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Bulgarian energy regulator submitted complaints to the European Commission

DKEVR asserts that long-term contracts of NEK with US TPPs are illegal

3E news
25-06-2014 11:18:00

”State Energy and Water Regulatory Commission (DKEVR) has lodged two complaints with the European Commission (EC) over illegal state aid to TPPs and renewable energy sources (RES) [producers],” said Boyan Boev, Chairperson of the DKEVR, speaking after an open sitting of the institution, Focus News Agency said.

”In our first complaint concerning the so-called American TPPs we think after the conclusions drawn from our analyses and the examination of the agreements of the National Electricity Company (NEK) with ContourGlobal, Maritsa Iztok 1 and AES Maritsa Iztok 1 it turns out NEK is obliged to purchase the whole amount of electrical energy produced by TPPs,” Boev said further.

He added that according to the DKEVR this principle did not correspond to the Third Energy Package and its goals.

He thinks the clauses in these agreements do not correspond to the standard agreements on purchasing electrical energy inked at the European markets. This puts in a favourable and economically beneficial situation these two TPPs in comparison with the other producers of electrical energy, Boyan Boev believes.

He remarked the principle was this way preserved when it came to new participants on the market as well.

Boev explained the agreements signed in 2001 between NEK and the two American TPPs, according to the Commission [DKEVR], are state aid as they meet all the criteria set in the Treaty on the Functioning of the EU, namely – participation of state resources, existence of an economic advantage, violation of [fair] competition and an effect on trade.

The DKEVR chair thinks this is a threat to Bulgaria’s obligation to organise full liberalisation of its energy market, created by the fact Bulgaria inked long-term agreements on purchasing electrical energy.

”For us the agreements between NEK and these 2 American TPPs present state aid in the sense of the Treaty on the Functioning of the EU, which makes it incompatible with the European market,” Boev commented.

He stated this was outlined in DKEVR’s complaint to the EC and the regulator had asked for the temporary suspension of these 2 agreements until all the facts and circumstances concerning the alleged illegal state aid are fully ascertained, respectively the exclusion from the regulated market, too.

As far as the complaint regarding RES producers was concerned, Boev said the RES installation exceeded [by far] the goals of Bulgaria, including the ones of the EC by 2020.

”The set in the Renewable Energy Sources Act scheme for [the formation] of these prices presents providing excessive aid to the RES producers,” the DKEVR official remarked.

”The complaint states determining the preferential prices once a year does not reflect the lasting trend for fast reduction in investment expenses for the construction of sites for production of electrical energy from RES, which are a main price-forming element in the formation of their preferential price, which leads to an increase in their preferential price,” Boyan Boev remarked further.

He also added in his opinion this was the main factor behind the huge interest of investors in Bulgaria and from abroad and behind the rapid increase in the number of photovoltaic [power] stations.

The DKEVR insists in its complaints the EC suspends the alleged state aid to TPPs and RES producers, after which presents a final position on the issue.

”If we do not comply with the decision on amending the long-term agreements between the National Electricity Company (NEK), ContourGlobal Maritsa Iztok 3 and AES Maritsa Iztok 1 and if we do not amend the regulations under the Renewable Energy Sources Act we will have to reduce the expenses, amending the price of the public supplier. If there is no solution at the same time to these problems [...], we [will] have to decide on the price NEK [pays] each quarter, having as a base the additional expenses they have,” said Boyan Boev, Chairperson of the State Energy and Water Regulatory Commission (DKEVR), speaking after an open sitting of the institution.

He also presented the proposals made to the NEK and the parties under the so-called long-term agreements on purchasing electrical energy, which include negotiations over amendments to the agreements, decreasing energy prices, the work of some units, and others.

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