How does the free electricity market work in Bulgaria?

The electricity market in Bulgaria is in the process of gradual liberalization, which started in 2004 and continues to this day. It consists of two segments — a segment with regulated prices and a segment with freely negotiated prices or the so-called free market.

On the regulated market, the price of electricity is set by the Commission for Energy and Water Regulation (EWRC), and electricity suppliers are determined by the state on a territorial basis. The main consumers in this market are the so-called household customers, mainly individuals.

The free market for electricity covers business customers, mainly legal entities. Here, participants have the opportunity to freely negotiate the price and terms of delivery, without their geographical location affecting this. In this way, they choose their supplier themselves. Consumers continue to pay prices for transmission and access to the network to which they are connected (transmission or distribution), but the EWRC does not set the price of electricity, as in the case of regulated ones. The Commission has the sole role of a regulator, exercising control over market participants.

The price of electricity on the free market is determined on a market basis depending on:

• the search
• the offering
• consumption in the day

There are other factors that influence prices, but one cannot speak of a pricing model, as is the case with the regulated market. One of the most significant conditions affecting the Bulgarian market is related to electricity prices in the regional market, which is influenced by the levels of markets in Western Europe. Factors directly responsible for the change in electricity prices on world markets, which are also relevant for Bulgaria, are: changes in demand and supply, changes in prices of the main energy resources (oil, gas, coal, etc.), carbon prices, weather conditions, planned (repairs) and extraordinary events (accidents, bans) import/export, bankruptcies), energy policies and others.

The liberalized electricity market in Bulgaria is established and operates in accordance with the European directives on liberalization of energy markets. The ability of consumers to choose their own provider leads to competition, improved service quality, investment in the sector and better price offers for consumers.