The Energy Poverty Ordinance is now public without knowing who will manage the process

Raya Lecheva

Elderly people in old housing, families with children under 18 in small housing, families with disabled people, these are only a part of over one billion poor households. What are the criteria for determining energy-poor households in our country, what will a special information system for the energy-poor do, are some of the questions answered by the long-awaited regulation on energy poverty. This is one of the most important documents for people with low incomes. This will be most pronounced after the increase in the price of energy for consumers with the liberalization of the market in two years.

But there is no answer to the question of who will manage this process. All the expected changes and the definition are up in the air without giving an answer as to who will manage the information system, how this process will be financed, who will inform people. The document was published yesterday for public discussion, and the deadline for opinions on it is November 8 - just two weeks.

The expectation is that the process will be managed by the Ministry of Labor and Social Policy, but it does not want or does not have the capacity to do so, say experts. Just a few days ago, the European Commission made a recommendation that, due to its complex nature, energy poverty should be considered as a multidisciplinary problem requiring a multisectoral approach. But in the document, such a clear vision is absent, isn't it a function of just getting money from Brussels for another reform under the Recovery Plan, which we are imitating once again?

According to the economist Teodora Peneva, this should be a supranational agency attached to the Council of Ministers. But our country has created so many agencies that do not work that the worry of the same happening here is huge. Peneva participated in the preparation of the definition, but she is adamant that without an institution to manage the process and funding, this will be another document that will mislead the population and the European Commission that Bulgaria is doing something in this direction. But people will see all this on their accounts when the market is liberalized. Will there be people to blame when they cannot meet their needs because of the high energy prices, Peneva commented to 3eNews.

It is one of the most important documents for people on low incomes after the increase in the price of energy for consumers with the liberalization of the market in two years.

What is important, however, is that the definition is clear.

Energy poverty is defined in relation to the disposable average monthly income of the household members, the cost of typical energy consumption and the energy characteristics of the dwelling.

A vulnerable household customer is, for example, a person over 65 years of age, living alone or with other people over 65 years of age, with a disposable income after reduction of energy expenditure less than or equal to the officially declared poverty line.

Vulnerable are people with 50 and over 50 percent permanently reduced work capacity after reduction with energy expenditure less than or equal to the officially declared poverty line.

These are people who receive monthly social benefits and/or targeted heating assistance under the Social Assistance Act for the previous heating season.

Disposable income per person net of energy expenditure is obtained by subtracting the typical household energy expenditure from the sum of household members' disposable income, and dividing the resulting income by the number of household members divided by 12.

The Ordinance uses the information that residential buildings in Bulgaria are divided into five types with a specific annual consumption of primary non-renewable energy according to the scale of energy consumption classes of residential buildings. For example, type 1 buildings are residential buildings built before 2010 that have not been completely renovated with a specific annual primary non-renewable energy consumption of 400 kWh/m2.

It should be borne in mind that by 2050 the country must renew all buildings in the country, and those with the worst characteristics are in class E, F, G are 91% - class E - 39%, class F - 34% and class G - 18%.

The annual cost of final energy per unit of area by building type is calculated on the basis of a specific annual cost of non-renewable primary energy of the building (kWh/m2), multiplied by a generalized factor accounting for extraction/production and transmission losses. This coefficient will be determined every year by the Agency for Sustainable Energy Development.

How many people live in a certain area will be important for determining energy poverty - one person per 40 km, two persons per 50 km m, four persons per 70 km m, 5 persons per 80 sq m. If elderly people, disabled people and children under the age of 18 live in the dwelling, this will also be important when defining a family as energy poor.

The regulation states that address registration, number of people in the household, as well as medical documents must be established, but from which structure - existing or new - is not clear. We only understand that the determination of vulnerable customers for the supply of electricity is carried out annually based on the data provided by the Social Assistance Agency by 30 October.

This is unlikely to concern most people, but it is important that they know who to contact.

