The price of electricity for households in Bulgaria could easily be likened to a game of poker. Energy companies are bidding, the State Energy and Water Regulatory trumps them, and finally becomes clear who loses. Last week its cards showed first the Austrian company EVN, which provides supply current Southeastern Bulgaria.
Its managers recalled the first series of solutions of the energy regulator, through which their technological costs were reduced from 15 to 8 percent, investment funds also cut. “These decisions completely twisted the situation in the energy sector. We need to get back to cost-oriented services so that our children do not remain without electricity,” said the regional manager of the company Jorg Sollfelner.
Now the company wants an average increase in the price of electricity in South-East Bulgaria of 17.9 percent. It immediately made the proviso that 10.7 percent of the requested increase will remain for EVN and the remaining 7.2 percent will go to the National Electricity Company and so it will get around 70 million levs revenues in excess.
“If the regulator accepts our proposal, the cost of daytime energy will be 18.205 cents per kilowatt hour and the night one – 11,244 cents. (excluding VAT). Currently our clients pay for daily consumption – 15 656 cents, and at night – in 8.926 cents kWh (excluding VAT). A monthly bill with consumption of 200 kwh daily peak power and 70 kwh nighttime power will increase from the current 45.07 levs (with VAT) to 53.14 levs” calculated the member of the board of the company Gocho Chemshirov.
According to Jorg Sollfelner, if the requested by the company new tariff is approved, this will guarantee the necessary flow of nearly 141 million levs for network investment for a period of one year. The funds will be used to replace the existing overhead lines with underground cables, and they are far more resilient to failures, especially in winter. Emphasis in the investment programme will be the renovation of substations, and improving meter reading.
It is noteworthy that the required investment amount is much higher than investments in previous years. The fact is that for the period 1989-2005, investment in the distribution network in Southeast Bulgaria were practically wiped out. With the privatization in 2005, EVN pledged to make up this shortfall by 2013 and invest a total of 958.255 million levs, or an average of about 106.4 million levs per year.
According to Sollfelner, the initiative for the introduction of the current bid is theirs – “so that we can launch an open discussion and be honest with the regulator.” He explained that if his company receives less than the requested increase in tariffs of electricity, the company will offer new price adjustments in December. On the question of the Banker weekly whether he agreed to the creation of a timetable for a gradual rise in the prices of electricity – a thesis that was launched last week by the Minister of Economy and Energy Vasil Shtonov – the regional manager of EVN said it will not help to balance the system because the period of deferment of the introduction of the real price of electricity will accumulate new deficits, albeit in a more modest size.
The other two distribution companies now wait to announce their demands. The manager of the firm providing electricity in northeastern Bulgaria Energo-Pro Stefan Abadzhiev laconically reported that they had not submitted a request for changes in their tariffs before the regulator. “Our company is in a state of survival since December last year and it is important for us to have a dialogue in the sector,” he said.
CEZ also said that so far they not submitted their file, and pointed out that they offer their share in the total price to be restored to a level that will allow the maintenance of the network. The company said that because of the drastically reduced costs, their utility company had a loss of 6.6 million levs in the first half of the year, but the electricity distribution was down by nearly 5 million levs. CEZ claimed that there was a need for 150 million levs annual investment to maintain the network. And it seems that in Western Bulgaria it is set to seriously increase the price of electricity.
As expected, especially cautious on this topic is the sector minister Vasil Shtonov. After the meeting of the Cabinet last week, he said that the current prices will rise as of 1 October, but exactly how much – is a question to be solved by the energy regulator. Regulator itself in recent months said that a certain lifting of the electricity price is required to offset the cost of the companies but also avoided commenting what this rise may be. It is soon to be seen what position the new management of the regulator may take.
The BANKER
