Bulgarian Energy and Mining Forum: The termination of the existing contracts between NEK and ContourGlobal and AES and the EU will seriously violate the sustainability of the country's power system

The termination of the existing contracts between NEK and ContourGlobal and AE and the EU may lead to a reduction or suspension of production from these power plants, which in turn will seriously undermine the sustainability of the country's power system, including the implementation of interconnection schedules, maintaining the necessary reserve for primary regulation of frequency, mains voltages, exchange flows and will worsen economic stability. This is stated in an opinion of the Bulgarian Energy and Mining Forum (BEMF) on the Draft Plan for Reforms of the Electricity Market in Bulgaria and addressed to the Internal Energy Market Directorate and the Energy Directorate General of the European Commission. In their opinion, the experts called for a broad public discussion.

The Bulgarian Energy and Mining Forum, as one of the largest NGOs in Bulgaria in the field of energy and mineral resources, strongly supports the legitimate position openly and repeatedly stated by the Ministry of Energy that the Maritza East complex should continue to operate in the long run due to its key importance. for security of supply of local resources. We hope that the government will continue to implement the right measures in dialogue with stakeholders, which will contribute to the achievement of a sustainable energy market. At the same time, Bulgaria complies with the regulations of the European Union for the internal electricity market and with our significant expertise we have always declared our readiness to assist the Ministry of Energy in successfully implementing market reforms that benefit all affected countries and meet the rules of EU.

Unfortunately, however, we find that the Government, in violation of the principle of transparency, has directly proposed to the EC for coordination significant changes in the Energy Act, which have a direct impact on key features of the electricity sector such as security of supply, sustainability of the national electricity system. of coal-fired power plants and the model of the electricity market.

So far, no attempt has been made by the responsible institutions to hold discussions with stakeholders on the development of a market reform plan.

The envisaged reforms should be proposed for wide public discussion with all stakeholders, such as European requirements due to the significant scope and expected impact on the overall functioning of the electricity sector.

There is also a lack of in-depth analysis of the consequences and their impact on trade and contractual relations in the sector, as well as the security of electricity supply.

The requirement to conduct broad and transparent public consultations is particularly important for overall regulation in the energy sector and for the protection of the public interest.

Although some of the envisaged reforms in the area of ​​additional services, balancing market and planned market mergers would have a positive effect on the market, the plan does not address other significant problems in the sector such as:

· the dominant role of the companies from the group of Bulgarian Energy Holding;

· operating old facilities that are publicly suspected of complying with environmental legislation;

· state support to cover the deficit in state energy companies;

· the lack of a solution for the accumulated deficit in state energy companies;

· lack of supply of long-term products, etc. The legitimate interests of investors in the country's electricity sector are being violated, without providing for legal and regulatory mechanisms to protect investments and the inviolability of already concluded contracts. This in itself is a negative signal to the entire investment community and the investment climate in the country.

The negative effects in case the proposals made are implemented as proposed will lead to at least two major problems that will affect the entire electricity system, including:

· The possible termination of the existing contracts between NEK and ContourGlobal and AE and the EU may lead to a reduction or suspension of production from these power plants, which in turn will seriously undermine the sustainability of the country's power system, including the implementation of interconnection schedules, maintenance of the necessary reserve for primary regulation of the frequency, mains voltages, exchange flows and others.

· The lack of these contracts or other source of predictable revenues will impair economic stability and jeopardize the sustainable operation of both plants.

· In addition, last but not least, we forecast a deterioration in the economic performance of the Maritza East Mines due to a reduction in coal production, followed by job cuts and the associated with this deterioration of the socio-economic situation in the region.

The other proposal, the introduction of a new mechanism for the purchase and sale of electricity from the free market by final suppliers, poses a risk to the financial security of all other market participants from production to delivery.

Due to all the above, including the expected deterioration of the country's energy security and the stability of the electricity system from the hasty changes in energy legislation, we insist that before any decisions on changes be held an open public discussion and dialogue with all stakeholders and competent authorities in Bulgaria.