The Cyprus Energy Regulatory Authority (PAEK) has successfully prevented a proposed 25% increase in basic electricity rates, according to Phileleftheros.
The move not only safeguarded the Cyprus Electricity Authority (EAC) but also shielded the government from public outcry had this significant hike been approved.
As previously reported, EAC had submitted a formal request to PAEK, seeking the 25% increase in basic electricity rates. This increase was intended to cover operational and other expenses incurred by EAC, both previously approved by PAEK and those anticipated in the future as part of the implementation of developmental programmes, which had also received regulatory approval.
The receipt of this request in March 2023 had taken the top management of PAEK by surprise. In 2022, PAEK approved a 14% rate increase, preventing a financial crisis for EAC due to inadequate cost recovery and the substantial rise in fuel costs, production expenses, and other materials and services.
The fact that PAEK has issued a decision regarding the request received in March 2023 reflects the significant concerns raised by the call for a 25% increase. This decision comes during a period of exceptionally high energy costs for Cypriot consumers and unprecedented price hikes in the retail market, making it challenging for thousands of households and businesses to survive.
From March 2023 until just a few days ago, there had been extensive correspondence between PAEK, the Cyprus Electricity Authority, and the Cyprus Transmission System Operator (TSOC). PAEK’s objective was to verify the data presented by EAC, which supported the need for a 25% rate hike, and to minimise the extent of any increase.
EAC had informed Energy Minister George Papastasiou about the difficulty in reaching an agreement approximately ten days ago, evidently indicating the impasse in negotiations.
Yesterday, PAEK made its decision public, ultimately rejecting the entire proposed rate increase, including the option of a smaller increase.
The regulator’s decision is expected to create a financial challenge for EAC, potentially leading to decisions by its management and board regarding project suspensions scheduled for 2023 or the interruption of ongoing projects.