Power deregulation is on

The government yesterday approved a code which is seen as greatly increasing power production and supplier choices for industrial and household consumers. Development Minister Dimitris Sioufas approved the Administration Code of the Electric Energy Transactions System (KDSSHE), which will go into effect initially for industry and by July 1, 2007 for the general public. The code is an important step toward the long-awaited deregulation of the power production and supply industry, which has proven particularly cumbersome since formal, but nominal, deregulation six years ago. The code also brings Greece in line with policies elsewhere in Europe, Sioufas says. «The signing of the codes gives the domestic and foreign business community the signal for the promotion of large-scale investment initiatives, which will create hundreds of new jobs directly and many more indirectly,» he said. The drafting of the code was the result of coordinated efforts by the Development Ministry, the Regulatory Authority for Energy (RAE) and the Electric Power Transportation System Operator (DESMHE) Authority. It involved consultations with several already-licensed private energy producers such as the Kopelouzos, Mytilineos and Terna groups and the Public Power Corporation (PPC), as well as labor unions and the banks which will fund the new private power plants. KDSSHE was drafted according to two main guidelines: creating an attractive environment for major investment in the power production and supply sector, and increasing supply options for consumers. Sioufas said PPC, which continues to be a virtual monopoly in power production and supply, will continue playing a leading role in the industry. This industry will also be supported by a law for the deregulation of the natural gas industry – now being drafted and hoped to be passed this summer – and the incorporation into national legislation of EU Directive 54/2004, which deals with power industry deregulation. Competition The code establishes short-term power and reserve energy markets and a long-term capacity availability market. Besides PPC, market participants will now include private producers and suppliers who buy and sell electric energy, auxiliary services and capacity availability, and consumers who choose domestic sources, neighboring Balkan countries and Italy as suppliers. Securing the competitiveness of PPC is seen as necessary, as the entry of independent producers and suppliers will be possible on condition their competitiveness is on par with PPC’s so they can compete on equal terms. Other goals of KDSSHE are ensuring the credibility and transparency of the component markets and the development of secondary markets which will optimize social benefits. Market entry will be open to anyone without administrative or other impediments. The new code also provides for the setting up of a wholesale Daily Energy Programming market. According to the Development Ministry’s statement, the new system will ensure the country’s energy sufficiency, increase investment, and bolster competition to the benefit of consumers and the national economy. Currently, the capacity of the country’s grid is considered only marginally adequate for 2005 and even less so for 2006. The anticipated additional demand will be met by the two plants to be built by Hellenic Petroleum and Motor Oil, which have secured funding through real sureties. The two 400-megawatt plants, in Thessaloniki and Corinth, are expected to be joined to the grid in 2005 and 2006 respectively.