Cyprus Mail

EAC split effective from December, regulator says (Update 3)


THE energy market regulator said on Monday that the EAC will be divided into two from December with a final draft of regulations for a new model in the energy market expected to be ready by the end of the year.

Chairman of the Cyprus Energy Regulatory Authority (Cera) Andreas Poullikkas said the unbundling of operations and accounts of the state-owned power producer EAC is close to completion, with operational separation scheduled to start in December, and final draft regulations ready just weeks after that.

In remarks after submitting Cera’s annual report to President Nicos Anastasiades, Poullikkas said that “the separation of accounts and operations of EAC is expected to come into force on December 1”. A “first audit” on April 1, 2017, will reveal whether EAC’s separation is in line with the regulatory decision of Cera.

In March, EAC workers threatened to launch an indefinite strike to prevent the separation of the power producer into two entities, one in charge of production and supply and another for the transport and distribution of electricity. Unions said they considered the operational separation a first step towards the company’s privatisation, which they oppose. In December 2015, the government ruled out selling the company to a private investor. A last-minute intervention by the president prevented the strike.

In a first reaction, the head of Epopai, one of the unions representing EAC workers, said there is now “harmony” in the consultations for the company’s separation.

“The model that the EAC is asked to operate is what was decided together with the president so that there is proper financial and operational separation, which safeguards the pledges given to third parties,” Andreas Panorkos said in an interview with CyBC television on Monday.

Poulikkas said that the introduction of a new tariff system will take Cyprus “into a new energy era, the era of energy union, as announced recently by the European Commission”.

“A regulatory decision on the methodology of tariffs has been taken,” Poulikkas said, that will determine pricing over the next five-year period on the basis of revenue and expenditure projections.

The new tariff system will provide for a predetermined eight per cent return on capital employed for production and six per cent in transmission and distribution as proposed.

“We are already in consultations with the EAC, have determined EAC’s return rate, and set reduction rates of EAC’s revenue over the next five-year period so that the consumer can benefit,” he said.

In a separate statement, Cera said that during Monday’s meeting with Anastasiades, its representatives briefed him about actions included in the regulator’s strategic planning.

These include the modernisation of regulation for licensing suppliers of electricity and gas, the creation of a natural gas market framework, options for importing natural gas for use in all sectors of the economy, achieving production targets with renewable energy sources by 2020, and the introduction of energy storage systems.

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