The big game for the licenses of the three distribution companies in the country, owned by CEZ, EVN and Pro Energy, began.
The first signal that the European Union intends to offer support to CEZ, EVN and Pro Energy came early last week when EurActiv wrote that because of attempts to withhold these licenses Bulgaria may face a penal procedure. The fact that the Commission will not just let the case go was demonstrated earlier this week at an open meeting to discuss the situation with the licenses. Not for the first time, though, the conference room of the regulator has turned out to be rather small to host all those willing to attend. But for the first time among the visitors there was a
top diplomatic presence
– Ambassadors of the Czech Republic, Spain and Austria, representatives of the missions of France and Italy, as well as commercial attaches from Germany, Romania and Poland were there. The BANKER found out that the diplomats had prepared with speeches on the case, but their desire was cooled off by the chairman of energy regulator Boyan Boev. At the beginning he made the comment that this was not a public discussion but a meeting to clarify the facts and circumstances around the licences and the word will be given only to the parties concerned.
First talked the representatives of CEZ. „We believe that the regulator intervenes in the relationship between licensees who are of commercial and legal character. The Commission itself does not have the competence to regulate the relations of a similar nature, as pointed out in a series of previous opinions. Behold, in a letter of the President of the regulator of January 17, 2013 it was clearly stated: „The Commission is not a party to the payment mechanism, which means it cannot participate in the collection and distribution of costs arising from obligations to society.“ The case law also supports this position, according to which the regulator has jurisdiction to hear only administrative disputes between licensees and consumers, this is a civil and commercial one,“ said the director of CEZ Electro Bulgaria Kremena Stoyanova. She added that there are no grounds for withdrawal of the license of the company, because the decision to initiate the procedure was taken on the basis of an act issued for the establishment of an administrative offense, which was appealed before the Sofia District Court and therefore has not yet entered into force. Nevertheless, the company offered the NEC to
start negotiating an agreement t
hat would settle things fair for both sides.
Pro Energy also demanded suspension of the procedure for revoking the license of their supply company. Its manager Stefan Abadzhiev said that if they were no deduced funds by the NEC in late December 2013 and early January 2014, the company would have gone in a risky financial situation that would affect the users.
Chairman of the board of EVN Bulgaria Joerg Sollfelner said: „We believe that the current position of the regulator to distance itself from the problem and put all the responsibility to the end suppliers is unacceptable. Current crisis can be overcome only if the regulator takes responsibility for creates a lawful and fair mechanism to offset the cost of green energy, as recommended by the World Bank in a report from May 2013. Revocation will not help cover the deficit. With or without EVN these deficiencies in the system will remain.“
The lawyers of the company also stressed out that here the question
is about a commercial dispute
that began with a complaint of NEC on 3 February 2014 in which the company itself described the commercial nature of the deductions made. „Formally we are in procedures running in parallel caused by the same reason, which is a violation of the administrative process. Such massive exercising of government coercion on the part of the regulator is also contrary to the fundamentals of administrative law. We request that the procedure be terminated immediately.“
In this situation, the energy regulator began to lose ground and as if felt that its only chance is to soothe the things. Suddenly, it turned out that NEC had submitted new evidence in the dispute around the licenses which gave reason to Boyan Boev to postpone the making of a decision on the case for April 28, so that CEZ, EVN and Pro Energy may get acquainted with the new evidence. Subsequently it became clear that the new evidence is actually nothing new and that perhaps
the state is already backpedalling
Deputy Minister of Economy and Energy Ivan Ayolov explained that actually it came to a description of the invoices and the ways in which the deduction of the EDCs were made in the period to which the dispute is being led. This was interpreted as just another proof suggesting that this is a purely commercial dispute rather than a regulatory one.
NEC also has indicated that they prefer to settle the conflict in the example proposed by CEZ – in an agreement which to clarify all the details and comply with all the requirements of the Bulgarian legislation. So the last decision again remained with the regulator – which mixed up all the mess – after in the last two years it did not find time to make an appropriate funding model for the government policy promoting renewable energy sources. It ultimately led to the current procedure for revocation of licenses.
The only trump card up in the hands of Boyan Boev now are the audits conducted in CEZ, EVN and Pro Energy started at the beginning of the year by teams of the regulator, the State National Security Agency, the National Revenue Agency and the Agency for State Financial Inspection. The results of these checks are already summarized and analyzed and will be submitted for the final report. If the inspections have found serious flaws, this may allow the energy regulator to press the electricity distributors to the wall to open a new procedure for revoking their licenses. Because it seems that the current one is doomed to failure.
The BANKER
