This month, every company in Bulgaria, received increased electricity bills, which have doubled compared to the same period last year.
The situation is similar across Europe, but compensation mechanisms are applied there. In Bulgaria, the caretaker Government continues to announce possible emergency measures for commercial consumers, but no progress has been made so far. In this context, the Bulgarian Industrial Capital Association (BICA) has already made a concrete proposal.
According to the proposal, the state should cover 35.8 euros for every MWh of electricity purchased on IBEX in the next six months. That would cost about 430 million euros. These funds could be provided by electricity producers, who are currently making big profits.
BICA points out that the average price of electricity for baseload in July 2021 was 94.9 euros/MWh, and for August – 111.6 euros/MWh, reaching 208 euros/MWh in peak hours. The average price in September (until 21 September) is 122 euros/MWh. At the same time, the reference price of electricity set by the Commission for Energy and Water Regulation is only 60.8 euros/MWh.
Electricity futures on the Bulgarian market for the fourth quarter of this year amount to 164.65 euros/MWh, and for the first two quarters of 2022 – 166.6 and 90.2 euros/MWh, respectively. Based on that, BICA estimates that the average price in the next six months will be 132.6 euros/MWh. This means that all commercial consumers in Bulgaria will be subject to a price shock of 71.8 euros/MWh in this period, above the official estimates of the regulators.
BICA stressed that the failure of the Bulgarian Government to take decisive measures in an adequately short period of time will lead to a great loss of competitiveness of the Bulgarian economy. The Association insist on partial compensation of these costs in the amount of 35.8 euros/MWh for all commercial consumers. Expected consumption in the sector in the fourth quarter of this year and the first quarter of next year should reach 12 TWh – which means that the total budget for compensation would amount to 430 million euros.
It is unclear whether the caretaker Government has the authority to approve such a scheme. However, without urgent measures, many companies will be forced to stop working, which will create conditions for the economic crisis.
