European Commission wades in to Greek energy regulator independence row

The European Commission has fired a warning shot in the wake of Greek government interference in the energy regulator’s undertakings in a letter sent to the minister, ICIS has learnt.

The energy minister and the country’s energy regulator RAE were at the centre of a spat last month when the regulator attempted to implement an annual increase in a green levy, known as the ETMEAR tariff (see EDEM 24 March 2015).

But the government, fresh from a bruising election campaign in an economnically crippled country that saw it, among many other things, pledge to lower energy bills, immediately proposed a draft bill preventing the tariff rise.

And rumours of government plans to scale back the electricity and natural gas regulator’s independence have been rife ever since.

A commission spokeswoman told ICIS on Friday the commission had contacted energy minister Panagiotis Lafazanis expressing concern over the government’s involvement in the regulator’s responsibilities.

“The commission has taken note of the apparent intentions of the Greek government in relation to the Greek energy Regulator RAE,” said the spokeswoman.

Breach

Regulatory independence is seen as a cornerstone of effective natural gas and electricity markets, as a means of ensuring wider consumer interests form the backdrop to any decision making process, as opposed to politically motivated influences.

If Greece does not take into account the commission’s concerns, and a plan to reduce both the regulator’s independence and its authority materialises, the country will be in breach of EU regulations. This is because legislation applying to all 28 member states says each country should have an independent regulator.

The Greek energy ministry was unavailable for comment at the time of writing.

The commission spokeswoman highlighted the need for an “effective and independent energy regulator” to ensure “a level playing field for all market participants”.

The Greek government attracted criticism from market participants last month, because its actions were perceived as undermining the regulator’s authority.

The government looked to fulfil an election pledge which had promised lower energy bills. But the regulator aimed to lower the ever growing deficit of marker operator LAGIE which pays subsidies to renewable producers for electricity delivered to the grid. This is funded by the green levy placed on end-user energy bills. The increase in renewable installations every year calls for an annual readjustment of the tariff.

LAGIE continues to battle serious financial issues. It is paying invoices to green producers dating back to November last year. sophie.udubasceanu@icis.com