Bulgarian energy board unlikely to scrap export tariff – traders

Bulgarian market participants are sceptical that the country’s electricity export tariff will be scrapped in the foreseeable future as part of measures to be put in place by the newly established energy board.

The energy board, formed by all electricity market stakeholders as well as EU experts, was established by the interim government to work on stabilising Bulgaria’s energy sector.

The Bulgarian electricity system is accumulating a deficit of around €128m per quarter mainly because of obligations on state-owned incumbent NEK to purchase electricity from renewable and conventional resources, it was revealed in August ( see EDEM 15 August 2014 ).

After the board’s first meeting last week the energy ministry published papers summarising the meeting’s conclusions.

Among the suggested measures were analysing and eliminating the obstacles for electricity exports, optimising the balancing market mechanism, changing the purchase agreements of long-term supply contracts, a gradual increase of the regulated household electricity tariffs and improvement of the management of state-owned energy companies.

All stakeholders agree that compromise needs to be made in order to stabilise the system, according to Bulgarian interim energy minister Vasil Shtonov.

“We have reached a turning point and market participants understand that this situation cannot go on,” Shtonov said in an interview published on the ministry’s website on Friday.

He added that the interim government is working on a long-term plan to overcome the deficits and was confident that the measures would be followed up by the next government.

Sceptical

“On principle everything is possible, but I don’t think they [the energy board] will change the prices for transmission through the grid and access to the grid [which are components of the export tariff],” one Bulgarian trader remarked.

A second added that he did not believe the board will be able to make a significant change to the market.

A third noted that the existence of the board would depend on the next government which will be elected on 5 October.

“A change would be difficult. There is no money in the system and nowhere for money to come from. They have to increase the end user tariffs a lot,” the third source said.

“It’s really difficult to say what they will do with the export tariff, “ he added.

A regional trader noted that ever since Romania scrapped its own export tariff, Romanian electricity has become cheaper than in Bulgaria, thus reducing potential for exports from Bulgaria.

“Romania out-prices Bulgaria. There is one less border for Bulgaria [to export]. It doesn’t make sense to flow electricity through Romania [to more expensive Hungary],” he said.

Therefore Bulgaria would have to do something to make its electricity competitive again.

The scrapping of the export tariff has previously been cited as a logical step towards further market liberalisation and boost of exports by market traders.

The levy changed several times over the past two years. After a shock 50% rise to €17.52/MWh in July 2012, the level has gradually decreased to first €6.37/MWh as of 1 August 2013, then €3.53/MWh as of 1 January 2014. As of 1 July this year the levy saw a slight increase to the current €4.08/MW ( see EDEM 5 June 2014 ). Irina Peltegova