The forthcoming new legislative developments in Greece in the coming weeks could have an impact on the producers and suppliers of electricity in the country, if they are not balanced with compensatory measures, reports Fitch Ratings.
In particular, as the report of the house points out, a series of new policy initiatives in order to address the effects of the increase in energy prices could worsen the financial profile mainly of the Public Electricity Company (PPC), the existing utility company in Greece, and finally put pressure on its ratings, in case they are valid for an extended period of time and are not accompanied by compensatory measures. Which, as Fitch notes, is not the case.
However, according to the house, a one-time contribution of 90% to the unexpected profits of the production companies will increase the leverage in 2022 for PPC and, to a lesser extent, Mitylineos, although it will not have an evaluation effect for both on its own. .
In addition, the government could approve a ministerial decision that will be implemented from July 1 and will last until June 2023, which will apply a price cap for each electricity generation technology.
“This in practice would remove any upward trend in the company’s forecasts and in our forecasts from the rise in energy prices for the next two years.”
However, the house emphasizes, “we continue to maintain our basic scenario for conservative prices”.
Additional ongoing discussions on intervening in the retail pricing strategy, for example by suspending the wholesale price adjustment clauses in force from August 2021, could seriously damage the financial profiles of utilities and the company’s view of the regulatory framework in Greece if not accompanied by measures to neutralize market intervention for providers.
“In our view, the principle of Greece’s energy policy to maintain a healthy utility industry supports our expectations that the government will introduce countermeasures to minimize the impact on the two investment utility companies, if the current discussions reach the level of a draft law.