CEWR confirmed the price of natural gas for the month of January at BGN 179.33/MWh

The Commission for Energy and Water Regulation (CEWR) approved the price of natural gas for January in the amount of 179.33 /MWh, excluding prices for access, transmission, excise duty and VAT. At this price, Bulgargaz EAD will sell natural gas to final suppliers and to persons who have been issued a license for the production and transmission of thermal energy, the press center of the energy regulator announced.

The approved price of natural gas includes the component price of natural gas at the entrance to the gas transmission networks, the component for the activity "public supply" under Art. 17, para. 7 of the NRCPG and the component for compensating costs under Art. 11a, para. 2 of the NRCPG, covering the costs of "Bulgargaz" EAD for storage of quantities in the storage facility in "Chiren" in fulfillment of obligations under the Emergency Action Plan.

The commission approved the price after an analysis of the current data and documents submitted today by Bulgargaz EAD, which indicate the prices of the individual suppliers and the size of their quantities in the total mix. The regulator found that the total estimated quantity for the domestic market was provided by several different supply sources.

The price mix includes the entire agreed quantity of Azeri natural gas delivered via the "Bulgaria - Greece" interconnector/IGB/ at prices according to the current long-term contract with Azerbaijan. These quantities cover about 27% of the country's consumption and are of key importance in achieving favorable prices for the blue fuel.

After organizing a tender procedure for the whole of 2023, "Bulgargaz" concluded three contracts for the supply of liquefied natural gas (LNG) with traders from the region for the month of January.

The company has also concluded a contract for the supply of natural gas at the entrance of the Bulgarian gas transmission network.

In the price mix for the month, the public supplier has also included quantities of natural gas from the "Chiren" gas plant.

The secured quantities of natural gas for the month of January cover the commitments of the public supplier to final suppliers and heating companies, as well as the quantities under bilateral contracts with industrial customers.

After the inspection of all the costs for the purchase of natural gas, the Commission adjusted the price proposed in today's application of "Bulgargaz" and reduced it from BGN 179.72/MWh to BGN 179.33/MWh. It was established that the price unreasonably included capacity costs in the amount of BGN 1,252,349.25 for the delivery of quantities of natural gas to Virtual Trade Point Bulgaria. These costs are subtracted from the total costs of the public supplier for the purchase of natural gas, which form the final price for the month of January.

With the decision to approve the price of natural gas, the CEWR also approved the estimated contingent-permanent costs of "Bulgargaz" for 2023 for the activity of public supply, which are part of the company's total costs. A weighted average rate of return on capital for the regulatory period 2023 has also been approved. The company has not been recognized for expenses in the amount of BGN 9,656 million for 2023, which have not been proven and are not directly related to the licensing activity. For this reason, these costs are not included in the formation of the price of natural gas during the year and are an additional factor for achieving lower prices.

The approved price of BGN 179.33/MWh is significantly lower than the estimated price proposed in Bulgargaz's initial application of BGN 204.14/MWh. The main reasons are the reduction of the stock indices on the international markets at the end of December, as well as the significantly lower than planned output from the gas storage in Chiren due to the mild weather. The public supplier has virtually injected additional quantities of natural gas into the storage. As a result, the average price of the stored quantities has been lowered, mainly pushed up during the summer months, when gas reached extremely high price levels on the international exchanges. The reduction in the price of blue fuel from Chiren, which is a price-forming element in the general mix, contributes to achieving a lower final price of gas for the month of January.

For heating companies, for businesses and for all Bulgarian consumers, the established price of BGN 179.33/MWh, or EUR 91.69/MWh, provides a price advantage, as it is significantly more favorable compared to the indices of the European gas markets for supplies during m. January, which are at levels of 118 EUR/MWh.

"There will be no change in heating and electricity prices from 1 January 2023, which is of key importance to consumers on a regulated market. In this way, the energy regulator helps to maintain prices in our country, since the main factor for the inflationary processes throughout Europe are the prices of energy carriers", said the Chairman of the Commission Prof. Ivan Ivanov at the open meeting held on December 30, 2022.

The decision of CEWR to confirm the price of natural gas for the month of January 2023 will be published on the website of the regulator.