The landscape around remains blurred pricing from electricity one and a half months before the expiration of the new model installed in August last year to replace the adjustment clause. The new monthly billing and 10-day advance billing model will expire on July 2nd. Ministry of Energy and Environment introduced commission a petition for an extension until the end of 2023 and, at the same time, a petition for an extension for the same period of the mechanism for collecting excess profits from electricity producers from the wholesale market (ceiling), which expires on June 30.

Brussels Based on the picture so far, they are said to be positive about the request for an extension of the ceiling on the wholesale market, although they believe that the de-escalation of prices has returned the market to normal. Moreover, they have already given the green light to the expansion of the known as the Iberian model, which they approved in exceptional cases last year for the Spanish and Portuguese markets, which the political leadership of the Ministry of Foreign Affairs assesses as a qualification and for its relation to the Greek request. It should be noted that the wholesale market cap mechanism has been the main lifeblood of the Energy Transition Fund to fund electricity bills. From 1 July last year, when it came into force, until the first days of May 2023, it strengthened TEM with €3.255 billion in revenue.

On the contrary, the competent authorities in Brussels are very skeptical about the extension of the pricing model in the retail market. This became clear, according to information, at the meetings held in Athens by the EU Director General for Energy. Ditte Juul-Jorgensen with the political leadership of the Ministry of Foreign Affairs, as well as representatives of the electricity market in the context of her participation in Delphi Forum. Both manufacturers and, in general, suppliers through their association (ESPEN) have strongly raised the issue of canceling the new pricing model with Ms. Juul-Jorgensen, arguing that it significantly affects competition by adding distortions.

In contrast to the wholesale market capitalization mechanism, whose positive impact has not been disputed, the new retail pricing model, from the first months of its implementation, confirmed the concerns expressed about the impact on prices, competition and outstanding debts from consumers who will abuse the opportunity to change. supplier per month that the Commission will take seriously the evaluation of the request for an extension of its application.

It is well known that the new pricing model has led to the desired political end result, but at additional costs for the government and consumers, as well as significant risk for suppliers. Especially:

The Ministry of Energy sent a request to the Commission to extend the excess revenue reimbursement mechanism until the end of 2023.

1. Monthly prices announced by suppliers since August and after the introduction of the new pricing model included the most extreme wholesale price forecasts, transferring high price forecasting risk to tariffs in an environment of high market volatility. . This multiplied the cost that the adjustment clause would have passed on to the electricity bill, which of course went unnoticed by consumers as it was covered by generous subsidies. Only two months September-October, according to processing “K”which are based on official data from the Energy Exchange, ADMI and his DADDIthe total cost of electricity for low voltage was increased by 1.11 billion euros more than it would have been if it had been estimated with an adjustment clause.

2. High subsidies to cover inflated bills have created surpluses for suppliers and sent wrong signals to consumers about savings, a problem both the OECD in its latest report and the International Energy Agency (IEA) pointed out that it would be more efficient to support consumers for through direct subsidies and tax incentives.

The undisputed surplus of production in the retail market obliged the Minister of the Environment and Energy Kostas Skrekas announced for the first time in early October last year, and then legislated their taxation, which was interpreted by many as a public failure of the new model from the first months of its implementation.

3. The new pricing model was also combined with the ability for consumers to switch suppliers on a monthly basis. This arrangement reinforced his phenomenon “energy tourism”that is, moving consumers from supplier to supplier, leaving unpaid bills, and according to the Hellenic Association of Energy Suppliers (ESPEN), increased outstanding debt by 500 million euros from last August to May 2023. Responsible Minister Kostas Skrekas has also publicly acknowledged the issue, which he says he is looking into in collaboration with the Energy Regulatory Authority (RAE) and suppliers…

4. Consumer mobility has increased slightly and has been significantly limited among private providers as the new pricing model is driven by checkpointwhose invoices form the basis for calculating the monthly subsidy. According to DEDDIE, 555,000 consumers switched suppliers in 2021 and 588,000 in 2022, a total increase of 33,000. The framework of horizontal tariff regulation effectively abolishes competition and ultimately “punishes” the most competitive in the market.