The deputies from the ruling majority did not accept the proposal for a Decision on additional monthly contributions to the Electricity System Security Fund

The ruling majority in the Energy Committee of the National Assembly did not accept the proposal for a Decision on additional monthly contributions to the Electricity System Security Fund (PSSF) from electricity producers, submitted by Ramadan Atalay, Stanislav Anastasov and Fatme Ramadan. In particular, the proposed Decision proposes that certain electricity producers (in particular from RES with 500 kW and over 500 kW) pay additional contributions only from the revenues realized on the Bulgarian Independent Energy Exchange (IBEX) for the period April 2022 - December 2022. No contribution is foreseen under this mechanism for producers using coal and / or natural gas as their primary fuel. During the discussion, it became clear that this also covers biogas producers.

The representatives of "We continue the change", BSP and "There is such a people" in the Energy Parliamentary Committee asked a number of questions about how exactly the tax rate was chosen, why only RES producers were chosen and not all and even expressed suspicion of violation of the Constitution. They also doubted that the proposed mechanism could only be the subject of a parliamentary decision. The opposite opinion was shared by the GERB MPs, who voted in favor of the proposal. MP Atalay seems to have expected such a development and said he was ready with a bill to introduce. During the discussion, sharp remarks were made between the deputies and the chairman Radoslav Ribarski made several remarks.

I think that the decision presented by me and my colleagues is late enough. We waited. The government was urged by the rostrum to take those steps that are necessary to reduce inflation by taking certain actions to raise those funds that are needed to compensate for business, Atalay said in presenting the decision. We also waited for the compensation of the municipalities and the social homes. "I think the government should have found an opportunity to propose a solution," Atalay said. He pointed out that the proposal is aimed at those sources for which it is not necessary to buy and provide raw materials.

The decision you have read states that the producers of electricity from RES (as required by law) of 500 and over 500 kW of the difference between the achieved average monthly market price "day ahead" of the IBEX platform and the determined estimated market price by groups, depending on the primary energy source, to pay additional monthly contributions to the PSSF.

Excluded from this mechanism are producers of electricity using coal and / or natural gas as their primary fuel, as well as biomass, because they do not make excessive profits due to the costs associated with greenhouse gas emissions and the price of natural gas. The proposed solution provides for the funds to go to the PSSF, "so that they cannot go to buy grain, but to cover those funds that are needed and described in the activities and work of the PSSF," Atalay said.

According to him, if the decision had been made in time, inflation would not have been 10%, as it is now, but 5%. He expressed his conviction that despite the fact that RES producers would not want to be deprived of their funds, they are still internally convinced of the need to support society.

Atalay expressed confidence that the decision should enter into force as soon as possible and be implemented in order to raise the necessary funds.

However, it turned out that the deputies did not agree. In principle, they agreed that the proposal was correct. A number of questions were asked. However, we remind you that most of them are regulated in the current energy law.

The MP from "We continue the change" Vasil Stefanov, as he put it "from a legal point of view", expressed doubt that the proposed Decision is unconstitutional. In particular, according to him, it does not comply with Art. 60 of the Constitution of the Republic of Bulgaria. "In the first place, the project specifies specific producers to pay additional monthly contributions to the PSSF, which can be defined as a fee or a tax." However, Article 60 of the Constitution of the Republic of Bulgaria stipulates that the payment of tax by citizens is to be done by law "according to their income and property".

"In this sense, regardless of whether it is a tax or a fee, they must be legally established, and you know that the decision is not normative. Another problem I see is the retroactive effect of the fee or tax, as we define it and try to introduce it, "said Stefanov. According to Stefanov, the EC's REPowerEU for energy independence and in particular deadlines is also a problem. Referring to the stated reasons, Stefanov pointed out that these are the reasons why the deputies from "We continue the change" would not support this project. "The most basic is art. 60 of the Constitution ", Stefanov pointed out once again.

Ramadan Atalay was adamant that it was not in conflict with the Constitution.

