THE Commerce Minister and the Electricity Authority (EAC) are at loggerheads over government proposals to license a private power operator to supply the Transmission System Operator (TSO) with reserve electricity when the EAC falls short.
The Commerce Minister has blamed the dispute on the EAC’s desire to retain its monopoly on the island’s electricity supply.
But the EAC has said a fourth unit in the pipeline at its Vasiliko power station will provide an additional 130MW by May 1 next year and that the proposed 50MW which would be supplied by Vouros Power Industries as capacity reserve was unnecessary.
“It’s not an issue of control,” EAC vice chairman Yiannos Valanides said. “What we object to is the privileged help and favourable conditions offered either directly or indirectly to private companies.”
Valanides said if a third party wanted a part of the electricity market then it should do so without expecting guarantees from the government that it would receive payment for its generation reserve, whether or not it had been used.
He said: “By law as the sole supplier of energy, we have to have a capacity reserve and are compensated for what is not used. If the regulator wants additional generation, the government should apply first to the EAC and, where the authority cannot provide the extra reserve, then go to third parties.”
He said the EAC had not been approached with such a proposal.
Valanides added: “If the private business is also compensated for its reserve then the additional costs will be added on to consumers’ bills. If the reserve is not used, the third party will effectively get paid for doing nothing and only have their investment costs.”
But Minister Antonis Michaelides said he hadn’t heard any complaints when the EAC had been getting paid £15 million for its capacity reserve.
“Now that there’s no reserve, we’ve discussed calling in third parties,” he said.
Although the minister has made no final decision about whether to grant Vouros Power Industries with the licence to produce reserve energy, Michaelides said he was concerned about a repeat of this summer’s power cuts next year and was determined to avoid it.
“I care about consumers. My first priority is to them. I want them to have light at night and air conditioning during the day. My second priority is the economy of the country, because a black out would cause billions of pounds worth of damage to the economy.”
Michaelides said the EAC simply wanted no one to come in their way and had failed to come to terms with the fact that the island had joined the European Union.
“They have to modernise and be able to cope with third parties entering the game,” he said.
“Unfortunately, based on our predictions for next year, the 130MW they have guaranteed do not appear to be sufficient to offer a generation reserve of 20 per cent, which allows for a fault or extreme heat wave conditions,” the minister said.
Instead, it would only give a safety margin of around eight per cent, he said.
The generation reserve is the margin of power between the maximum demand and available power.
“Our dilemma is do we live with the eight per cent next year, or do we have to involve others so that can reinforce the output,” Michaelides said.
But Valanides said this year’s reserve had been insufficient because electricity demand had reached its peak under “extraordinary weather conditions, which occur only every eight to 10 years”.
He said an additional 50MW might supply the island with a 20 per cent reserve for four or five days during heat wave conditions, but that the remainder of the time under normal temperatures it would have a reserve of 30 to 35 per cent.
“This is a very high reserve for an electricity company to have during peak demand,” he said.
The minister said a meeting was scheduled for tomorrow to discuss the issue. So far, all parties had agreed to talks expect for the unions.
“We hope to reach a decision that will keep everyone happy and to reach a compromise that would facilitate a solution that would sere the interests of the country, consumer and economy. These are the basic aims and principles of this ministry,” Michaelides said.
