Filenews 10 May 2025 - by Chrysanthos Manoli
Information from the Liberal Party states that the Presidency of the Republic and personally President Christodoulides have sent a strong message to EAC and CERA not to proceed - at least not at this stage - with the approval of increased electricity prices on the basis of the requests submitted a long time ago by the regulated activities of the Electricity Authority for its allowable revenues for 2025.
If CERA refuses to EAC the increase of its prices - by about 8 to 9%, as unofficial information says - in its final accounts, it will be the third consecutive year that the Authority is prevented from recovering expenses that have been approved by the regulatory authority. No price increases have been approved for the recovery of approved EAC expenses/projects in 2023 and 2024. And in 2022, they were approved with a delay of five months.
The same last year
We remind you that last year the Presidential Office intervened and asked - to be precise, it demanded - the president of EAC to remove the chestnuts from the fire, promoting an amendment to the request submitted by the regulated Activities and Directorates of EAC and finally no increase in tariffs was allowed, except for an increase for recoverable costs of the independent Cyprus Transmission System Operator (TSO).
There is no official information from CERA or EAC on the exact percentage of the increase in tariffs requested by the Electricity Authority and the percentage that CERA deems justified, but without issuing an official decision and leaving the matter pending.
As we mentioned above, the unofficial information of the Liberal Party states that after processing and evaluating the requests by CERA, the increase ranges from 8 to 9%. If such an increase is approved, it will automatically amount to "cancelling" or eliminating the benefit that domestic electricity consumers derive from the reduction of VAT to 9% (from 19% until the end of March 2026), something that the Government does not want in any way.
Who takes responsibility?
However, a possible rejection or marginalization of this year's EAC request for an increase in pricing, at a time when the costly investments it has to implement in the framework of its development program (which was approved by CERA) are increasing, will cause serious disruption to the organization and worsen its financial situation.
The information of the Liberal Party states that the Presidential Council and CERA have thrown the ball at the EAC stadium, from which they now expect a diversification of its position and a revocation or revision of its initial demands regarding the allowable revenues (recoverable expenses) and the amount of electricity tariffs.
We have been informed by EAC that next week the Chairman of the Board of Directors Giorgos Petrou and other executives will begin consultations with the management and the regulated activities, in order to re-evaluate the situation.
The easy solution...
EAC's previous request for an increase in prices to recover its expenses for the implementation of its development program was submitted in the summer of 2023 and was kept pending by CERA and the Government until spring 2024, when it was rejected with... decision of the EAC Board of Directors, after intense pressure from the government.
That request concerned a 6% price increase on the total bill of an indicative household consumer (with a bi-monthly consumption of 800 kWh).
As EAC had reported at the time, a significant part of the increase in pricing was due to the Accounting Adjustments for the year 2022, amounting to €54 million. That is, an amount that, with CERA's approval, was spent by EAC in 2022, without being able to recover it through the 2022 tariffs and requested to recover it in 2024.
EAC has pointed out several times that from the discount on its tariffs during the years 2020-2022, in the midst of the pandemic, it had a cost of €53 million, which burdened its cash reserves. In addition, EAC claimed that it lost revenues of €24 million due to CERA's delay in approving the new 2022 tariffs (it did so five months late, according to EAC), an amount that was also not ultimately recovered. In addition, it is reported that no new tariffs were approved for the year 2023 either, even though CERA had approved the permitted revenues for 2023.
Based on the 10-year development program of its Regulated Activities, EAC has projects to implement by 2032 worth approximately €1.7 billion, of which projects of €1 billion concern the expansion and strengthening of the network.
We remind you that it was recently announced by EAC that it will finance the storage systems in Dhekelia (about €60 million) from its cash reserves, part of the expenditure for smart meters and the three central storage systems in an equal number of its substations.
It should be noted that the organization also has to manage a hole caused in its finances, due to the fact that the 6th unit in Vassiliko (cost at least €160 million) has been completed at the expense of EAC, but their recovery by decision of CERA will be pending until this unit (160 megawatts) can be operated. In order for it to work, natural gas will have to be imported...
The fuel clause
Meanwhile, for the period April – June, CERA approved an increase in the fuel clause (compared to the clause in force in the period January – March 2025), as it was preceded by increases in the price of fuel internationally. The clause applies for adjustment purposes for every 1 cent change in the price of fuel compared to the Basic Price of €300 per metric tonne, for every kWh of electricity billed.
Following the recent and ongoing decrease in the price of Brent oil on the international market, conditions are being created for a new amendment of the fuel clause by CERA, with a reduction this time.
