The Cyprus Electricity Market Association has lodged a formal complaint with the European Commission’s Directorate-General for Competition regarding the planned upgrade of the Dhekelia power plant with two gas turbines, multiple sources confirmed to philenews.
The complaint specifically targets the government’s written representations to the European Commission seeking approval to recover the investment costs through Public Service Obligation (PSO) charges applied to all electricity consumers rather than solely to the Electricity Authority of Cyprus (EAC) customers.
The association, led by Cyfield CEO George Chrysochos, alleges the government’s efforts strengthen EAC’s dominant market position.
The association argues that Commission approval to recover costs through PSO charges would constitute state aid to the state-owned electricity provider.
According to sources familiar with the complaint, CEMA contends the Dhekelia plant upgrade, estimated at approximately €150 million, is economically unsustainable and would not effectively address electricity supply adequacy issues in Cyprus.
The association proposes alternative solutions, suggesting that supply challenges could be resolved by fully utilising the new 260-megawatt power generation plant (PEC-Cyfield) at Vasiliko, either through accelerated natural gas introduction or temporary generator modifications allowing diesel usage until natural gas becomes available.
Government sources express concern that the association’s complaint has complicated efforts to secure Commission approval for the financing arrangement.
If the Competition Directorate rejects the funding request, energy authorities face a significant dilemma.
They must either abandon plans for new generators at Dhekelia—which both the Cyprus Energy Regulatory Authority (CERA) and the Transmission System Operator consider essential for system stability—or proceed with the installation at EAC’s financial risk.
The latter option could create substantial economic challenges for EAC, as workers consider the Dhekelia upgrade economically unfeasible under current Cyprus energy market conditions.
Assuming the financial burden for the new generators, particularly after EAC’s commitment to fund storage systems from its reserves, would increase electricity costs for EAC customers in a competitive market.
This could paradoxically create conditions for private energy producers to raise their prices to levels approaching EAC rates despite their significantly lower production costs.
This latest complaint follows a similar action by the association approximately one year ago challenging the Energy Ministry’s request for a derogation allowing EAC to install centrally managed storage systems operated by the independent Transmission System Operator.
Despite that complaint, the European Commission ultimately approved Cyprus’s derogation request.
The Council of Ministers approved relevant legislation in early February allowing the Operator to manage central storage systems, with the bill submitted to Parliament yesterday.
