Proposal for a solution regarding the problem with extremely high electricity prices

The members of BACI have been seriously affected by the galloping huge daily rise electricity prices. If urgent and immediate measures are not taken, these electricity price levels may lead to them becoming economically unaffordable for the cement production plants in the Republic of Bulgaria.

The working mechanism of the electricity exchange market in Bulgaria is currently such that it causes price distortions for large consumers, as well as the possibility of manipulation by players on the energy exchange.

In an official letter, BACI proposed to the Prime Minister, the Energy and Water Regulatory Commission, the Ministry of Economy, Ministry of Energy and Independent Bulgarian Energy Exchange (IBEX) Ltd the following short and effective mechanism to change the working rules of the IBEX. This change will divide industrial consumers into large and small for the purposes of electricity purchases on the exchange and will segment the rules for the purchase and sale of electricity depending on this:

PROPOSED CHANGES TO THE WORKING RULES OF THE BIEE:

  1. In the ‘Bilateral contracts’ market segment, exchange trading is organised in accordance with the following characteristics:
  • Auctions for the purchase of band load to be held;
  • At least 9,600 mWh per day of this electricity should come from the NPP, which shall be no more than 20% of the plant’s production;
  • Participants in these auctions may only be:
    • consumers of exactly this type of load, and
    • traders who offer all the energy purchased only to consumers in the country with precisely this type of load.
  1. In the Day-Ahead Market segment, an “Export Electricity” sub-segment should be organised in accordance with the following characteristics:
  • Electricity is supplied at no more than 19,000 mWh/per day /which is it at present/;
  • Participants are only traders who will export this electricity.

Benefits of the proposed solutions:

  1. NPPs and consumers of band load will trade with each other or through traders  of a product (in this case electricity) which is inherent to them and as such they will be able to achieve a market price for this product, as well as predictability of production;
  2. The market price of electricity for all other consumers in the country will normalize, since the price of electricity for export will not affect the price of electricity for the domestic market;
  3. The benefit to the country of exporting electricity at high regional prices will not be lost.
  4. These changes can be made immediately by complying with all requirements of the existing regulations /without the need for legal changes/ and this will lead to a rapid effect for the entire economy of the country.