14.03.2024

AOBR: We categorically oppose the proposal to restore the price "obligations to society" in the amount of at least BGN 30 per megawatt hour

The Association of Bulgarian Employers' Organizations (AOBR) is against the proposal to restore the price "obligations to the society" in the amount of at least BGN 30/megawatt hour (MWh) in connection with a growing shortage of funds in the "Security of the Electricity System" Fund (FSES ). This is stated in a letter of the Association, sent to the Minister of Energy in resignation, the Chairman of the Energy Commission of the National Assembly, the Chairman of KEVR and the Chairman of the Board of FSEU, with a copy to the Minister of Finance.

"We categorically oppose such proposals and are determined to prevent such a decision by all means permitted by law!", the employers state in their letter, signed by Kiril Domuschiev, rotating representative of the AOBR, on behalf of the members of the organization AIKB, BSK , BTPP and KRIB.

"Over the past week, at a public event by the Chairman of the Energy Commission and the Chairman of the Energy and Water Regulatory Commission (EWRC), alarming information was presented regarding a growing shortage of funds in the Power System Security Fund (PSES) . We find inadequate the proposal to recover the cost of "obligations to society" in the amount of at least BGN 30/MWh.

The average price of the day-ahead market segment of BNEB EAD for the period March 1-12, 2024 is BGN 133,56/MWh, and for the period January 1-March 12, 2024 it is BGN 152,86/MWh. Restoring the 'duty to society' price in the proposed order would mean a 20-23% increase in the energy price excluding excise duty, VAT and balancing costs and network prices. At the same time, the day-ahead market price in our country has been one of the highest in the European Union since the beginning of the year.

Against this background, a negative index of industrial production is reported for the 13th consecutive month, and in some industries since the beginning of the calendar year there has been a decline in orders of the order of 20-25% compared to the third and fourth quarters of 2023. In as a result, any additional energy expenditure will drastically worsen the competitiveness of the Bulgarian economy, which is currently being crushed by high gas prices (Bulgargaz sells for the month of March at prices 24% higher than the TTF quotations and 42% more higher than those of "Gas Hub Balkan").

At the same time, from July 1, 2024, an unclear "liberalization" of the electricity market for domestic consumers is coming, and the amount of compensations to be paid to final suppliers is unknown. This will essentially continue the vicious practice of cross-subsidizing the free market to the benefit of residential consumers.

In conditions of economic slowdown throughout the European Union and a drop in orders for Bulgarian enterprises, even a minimal increase in energy costs will lead to serious consequences for the Bulgarian economy. There is no doubt that both the recovery of the "obligations to society" price and the increase in the traders' contributions to the fund will be paid by the enterprises, i.e. from those working in the real sector.

The increase in the costs of electricity for business users will explode the inflationary processes and will put Bulgaria's acceptance into the Eurozone at significant risk. Therefore, we express our bewilderment that the first measures that are proposed are to increase the revenues in the FSES without looking for opportunities to optimize the fund's expenses.

We also categorically oppose the speculation that the shortfall in the FSEU is due to the payment of compensations to non-domestic end users. These statements do not correspond to the facts. We categorically protest against the planned significant increase in the cost of electricity for enterprises, which is aimed only at continuing the cross-subsidization of the prices of household consumers and stifling the Bulgarian economy. We also express our disappointment at the fact that when announcing these intentions, the position of the directly affected party - the Bulgarian business - was not sought. We insist on an urgent meeting," the AOBR letter concludes.