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Our View

Our View: A new delaying tactic on opening up the energy market

NOBODY would have been surprised to have learned on Tuesday that the liberalisation of the energy market has been put back yet again. The local market was supposed to have opened to independent electricity producers last year, it was subsequently put back to 2019 and the latest news is that it will probably not even happen in 2020. After a meeting of the House energy committee that discussed the matter, its chairman, Angelos Votsis, said “unfortunately the time-frames, for yet another time, appear to have been amended.”

The Electricity Authority of Cyprus (EAC) unions are vehemently opposed to the opening of the market as competition would expose the high costs and inefficiencies of the Authority which is a price-setting monopoly protected by law. The fat salaries, benefits and big pensions that would come under threat by competition are being protected by the unions, which threatened to strike if the government went ahead with plans to set up independent Distribution System (DSO) and Transmission System (TSO) Operators that would buy power from other producers and put it on the electricity grid.

The government gave in to the unions’ demands and the Operators remained part of the EAC. There could not have been a more foolish decision, the government handing exclusive responsibility of opening the market to bodies belonging to the organisation vehemently opposed to this. It was not even a secret, as the EAC has been filibustering and threatening strikes all along; what is worse is that its senior management is in full alignment with the unions on the matter.

On Tuesday at the House it became apparent that the EAC found a new, if predictable, delaying tactic – the tenders procedure for a specialised software system. It informed deputies that it had declined the offer made to it and the preferred tenderer has challenged the decision at the Tenders Review Authority. How many more such disputes there would be is anyone’s guess. The DSO estimated that once a contract for the development of the software was signed, it would take 15 to 18 months before the distribution system became operational.

Under the circumstances, mid-2020 may be an over-optimistic forecast for the opening of the energy market. If the EAC is left with the responsibility of opening the market, it might be 2030 before this happens. Meanwhile, households and business will have to pay higher electricity rates, as these will include the fines of the EU for the Republic’s failure to meet the new targets for lower carbon emissions. And all this because the government gave the task of opening the energy market to the organisation that does not want this to happen.

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