site.btaHead of Energy Regulator and One Deputy Agree to Come Down

Head of Energy Regulator and
One Deputy Agree to
Come Down


Sofia, August 28 (BTA) - Following a conference with Economy and
Energy Minister Vassil Shtonov, the head of the State Energy
and Water Regulatory Commission (SEWRC), Boyan Boev, and one of
his deputies, Lilia Mladenova.

This development comes a day after Economy and Energy Minister
Vassil Shtonov said that SEWRC Chairman Boyan Boev and two other
SEWRC members have been asked to resign because the regulator
has failed to discharge its duties. Meanwhile, the government
set up an Energy Board as a permanent advisory body to the
Council of Ministers in the solution of important energy issues.
Early on Thursday, the regulator said in an official statement
that there are no reasons for any of its members to resign,
given the positive effects of SEWRC's actions.

Apparently the conference with the Minister has changed that
position.

The other SEWRC deputy chairman, Elenko Bozhkov, who was urged
by the new government to resign over suspected conflict of
interest, has not announced his decision.

The Economy and Energy Ministry recalls that one of the
recommendations by the European Commission and the World Bank in
their reports on the Bulgarian energy sector in May 2013 was to
improve the capacity of the energy regulator.

It quotes a letter to the Bulgarian government of April 4, 2013,
from EU Commissioner Gunther Oettinger mentioning the
composition of the SEWRC as an example of appointments which do
not help enhance confidence in the independence of the
regulator.

SEWRC said in its Thursday morning statement that the problems
it has encountered
in the energy sector include overproduction of electricity from
renewable sources and from plants operating under overpriced
long-term agreements; falling consumption of electricity due to
gradual market liberalization in the sector; and financial
deficits incurred in the past as a result of flawed
methodologies and inaccurate projection of renewable energy
outputs.

Therefore, SEWRC has drawn up a long-term strategy to address
problems in the sector and has begun to implement that strategy,
the statement said. The positive effect of the steps taken by
the regulator will only be felt over the medium term, no sooner
than five years from now, and Bulgaria will be able to avoid a
drastic rise of electricity prices for both industrial and
household users. SEWRC has made all its decisions amid utmost
transparency and lawfulness, the regulator said.

Among the measures it has taken, SEWRC also listed audits at
electricity distributing companies which have detected many
irregularities; checks of all renewable energy operators
concerning the procedures of their connection to the power grid;
and checks of all electricity traders. Actions have been taken
to implement EU Regulation No 1227/2011 on wholesale energy
market integrity and transparency and EU Regulation No 543/2013
on submission and publication of data in electricity markets.

SEWRC further recalled that it has sent two complaints to the
European Commission about unlawful state aid provided to power
plants which operate under overpriced long-term agreements and
about excessive state aid provided to renewable energy
operators.

It is beyond SEWRC's powers to deal with more than half of the
three billion leva deficit incurred by the National Electricity
Company (NEK), the statement said. With its pricing decision on
July 1, SEWRC established a mechanism to offset one billion leva
of that deficit in the next five years. As for the remainder,
an appropriate mechanism will be created upon completion of an
audit at NEK so as to avoid a sharp rise in electricity prices.
Any other expenses of NEK which have no relevance to the work it
is licensed to perform, such as the building of a nuclear power
plant at Belene or the Tsankov Kamuk hydroelectric power
project, should not be factored into the end price of
electricity and are beyond SEWRC's competence, the regulator
said.

Commenting the initial refusal of the SEWRC leadership to
resign, Caretaker Prime Minister Bliznashki said in Blagoevgrad,
Southwestern Bulgaria, "Let them keep their posts for as long
as they want. Society has long ago lost trust in them". In
Bliznashki's words, no matter what SEWRC does from now on, it
will trigger newer and newer waves of people discontent. "This
composition of SEWRC carries a huge blame for the difficult
situation in the energy sector. Next year the gap in the sector
will increase to
3,800 million leva," he said. Bliznashki argued that the Energy
Board is the alternative, because it will have to come up with
positions which SEWRC must heed, if the latter wants to avert
people's discontent. SN, PK /VE, ZH/LN/PK/