SOFIA, July 1 Bulgaria raised electricity prices
by an average of 2 percent on Tuesday aiming to keep politically
sensitive costs at bay despite huge deficits in the Balkan
country's energy sector.
The move, announced by the country's energy regulator late
on Monday, comes less than a week after it said that state power
provider NEK had accumulated debts of 2.9 billion levs ($2.03
In May, the regulator urged NEK 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, which produce about 20 percent of Bulgaria's
The regulator said the agreements breached EU competition
rules and that NEK should renegotiate terms to lower the cost of
electricity produced by AES by at least 30 percent and
ContourGlobal by a fifth.
It said in a statement the partial market liberalisation,
reduced consumption and a high ratio of electricity bought under
long-term contracts had led to an "excess of electricity
delivered at prices not in line with market valuation".
This is the first price rise approved by the regulator since
Electricity costs are a politically sensitive issue in the
European Union's poorest country where power bills consume a
large slice of household income, especially in winter.
The Socialist-led government has cut power prices twice
since coming to office last May aiming to avert a repeat of
street demonstrations against high power prices which toppled
the previous centre-right government in February 2013.
However, Prime Minister Plamen Oresharski's cabinet, dogged
by street protests and charges of graft, has said it would
resign soon after the Socialists did badly in the EU vote.
Bulgaria's wholesale natural gas prices will fall by 1.81
percent from July 1, the regulator said. It set gas prices at
601.7 levs ($420) per 1,000 cubic metres for the third quarter
of 2014 from 612.8 levs.
Russia's Gazprom supplies over 85 percent of the
gas required by Bulgaria, whose daily gas requirement averages
3.3 million cubic metres per day.
Last month, the government said it could ensure natural gas
supplies for at least three or four months if a price dispute
between Moscow and Kiev disrupts supply.
($1 = 1.4293 Bulgarian Levs)
(Reporting by Angel Krasimirov; editing by Jason Neely)