From May to September the price on the power exchange in Bulgaria increased almost two times from 117.42 BGN/MWh to 218.17 BGN/MWh in August. In September (as of 29.09.2021) the levels are even higher – 244.0 BGN/MWh. However, the wholesale price of electricity in Bulgaria in September is the second lowest in Europe, after the Polish power market.
Currently there are no market signals showing that the prices will be declining. Unless more drastic measures are taken beyond financial compensations, which are currently only being discussed for businesses. The problem, however, is that the price tornado will soon hit household consumers in Bulgaria. Electricity supply companies have a legal basis to request an increase in regulated prices for households from January 1, 2022. The Chairman of the Energy and Water Regulatory Commission (EWRC) Ivan Ivanov has already warned about this possibility.
In early August, high electricity prices in Bulgaria forced large energy-intensive companies, including KCM, to suspend operations. The same is now true also for other European companies.
Due to the record price of natural gas, the American producer of fertilizers CF Industries Holdings is closing two of its plants in the UK, reports The Wall Street Journal. This is not an isolated case in the country – due to high energy prices, steel producers also suspend their production for days when the price of electricity is too high.
Measures have been discussed with market participants and the Ministry of Energy for three weeks now to tackle the rising prices in Bulgaria. Large industrial consumers are demanding direct compensation from the state to cover higher electricity bills. Other proposals are related to changes in the supply model aiming to redirect trading to the forward segments of IBEX, where contracts can be concluded for longer delivery periods week, month, quarter, half a year, year, etc. Due to the large exposure of traders and consumers to the day-ahead market, where electricity is traded for the next day, the effect of soaring prices affects all market participants. Discussions on measures to support businesses continue, and the plan of state is expected to be announces the upcoming days.
Galloping natural gas and electricity prices are also forcing European governments to discuss billions of euros in aid to households and affected suppliers amid growing concerns about worsening the energy crisis in the winter.
Italian Prime Minister Mario Draghi has announced measures worth 3 billion euros to mitigate the rise in energy prices for households and small companies. Without government intervention in the next quarter, the price of electricity could rise by about 40 percent and gas – by 30 percent, the prime minister told representatives of the Confederation of Italian Industry. For this reason, the cabinet has decided to eliminate for the last quarter of the year the infrastructure costs for gas for all, as well as the costs related to electricity for households and small businesses.
Italy’s plans come after Spain’s decision last week to redirect excess profits the government believes energy companies have accumulated, while giving tax exempts to consumers.
France has already announced a € 100 subsidies for nearly 6 million low-income households. The UK government is also considering granting state loans to energy companies to take the customers of bankrupted small suppliers, while the forecast is that several suppliers could go bankrupt within days.
Greek Energy Minister Kostas Skrekas has announced that a special compensation scheme is being introduced. The 150 million euros’ scheme includes a 9-euro subsidy for the first 300 kilowatts of electricity consumed by a household per month. The government is taking on the increase in the price of electricity, regardless of the supplier. The measure will be in force until the end of the year.