RAE OKs increases in power rates

The Regulatory Authority for Energy (RAE) has approved the application of the Public Power Corporation (PPC) for passing some of the added fuel costs on to consumers. Sources suggest that RAE has approved, and suggested to the Development Ministry, a 2 percent rise on top of inflation in electricity bills, to offset the increased cost of fuel that PPC pays due to the high prices of oil and natural gas. Now the proposal depends on the approval of minister Dimitris Sioufas, who is authorized to determine tariffs. He will have to consider both the impact on inflation from an additional 2 percent rise, after the strong inflationary pressures by fuel price hikes, and the consequences for households which will have to pay much more for heating oil next winter The PPC management appears satisfied with the acceptance of its application, though not with the size of the increase, which it wanted to be twice as high. The company has not yet submitted an application to RAE about the total increase in charges, with the regulator taking for granted an increase in harmony with the inflation. The fate of the PPC application will depend on its negotiations currently under way with Sioufas and Economy Minister Giorgos Alogoskoufis. PPC counters the government’s inflation concerns by citing the state’s obligations toward utility companies, opening up a more general debate about the rationalization of utility charges. In this context, PPC demands that it be fully relieved from collecting charges on behalf of third parties, such as local authorities or the the state broadcaster, which make tariffs seem much higher to consumers that they actually are, especially ahead of the market entry of competing power producers. The final decisions on PPC charges must be made in August, as they will apply from September 1, 2006.