Filenews 31 January 2025 - by Chrysanthos Manoli
It is still somewhat early for a final request from EAC and for decisions from CERA, but the information available converges to the conclusion that from the preliminary approvals given on 24/1/25 by CERA to EAC for the recovery of its expenses in 2025, it seems inevitable to impose increases in final tariffs, amounting to about 3% or a little higher.
EAC's request for tariff increases to finance recoverable expenses approved by CERA on January 24 is expected to be submitted in a few weeks.
We remind you that last year EAC had submitted a request for increases of approximately 5.11% in the final consumer tariff, with effect from 2023, but, after the political uproar caused, with the involvement of the Parliament, EAC revised the request and finally last March CERA decided not to impose any increase in electricity tariffs.
It seems very difficult to reject such a request (with a smaller percentage increase) again this year.
Serious cost cuts
According to CERA's decision, for the year 2025, the permissible return on the average Regulated Fixed Asset Value Base of EAC Production remains at 4.6%, as recommended by EAC Production.
CERA's preliminary decisions approving EAC's expenses in 2025, which can be gradually recovered through tariffs, show that serious expenses that EAC budgeted to start in 2025 were rejected, without the regulatory authority's consent.
In particular, recovery at this stage of the following costs was refused:
– The capital expenditure for the installation of 2 x 40 MW of Open Cycle Gas Turbines in Dhekelia, worth €90,000,000, is not approved, since it is estimated that this project will not be fulfilled within 2025. When and if this is completed, CERA states in its decision, then EAC Production can apply for its inclusion in the Permitted Revenues.
– For the budget line "Repairs, maintenance and operational consumables", an amount of €11,805,000 is approved from the request of €29,314,712, which is considered reasonable by CERA after thorough research and analyses.
– The capital expenditure "Modification of Selective Catalytic Reduction Systems on Boiler 3 at VPS", worth €15,221,213, is not approved, since there is a contract signed for €7,142,480. The amount of the contract, which is considered reasonable by CERA, is approved.
– The capital expenditure for RES-Photovoltaic Parks, amounting to €6,720,000, is not approved since it is estimated that this project will not be fulfilled within 2025. When and if this is completed, then EAC Generation may request its inclusion in the Permitted Revenue,
– The capital expenditure for the change of 3 chains and 2 anchors of the anchorage (single point), worth €3.300.000, is not approved, since there is a contract signed for €1,149,256. The amount of the contract, which is considered reasonable by CERA, is approved.
– The capital expenditure for Batteries -10MWh/year, amounting to €3,500,000, is not approved since it is estimated that this project will not be fulfilled within 2025. When and if this is completed, then EAC Generation can request its inclusion in the Permitted Revenue.
– The capital expenditure "Replacement of phase 1 400V circuit breakers", worth €200,000, is not approved as it is estimated that this project will not be fulfilled within 2025. When and if this is completed and put into operation, then EAC Generation can request its inclusion in the Permitted Revenue.
– The capital expenditure "Gas Turbine controls upgrade – speedtronic" worth €2.100.000 is not approved since there is a signed contract of €2.085.000. The amount of the contract, which is considered reasonable by CERA, is approved.
– The capital expenditure for the conduct of robotic control and the necessary electrical inspections of the generators of the four gas turbines, worth €200,000, is not approved since it is estimated that this project will not be fulfilled within 2025 but within 2026, based on clarifications submitted by EAC Production. When and if this is completed, then EAC Generation can request its inclusion in the Permitted Revenue.
– The capital expenditure "Replacement of the obsolete stimulation system of the gas turbine generators of ISM" in Moni, worth €500,000, is not approved since it is estimated that this project will not be fulfilled within 2025. When and if this is completed, then EAC Generation can request its inclusion in the Permitted Revenue.
– For the heading "Legal Costs and Third Party Fees", an amount of €655,700 is approved from the request of €1,531,500, which is considered reasonable by CERA, as this was the level of the actual exit of the year 2023.
