Which consumers can enter the open market?
Currently on the open market could register only consumers connected to the high and medium voltage grids and low voltage grid, who have installed capacity over 100 kW, those consumers could buy electricity on freely negotiated prices. It is expected at the end of 2015 or in 2016 to be introduced the so called “standard load schedules” which will allow the domestic customers to be able to choose their electricity providers.
What are the advantages of the customers to enter the open market?
The competitive environment for electricity trade reduces the price of electricity and increase the quality of the service. Customers have the option to choose their supplier and to negotiate the terms of the contract and billing, as well as additional services related to the provision of power. Our analysis show that the current prices on the regulated and on the open market are different and the customers could achieve significant reduction of their energy expenses by 20% – 30%, if they buy the electricity from trading companies.
In addition the customers could freely choose their supplier and negotiate the contract terms and conditions as well as the provision of additional services.
Is it mandatory to register on the open market?
No, it is not.
As of August 1, 2013 all users of the “MV” can enter the open market. Until doing so, consumers will be supplied by a Supplier of last resort at prices that are significantly higher than the freely negotiated prices.
Business consumers “low voltage” can still buy electricity at regulated prices that are also higher than those that can be negotiated on the open market. Currently, consumers connected to low-voltage network with installed capacity above 100 kW are eligible, but not obliged, to register on the open market. The advantage to all customers is the opportunity to negotiate a lower price and get better service.
Are there risks from entering the open market?No, there are no risks. The liberalization of the electricity market is an irreversible process that follows the directives of the EU and Bulgaria, as a member state, will carry it out to the end.
What is the mechanism of buying and selling electricity?
The deals on the open market are done between generators, traders and consumers of electrical energy. The generators produce and wholesale. The traders as a link between the supply and demand create portfolio of generators, from which they buy and customers to which they sell. The traders buy the electricity from generators or other traders from Bulgaria or from abroad (import). The sales on the other hand are made to customers and to other traders in the country or abroad (export).
How does the open electricity market work?
Customers can choose their electricity trader, but not their network operator. The distribution network is owned by the distribution companies (CEZ Distribution Bulgaria AD, EVN Electricity PLC, Energo-Pro Grid), which remain responsible for the quality of supply and network maintenance. By entering open market, the customer enters into two contracts – one with his retailer/trader and one with the distribution company. At the end of each month the client receives two invoices: – one from the trader for the consumed active energy, excise and price “obligations to society”, and one from the distribution company for transmission and access to the network.
How to register on the open market?
Contact an electricity trading company. It will guide you through the process by preparing the required documentation and completing the registration procedure.
Currently, the registration on the open market takes about 1.5 – 2 months. Customers with outstanding liabilities to their current supplier cannot be registered. The same applies to subsequent switching of suppliers.
What is a balancing market?
The electricity is a commodity that could not be stored that is why it is required to maintain real time balance between generation and demand in the electrical system in the country. Due to this fact the electricity deliveries are registered for 24 hours on an hourly basis. To reach a balance in the system, the consumers should prepare hourly forecasts for their demand, as close as possible to their actual consumption and the generators should produce those quantities. When there is a mismatch between the declared energy quantities and the actual consumption or generation in the system, the balancing market steps in and clears the imbalances – the difference between the declared and the real consumed/generated quantities. The balancing market has the function to stimulate accurate forecasts. Because of that the prices of balancing energy are determined in a way to punish financially the mismatches and lead to additional expenses for supply.
What is a balancing group and is there any benefit in participating in it?
With the goal to reduce the imbalances traders create and coordinate the so called balancing groups, which unite different end consumers. In this way favorable conditions are created so the excess or lack of electricity could cancel each other within the boundaries of the group. This leads to reduction of the overall imbalance of the group. As a result the imbalances are significantly lower compared to the cases, when the end consumers are individually balanced.
Usual market rule is that the consumers are not supposed to be facing the risks of balancing market, because the traders are forecasting and balancing the deviations in the consumptions of their customers. In that way the traders are taking the financial risks for the realized imbalances. With that kind of a model the client pays only the energy consumed and all the other expenses related to the management of the trading portfolio and the compensations for the imbalances are paid by the traders.
Which is the current legal framework regulating the electricity trading?
The electricity trading in Bulgaria is regulated mainly by the Energy Law and the Rules for electricity trading. Their current versions could be found on the web page of Energy and Water Regulatory Commission.