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Bulgarian export tariff jumps by 50%; traders in shock

29 Jun 2012 17:44:47 | edem

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Balkan electricity traders were stunned by a last-minute decision by Bulgarian energy regulator DKER to increase the export tariff to €17.52/MWh from 1 July, instead of the expected €15.74/MWh.

The regulator's preliminary report for discussion was published a month ago, when traders expressed concern at the planned increase to €15.74/MWh (see EDEM 31 May 2012) - an expected 35% increase on the previous tariff level, pegged at €11.70/MWh. However, the official document published on the regulator's website on Friday showed a further rise beyond the expected levels, leaving traders scrambling to recalculate their positions for exported electricity for next month.

"Everybody was expecting the decision on Thursday, but they published it on Friday morning. We still cannot believe it," one Bulgarian trader said.

The Bulgarian export tariff was comprised of four components - the €11.70/MWh tariff before the increase consisted of €4.76/MWh for transmission through state-owned utility NEK's system, a fee for access to transmission system operator ESO's system at €3.57/MWh, a renewable energy fee of €1.90/MWh, and a fee for high-effective combined production of €1.46/MWh.

Renewable component

The largest increase is the green energy fee component. The regulator's preliminary report pegged this component to rise from €1.90/MWh to €4.42/MWh, but the official fee published on Friday put the fee at €5.68/MWh.

DKER is justifying the rise of the green energy component to offset expenses of Bulgarian lev (lv) 465,000 (€237,700) for state-owned utility NEK and suppliers ČEZ Elektro Bulgaria, EVN Bulgaria and E.ON Bulgaria as they are obliged to buy renewable electricity, including a compensation of 120,000lv to NEK for the previous regulatory period.

The regulator also introduced a fifth component, called non-recoverable expenses, amounting to €1.73/MWh, based on the fact that NEK is obliged to buy electricity from the privately owned 670MW Maritsa East 1 and 908MW Maritsa East 3 coal-fired power plants.

Bulgaria's energy minister Delian Dobrev announced on Sunday that these long-term purchase contracts were very expensive for the Bulgarian energy system. The government is investigating the calculation of this purchase price.

"When these contracts were signed from the previous governments there was no EU clause forbidding a long-term purchase contract, but the liberalisation package stipulates that such contracts cannot be signed in a free market," Dobrev said in a video interview published on the ministry's website.

He added that the current government was in a difficult position as it had to reduce the regulated market in favour of the free market on one hand, but also to pay for those long-term contracts in the years to come.

'Killed local production'

Traders have expressed their concerns on many occasions about the high export tariff killing the opportunity for local producers to sell on the free market.

"They just killed local production [for export]. I guess they are only going to generate for the internal market," one Bulgarian source said.

Another source pointed out that Bulgarian energy will no longer be valid for trading purposes. "We are probably going to use Bulgaria only for transit. However, they should dispute that decision. There should be a way to fight it," the source added.

A third source suggested that there could be a way to appeal DKER's decision if they act in the next 14 days, but a fourth remained sceptical. "You cannot appeal such a decision. You just pay and continue to work under the new conditions," he said.

"Romania and Bulgaria are going backwards instead of forwards, closing doors for businesses. That is communist thinking," one Romanian trader said, referring to the news that Romania is also expected to increase its export tariff by €0.60/MWh (see EDEM 28 June 2012).

A fifth source active in the Balkans said he hoped that exports from Bulgaria will stop and the government will realise the big mistake it has made.

Another Bulgarian trader suggested that the transmission system operator ESO may continue to cut the import cross-border capacity as it did for July (see EDEM 15 June 2012), which would force people to buy electricity from Bulgarian suppliers. IP

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