Mission - Positions

Natural Gas

UNICEN Position and Proposals for the Natural Gas Market

One of the biggest problems of the real economy is high energy costs. The cost of energy, both electricity and gas, for the Greek industry is significantly higher than the European average, fact which is consistently recognized by the European Commission. In the recent (19/11) newsletter for Greece in the context of progress towards an Energy Union, the Commission, regarding the energy costs for industrial consumers, states that “both electricity and gas prices are significantly above EU average. Gas prices in particular are among the highest, also above OECD average and those of most the EU trading partners”. {SWD (2015) 226, Factsheet on Greece}.

Greece must take all appropriate measures that will enable her to participate actively in the new energy direction for Europe which is to create a true single energy market, while promoting both environmental objectives and aid targets, specific and tangible measures of industry, in particular of energy intensive

We fully support the liberalization of the natural gas and electricity markets in Greece. The implementation of transitional measures towards this objective should not however introduce new distortions, but rather eliminate existing. Any measures adopted should take into account their impact on the real economy and the energy intensive users in particular.

More specifically:

Natural gas:

There is need to implement measures that will facilitate and speed up the process of market liberalization and the abolition of the existing derogations.

Gas prices in Greece are among the highest in EU and above the European average. In addition, gas for industrial consumption is burdened with the highest effective excise duty of 5,4 €/MWh, with no relief for energy intensive industries.

We expect that liberalization will bring more suppliers and liquidity in the market, and as a result, lower prices for the benefit of the end consumer in the long run. It is therefore of paramount importance to introduce measures with prudence in order to avoid price distortions that can endanger the viability of the energy intensive industry.

We are very concerned that the new institutional framework for the gas market could in fact contribute to the creation of adverse competitive conditions for potential alternative suppliers.

Under the new legislative scheme (Law 4336/2015), the EPAs, -currently DEPA controlled companies, as DEPA owns 51% of their share capital-, are being acknowledged as eligible customers for supplying other eligible customers (industrial at first place), and as a result, they are also being entitled to participate to the natural gas e-auctions conducted by DEPA.

The above scheme reinforces DEPA Group market dominance, as DEPA and EPAs collectively own 99% of the customer portfolio. Thus, the entrance of alternative suppliers in the market becomes practically impossible.

In addition, through their participation in the natural gas e-auctions, the EPAs have the possibility to collectively absorb up to 45% of the gas quantities released by DEPA. According to information provided by the media, the EPAs have absorbed 30% of the gas quantities released in the 2016 annual natural gas e-auction, squeezing out smaller suppliers or eligible customers.

It should also be noted that EPAs contracts do not provide distinct indication/analysis of the applicable charges (supply, distribution & transmission). Due to this lack of transparency in terms of pricing, it is therefore impossible to define whether EPAs pricing terms are in line with competition law requirements.

On the basis of information provided in this regard, it appears that the EPAs have not readjusted the pricing terms of their contracts so as to include the legislative increase of the distribution charge (increase of 4 €/MWh for a transition period, by virtue of article 8 par. 3 of Law 4336/2015), thus creating a competitive disadvantage towards present or potential suppliers.

Furthermore, we believe that the benefits of the liberalization of the natural gas market might be annulled by the horizontal increase of the provisional distribution charge from 0,8 to 4 €/ΜWh, as the latter represents an excessive charge that is not based in any approved cost analysis. 

In our opinion, the provisional distribution charge should take into consideration the customers profile and /or should be based on a progressive coefficient, taking into account the throughput.

The permanent distribution charge should take into account:

  • real running costs and not sunk costs or past investment costs that have already been depreciated, or depreciation of assets that have been re-evaluated, or depreciation of intangible assets,
  • the volume and the consumption profile of the customer

Any increase in the distribution charge should be implemented in parallel with the rationalization of the excessive excise duty of 5,4 €/MWh

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