site.btaPrime Minister Calls for Broader Debate on Electricity Pricing

Prime Minister Calls for Broader Debate on Electricity Pricing

Sofia, June 10 (BTA) - Prime Minister Boyko Borissov on
Wednesday called for a broader debate on electricity pricing.
The matter was discussed after the Council of Ministers ended
its weekly meeting earlier in the day, the Cabinet's Press
Service reported. Borissov recommended to the ministers working
on electricity sector regulations to hold talks with the
competent parliamentary committees.

Energy Minister Temenouzhka Petkova said that the National
Electricity Company (NEK) has objected to the latest price
proposal by the Energy and Water Regulatory Commission (EWRC)
because the proposal implies that the price at which NEK sells
electricity will fall from 125 leva/MWh to 119 leva/MWh.

On the other hand, EWRC estimates show that NEK will earn larger
revenues from a proposed increase of the public obligation
charge for non-household users of electricity from 18.93
leva/MWh to 40.21 leva /MWH (making it equal to the public
obligation charge for households). But this increased flow of
revenues will not be enough to offset NEK's financial deficit,
Petkova said.

Borissov noted that the planned rise of the public obligation
charge for non-household users of electricity will lead to a 20
per cent increase of the electricity price for such users,
which, according to the Prime Minister, is too much. It will
cause businesses to factor the increase into their product
prices, he warned.

Borissov said that although the government may not interfere in
EWRC's affairs, he does not see any arguments in favour of the
regulator's price proposal.

Meanwhile, EWRC hosted a public discussion on the electricity
prices. Its Chair Ivan Ivanov said that unless the public
obligation charge is increased for non-household users, a hole
of 285 million leva will open up in the system, causing the
electricity price for households to go up by 17 per cent.

Kiril Domouschiev, Board Chairman at the Confederation of
Employers and Industrialists in Bulgaria (KRIB), said that
employer organizations feel too much strain as they have not
expected such a sharp rise in the electricity price for
industrial users. "For the companies which create jobs and pay
taxes, such an increase comes as a paradox, especially when you
consider that the European Commission and KPMG have said in
reports that the prices of electricity and natural gas in
Bulgaria are among the highest in Europe," Domouschiev said. He
warned that the increase will ruin entire industries, such as
glass-making, the biotechnology sector and metallurgy.

"It is not right for businesses to fill the gaps in the
electricity sector created by inefficient practices,"
Domouschiev said. He threatened that if the public obligation
charge for non-household users of electricity is actually
increased from 18.93 leva/MWh to 40.21 leva/MWh, industrial
companies will stage protests.

The planned increase also met with opposition from trade unions,
which said it will affect state-owned power plants and mining
companies.

EWRC Chair Ivan Ivanov tried to dispel fears by saying that the
Energy Act will soon be supplemented by an ordinance which will
halve the public obligation charge for energy-intensive
industries.

Konstantin Stamenov of the Bulgarian Federation of Industrial
Energy Consumers demanded a breakdown of the public obligation
charge to show what part of it goes to what type of electricity
supplier - whether it is in-house power plants, heating plants,
US-run thermal power plants, or renewable energy operators.