CEZ, EVN and Energo Pro are reported to be facing de-facto bankruptcy owing to the decrease in electricity prices effective since March 2013 and new rules for purchasing renewable energy.

The three principal power distributors operating in Bulgaria, CEZ, EVN and Energo Pro, are reported by the country’s press to be facing de-facto bankruptcy owing to the decrease in electricity prices effective since March 2013, the new rules for purchasing renewable energy, and obstructions to the reimbursement of due payments by the State Commission for Energy and Water Regulation, DKEVR.
According to reports in the Sofia based newspaper Sega Daily, the Confederation of Independent Trade Unions in Bulgaria, CITUB, has warned that potential job losses in the mining sector caused by the priority purchasing of renewable energy may cause Luddite style riots as workers set out to destroy solar panels and wind turbines.
A parliamentary energy committee has stated that the situation at EVN is the most problematic as the company had run up losses of nearly BGN 300 million since June 2012. In addition, Energo Pro has accumulated losses of BGN 15.7 million since the beginning of 2013, and the sum is expected to reach BGN 143 M by end-2013, according to Plamen Stefanov, chair of the management board of Energo Pro Sales AD. CEZ is said to be facing a loss of nearly BGN 200 million.
The reduction in electricity rates introduced in March is expected to result in losses of BGN 35 m a year for EVN and BGN 24.6 m for Energo Pro. And in March, EVN warned that it was facing the prospect of bankruptcy owing to changes in the regulations governing purchases of renewable energy introduced in the summer of 2012.
Joerg Sollfelner, CEO of EVN Bulgaria, said that the three power distributors had started running up losses after DKEVR amended the price formation model. Prior to the changes, power distributors bought renewable energy, sent the invoices to Bulgaria’s National Electric Company, NEK, and were reimbursed for the costs. However, the practice caused NEK to amass huge debts when green energy output substantially exceeded forecasts. Under the new regime, NEK pays power distributors on the basis of forecasts, while the risk of connecting excessive renewable capacity to the grid is at the expense of EVN, CEZ and Energo Pro.
Although compensations are possible at a later stage, the three power distributors expressed fears that such a practice could lead to serious losses and disruptions to electricity supply.
The immediate result is that at least one of the three, Energy Pro, cannot implement its grid investment programme, and staff pay bonuses are being withheld. And according to CITUB, Bulgarian miners, who are also dissatisfied with the changes, have expressed readiness to stage protests and to even attack wind turbine and solar panel installations.