Sunday , October 17 2021

Severe winter is coming: Cold and energy price rally “freezes” Europe | ECONOMY



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Balances in a difficult situation, which includes on the one hand the jump in energy prices and on the other hand the sharp drop in temperature, below normal for the season, is called upon to reach Europe.

As the price of gas and electricity continues to rise, meteorologists are already cold in large parts of the Old Continent in the coming week, according to a Bloomberg report.

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Cold winter is coming to Europe

According to a Bloomberg report, the weather forecast for southern and southwestern Europe reflects temperatures below normal for next week.

The cold snap will resume on November 8, with EU countries worried it could increase household demand for gas and electricity.

Electricity subsidy from 18 to 24 euros – How the heating equipment fee is calculated [παραδείγματα]

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In this light, the EU considers joining the energy market as a union so that all Member States can supply gas together to improve the energy stability of the bloc and at the same time prevent a possible price shock in the near future.

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The Commission is considering a price negotiation on the Union

The Commission is expected to consider options to strengthen the advantage offered by trade as a bloc of countries, in a bet not to undermine the pandemic recovery effort.

The same plan is likely to include relief measures for citizens, with tax cuts, direct financial assistance to the weakest and state aid to businesses.

According to Bloomberg, all 20 EU countries, including ours, have taken national action on the issue. The Commission notes, according to a Community source, that Member States may designate a supplier of emergency energy.

Gas and electricity prices have risen to historic highs as Europe slowly enters the winter, leading energy industrial giants to reduce production.

At the same time, the image of the energy market worries about the launch in household accounts.

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A difficult economic situation

The rise in prices coincides with an increase in demand as European countries emerge from the lockdowns imposed to deal with the pandemic, as well as limited supply from Russia and Norway.

Although Russia’s Gazprom says it is meeting its obligations under the intergovernmental agreements, the energy giant offers a few, if any, additional gas supplies.

In Europe, prices are expected to fall in April 2022, but are not expected to be at the level they were a year ago in the spring of next year.

Nervousness in the markets – The Bank of England warning

The “possible inhibition” of recovery due to the shock caused by the explosion of energy prices, is causing nervousness in the markets.

Today, ECB President Christine Lagarde said that the economic recovery of the eurozone was due to frictions and imbalances associated with rising energy prices and supply chain disruptions, which could further slow the recovery. And then the end of the pandemic.

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While some banks, such as ABN AMRO, now predict that the bonding “rally” will continue until 2023, the Bank of England has warned that stock and bond markets could be sharply corrected if investors reassess the outlook. Economic recovery from COVID-19 and whether there are signs of increased risk-taking in investment banks.

Ahead of Athens and Madrid

The establishment of a common platform for trade in energy resources in the EU has been systematically promoted in recent weeks, according to Bloomberg, by Athens and Madrid.

However, the idea of ​​joint negotiations is not new, having fallen on the European table a decade ago, to tackle the Union’s energy dependence on Russia.

The EU toolbox

The leaders of the “27” will discuss the energy issue during the summit on 21 and 22 October in Brussels.

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The Union Precision Toolkit is expected to include, but is not limited to:

  • Tax exemptions or reductions
  • Tax refund for households and businesses
  • Look for long-term agreements for sustainable electricity sources
  • Withdrawal of funding from sustainable sources from electricity bills
  • Price ceiling
  • Extraordinary financial aid for the weakest.

The initiatives of the Greek government

The Greek government has already devised a wide range of measures to increase the fee for heating and energy, with the aim of increasing electricity and gas so that it does not reach the pocket of the consumer.

According to the announcements of Christos Staikouras, Kostas Skrekas and Theodoros Skylakakis, the interventions will have to do with heating and electricity.

Double the electricity subsidy

  • The subsidy for electricity bills for the four months September-December increases from 30 euros per megawatt hour to 60 euros per megawatt hour for consumption up to 300 kilowatt hours per month. In practice, the subsidy goes up from 9 to 18 euros per month.
  • In addition, PPC will continue with additional discounts for consumption of 300 to 600 kilowatt hours per month, above the 30% discount granted since August, and advises alternative suppliers to continue with similar movements.
  • For the beneficiaries of the Social Household Tariff, the subsidy is set at 80 euros per megawatt hour rather than 24 euros per month, so that, as Mr Skrekas said, “they do not see an increase in the bills”.
  • In natural gas, DEPA Commerce will continue with a 15% discount to suppliers so they can pass it on to domestic consumers. It is recalled that since last year natural gas (like other heating fuels, other than oil) has been included in the heating allowance.

What about the increase in heating allowance

The amount of the allowance increases by 59% for an average household with two children. The increase varies from 36% for households without children and up to 68% for households with three children.

Analytical:

  • The calculation basis of the fee is increased from 220 euros to 300 euros (this amount is multiplied by the degree days, which are a factor of 0.12 to 1.62, depending on the cold of the region).
  • The benefit for each child is increased by 20%, instead of the 10% that was valid until today.
  • The minimum fee is increased to 100 euros, from 80 euros.
  • The maximum fee increases up to 750 euros, from 650 euros.

Indicative examples by regions

  • In the center of Athens (with a daily rate of 0.43) for a household with two children, the benefit will increase, from 114 euros last year, to 181 euros this year.
  • In central Thessaloniki (with a grade point average of 0.71) for a household with two children, the benefit will increase, from 188 euros last year, to 299 euros this year.
  • In Kozani (with a daily rate of 1.12) for a household with two children, the benefit will increase, from 295 euros last year, to 469 euros this year.
  • In Florina (with a grade point average of 1.18) for a household with two children, the benefit will increase, from 312 euros last year, to 496 euros this year.

Extension of the inclusion criteria for the heating allowance

From 12,000 for the unmarried, up to 14,000 euros.

In the case of a household, the benefit is 20,000 euros, which will be increased by 3,000 euros for each child, instead of the 2,000 euros that were valid until today. Therefore, the income limit is increased:

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  • From 24,000 for the household with two children, up to 26,000 euros
  • From 26,000 for the family with three children, up to 29,000 euros

Increase the criteria for ownership:

  • From 130,000 worth of real estate for the unmarried, up to 180,000 euros
  • From 250,000 worth of real estate for the married, up to 300,000 euros

Based on the above, it is expected that 80% of the households that will consume the subsidized forms of fuel – diesel heating oil (DIESEL), natural gas, LPG, firewood and biomass (pellets). It is estimated that approximately 1.8 million households consume these forms of fuel, of which approximately 1.45 million households are eligible for this benefit.

In 2020, 707,328 households submitted a request and received the compensation. Based on the above, it is expected that the number of households that will apply for and receive the assistance will be more than one million, taking into account the extension of the criteria and the increased interest rate due to the increase in the fee.

How to apply the 15% discount on natural gas

The natural gas suppliers active in the retail market will be affected by the 15% discount on the price of fuel that will be applied by DEPA Commerce, so that the price reduction can be passed on to domestic consumers.

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In the coming days, according to competent sources, the mechanism for calculating discounts will be formed, depending on the number of domestic consumers and the volume of consumption represented by each supply company operating in the market and being a customer of DEPA Commerce. The mechanism for configuration and certification for the application of the discounts will follow.

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