Energy producers and traders warn of risk of energy catastrophe if rate-cutting bill passes as it stands

In recent days, a number of businesses have announced that they have sent letters to the institutions expressing their strong disagreement with a new law being prepared to stop the rise in energy prices.

The purpose of the law is to transpose into Bulgarian legislation an adopted European directive to deal with high energy prices. Several companies expressed concerns that the bill distorts the guidelines given by the EU. According to them, the European Commission excludes coal and gas producers from the planned additional taxation, while the Bulgarian government plans to tax them with additional burdens. The companies warn that this would lead to a deterioration of liquidity and rapid bankruptcy.

Strongly affected by the measures planned by the Bulgarian government will be the electricity traders, who have also sent letters to several ministers and institutions expressing their concerns.

It turns out that the main measure specified in the European regulation to deal with high prices, namely the reduction of the gross consumption of electrical energy, is not even present in the Bulgarian draft law.

Electricity traders disagree with the proposal to make earmarked contributions by fixing a margin of 5% for wholesale transactions and 15% for transactions with end customers, since this margin is not sufficient to cover the costs accompanying each transaction – for balancing, administration, salaries, credit risk, costs for cross-border capacities and other costs for servicing the transactions.

We also recall that electricity traders took on the main financial and administrative burden related to the redistribution of the amount of compensation for businesses, without being compensated for the costs incurred.

According to electricity traders, the adoption of the law in this form will lead to a restriction of competition due to the withdrawal of market participants and problems in the free market, from which a drastic reduction in exports and a worsening of the energy situation in the EU will follow, as well as the shutdown of production capacities. According to experts in the industry, the bill in its current form will move the country away from the goal of reducing energy prices and energy independence.

Romania has been implementing the regulation in a similar way for almost 2 months now and the effect has been the withdrawal of almost all foreign traders, a drastic drop in exports and a lack of interest from suppliers to serve end customers.