Greece says to open up its power market
Greece is to gradually increase electricity prices and allow investors access to its coal deposits, as part of measures to open up a power market dominated by state-controlled utility PPC (DEHr.AT: Quote).
Greece said that by the end of the year it would adopt «a mechanism to ensure that the energy component of regulated tariffs reflects, gradually and at the latest by June 2013, wholesale market prices», in a report on Friday to the European Union, IMF and the European Central Bank.
Power market liberalisation is one of several conditions the EU and IMF imposed on cash-strapped Greece to continue funding a three-year, 110 billion euro ($141 billion) bailout started in May.
Greece is an energy liberalisation laggard — PPC still controls 97 percent of the retail market for electricity.
Friday’s move will increase Greek electricity prices, currently among the lowest in the EU because they are regulated by the state and do not fully include PPC’s carbon emission costs.
Greece also pledged to offer PPC’s rivals gradual access to its lignite deposits and plants. «This access will remain in place until effective implementation of the liberalisation has taken place,» the report said, without giving further detail.
Electricity market reforms would also include making grid operator DESMHE more independent and more effective.
Greece’s proposals offer an alternative to a more radical liberalisation approach proposed by EU officials, who had said privately that PPC should sell 40 percent of its lignite and hydro capacity to rivals to boost capacity. [ID:nLDE66Q16L]
EU and IMF officials have since said talks on the issue were ongoing and they were not necessarily pushing for an asset sale. [ID:nLAG006364]
The socialist government has so far refused to consider selling PPC assets for fear of upsetting the company’s powerful labour unions.
Low electricity prices and regulation have stifled competition from PPC’s upstart rivals, such as Greek group Hellenic Petroleum (HEPr.AT: Quote) and Italian utility Edison (EDN.MI: Quote) which run natural gas fired power plants.
Finland and France have lower electricity prices than Greece, but they use low-cost nuclear power which Athens rejects. (Reporting by Harry Papachristou; Editing by Ingrid Melander and Dan Lalor) ($1 = 0,7806 euro)
07/30/2010
— Filed under: Politics
Tags: Greece, power market
