Bulgaria’s state-owned National Electric Company (NEK) has reported a loss of BGN 425 M for the first nine months of 2014.

NEK’s loss has increased by 275,2% year-on-year, according to a financial report of the company, as cited by econ.bg.

At the end of June 2014, NEK reported a loss of BGN 250 M.

NEK says that the power price hikes introduced on July 1 and October 1 will not suffice to stabilize the company.

NEK blames the poor results on the pricing policy of the State Commission for Energy and Water Regulation (DKEVR), the obligation to buy larger quantities of expensive electricity, and the increasing number of consumers switching to the free market.

“In the first nine months of 2014, the company keeps functioning against the backdrop of unfavorable pricing and economic conditions, at the same time absorbing all financial drawbacks and shouldering the entire commercial risk on the electricity market,” NEK states.

The 21.6% year-on-year decrease in the output of hydropower plants has also contributed to the poor condition of the company.

According to the report, Bulgaria is plagued by a surplus of electricity and hydropower plants are unnecessary.

NEK reports a 4% year-on-year decrease in purchases of electricity.

NEK informs that the surplus of electricity forces it to pay a higher price to US-owned thermal power plants AES-3C Maritza East 1 EOOD and Contour Global Maritsa East 3.

In the case of a surplus of electricity, when the two TPPs are not functioning, NEK is obliged to pay them for their availability.

According to the financial report of NEK, the purchase of electricity produced by the Kozloduy nuclear power plant, which is cheaper, drops by 21.8%.

As a result, the price of electricity on the regulated market increases, causing the number of companies switching to the free market to jump by 75% on the year.