For a Public Benefit Organisation like EAC, providing a public account of the work of the outgoing Board of Directors is an obligation, since EAC belongs to the State and serves the citizens of Cyprus. As the Board of Directors, we have a responsibility to present the results of our term in a transparent manner, in the context of proper corporate governance, providing information on our achievements, the challenges that we have dealt with and those we expect to face in the future.
It is vitally important to note that all of us who have served EAC in positions of responsibility have a duty to ensure the continuation of its work and to strengthen its value as an invaluable asset of Cypriot society.
What we have achieved during our term of office is a result of our close and productive cooperation with the Authority’s Management, Trade Unions and staff. The contribution of EAC’s people is a crucial element, not only for its progress but for the reinforcement of its role as the most reliable energy provider in the country.
Functional and Accounting Unbundling
To facilitate the opening up of the electricity market in Cyprus, by implementing an EU Directive and the relevant decision of CERA, EAC has undergone functional and accounting unbundling, resulting in its separation into four Core Regulated Activities, a Non-Regulated Activities Unit and Common Services. Each Core Regulated Activity organises its departments independently in order to respond effectively to the new needs of the Market.
The Organisation was certified by CERA for its Functional and Accounting Unbundling in December 2019.
EAC has successfully complied with the provisions of CERA’s regulatory decision regarding the Functional and Accounting Unbundling of its Activities and its compliance with all requirements is monitored continuously. For this reason, a consultant was hired recently to provide services to the Board and Management of the Organisation to ensure that it deals effectively with all the challenges arising from its Functional and Accounting Unbundling.
EAC is ready to support the opening up of the Electricity Market on the basis of transparency and equal treatment.
Significant Financial Data
Significant Financial Data for 2022, based on the audited Financial Statements
EAC’s total revenue for 2022, after the deduction of the special discount granted due to the COVID-19 pandemic, amounted to €1,327.1 million. The special discount granted to all EAC customers was approximately €7.8 million. Total expenses were €1,305.2 million, resulting in an operating profit of some €21.8 million (compared with a loss of €41.2 million in 2021). Profit for 2022 amounted to €12.9 million.
The improvement in results compared to the previous year was due to the restart of the economy, following the recession caused by the spread of the pandemic, the stabilization of oil prices to a degree, after they soared as a consequence of the conflict between Russia and Ukraine, but mainly due to the introduction of new tariffs in July 2022 and the strict management of the Organisation’s finances. Despite the improved results, operating profit for 2022 was still below the permitted level.
Operating profit for the year ending 31 December 2022 and changes compared with the previous year.
The increase of €481 million in total revenue is mainly a result of increased sales revenue. Revenue for the year from sales of electricity before the discount was €1,266 million and rose by €469 million or 59%. The significant increase in sales revenue was mainly due to the higher sale price, resulting from the automatic adjustment because of the rise in oil prices, as well as from the introduction of new tariffs in July 2022.
Total operating expenditure amounted to €1,305 million, an increase of some €417 million or 47%, mainly due to the rise in fuel costs and the purchase of carbon offset credits.
Analysis of Operating Expenditure in 2022
Fuel costs increased by €286 million to €671 million as a result of greater electricity generation and higher oil prices.
The price of electricity from third parties increased by 63% to €104 million, mainly due to higher oil prices. Purchased units fell by 2.4%.
The cost of carbon offset credits rose by €83 million to €248 million. This increase is attributed mainly to the higher purchase price of credits. The average per credit price in 2022 was €80.02 compared to €53.68 the previous year. The number of credits purchased during the year was 0.7% higher than that of the previous year.
It is noted that around 78% of total expenditure was down to the cost of fuel, the purchase of electricity and the purchase of carbon offset credits.
Expected results for 2023
Based on provisional data, we anticipate that the results for 2023 will be substantially better than those for 2022.
Cash reserves as at 31st December 2023 stood at approximately €300 million.
Discount on Bills
A 10% discount was applied to electricity bills for the 4-month period from November 2021 to February 2022. The total amount of the discount was €22 million.
Development and Implementation of RES Projects
Our vision is of a green energy future. The goal of the Organisation is to reduce dependence on liquid fuels and increase the use of Renewable Energy Sources (RES).
The first phase of the 12MW capacity Photovoltaic Park at Akrotiri was recently brought into operation at a cost of €5.0/kWh, which is incorporated into the EAC electricity generation mix.
In the framework of the joint venture between EAC and the Holy Archbishopric of Cyprus for the development of large-scale Photovoltaic Parks in the Achera area, the first phase of the 8MW capacity project is currently under way and is due for completion around May 2024. The second phase, with a capacity of 34MW, will follow as soon as the issue of its connection to the EAC grid is resolved. At present, planning permission is pending.
The installed capacity of the Core Regulated Activity (CRA) of Generation from photovoltaics today is 12MW, raising total capacity to 15MW. Licences have already been secured for the construction of photovoltaics of approximately 155MW capacity.
The addition of RES projects to the EAC generation mix has multiple benefits for the country and all consumers, by reducing our dependence on imported fuels and maintaining electricity prices at low levels.
Goals, Next Steps and Challenges
The plan for EAC’s participation in RES projects has been approved by the Ministry of Energy, Commerce & Industry, following long negotiations between EAC, the Ministry and CERA. The agreement allows for the gradual development of photovoltaic parks with a total capacity of 600MW by 2032.
The plan was adopted by CERA in a draft of regulatory decision 353/2023, dated 10 October 2023. CERA has yet to publish its final decision due to issues raised by the EU.
EAC participation in the NGIC
In 2020, EAC had decided to participate in the
