The Commission for Energy and Water Regulation adopted the methodology for determining the electricity prices of the Supplier of last resort

The Commission for Energy and Water Regulation adopted at a closed meeting a Methodology for determining the prices of electricity of the supplier of last resort (Methodology), announced the press center of the energy regulator.

As it became clear in June, the new methodology is linked to the prices of electricity in the "day ahead" segment of the IBEX and those for the lack of a balancing market).

According to Art. 21, para. 1, item 12 of the Energy Act (EA), the Commission has the power to adopt and control the application of the Methodology for determining the electricity prices of TED, the press center clarifies.

The reason for the adoption of a new methodology is that the current methodology from 2013 regulated a way of determining the electricity prices of TED, which is not in accordance with the legislation applicable to date. It provided for the purchase of electricity to cover the consumption of TED's customers to be done only by the public supplier, based on a decision of the EWRC to determine the respective quantities, while according to Art. 100, para. 1 of the Energy Act, this energy should be provided exclusively by concluding transactions with electricity at freely negotiated prices with an unlimited number of trade participants. These contradictions with the law are significant and this requires the adoption of an entirely new act to reorganize the way of determining the prices of TED in accordance with the changes in regulations and current market developments.

With the adoption of the new Methodology, the price for delivery of TED is linked to the hourly prices on the day-ahead market of the IBEX and to the prices for shortage on the balancing market. This ensures that the prices paid by customers at any time will be significantly higher than the market and thus customers have no incentive to stay with this TED. The formation of unreasonably high prices of delivery is prevented, as well as an acceptable return from the provision of the service is ensured and thus greater equality, predictability and security in the relations between TED and their clients is achieved.

The new Methodology regulates clearer rules and a fairer mechanism for determining the prices of TED, which take into account the interests of both suppliers and customers. The possibility for TEDs to purchase the necessary electricity at arbitrary prices is taken away, regardless of the current price levels on the market. Tolerance is allowed in the amount of prices, which takes into account the specifics of the activity of electricity supply from TED and the related difficulties in forecasting the number of customers and their consumption. An essential element in the Methodology is that it creates conditions for EWRC to quickly and effectively control the correct formation of prices by TED.

In accordance with the requirements for publicity and transparency, the draft Methodology and the report of the working group were published in advance on the website of the regulator and on the Portal for public consultations, reminded by the energy regulator. Prior to the final adoption of the Methodology, in compliance with the legal provisions, the EWRC held a public discussion with the interested parties on 14.06.2021. Representatives of NEK EAD, CEZ Electro Bulgaria AD, EVN Bulgaria Elektrosnabdyavane AD, Energo-Pro Sales AD took part in the discussion remotely. Within the scheduled 14-day period, the participants in the discussion, as well as the Bulgarian Industrial Association and ESP Golden Sands OOD, submitted written statements. In the Coordination Table to the draft Methodology, the Commission gives a reasoned opinion on each of the submitted proposals and objections.

The Methodology for determining the electricity prices of the supplier of last resort adopted by the EWRC will be sent to the State Gazette for promulgation