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Wednesday, October 4, 2023

SSAI: Scream of despair for Competitive Electricity Market

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A cry of despair as to whether the Competitive Electricity Market will be able to function properly in accordance with the rules and regulatory decisions of CERA, addresses the Association of Competitive Electricity Market Participants (SSAAI), which operates under the under the auspices of OEB.

As stated in a statement by the president of SSAI, George Georgiou, it should be understood that in the medium and long term the cost to the consumer is reduced only with the smooth operation of the Electricity Market, with the abolition of monopolies and oligopolies.

The announcement is quoted as follows:

“The international community has recognized that the most appropriate way to reduce electricity prices is through the operation of electricity markets that offer consumers the right and choice of electricity supplier. A prerequisite is the reduction of large vertically integrated organizations both in terms of clientele and electricity generation.

To this end, the Republic of Cyprus has been making efforts since its accession to the European Union to create conditions for the operation of a free Competitive Market. For this reason and for no other reason, the Cyprus Energy Regulatory Authority (CERA) and the Transmission and Distribution System Operators were created, with the former also being appointed as a Market Operator. Tens of millions have been spent to get to the point of announcing the possibility of the Market operating within the current year. This opportunity attracted Cypriot and foreign individuals to invest tens of millions in order to be ready to adequately meet the obligations of the Republic of Cyprus, in return for its commitments to the European family.

Admittedly, electricity markets do not eliminate the large pre-existing organizations, but reduce them in size and force them to become more flexible and efficient, thus reducing the cost of generating and supplying electricity, with concrete examples in all European countries. But nowhere is this achieved when a single organization has a huge share in production and supply. That is why the primary and main concern of the Regulatory Authorities was and is to constantly reduce and reduce the organizations that hold a dominant position.

In Cyprus, it has been proven that this is not the primary goal of CERA. CERA is limited to controlling the EAC and imposing any percentage reductions on prices but does not take substantial measures to limit the dominant position of the EAC. Any such measures tend to be of limited validity without ensuring a substantial long-term reduction in production and supply costs. The huge investments of individuals either in photovoltaic production or in conventional production with natural gas have to face the constant change of the Rules of participation in the Market, both by the state and by RAEK. To this end, they use popular and superficial populist solutions, which aim to reduce the cost of electricity to the consumer.

But why is the capacity of the EAC photovoltaic capacity being strengthened? Is it to eliminate the chances of survival of independent private producers who will be called to compete with the EAC in an unequal race with huge risks? At night the photovoltaic producers will be obliged to buy their energy expensively (at prices set by the EAC) and during the day to sell the non-contracted one at degrading prices. This is because the

CERA has chosen to implement, for the small isolated system of Cyprus, a difficult and perhaps inappropriate market model. This is because CERA decided to give the EAC the right to increase its capacity in conventional production, adding new state-of-the-art units. Why was not a power tender announced (with the participation of the EAC) to choose the most economical long-term solution as is the case in other European countries?

The above deposit is not a complaint of affected companies that have invested significantly in the field of production and supply, but a cry of despair, whether the Competitive Market will be able to function properly in accordance with the Rules and Regulatory decisions of CERA. CERA is an independent Authority and does not belong to any Ministry for this very purpose, in order to aim and achieve long-term benefits and to prevent adventurous solutions. As for the Market Officer, one appears to be taking a stand against the further penetration of photovoltaic production unless it is accompanied by storage (which according to current data is not viable) and at the same time unreservedly accepts the assignment of a huge project to the EAC without storage, previous announcements of the Ministry of Energy during the announcement of the latest procedures for the integration of photovoltaic parks. As a result, existing private investors will be “punished” by the Market. and oligopolies. This is the aim of the European Commission Rules, which are controlled by its competent bodies such as ACER, and which may be where those directly involved should go to restore order. “The main concern of SSAAI is to reduce the cost of electricity to all consumers through the Electricity Market and competition by increasing productivity and improving the final cost reduction options.”

Source: www.philenews.com

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