Bulgaria’s state-owned power utility will close the year at a loss of BGN 350-400 M if the new electricity prices enter into force as of July 1, according to Petar Iliev, CEO of the National Electric Company (NEK).

NEK says in an official media statement that the new electricity tariffs are illegal.

NEK opposes the 4.3% reduction from BGN 125.32/ MWh to BGN 119.87/ MWh in the price at which NEK sells electricity to distributors to suit the needs of households.

According to NEK, Bulgaria’s’ Commission for Energy and Water Regulation (KEVR) has presented a price model which has not been presented for discussion.

NEK claims that the model put forth by KEVR mixes revenues from sales on the regulated market (for household consumers and small companies) and from free trade in electricity.

NEK also draws attention to a violation of the principle that KEVR only regulates deals on the regulated market and is not authorized by law to determine the prices and quantities of electricity for the free market.

NEK, as cited by econ.bg, declares the new pricing scheme illegal, stressing that it does not agree with the Energy Act.

During an open meeting of KEVR last week, Petar Iliev warned that the mistakes in the pricing scheme would increase the operating deficit of the state-owned power utility from a rate of around BGN 1 B to BGN 1.778 B by June 30, 2016.

NEK proposes to the energy watchdog a number of measures that would improve the condition of the company, one of them being that KEVR set not only annual but also monthly quotas for the electricity produced for household needs, another one being to include the cheap electricity produced by the Maritsa Iztok 2 thermal power plant into the household mix, and the third one to further reduce the purchase price of renewable energy produced over the quotas approved by the watchdog from BGN 119.87/MWh to BGN 79.66/MWh.