Government of Greece: "The price of electricity has increased because… it needs to be sent to Ukraine"

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The Ministry of Environment and Energy has provided clarification on electricity prices and the price containment measures announced today for August in a question and answer letter.

In particular, attention is drawn to the following.

1. Why did wholesale prices increase in Greece? The reason for the increase in electricity prices in Greece is due to a combination of factors, including the following:

• prolonged heat in Greece, which was expected but turned out to be above normal;
• an unexpectedly prolonged heat wave in Ukraine, which was worse than in Greece. Increased demand from Ukraine as Russians continue to destroy electrical infrastructure

• The increased demand, especially in Hungary in the West, does not weaken. Weak links with the West (for example, Austria-Hungary), we are transmitted prices from Hungary, although we are about 1000 km away. However, in neighboring Austria, prices are significantly lower, because it exported as much as it could export to Hungary, and its prices were separated from each other.

2. How VHow do wholesale electricity prices in Greece affect prices in other European countries? Does this only happen when wholesale prices rise, or when they fall?

Wholesale prices are mainly influenced by the interconnected Balkan countries, which are not well connected to the rest of (Central) Europe. This happens both when prices rise and when they fall. In particular, interconnections affect supply and demand. And we strive to have connections – we have improved them – to operate the system as efficiently as possible. This means, however, that there may be periods when energy goes abroad and prices rise due to demand abroad, and vice versa, periods when prices fall due to cheap energy supplies coming from abroad. The above prices refer to wholesale prices. To this are added the costs, mainly related to the cost of operating the networks and the social services that we offer, either with low tariffs for vulnerable groups of the population or with very large subsidies for electricity in Crete and the islands through YKO. These amounts will be drastically reduced when the interconnections are completed.

3. Why did retail prices for electricity increase in July?

Retail prices are lagging behind wholesale prices, which have risen for the reasons outlined above. However, the government has responded immediately by taking steps to ensure that consumers do not see their August bills increase.

4. When will retail electricity prices return to seasonal levels?

The fall in retail prices depends on the type of invoice. In yellow it occurs immediately, with a delay of at least one month in green, while blue ones are not affected during the term of the relevant contracts. Prices for August futures, i.e. market estimates of future prices, indicate a fall in wholesale prices in Greece.

5. Will such increases in consumer bills become common in the future?

We are taking measures to ensure that this phenomenon does not happen often. In this direction, we are adopting a policy of further increasing the penetration of renewable energy sources, installing energy storage plants, strengthening interconnections to avoid the need to operate expensive thermal plants that increase the cost of electricity. The government has proven time and again that it will intervene and help consumers when necessary, although European instruments are extremely limited and European commitments are strict. This is what we have done now with the emergency measures we have announced regarding electricity costs.

6. Are there any special measures from the government to help consumers cope with the increased costs?

With the money collected as a special levy from electricity producers for the Energy Transition Fund, electricity consumers who are bound by contracts with variable electricity tariffs and who are affected by the upcoming sharp increase in tariffs next month will be subsidised in August. The consumption limit of the subsidy for household consumers will be 500 kilowatt-hours (kWh) per month. The announcements on the circle of beneficiaries and the exact amount of the subsidy in EUR/MWh for each category will be made immediately after the announcement of the final prices of the special tariff (green) in the first days of August.

7. Will you take measures to provide financial assistance to farmers?

We have already introduced the GAIA tariff, which applies to owners of rural electricity networks. Thanks to this, they have access to low electricity prices in the long term for 10 years. After the latest events, no farmer should remain outside the GAIA until the end of July. They guarantee pre-crisis prices for all their electricity for two years.

8. Have you taken into account that the increase in electricity prices will also affect the prices of products? What are you going to do about it?

We believe that last month's increase is temporary and does not have a significant impact on production costs, and therefore justifies any concerns about rising inflation. Inflation has been contained around the world in recent times.

9. Will the government take steps to combat energy costs that will be a concern for businesses? What initiatives will the government take to ensure that small and medium-sized businesses do not have to pay back huge amounts? ETMEAR?

A very important measure that we are taking in the interests of business concerns the fact that there will be no compensation for ETMEAR. This backlog will not be resolved at the expense of SMEs, since it is not their fault that its implementation has been delayed. Therefore, there will be no retroactive effect. A decision with benefits of hundreds of millions of euros for small and medium-sized businesses.

10. What benefit will consumers see on their bills from the measures taken and when?

The measures are currently being quantified to determine the exact benefit to consumers. They will see the benefit on their next electricity bill (August).

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