OPINION

Distorted energy policy

Strange things have been occurring in the energy sector, many of which have more than a whiff of scandal about them. The Public Power Corporation (PPC), the largest state corporation, 49 percent of which is listed on the Athens Stock Exchange, is about to end the year with a major reduction in profits (53.4 percent in the first nine months), even though it is a state monopoly. According to sources, a large part of those losses are due to PPC’s subsidizing private power plants. Since PPC does not pay for lignite, its power plants are low cost (27 euros per megawatt hour). However, since PPC’s production is not high enough to meet current needs, market prices are estimated at the higher rate (over 60 euros) of modern private plants. This price is set by the state energy authority (RAE) and PPC is forced to buy power from the Electric Power Transmission System Operator (DESMHE) at 70 euros per megawatt hour and then sells it for 40 euros to major industries and for far less to households. Yet private power plants are making money. The Mytilineos firm will have a plant producing electricity from natural gas in April 2007. The plant has received major state subsidies to provide power to an aluminium factory Mytilineos bought a few years ago. However, now that private units can sell power for over 70 euros, Mytilineos will be better off selling its electricity to the system and buying power for its aluminium factory from PPC at 40 euros. According to other reports, PPC is to spend 215 million euros this year in subsidies for private power producers and, as new private units enter the system over the next few years, subsidies will reach 2 billion euros.