The package of energy measures to be announced in the coming days focuses on heating and intervention both in the pump price and in the horizontal increase of the allowance, leaving electricity support out of the picture.
The possibility remains open for a cap to be imposed on profit margins for fuel trading companies and gas stations, with the measure still under examination by the Ministry of Development, while scenarios for imposing a cap on refinery margins have been definitively ruled out.
Examining the components of the package that the competent ministries are expected to specify, the emphasis falls on the effort to make heating oil available on October 15 below 1.75 euros/liter, as the Prime Minister has committed, although the amount with which the refineries will contribute to the price subsidy has not yet been finalized. Depending on their participation, we may even see lower prices for this specific fuel.
In reality, the interest of what sources from the Ministry of Environment and Energy conveyed yesterday ahead of the specification of the new measures to address energy costs lies more in what will remain outside the package than in what will be included, which is more or less known after the recent announcements by Mitsotakis.
A cap on refineries is ruled out
Outside the government's planning is, for example, the imposition of a cap on refinery profit margins, on the grounds that such a move could create risks for security of supply, as a ministry official conveyed, given that refined products are traded in an internationally competitive market.
Any imposition of a cap on the sector's margins could, according to the same reasoning, make less competitive, for example, the diesel fuel produced and to a large extent exported by Greek refineries to a number of markets, with all that this would mean for the country's ability to supply such products abroad.
Similarly, an extraordinary taxation of the profits of oil companies would largely concern revenues deriving from sales abroad.
This is also the reason why the government appears negative toward the stance of 6 European countries on imposing extraordinary taxation on the sector's profits ."If they were supplying the greater part of their production to the Greek market, then it would indeed make sense to return to the Greek consumer part of their revenues,” as the same sources said.
Electricity and the change of line
On another front, that of electricity, the government's approach shows a change in stance compared with what applied a year ago when the subsidy was considered a one-way street every time prices exceeded the psychological threshold of 15-16 cents/kilowatt-hour.
Although everything shows that September will also close with a double-digit increase in the wholesale price, which is “running” at +16% (160.38 euros/MWh compared with the previous month), continuing August's rally (+21%), nevertheless the government does not appear to be oriented toward a new round of subsidies.
Although many providers absorbed the increase of a month ago and even though for more than eight out of ten households - as much as the share of the three largest suppliers - the average charge in green tariffs is moving marginally above 16 cents/kilowatt-hour, the market average is approaching 21 cents/KWh. It is the highest average in over a year in this specific category, where there are still more than 3 million households.
To the question of why electricity subsidies are outside the picture, the answer given by officials of the Ministry of Environment and Energy is that consumers now have at their disposal a plethora of competitive blue products, which allow them to shield themselves from price increases. The rationale is that the electricity market no longer resembles at all that of heating oil, where consumers have much more limited choices.
The fiscal factor
In the scenario, of course, where the average charge in green tariffs shoots up, for example, to 25 cents/KWh, it is obvious that the government will resort to subsidies. But the broader approach shows a change of line, which is also dictated by fiscal margins.
"Every intervention in heating oil, fuels or electricity entails a significant fiscal cost and the government does not want to create the impression of a policy without limits". At a time when government bond markets are under pressure, it is important not to send the message of unlimited state aid,” say sources from the Ministry of Environment and Energy.
At the same time, a fiscal “cushion” is being maintained in case price increases persist or the energy crisis is prolonged, so that there is room for new interventions if needed.
Support for heating with natural gas remains open
Finally, the scenario of additional support for consumers who use natural gas for heating but are not included in the existing allowance remains open, although for the time being no specific decision has been taken.
Of course, as officials of the Ministry of Environment and Energy explain, despite the recent increases, natural gas remains a cheaper option than heating oil, limiting the need for immediate intervention.