Electricity prices are breaking one record after another, hitting €287 today and reaching… €400/MWh this evening, as Brussels repeats its call to “cut consumption” while avoiding any mention of Greece’s request for fiscal flexibility, and the government searches unsuccessfully for money to fund subsidies in sectors beyond fuel.
Against the backdrop of what Stavros Papastavrou yesterday called “an unprecedented and perhaps the most serious energy crisis we have ever experienced” at the meeting of energy ministers in Luxembourg, and with suppliers due to announce their tariffs for next month, the government may announce as early as today a new support package for the first fortnight of November.
Leaving around 3 million households still on green, variable-rate tariffs, as well as around 800,000 people who heat their homes with natural gas, outside its scope, the measures will cover fuel only and, according to reports, will be exactly the same as those currently in place. That means:
- 40 cents per litre for heating oil (20 cents from the budget and 20 from refineries). The latest price survey puts the nationwide average at €1.56 per litre. It is worth noting that no large-scale wave of orders has begun yet.
- 20 cents per litre for diesel. The nationwide average is €2.13, while prices exceed €2.20 in the Dodecanese and Kefalonia, and reach €2.35 in the Cyclades.
- 10 cents per litre for unleaded petrol. The latest price survey puts it at €2.13. It is around €2.40 in the Cyclades and close to €2.30 in the Dodecanese.
In reality, despite the new subsidy package, the government’s concern is clear. The arrival of winter is accelerating the energy crisis: Brent is 81% more expensive than a year ago, gas is up 217% and wholesale prices are more than 100% higher. No one is ruling out a US escalation in the Persian Gulf if Trump suffers a decisive defeat in the midterm elections next Tuesday, 3 November.
Three factors point to a bitterly cold winter ahead.
1. An endless rally in prices
October is ending with a 24% increase in wholesale electricity prices, with the monthly average at €194/MWh, compared with €157/MWh in September. This means that, whatever share suppliers absorb, higher green-tariff prices are inevitable. And this will be the fifth consecutive month of increases for a tariff category used by seven in 10 consumers, even though the period of peak demand has not yet begun.
2. No additional funds to extend subsidies for electricity and gas
According to government sources who spoke to euro2day.gr, on the basis of current conditions, extending subsidies to electricity and natural gas is not feasible. No funds appear to have been found, either in the state budget or in the Energy Transition Fund (TEM), the special national mechanism used to shield consumers from price fluctuations. The current picture suggests there is no room left in the pot, with the government banking on Brussels granting greater fiscal flexibility. The effort is considered extremely difficult.
3. “Cut gas consumption and switch to heat pumps”
Asked yesterday what short-term measures had been discussed at the meeting of the Council of Energy Ministers, Commissioner Jørgensen cited, among other things, “‘social leasing’ programmes for electric vehicles or heat pumps, as well as subsidies to replace gas boilers with heat pumps and to fund renovations — such as replacing window frames or installing insulation”. In other words, measures that have no immediate impact on energy costs, even for those who can afford to adopt them.
He reiterated that the Commission welcomed a reduction in natural gas demand, saying “there is scope for more action of this kind”, and made clear that any country wishing to subsidise fossil fuels (oil and gas) could do so, without the Commission making any mention of raising the spending cap.
“I understand this logic (that is, providing subsidies), because when people are cold — and that is what we are talking about — people are cold. Of course, policymakers must be able to help. The same applies to being able to put fuel in one’s car in order to get to work. At the same time, however, I want to stress that this measure must be targeted and temporary,” the commissioner said.
In practice, this means that Brussels will evidently neither stop countries with deep pockets from continuing to subsidise transport fuels, heating oil, natural gas and electricity bills, nor make it easier for them to do so. For all the others, the answer to the question of what happens is to cut consumption.
Papastavrou proposes joint meeting of energy ministers and Ecofin
By contrast, Greece’s Energy Minister, Stavros Papastavrou, again stressed the urgent need for fiscal flexibility for member states and for a change in how funds unlocked by approval of the energy escape clause can be used. Spending should not have to go towards long-term energy investments, but could instead be allocated to targeted, temporary support measures for citizens and businesses.
He also proposed a joint meeting of energy ministers with finance and economy ministers, alongside ECOFIN and Eurogroup meetings (the latter is due to meet on 9 November under the presidency of Kyriakos Pierrakakis), to consider together how the crisis can be addressed within European rules.
Although, reportedly, a number of his counterparts were receptive to the proposal, and the ministers of Malta, Bulgaria, Slovakia and Romania publicly backed it, the challenge is not only when the joint meeting will take place but also whether a higher spending ceiling will be approved — particularly when the “frugal” group is firmly opposed.
“We are facing an unprecedented and perhaps the most serious energy crisis we have ever experienced. The European Council conclusions state verbatim that ‘the current situation urgently requires a coordinated European response with targeted and temporary measures, taking into account the particular circumstances of member states and safeguarding the single market’. Our task now is to turn the decision of our countries’ leaders into action,” St. Papastavrou said at yesterday’s Council meeting.