May 14, 2014 / 4:20 PM / in 4 years

UPDATE 1-Bulgaria plans to fine foreign-owned power distributors

* Watchdog finds 2,690 breaches of rules of 3 power firms

* To decide on distributors’ licences after the EU vote

* Foreign-owned companies say work within rules, EVN to appeal any fine (Adds Energo-Pro and EVN comment)

SOFIA, May 14 (Reuters) - Bulgaria’s energy regulator said it planned to fine foreign-owned power distributors CEZ , Energo-Pro and EVN for more than 2,600 shortcomings in their operations since 2008.

The fines, which could total at least 50 million levs ($35 million), will be another blow to the power firms and send a strong negative signal to foreign investors.

The regulator said on Wednesday that, following a thorough five-year audit, it planned to impose a fine of between 20,000 levs ($14,000) and 1 million levs for each of the shortcomings within 15 days.

“Groundless commissions, groundless expenses for consultants’ services were ascertained,” Boyan Boev, the chairman of the regulator, told reporters. “Exceptions have turned into a bad practice for the three power distribution companies”.

In response, Czech CEZ and Energo-Pro said in separate statements they operate in line with Bulgarian and EU regulations, but would study the audit carefully and take steps to guarantee the interests of their customers and shareholders.

Austrian EVN would appeal any sanctions against it in court, Joerg Zolfellner, chief executive of its Bulgarian unit, told a press conference, saying the audit was carried out in a chaotic, non-professional and biased way.

The regulator has already started a process toward potentially revoking the licences of the three companies due to a payment dispute between them and public power provider NEK.

But the commission said it would first deal with the fines before deciding on the licences, effectively delaying the ruling until after a May 25 vote for members of the European Parliament, which is seen as a test of the Socialist-led government’s popularity.

High electricity bills are politically sensitive in the European Union’s poorest country, and protests against them toppled the previous government in February last year.

On Tuesday, the anti-monopoly watchdog accused the three firms of breaching competition rules by setting unreasonably high prices for telecoms providers to access their power networks.

$1 = 1.4270 Bulgarian Levs Reporting by Angel Krasimirov and Tsvetelia Tsolova; editing by Jane Baird and David Evans

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