Legal News, Issue 3, 2018 | KPMG | BG
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Important amendments to the Energy Act

Legal News, Issue 3, 2018

Important amendments to the Energy Act were promulgated in the State Gazette, issue 38 dated 8 May 2018. Below you can find a summary of the changes.

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Amendments concerning the producers from high-efficiency combined electricity and heat generation and producers of electricity from renewable sources with a total installed capacity 4 MW and exceeding 4 MW

The electricity produced by producers from high-efficiency combined electricity and heat generation and producers from renewable sources with a capacity 4 MW and exceeding 4 MW will not be purchased at preferential prices, as of 1 July 2018 for the high-efficiency producers and not later than 1 January 2019 for the producers from renewable sources.

The preferential regime will be replaced by payment of a premium to the said producers by the Electricity System Security Fund (the “Fund”). The Fund should conclude contracts for compensation with a premium:

  • with the high-efficiency producers not later than 30 June 2018 and
  • with the producers from renewable sources not later than 31 October 2018.

After the entry into force of the contracts with the Fund, the above producers should sell their electricity at freely negotiated prices. The transactions should be executed only on the organized electricity exchange market, except in the cases in which the producers supply their branches, enterprises and sites or supply client sites through a direct electricity distribution line.

The producers may also sell their electricity through a coordinator of a balancing group.

The premium amount will be defined annually by the Energy and Water Regulatory Commission (EWRC) as a difference between the preferential prices and the forecast market price determined by the EWRC for the respective period. The Fund will compensate with a premium:

  • the high-efficiency producers up to the quantities specified by a decision of the EWRC for determining of a preferential price and
  • the producers from renewable sources up to the net specific electricity production on the basis of which the preferential price is determined.

The Fund will pay a premium only for the quantities of electricity for which the monthly certificates/guarantees of origin have been transferred to it.

Payment of the “public obligations” fee to the Electricity System Security Fund

As of 1 July 2018 traders, producers and operators of an organized electricity exchange market concluding transactions with electricity at freely negotiated prices with final customers, as well as the end suppliers supplying electricity to final customers at regulated prices, should have an obligation to pay the invoiced “public obligations” fees to the Fund. The same obligation will apply to the electricity transmission and distribution network operators for the invoiced price for the electricity used for technological expenses.

For the purpose of securing the timely performance of the above obligations, the traders and producers specified above should provide to the Fund a bank guarantee or a deposit. The amount of the guarantee/deposit should be calculated on the basis of the highest monthly “public obligations” fee invoiced by the respective trader or producer in the preceding 12 months.

Competence of the EWRC to control the implementation of Regulation (EU) No. 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency

The EWRC is already entitled to investigate and sanction infringements of Regulation No. 1227/2011 related to trading with inside information and manipulations on the wholesale electricity market. The sanction which may be imposed for any such infringements is up to 10 percent of the turnover for the preceding financial year of the respective legal entity in breach.

The EWRC will also control whether the market participants engaged in wholesale trading with electricity and natural gas on the organized exchange market or outside it comply with their obligations under Regulation No. 1227/2011 for registration at the Agency for the Cooperation of Energy Regulators (ACER) through the EWRC, for reporting of the wholesale transactions to the ACER and others. The sanction for non-compliance stands between BGN 10,000 and BGN 100,000.

 

© 2018 KPMG Bulgaria OOD, a Bulgarian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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