(Fixes spelling of ContourGlobal in 13th paragraph)
By Tsvetelia Tsolova
SOFIA May 29 Bulgaria's state energy regulator
has urged the 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.
AES and ContourGlobal produce about 20 percent of
Bulgaria's power at the two plants.
The Socialist-led government has vowed to keep electricity
prices unchanged after cutting them twice since coming to office
last May, after street demonstrations against high power prices
toppled the previous centre-right government in February 2013.
The regulator said in a statement on Thursday the agreements
with the two U.S. companies breached EU competition rules and
power provider NEK should renegotiate terms to lower the cost of
electricity produced by AES by at least 30 percent and
ContourGlobal's 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 over 1 billion levs ($695 million),"
the regulator said.
AES declined an immediate comment. ContourGlobal said the
energy regulator was not a party to their contract with NEK and
did not have a right to impose conditions on it.
"We expect the government to honour its obligations under
the contract," the company said in a statement.
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.
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.
That would ensure that foreign investors are not punished by
sudden regulatory changes, the analysts say.
AES invested 1.2 billion euros ($1.6 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
ContourGlobal, which acquired a 908-megawatt plant in the
same complex, has a similar 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 said the proposal to
halve energy purchases at the lucrative feed-in tariffs would
bring to bankruptcy all investors in the sector.
($1 = 1.4381 Bulgarian Levs)
($1 = 0.7354 Euros)
(Additional reporting by Angel Krasimirov; Editing by Susan