The European Commission Wednesday asked Greece to improve competition in its electricity sector by giving companies fairer access to lignite, used to generate the bulk of local electricity.
The commission accuses Greece of distorting competition in the electricity market in favor of its state-owned electricity incumbent Public Power Corporation SA (PPC.AT), or PPC, by giving it near exclusive access to lignite, also known as brown coal.
Despite market liberalization in 2001, PPC continues to dominate the Greek electricity market producing more than 85% of the electricity consumed, the commission said.
"Customers are denied the benefits of competition in the electricity sector when one operator controls virtually all access to Greek lignite reserves, which currently represent the cheapest source of power generation in Greece," competition commissioner Neelie Kroes said.
Greece should establish a level playing field by giving competitors access to substantial volumes of lignite, she added.
Virtually all lignite deposits in Greece are owned by the state, which grants companies exploitation rights. PPC currently owns 91% of these rights.
Lignite, abundant in Greece, is the cheapest available fuel, and lignite-fired electricity generation accounts for over 60% of total power generation.
The commission has given Greece two months to come up with proposals to change the situation and additional six months to implement the proposals. If after this period there is no discernible change the commission may open an infringement case against Greece.