Heating with Fixed Price during Heating Season

Central heating price will not up this winter. Heat distribution companies will correct heating energy prices at 6 months, instead of at 3, as currently. This became clear during a public discussion over the new gas prices order drafted by the State Commission for Energy and Water Regulation (SCEWR). The aim of the amendments is to avoid heating price changes during the active heating season. Now heating companies correct them according to gas price changes, which are approved each three months.

Companies insist on fixed fuel price during the season so that they could pay out on time their debts to the central supplier.

During its negotiations with Russia’s Gasprom Bulgargas will demand a principle to be set out in the new gas supply agreements according to which prices would not change October till April,

Executive Director of the company Dimitar Gogov explained journalists. He elaborated there was no way for commenting on changes to the currently active gas supply agreements expiring in 2011, but only on a single price change during the heating season.

Bulgargas’ head insisted the regulator to approve of the proposed by all companies gas price increase by 18% as of start-January, pointing out the company would be unable to work with much lower prices that those mentioned. A week ago head of the regulator Anguel Semerdahiev stated SCEWR would most likely allow the state company to up prices, but would do its best this would not be at the expense of heating energy prices.

If the amendments to the order get approved, gas price will keep flat, and

the state-owned supplier will be compensated after the end of the heating season,

the chair of the Commission pointed out. The regulator will comply with Bulgargas’ actual expenses, and the company’s revenues from gas sales will be transferred to a following period.

For the first time in the last 10 years Bulgargas might be forced to sanction customers purchasing less than ordered gas quantities, Dimitar Gogov explained. This year for the first time the company has bought less than the ordered qualities from its suppliers and this could happen to activate forfeit clauses. Currently negotiations are being held with the three suppliers, but so far agreement is reached with one of them only over not paying penalties, the company’s director said. In the same time, non of Bulgaria’s supplier customers owes money to the company for non fulfilling their orders, and if non-purchased natural gas quantities were to be paid for, the public supplier’s customers would have to pay extra BGN 25-30 million.

At forming gas prices the value or its delivery should figure in,

which is now not accounted, Dimitar Gogov thinks. To him, it is not clear what is the connection between gas quantities and at the Chiren storage and gas prices – according to the order, reserves should also be accounted for at fixing the final consumer price, but it should be clear if the storage stores reserves or locally extracted in Bulgaria quantities, the head of Bulgargas considers.

The Bulgarian Industrial Association (BIA) emphasized once again the new variant of the order offers crossed subsidizing of gas prices, but SCEWR’s chair disagreed. According to Chair of BIA Bozhidar Danev, the order did not comply with the requirements for liberalized market, as SCEWR would still regulate all prices. Seventy per cent of Bulgaria’s gas consumption is for heating companies, who would take the difference if you hold prices - consumers or industrial enterprises, head of the association asked. The Ministry of Economy, Energy and Tourism, though, backs the regulator’s proposal for clearer formula for setting natural gas prices.