First law - everything in this world has its price. Without going deep into the science of political economy, we can immediately say that the price of electricity is a secret in Bulgaria. In this country the price of electricity is a blessing, excuse, and allegation. Here the price of electricity is a bargaining chip in politics. It overthrows and supports governments and is the focus of various interests and lobbies. Mostly because during the recent years of democracy the price of electricity has not been what it should be - an objective result of the situation in the energy sphere. During the times of socialism the situation was similar because electricity production was subsidized by the state, but at the expense of other things. There is one sure thing to this very day - the price of electricity has always been lower than the cost of produced electricity and its distribution. The National Electric Company (NEC) currently sells each MWh of energy at a regulated price that is nearly 30 euros lower than the purchase price. This creates a deficit.

Resignation requests, concerns about bankruptcies and warnings about a sharp rise in prices. Such was the reaction of business when the prices of electricity, valid as of August 1, were announced. Large employers' organizations called for postponing the rise until January 1 next year. However, this could not happen, according to the law. On August 1 the new electricity prices will be a fact, said head of the State Energy Regulatory Commission, Ivan Ivanov, after a meeting of the regulator. He quoted the Official Gazette, which has published the changes in the Energy Act, reading that the previous price period ended on June 30 and it could be extended by a month, which has already been done.

When it comes to the business, which has its right to protest, we are to recall that the business in Bulgaria did not protest when in October 2014 the prices of electricity for households rose by 10%, nor did it protest in 2013, when there was a 13-percent hike. The business was not protesting in 2007, when there was also a dramatic price rise in the regulated market. However, in 2013 the government of Oresharski reduced the price, which led to more than 300 million euro of losses. Even further back in time – in the period 2002 -2005 the annual price rise was about 15 percent. After all that, the deficit of the Natsionalna Elektricheska Kompania (NEK) keeps growing, indicating that the actions in the energy sector have always been inadequate or non-transparent, because otherwise the price of electricity could be determined according to some economic logic.

Second law: no free lunch! Currently, the deficit in the energy sector or the NEK is about 2 billion euros. This can not be hidden. The law states that debts will be paid in the future and the government and the regulator have to figure out how this would happen- whether through state aid, market prices, or regulation. According to the business, prices should not be changed until the start of the unified energy market that would allow producers to sell energy at market prices. This is expected to happen next year.

On August 1, the regulator included in the price of electricity the so called social fee that would be paid equally by businesses and households. As you think about it though, this is not a tax to society but money that goes to the state electricity monopoly NEK, i.e. this is a state fee. This way a temporary way out of a situation that has been going on for years has been found until the local elections in the autumn. More than half of the 2 billion euro deficit that plagues state companies is the result of the failed Belene NPP project and the burden of the Tsankov Kamak Hydroelectric Power Plant, hanging on the state’s neck. The remaining 40% or 800 million euros are the result of regulated or badly regulated prices. Despite the optimism of Energy Minister Temenuzhka Petkova and head of the electricity regulator Ivan Ivanov that after liberalization of the market, prices would fall, expectations of experts are right in the opposite direction – prices would rise and the deficit would start shrinking. No one knows when, because there is no roadmap for reforms in the energy sector. Management mandates, however, have already been defined and if someone started playing with electricity once again, the short circuit is matter of time.

English: Alexander Markov