The Energy Commission is proposing that the government bring back the Business Compensation Program for high electricity prices

Businesses will be compensated for high electricity prices, which have risen significantly in recent days. The compensation ceiling is expected to be at an average monthly price of BGN 180/MWh. This became clear during the meeting of the Energy Commission of the National Assembly. In effect, this is a resumption of the High Electricity Business Compensation Program introduced during the energy crisis with the difference - a lower compensation ceiling.

The deputies decided to instruct the Council of Ministers to adopt a Program for providing compensation to non-domestic end customers of electricity.

In practice, the deputies combined the proposals of the people's representatives from "Vazrazhdane" and "GERB-SDS" into one.

The program is expected to run from July 1 to December 31 this year, subject to state aid rules. The compensation is expected to be in the amount of 100 percent of the difference between the real average monthly exchange price of the "Day Ahead" segment of the "Bulgarian Independent Energy Exchange" for the relevant month and the base price of BGN 180/MWh for non-residential end customers, regardless which network they are connected to. That is, compensation for businesses will be paid at an average monthly price of over BGN 180/MWh, but not at an average monthly price of BGN 175/MWh.

However, the Energy Committee will refine the text on Friday morning at an extraordinary meeting, where differences should also be ironed out, and it is expected to be brought to the plenary immediately.

The Minister of Energy, Vladimir Malinov, is committed to a quick reaction of the department's team, given the fact that such a program was implemented only recently. He promised that a proposal to include this item in the agenda of the Council of Ministers will be submitted on Wednesday, following the procedure for notification by the European Commission.

The decision of the energy commission is in response to a call from the business, whose representatives attended the meeting and openly raised the question of compensation.

During the meeting, Minister Vladimir Malinov assured that the team of the Ministry of Energy has been working since the beginning. "First, attention should be paid to the factors that led to these deviations in electricity prices, which have been happening since the beginning of July in Bulgaria. We have not stood idly by during this period," he said, adding that an energy ministry team immediately began an analysis that concluded the situation was "entirely due to external factors."

According to Minister Malinov, there are three main factors – high temperatures, increased demand for electricity and imports to Ukraine, as well as some temporary repairs, which led to the creation of bottlenecks for imports to our market.

"In order to analyze this period, it was necessary to know what the factors were. Our analysis is that this increase in prices is entirely due to external factors, independent and unaffected by the actions of the Bulgarian energy industry and the enterprises that are state-owned and that are structurally determining in the production and trade of electrical energy.

The three main factors that the team said had a strong impact were: high temperatures (whether due to climate change or some temporary wave, but a major factor). Secondly, the external factor that also influenced is also related to the increased demand and import of electricity in Ukraine in view of the Russian attacks and a change in Russia's strategy in terms of attacking energy generating facilities and reducing the ability of Ukraine to produce energy, with which to satisfy its own consumption. And thirdly, but not least – these differences, which are in Central and Western Europe and, respectively, on our belt, starting from Greece, passing through Bulgaria, respectively, Romania-Hungary, are due to some temporary repairs, but also to the creation of the so-called "bottleneck" for technical capacity to transfer electricity from Central Europe to our markets", According to the minister, even if some of the factors are overcome in the long term, two of them will remain, "since the forecast is that in the winter consumption, or the demand for electricity on the Ukrainian market will increase several times". "I don't see the possibility of new grid interconnectors being built, increasing capacity and taking advantage of, for example, cheap nuclear power produced by France or price signals to equalize this 'single market' in terms of prices electricity," said the energy minister.

Vladimir Malinov explained that in order to proceed to compensations, it is necessary to see the income part as well, i.e. the possibilities of the Power System Security Fund (PSSF) to ensure compensations. In this regard, he expressed readiness to support a "reasonable program for a compensatory mechanism consistent with financial resources." Dwelling again on the analysis of the ministry, Minister Malinov expressed expectation for the calming down of prices.

PSSF Chairman Dian Chervenkondev, for his part, explained what the revenues in the Fund are made of and what they are spent on, stressing that they mainly come from the state energy sector. According to him, given the proposed compensation at a ceiling of BGN 180/MWh, the projected costs will be BGN 230 million, and if the decision is accepted to take effect from July 1, BGN 160 million will be collected, but there are revenues of BGN 471 million, which can be used for compensation. "PSSF has an opportunity to compensate businesses," Chervenkondev said.

Before that, in the framework of the meeting, the chairman of AICB Vasil Velev stated that if the business does not receive enterprises, it will start closing enterprises. He argued that compensation does not raise inflation, on the contrary, it lowers it. He also insisted that "these compensations should be quick, simple and easy", recalling the EU's assessment that the Bulgarian compensation program for 2022-2023, which was in place until recently, was the best. “Those who criticize her for being on kalpak, I mean she is not on kalpak but on MWh. And so it should buzz,” he said. "The price for a household is BGN 127. 69 cents. It is regulated, for one year ahead. This is the price at which it does NOT sell to end suppliers and to it, as with us, fees, access, transmission, distribution are added. For the first half of the year, the average price is BGN 150, which is a normal price. The estimated market price of EWRC for a year ahead is BGN 173, and now, as of today, it is close to BGN 300, provided that the first two weeks were normal. That is, in just the last few days, the price went to BGN 287 until yesterday, and for us BGN 180 is a possible, fair, good limit above which non-domestic consumers should be compensated. If possible, there will be such a decision for the next year," Velev pointed out, reminding that there was such a decision for the first half of this year as well, but it was not used, as the prices were lower. He asked for quick measures and the implementation of the program from July 1, so that there are no closed enterprises.

Evgeni Ivanov from AOBR defined the compensation level of BGN 180/MWh as good.

The chairman of the BSK Dobri Mitrev also expressed his support for the proposal made, and the deputies, regardless of their political differences, to stand behind Bulgaria being a stable country.

"There are enterprises with continuous production," pointed out the Chairman of the Board of BFIEK Konstantin Stamenov, emphasizing that there are hours of the day when the price reaches BGN 2,000/MWh. This has caused some of the enterprises to limit production. Konstantin Stamenov did not stand behind a specific figure, but behind the need to define a compensatory mechanism for such cases.

Atanas Dimitrov of the Bulgarian Hotel and Restaurant Association, as well as his colleague Alibegov, also expressed the need for significant predictability and also stood behind a decision that would "preserve business".

The draft decision of the deputies of the energy committee, supported by 16 votes "for" and 2 "abstentions", is expected to be introduced and voted on in the plenary hall as early as Friday, July 26.