News

From Bulgaria

A 30-percent tax on photovoltaic energy producers’ profits was proposed on Sept. 26 by the state-owned Bulgarian Energy Holding EAD (BEH). In an official letter to the Parliament Chairman Mihail Mikov, parliamentary energy commission’s chairman Ramadan Atalai and energy minister Dragomir Stoinev, BEH’s CEO Boian Boev cited balancing Bulgaria’s struggling energy system as the main objective of his proposal. The measure should also improve the condition of the decapitalised National Electricity Company, which is practically bankrupted with a running debt of over BGN 2 billion (EUR 1 billion), and allow for further electricity price cuts for households. In a move to appease public discontent with soaring utility bills, Bulgaria’s energy ministry and the State Energy and Water Regulatory Commission (SEWRC) removed the so called “green energy addition” from bills, incorporating it into the energy mix price, and decreased household electricity prices with 4-5%.

The letter caused an outrage among PV producers who called for the condemnation of Boev’s proposal and immediate international independent audit of the Bulgarian Energy Holding and its eventual unbundling.

“We could not agree with the idea that the proposal of BEH for a 30-percent tax on PV producers’ profits and the restrictions imposed on renewable energy as a whole could be regarded as compliant with the government’s policy for seeking sustainable and effective solutions for Bulgaria’s energy sector. It would destroy the solar business in Bulgaria”, Meglena Rusenova, board director of the Bulgarian Photovoltaic Association (BPVA) stated.

The desert sands of state-run energy

The proposed levy on PV energy contradicts the government’s efforts for a stable business climate and a reliable legal framework for investors, BPVA declared in an official statement circulated following the unveiling of BEH’s intents. Boev’s proposal was deemed “scandalous and absurd”.

The disappearance of enormous amounts of money in the unreformed state energy sector, much like pouring water in desert sands, should be considered detrimental to energy consumers and energy prices in Bulgaria. If implemented, this practice will further deepen the energy sector crisis, while the destination and spending of the tax incomes will sink into obscurity”, Meglena Rusenova of BPVA affirmed.

Call for independent audit of BEH

PV producers insist that an independent audit and revision of the Bulgarian Energy Holding is the only way “for all Bulgarians to understand where the billions of euros in loans obtained by BEH have gone”. BPVA requested that prime-minister Plamen Oresharski, Deputy PM Daniela Bobeva, responsible for economic development and energy minister Dragomir Stoinev make an official statement regarding BEH’s proposal, which “protects economically unviable and polluting energy production to the detriment of renewable energy sources”.

Shedding light on the management of the megastructure, comprising the National Electricity Company (NEK), Maritsa East 2 thermal station, Maritsa East coal mines, Kozloduy nuclear station, gas companies Bulgargaz and Bulgartransgaz and electricity network operator ESO, has been requested numerous times by energy sector participants. Antitrust procedings have been launched by the EU in August, following an extensive review by the European Commission back in April, calling for reform in the state holding’s structure.

Restrictions on renewables

Shedding light on the management of the megastructure, comprising the National Electricity Company (NEK), Maritsa East 2 thermal station, Maritsa East coal mines, Kozloduy nuclear station, gas companies Bulgargaz and Bulgartransgaz and electricity network operator ESO, has been requested numerous times by energy sector participants.

More recently, the Electricity System Operator, which is yet to be fully unbundled from the National Electricity Company, has been in the center of a dispute on continuous renewables restrictions in spring 2013 driven by record-low energy consumption due to warm weather. The practice came under the criticism of renewable energy producers which condemned it as inadequate and against competition laws and EU legislation.

The citueation became further exacerbated by temporary shut downs of energy units at thermal stations and even Kozloduy NPP in a move to avoid grid failures.

What is more, as of Sept. 2012, the energy regulator imposed on renewables a fee for grid access, which, according to producers’ estimates, stomped up to 40% from their revenues. The fee, collected by regional utilities, was subsequently abolished by the Supreme Administrative Court in June 2013. It remains unclear however whether and when the fee revenues, amounting to some BGN 150 million, according to EVN Bulgaria's CEO Joerg Sollfelner,  will be restored to producers. EVN, which operates in Southeast Bulgaria, has the largest amount of renewables connected to its grid.

Meanwhile, energy producers have come under the scrutiny of the energy regulator and even the focus of a recent and rather vague report by the Bulgarian security services.