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PPC’s poor efficiency performance October 23, 2007

Posted by grhomeboy in Energy.
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All of PPC’s lignite-fired power stations were found seriously wanting in terms of best production practices compared with other European plants.

Electricity utility Public Power Corporation (PPC) can save up to 750 million euros by rationalizing its operations, a special study has found.

The report, prepared by Booz Allen Hamilton for the corporation’s new business plan, eloquently explains the corporation’s poor economic situation, which is not due to outside factors such as fuel prices or the way that the daily electricity distribution market operates, as PPC often claims.

The study points out that PPC’s main production units operate inefficiently, causing a significant financial burden. It also says there is a need to reduce spending by at least 1 billion euros annually if PPC is to become competitive and secure satisfactory returns for shareholders.

PPC’s mining division was found to be the most inefficient, with margin for reducing costs by 270 million. Power production could save about 111 million, distribution about 110 million, transmission 23 million and commercial operations 12.6 million euros.

The efficiency of the mining division, which operates lignite mines, was assessed in comparison to coal. The report says that under present conditions, four of the five large mines are not competitive. According to Booz Allen Hamilton, for the price of lignite to approach that of coal and eliminate the competitive disadvantage, costs must be reduced by 270 million, or between 18 percent and 74 percent for each mine.

In production, a comparison of expenditures between PPC plants and those in other countries showed that lignite-fired stations lack best practices.

Corresponding comparisons for oil and natural gas-fired stations showed potential for reducing operating costs, although maintenance costs are lower than in others adopting best practices.

In distribution, the study found significant divergence on quality issues, which have an impact on consumers, as EU standards are not adopted. More specifically, each Greek electricity consumer suffers 252 minutes of blackouts annually, compared to respective averages of 162 minutes in Ireland, 131 minutes in Spain, 97 in Italy, 68 in the UK and 51 in France. Only Portugal fares worse than Greece, with 304 minutes of blackouts. Greece also lags behind by 21-23 percent in the time required for new ordinary connections and by 44-46 percent for more demanding connections.

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