KEVR approved the natural gas price proposed by Bulgargaz. Thus, the price of gas increased by 23% compared to December.
The Energy and Water Regulatory Commission approved the price of natural gas for the month of January at 179.33/MWh, excluding access, transport, excise and VAT prices. At this price, Bulgargaz EAD will sell the natural gas to final suppliers and entities that have been granted a license for the production and transmission of thermal energy.
The approved price of natural gas includes the price component of natural gas entering the gas transport networks, the component for the “public procurement” activity pursuant to art. 17, par. 7 of the NRCPG and the compensation component of the expenses pursuant to art. 11a, par. 2 of the NRCPG, to cover the costs of the “Bulgargaz” EAD for the storage of quantities at the “Chiren” storage facility in fulfillment of the obligations set out in the Emergency Action Plan.
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The commission approved the price after an analysis of current data and documents presented today by Bulgargaz EAD, which indicate the prices of individual suppliers and the extent of their quantities in the total mix. The regulator found that the estimated total quantity for the domestic market was provided by different sources of supply.
The price mix includes the entire agreed quantity of Azerbaijani natural gas delivered via the “Bulgaria – Greece” interconnector/IGB/ at prices under the current long-term contract with Azerbaijan. These quantities cover about 27% of the country’s consumption and are of fundamental importance for obtaining advantageous prices for blue fuel.
Having organized a tender procedure throughout 2023, “Bulgargaz” has concluded three contracts for the supply of liquefied natural gas (LNG) with traders in the region for the month of January.
The company has also concluded a contract for the supply of natural gas at the entrance to the gas transmission network in Bulgaria.
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In the price mix for the month, the public supplier has also included the quantities of natural gas from the “Chiren” gas plant.
The quantities of natural gas guaranteed for the month of January cover the public supplier’s commitments towards final suppliers and heating companies, as well as the quantities covered by bilateral contracts with industrial customers.
After inspection of all costs for the purchase of natural gas, the Commission adjusted the price proposed in today’s “Bulgargaz” application and reduced it from BGN 179.72/MWh to BGN 179.33/MWh. It was found that the price unreasonably included capacity costs in the amount of BGN 1,252,349.25 for the delivery of quantities of natural gas to Virtual Trade Point Bulgaria. These costs are subtracted from the total costs of the public supplier for the purchase of natural gas, which constitute the final price for the month of January.
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With the decision to approve the price of natural gas, KEVR also approved the estimated contingent-permanent costs of “Bulgargaz” for 2023 for the public supply business, which are part of the company’s total costs. A weighted average rate of return on capital for the 2023 regulatory period has also been approved. The company has not been recognized expenses in the amount of BGN 9,656 million for 2023, which have not been demonstrated and are not directly related to the business of license . For this reason, these costs are not included in the formation of the natural gas price during the year and are an additional factor in achieving lower prices.
The approved price of BGN 179.33/MWh is significantly lower than the estimated price proposed in Bulgargaz’s initial request of BGN 204.14/MWh. The main reasons are the decline in stock indices on international markets at the end of December, as well as the significantly lower than expected production from the Chiren gas field due to the mild weather. The public supplier has virtually injected additional quantities of natural gas into storage. As a result, it is lowered
the average price of the quantities stored, mainly inflated in the summer months, when gas reaches extremely high price levels on international exchanges. The reduction in the price of Chiren’s blue fuel, which constitutes a price formation element in the overall mix, contributes to the achievement of a lower final gas price for the month of January.
For heating companies, enterprises and all Bulgarian consumers, the set price of BGN 179.33/MWh, or EUR 91.69/MWh, offers a price advantage, as it is significantly more favorable than the indices of the European gas markets for supplies in January, which settle at levels of 118 euro/MWh.
“There will be no changes in heating and electricity prices from 1 January 2023, which is of paramount importance for consumers in a regulated market. In this way, the energy regulator supports price maintenance in our country , since the main factor of inflationary processes throughout Europe are the prices of energy carriers”, said the President of the Commission, Prof. Ivan Ivanov, at the open meeting held on 30 December 2022.
KEVR’s decision to confirm the natural gas price for January 2023 will be published on the regulator’s website.
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