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24.01.2018 11:16
Building Tension Due to Surge in Electricity Prices on the Free Market

  • © Ian Muttoo,

The speculative and unfounded rise in electric energy prices will lead to bankruptcies, permanent loss of jobs and freezing of income levels in a number of industries, the Confederation of Independent Trade Unions of Bulgaria (CITUB) and the Confederation of Labour Podkrepa said in a joint statement. Significant volumes were directed to particular traders under vague conditions, which give non-market competitive advantage over other market participants. The two union organisations believe that this speculative and unfounded increase in the price of electricity will lead to surge in the prices of food and non-food goods, and will then be transferred to the regulated prices, ultimately affecting household consumers.

The Association of Organisations of the Bulgarian Employers (AOBE), in which Bulgarian Industrial Capital Association (BICA), Bulgarian Industrial Association (BIA), Bulgarian Chamber of Commerce and Industry (BCCI) and Confederation of Employers Industrialists in Bulgaria (KRIB) are members, will refer to the Commission for Protection of Competition (CPC) in relation to the rise of prices for electric energy on the free market. AOBE will require CPC to check if there have been cartel agreements as well as unfair commercial practices by the electricity traders.

AOBE also said that power plants sell their energy at much cheaper prices on their own platforms, compared to what they offer on the energy exchange. The employers also reminded that that the price of energy on the regulated market is 76 BGN per MWh, while currently electricity suppliers are concluding contracts at 110-125 BGN per MWh. If the situation perseveres, it would affect prices for households as they are expected to rise between 15 and 30%, the Chairman of BICA Vasil Velev said.

In a response, the Minister of Energy Temenuzhka Petkova stated that household consumers should remain calm. She assured that there is no connection between prices on the regulated and the free market and any analogy with the increase of prices for households is illogical.

The energy minister informed that average prices for electricity with a date of delivery in 2018 on the energy exchange and on the platforms of state-owned power plants are 75 BGN per MWh. Therefore the claims by businesses that energy suppliers offer prices as high as 100-120 BGN per MWh sound improbable and alarming. She was surprised that businesses have not yet referred to CPC, given that the issue has been discussed since the end of last year. Petkova firmly stated that the government stands by its support for rigorous law enforcement, should the presence of such practices be established.

The same position, regarding electricity prices for households, was taken by the Chairperson of the Energy and Water Regulatory Commission (EWRC) Ivan Ivanov. He said that there are no objective prerequisites for a drastic increase of the price of electric energy on the regulated market from 1 July. The methodology the regulator uses provides no grounds to talk about such a dramatic increase, he explained. “I am unpleasantly surprised that some political parties and business representatives are speculating with those prices. They will get an answer on 30 June, when we will take our decisions”, added the Chairperson of the EWRC. He went on further to make it clear that by the end of March the Commission will receive electric energy producers’ applications and they will be reviewed in the second quarter. Until then, all statements about price increases are absolutely unfounded and unverifiable, Ivanov was adamant.

However, he confirmed that there are significant discrepancies in the prices offered by traders to end clients, businesses in particular. He also pointed that pursuant Regulation (EU) No 1227/2011 on wholesale energy market integrity and transparency (REMIT), EWRC can be empowered to investigate and impose sanctions, but only on the wholesale market, i.e. on the Independent Bulgarian Energy Exchange (IBEX). According to Ivan Ivanov, the necessary changes in the Energy Act which will include REMIT provisions have been prepared and should be discussed and approved by the National Assembly. He stressed that the regulator is not allowed by law and cannot obtain rights to investigate suppliers’ contracts with Bulgarian businesses. Ivanov said that claims for potential cartel agreements are handled by CPC.

TAGS: tension | electricity | high | prices | free market | regulated market | businesses | CITUB | AOBE | BICA | BIA | BCCI | KRIB | CPC | households | Vasil Velev | energy suppiers | energy traders | Temenuzhka Petkova | Ivan Ivanov | EWRC 

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