Bulgarian power distributor EVN has warned about a looming 4% increase in electricity prices which would be necessary to compensate costs arising from the purchase of renewable energy.

According to the power distributor, which supplies electricity to southeastern Bulgaria, the electricity  system is plagued by a shortfall which needs to be covered.

At the same time, the former Chair of Bulgaria's State Commission for Energy and Water Regulation (DKEVR), Angel Semerdzhiev, suggested last week that electricity prices were very likely to decrease by 1-2% from July 1, 2013.

Jorg Sollfelner, Regional Manager of EVN Bulgaria, told journalists Thursday that a special fund for compensating expenses could be set up to prevent a power price hike in July 2013 for the same reason which caused the 13% power price spike in 2012.

Sollfelner, as cited by the Bulgarian Telegraph Agency (BTA), explained that the fund would collect revenues from the ''green surcharge'' and half of the revenues from the sale of CO2 emissions.

He explained that the idea for the Fund has been discussed at the Confederation of Employers and Industrialists in Bulgaria (CEIBG) and the Bulgarian Federation of Industrial Energy Consumers (BFIEC).

The General Manager of the power distributor informed that the costs for purchase of green energy amounted to around BGN 760 M, of which around BGN 300 M were compensated by the current tariffs,  while the remaining part was to be compensated by the end-suppliers, i.e. CEZ, EVN and Energo-pro and the state National Electric Company .

He noted that a sum of at least BGN 420 M in uncompensated expenses would pile up in the period July 2012 - July 2013.

The General Manager of EVN Bulgaria suggested that the fund could get at least BGN 200 M from sales of carbon emissions and from the green energy surcharge.

He emphasized that the creation of a compensation fund was just one option and the Bulgarian government would have to decide how to compensate the green energy purchase costs.

Sollfelner argued that the idea to transfer the burden of these expenses onto end-consumers was a bad option, adding that this could entail a power price hike by at least 4% only because of the renewable energy surcharge.