Mladenovski: EWRC is looking for reserves so that the increase in the price of electricity for households is less

"We are still working on finding reserves, but the initial proposal is exactly this: an average increase in the price of electricity of 4.6% and an average increase in the price of heat of 4.5%. What does this mean in numerical terms? For a subscriber in Sofia with an average bill of 60 leva, the increase will be in the order of 2 leva and 30 stotinki, in Varna – 2 leva and 50 stotinki, and in Plovdiv a little more – 3 leva and 20 stotinki.

With heating it is the same - a subscriber of "Sofia District Heating”, if it currently pays an average of about 100 leva per month (with the currently planned increase of 4.5% from July 1), it will pay about 105 leva and 50 stotinki. But this is only if these prices are maintained.

We are also requesting additional data and are working, so there may be some minimal adjustment.

For the moment, the forecasts are that the price may even go down a little." This was stated by the Chairman of the Energy and Water Regulatory Commission (EWRC), Plamen Mladenovski, to journalists after the two open meetings of the regulator - on the prices of heat and electricity for end-users.

As is known, the electricity market model is changing from July 1 - the liberalization of the wholesale electricity market has started. The regulated market remains, but the current model will be transformed with the aim of a gradual transition to full liberalization, the date for which remains unspecified for now. The financial resources from the difference between the market price of electricity at which end-users buy and with which household users will be compensated will be provided by the Electricity System Security Fund (ESSF). There are still concerns that the funds from the ESSF may prove to be insufficient. On this occasion and in response to a question about what would happen if the money in the Electricity System Security Fund was not enough, the Chairman of the EWRC replied that then the regulator would intervene. At the same time, he was categorical that "at the moment there are no such indications". He again explained where the ESSF provides the funds from - revenues from carbon emission quotas, from a 5% percentage contribution from electricity producers and from the decision of the Council of Ministers regarding producer price ceilings.

At the moment, these are the real figures and thanks to the fact that we are preserving the regulated retail market, Plamen Mladenovski also said in response to a question from the audience whether the current amendment is conservative or real. According to him, the amendment is comparable to the amendments in previous years. In support of his words, he recalled that in 2021, 2022 and 2023, the price increase was also within the range of about 4%. He explained the increase in January of this year by over 8% with the “low increase in the price of electricity since July 1 last year of only 1%.

“If we had liberalized the market completely, both at retail and wholesale, the price increase would certainly have reached over 70%,” the chairman of EWRC also explained.

Mladenovski also expressed hope “that the model will work and that nothing will change for the consumer from now on”. 

“No one can guarantee and predict that nothing will happen. As we know, the price of electricity depends on a number of factors that are outside Bulgaria, which are not under the control of either the Bulgarian government or the Bulgarian regulator, but there are currently no indications that there will be an additional change in prices during the regulatory period. I hope that everything will be calm and consumers should be calm”, said the chairman of EWRC Plamen Mladenovski.

Meanwhile, the report of the working group on the EUSF states that "The estimated revenues under Art. 36e, para. 1, item 1 and item 2 of the Environmental Protection Act of the Fund for the period 01.07.2025 - 30.06.2026 are estimated at BGN 1,969,340 thousand, including the revenues received from the auctions of greenhouse gas emission allowances provided for in the Environmental Protection Act and the revenues from the contributions under Art. 36f of the Environmental Protection Act.

The estimated full amount of revenues from the sale of greenhouse gas emission allowances for the new regulatory/pricing period is estimated at BGN 1,541,811 thousand, taking into account the estimated net quantities of greenhouse gas emission allowances that the Republic of Bulgaria will sell on the EEC and the trend of changes in the prices of quotas.

The forecast is made at projected average prices of around 70.00 EUR/tonne. The risks of quota withdrawal in the second half of 2024 and the stated intention of the European Commission to increase the offer of allowances under the Market Stability Reserve (MSR), as well as the preliminary auction calendar for the first half of 2026.

Based on the forecast for the next regulatory/pricing period for domestic electricity consumption and electricity for export, linked to the hourly profile of electricity production and the hourly profile of imported electricity, the estimated revenues in the Fund under Art. 36f of the Energy Act are estimated at BGN 431,811 thousand, which are multiplied by a coefficient of 0.99, taking into account the provision of Art. 36e, para. 3 of the Energy Act. “

During the meeting, the chairman of the FSES, Dian Chervenkondev, said that the working group's report can be conditionally divided into two parts - the first, which provides for the collection of revenues and the second, which concerns the compensation for end-users from July 1.

"This is an exceptional challenge for us," said Chervenkondev, explaining that over 5 million invoices will have to be checked every month, but that is not the concern. "What would make it difficult for us is the detection of electricity and the one purchased from the end-users," which, in his words, is due to the different periods of detection of electricity meters. In this regard, he called for a way to be found for faster remote detection of devices.

The chairman of the EWRC, Plamen Mladenovski, for his part, explained that a way is being sought to move from the so-called steering towards remote metering at the next stage, adding that there is a possibility that EWRC will issue a statement on the subject in the autumn (he reminded that there is one, but it is from 2013). In this regard, Mladenovski drew attention to the current complex situation in the sector, leading to a very dynamic market, as well as the fact that we are still in the middle of a transitional period from coal-fired power generation, as well as the lack of digitalization of the network in Bulgaria, which is an obstacle for end customers to reduce their prices.

Representatives of the electricity distribution and electricity supply companies (Electrohold, EVN and ENERGO-PRO) expressed a number of concerns, including on the Z-factor. According to Zornitsa Genova, the surcharge of 4.92% will not be sufficient. The three companies, as for many years, took the position of insufficiently recognized technological costs (7%). EVN drew attention to the "highly underestimated balancing costs of 1.82 leva per MWh". According to the company's representative Shteryu Radev, the calculations are for a price of 3.83 leva per MWh and are much more realistic. However, the Chairman of the EWRC Plamen Mladenovski described the EVN model as "technically incorrect", and the ones applied by the regulator's working group as "mathematically more correct". Plamen Stefanov from ENERGO-PRO joined his colleagues in expressing an opinion about the greatly underestimated factor of the inflation rate.

The Chairman of the EWRC Plamen Mladenovski, for his part, noted that "every year we talk about the same thing with you" referring to the technological costs of the companies.

Only the Golden Sands EPC, where there is a reduction in the price of electricity for end-users, did not raise any objections to the regulator.

Disagreement with some of the conclusions of the working group was also expressed by ESO and NEK. In particular, Gergana Terziyska from ESO objected to the reduction of the rate of return for electricity transmission, and Ventsislav Markov from NEC expressed disagreement with regard to the contract with AES, compensations for the purchase of electricity for end suppliers, as well as with regard to the company's hydroelectric power plant.

The companies expressed their readiness to submit their opinions by the appointed time today.

Earlier, during a previous meeting, at which heat prices were discussed, a large part of the district heating companies expressed objections mainly in the part of technological losses. During the meeting, it became clear that the companies are not doing a good enough job in renewing the heat transmission network. Thus, the energy regulator has found a way to stimulate the companies to activate this type of work through regulatory reports.