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European CommissionThe Second Economic Adjustment Programme for Greece. Fourth Review3. A further development is represented by the recent difficulties of several energy-intensive companies, which have reportedto be close to shutting down because of the high energy costs. The reaction of the Government was a direct intervention inPPC's general assembly to propose and approve a significant discount to electricity prices for energy intensive companies.While this solution provides an obvious immediate relief for companies, it is clear that it creates further problems on othersides. In essence, it does not tackle the distortions but rather compensates them, at the expense of PPC's profits.Against this background, and taking account of discussions during the review missions, the government has decided to adopta package of reforms, including ambitious actions on both the gas and electricity markets.In the gas market:The Government has committed to a package that would change the landscape of the gas market, allowing Greece to reap thebenefits of an increased and more diversified gas supply and of the recent renegotiations of existing supply contracts withRussia. The positive effects (some already in the short term) on the competitiveness of the manufacturing (especially energyintensive)sector, and on the welfare of households, are expected to have a measurable impact on growth, possiblysignificantly larger than the one foreseen by other product market reforms in the pipeline, given the pervasive relevance ofenergy in the economy.• To increase choice among consumers, restrictions are to be eliminated, starting with business consumers, and later for allconsumers. The government committed to adopt legislation by June so that from 1 October all gas industrial consumerswill be fully eligible to choose their supplier. This would also have the implication to remove restrictions to cross-sellingelectricity and gas. All other costumers would be free ("eligible") to choose their supplier later, based on an action planadopted by the Government before the completion of the review.• To improve market operations, the unbundling of network development and maintenance from supply will also beintroduced with new legislation adopted by end September 2014. From 1 July 2015 the network activities of the EPAswould be separated from their supply activities and would be regulated, thus stimulating the growth of the distributionnetwork, and, through this, of gas demand.• To spell out the further reforms and actions needed to further improve the functioning of this market, increase choice andaccess to other sources, and stimulate demand and move towards a more efficient use of gas, a comprehensive action planfor the reform of the gas market has been approved by the Government before the completion of the review. Thisincludes the creation of a wholesale market, easier access to LNG, scope for the growth of the distribution network, andthe promotion of the use of gas as heating fuel.In the electricity market:• To make the management of capacity more cost-effective, capacity payments would be reduced, progressively butstarting immediately, taking into account the need for capacity adequacy and a sufficient response to peak demand. Thisimplies a reduction in the quantity of capacity remunerated, but possibly also a reduction in the unit level ofremuneration.• To improve the management of electricity demand from energy intensive companies, state-aid- and third-packagecompatibleinterruptible contracts would be introduced, providing to them compensation for this service.• The costs of energy-intensive companies could be reduced further through the state-aid-compatible and fiscally-neutralcompensation of CO2 costs incorporated in electricity costs.• To bring competition in the supply side of the electricity market, the auctioning of PPC capacity (NOME) would bebrought ahead and started on 1 September 2014.• To further reduce distortions in the structure of electricity prices, on 1 July 2014, PPC would take the decision to reviseits tariff structure, including discounts, to take into account the measures taken by the government.The benefits of the package, if properly implemented, are manifold. Many restrictions would be lifted and markets would bemade more competitive. Consumers would benefit from greater choice. Households would have access to a cheaper and lesspolluting energy source for heating. The benefits of lower gas prices, and future increased supply, would be fully reaped.Energy-intensive industries would see an improvement in their competitiveness. Gas companies would be exposed tocompetition, but on the other hand would have access to a wider market. Last, but not least, a significant intervention inPPC's tariff structure, which could endanger its profitability, would be neutralised.The rapid and cumulative implementation of this package would be a powerful signal that a key product market reform isbeing undertaken in Greece, an important message both for consumers, businesses and investors. Strong commitment to andimplementation of such reforms by the Greek authorities appears crucial for supporting a sustained economic recovery.3.6.2. Electronic communications118. The authorities have committed to launch the public consultation on the tender procedure for theassignment of the digital dividend (800 MHz band) allocating and authorising the use of the digitaldividend to Electronic Communication Services by April 2014, and launch the tender procedure itselfby June 2014, so as to respect the October 2014 deadline for the assignment of the frequencies of thedigital dividend.62