Sofia city hall asks heating utility to amend terms of service to lower bills

Written by on February 28, 2013 in Bulgaria, Business, News - No comments

Sofia city hall voted on February 28 to order the city’s heating utility, Toplofikatsiya Sofia, to amend its terms of service and stop charging interest on the monthly bills handed to its customers. The measure is the first of a package that is meant to prevent high heating prices and make it easier for consumers to pay their bills.

The city council also voted to task Toplofikatsiya’s board of directors to draft a plan with incentives for customers who pay their bills on time, as well as draft a framework settlement proposal to be offered to the utility’s customers with overdue payments.

Normally, Toplofikatsiya Sofia checks the meters once a year – at the end of the heating season, to record actual consumption. The monthly bills are just rough company estimates based on the same period of the previous year; after the meters are checked, the utility issues a “balancing bill”, which shows the additional amounts owed or whether the customers overpaid and are owed money by Toplofikatsiya.

This system has been in place for more than a decade but never got widespread customer acceptance. Among the list of requests presented by protesters last week to President Rossen Plevneliev was also the demand that Toplofikatsiya stops billing its customers based on its own forecasts, but only on actual consumption.

(The reason such a system was picked was because it was judged that monthly checks of heating meters attached to radiators would take too much time and cost too much money. Another relic of the communist-era heating system is that even people who ask to have their radiators disconnected from central heating still have to pay for the heating done by through the pipes that pass through their apartments – as they do in most housing build during the communist era.)

By removing Toplofikatsiya’s right to impose interest on overdue bills during the heating season, the city hall effectively removed the biggest incentive for customers to pay their bills on time – rather than wait for the “balancing bill” that usually is issued in summer.

Should too many customers jump at the opportunity, this could severely disrupt Toplofikatsiya’s cash flow; the company is already 160 million leva in debt to its main supplier, state gas distribution company Bulgargaz.

Earlier this week, Sofia mayor Yordanka Fandukova said that there were three options under consideration to keep Toplofikatsiya’s cash flow going. Two of them were too costly – asking customers to install meters that could be checked remotely, without access to the premises, or instituting monthly checks of the meters.

A third option, for households to report the data themselves, would require some training but was feasible. Once the data was collected, a representative chosen by a building’s residents association would then pass on the data to the utility. Annual checks by the heating utility would still be carried out, Fandukova said.

However, the introduction of such a system would require amending the existing regulations, which could only be carried out by the Economy Ministry, thus there was no timeframe when such a system could be introduced, Fandukova said.

(Photo: jaime06492/sxc.hu)

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