Power price hikes set to hurt medium-use consumers most

Development Minister Christos Folias is expected to signature tomorrow the decision regarding the electricity rate rises, based on the proposal submitted to him yesterday by the Regulatory Authority for Energy (RAE). This will bring to an end discussions and speculation that have continued since last week on the level of rate hikes that the Public Power Corporation (PPC) has requested, with Folias probably accepting PPC’s demand for immediate application from Saturday, December 1. Medium consumption (801-2,000 kilowatt-hours per four-month period) and industrial consumption (medium and high-voltage) will be those to see the highest rises. RAE and the ministry intend to minimize rate rises for domestic consumption up to 800 Kwh and for families with four children or more. High consumption, of over 2,001 Kwh, will see a smaller rise than the medium category. The idea behind this adjustment in rates is based on the fact that very large consumption is already expensive and concerns a very small portion of consumers. By contrast, the medium consumption bracket includes a very large portion of domestic consumption (close to 38 percent), while the aim of reducing power consumption is also served through such a high rise. The level of rate rises in this category of consumers may reach 10 percent. As far as industrial consumption is concerned, the increase will be far greater, up to 20 percent for energy-intensive industries. Both RAE and the Development Minister have reportedly considered the benefits to PPC and the impact on people’s incomes and the competitiveness of the economy, which have all been factored into the final decision. The main feature of the first power rate changes under the ministerial authority of Folias is their departure from the mentality of keeping increases in line with the inflation rate, as his predecessors had done since the entry of PPC onto the stock market. The minister has apparently also accepted the PPC demand for separate rates for regulated services and more competitive ones. The definitive decisions by the Development Minister are eagerly anticipated by the industry, as they will give a hint of the policy to be followed in the electricity market. RAE reached its decision yesterday after three days of discussion and delivered it on the same day to the minister.