Once it became clear that the days of the Cabinet Oresharski have already been counted, the tenacity of the State Energy and Water Regulatory Commission (SEWRC) to push energy prices down suddenly dwindled. Earlier this week, the SEWRC ruled on the new tariffs of energy that went into effect on July 1, and decisions certainly provoked a serious surprise.
Despite the previously announced fourth consecutive (political) cheapening of electricity prices for households by nearly a percentage, it turned out that prices for household users of electricity will soar. CEZ users already pay 2.78% more (0.15365 lev without VAT) per kilowatt hour daily and 2.22% more (0.08697 lev) per kilowatt hour for night energy. EVN customers were delighted with appreciation of 0.64% of the power they consume during the day (0.15425 levs) and 0.22 percent (0.08695 levs) for the night consumption. Subscribers of Energo Pro, whose daily rate jumped by 2.5% (up to 0.16356 lev) per kilowatt hour and the night enjoyed a night tariff price hike of 1.01% (up to 0.08951 levs) per kilowatt hour.
The idea is
to provide fresh funds into the system,
which will come from end users. These, however, will not be for the benefit of EDCs because at the same time the SEWRC is reducing the cost of transmission and network access from 34.48 to 23.71 levs per megawatt hour and the profit margin for end suppliers declines from 3 to 2.28 levs per megawatt hour. The purpose of this whole financial obfuscation is actually to secure the financial position of the National Electricity Company (NEC). Last week, the regulator finally spit it out and said it in public that the company had a financial gap of 2.9 billion levs. Of these, 1.5 billion levs are from the unrecovered cost of purchasing electricity that cannot be repaid from any sources and should be included in the bills of users. This in fact already started with the decisions taken last week.
Energy sold by NEC has increased from 100.43 to 114.10 levs per megawatt hour. The price for the transfer and access to the transmission network has also increased – from 6.91 to 7.98 levs per megawatt hour. This will compensate 998.8 million levs out of the 1.5 billion levs in question over the next five years, and the regulator has prepared
a special installment plan
for this to happen. A total of 269.3 million levs will be collected this year, while next year another 247.754 million levs will be covered, while in 2016, 2017 and 2018 each will compensate for 160.582 million levs. What remains uncertain is a sum of 495 million levs and the energy regulator apparently will have to find a way to introduce another or several other increases in the price of electricity in the coming months or years. This is the truth, in spite of all political talks about decreasing the price of electricity. Moreover, these accounts will not be fulfilled if the state commission fails to agree with the American owners of the TPP Maritza East I and Maritsa East III to reduce the price of energy produced by their facilities, which is purchased under the long-term contracts.
Rates of private stations were finally officially announced and they are really scary. For every megawatt hour Maritza East I will get from NEC 190.7 levs and Maritsa Iztok III – 128.44 levs, provided that the market price is about 80 levs per megawatt hour. The hopes of the regulator are then after talks these levels may fall to 90.35 and 70.88 levs respectively per megawatt and blocks of TPPs may enter the free electricity market. If reduction in prices requested by the commission is achieved, the costs of NEC will decrease by 424 million levs for the next period. For the whole duration of the contracts the positive effect of the amendment will be 5.4 billion levs (TPP Maritza East I – 3.5 billion levs, Maritsa East III – 1.8 billion levs)
TPP Maritza East III has already stated that if Bulgaria wants to terminate the contract it will have to pay over 600 million euros – the price of the investment made to date in the plant. So the task is not easy to solve. But even if a favorable outcome in this case is achieved, what remains an open question is the purchase of
electricity from green plants
which forms 30% of the costs in the price of the regulated market.
NEC and the regulator, however, have their own recipe for this illness. In Parliament MPS have submitted draft amendments to the Law on Renewable Energy, which provides that upon an assessment of the energy regulator the country may buy only part of the expensive green energy at the preferential prices. Another preventive move is related to the balancing market (that started working effectively from June 1) for producers of energy from renewable energy sources. This is the mechanism by which green plants bear the costs of the power system caused by their intermittent production (related to weather changes), and so introduces a direct cost savings to society. According to the Bulgarian Photovoltaic Association from mid-June NEC unilaterally and in violation of the rules for trade in electricity, adopted by the regulator, has already begun to adjust the estimated hourly schedules submitted by manufacturers of eco-friendly power and the balance group coordinators. The goal again is clear – to reduce the production price of electricity from renewable energy sources at the expense of that from conventional ones. Representatives of the Photovoltaic Association believe that these actions of the state-owned company bestow an
advantage for certain market participants
some of which are related parties and distort the market.
Where forecasts of end suppliers for the electricity demand are lower than what was forecast by producers, NEC determines the hourly amount for each day for each of the manufacturing plants taking into account the manufacturing characteristics of their aggregates. In order not to be accused of defending one or another manufacturer NEC limits equally manufacturers, including production from its own plants. „We believe that the claims of certain producers seek only to compromise the balancing market with the aim to avoid the trade rules, which will be detrimental to society,“ said representatives of the regulator. Unhappy with its decisions, however, proved to be also businesses. Federation of Industrial Users of Electricity forecast contraction in consumption. „We’ll go out to protest. Currently we are discussing our positions with companies,“ said chairman Konstantin Stamenov. Bulgarian Industrial Association on its turn forecast a collapse in exports.
