Bulgaria’s utilities regulator outlines electricity price cut proposal

Written by on March 4, 2013 in Bulgaria, Business, News - No comments

Bulgaria’s State Energy and Water Regulatory Commission (SEWRC) presented on March 4 its proposal for the electricity price cuts set to go into effect on March 5.

Despite earlier speculation, the price cuts – averaging between 6.2 per cent and 7.3 per cent, depending on the geographic location of end-customers – would be implemented without changing the relative weight of the different electricity producers in the total amount of electricity reserved for household consumption.

Last week, acting Economy and Energy Minister Delyan Dobrev said that prices could be cut, according to Government calculations, by as much as eight per cent, mainly by increasing the weight of the cheaper electricity produced by the Kozloduy nuclear power plants to replace some, if not all, of the more expensive electricity generated by coal-powered thermal plants. Several thermal power plants owned by controversial businessman Hristo Kovachki stood to lose the most business if such a plan were to be implemented.

This drew immediate criticism from coal miners employed at the mines whose output powers those plants, as well as threats that hundreds of miners would march in protest against the regulator on March 5. Bulgaria has already seen nationwide protests, now in their fourth week – but these were sparked by the high electricity prices and a sudden jump in electricity bills for January.

(As an aside, Kovachki’s power plants buy most of their coal from mines also owned by the tycoon.)

Instead, the price cut would come from reducing the price of electricity generated by gas-powered plants – a move SEWRC could afford because of the 20 per cent cut in the price of gas bought from Russia starting January 1 – and reducing the margin of “technological losses” afforded to the three private electricity distribution companies from 15 per cent to 12 per cent, the regulator said.

The electricity distribution companies are allowed to bill customers for the electricity “lost” through their power grid on the way to end-users, with SEWRC setting the maximum level of acceptable losses. In return, the electricity distribution companies are required to spend the revenue generated this way on investment in grid upgrades and improved energy efficiency – a reduction in the “technological losses” level would leave them with less money to carry out their investment plans.

The solution proposed by SEWRC is the best possible compromise that will carry the lowest possible risk to Bulgaria’s energy system, the regulator’s acting chairperson Yuliana Ivanova said. (Ivanova resigned on February 17, just four days after her appointment after it emerged that she had owned a company that had illegally sold cigarettes online, but she is yet to be replaced.)

Following the public discussion of the proposal, held on March 4, interested parties have until noon on March 5 to present any comments or objections in writing. SEWRC will then hold a closed meeting and issue a ruling that will go into effect immediately.

The current proposal envisions an average price cut of 6.2 per cent for customers of Czech Energo-Pro (which owns the distribution company servicing northern and northeastern Bulgaria), 7.2 per cent for customers of Czech CEZ (which services western Bulgaria, including capital city Sofia) and 7.3 per cent for customers of Austria’s EVN (which owns the distribution company servicing southern and southeastern Bulgaria).

Some customers might see different figures, depending on the time when they use the most electricity – the regulator’s proposal envisions reductions ranging between 5.3 per cent and 5.8 per cent during daytime and 8.8-14.6 per cent at night.

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