SOFIA May 29 Bulgaria's state energy regulator
has urged the country's public power provider to renegotiate
agreements under which it is obliged to buy all the electricity
produced by two coal-fired plants owned by U.S. companies.
U.S. power companies AES and ContourGlobal produce
about 20 percent of Bulgaria's power at the two plants.
The regulator said in a statement on Thursday the agreements
breached EU competition rules and that power provider NEK should
renegotiate terms to lower the cost of electricity produced by
AES by at least 30 percent and ContourGlobal by a fifth.
The regulator also proposed changing legislation to cut by
50 percent the preferential rates the country is obliged to pay
for electricity generated by wind and solar power plants.
Under current legislation the state must buy all renewable
energy produced at the preferential rates.
"After the contracts are amended and if the purchase of
renewable energy on preferential prices is limited, we can see a
reduction of costs by which the regulated prices are set by over
1 billion levs ($695.36 million)," the regulator said.
AES and ContourGlobal declined an immediate comment.
The proposals are the latest attempt by Bulgaria to avoid a
spike in regulated power costs, a politically sensitive issue in
the European Union's poorest country where power bills swallow
up large chunks of household incomes, especially in winter.
The Socialist-led government has vowed to keep electricity
prices unchanged after cutting them twice since coming to office
last May in a bid to avoid a repeat of mass protests. Street
demonstrations against high power prices toppled the previous
centre-right government in February 2013.
Energy analysts say Bulgaria should work to amend its
inefficient energy sector and increase energy prices, while at
the same time offering financial support to poorer citizens to
shield them against such increases. That would ensure that
foreign investors are not punished by sudden regulatory changes,
AES invested 1.2 billion euros ($1.63 billion) in a 670
megawatt thermal power plant in the Maritsa East coal-mining
complex that started operations in 2011 and has a 15-year power
GlobalContour, which acquired a 908 megawatt plant in the
same complex, also has such an agreement that expires in 2024.
Bulgaria has already imposed a 20 percent tax on the income
of solar energy producers, many of which are foreign-owned, in a
bid to rein in a boom in renewable energy that resulted in over
1,600 megawatts of wind farms and photovoltaic installations.
The Bulgarian Photovoltaic Association condemned the
proposal to halve the energy which is purchased at lucrative
feed-in tariffs, saying the move will bring to bankruptcy all
investors in the sector.
($1 = 1.4381 Bulgarian Levs)
($1 = 0.7354 Euros)
(Additional reporting by Angel Krasimirov; Editing by Matthias
Williams and Susan Thomas)