Information system without structure

An information system is being created and there is talk of an information system behind which there is no structure to manage it, the document makes clear. But this structure will also have to manage the funds from the Social Climate Fund, which can be around BGN 3 billion to compensate for high energy prices, but for families who cannot afford it or energy-poor households.

Let's say again, the estimated number of energy-poor households in our country will be determined on the basis of statistical data on the average number of persons in a household for the country as a whole, provided by NSI, the typical area of a household and annual final energy consumption for residential buildings with the worst energy characteristics.

It is important that the expected number of households is provided annually by NSI to the Executive Director of the Agency for Sustainable Energy Development by March 1 and is published in the annual analysis of the state of energy efficiency in the country under the Energy Efficiency Law. But we still avoid saying who will have the responsibility to carry out this horizontal and supra-departmental task. This could also be a directorate in the Ministry of Labor and Social Policy, it could be one or several people, but knowing who carries will collect and manage the information, commented Peneva.

A doubling of Europeans with the lowest incomes, who cannot keep their home warm enough

The latest EC figures, published in the latest recommendations to Member States, show that in 2022, approximately 40 million Europeans, or 9.3% of the Union's population, were unable to keep their homes sufficiently warm. This is a sharp increase compared to 2021, when 6.9% of the population was in the same situation.

The proportion more than doubled for people in the lower income brackets. These figures show the seriousness of the situation and the need for policymakers to take action to tackle the root causes of energy poverty within a fair and just transition that ensures no one is left behind.

EC recommends interdepartmental management and the establishment of energy poverty observatories

That is why the Commission recommends updating the Integrated Climate and Energy Plans to promote fairness and provide a stable framework for reducing energy poverty. Energy poverty management should enable inter-agency and vertical cooperation between national, regional and local governance structures, as well as wider stakeholder consultation.

The Commission defines a set of 13 energy poverty indicators from which Member States can choose those appropriate to their context to identify energy poverty. The Commission recalls the important role of the Social Climate Fund, created to provide funding to Member States to support vulnerable households, including households affected by energy poverty. But also, vulnerable micro-enterprises and vulnerable transport users who are particularly affected by energy and transport poverty. This includes supporting investments to increase energy efficiency and access to zero- and low-emission mobility and transport.

By June 2025, countries must have social climate plans

To receive funding, member states must present their social climate plans by June 2025. They should build on their 2024 updated national energy and climate plans, the Commission says.

It is not by chance that such a serious role is given to energy efficiency and the possibilities of renovating housing, because it is the energy-vulnerable households that will receive priority for funding under the rehabilitation programs. Currently, the proposal of the Deputy Minister of Regional Development, Angelina Boneva, is to issue vouchers for energy-poor households. With them, they will be able to provide their share of the rehabilitation. But whether this idea will be realized remains to be seen. Still, for part of the industry, it sounds rather populist, but useful.

The EC is introducing something new, talking about energy poverty observatories, bringing together all key actors to achieve a cross-sectoral understanding of the energy poverty situation at all levels. It is thus a multidisciplinary management tool that can serve as a flagship project for other policy areas. Such observatories can also provide a platform for stakeholders to participate in debates at national and local level, providing key expertise on the problem of energy poverty and proposing policy initiatives, the Commission believes. The Commission recommends encouraging consumers to produce their own energy, as well as encouraging energy communities.

Rehabilitation of the housing of the poorest will be a priority

Prioritizing the renovation of buildings with the worst energy performance provides an opportunity to directly address energy poverty, as people affected by energy poverty and vulnerable people tend to live in such buildings. This applies to providing opportunities to replace heating appliances and to use smart meters that will allow consumers to monitor their actual energy consumption throughout the day. Such systems can help identify people in a state of energy poverty.

And Bulgaria postpones any reform until the last moment and it is adopted too quickly without being able to be discussed in detail. The deadline for submission of opinions is November 8. Surprisingly or not again too short and again around public holidays.