Filenews 24 February 2022
A cry of despair on whether the Competitive Electricity Market will be able to function properly in accordance with the rules and regulatory decisions of CERA, is addressed by the Association of Participants in the Competitive Electricity Market (SSAHE), which operates under the auspices of OEB.
As stated in a statement by the president of SSAAI, Giorgos 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 communication reads as follows:
"The global community has recognised that the most appropriate way to reduce electricity prices is achieved by operating electricity markets that offer consumers the right and choice of their electricity supplier. A prerequisite is the limitation of large vertically integrated organizations both in terms of clientele and electricity production.
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 was created the Cyprus Energy Regulatory Authority (CERA) and the Transmission and Distribution System Operators, with the former being appointed as a Market Operator. Tens of millions have been spent to come to the point of announcing the possibility of operating the Market later this year. This possibility has 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 the face of its commitments to the European family.
Admittedly, the electricity markets do not abolish the large organisations that existed before, but limit them in size and force them to become more flexible and more efficient, thereby reducing the cost of producing and supplying electricity, with tangible examples in all European countries. Nowhere, however, is this achieved when a single organisation holds a huge share in production and supply. That is why the primary and main concern of the Regulatory Authorities was and is to limit and continuously reduce the organizations that hold a dominant position.
In Cyprus, it has been proven that this is not the primary goal of CERA. CERA confines itself to controlling the EAC and imposing any percentage reductions in tariffs, but not to take substantial measures to limit the dominant position of the EAC. Any measures of this kind tend to be of limited force without ensuring a substantial long-term reduction in production and supply costs. The huge investments of private individuals either in photovoltaic production or in conventional production with natural gas have to face the continuous change of the Rules of participation in the Market, both by the state and by CERA. To this end, they are exploiting sound and superficially efficient populist solutions, that they are supposedly aimed at reducing the cost of electricity to the consumer.
But why is the potential of the EAC's photovoltaic capacity enhanced? Is it to annihilate the chances of survival of independent private producers who will have to compete with EAC in an unequal struggle with huge risks? At night, photovoltaic producers will be forced to buy their energy expensively (at prices set by the EAC) and on the day sell the non-contracting party at derisory prices. That's because the
CERA has chosen to apply, for the small isolated system of Cyprus, a difficult to understand and perhaps inappropriate market model. This is because CERA decided to give EAC the right to increase its potential in conventional production, adding new new units of the latest type. Why was a power tender not launched (with the participation of the EAC) to choose the most economical solution in the long term as is the case in other European countries?.
The above deposition is not a complaint of affected companies that have invested significantly in the production and supply sector, 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 a Ministry precisely for this reason, in order to aim and achieve long-term benefits and to prevent adventurous solutions. As for the Market Operator, one appears to be against the further penetration of photovoltaic production unless it is accompanied by storage (which by today's standards is not viable) and at the same time to accept without protest the assignment of a huge project to the EAC without storage, despite the 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.
It must 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. This is the aim of the Rules of the European Commission, which are controlled by its competent bodies such as ACER and which perhaps this is where those directly involved should turn to restore order. The main concern of SSAAI is through the Electricity Market and competition to reduce the cost of electricity to all consumers by increasing productivity and improving end-cost reduction options.
