There is a well known Greek proverb which is used to describe how a bad or difficult situation sometimes turns into a disaster. This proverb freely translated as ‘things have gone from bad to worse’ applies perfectly well to what we experience this week with the continuous strikes by Public Power Electricity(PPC) workers union. GENOP-DEH, (PPC’s union) leaders have urged their members to strike in unison joining forces with hundreds of other public sector unions across the country which complain about the government’s proposed legislation on social security restructuring.
As Greece is facing an acute demographic problem with current earnings unable to support long term an over generous social security and pension scheme, the government has decided to introduce legislation in an
effort to trim certain unfair benefits (e.g full pension to women workers with 20 year employment) and also bring into line and under the same roof the hundreds of disparate state supported pension funds. PPC workers, who enjoy unique benefits and are paid well above state employees norms, want to prevent their pension fund to come under IKA, the state’s obligatory pension and social security system. Should this happen, they are afraid, they will loose various extra benefits ( inc luding free electricity for their households and hefty cash piles paid upon retirement in addition to their monthly pensions)
As the PPC strike unfolds more electricity generation stations become idle as there are no sufficient workers to maintain the power generation units in operation. The Independent Electricity System Operator (DESMHE), yet another state body, is therefore obliged to take periodically off the grid certain power stations in an effort to maintain in minimal operation the national grid.
The present strike imposed electricity shortages, and the ensuing blackouts, are reminiscent of the problems which Greece’s grid is facing every summer, over the last decade or so, as the electricity system strives to meet an ever rising demand. With generating capacity lagging behind demand during the hot summer months Greece is
habitually suffering extended blackouts, mostly in June and July, both on the mainland and in the islands. The main reason for the rising demand are the new electricity loads imposed on the system from thousands of new air conditioning units which are installed every year by households, hotels and offices. Air conditioning units are great power consuming devices especially in a country like Greece which lacks completely quality control mechanisms. This allows poor quality air conditioning units to be imported and installed which inevitably increase the electricity demand burden.
In order to meet Greece’e electricity rising demand PPC executives estimate that each year the system in order to cope needs a new unit of 300 MW installed capacity. At present the system consists of 11,930 MW of installed capacity in the mainland interconnected grid,11,060 of which belong to PPC and the rest to independent power producers (IPP’s). Yet PPC is responsible for 97% of the annual total electricity production. Following legislation enacted two years ago, in line with EU directives for electricity market liberalization, PPC has been instructed to install only 1,200 MW of new capacity over the next ten years in order to leave room for IPP’s to install the required extra power plants. Consequently the government, through DESMHE, attempted to organize a poorly conceived scheme for guiding the entry into the market of the private operators, which not only failed as it attracted minimum participation, but more importantly wasted two full years in clarifications and protracted negotiations. The end result is that the two main Greek IPP’s, namely Terna Energy and Endessa Hellas, have taken the situation in their own hands and independently of DESMHE have now commissioned the construction of a series of new power plants totaling some 2,000 MW’s which will be build and come on stram over the next four to five years.(see table)
/photos/new power plants in greece.pdf
However, as none of these new plants is scheduled for completion before the summer of 2009 at the earliest, the country is bound to suffer protracted electricity shortages once again next summer. In search for extra capacity the ministry of Development, which supervises the energy sector, has decided to grant the Endessa Hellas, which is 50% controlled by the Mytilineos group, a license to operate its brand new 330 MW cogeneration plant in Vioetia,(initially conceived to provide electricity and steam for the nearby Mytilineos owned aluminium plant) as a full commercial plant and to sell electricity into DESMHE’s daily electricity pool. This has caused considerable consternation to PPC as it will be obliged to continue to sell huge amounts of electricity, at preferential market rates, to the aluminium plant. These rates, not uncommon in other countries with energy consuming industries, were negotiated some 50 years ago when Greece was desperately trying to attract industrial investments in the post war period. Although since then they have been adjusted for inflation and other economic parameters, they remain nevertheless well below the average industrial rate. Another reason why PPC is so much against the foreseen commercial operation of the Endessa plant is the fact that this will strengthen the IPP’S market as it will increase the number of players and hence help to push up wholesale electricity prices.
With the imminent entry of Endessa Hellas into the pool the number of IPP’S is to be increased to three, with Thessaloniki Thermoelecric (it belongs to Hellenic Petroleum) and Heron (it belongs to Terna Energy) thus forcing PPC to compete in an open market.
The last thing that PPC’s management wants is to encourage true market competition in the docile electricity market in Greece. To that end it has proposed to join forces with the German giant energy company RWE and with Greek industry Hallivourgiki in order to build large coal fired plants which will belong to nominally independent companies.( PPC will own 49% with RWE holding 51%, and likewise with Hallivourgiki).
Unaware,and truly uninterested to find out more, that such shady arrangements only help prolong PPC’s monopoly, the unions, namely GENOP-DEH, reactionary by custom, have opposed the above plans adding to the general confusion. As GENOP leaders are openly against any form of market competition, either in support of PPC’s dominance or against, it can be safely concluded that we have not yet seen the worst in terms of strikes and electricity shortages. At the same time the picture now looks more bleak than ever before on the possibility of the Greek electricity market opening up to competition and the prospects of better electricity services.