The main factor for the record rise in energy prices that we have seen recently is the shock creation of new money through various instruments. Which is the effect mostly of US Federal Reserve and European Central Bank policies over the past two years. Especially in the context of the pandemic, they acted as if we were in crisis, but in reality, after the first few months, rapid economic growth began. This was stated by the former Minister of Economy, Energy and Tourism in the first government "Borisov" and the current mayor of the capital region "Sredets" Traicho Traikov on bTV.
He noted that the role of central banks is generally to control inflation. "And not only did they miss it, they even don't mind, I'm afraid." Because in this way they help a lot of governments not to go bankrupt and even to clear their debts a little bit, "Traikov said. According to him, as a result, prices of all listed assets have risen around the world. And especially in Bulgaria, because we do not have a normal stock exchange, this has affected the ballooning of the real estate market.
"Thus, since the carbon market is open to non-consumer traders, prices have risen by the same logic, even thanks to non-energy conditions," Traikov said.
According to him, however, there are other factors that led to the record rise. In particular, the prices of gas and other fuels have risen so much both because of the general rise in the price level and because of the increased consumption, especially in Asia. "To this must be added some of Gazprom's actions, used as light pressure to bolster Nord Stream-2." Regarding the latter, there is an initiative of a group of MEPs to refer the matter to the EC and to consider the case. "And by putting all this together and entering the Bulgarian synopsis, the deficits of our regulation have also helped Bulgarian prices to explode."
According to him, the ongoing inspections of SANS and the Ministry of Interior in the Energy and Water Regulatory Commission probably have the potential to find something. But part of it is not the work of forensic scientists, but of experts. Because there are problems that are not crimes. "For example, it is not normal to export under a long-term contract, and the Bulgarian market to be supplied under the" Day Ahead "scheme," says Traikov. He sees reasons for the rise in prices in the work of Bulgarian traders and the way the market in our country has developed. "Traders who supply Bulgarian customers have, in fact, given up their role as market participants. They are simple commission agents because in the mass case under their contracts with their clients they sell them energy on the basis of the stock exchange price plus a surcharge. Therefore, it is not a problem for them to buy at any price from the market and transfer it to the customer, "says Traikov. He adds that this is according to the rules for trade in our country, which is why the inspections may establish the need for some regulatory changes, and not necessarily crimes. According to him, however, there are crimes in the energy sector in Bulgaria.
"Every stock exchange in the world has manipulations or attempts to do so. The only difference is the extent to which supervisors are able to intercept or investigate and punish them afterwards. We are yet to see what will happen in Bulgaria - we hear about one-day companies, about large quantities purchased, which are then sold on the black market, etc.," Traikov noted.
According to him, many things could be mentioned as "planted bombs". There are such in the rules of trade, as well as in things related to the hardware of energy, as well as related to the policy that Bulgaria has pursued in relation to this sector in our country on the European stage. "There is always silence to the last, so that no one gets angry. And when it is already heard that there is no way to hide things anymore, it turns out that we are already late, "he said. And he gave an example with the coal energy in our country, in relation to which since 2017 in the EU there is an active debate on what exactly are the rules for the time ahead. "The then Minister of Energy, already under pressure, acknowledged the delay and announced that we would ask for a derogation," Traikov recalled.
According to him, things should be divided regarding the ongoing inspections in the energy sector. "What may be identified as a crime should be treated as such. And where things can be improved, done and acted upon so that the problems are eliminated," he advises.
Traikov also said he was not particularly in favor of compensating businesses for high energy prices at the moment, as such actions usually lead to a spiral and end badly. According to him, if anyone needs to be compensated, it is the households. But in Bulgaria there is no such need, because they, due to the delayed liberalization of the market, are still paying their bills at regulated prices. "As a result, at the moment the prices of energy we pay at home have not risen," said Traikov.
However, he predicts that the companies that present their costs to the EWRC for determining their regulated prices will certainly have grounds to request a price increase. And another question is what the regulator will allow. According to Traikov, they will have the right to demand recognition of higher costs both in terms of energy itself and in terms of infrastructure and networks, because everything has become more expensive - metals, building materials, fuels and everything in the chain. "Ultimately, if the state raises household prices, it may decide to compensate them in the form of social policy," Traikov said. He gave the example of countries where households are on the free market, which is why they are already among those hit by the big rise, which is why the countries concerned have already started to compensate them.
He is of the opinion that these extremely high prices are unlikely to last long. And the reason we are watching them now is that seasonal factors have accumulated in Europe. Not only was there not much sunny weather this month, but there was also no wind, which is why most of the RES did not produce much electricity. And this, combined with the higher price of gas, has led to further increases in electricity prices.
On the other hand, Traikov expects prices to fall in the future due to the cyclical nature. In this regard, he gave the example of the previous boom after the end of the last crisis - 2010-2011, when metal prices rose very sharply. And then their producers made extra profits, as energy producers do now. "And then there were also justified questions about whether those who consume metals should not be compensated for the high prices. It sounds fair in principle, but there is cyclicality in these things. On the other hand, purely institutionally, this is treated as state aid, for which the state must obtain permission to do so, as this is prohibited in the EU. Because, for example, if the German producers receive compensations, this puts them in better conditions compared to the Bulgarian ones and vice versa. "If the EC allows one country to grant such compensation, it must allow the others," Traikov explained.