The Energy and Water Regulatory Commission approved a price of natural gas for August of BGN 57.60 per MWh
Despite the increase, the price of natural gas for the Bulgarian market remains significantly lower than the current prices on European gas exchanges
The Energy and Water Regulatory Commission has decided that the price of natural gas for August will be BGN 57.60 per MWh (excluding prices for access, transmission, excise and VAT), the press center of the energy regulator announced. The decision was made after an analysis of the previously updated proposal of Bulgargagaz. Earlier in July, a much lower price was expected from the public supplier, and the working group's report discussed a price of BGN 55.84 per MWh (excluding access, transmission, excise and VAT prices).
In the last few days, however, spot prices for natural gas (not just TTF) have jumped to more than 40 euros per MWh or more than 580 dollars per 1,000 cubic meters. The alarming growth was also reported during the EWRC open meeting on July 29 this year. Nevertheless, the executive director of Bulgargaz Nikolay Pavlov promised that the price sold by the company would be BGN 15 lower than that of the European gas hubs. However, in reality since the beginning of the year the price is already twice as high, but this does not apply only to the Bulgarian gas market.
The Energy and Water Regulatory Commission adopted a decision in connection with the application submitted by Bulgargaz EAD for approval of a price for August 2021, at which the public supplier will sell natural gas to the final suppliers and to the persons to whom a license for heat production and transmission. The decision was made in accordance with the terms of the contract between Bulgargaz EAD and OOO Gazprom Export, the terms of the contract with the Azerbaijani company and the agreements to it, reminded by the regulator.
The decision of the Commission takes into account the price of natural gas proposed by Bulgargaz EAD on 01.08.2021, updated with the market indices of the European gas hubs as of 31.07.2021 and the average monthly exchange rate for conversion of euro into US dollars at the European central bank for July 2021. The updated price application of the public supplier also takes into account the quantities of natural gas under the exemption program, under the contracts with the licensees, as well as with customers at freely negotiated prices.
After a detailed analysis of the current data and documents submitted by Bulgargaz EAD and after calculations made according to the price model, with the adopted decision EWRC approved the price of natural gas from August 1, 2021 in the amount of BGN 57.60 / MWh (excluding prices for access, transmission, excise and VAT).
The increased price of natural gas for August reflects the trend of continuing increase in the prices of natural gas on the international gas markets. At the open meeting held on July 29, 2021, the Executive Director of Bulgargaz EAD Nikolay Pavlov explained that after the submission of the application on July 9, 2021, the prices on the European gas markets continue to rise and now reach over 35 euros / MWh. Forecasts show that for the period September-December 2021 the expected values of natural gas on European markets will reach 39-40 EUR / MWh. From his data, it also became clear that crude oil prices continue to remain at high levels - 74-75 USD / barrel. Nikolay Pavlov stressed that despite the increase, the price of natural gas for the Bulgarian market remains significantly lower than the current prices on European gas exchanges.
The approved price of natural gas of BGN 57.60 / MWh includes the component price of natural gas at the entrance of the gas transmission networks, the component for the activity “public supply” under Art. 17, para. 7 of the NRCPG and the component for compensation of expenses under Art. 11a, para. 2 of the NRCPG, covering the costs of Bulgargaz EAD for storage of quantities in the underground gas storage Chiren in fulfillment of obligations under the Emergency Action Plan, are specified by the energy regulator.
The EWRC has the authority to approve the price of natural gas upon an application submitted by the public supplier. Based on the provided data and documents to the application and after checking the calculations, the Commission approves the price of natural gas for the month, which is applied from the first day of the month, according to Article 30, paragraph 1, item 7 of the Law on energy. In approving the price of natural gas, the EWRC takes into account the stated estimated quantities of natural gas imported from the domestic market, the terms of supply contracts, as well as the BNB average exchange rate of BGN against the foreign currency in which natural gas is paid. The powers of the Commission are only to establish whether the application of Bulgargaz EAD meets the requirements of Ordinance № 2 for regulation of natural gas prices and supply contracts, the announcement reminds.
In determining the expected delivery prices in connection with the formation of the price of input of gas transmission networks according to Art. 17, para. 3 of the NRCPG, the total amount of natural gas envisaged for delivery in August 2021 and the relative share of the quantities for public supply of natural gas, the natural gas release program, as well as under the bilateral agreements are reported.
The decision of the EWRC for approval of the price of natural gas from 1.08.2021 is published on the website of the regulator.