At the end of 2022, amendments to the Law on Implementation of the provisions of the State Budget Act came in force, obliging electricity producers and electricity traders to make financial contributions to the Security of the electricity system fund (SESF). The aim is to use the funds collected to pay compensations to non-household electricity consumers due to high electricity prices on the free market.
The amount of funds that must be paid by producers with installed capacity of more than 1 MW is determined on a monthly basis, as the difference between the selling price and a certain price cap (threshold) for different types of producers. For example, RES with premium contracts will have a revenue ceiling equal to the estimated market price determined by the Regulator. Everything above it will be collected by SESF. For other producers, the Council of Ministers determined the caps as follows:
– Kozloduy NPP = 180 BGN/MWh
– Coal-fired power plant 350 BGN/MWh + 1.32 x the average monthly price of emission allowances
– Thermal power plants that burn waste or biomass = 350 BGN/MWh + 0.9 x the average monthly price of emission allowances
– RES producers without contracts for premium = 350 BGN/MWh
Contributions from traders are equal the difference between revenues and expenses increased by 10% for wholesale transactions and by 15% for retail transactions (with end consumers in the country). Regarding collection and calculation, there are many ambiguities that are not clear in the declaration form provided by the SESF. It is unclear whether the contributions must be made by legal entities that are not registered in Bulgaria, what type of transactions will be taxed (e.g. import), the regulations concern transactions concluded or with delivery during the period of validity of the Law and others. Uncertainties in the implementation of the new law lead to the impossibility for electricity traders to get an idea of the real size of the targeted contributions. Accordingly, companies limit their risk by limiting their activities on the Bulgarian market because they do not have a clear idea of how the revenues will be taxed.
Although the financial contributions by power producers are already being collected in the SESF, the Council of Ministers has not yet approved a program how do distribute them to end consumers. If this does not happen in the next few days, many business consumers will not receive or will receive their compensation for the month of January with a delay.