The proposed changes to the Energy Law will cause significant additional costs for ENERGO-PRO
ENERGO-PRO welcomes the purpose of the bill to create a framework of specific rules and measures to guarantee consumer rights, but the company calls for the economic consequences of the proposals to be analyzed in advance and subjected to wide public discussion
The draft law on amendment and supplementation of the Energy Act (ZIDZE), submitted on September 20, 2013, provides for 8 changes that affect the activities of electricity distribution companies in Bulgaria.
ENERGO-PRO welcomes the purpose of the bill to create a framework of specific rules and measures to guarantee consumer rights. At the same time, the legal and technical-economic analysis carried out by the company's experts shows that the proposed legislative measures will cause significant changes in the legal, business and regulatory environment in which the electricity distribution and supply companies operate and will have serious economic and social consequences in the Energy sector.
ENERGO-PRO experts are adamant that the proposed changes will cause significant new costs for electricity companies. Such costs are not provided for in the latest price decision of the State Commission for Energy and Water Regulation (DCEWR), which established a fragile balance between electricity prices and revenues required for the activities of electricity distribution and electricity supply companies.
The proposed changes in the Energy Act (EE) aim to expand the range of services of electricity distribution companies and increase their quality — measures that will undoubtedly be positively accepted by the whole society. At the same time, the balance between the quality offered by the national energy system and the operating and investment costs of energy companies is an issue that must be addressed in a national debate, as part of the national energy strategy. An improvement in the quality and scope of the services provided by electricity distribution and supply companies can only be achieved as a result of expanding the volume of investments and the activities they carry out. Accordingly, in the conditions of the state-regulated energy segment, the costs of necessary investments and additional activities should be taken into account when determining the price levels of electricity. According to Art. 31 (2) of the PE, in exercising its powers of price regulation, the DCEFR is obliged to comply with the principle of reimbursement of economically justified costs for the activities of energy enterprises, as well as the costs arising from the performance of obligations to society, such as those imposed by the Energy Act.
Until now, the Bulgarian society has not been presented with an economic analysis of the consequences of the proposed legislative changes. Even the slightest review shows that they will impose high requirements on electricity distribution companies for the way they serve citizens, and their implementation will require both serious costs for new activities and investments for rehabilitation of distribution networks. Preliminary analyses made by the company's experts show that the eight proposals for changes submitted for consideration in the National Assembly could trigger between BGN 50 and BGN 70 million annual costs for additional activities, as well as investment investments amounting to over BGN 300 million for ENERGO-PRO. The real consequences for energy, if these changes are adopted, could prove to be of serious economic and social importance due to the financial burden they impose.
“We would like to emphasize that ENERGO-PRO takes its obligations under the regulations extremely seriously and would in no case treat the interests of its customers in bad faith. We understand the objectives of the bill to create the necessary framework of specific rules and measures to guarantee consumer rights and we are ready to actively cooperate in this direction, but we rely on an objective assessment of the economic and regulatory environment in which the electricity companies operate”, said Stefan Abadzhiev, Manager of ENERGO-PRO Varna EOOD. “The specialists of ENERGO-PRO are ready to actively participate in a transparent public debate dedicated to making a detailed analysis of the action and financial consequences of adopting one or another variant of the proposed legislative measures,” he added.
If the proposed changes are adopted without a thorough financial analysis and introduced as a legal obligation, any unforeseen costs would reflect on the Bulgarian energy system as a whole and pose an immediate danger of an increase in energy price levels, since all possibilities for additional costs to be borne by the electricity distribution companies have already been exhausted.
