Parliament approves electricity market reform
(Article by Mira Todorovic Symeonides, published in the Energy & Natural Resources Newsletter of the ILO on July 4, 2016)
Introduction
On May 22 2016 Parliament approved Law 4389/2016 (OJ A 94/2016), entitled “Urgent Regulations
for the Implementation of Agreements on Fiscal Targets, Structural Reforms and Other Provisions”,
as amended on June 6 2016 through Law 4393/2016 (OJ A 106/2016). The law introduces
significant changes to the Greek electricity market, it approves electricity market reform , with particular regard to the following goals:
l reducing the share of the Power Public Corporation (PPC) in the electricity supply market;
l unbundling the transmission system operator from the PPC and partially privatising it; and
l regulating the temporary capacity mechanism.
Electricity auctions for suppliers
With regard to the retail market, the law introduces quarterly auctions whereby the PPC will sell
electricity term products along with physical delivery to eligible electricity suppliers (so-called
‘NOME’ auctions, after the French acronym for such models). The purpose of this initiative is to
reduce, by the end of 2019, the PPC’s retail market share in the interconnected system (electricity
sold on islands that are not connected to the mainland grid is not included) from 95.24% (as of
August 2015) to less than 50%. The annual quantity of PPC-generated electricity to be sold at the
auctions should gradually increase from the quantity sold by the PPC in August 2015, from 8% in
2016 to 13% in 2019.
Only duly registered suppliers will have the right to purchase electricity at these auctions, with the
exception of the PPC and energy-intensive consumers. Energy-intensive consumers which hold a
supply licence will be eligible to participate in the NOME auctions only if they supply electricity on
the retail market as a separate activity.
The Regulatory Energy Agency (RAE) will further regulate the annual quantity of electricity to be
sold, as well as other details regarding the implementation of the auctions. The first auction is
planned for September 2016. The Ministry of Finance and the Ministry of Environment and Energy
will, on the RAE’s proposal, regulate the initial electricity price for the auctions, based on the
variable costs of electricity production from lignite and hydroelectric power plants. The auctions
will be organised by the market operator (LAGIE), which will issue the respective rulebook
governing the auctions until the end of June 2016.
These auctions should enable alternative suppliers to have direct access to cheaper electricity
acquired beyond the mandatory pool of the day-ahead wholesale electricity market, thus increasing
competition between them and the PPC. The law provides that electricity should be sold at a price
incorporating a mixture of variable costs of electricity production by the PPC from lignite and hydro
power.
Details on the regulation of NOME auctions – in particular, issues as to eligible auction participants (whether only suppliers were eligible or also producers and self-supplied energy-intensive
consumers) and calculation of the initial auction price – were discussed during the two public
consultations launched by the RAE in May and August 2014. However, the Hellenic Union of
Industrial Consumers of Energy objected to the law following its adoption, claiming that the
exclusion of its members (self-supplied energy-intensive consumers) from participation in NOME
auctions contravenes general EU principles, as it treats suppliers unequally. It further pointed out
that its members should have the right to purchase electricity at NOME auctions for their own
consumption, and that they intend to develop electricity supply – particularly to small industries –
as a separate activity.
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