The mechanism of financial compensation for non-household consumers in Bulgaria, including companies, hospitals, schools, administrative institutions, religious temples and others, will be extended until the end of 2023. This was decided by the members of the Parliament (MPs) on 08.11.2022, and their decision came into force from 11.11.2022 after its publication in the State Gazette.
Initially, the draft decision provided for the compensations to be for the price of electricity above 25 BGN 0/MWh, but this threshold was lowered to 200 BGN /MWh. The lower threshold also means larger financial support for business consumers. The amount of compensation for 2023 will be determined by deducting 200 BGN/MWh from the average monthly spot price. For example, if the power exchange price for January 2023 is 700 BGN/MWh, the amount of compensation will be 700 minus 200 or equal to 500 BGN /MWh. The total amount of the monthly compensation will be deducted from the final electricity bill.
In the initially promulgated version of the decision, it was envisaged that consumers connected to the high voltage network, i.e. energy-intensive industries, would not receive the full amount of compensation, but 80% of it. They were given the option, upon proving investments in energy efficiency and RES, to increase this percent to 100%. Given the need for notification of such a measure, which differs from the one hundred percent compensation for commercial consumer connected to low and medium voltage networks, the MPs changed the decision. The aim was to avoid a notification procedure that could last several months, during which business consumers would not be allowed to receive compensations. Therefore, the decision of the National Assembly was amended and all non-household consumers incl. those of high voltage are compensated at 100% of the difference between the spot price and 200 BGN /MWh.
Some analysts and MPs describe the way the compensation mechanism is applied as “handing out money to everyone”. The reason for this is that everyone receives the same amount of compensation regardless of how much their business is affected by high electricity prices. In this regard, the Ministry of Finance (MoF) notes that some of the recipients of compensation make significant profits because they are overcompensated. We publish below the exact statement of MoF:
“The good results in corporate tax revenues also indicate a possible overcompensation of certain business sectors, primarily due to the wide scope of measures for electricity consumers outside the regulated market. Many businesses have already shifted the burden of high energy prices to end customers and households, and the lack of focus on compensation measures has led to a distortion of their financial results and the formation of significant profits.”
