Majority lawmakers reject proposal for compensatory mechanism for electricity prices for businesses

With 83 votes against and 31 abstentions, the deputies from the National Assembly rejected the proposal of their GERB colleagues Delyan Dobrev, Zhecho Stankov and Temenuzhka Petkova to introduce a compensatory mechanism for business. The proposal received the support of only 83 of the deputies.

The proposal provided for the Minister of Energy and the Minister of Finance to prepare a compensatory mechanism for compensation of non-domestic end customers up to 75% of the difference between the estimated market price set in the EWRC decision of July 1 last year and the average monthly price “On the platform of the IBEX. "The value of the 'energy' component paid by non-household end-users cannot be lower than the estimated market price set in the energy regulator's decision," the document said on December 21 last year, but rejected earlier for discussion in plenary.

The proposal also provided for the compensatory mechanism to enter into force on 1 December 2021.

The reasons of the petitioners state that for the period from 1.12 to 21.12 last year the average price of electricity on the day-ahead market of the IBEX is BGN 453.11 per MWh. This price is 280% higher than the price forecasted by the EWRC for the period. For comparison, for October the average price is BGN 368.61 per MWh, and for November it is BGN 408.18 per MWh. At certain hours in October, the price of electricity reached almost BGN 1,000, which is 8.4 times (840%) above the price projected by the regulator in the decision from July last year.

Energy prices for the first months of 2022 are expected to continue to rise. To date, according to the European energy exchange (EEX), the price for January is expected to be 387 euros (739.30 levs per MWh).

The expected price for the whole first quarter is EUR 368 (BGN 719.75 per MWh). These electricity prices will undoubtedly lead to bankruptcies, mass layoffs, rising unemployment, end products, reduced purchasing power, risk of falling GDP, reduced taxes on tax revenues and social security, the importers said.

In their proposal, the importers also list the sources of financing - from the improved budget balance in the amount of BGN 5 billion, specifying that a large part of these revenues are from VAT on electricity. Also from the surplus of the EUSF as a result of the increased amount of quotas and higher contributions of 5% on the turnover of electricity producers and transmission operators, as well as the excess profits of electricity producers Kozloduy NPP, NEK and others.

The prime cost of 1 MWh of electricity produced by Kozloduy NPP is BGN 55.01, and by NEK HPP - BGN 83.43 amounting to over BGN 1 billion, the cumulative excess profit of the companies for the period of compensations will be BGN 2.9 billion, it is said in the submitted proposals.

During the debate, none of the petitioners - Delyan Dobrev, Zhecho Stankov and Temenuzhka Petkova, as well as other GERB MPs, including Ramadan Atalay and Stanislav Atanasov from MRF and Tsoncho Ganev from Vazrazhdane - received support from the ruling coalition parties.

Lubomir Karimanski of There Are Such People proposed that the current proposal be postponed to January 14 and that the ministers of energy and finance be summoned to explain the compensation mechanism the government is proposing.

Vladimir Tabutov from the ruling party "We continue the change" said that there will be compensations for the business as "our proposal is in unison up to 75%, but with a ceiling of up to BGN 250 per MWh" and is motivated by the fact that currently such a proposal is discussed in the Council of Ministers.

Zhecho Stankov's warning that January cannot be analyzed, as the first week is usually a holiday, and the price of BGN 400 per MWh is by no means low, and the warning for new growth in February did not startle the ruling coalition parties. .

Opposition deputies failed to convince the government with the bills presented, which have multiplied for municipalities and hospitals and schools. They were not convinced by the proposal made by the MRF MP Ramadan Atalay and supported by Delyan Dobrev from GERB, if they want to correspond as submitters of the above-mentioned proposal for a compensatory mechanism.

"We as the National Assembly need to do what the government does not do," Ramadan Atalay said during the debate. He also recalled the existing moratorium and proposed that it be lifted, because as long as it exists, there will be no way to pay gas compensation. "Our proposal is to lift the moratorium, to pass tax laws, to end the law on energy poverty, and those in Boyana to come out of the jacuzzi and pay their bills," he reminded. According to him, if the ministers of finance and energy are to come to the parliament, but to vote for the compensation for the business and to end the moratorium.

"The topic is very serious, not for the faint of heart. It is important ", the MRF MP appealed.

However, this did not convince the ruling coalition. The deputies from the four coalition forces were not convinced by the words of Delyan Dobrev that GERB is only submitting a proposal, which in fact belongs to the employers' organizations and is from December 21, 2021. "We agree that you should add any of our names, because this is a decision that is beneficial for business," Dobrev said.

He received resistance from Vladimir Tabutov, who assured that the Minister of Finance is in contact with business and "a solution will be found."

Those who voted "against" the compensatory mechanism also failed to convince Alexander Nenkov, who noted the "deafening silence" of the coalition parties and called on them to "break the silence" or offer an alternative. The only answer was that there would be compensation.

In fact, as is well known, the difference between the compensatory mechanism proposed by GERB and the current government is not only with regard to the proposed 30% ceiling, which, as it turned out, will be dropped.

The main difference is in the base price from which you start. The proposal of GERB, ie The base price of the employers is to take the one from the EWRC decision of July 1, 2021, which is BGN 119 per MWh, while the proposal discussed by the cabinet is the base to be BGN 185.79 per MWh.

As Zhecho Stankov commented during the debate in the plenary hall, the difference in these BGN 50 is fatal, especially for small businesses, because for a year this means BGN 6,000 - an amount that is essential.

Earlier yesterday, Energy Minister Alexander Nikolov also commented to journalists on the mechanism for compensation for the price of electricity. "As for the discussed changes in the structure of compensation for electricity, as you know at the beginning, our proposal was for structuring with a ceiling of 30% of the price increase of 75% after a base of BGN 185.79 per MWh. This proposal included the analysis, which was made at the end of the year with the business, which showed possible extreme prices of BGN 750. At the moment this price is in fact, the market is at lower values, which allows us to be more flexible about the said ceiling. Currently, we can afford to enter the agreed framework, although we will exceed the compensations for business and everyday life for the heating season, including those of the caretaker government of over BGN 2 billion. The ceiling we will offer for a net amount will be BGN 250 per MWh, ie no more than BGN 250 per MWh. This roughly corresponds to the initial estimate, which is 30% of BGN 750, but at the moment this will not be achieved accordingly, "the minister said yesterday.

The promise is that the proposal will be discussed at a government meeting, the relevant decision will be made, and then a notification from the European Commission will be awaited.

As it turns out, the business will continue to wait.