site.btaRegulator Considers Postponing Electricity Price Change

Regulator Considers Postponing Electricity  Price Change

Sofia, June 22 (BTA) - By Friday, the Energy and Water
Regulatory Commission (EWRC) will have decided whether to
postpone the start of the next pricing period for electricity,
which usually begins on July 1, EWRC Chairman Ivan Ivanov told
journalists on Monday. Such postponements were made legally
possible by new legislation in 2013.

The decision will be made after Parliament hears EWRC on the
matter, Ivanov said. He noted that it is possible to change the
electricity pricing model in order to avoid a large increase of
the public obligation surcharge for the free market while also
preventing a major price rise for household users, but this
requires additional measures.

Any increase in the number of large industrial plants benefiting
from a proposed relaxation of the public obligation surcharge
requirement will reduce the proceeds from the surcharge itself
and will thus increase the financial deficit of the National
Electricity Company (NEK), Ivanov warned. The current proposal
is that the relaxation should only apply to large industrial
plants which use over 30 gigawatt-hours of electricity annually,
which will cause NEK to lose 95 million leva in annual
proceeds, but the loss will be offset by 97 million leva in
additional revenues which will come from a renegotiated
availability charge paid by two US-owned thermal power plants.
If, however, the scope of industrial plants benefiting from the
relaxation is enlarged, the authorities should take additional
measures to offset the increased loss of proceeds for NEK,
Ivanov explained. Such additional measures were mentioned in the
Council of Ministers on Sunday, he said.

Ivanov was adamant that the electricity exchange must go into
operation on November 2 and its parameters must not be altered.

He complained that EWRC has come under strong political pressure
as the date for announcing the new electricity prices
approaches.

Energy Minister Temenouzhka Petkova commented Monday that the
price of electricity is solely a matter of the regulator's
decision and that nobody is trying to interfere with the
regulator's work. "What the government can do is set the policy
in the energy sector," she added.

She also said that the government strongly wants to see an
ordinance "to aleviate the Public Obligation charge for the
industry" take effect from July 1 but it needs the green light
from the European Commission for that.

She said that the energy regulator has already approved an
agreement with AES Maritza East 1 for reducing the availability
price and some provisions in an agreement with Contour Global
remain to be specified, whereafter the contracts will have to be
approved by all creditor banks of the two power plants. "In the
meantime, we are working to secure funding to enable NEK pay up
to the two power plants," the Minister said.

Bulgaria has reached an agreement with the two US-owned power
plants to lower the availability price for their electricity on
condition that NEK pays millions of euro in outstanding
liabilities to the two power plants.

It also transpired Monday that the parliamentary committee for
oversight of the energy regulator is holding an extraordinary
meeting June 23 to prepare legilative changes to postpone the
enforcement of the new pricing model for electricity. On June
24, when it is scheduled to give a hearing of the EWRC
leadership, Parliament will also consider the committee's
legislative proposal, the committee chairman, Dimiter Glavchev,
told the press after attending a meeting of representatives of
all groups in Parliament with Energy Minister Petkova.

Glavchev said that while the energy regulator is an independent
institution, it is essential that all institutions work in
synergy to ensure the best solution in this situation - both for
the energy businesses and for consumers.

Temenouzhka Petkova commented that the nature and scope of
legislative changes depend on the outcome of an audit by the
Public Financial Inspection Agency in the green energy sector.
"The audit will give a full picture about this sector. To date,
nobody has ever checked the costs for renewable energy projects
and the investment costs are crucial for setting the
preferential prices for purchase of green electricity," said
Petkova.

Patriotic Front: No price increase before the syphoning of the
energy sector is stopped

The Patriotic Front issued a statement saying that they insist
to keep the price of electricity unchanged "until the syphoning
of the energy sector is stopped". They argue that several
measurs are enough "to restore justice and end the hike of the
electricity price". First, a Public Obligation charge of 10 per
cent or more should be added for electricity export. Second, the
profit from the sale of electricvity should go to the National
Electricity Company. The energy regulator must demand an
immediate answer from the European Commission abou whether "the
much higher preferential prices" for electricity produced by the
two US-owned power plants in Bulgaria and the power plants
using renewable energy sources, constitute unauthorized state
aid.

A share repurchase for US-owned power plants

The Confederation of Independent Trade Unions in Bulgaria
(CITUB) calls upon the government to offer a repo option for the
shares of the US-owned AES Maritza East 1 and Contour Global
Maritza East 3 power plants. CITUB held a news conference to
present its position on the measures that need to be taken to
stabilize the energy sector.

The union also insists that the government should take over some
1.9 billion leva in debts that the National Electricity Company
has incurred as a result of the Tsankov Kamak hypro-power
projects and the abandoned Belene N-plant project. This will
reduce the the NEK debts to 1.3 billion leva.