Тhe Bulgarian state will help businesses pay their electricity bills above 90 euro/MWh

Despite the unanimity reached by almost all Bulgarian political parties that businesses should receive compensation due to the increase in electricity prices, the debate in the parliament lasted two hours and was accompanied by a number of scandals and criticisms.

In the end, the demands of the employers' organizations were accepted by all political parties and not a single MP voted against them. The proposal was also supported by almost everyone in the liberal We Continue the Change - Democratic Bulgaria (PP-DB), who initially declared their stance against it, but finally only five of theor MPs voted to "abstain".

The state will pay the electricity over 90 euros/ MWh

A joint draft decision of GERB and Revival was submitted to the parliament on Friday, as the two parties had initially submitted separate but identical proposals. As early as Thursday, it became clear that all parties, except PP-DB, stand behind the idea that non-domestic electricity consumers should be supported even more generously than before.

The reason - in the last two weeks, electricity for businesses had reached shocking prices at the Bulgarian Energy Exchange (IBEX), which led to a slew of complaints from employers' organizations and the country’s tourism sector.

With today's decision, the Bulgarian state will cover the electricity costs of non-domestic consumers at an average monthly price on the exchange above 90 euros/MWh. This aid will be in effect until December 31, 2024. Until now, state compensations for electricity costs applied when the rate passed over 100 euros/MWh, but the reason why the threshold was being reduced was never offered.

During the first six months of the year, the compensation scheme did not really work, as the prices did not exceed 100 euros. In recent days though the values ​​have once again jumped slightly above 100 euros.

The MPs' concerns are that businesses are suffocating, and in addition, household consumers could also be affected. Their reasoning was that due to the expensive electricity, tourist sites may have to close before the end of the season if they could not pay their energy bills.

Let’s protect the interests of the businesses, let’s protect restaurateurs and hoteliers and prevent the following situation - galloping inflation due to the high price of energy; something that would affect all households," said Zhecho Stankov from GERB.

Criticism of the idea came only from Radoslav Ribarski from PP-DB, who accused Bulgarian businesses of "not looking for long-term contracts because they (know that they can) come to the parliament and seek compensation".

According to him, businesses mainly buy electricity from the Day-Ahead market, something that’s not commonly practiced in the rest of Europe.

This (parliamentary) decision does not foster discipline if we only hear MPs say: "Let's just give the money", Ribarski said.

He also proposed an amendment to the text to include "compensation for households in a situation of energy poverty", instructing the Council of Ministers to adopt within a month a program for compensating households living in energy poverty. His idea met criticism but was nevertheless supported by Revival on the grounds that this was the first time PP-DB had offered relief to ordinary people. In the end, Ribarski’s proposal was not accepted, as the votes of PP-DB and Revival were not sufficient.

Money from the Security Fund

Compensation for the business sector will be paid from the Electricity System Security Fund (FSES), which assured us on Thursday that it has enough money for these purposes. On Friday, this was also confirmed by the acting energy minister, Vladimir Malinov. The chairman of the FSES said that according to their calculations, the compensation will cost 115 million euros. 

Radoslav Ribarski, however, is of the opinion that the Fund should keep the money for the upcoming energy market liberalization and the compensation of household consumers. He also objected to the fact that the mechanism does not include compensation for the network fees of the electricity distribution companies.

The compensation mechanism does not spend money set aside from the FSES but rather operates on the principle of connected vessels – 900 euros, being the price at the Bulgarian Nuclear Power Plant, goes to the Fund, and the Fund then pays it out to the businesses, as explained by Delyan Dobrev, MP and Chairman of the parliamentary Energy Commission.

However, the compensation must first be approved by the European Commission, a topic that was also discussed today at the Bulgarian parliament, as it was not clear when or if this will happen at all.

According to Ribarski, an answer may come in the autumn at the earliest. Energy Minister Vladimir Malinov, for his part, explained that Bulgaria’s neighboring EU countries had activated similar mechanisms and had received quick approval.

Translated by Tzvetozar Vincent Iolov