Trying to justify the mini-crisis of July, when the wholesale price of electricity even though it was windy and sunny – i.e. photovoltaics and wind turbines were working at full capacity – was on some days even over 200 euros, because every night the natural gas producers threw a profit party raising the price up to 14 times over 600 and 800 euros, Kyriakos Mitsotakis and Theodoros Skylakakis set out to explain to us what is going on, obscuring everything they could to cast ashes in the eyes of the world that the government is not to blame for the wrongs and everything does is good.
Mr. Mitsotakis told us that the huge increase in the wholesale price is due to a crisis that “affects the whole of South-Eastern Europe up to Hungary and the countries with which we are electrically interconnected”, he acknowledged for the first time that “the wholesale price creates skyrocketing profits for the producers with natural gas” – while insulting Alexis Tsipras when he made the same argument two years ago – but the government imposes an emergency shutdown on the producers “so that the citizens do not see increases”, so all is well.
After the imposition of the tax on producers and the crumb subsidies, Mr. Mitsotakis came back claiming that the government sent a message that “the Greek consumer cannot pay for any malfunctions in an energy market that at the European level has not yet reached the point which we would like” (it’s all Europe’s fault…), but he said he was happy about the drop in the wholesale price due to the government’s announcements (“I’m glad that in the last few days, possibly as a result of the government’s announcements, prices have returned to normal levels “). In other words, Europe is to blame for rising prices, but when prices fall – even if the drop is only a few cents and electricity remains very expensive – we take the credit.
“Skyfalls, but legal”
In similar tones and Thod. Skylakakis, the Minister of Energy, who while the prices of the megawatt hour were increasing but had not crossed the threshold of 200 euros said that the rise in prices in the summer is the new normal due to the increase in demand and we have to get used to it. He indulged in analyzes of bad market conditions, told us that it makes sense that sometimes the demand for energy from abroad increases too much and we should export, insisted at all tones that, although skyrocketing, the profits of energy producers are legitimate, and concluded once again exorcising the “expensive” lignite.
Finally, the conclusion of the RAAEF (Regulatory Authority for Waste Energy and Water) came as icing on the cake, which opened an investigation into the mini-crisis of the days – for the prices that had only been recorded during the energy crisis – and which, according to the Ministry of Environment and Energy ) exonerated Greece’s natural gas producers, insisting on the “exogenous” nature of the problem.
That is, in two words, while as it is explicitly stated in the explanatory statement of the amendment for the extraordinary fee voted by the ND together with PASOK, Hellenic Solution, Spartans, “the electricity sales prices in the market from the natural gas units approached significantly higher levels than levels of electricity generation costs and thus increased electricity costs for consumers” – that is, gas-fired electricity producers sold electricity in July far above the cost of generation, accumulating surplus profits –, it is neither their fault nor the market model that the government does not want to change, but something else, external.
In response to all the hype, two energy market insiders made a splash last week by shedding light on the three major contributors to the crisis that the government has tried so hard to hide. Factor one, the role of natural gas producers in the rise in prices, factor two, the refusal to use lignite by the ND government, which creates the conditions for the “legal” profiteering party of the natural gas oligopoly at the expense of consumers and the of national economy; factor three, the nature of the “external” factor and its political dimensions.
Kontoleon: “Producers raised prices”
One of them was Antonis Kontoleon, a top executive of the Stassinopoulos group and president of the Union of Industrial Energy Consumers (EBIKEN), who has repeatedly criticized the price-gouging cartel practices of the natural gas oligopoly, who recalled the elementary: Greek prices are not shaped like this in general and vaguely, neither by foreign traders nor by themselves in the market, but by the offers made by the four natural gas power producers (PPC, Protergia, Elpedisson, Iron) who, as modern Mavragorites they seized the opportunity of an explosive increase in demand to raise prices and profits at the expense of Greek consumers. EBIKEN even published on its website the research of Balkan Energy, a consulting company for the energy market in the Balkans based in Switzerland, which states, among other things, that in Southeastern Europe there was no shortage of energy but “the main reason for the alarming increase in prices in Southeastern Europe there was an increase in the offer prices of the producers in all markets, led by the Greek market”. That is to say, in two words, the Greek oligopoly drove the prices to the heights, dragging the prices along in all the Balkans, because it may have the backs of the Mitsotakis government.
