Bulgaria’s State Energy and Water Regulatory Commission (SEWRC) has asked state-owned electricity utility NEK to begin talks with two coal-powered plants, owned by US private investors, to renegotiate the terms of long-term electricity purchase contracts.
The regulator said late on May 29 that NEK should ask the two power plants to agree to lower electricity purchase prices and also a reduction in the quantity of electricity that NEK is required to buy from them.
To be precise, NEK should target a 30 per cent reduction in the price of electricity bought from AES Gulubovo, owned by US energy firm AES and also sometimes referred to AES Maritsa Iztok 1, and a 20 per cent cut in the price of electricity bought from ContourGlobal Maritsa Iztok 3, owned by US-based firm ContourGlobal. NEK should also ask to reduce the amount of electricity it buys from the power plants in half.
SEWRC said that the “positive effect” from such changes would be 5.4 billion leva (about 2.76 billion euro) – meaning that the two power plants would be asked to forego this much revenue over the remaining duration of the contract. In the short term, NEK would save 424 million leva between July 2014 and June 2015.
Bulgaria signed the 25-year contract with the two power plants in June 2001 as an investment incentive with AES and US firm Entergy (which sold its majority stake in Maritsa Iztok 3 to Italy’s Enel in 2003, which in turn sold the plant to ContourGlobal in 2011), which took on the costs of modernising the power plants.
Although increasingly often blamed for the high price of electricity in Bulgaria in recent years, the contract is reportedly iron-clad, giving NEK no leverage to negotiate a lower price.
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(AES Gulubovo power plant. Photo: Gonzosft/Wikimedia Commons)