Bulgaria's Three Power Distributors Face Bankruptcy - Report
The three power distributors operating in Bulgaria, CEZ, EVN and Energo Pro, face de-facto bankruptcy due to the decrease in electricity prices in effect since March 2013, the new rules for purchasing renewable energy, and the obstructions to the reimbursement of expenses by the State Commission for Energy and Water Regulation, DKEVR.
According to reports of Sega daily, the Confederation of Independent Trade Unions in Bulgaria, CITUB, has warned that potential job losses in the mining sector caused by the priority purchasing of renewable energy may cause people to break solar panels and wind turbines.
A sitting of the parliamentary energy committee revealed that the situation at EVN was most problematic as the company had run up losses of nearly BGN 300 M since June 2012.
"Energo Pro has accumulated losses of BGN 15.7 M since the beginning of 2013, and the sum is expected to reach BGN 143 M by end-2013," said Plamen Stefanov, Chair of the Management Board of Energo Pro Sales AD.
Meanwhile, CEZ is said to be facing a loss of nearly BGN 200 M.
The reduction in electricity rates introduced in March is expected to result in losses of BGN 35 M a year for EVN and BGN 24.6 M for Energo Pro.
Back in March 2013, EVN argued that it was facing the prospect of bankruptcy due to the changes to the regulations governing purchases of renewable energy introduced in the summer of 2012.
Joerg Sollfelner, CEO of EVN Bulgaria explained that the three power distributors had started running up losses after DKEVR amended the price formation model.
Prior to the changes, power distributors bought renewable energy, sent the invoices to Bulgaria's National Electric Company, NEK, and were reimbursed for the costs.
However, the practice landed NEK in dire straits, causing it to amass huge debts as a result of the fact that the green energy output substantially exceeded the forecasts.
Under the new methodology, NEK pays power distributors on the basis of forecasts, while the risk of connecting excessive renewable capacity to the grid is at the expense of EVN, CEZ and Energo Pro.
Although compensations are possible at a later stage, the three power distributors expressed fears that such a practice could lead to serious losses and disruptions to electricity supply.
Energy Pro admitted that it lacked the money to implement its investment program.
"We are in a state of bankruptcy, it is to be declared any time now. The investments we are making in the grid, are at the bare minimum," said Stefan Abadzhiev from Energo Pro.
Abadzhiev noted that the company had failed to pay the social bonuses to its employees, prompting growing discontent among them.
EVN, CEZ and Enrgo Pro, however, declined to specify the extent of a power price hike from August which would suffice to compensate them for their losses.
According to CITUB, Bulgarian miners, who are also dissatisfied with the changes, have expressed readiness to stage protests and to even damage wind turbine blades and solar panels.
The reason for their anger is said to be the fact that the new methodology yet again envisages priority purchasing of expensive renewable energy, which means that in cases of reduced electricity consumption, restrictions may be imposed to the output of all other types of energy plants except for green energy plants.
Bulgaria ended up in a similar situation a few months ago, when the overproduction of electricity against the backdrop of low consumption resulted in restrictions to the capacity of the Kozloduy nuclear power plant and a part of the miners were sent on forced leave.
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