Before the election, the Energy and Water Regulatory Commission accused Bulgargaz of incompetence

The Energy and Water Regulatory Commission (EWRC) will not support Bulgargaz's new proposal for a 7.5% increase in natural gas prices in February. What is more, the regulator directly accused the management of the public supplier of "incompetence," which leads to artificial price increases for domestic consumers. The catch is that Plamen Mladenovski directed his criticism at the "previous management" of Bulgargaz without naming it, but the last major change was in the spring of 2024.

Earlier on Wednesday, at an open meeting, the gas supplier submitted a new price proposal for consideration, which visibly angered Commission Chairman Plamen Mladenovski. At the beginning of the month, Bulgargaz proposed a 3.82% price increase in February compared to January. At Wednesday's meeting, however, the executive director of the public supplier, Veselin Sinabov, announced a new price proposal of €33.5/MWh, or a 7.5% increase.

The reason given for the new price was the increase of more than 30% in prices on the European TTF gas exchange and the Balkan Gas Hub, as well as increased demand from the company's customers.

Mladenovski's criticism is twofold: that low prices for businesses cannot be maintained at the expense of households, and that exchange prices should not matter since the company has secured the necessary gas quantities for the winter period in advance.

"Playing the market with non-market methods"

By playing the market with non-market methods, we are depriving domestic consumers of the opportunity to take advantage of the lower prices under the contract with Azerbaijan," Mladenovski said, quoted by the regulator's press center.

Interestingly, he accuses the previous management of Bulgargaz of "short-sighted policy," which resulted in consumers constantly paying an "incompetence tax."

He refers to the strategy adopted several years ago, after the 2022 gas crisis, to mix prices from different suppliers – cheaper Azerbaijani gas with more expensive LNG supplies or the expensive raw material pumped into Chiren years ago.

Pre-election concerns?

However, we would like to remind you that Mladenovski, who was part of the management of the Energy and Water Regulatory Commission (EWRC) and under the administration of Ivan Ivanov (as head of the "Electricity and Heat Energy" directorate), has never been so blunt before.

We also recall that the management of Bulgargaz was replaced in April 2024 and Mladenovski has been working with its new team for nearly a year and nine months – most of the time directly as head of the regulator.

All this leads to the suspicion that the chairman of the EWRC may be reacting to the upcoming elections, as it is not good for the ruling party for gas prices to rise so sharply during an election campaign.

We recall that one of the first things Kiril Petkov did as prime minister when he came to power at the end of 2021 was to dismiss the management of Bulgargaz. At that time, the requested increase was about 30% and was linked to deteriorating market conditions related to Russia's sabotage activities against supplies to Europe, which began even before the start of the war in Ukraine. According to Petkov at the time, the state-owned company deliberately refused to import cheaper Azerbaijani gas. But at that time, the Bulgaria-Greece interconnector was not yet ready.

Business takes priority over households

Mladenovski now also argues that the price is rising more than expected because of higher demand from businesses.

I categorically do not support increasing the price for domestic consumers because of fertilizer plants and other industries. I do not think that the Commission will vote for such a decision, regardless of the increased price on the TTF and the Bulgarian gas exchange," said the chairman of the EWRC.

In the price mix for February, Bulgargaz has included the entire contracted amount of Azerbaijani natural gas delivered via the Bulgaria-Greece interconnector (IGB), in accordance with the long-term contract with Azerbaijan. These quantities cover a significant part of the consumption for the month and play an important role in the favorable price of blue fuel, says the EWRC. The price mix for the month includes liquefied natural gas (LNG) under contracts with traders, as well as a quantity from the Chiren gas storage facility.

Now, on January 29, the public supplier is expected to submit to the EWRC current data forming the price of natural gas. If they differ significantly from the price announced on Wednesday, it will probably be possible to talk about incompetence, but on the part of the current management of the public supplier.

Translated with DeepL.