Before having benefited from the January 1 price reduction of the power prices for industrial consumers, the latter were subject to just another surprise. It turned out that the NPP Kozloduy and Maritsa East 2, which produce the cheapest electricity on the open market, requested a review of contracts with large industrial enterprises and also – increasing the cost of electricity supplied to them, said the Federation of Industrial Energy Consumers, the Association of Metallurgical Industry and the Bulgarian Chamber of Chemical Industry.
In practice, on 1 July 2007 the electricity market in Bulgaria was fully liberalized and every user has a legal right to choose their supplier. So the biggest consumers and electricity traders have the right to enter into transactions at freely negotiated rates. A fundamental quantity for this market is provided precisely by the two state plants. Both NPP Kozloduy and Maritsa East 2, however, were affected by the needed populist attitude of the new President of the State Energy and Water Regulatory Commission Boyan Boev. From the beginning of January the availability cost of the nuclear power plant was reduced from 22.45 to 22.11 levs per megawatt hour after and the costs for cleaning, landscaping, fees and permits totaling 5.46 million levs were cut.
The largest coal-fired plant in the Balkans also bears his burden. It had its spending trimmed over subscription maintenance, rentals, business trips and expert services for a total of 716,000 levs and thus its availability price was reduced from 22.82 to 22.47 levs per megawatt. However, the bosses of both companies have figured out how to fill in these holes at the expense of businesses. In fact, they used the door that was opened for businesses after January 1 in the tariff for transmission over the network of the Electricity System Operator (ESO) was cut down from 9.71 to 4.15 levs per megawatt hour. Professional organizations estimated that thus total resource of 6 million levs is freed, which in these difficult times of crisis can help businesses stabilize, as well as not cut jobs or close down facilities. Only that the two major plants had a completely different view. In the end, the two plants are about to implement serious modernization programmes and are trying to get as much money for them as possible. Basically, their current contracts with businesses expire at the end of June 2014, but they have asked to have them annexed by February 1. Both the nuclear and the thermal power plant are in strong positions as they can trigger the clause of a one month’s notice to terminate the concluded contracts and to announce new tenders for the sale of electricity.
The problem will be for the large consumers. The financial impact of such a review of pricing conditions will be worth around 3 million levs more revenue for the plants in the next five months, but for over 3000 enterprises, employers and their hundreds of thousands of employees, this means increasing the cost of electricity by 2 % to 5%, it said in a letter of these three organizations, addressed to the Minister of Economy and Energy Dragomir Stoinev, President of the regulator Boyan Boev and Director of NPP Kozloduy and Maritsa East 2. According to them, the revision of contracts will seriously disrupt the fragile confidence in the market and is a textbook example of abuse of a dominant position, which will lead to sanctions by the Commission for Protection of Competition and DG Competition of the European Commission, much greater than the financial benefits for both state-owned plants.
The BANKER
