High electricity prices on the free market worsen the financial condition of water companies

The problems with the high prices of electricity on the free market have seriously worsened the financial condition of the water supply companies. The reason is that after the latest changes in the Energy Act, they have to buy the electricity they need at freely negotiated prices, while the services provided to their customers are paid at a regulated rate. The topic was the main one in the discussion of the problems of the sector between the managements of the Energy and Water Regulatory Commission and the Bulgarian Water and Sewerage Holding.

As a result of the significant increase in the prices of both the Bulgarian and European energy exchanges, the costs of the water supply and sewerage companies have increased many times over. At the same time, the decisions of the EWRC for the prices of the services provided by them set much lower costs for electricity and this leads to a financial imbalance. The problem is especially severe for those water companies that, due to the specific geographical conditions and the way of construction of water supply and sewerage systems, supply water to consumers mainly by pumping method.

Bulgarian Water and Sewerage Holding informed the EWRC that steps have been taken for organized supply of electricity to the companies in the holding group, and measures are being developed to support commercial companies in the current difficult situation for the sector.

The regulator and the state holding also discussed the possibilities for changes in the regulatory rules in case of subsequent changes and / or revision of the approved prices of water supply and sewerage services in the period 2022-2026, to propose an amendment in this part of the by-laws to the Law for regulation of the water supply and sewerage services.

With regard to business plans, it was generally agreed that the dynamics of electricity prices on the free market creates significant difficulties for adequate planning of future operating costs of companies. The EWRC provided information on the review of the applications submitted by the companies. In order to provide practical assistance, experts of the regulator are to conduct working discussions with each applicant company, as a result of which the water companies will make the necessary adjustments in their business plans.

Emphasizing the role of effective cooperation between the institutions, the participants in the meeting agreed that Bulgarian Water and Sewerage Holding should provide methodological support to the water supply and sewerage companies of the holding group in terms of forecasting electricity costs and all other components of business plans.