After raising electricity prices in the mid-voltage category, independent suppliers are now set to do likewise for low-voltage electricity, supplied to households and businesses. A first step by one or more suppliers is expected to swiftly trigger action from the rest.
Virtually all independent suppliers have activated a clause used to cover elevated System Marginal Prices, or wholesale prices. The power utility PPC has already increased its mid-voltage electricity prices.
Higher tariffs at PPC, still the dominant player, have prompted many consumers to switch supplier in recent times, leading to considerable market share losses for the utility.
Though independent suppliers are currently gaining clients from the PPC outflow, they are also keeping a close watch on each other.
Independent suppliers must keep providing incentives to lure PPC customers, and, at the same time, lessen their risks of financial loss.
Lower-cost electricity acquired by independent suppliers at NOME auctions will soon run out. The government recently decided to abolish this procedure, loss-incurring for PPC. Independent suppliers should start being exposed to the wholesale market’s higher prices in January and will be fully exposed by June.
By this stage, the performance of independent suppliers will greatly depend on wholesale electricity market conditions.
If LNG prices remain subdued, a favorable prospect for the SMP, then independent suppliers, despite their increased exposure to the wholesale market’s conditions, will not be forced into loss-incurring deals but, instead, will be in a position to keep competing against PPC for market share gains.
State-controlled PPC has adopted into its business plan the prospect of a market share reduction to levels of around 60 percent or less by June, 2020. Subsequently, independent suppliers will control 40 percent of the retail electricity market, meaning competition between them, rather than against PPC, stands to intensify.
Any agreements reached during negotiations between the government and the European Commission in January will also impact the market.