Serious questions arise from an assessment of the plan announced (on July 2) by the EAC unions, to operate the power plants with a skeleton crew and without adding or removing units from the power grid—even though they backed down at the last minute. As is well known, on July 8 they announced the suspension of their protest measures and the scheduling of a meeting with the Minister of Energy on July 22, hoping that their demands would be met.

However, reasonable questions arise as to whether actions such as those they had announced are compatible with the current regulatory and legislative framework, given the dominant position of the EAC, the duties of the Cyprus Transmission System Operator, and the powers of the CERA.

According to the letter from the EAC’s labor unions, starting Thursday, July 9, 2026, at 7:00 a.m., shifts at the Vasilikos, Dekeleia, and Moni would operate with a skeleton crew, and there would be no additions or removals of units from the power system. The same letter explicitly stated that this practice increases electricity costs, creates a chain reaction of problems in the operation of the units, and places a strain on personnel and equipment.

Is this ultimately a general union mobilization, or a preemptive announcement of a refusal to carry out actions directly related to the daily allocation and reallocation of generation within the power system? Cyprus, as is well known, has at times been identified as a system with heightened sensitivity regarding supply adequacy and security, with the Cyprus Transmission System Operator (CTSO) and the Cyprus Energy Regulatory Authority (CERA) having warned of risks of marginal adequacy, particularly during periods of high load.

The Electricity Market Regulation Law 130(I)/2021 constitutes the basic legislative framework for the Electricity Market in the Republic of Cyprus and defines the responsibilities of the CERA, the Cyprus Transmission System Operator (CTSO) and Market Operator, licensed producers, and other market participants. Within this framework, CERA is the national independent Energy Regulatory Authority and exercises regulatory oversight to ensure the proper functioning of the market, oversees licensees, and may impose sanctions on participating entities that violate regulations.

The Jurisdiction of the TSO and the Responsibility of the AHEK

The TSO has, among other things, exclusive authority over the efficient, coordinated, safe, reliable, and economically viable operation of the Transmission System and must ensure the availability of all generation and other services necessary for the performance of its duties. Furthermore, it operates a system for load allocation and use of the Transmission System based on objective, non-discriminatory, economic, and technical criteria, in accordance with the terms of its license and applicable regulations.

At the same time, the EAC, as a long-standing vertically integrated entity with a dominant position in key segments of the Electricity Market in Cyprus, is subject not only to the obligations of specific energy law but also to the general rules of competition that prohibit the abuse of a dominant position. The existence of a dominant position is not illegal in and of itself, but it entails an increased responsibility to refrain from adopting practices that distort the functioning of the market, hinder access, or jeopardize the public interest in a secure electricity supply.

A prior declaration that no units will be added to or removed from the system could be interpreted as a refusal to carry out critical operational actions related to the NTSO’s duties regarding load dispatch, reserves, and the safe operation of the system? Since the relevant addition or removal of units is required by the TSO based on technical and economic criteria, failure to carry them out cannot, in principle, be considered compatible with the obligations of the licensed producer and the dominant participant.

The Specific Nature of Sectors of Vital Importance

The right to collective action and to strike is, of course, protected by the Constitution and the law. However, in sectors of vital importance such as electricity, the impression is given that this right is exercised in a manner that undermines the fundamental obligations of security of supply, operational stability, and the protection of the public interest, particularly in an isolated, non-interconnected system.

In this light, this specific form of mobilization, insofar as it renders the TSO practically unable to allocate and dispatch contracted generation as dictated by the system’s needs, shows serious signs of incompatibility with the current energy and regulatory framework.

The EAC is not a mere economic entity but a company that continues to hold a structurally critical position for the country’s energy sufficiency and security of supply. Therefore, if, through the actions or omissions of its bodies or staff, the activation of necessary power plants is hindered, does this constitute an abuse of a dominant position? Does this practice lead to market distortion, cost shifting, or the creation of an artificial shortage of generation capacity?

It should also be noted that the TSO does not have the discretion to refrain from reserving generation units when they are necessary for the safe and economical operation of the system. On the contrary, it has a legal obligation to dispatch available generation units, including those of the EAC, based on objective, non-discriminatory, economic, and technical criteria, and with a view to ensuring adequacy, reserves, and security of supply.

Did it act correctly, or is there an issue of omission?

If a producer or other participant fails to comply with lawful and documented orders from the TSO, the TSO must record the non-compliance, activate operational security procedures, and notify the CERA and other relevant state authorities. Did the CMO act in this regard, or does this also raise the issue of negligence and a breach of its regulatory obligations?

The EAC, as a dominant participant in the Electricity Market, is required to submit to the Market Operator a generation schedule that fully reflects its commitments under bilateral contracts, its participation in the day-ahead market, the units subject to mandatory inclusion, and the other quantities subject to the daily allocation and balancing mechanism. This obligation is not limited to simply reporting the units that are in operation but requires full participation in market procedures, load scheduling, settlement, and balancing, in accordance with the applicable regulatory framework.

If the EAC fails to comply with the schedule it was required to submit and the actual injections deviate from the declared quantities, imbalances are created, which the Market Operator is required to settle and charge to the EAC as the responsible balancing participant, in accordance with market rules and the imbalance settlement mechanism. This omission does not waive the settlement obligation but triggers the prescribed market and regulatory consequences, which the CERA is required to oversee.

Settlement of Imbalances and Billing of the EAC

A crucial additional element, incorporated into the electricity market rules pursuant to Regulatory Decision 01/2015, is the imbalance settlement mechanism (imbalance settlement). If the EAC, due to staff refusal to carry out orders to add or remove units, deviates from the approved generation schedule submitted to the Market Operator, imbalances are automatically created in the system, which the Market Operator is required to settle and charge to the EAC at the balancing price, regardless of the cause. Any failure to do so would constitute a breach of the Market Operator’s (DSMK) regulatory obligations to the CERA.

Furthermore, in the scenario where the EAC does not submit the required generation schedule per unit to the Market Operator but limits itself to providing information on units already in operation, then the following questions arise:

• Is a substantial part of the market mechanism being bypassed?
• Is the proper implementation of integrated allocation and the balancing process being hindered?
• Can this be considered a separate breach of the EAC’s obligations as a market participant, beyond the ex post imbalance charges?

Sanctions and Competent Authorities

The imposition of administrative fines for violations of the obligations arising from Law 130(I)/2021, licenses, and market and transmission rules falls under the jurisdiction of the CERA. The CEM may activate the operational and contractual mechanisms of the market framework, but regulatory and administrative sanctions are imposed by CERA, which supervises both the dominant participant and the compliance of other licensees.

If the facts constitute an abuse of a dominant position or other anti-competitive conduct, the Hellenic Competition Commission also becomes competent, with the authority to impose the corresponding sanctions under competition law. Consequently, the institutional response is to initiate proceedings without delay before the CERA and, as appropriate, before the HCC.

The executive branch is constitutionally authorized to request immediate information from CERA, the CERA, and the EAC management regarding whether the announced practice jeopardizes security of supply and what measures are being taken to prevent system disruption. Furthermore, it is justified to request that the CERA immediately investigate any violations of participants’ licensing and regulatory obligations, as well as written confirmation from the System Operator that it will continue to commit all necessary units in accordance with the law and will record every instance of non-compliance.

Given all this, does the practice of not adding or removing units from the system constitute a violation of the current regulatory and legislative framework of the electricity market? Does it run counter to the obligation to ensure the adequacy and security of supply? The relevant authorities must provide clear answers.

Source: cyprusenergy.news