Four proposals from the Greek government for lower electricity prices

The Greek government is considenring four alternative proposals for the implementation of the national electricity price reduction plan from June onwards, if European leaders fail to agree on a uniform approach to the problem of energy costs in May.

According to information, the proposals that have been made do not include a cap on prices, but there will be a revenue cap for electricity producers with the additional cost being covered by state subsidies.

This is a very complex issue for Maximos Mansion and the economic team of the government. That is, how much money will be required from the state budget, what will be the impact on the country’s fiscal course and, of course, how long the extraordinary measures will last. The total annual cost of electricity price increases in the country is estimated at 12 billion euros.

The four scenarios lead to retail electricity prices even at the pre-crisis levels of 2021, i.e. around 0.13 to 0.16 euros per kWh. Today, prices even reach 0.33 to 0.35 euros per kWh, without subsidies.

The scenarios

The proposed interventions are:

1. Imposition of a maximum horizontal clearing price of electricity producers’ payments for the electricity they produce and sell through the Greek Energy Exchange.

2. Apply a different cap on the revenues of electricity producers depending on the technology they use. That is, a separate maximum payment for RES units, natural gas, lignite and hydroelectric plants.

3. Caps on prices and subsidies of electricity bills.

4. Α brave increase in the state subsidy of electricity bills.

Any of the above options would lead to a lower purchase price from the electricity suppliers and the repeal of the readjustment clause.