Bulgarian Energy Regulator Postpones CEZ, EVN Hearings in Payment Dispute

By Sean Carney

Bulgaria's energy regulator Monday delayed until at least next month the deadline for deciding whether to revoke the operating licenses of two Czech and one Austrian electricity companies for delinquent payments to the state-run National Electricity Company, or NEK.

At issue is a dispute between the regulator and the three companies--CEZ AS (BAACEZ.PR), EVN AG (EVNV.VI) and Energo Pro--over repayments worth several hundred million euros. The electricity companies have said they have honored all legal and commercial responsibilities.

The European Commission has been in touch with the Bulgarian government and expressed its concerns that the regulator is not acting independently of political pressure and that it is trying to abuse the finances of foreign companies to support state-owned entities.

The regulator at Monday's public hearing didn't seek additional information from the three companies and set May 12 as the date by which they must present their official positions, said Kremena Stoyanova, chairperson of the managing board at CEZ Electro Bulgaria.

EVN confirmed the new deadline had been set and that the regulator did not seek any new information Monday.

The regulator couldn't be reached immediately for comment.

Bulgaria's electricity sector faces a liquidity crisis, as domestic energy legislation stipulates that foreign-owned electricity distribution companies have to pre-pay renewable energy feed-in-tariffs to NEK, which must then reimburse the three distribution companies for those payments once it collects fees from end-users.

However insolvent NEK has failed to compensate the distributors, who in turn have pro-rated their accounts payable to NEK to reflect the difference.

The situation is further complicated as the local market faces dwindling demand, an oversupply of power and the need to invest in modernizing baseload power generation for standby capacity should production fall at renewable plants.

The cash-flow crisis and generation surplus were initiated by the government's offer of generous subsidy levels on zero-emission renewable energy, leading to a buildup of wind, solar and hydro-power generation facilities to over 1,300 megawatts of installed capacity.

The government in Sofia had planned for only 300 MW of renewable power capacity.

Write to Sean Carney at [e-mail]

-0-