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From Bulgaria

Bulgaria’s State Energy and Water Regulatory Commission (SEWRC) presented today during a press briefing previously unannounced data about the expenses of the state-owned energy National Electricity Company for 2010 – 2014, which have fallen short to be compensated via the domestic electricity prices for that period. The total amount of the expenses is BGN 2.9 billion (about EUR 1.45 billion), BGN 1.4 billion of which come from investments on the non-regulated market segment. The remaining BGN 1.5 billion is unrestored expenses resulting from NEC’s role as licensed public supplier. 

According to the energy watchdog NEC’s investments in two large-scale energy projects – Tsankov Kamak hydropower dam and Belene NPP – translate into so far uncompensated expenses of BGN 694 million and BGN 784 million, respectively. The regulatory commission stressed that these investments are not related to the public supply role of NEC and thus are not eligible for compensation through the domestic electricity price. Nevertheless the regulator failed to explain how this growing deficit could be covered from now on.

Expenses from NEC’s regulated licensed activity which also were left out of electricity pricing for the four year period come from obligatory renewable energy buying (BGN 720 million), PPAs with AES Maritsa East 1 TPP and ContourGlobal Maritsa East 3 TPP (totaling to BGN 382 million, BGN 192 million of which went for capacity payments, another BGN 88 million were spent on CO2 emissions and BGN 85 on “other services”) and expenses stemming from the exploitation of Chaira pumped storage plant (BGN 392 million).

Apart from the BGN 720 million uncompensated expenses from obligatory renewable energy buying, NEC has also accumulated considerable loses from lower-than-expected revenues from carbon trading (BGN 259 million for 2013 - 2014). NEC was also burdened with BGN 27 million due to its function of administrating the RES compensation methodology.

According to the data presented by the energy watchdog the BGN 382 million deficit accumulated by NEC due to the PPAs with the so-called American power stations is mostly due to capacity payments (BGN 209 million, with price per megawatt of BGN 70 for AES Maritsa East 1 TPP and BGN 50 for CountourGlobal Maritsa East 3). 

Despite the considerable deficit at the state power company, Boyan Boev, chairman of the regulator, assured that no steep price increase is planned for the year ahead even though these expenses are to be slowly compensated via electricity pricing.

With the new yearly regulatory period for electricity is to start July 1, Boev stated for the media that the regulator is expecting that the European Commission reacts within the next two weeks to the two complaints it sent about the PPAs and the RES feed-in tariff scheme on Wednesday.

In his words the two American power plants should “transition to liberalised-market sales” though without giving any details how this should be done. Boev said all questions regarding the negotiations between NEC and AES and ContourGlobal should be addressed to the management of the state-owned company.

A thorough audit of NEC is also to reveal more insight on the company’s activities and financial situation, Boev informed.

Following the press briefing Meglena Rusenova, chairperson of the Bulgarian Photovoltaic Association stated that the actions of the energy regulator put a great risk not only on renewable energy producers, but also on the banking sector. If a proposal of the commission for cutting the portion of renewable energy bough at preferential prices, it would create a deficit in the banking sector of BGN 4 billion due to the impossibility of producers to pay their credits, Rusenova explained.

“The regulator’s complaint to the EC is a palliative measure which only proves that the regulator is protesting its own decisions. Mr. Boev ackowledged that the regulator has been approving the sale of electricity beyond its actual price for years”, Rusenova said, précising that none of the measures proposed for cutting the deficit at the state-owned NEC have been talked through with other energy producers.

Rusenova called for all state decisions regarding the Bulgarian energy sector to be stopped until the measures proposed by the EU and the World Bank suggesting more transparency, unbundling of NEC and restructuring of the regulator are taken.