ATHENS, Feb 21 (Reuters) - Greece plans to launch a power trading exchange next year to reform its electricity market in line with European plans for an interconnected energy grid which will help cut costs and improve energy security, it said on Tuesday.
Greece's wholesale electricity market is currently based on a mandatory pool system. Power producers may enter into bilateral contracts but those are constrained within the pool.
The trading exchange would help boost competition, secure transparency in power sales and eventually lower prices for households and businesses, Energy Minister George Stathakis told a news conference.
"We are hopeful that the transition to the new model will take place... in mid-2018," he said.
Greece and the European Commission have been preparing a study, expected to be ready by the end of the year, on how the new market will operate, he said.
The country's market operator (LAGIE) and the Athens Stock Exchange agreed last week to jointly help set up the exchange, which will be based on a day-ahead, an intraday, a forward and a balancing market. Initially, they plan to set up a clearing house.
Chief Executive Officer at LAGIE, Michael Philippou, said the aim was also to boost liquidity for businesses which would be siphoned into investments.
Under its bailout with euro zone lenders and the International Monetary Fund signed in 2015, Greece has agreed to open up its electricity market. Last year it launched power auctions to help cut the dominance of state-controlled power utility Public Power Corp. (PPC), which controls about 90 percent of the country's retail market.
The effectiveness of the measure has been a sticking point in drawn-out negotiations between Greece and its creditors for the conclusion of a bailout review, which is crucial for new funding for the cash-strapped nation. (Reporting by Angeliki Koutantou; editing by John Stonestreet)