Greece Receives EU’s Initial Approval to Curb Power Prices

Greece has announced that the European Commission has given initial approval for a plan to cap wholesale electricity prices, aimed at alleviating the burden of rising energy costs on households and businesses.

Due to a significant portion of the country’s power generation relying on gas, the Greek government has been providing subsidies for power and gas bills and has also issued one-time financial support to vulnerable groups, amounting to 4 billion euros since September.

The situation has been aggravated by escalating gas and electricity prices following Russia’s invasion of Ukraine, leading to sharply increased energy costs for Greek consumers. In response, Athens has committed to implementing a ceiling on wholesale electricity prices starting this summer.

Greek Energy Minister Kostas Skrekas highlighted the importance of this development, stating that an initial agreement on the new mechanism will affect the electricity market from July onwards, following discussions with the EU Energy Commissioner in Brussels.

The proposed scheme will involve a limit on payments to power producers, aimed at ensuring these payments reflect their actual production costs while adhering to EU market rules. This approach intends to dissociate rising gas prices from electricity prices.

Next week, Greece plans to inform the European Commission about the draft legislation related to this new mechanism.

In addition, Athens intends to finance this initiative through proceeds from its carbon emission permits.