Household electricity prices to increase by 12.2% - The Best from Greece

Electricity prices will increase by 9.2 percent from New Year’s Day, the environment, energy and climate change ministry said on Thursday.

 

The increase is less than state-controlled utility Public Power Corporation (DEI) wanted said it needed to shore up its finances but still a burden for a populace already hit by austerity.

 

Under the terms of an EU/IMF bailout, the government must increase its regulated power prices to reflect the true cost of energy generation. The price hikes will be applied on January 1, Environment Minister Yiorgos Papakonstantinou told cabinet colleagues on Thursday.

 

But the actual increase will be closer to 12.2 percent, as bills will include the 3 percent increase in the renewable energy sources (RES) levy announced on December 21.

 

Papakonstantinou also said that his ministry is considering abolishing cheaper electricity rates enjoyed by DEI employees and pensioners.

 

Also under consideration is cutting the levy, collected via electricity bills, for the Hellenic Broadcasting Corporation (ERT).

 

DEI, which supplies about 90 percent of the country's retail power market, is trying to cope with rising fuel costs and falling demand in the recession-struck economy. It is also cutting an ambitious investment plan of about 10bn euros.

 

The increase granted is much less than the 17 percent requested by the company and the 12.7 percent the country's energy regulator had recommended. The last time that DEI was allowed to raise prices was July 2008.

 

DEI currently charges more to corporate clients to subsidise low prices for households. It produces about half its electricity from burning lignite, which will become more expensive from 2013.

 

The 9.2 percent figure is an average of increases for companies and households, according to the ministry statement, which did not provide the figures for each category.

 

The company reported last month its first quarterly loss in almost two years and expects to remain in the red in the fourth quarter.

 

Standard & Poor's cut DEI's credit rating deeper into junk territory on December 22, to CCC from B-, partly on concerns that it might not be able to roll over about 1.2bn euros in maturing bank loans next year.

 

But austerity-hurt citizens will struggle to pay more for electricity. The government has already imposed a raft of new taxes on electricity bills as it struggles to raise cash and avoid default. (Reuters, AMNA, Athens News)