Filenews 8 October 2021 - by Chrysanthos Manolis
The electricity consumption that will be counted in October for bi-monthly consumers will be the most expensive recorded in Cyprus since December 2018, in terms of at least the fuel. This is because the average monthly weighted fuel price (average of EAC's fuel cost) for October will be the highest recorded since August 2013!
These conclusions are derived from the data updated on its website by the EAC.
Cyprus may not consume natural gas, a fuel whose price has increased by at least 4-5 times from January 2021 until today in European countries, but it does not avoid the big increase in the price of electricity, compared to last year's low charges, as at high prices crude oil is also sold in the international market, derivatives of which are fuel oil and diesel, which is exclusively burned by the EAC.
In addition, the price of electricity is also burdened by the skyrocketing price of greenhouse gas emission allowances, which have approximately quadrupled since 2020 and are included, since 2016, in the average fuel price used by the EAC.
Although in August it was estimated by the EAC that a small reduction in electricity charges would gradually follow (September '21 was almost 2% cheaper than August '21), due to the receipt of fuel loads at lower prices than the prices in force for July and June, things turned out differently, as the weighted average price set by the EAC itself for bi-monthly consumers of October is 549.06 euros per metric ton, which is the highest weighted average fuel price paid by the EAC for about 8 years. According to EAC data, a higher weighted average fuel price than that of October this year was recorded in December 2013 (€557.95 per tonne).
However, we must reiterate that since 2016, the EAC has included in the average monthly weighted fuel price and the allowances it pays, following auctions, for the purchase of greenhouse gas emission allowances. This means that today the average price of fuel may appear to be eight years old, but the cost of purchasing pollutants and not only the net cost of purchasing petroleum products also contribute significantly to this record.
Based on these data, it follows that where we expected a decrease in the bills to be measured in October, we are likely to have an increase of about 5%, compared to the previous measurement, while compared to 2020 the increase is maintained at very high levels, around 35-40%, although we do not have an official update from the EAC.
According to the Electricity Authority, for bi-monthly consumers whose electricity will be recorded in October, there will be an avoidance cost (fuel cost) of 12,738 cents per kilowatt-hour, compared to 11,659 cents which was the cost for September counts and 11,858 cents for August counts. There is no data on the final price to the consumer.
In comparison, it is worth noting that for the consumption measured in January 2021, the weighted average fuel price was "just" 393.35 euros per ton and the avoidance cost (EAC fuel cost) was 9,102 cents per kilowatt-hour! Other charges (operating costs, network costs, ancillary services, taxes-fees, etc.) are added to the fuel costs and raise the final cost for the consumer to about 23 cents per kilowatt-hour.
One of the cheapest!
Nevertheless, the wholesale price of electricity in Cyprus is currently one of the cheapest in the EU, as the large increase in the price of natural gas and CO2 emissions, combined with the greater penetration of RES in this transitional phase, makes most EU countries more expensive than Cyprus.
The indications that exist do not justify optimism that a reduction in the cost of electricity generation is imminent, either in Cyprus or in the EU. On the contrary, the increase in electricity demand due to weather conditions is likely to raise prices further, leading to a worsening of the already existing energy crisis.
The only consolation for Cypriot electricity consumers is the entry into force from November 2021 to February 2022 of the decision to reduce charges.
Russia is not to blame, Merkel says about the cost of gas
Where too many government officials and analysts in EU countries are shifting the blame on Russia for the lack of sufficient quantities of natural gas and, by extension, the multiplication of the price of fuel, German Chancellor Angela Merkel takes a distinctly different position, possibly in light of the two countries' cooperation in transporting Russian gas to Germany.
Mrs. Merkel asked the following: "The question is: Are there (European) orders that have been made and Russia does not supply (with natural gas)? According to my latest information, this is not the case. This means that there are no orders that Russia has said about: We will not supply you and we will certainly not do it through the Ukrainian pipeline." Immediately afterwards she explained: "Russia can only supply natural gas on the basis of contracts. So the question is: Are orders enough or the high price of gas at the moment is perhaps also a reason why orders are not made so large? All this should be analysed by the EU summit on 21 and 22 October in Brussels. Then we'll come back to the matter." At the same time, Merkel stressed that "we were recently accustomed to very low gas prices"...
Russia yesterday categorically denied responsibility for the sharp rise in gas prices. "We insist that Russia plays no role in what is happening in the gas market in Europe," Kremlin spokesman Dmitry Peskov said.
