Government to intervene in energy dispute

The government has been alarmed by the inability of Thessaloniki Energy, the subsidiary of state-controlled Hellenic Petroleum (HELPE), to break into the electricity market, which is being monopolized by another state company, Public Power Corporation (PPC) with its ability to offer electricity at far lower prices. Development Minister Dimitris Sioufas yesterday discussed the issue with Prime Minister Costas Karamanlis. Both are concerned over the implications of the case for likely private sector investors who may decide that the opening of the energy market was in name only. A meeting will be held today at the Development Ministry. Yesterday, Thessaloniki Energy was unable, for the fourth day in a row, to compete with the PPC in supplying the electricity grid, also run by PPC, with power. Even at times of peak demand, the price offered by PPC did not exceed 55 euros per megawatt-hour (MWh) whereas Thessaloniki Energy’s unit has to sell at 60 euros per MWh to break even because of high charges from Public Gas Corporation (DEPA), whose natural gas it uses, whereas PPC uses lignite and hydroelectric power. Thus it remained shut once again rather than sell at a loss, confirming the worst fears that potential private investors had expressed back in 2001. Thessaloniki Energy’s contract with DEPA expires tomorrow and the government has delayed a decision providing competitive gas prices for enterprises. The most likely outcome for the HELPE subsidiary is a contract extension and renegotiation, either with DEPA or private firm Prometheus Gas. The government has decided to intervene in what is supposed to be a freely operating market by pressuring DEPA to offer a lower price to Thessaloniki Energy and for PPC to reconsider its aggressive pricing policy. PPC, however, appears unyielding: according to sources, it is prepared to join today’s talks by presenting data showing that its pricing policy follows energy market regulations. On the other hand, Sioufas appears to have Karamanlis’s go-ahead to intervene in the market. On leaving the PM’s office, he tried to placate fears saying that «the situation will return to normal soon.» Yesterday, HELPE submitted to the Regulatory Authority for Energy a plan to open a 390-megawatt combined-cycle gas power plant at Megara, west of Athens. The management believes this new unit would also help the Thessaloniki unit survive.