site.btaCompetition Seen as Best Way to Keep Down Free-market Price of Electricity

Sofia, February 15 (BTA) - Energy expert Anton Ivanov said on Thursday that the best way to prevent a rise of the free-market price of electricity is to create conditions for an enlarged competitive market. "Any other measures will have short-term effect," Ivanov told a BTA-hosted news conference of the Bulgarian Energy and Mining Forum (BEMF).

He noted that the solutions which are being considered now are of administrative nature and will be short-lived, which means prices will rebound after some time. He argued: "A competitive market will create a situation where industrial plants are able to plan their expenses, and the possible bankruptcy of enterprises in Bulgaria will not require import of electricity from abroad."

Ivanov recalled that the price of electricity on the free market is based on three main types of costs. He singled out the influence of neighbouring markets, saying that when Bulgaria's neighbours raise their prices, the rates here go up too. The public obligation surcharge, which is one of the price components, provides little leverage to reduce the overall price, the expert said.

BEMF Chairman Ivan Hinovski said that, ideally, all long-term contracts in the electricity sector should be renegotiated. Some hydroelectric power plants should be allowed to sell their output through the energy exchange under competitive terms. This will give the companies greater liquidity, and the electricity from hydroelectric power plants will be offered at very low prices, but there will be a risk for some of the larger plants which will be forced to reduce their price levels, Hinovski explained. He concluded, though, that the market needs such competition.