Dragomir Stoynev from the BSP agreed on the need for additional payments, but according to him this cannot be done only with the Decision proposed by the MRF, but through legal changes. "It simply came to our notice then. Indeed, some sectors have made extra profits ", he stated, pointing out a slightly more side factor, for example, that the price of corn has become BGN 2,000, and" measures must be taken there "and pointed out that these profits really must be taxed. He expressed concern about how these funds would be spent by the PSSF and which producers it would cover. He also saw ambiguity regarding the determined 80% additional payments. "It must be clearly stated to whom this bill applies and who it excludes," Stoynev said. "We must move towards a law, not a solution," Stoynev said, arguing that no one knew how long the situation would last. "Overall, this decision is a good one, but it should not be a solution," Stoynev concluded, adding that it should be for all electricity producers.

Stanislav Anastasov from the MRF, for his part, reminded that the proposal does not apply to renewable energy producers who have introduced energy sites after January 1 this year. They also do not affect producers who intend to invest.

Rositsa Kirova from GERB, for her part, commented that this is a crisis measure that will enable the over-profits of electricity producers to support society. "If this is a crisis measure, I think we should support this proposal. However, with this we also take from the profit of Kozloduy NPP, she stated. But she was clear that she would support the proposal. She reminded that there is a deadline in the Decision.

Vladimir Tabutov from "We continue the change" even expressed doubts that this decision may hinder the implementation of the objectives of the EC for RES. According to him, "EWRC is the institution that can determine whether a producer has a surplus or not", based on approved business plans.

Vladislav Panev from PG "Democratic Bulgaria" expressed concern that the proposal for a Decision introduces economic uncertainty. "If you invest in a new project now and see how the conditions change, you will obviously decide that in this country the conditions of your project can also change in 10 years," he said. Panev added that it is good that the new projects are according to market rules - over 30 kilowatts there are no subsidies and economic aid. However, we must keep in mind that the change in taxation through Decisions of the National Assembly in one reading introduces economic uncertainty not only for the entities to which this decision applies, but for the entire business environment, "he said. In this regard, as he put it, there may be a solution, but only if it goes through law.

Deputy Minister of Energy Plamen Danailov, for his part, expressed the opinion that this proposal should be supplemented. Moreover, it became clear from his words that such a move would be necessary given the fact that compensation for business for April has been provided, but we must already think about the month of May and beyond, and BEH is experiencing difficulties.

As Danailov pointed out, in Bulgaria the price for household is the lowest in Europe - 55 euros. "It simply came to our notice then. Separately, the price for all non-household consumers after compensation for the entire period is within about BGN 230 per MWh - the average price for the period from October to February inclusive. To this end, almost 3 percent of Bulgaria's gross domestic product has been allocated to compensate.

Separately, the EUSF is currently used to compensate for high electricity prices. In this regard, the Ministry generally supports the replenishment of the fund so that compensation can continue if necessary. In this regard is the decision of the EU - compensation to continue as long as necessary. There is no time limit in the decision, "he said.

However, regarding NEK, because it is included in this draft decision, Danailov said that the company is in good financial condition, but has accumulated billions of deficits from previous periods. "At some point, they need to be compensated," he said. This, he said, is a good time for such a step.

At the same time, he pointed out that "it is not clear how RES with zero premium and above are treated. Separately, HPPs with more than 10 MW are in a completely different mode and therefore there are many questions about how (the Decision) will affect the BEH companies. "Yes, the nuclear power plant has a very low cost, but it does not calculate a number of costs, including decommissioning, and it is extremely expensive," he said.

"With regard to all the above, the Ministry of Energy proposes to further develop the proposal and make it possible to determine the percentage of the contribution, which should be one month, or rather quarterly, because it is easier, or this percentage should be determined by EWRC depending on the market prices and with equal treatment of all manufacturers by technology, differentiating the contribution depending on the technology and the necessary costs for maintenance and operation. To clarify the need for these funds and whether there is no need for legal changes for the PSSF, "said the Deputy Minister. Comparing with a similar decision in Romania, he pointed out that it is not income that is taxed there, but profit.

From the words of the Deputy Minister of Energy, it became clear in practice that such a decision takes place.

"Compensation is until April. A decision must be made in April on how to proceed from May onwards. One of the possibilities is to continue the compensations, but it is difficult for BEH to provide the funds on its own without additional help from the state budget or from other participants in the energy market, "Danailov said.

However, the representatives of the RES sector, as well as ATEB, disagreed with such a decision. However, as it became clear, the government is also thinking in the direction of Ramadan Atalay's proposal, and a solution is certainly forthcoming.