At the same time, Ant. Kontoleon raised the question of why the lignite units are finally not working so that the prices fall, since the government itself chose to use them when the price of a megawatt hour escaped above 200 euros (218.77 on 7/17) by switching on the next day (18/7) six lignite units and dropping the price by 30% in 24 hours, to 153.95 euros per megawatt hour.
Chiotis: The lignite Ptolemaida is cheaper
The second expert on the market and critical of the government was the former director of PPC Efstathios Chiotis, who debunked the government’s constant use of the “expensive” lignite myth, even giving detailed figures. With the current prices, noted Ev. Chiotis, the cost of electricity generation with lignite and pollution rights is 86.52 euros per megawatt hour for the state-of-the-art lignite plant Ptolemaida 5 and 92.57 euros per megawatt hour for the natural gas thermal units. A fact which – we add – shows us that the natural gas units that made offers of 600 and 800 euros per megawatt hour in July were selling their electricity six to eight times above their cost, achieving a profit margin of 600% and 800%, i.e. unimaginable super profit because the ND government plays it “green” and doesn’t want lignite, while most other European countries still use it. And from these super profits, it takes crumbs and recycles them by subsidizing households when the prices get out of hand too much in order to play it socially sensitive and not to shout at people.
The secret of Ukraine’s energy imports
In addition, added Ev. Chiotis, even if the government didn’t admit it to the Greek people, according to Skylakakis, the electricity exports that we have to do according to all indications concern Ukraine, which after the Russian strikes on its power plants has an energy deficit and imports daily energy from Poland , Romania, Slovakia, Hungary and Moldova – at even lower prices than those applicable in the specific countries that have connections that reach Greece and where everywhere the prices went high in July.
Based on these indications, according to Ev. Chiotis, it is very possible that some European body is coordinating in the background a provision of energy assistance from Eastern Europe to Ukraine on special terms – perhaps understandable, but it must be done in another way. “With community funding and openly, without enriching producers, without burdening the Greek consumer, without the mediation of the Energy Exchange”. Because, if this scenario is true, we add, Mitsotakis is playing it the most willing ally of Ursula von der Leyen and NATO, allowing the oligopoly of natural gas producers to hoard and all together send the bill to Greek households .
Up to 9% increases, to 15 minutes per kilowatt hour in August
Households will pay for the kilowatt hour in August at 15 minutes. This means that it is moving at the same levels for many already expensive companies, despite the explosive increase in the July wholesale price to 135.18 euros per megawatt hour (36.7% compared to June) or as much as 9% higher for PPC and Physico Gas that was comparatively cheaper until last month. And this, as according to numerous indications in the two weeks that intervened between the initial government announcements on the imposition of an extraordinary fee on producers to provide electricity subsidies and the passing of the relevant amendment last week, a gentlemen’s agreement was mediated between the government and the large companies (it is and producers and retail companies) to hold down prices. The achievement of a gentlemen’s agreement was shown by the gradual retreat of the wholesale price from 219.28 euros that had been found on July 22 to the zone of 110 euros per megawatt hour towards the end of the month. It was also seen from the pre-announcements and leaks carried out by the large vertically integrated companies that control 80% of the market and set the tone, which announced earlier than August 1 green tariff prices at July levels or “photographed” limited increases such as PPC. At these prices there will therefore be a subsidy of 1.6 cents per kilowatt hour so that the final price is around 15 cents and will be financed by the €10 per megawatt hour fee that will be imposed on natural gas electricity producers in July. Of course, all this does not mean that we should not be careful how many hours we turn on the air conditioners, since 15 cents per kilowatt hour means a 50% increase compared to May, i.e. expensive electricity.
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