PEOPLE should not get carried away over gas prospects as they will still have to incur the 6.96 per cent rise in electricity bills for possibly another “three difficult years”, the energy regulator warned yesterday.
“We should not raise people’s expectations because the next three years will be rather difficult in relation to electricity cost,” the head of the Cyprus Energy Regulatory Authority (CERA) Giorgos Shammas said.
Preliminary results indicating a mean range of 7 trillion cubic feet of natural gas in Cyprus’ Block 12 of its exclusive economic zone have created a euphoric atmosphere on the island.
Commerce Minister Praxoulla Antoniadou even talked of “tens of billions” of euros worth of gas.
Shammas yesterday urged caution however, saying that in terms of electricity prices, people should not “expect the first positive results” before 2015.
The island is still undergoing an energy crisis brought about when the naval base explosion in the summer knocked out Cyprus’ main power station at Vassilikos.
Over half of the island’s energy production capacity was lost with people suffering through rolling power cuts for much of the summer.
Even with additional measures such as renting extra generators and resurrecting older, less efficient units, energy supply in the peak summer months is only marginally adequate.
To cover additional costs, CERA approved in September a 6.96 surcharge to already hefty electricity bills.
But bills cannot be lowered before the Vassilikos power station is fixed, Shammas said.
After fixing the units “we face the prospect of removing the 6.96 per cent raise,” Shammas said.
Vassilikos’ combined cycle units 4 and 5, which can handle gas should be fixed by the summer, Shammas said adding that additional units would take longer to fix or build.
Shammas said that according to an outside consultant, electricity prices should only start dropping by “a few percentage points” in 2015 eventually falling by 20 per cent.
The drop in prices would be the result of a drop in emissions and because the combined cycle units at Vassilikos are more fuel efficient, Shammas said.
The Electricity Authority of Cyprus’s (EAC) chairman Harris Thrassou said that Cyprus currently pays up some €10 to €11 million in buying greenhouse emission allowances as per the European Union’s regulations.
“The Cyprus consumer will benefit from this (emissions’ drop) immediately,” Thrassou said.
Thrassou said that “in about two years the EAC will be able to cover 50 to 60 per cent of energy consumption by burning natural gas”.
But a “large investment” of this sort is not viable just for domestic use, Thrassou said.
EAC general manager Stelios Stylianou told the Mail that companies, such as Noble Energy, aim for “maximum extraction” since it is more profitable for them to extract as much gas as possible, sell some for home use and then export the rest.
“This is good for the company but not good for the country,” Stylianou said adding that they all needed to come up “with the optimum solution”.
Thrassou said that it was impossible to know by how much bills would fall in the future given they did not know yet “what the distribution price would be”.
“As the EAC we don not know who with we will be negotiating (the natural gas) price – is it the commerce ministry? Is it Noble? is it the energy regulator?” Stylianou said.
But commerce ministry energy chief Solon Kassinis yesterday said that the state held a “very significant proportion” of the profit-sharing scheme agreed with Noble Energy, which is drilling for gas.
Meanwhile, the cabinet approved on Tuesday the construction of a platform at Vassilikos to import and export hydrocarbons, Communications and Works Minister Efthymios Flourentzos said yesterday.
Flourentzos said that the government appointed an experts’ consulting committee “to help it forge a policy that should be followed so that the Republic of Cyprus’ rights are ensured in taking advantage of hydrocarbons in the most correct way”.
“The benefits which will arise will be significant,” Kassinis said adding that the government had the “better” agreement from all its neighbouring states on hydrocarbons’ exploration although he could “not say” what the agreement amounted to.
Be that as it may whatever significant benefits come Cyprus’ way, bills will remain high for some time yet.
