site.btaElectricity Price Hike Inevitable, but Insufficient, National Electricity Company Says

Electricity Price Hike Inevitable, but Insufficient, National Electricity Company Says

Sofia, September 25 (BTA) - The October 1 electricity price
increase will cover only 140 million leva of the 1,000 million
leva deficit which will be generated only within this regulatory
period, Ventsislav Markov, who heads the Regulations Department
at the National Electricity Company (NEK), said on Thursday.
He was speaking at an open meeting of the State Energy and Water
Regulatory Commission (SEWRC).

Markov noted that SEWRC's calculations are based on an annual
sum of 200 million by which the NEK deficit will be decreased,
but as the prices will become effective on October 1, the sum is
actually 140 million leva. The problem of NEK's payments to
energy producers will remain, he declared.

SEWRC Chairperson Svetla Todorova commented that the regulator
is also undertaking other measures to cushion the impact of the
prices of energy produced from renewable energy sources and by
the two American power plants. The commission expects to see new
agreements or legislation over the next few months, she said.

In turn, the representatives of the three electricity
distribution companies described the price increase as just a
small step, adding that many of the regulatory problems they had
complained about in the past still remain. The level of
technological costs remains at 8 per cent for EVN and CEZ, and 9
per cent for Energo-Pro, which is lower than the actual level
of these costs, all three companies said. Technological costs in
the case of Energo-Pro reach 14 per cent while EVN say their
level is about 10 per cent.

The increase will only allow the companies to meet minimum costs
for maintenance of the network and services to clients, but
without an opportunity to upgrade and develop it, Ilina
Stefanova, manager at EVN, said.

Zornitsa Genova of CEZ pointed out that the company sustains
considerable expenses for operating on the balancing market
which SEWRC does not acknowledge. The other two electricity
distribution companies also said they had a similar problem.

An express analysis of NEK has come up with drastic results and
the speed at which its financial condition is deteriorating is
ghastly, Todorova said. She admitted that there are grave
problems in the operation of the balancing market.

Tensions rose during the discussion to the point where eggs were
thrown at SEWRC members by people who said they are members of
civil organizations. They were subsequently escorted out by
police. In the long run the public discussion was terminated
after tensions rose again. Representatives of civil
organisations said protests against the price hike as of October
1 are being organized.

In another development, Economy and Energy Minister Vassil
Shtonov commented that NEK can pay only partially to its
contractors because of problems in the energy sector and that is
why it is the obligation of the management of companies working
with NEK to streamline the way in which payments are made.
Their first obligation is to pay their workers, then the
suppliers, then the banks and, finally, pay themselves. Shtonov
was speaking to journalists before another public discussion,
this time on Bulgaria's agenda in terms of national objectives
and priorities in energy industry. The statement was occasioned
by protests of employees of heating companies because of unpaid
NEK obligations.

In Shtonov's words, the bad management of NEK's partners has
resulted in a reverse order of payments, at which they pay
themselves first, then the banks, then the suppliers and, when
they finish their money, they send their workers to protest.
These companies' obligations to NEK are much more than NEK owes
them, he pointed out.