Filenews 6 August 2024
On June 5, 2024, following a meeting with a delegation of ADMIE, the operator of the electricity interconnection between Cyprus and Crete, OEB announced that "in view of the importance of electricity costs for the economy and competitiveness of our country and society in general, OEB considers it vital that the final cost-benefit study be evaluated by an independent firm and state authorities, in order to take the final investment decision for the participation of the Republic in the share capital of the project".
However, the memorandum acquires to some extent the role of consent to ADMIE's request to start recovering its costs for the cable from Cypriot and Greek electricity consumers, although this is not clearly stated and despite the fact that OEB stresses that a project fully regulated and guaranteed in terms of recovery of its costs and return on capital cannot be considered unviable.
Yesterday, even before the evaluation of the cost-benefit study by the state authorities was completed, OEB published its memorandum to the President of the Republic, in which it expresses a clear position in favour of promoting electricity interconnection, in the belief that it will lead to cheaper electricity and electricity exports.
OEB's position in favour of the electricity interconnection is independent of any decision of the Government for a shareholding in the implementing body (Great Sea Interconnector). This is because the realization of the interconnection does not depend on any decision of the Government, as relevant regulatory decisions and a decision of the Commission are already in force that allow ADMIE and the Great Sea Interconnector to proceed with the electricity interconnection, regardless of the Government's decision to buy or not shares in the investment. And already the interconnection is underway, with the construction of the cable by the company Nexans.
In essence, the publication of the memorandum by OEB yesterday, in favor of the interconnection, acquires the role of support for ADMIE's request to start recovering its costs for the cable from Cypriot and Greek electricity consumers from 1/1/2025. As only this parameter is under discussion and pending.
In fact, the publication of OEB's memorandum, five days before CERA's decision (August 9th) whether it will accept IPTO's objection and approve the charging of consumers from 1/1/2025, may be considered as pressure on CERA to consent to withdrawal.
In the conclusion of OEB's memorandum to President Christodoulides, the following is recorded: Despite the possible delays in the execution of the project and the possibility of an increase in the cost of the final investment, after a few years with our interconnection with Europe and the rest of the world we will be in a better position in terms of electricity costs. We have the opportunity to lift our energy isolation, to get on track to balance electricity costs at the lowest rate in Europe, to become important for our partners in the EU and to actively highlight our regional role. Interconnection can only bring benefits for our country, businesses and citizens in the future. Let's not miss the opportunity."
OEB's decision is not painless
It is interesting to note that within OEB there are important associations of entrepreneurs with interests in the energy sector. As OEB itself mentions in its memorandum to the President of the Republic, its members are the Pancyprian Energy Saving Association (PASYEEN), the Association of Large Electricity Consumers, the Electricity Market Association (SAI), the Association of Renewable Energy Sources Companies (SEAPEK), the Association of Biofuels Producers of Cyprus, the Cyprus Solar Energy Manufacturers Association (EBIEK), the Pancyprian Association of Biogas Producers (PSB), the Wind Energy Alliance (Wind Energy). Active members of OEB are also EAC, DEFA and companies that are large investors in energy projects.
These associations and authorities have conflicting interests, with many of them rejecting the electricity interconnection, fearing a severe blow to their investments.
