site.btaUPDATED Legislators, Energy Sector Officials, Experts Discuss Challenges amid Changes on Bulgarian Electricity Market

Legislators and energy sector officials are discussing the legal and practical aspects of changes on the Bulgarian electricity market at a roundtable here on Thursday. Several of them voiced concern over the deficit in the Electricity System Security Fund (ESSF).

The forum is organized by the Electricity Management Institute with the participation of representatives of the Parliamentary Energy Committee, the Energy Minister, the Energy and Water Regulatory Commission, the European Commission and European Parliament representations in Sofia, business organizations and associations, energy companies, NGOs, scientific teams, and experts.

The participants are discussing matters related to the financial stability of suppliers to household consumers, the liquidity and price levels on the electricity market, and household consumers' preparation for the forthcoming full market liberalization in 2026.

The head of the energy regulator, Ivan Ivanov, said the fears that supply won’t meet demand are ungrounded. “Every week, we issue licences for hundreds of megawatts of new generating capacity and this will be felt very soon,” he said. 

He said that becoming a net importer of electricity has not caused any shocks on Bulgaria’s electricity market, which will just be a part of a large single market.

The chair of the parliamentary energy committee, Delyan Dobrev, expressed concern over the shortfall in the Electricity System Security Fund. “The ESSF deficit now stands at BGN 1 billion for one regulatory period and what worries me is how we will deal with this deficit.”

Deputy Energy Minister Iva Petrova and the regulator’s chair agreed that the deficit is excessive.

According to Ivan Ivanov, the deficit was caused by the collapse of prices on the energy market, which were dramatically lower than the regulator’s projected price of BGN 250/MWh. A further factor was the decreasing price of carbon quotas, probably caused by the swift transition out of coal energy.

Asked where the resources for filling this gap in the ESSF can be found, Ivanov said that he is firmly opposed to the idea of updating prices for household electricity users by a regulator's decision at this moment. "I can't give consumers a well-grounded answer about why their price is being increased to ensure resources for the preferential prices: to the heat plants that generate electricity in c0-generation, to the producers from renewable energy or the American-owned AES power plant. I hope that a solution will be found that will spare us having to make such moves," the regulator's chief said.

He added that one option to fill up the deficit is from financing from the national budget. "The EFFS helped the government in its programme for supporting non-household users during the big energy crisis and now the government can return the gesture to the Fund. It will be in the interest of consumers," said Ivanov. 

ESSF chair Dian Chervenkondev said that ten years ago a ESSF deficit essentially blocked all settlements across the Bulgarian energy system.

Longer phase-out of Maritsa East 2 now possible 

There is now a reason and a possibility for the smooth exit of the Maritsa East 2 (or Maritsa Iztok 2) coal plant from the market, said Ivanov. "The European Commission decided last week, but has not yet enacted it, that the temporary nature of the capacity mechanism can be overcome and extended it until the end of 2028. This now makes it possible to hold talks and allow Maritsa East 2 to leave the market more slowly, by 2028," he said.  

Ivanov explained that the expiration of the 15-year contract of Contour Global for the purchase of electricity at preferential prices earlier this year was planned and there was no negative effect from the plant's suspension of operation on February 22.

Ivanov also dismissed fears of electricity price increases after July 1. He did not expect there to be a significant problem after July and explained why: "The price will be set by the Council of Ministers, but it will be based on the previous annual price from July 1, 2023 to June 30, 2024 and on inflation. There is also a 7% charge relating to the final suppliers. That is to say, the price that will be set is quite clear, and there will be no spike of two, three times." 
Ivanov highlighted the excellent cooperation with the representatives of the Bulgarian Independent Energy Exchange.

"The very fact of the rapid entry of the energy regulator into REMIT has a disciplining effect. Together with the regulators of France and Spain, we are the three regulators that are set as an example in the EU," Ivanov said.