The Commission for Energy and Water Regulation adopted a decision by which the price of heat energy for household consumers for the new regulatory period 1.07.2022 – 30.06.2023 will be increased by an average of 29.73% for the entire country.
For household users of “Toplofikatsia Sofia” EAD, the established price remains BGN 137.86/MWh, at the current price BGN 98.48/MWh, which is a change of 39.99%. The consumers of “EVN Bulgaria Toplofikatsia” EAD will pay a price of BGN 137.66/MWh, at the current price of BGN 99.55/MWh, which is a change of 38.28%. The price of “Veolia Energy Varna” EAD is changed by 38.88% and becomes 136.51/MWh, at the current price of BGN 98.29/MWh.
The change approved by the regulator is nearly 10% lower on average than the regulator’s preliminary estimates, which had predicted a 39.26% increase, and significantly lower than the 123.58% average increase requested by energy companies. In its final decision, the KEVR ascertained and took into account several additional circumstances: firstly, the heating companies that use gas will receive compensation from the Government and in the month of May, secondly, some of the companies actually used a smaller amount of gas in the spring of 2022. , and on the other hand, lower real fuel costs were found for some district heating systems.
KEVR has taken extraordinary measures to address the extraordinary situation with fuel prices and to support domestic consumers for the upcoming heating period. The Commission implemented a regulatory mechanism to offset the bills of these consumers through the Electricity System Security Fund. In this way, they will not have to pay prices for heating in the amount requested by the heating companies.
The main reasons for the proposed increase in heat energy prices are the quadrupling of natural gas prices and the doubling of carbon emissions. These costs have the largest share as an influence on the final prices. For companies across the country, these two components account for an average of 80 percent of their heat production costs. For “Sofia Heating” natural gas and emissions form 87.61% of the price of the heating service, for “Pleven Heating” this share is 85.52%, for “Vratsa Heating” – 83.08%, for “Pernik Heating” – 81.68%. For the rest of the companies, the share of natural gas and carbon emissions in the formation of the final price is from 64.36% to 79.34%.
As a result of the sharply increased demand for natural gas worldwide, and in recent months due to the military conflict in Ukraine, the prices of natural gas for the needs of district heating have increased almost fourfold – from BGN 45/MWh to over BGN 160/MWh . During this period, the prices of thermal energy for consumers remained unchanged, which led to an increase in the costs of the companies and an accumulation of deficit. In the new period, this deficit will be compensated, because otherwise the companies may go bankrupt.
Carbon prices in the past one-year period from July 1, 2021 also increased by 79.02% – from €51/ton on July 1, 2021 to €91.30/ton on July 1, 2022. This further increases costs of the companies, which should be accounted for in the heat energy prices.
Despite the compensation provided by the government for natural gas in a total amount of over BGN 220 million for the period December 2021 – May 2022, the district heating companies have accumulated an additional deficit of gas costs of over BGN 500 million. Only for “Toplofikatsia Sofia”, according to the latest calculations, the accumulated deficit is in the amount of about BGN 332 million for the past period.
The Commission expects an additional positive effect on the prices of household consumers as a result of the measures adopted by the National Assembly on 29.06, with which VAT is reduced from 20% to 9% on the prices for supplies of central heating and supplies of natural gas. According to estimates, as a result, the average increase in heat energy for the household will be reduced from 29% to 18%. The reduction of the rate will also have a favorable effect on the costs of non-commercial users for natural gas supplies. The adopted legislative change to exempt electricity, liquefied petroleum gas and natural gas from excise duty will also have a positive impact on household electricity and heat prices.
The Commission’s decision was taken after a previously held open meeting and public discussion with the participation of the interested parties – the Ombudsman, the BCPP, civil organizations and associations, etc. In the final decision of the KEVR, all the proposals made during the public discussion were taken into account.
At the discussions, the Commission’s experts defended the applied method of regulation, because in conditions of great dynamics of raw material prices, it is the most appropriate and gives the best opportunity to reflect these changes. It was explained that the determination of the estimated prices of natural gas and carbon emissions for a one-year period ahead is after simulations of futures trading on European exchanges. It is also guaranteed that on the Bulgarian-Greek connection “Komotini-Stara Zagora” our country will receive in full the agreed quantity of Azerbaijani natural gas of 1 billion cubic meters. annually.
The Commission’s decision to approve heat energy prices for the new regulatory period 07/01/2022 – 06/30/2023 has been published on the website of the regulator.
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