Tariff hike needed for PPC plan

Greece’s largest energy utility, Public Power Corporation (PPC), said yesterday it may seek an equity increase to fund its 2009-2014 business plan if the government does not approve tariff rises. PPC, which has a market capitalization of 2.2 billion euros, is planning to invest about 11.5 billion euros under a six-year plan to modernize operations, expand abroad and boost profits in a newly liberalized market. Raising tariffs 5 percent above the inflation rate for the next six years, as well as savings of 500 million euros annually in personnel costs, would allow the company to finance its investment plan, it said. «If the proposed tariff increases are not realized, alternative options will have to be examined,» the company stated. It said an equity increase or asset disposals were options but gave no further details. Power prices in Greece don’t reflect costs, according to the utility. Data provided by PPC, which cited EU statistics agency Eurostat figures, showed that Greece’s electricity tariffs in the first half of the year were the sixth cheapest among the 27 member states. PPC shares have fallen 73 percent so far this year, as rate increases have failed to keep pace with the rising cost of using oil to produce electricity, alongside a lack of rainfall that could provide cheaper hydropower. The government, which owns 51 percent of the company, has kept a lid on rate increases to prevent popular discontent at rising prices. Union opposition has also stifled attempts to reduce costs. Development Minister Christos Folias, who oversees PPC’s operations, yesterday ruled out any tariff increases for 2009, citing the global economic crisis and citizen concerns at making ends meet. A fuel-linked increase, to begin on January 1 next year, will mean an average 5.6 percent increase in customer bills in the first quarter of next year before decreasing, PPC’s investment plan said. The proposal of a 5 percent increase over inflation over the period will raise 1.4 billion euros in revenues, it added.