The Regulatory Authority for Energy (RAE) is proposing that direct state financial support be excluded from incentives for investment in the energy sector, arguing that they are incompatible with the ongoing process of deregulation, according to sources. The proposal is the main one in a number which RAE has submitted to the government, within the framework of the planned reform of the investment incentives law and following a request by the Development Ministry. «The provision of state support in the sector of energy production is generally not expedient, given that energy markets are in the process of deregulation,» RAE is quoted as saying. The independent energy watchdog’s position is that any asymmetrical policy of state support to investment in the sector is inappropriate. Given that publicly controlled enterprises, such as the Public Power Corporation (PPC), the Public Gas Corporation (DEPA) and Hellenic Petroleum have an overdominant position in Greece’s energy markets, any inclusion of state support in the investment incentives law would constitute a distortion of competition and a further impediment to the entry of new enterprises into the sector. Nevertheless, for the promotion of new private investment RAE proposes that the new incentives include tax breaks to firms wishing to invest in electric power production, on condition that they are not in any way affiliated with an energy company in which the State is a shareholder. Furthermore, it proposes the maintenance of financial support for special investment plans exclusively in the areas of renewable energy sources (RES). However, it excludes investment subsidies even for environmental protection to companies active in the competitive segment of electricity production. For investment in renewable sources of energy, RAE proposes grants as the preferable form of economic support, particularly for capital expenditure, and an increase in the subsidies currently applicable. The Center for Renewable Energy Sources recently said the main problems in the development of RES power production are the slow licensing process, weak transmission networks and reactions from local communities due to inadequate information.