new mechanism compatible with the European Commission requirements and with the approval of the troika is supposed to start functioning.

The troika now deems there is no need for a mechanism that compensates plants for their contingency capacity now that the country is in recession and there is an oversupply of power. It only acknowledges the need for compensation to units that supply flexibility to the system and has demanded a reduction of the current cost by over 50 percent.

The current system hands out some 570 million euros per year for such payments to plants, of which 390 million goes to PPC and 180 million to independent producers. RAE has proposed a cut to 450 million in total, but the troika is demanding a total cut of 270 million euros.