site.btaRegulatory Commission: Heating Prices to Drop by up to 10% Due to Cheaper Natural Gas

Regulatory Commission: Heating Prices to Drop by up to 10% Due to Cheaper Natural Gas

Sofia, March 21 (BTA) - The clients of the heating utility
companies will feel the lowering of the natural gas price as of
April 1, Energy and Water Regulatory Commission (EWRC) Chair
Svetla Todorova told the media on Saturday.

Taking a journalist question, she said that, given the expected
gas prices drop by at least 13 per cent, the heating and hot
water prices will be reduced accordingly, as the decrease will
be around 10 per cent for the subscribers of certain heating
utility companies.

At a public meeting, gas supplier Bulgargaz appealed to the
regulatory authority to take into account the strengthening of
the US dollar while determining the new gas prices. Bulgargaz'
proposal to EWRC involves a price of 523.72 BGN per 1,000 cu m
exclusive of excise duty and VAT, or 13.17 per cent reduction
compared to the effective price, for the second quarter of the
year. However, Bulgargaz Director Ivan Ivanov said that the
proposal was drafted at a lev/US dollar exchange rate of 1.66
BGN/USD 1, while now the exchange rate is much higher. This will
incur losses of around 30 million leva on Bulgargaz for the
next regulatory period, Ivanov observed.

EWRC member Dimiter Dimitrov commented that so far the company
has not sustained such a loss from the exchange rate
fluctuations only because there are other price-formation
factors, such as caloric value of the fuel, price of alternative
fuels, etc. He was adamant that the regulator will not reduce
the decrease, proposed by Bulgargaz, and the price will be at
least 13 per cent lower as of April 1. Asked whether EWRC will
comply with the requests of industrialists and employers for
reduction of the price by over 20 per cent, Dimitrov replied
that he is not familiar with their calculations and that the
regulator will determine the price on the basis of the effective
formula.

Dimitrov underscored that Bulgargaz should have sufficient
financial resource to ensure depositing of natural gas in the
Chiren depot, which is now exhausted. At the same time, the
outstanding obligations of debtors to the company amount to
around 200 million leva.

Todorova said that later in the day EWRC will hold a closed-door
meeting to discuss the effect, which the reduction of the price
will have on heating utility companies. A guiding principle
will be to compensate the losses of heating utilities and plants
for past regulatory periods, when their prices were not changed
proportionally to markups of natural gas prices.

Todorova also said that the electricity distribution companies
will not be sanctioned for the disruptions in electricity
supplies because the country was in a situation of force
majeure.