EWRC: The rise in electricity prices in the second half of 2022 has become a challenge for the economy

The record rise in the prices of energy resources in the second half of 2022 has become a challenge for both the Bulgarian energy industry and the national economy. This is stated in the annual report on the work of the Energy and Water Regulation Commission (EWRC) in 2022.

The Commission's priority in the Electricity sector in 2022 was to minimize the consequences of the drastic surge in electricity and natural gas prices caused by the military conflict and the COVID-19 pandemic, the Regulator's report states.

The economic and geopolitical consequences for Bulgaria and Europe necessitated the need to provide alternative suppliers of energy resources.

To meet the challenges, the Commission has taken a number of important steps. Amendments and additions were adopted to the Rules for trading in electricity and to the Rules for the operation of an organized exchange market of electricity, which reformed the balancing services market. A 15-minute settlement interval and 15-minute intraday trading products were introduced.

The changes led to a fairer distribution of the costs of imbalances between commercial market participants and to achieve energy supplies at minimum costs. The new regulatory framework contributes to the fulfillment of the EU's main goal in the field of electricity - the creation of a fully functioning and interconnected internal energy market, contributing to the security of energy supplies, increasing competitiveness and ensuring the possibility for all consumers to purchase energy at affordable prices.

Electricity tariffs for the regulated market in 2022 remained without significant change - prices for household customers increased by 3.4%. In order not to create financial losses for balancing service providers, the Commission continued to apply the approach adopted in 2021 when determining the threshold price for concluding transactions on the balancing energy market for downward regulation.

In the Heat and Power sector, the Commission made efforts to limit the inevitable increase in heat energy prices in the 2022-2023 season. This goal was achieved despite the drastic increase in the price of the main fuel - natural gas, and greenhouse gas emissions. An aggravating factor was the accumulated uncompensated costs of the heating companies of over BGN 503 million, due to the moratorium introduced by the National Assembly on the change of established prices for the period 2021-2022. Regardless, the regulator managed to limit the increase in the price of heat energy for households users up to 29.73% on average for the entire country. This was mainly achieved through the preferential electricity prices of the heating companies and limitation of their cost components for fuel and heat energy transmission. With the reduction of VAT on heat energy from 20% to 9%, the real price increase was reduced to 17.84%.

Regarding the received complaints, the Commission observes the statutory deadlines for their examination. In 2022, five planned inspections of companies in the "Electricity" sector were carried out - "Electricity Distribution Networks West" EAD, "Electricity Distribution South" EAD and "Electricity Distribution North" AD. District Heating-Sliven EAD, District Heating-Gabrovo EAD and EVN Bulgaria District Heating EAD were the subject of scheduled inspections in the "Heat Energy" sector. Extraordinary inspections of licensed companies were also carried out following reports from institutions and citizens about the deteriorating quality of the services provided. 1,539 complaints were received in the "Electroenergetics" sector - 1,354 of them were followed by administrative proceedings. In the "Heat Power" sector, 44 complaints were received under the competence of the Commission.

In 2022, EWRC's efforts in the Natural Gas sector were aimed at securing the necessary quantities for the country's needs and controlling the sharply rising prices of natural gas due to the suspension of supplies from Russia. After the suspension of deliveries under the long-term contract with "Gazprom Export" in April 2022, our country began to provide alternative routes and supplies of natural gas. In the conditions of a crisis with difficult supplies and high prices, the introduction of the intersystem gas pipeline IGB "Bulgaria-Greece" into commercial operation on October 1, 2022 was of key importance for ensuring the most favorable prices for Bulgarian consumers. EWRC made its significant contribution in this direction by adopting important regulatory decisions in an extremely short period of time, which fulfilled the necessary requirements and created the legal possibility for the start of the interconnector.

In 2022, 31 traders were licensed, making their total number reach 75.

In 2022, the "Waterworks Services" sector began the new 5-year regulatory period 2022-2026. The Commission previously adopted instructions for waterworks operators on the application of the regulations to the WSRCU, the groups of operators, the quality indicators, the rate of return, the rules for regulatory accountability. The review of business plans in 2021 was delayed due to the adopted Moratorium on water service prices, and in 2022 the Commission adopted decisions approving 30 water service operators business plans and water service prices.