EU antitrust regulators accept concessions from Bulgaria’s BEH

Bulgarian Energy Holding BEH [Capital weekly]

European Union antitrust regulators today (10 December) accepted an offer from state-owned Bulgarian Energy Holding (BEH) to open up the Balkan country’s wholesale electricity market.

“BEH has committed to offer certain volumes of electricity on an independently-operated day-ahead market on a newly-created power exchange in Bulgaria,” the European Commission said in a statement.

The offer came following a three-year investigation which led to EU charges that BEH had prevented traders from freely re-selling electricity bought from the company and that it also set territorial curbs on the traders.

>>Read: Analyst: Politics have marred Bulgaria’s energy sector

The Commission said such behaviour breached EU antitrust laws, putting BEH at risk of a fine up to 10% of its revenues if found guilty of wrongdoing.

Bulgaria will hold the first test trading session of its newly created day-ahead power exchange on Friday and plans to have it fully operational as of next year.

BEH has teamed up with European power market Nord Pool Spot to set up the exchange. It has promised Brussels it will transfer control of the ownership of the exchange to the Bulgarian finance ministry to ensure its independence.

BEH will also provide liquidity to the power exchange for five years. The volumes will be put up for sale in the day-ahead market, with a maximum price based on the marginal costs of BEH’s production subsidiaries.

>>Read: Borissov warns of Bulgarian energy ‘catastrophe’

The Commission said it was satisfied with these commitments.

“They will make it easier to trade electricity, improve price transparency on the market and promote the integration of the Bulgarian wholesale electricity market with neighbouring countries’ markets,” the Commission said.

The European Commission opened antitrust proceedings into BEH's behaviour on the wholesale electricity markets in Bulgaria in December 2012.

Last June the Commission invited comments from the state-owned Bulgarian Energy Holding EAD (BEH) to address competition concerns about BEH's behaviour on the non-regulated wholesale electricity market in Bulgaria.

The Commission expressed concerns that BEH may be hindering the resale of electricity by imposing territorial restrictions on traders, in breach of EU antitrust rules [read more].

The Bulgarian energy sector has a bizarre structure, with Bulgarian Energy Holding (BEH), a state holding firm, being the owner of the National Electricity Company NEC. NEC runs huge deficits largely due to the long term purchase contracts between NEK and the private coal-fired producers operating the coal stations Maritsa East 1 and Maritsa East 3. The two power stations were awarded with special high prices for their electricity. In return, their owners, American companies AES and ContourGlobal, have upgraded the plants and made them more efficient and compliant with environmental standards.

Another issue is that solar and wind power plants have benefited from preferential prices for many years. Last February, the Bulgarian parliament scrapped preferential prices for new, renewable energy installations, but the existing ones still benefit from the scheme.

>> Read: Bulgaria scraps incentives for new renewable energy installations

Bulgarians also complain about the monopoly of the electric utilities. Indeed, the country is divided into three regions, with monopoly over distribution networks respectively in the West by the Czech firm ?EZ, in the northeast by the Czech Energo-Pro, and in the south by the Austrian EVN [see map].

>> Read our Links Dossier: The energy conundrum in Bulgaria and Greece

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