site.btaNEK Will Lose Lv 400 Mln Annually If Planned Electricity Prices Remain Unchanged

NEK Will Lose Lv 400 Mln Annually If Planned Electricity PricesRemain Unchanged

Sofia, June 2 (BTA) - The National Electricity Company (NEK) will lose 400 million leva every year if the electricity prices set by the Energy and Water Regulatory Commission (EWRC) for the period after July 1 remain unchanged, NEK Executive Director Peter Iliev told reporters on Thursday.

Iliev said the price at which NEK will sell electricity has been reduced from 115 to 106 leva per megawatt-hour as some costs have not been recognized. The new rate does not take into account the loan taken out by NEK to pay off its outstanding liabilities to the two US-owned power plants in the Maritsa East
energy complex. This year the expenses associated with the loan will amount to 60 million leva, he said.

He pointed to the practice of cross-subsidization of heating energy through electricity. He believes it is unfair to make everyone pay for those 20 per cent of electricity users who also use heating energy. It is unacceptable to recognize the high-efficiency co-generation of electricity by heating plants while at the same time allowing 80 per cent of heating energy to be released into the air, Iliev argued. According to him,
heating plants produce much more electricity than necessary because they can make more money by generating electricity while releasing the co-generated heating energy into the air.

NEK is required to buy 400 MWh of electricity from heating plants and in-house power plants annually. The heating energy produced in the process, in such warm weather, goes God knows where, Iliev said.

Bulgarian District Heating Association President Iliya Nikolaev commented that 50 per cent of the heating energy distributed through heating networks is lost during the summer, which is a normal rate. Nikolaev spoke to journalists after attending an open-door EWRC meeting. He reacted to Iliev's claim that the
summertime heat loss rate is between 60 and 80 per cent. Nikolaev explained that in certain modes of operation a heating plant may release more energy in order to keep its machines going. He said NEK's accusations are a "normal business technique," considering the company's poor financial position.

According to Nikolaev, it is not true that heating costs are paid for through electricity bills. If heating energy is
cross-subsidized through electricity, the process is regulated, he said. Maybe it should not be like that, but it reflects the total costs of the companies, he noted.

Heating companies have had to cut down on their expenses for vital repairs and investments, Nikolaev said. In recent years, the losses incurred by heating companies account for 10 or more per cent of their turnover, and the rate of return is between 4 and 5 per cent, which is the lowest level in the energy sector. The prices charged by heating utilities must reflect their actual costs and encourage investment, he said.

Nikolaev added that heating energy prices will fall by an average of 3.5 per cent as of July 1, and the prices of
electricity co-generated by heating plants will drop by about 10 per cent.

During the EWRC meeting, EVN Bulgaria Toplofikatsia objected to the new prices in the heating sector proposed by the regulator for the period after July 1, the company reported in a press release. The company does not accept the significantly lowered before-tax rate of return which the EWRC puts at 5.77 per cent.
According to EVN Bulgaria Toplofikatsia, the regulator still refuses to recognize balancing-energy costs, although such costs are factored into the electricity price by every trader on the free market.

Representatives of public and private energy companies discussed at open meetings the new electricity prices proposed by the regulator from July 1. On average the electricity price for households will go down by 0.02 per cent.

CEZ will continue to charge 0.17220 lv/KWh for daytime electricity and 0.09923 lv/KWh for nighttime electricity.

EVN will increase its electricity prices by 0.65 per cent to 0.17187 lv/KWh for daytime electricity and 0.09761 lv/KWh for nighttime electricity.

Energo-Pro will supply cheaper energy by 0.91 per cent with daytime rates of 0.18284 lv/KWh and nighttime rates of 0.10113 lv/KWh.

ERP Zlatni Piasaci's electricity prices remain unchanged with daytime rates of 0.18783 lv/KWh and 0.09801 lv/KWh.

The energy distributing companies may submit written opinions at the regulator by noon on Friday. EWRC head Ivan Ivanov said that a public discussion will take place on June 9. The final decision about the prices of electricity will be made at closed meetings at the end of June.