IPTO asks RAE to increase its revenues – Warns of adverse effects

IPTO is requesting a review of RAE’s decision setting the rate of return on its funds, warning otherwise of adverse effects on the electricity system.

The tug-of-war between the two entities directly concerns consumers as on the one hand IPTO revenues (the amount of which is administratively determined by RAE) are covered by system usage fees included in the accounts, on the other hand as IPTO points out, if the reduction of revenues leads to delay in investment, consumers will be burdened many times over by the delay in implementing a number of infrastructures, such as island interconnections, which lead to a reduction in billing charges.

The president of RAE, Ath. Dagoumas, is expected to comment on the issue, who is giving a press conference today.

According to IPTO, RAE decided last week to reduce the rate of return on investment (WACC) to 6.1% compared to IPTO’s proposal for WACC of 7.5% submitted in October 2021. According to the Administrator, if the decision, there will be three serious consequences for the electrical system:

First, there is a very serious risk of delays in connecting the Dodecanese and the North Aegean islands, which are expected to be completed by 2028. This means that: “consumers will continue to pay higher SGIs in their bills; will have access to high quality electricity, while the remote islands of the Aegean will remain unconnected to the national electricity system in the geopolitical situation we are going through “.

Secondly, the national energy transition targets are in serious jeopardy, as it is very likely that not all the investments required in the Transmission System will be made in order to achieve 29 GW of electricity by 2030.

Third, at stake is the implementation of investments in international interconnections investigated by IPTO such as the Euroasia Interconnector, the Greece-Egypt electricity interconnection and the second Greece-Italy interconnection.

Instead of the reduction to 6.1%, IPTO submitted a new proposal to increase the WACC to 8.16% to cover, as stated, the cost of raising lending rates after the war in Ukraine

“IPTO’s 7.5% WACC proposal was tabled in October 2021. Since then, however, the situation has deteriorated dramatically. After the recession caused by the pandemic crisis, the outlook is dire as the start of the war in Ukraine at the beginning International investment firms forecast an increase in euro interest rates of 100-150 basis points during the year, reflected in the sharp rise in government bond yields worldwide in the rapid escalation of lending rates “, concludes IPTO.