The Bulgarian Energy and Mining Forum proposes a "quasi-market" trading model for the IBEX in an attempt to stabilize electricity prices

The organization gives several proposals to EWRC and ME with measures, including Sofia District Heating to switch to fuel oil

Energy / Bulgaria
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The Bulgarian Energy and Mining Forum (BEMF) proposes the introduction of a "quasi-market" trading model of the IBEX, in which state-owned power plants will be included at lower prices with proposals for long-term contracts. This can happen in compliance with the legislation, but the EWRC must change the rules of trade. This is written in the position of BEMF, sent to the media. The organization also offers a number of other measures, part of which is the purchase of electricity from TED and the electricity distribution companies to purchase from NEK the electricity they need for technological costs.

The high prices of the Bulgarian Independent Electricity Exchange (IBEX) on the Day Ahead platform have a direct impact not only on the monthly bills of the business, but will also have a negative impact on the prices for household and industry through the increased prices of technological costs of network operators - ESO and ERPs during the next price period (01.7.2022 - 30.6.2023).

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And the main reason is that in determining the prices of regulated network services of ESO and ERP operators, EWRC according to the rules is based on the "estimated average annual market price" of electricity and the difference between the estimated and real price of the IBEX platform " A day ahead. This difference is used as a basis for determining the prices of network services in the next price period, which already exceeds the forecast by more than BGN 200 / MWh (BGN 131.27 / MWh). All this causes losses to network operators due to a significant increase in their costs of more than 200% and will lead to an increase in the price of network services, which are a component of the electricity bills of both non-household and household consumers. These regulatory changes related to the new requirement for network operators to buy their technological costs not from the Public Provider as before at a price of BGN 108.37 / MWh, but from the IBEX "Day Ahead" were introduced erroneously and hastily in 2018 without analysis for compatibility and consequences.

BEMF's energy experts predict an inevitable new serious increase in electricity prices as early as January 1, 2022, unless new emergency measures are taken by the Government and the EWRC as of November 1, 2021.

The application of measures related only to compensation of costs of non-household consumers is an asymmetric action. It will not lead to normalization of prices and calming of the market.

New emergency measures are needed related to changes in the Electricity Trading Rules and even the introduction of a "quasi-market" model of trading of the IBEX, which will not be in violation of the European rules for stock exchange trading.

BEMF offers:

1. In accordance with the powers under the Energy Act, art. 21, para 1, items 1, 9, 13 and 15 and art. 23, item 4 and item 5 EWRC to introduce after public discussion a change in the Trade Ordinance with electricity and gave instructions to all network operators, which no later than November 1, 2021. to switch to the purchase of electricity for technological costs instead of from the platform "Day ahead" - from the Public Provider at regulated prices, or from the platform "bilateral contracts".

2. The Ministry of Energy to order through BEH the state power plants of the holding to participate in these tenders in order to provide energy to cover the technological costs of the network operators for this period.

3. Change in the methodology for pricing of TED energy and its purchase for a temporary period until 31.12.2022 instead of from the platform "day ahead", from the platform "bilateral agreements". Preparation of a procedure for transfer of all interested non-domestic producers to TED.

4. Urgent measures for the realization of imports of the full Azeri gas quota under the contract with SOCAR on the basis of a set-off scheme.

5. Extraordinary temporary change of the fuel base of Toplofikacia Sofia to fuel oil

6. Normalization of stock exchange prices through the application of a "quasi-market" mechanism for state regulation of the profits of large state-owned companies:

6.1. Non-household consumers should be encouraged to change the place of trading of electricity from the "day ahead" platform to the "bilateral agreements" platform, stating the necessary quantities oriented to a certain producer and its regulated price, plus surcharges.

6.2. TPP "Maritsa-East 2" to be stimulated to participate in the tenders at the request of non-residential users of the platform "bilateral contracts" for long-term 6-month or annual contracts with different quotas, accepting offers at prices at least its regulated price, plus the estimated cost of emissions, plus profit. There are two other options - instead of the estimated price of the issues, to include a price for their possible hedging, or, without hedging, if BEH buys them in advance under some scheme.

6.3. In the same way, Kozloduy NPP should be stimulated to participate in the tenders at the request of non-residential users of the "bilateral contracts" platform for long-term 6-month or annual contracts with different quotas, accepting offers at prices at least its regulated price, plus profit agreed with BEH. These transactions should include the condition that they are only for traders up to the amount of the total consumption of their Bulgarian customers (the so-called size of a balancing group).

6.4. Ministry of Energy to propose through BEH to the state power plants of the holding to apply the model by participating in these tenders at the levels of prices offered by consumers, defined as a regulated price, including carbon prices, plus profit.

6.5. The additional condition with the participation of traders should be included in the transactions in question - the purchased energy quotas should have a ceiling of the transactions up to the amount of the total consumption of their Bulgarian customers (up to the volume of consumption of the balancing group).

BEMF experts are convinced that the proposed measures, some of which are temporary, are legal and are in full compliance with the EC recommendations for emergency policies and actions in the current crisis.

EWRC must be persuaded as a matter of urgency to introduce the proposed changes in the normative documents, which are not in violation of the Energy Act and do not require additional changes in it.

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