* Balkan country cuts prices for second time this year
* The government hopes cut would avoid new protests
SOFIA, July 30 Bulgaria's state energy regulator
cut the electricity costs for households by an average of 5
percent as of August 1 as part of a pledge by the ruling
Socialists to reduce power costs' burden in the European Union's
The new tariffs approved late on Monday were criticised by
businesses, saying the cuts would deepen the already poor
capital state of power producers and distributors.
Electricity prices are politically sensitive in the Balkan
country since power bills bite off a big chunk of monthly
incomes, especially during the winter.
This is the second cut in the power prices this year.
In March, the regulator cut the electricity costs for
households by an average of 7 percent following mass protests
over high utility bills and poverty that toppled the
centre-right government of GERB a month earlier.
The Socialist-led government, under daily pressure to resign
from thousands of protesters over corruption, hopes the cuts
will avoid the protests expanding into a wider wave of
demonstrations in the autumn and the winter.
The regulator has said the cuts will come at the expense of
the way producers of expensive renewable energy are compensated
and a decrease in the purchase price of electricity from large
state power producers.
It has also limited the investment the three power
distributors in Bulgaria - Czech company, Energo-Pro
and Austria's EVN - can claim for improving
the power grid's efficiency.
"The price regulation will lead to two negative effects,"
said Georgi Stoev, an economic analyst with Sofia's based
independent think-tank Industry Watch.
"Businesses will suffer as it has to bear on its back the
new cuts while non-recognition of the projected investment costs
of power distributors will discourage investors in the sector."
($1 = 1.4755 Bulgarian levs)
(Reporting by Angel Krasimirov; editing by James Jukwey)