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Bulgaria tariff could wipe out electricity exports, traders fear

31 May 2012 17:57:48 | edem

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A planned increase in the Bulgarian electricity export tariff could nullify the country's ability to sell its generation across borders at competitive rates, Balkan traders fear.

The national regulator DKER will discuss on Friday whether to increase some of the tariff's components., which could result in a 34% rise in the overall tariff rate.

Traders expressed their concern that if the export tariff increases it will be unprofitable to export electricity from Bulgaria, which typically has one of the lowest electricity prices among the Balkan states.

"When you add the cross-border capacity prices on top of it then export from Bulgaria will be killed at 99.9%," one Bulgarian trader said.

However, the trader doubted that a final decision would be made at Friday's meeting, adding that "at least two weeks will pass" before anything becomes official.

Three other Bulgarian sources pointed out that with current low prices in Serbia and Romania traders will most likely use Bulgaria only as a transit to export to Turkey in the summer. "Q4 would be very tight though, as it'll be a real struggle to find cheap energy in the region," one participant said.

Renewable component

To date the tariff has been comprised of a fee for transmission through state-owned utility NEK's system (€4.76/MWh), a fee for access to transmission system operator ESO's system (€3.57/MWh), a renewable energy fee (€1.90/MWh) and a fee for high-effective combined production (€1.46/MWh).

DKER published a proposal about the change in electricity and heat prices from 1 July on Tuesday. According to it, the green energy component may more than double to €4.42/MWh.

In March, NEK announced that it will be seeking to increase the renewable energy component from €1.90/MWh to €6.31/MWh because of the rise of the share of renewable electricity production in the overall energy mix in Bulgaria, and in particular, the rise of photovoltaic electricity, which is priced the highest of all renewable sources (see EDEM 7 March 2012).

But one trader expressed his doubts that the export tariff would rise as much as some fear. "Yes, they are proposing it but it is still uncertain if they are going to keep the renewable energy component as part of the tariff," he said.

'Impossible'

Another primary concern among the traders was that Bulgarian electricity producers "wouldn't stand a chance" selling on the free market.

"Perhaps only Kozloduy [nuclear power plant] will be able to sell some electricity, but it will be impossible for the rest," one of the Bulgarian traders said.

According to DKER's proposal, NEK would also like to compensate for losses made in previous regulatory periods owing to high expenses connected to renewable energy production. However, DKER has recalculated these expenses lower.

The regulator is also proposing a fifth component, called non-recoverable expenses, amounting €1.50/MWh based on the fact that NEK is obliged to buy electricity from the 670MW Maritsa East 1 coal-fired power plant.

The NEK transmission fee would remain almost unchanged while access to ESO's transmission system may see a slight decrease.

If the changes get approval, the current export tariff of €11.70/MWh may jump to €15.74/MWh. IP

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