Which consumers can enter the free market?
Currently the free market is available for all types of consumers – business and households. A mandatory requirement applies only to the high and medium voltage consumers to be supplied by a provider on the free market. On the other hand, households and small business consumers connected to the low voltage network have the choice to either stay on the regulated or join the free market.
What are the advantages for the customers to enter the free market?
The competitive environment for electricity trading leads to a decrease of the price of electricity and an increase of the quality of services. Customers have the option to choose their supplier and to negotiate the terms and conditions of the contracts and select billing option, as well as to request additional services related to the power supply.
In addition, the customers could freely change their supplier and pick the best services that meet their needs.
Is it mandatory to register on the free market?
It is mandatory only for the large industrial consumers (medium and high voltage) to be registered on the free market. For everyone else it is a matter of choice to either enter the free market or stay in the regulated one. The legal framework allows unlimited migration for the households and the small business consumers between the two market segments. The consumers’ advantage of being part of the free market is the opportunity to negotiate a lower price and get better service.
Are there risks from entering the free 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. In case the supplier isn’t able to fulfill the terms and conditions of contract, the consumer has the right to choose a different supplier. There is no risk for the consumer of not being supplied with electricity. Even of his supplier is unable to deliver, the client will automatically be transferred to the Supplier of last resort, who will service the consumer until the later chooses another supplier on the free market.
What is the mechanism of buying and selling electricity?
The deals on the free market are done between generators, traders and consumers of electrical energy. The generators produce and wholesale through the platforms of Independent Bulgarian energy exchange. The traders as an important 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, from IBEX or from other traders from Bulgaria or abroad (import). The sales on the other hand are made to customers, IBEX and to other traders in the country or abroad (export).
How does the free 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, Elektrorazpredelenie Yug EAD, Elektrorazpredelenie Sever AD), which remain responsible for the quality of supply and network maintenance. By entering free market, the customer must sign 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 services.
How to register on the free market?
Contact an electricity trading company. They will guide you through the process by preparing the required documentation and completing the registration procedure.
Currently, the registration on the free market takes less than a month. Customers with unpaid bills cannot change the supplier. 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 consumption in the electricity system in the country. Due to this fact the electricity deliveries are registered ahead of time for 24 hours on an hourly basis. To reach a balance in the system, the consumers should notify their suppliers for their planned consumption, then the supplier prepares a forecast for the demand of all of his customers for the next day and ensures that an equivalent volume will be purchased from the generators. When there is a mismatch between the declared volumes 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 to impose additional expenses in case of imbalances.
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 and/or generators. In this way favorable conditions are created so the excess or lack of electricity cancel out within the balancing 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 doing the balancing themselves. With the latest regulatory changes all customers are obliged to join a balancing group and pick a coordinator, who will forecast their consumption and manage the imbalance.
Usual market practice is that the traders are forecasting and balancing the deviations in the consumption of their customers. In that way traders are taking the financial risks for the realized imbalances. With that kind of a model the client pays only the consumed electricity and a small fraction for balancing services and all the other expenses related to the management of the trading portfolio and the compensations for 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, the Electricity trading rules and the rules of IBEX. Their current versions could be found on the web page of each of the aforementioned organization.