New hike expectation in electricity – Paraanalysis

Increases in natural gas used in electricity generation are expected to be reflected in electricity prices in a short time. Previously, the government had reflected the cost in 2021 on consumers’ bills, with the increase in electricity in January exceeding 100 percent. Due to the reaction that started after the aforementioned hikes made the electricity bills unpayable, some arrangements were made to reduce the bill.

Accordingly, AKP President Recep Tayyip Erdoğan, who made statements after the cabinet meeting, announced that the consumption limit for electricity bills will be increased from 210 kilowatt hours to 240 kilowatt hours per month for the transition from low tariff to high tariff. With this decision, all of the average monthly electricity consumption of the households was included in the low-level tariff. While it was announced that the VAT in electricity consumption for residences was reduced from 18 percent to 8 percent, EMRA also announced that the low tariff limit was reduced from 1.37 to 1.26 TL.

HIRE ALERTS FROM THE EXPERTS

Despite all these regulations, it is expected to increase again in the following months of the year with the increase in electricity costs. The decrease in the amount of electricity produced by the dams due to drought was tried to be covered with natural gas cycle power plants and the rate of natural gas used in electricity production increased rapidly. According to the data of TEİAŞ, 32.71 percent of the electricity produced last year, which reached 331 billion kilowatt-hours, was produced by natural gas conversion power plants. In the first month of 2022, 26.6 percent of the total production was realized by natural gas and LNG power plants. As long as the share of imported resources in electricity production is not reduced, the cost will inevitably be reflected in the bills of consumers.

Experts recommend bringing domestic and renewable energy to the fore in order to ensure security of electricity supply and cheaper energy use by the public. In this context, he states that both renewable investments and thermal power plants that work with domestic coal and have made environmental investments should be highlighted.

THE PRICE OF NATURAL GAS INCREASED TO 7 THOUSAND 450 LIRA

The third hike of the year for natural gas used in electricity generation was made on 1 March. According to the statement made by BOTAŞ, as of March 1, the tariff for electricity generation was increased by 18.3 percent. Thus, the price of 1000 cubic meters of natural gas increased to 7 thousand 450 liras.

BOTAŞ had also increased the gas used by natural gas conversion power plants that produce electricity in February and January. While the tariff for electricity generation was increased by 14 percent in February, the current tariff for residential and industrial subscribers remained constant. BOTAŞ announced that as of January 1, a 25 percent increase was made to the residential tariff for natural gas, a 50 percent increase to the current tariff for industrial subscribers, and a 15 percent increase to the tariff for electricity generation. Thus, the price of 1000 cubic meters of natural gas, which was 4 thousand 800 TL on December 1, 2021, reached 7 thousand 450 liras with the increase made on March 1.

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