Public Power needs revenue injection as early as possible


An effort to boost Public Power Corporation’s (PPC) revenues without increasing the burden on consumers – as promised by Energy Minister Kostis Hatzidakis and PPC’s new management under Giorgos Stassis – is looking like an increasingly challenging task, as estimates of the amount needed to balance the company’s accounts are estimated at 700 million euros on an annual basis.

An anticipated return of some 200 million euros from an adjustment in PPC’s spending on other public utilities in 2011, as well as the reduction of value-added tax on electricity and another 200 million euros from the surplus of the account for the renewable energy sources (RES), add up to a potential revenue increase of 12 percent for the utility.

This translates into an annual boost of around 430 million euros for PPC’s coffers, which, however, is still significantly below the 700 million euros the company’s economic services say will be needed to balance its books.

Meanwhile, given that the adjustment of rates is not expected before early September, PPC stands to get only a third – some 143 million euros – of that 430 million by the end of the year. This is far below the amount needed to reverse the picture of the utility’s finances ahead of Ernst & Young’s report on second-quarter results.

Hatzidakis has made no secret of his concerns ahead of that September 24 milestone, with PPC’s new management also expressing doubt. This is because the RES account surplus, which is being disputed by company officials, has not yet been confirmed by the Regulatory Authority for Energy.

The 2011 public service cash is also uncertain, as there is no such provision in this year’s budget, while the ceiling on emission costs is about to be abolished.

Another source of financing for PPC will be the securitization of overdue arrears from unpaid bills, amounting to 2.7 billion euros, from which the utility expects to collect 18-20 percent of their nominal value.

However, this is not going to happen before October.