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From Bulgaria

19.12.2017 17:42

Electricity Market Turmoil: Rising Prices and Doubts of Market Manipulation and Abuse

AUTHOR: publics.bg

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In a letter by the Free Energy Market Association (ASEP) to Prime Minister Boyko Borissov it says that a long-term supply deficit by state electricity producers has been created, which led to the inability to supply end customers. As a result, part of electricity suppliers have withdrawn from the market, others have been suspended, and still others have started to renegotiate existing contracts. Consumers also reacted to the drastic increase of the price of electricity, which poses a threat to their economic welfare, and took a stand against it.

In addition, the association points to the changes in the Energy Act from 13 December which, according to it, have happened without any public consultations. Under the changes, all producers with capacity above 5 MW are obliged to conclude their transactions exclusively on the energy exchange in Bulgaria from 1 January 2018. Given the dominant position of the producers in the structure of BEH, electricity supplies can be guaranteed only by the state producers, ASEP adds.

A day before, the Bulgarian Federation of Industrial Energy Consumers (BFIEC) announced that it wants an emergency meeting with the PM after industrial consumers started receiving letters by electricity suppliers about an increase of prices of 50-90% starting from next year. The Chairman of the Board of Directors of ASEP, Sonia Kadieva, commented for publics.bg that the percentages could be in this range only if the prices are compared to the ones in March 2016.

Another organisation – the Association of Traders with Electricity in Bulgaria (ATEB) – also commented the issue in an open letter to the media. Electricity is not a good that can be stored, it is produced and consumed in real time and traders cannot “hide” it. According to ATEB, a possible reason for the deficit is a lower production. As seen in the financial reports, the licensed traders have accumulated a total of over 70 million BGN loss. This means that they are not the reason for the rise in prices, but they took the hit from the increased prices rather than their clients.

The Chairperson of the Energy Committee at the parliament, Delyan Dobrev, called firms to buy their electric energy from the regulated market because of the private suppliers who raised their prices multiple times. Until 1 January 2018, few traders, who „racketeer, blackmail, pressure business in Bulgaria”, Dobrev explained. In his words, hundreds of thousands of companies suffer from those unfair traders. They were well known in the last twenty years, they were the same, not more than ten, and somehow they own the electricity on the free market, thus forcing firms on the brink of bankruptcy. Dobrev did not specify any names and clarified that he has a register of auctions by NPP Kozloduy, TPP Maritsa-East 2 and NEC which shows which suppliers buy energy and at what price in the summer.

In a response to claims of electric power deficit and significant increase in the price of electricity the business, in a meeting with big industrial companies, the Minister of Energy, Temenuzhka Petkova said that state energy companies NPP Kozloduy, NEC EAD and TPP Maritsa-East 2 comply strictly with their obligations to ensure there is electricity on the free market. According to NEC data, 50 to 300 MW from the quantities supplied on the exchange are left unsold on a daily basis.

Few days later, unions and employers requested immediate action in order to calm the electricity market. In a position the Confederation of Independent Trade Unions of Bulgaria (CITUB), Confederation of Labour Podkrepa, Bulgarian Industrial Capital Association (BICA), Bulgarian Industrial Association (BIA), Confederation of Employers and Industrialists in Bulgaria (KRIB) they state that actions for the increase of the price of electricity are undertaken unjustifiably, without any connection to the realities in the sector, in a non-transparent and completely non-market oriented manner. The process has escalated dramatically in the last few days when traders wanted to terminate supply contracts or to one-sidedly impose prices which are 30 to 65% higher than the current ones, according to the announcement by the five organisations.

They warned that speculative and unfounded increase in the price of electric energy will lead to bankruptcy, permanent loss of jobs and freezing of income across many sectors and industries.