Changing the Bulgarian Energy System

On May 11, 2010, the Bulgarian National Commission on Energy and Water Regulation announced that the prices for electricity, heating, and natural gas will rise from July 1st. This would be the third such price-change since the beginning of the year and it was met with great opposition from consumers.

It is a well-known fact that Bulgaria receives 92% of its natural gas from the Russian Federation (the other 8% are produced locally). Giving the argument that the changes in the Euro – US Dollar currency market have affected the price of natural gas is therefore rather strange, but within the realm of the acceptable. The other two arguments – that the raising of prices is in line with market changes, and the more expensive nature of alternative fuels – are rather less acceptable.

First, the price of oil and gas on the world market has not changed much since October of 2009. Since then, it has varied between 70 and 90 USD per barrel, with a recent decrease occurring in late April 2010. Therefore, this first argument baffles me, as it does many people. Of course, there are other factors to be considered, like transit costs for example. Yet, there has been no mention of changes to the contracts that Bulgargaz, the state-owned gas monopolist, has with Overgaz, the Ukrainian monopolist and main transit partner.

Secondly, the argument for the more expensive nature of alternative fuels has baffled people more than anything else. For one, that does not even sound like an argument. The energy structure in the country is such that heating is provided mostly from gas-fired plants (with some coal- and solid fuel- fired ones), while electricity is produced in a range of ways including nuclear and hydro power. Raising the price of natural gas on the Bulgarian market directly affects the price of heating. Alternative fuels do not play a role here, and it is therefore a redundant argument.

Bulgaria felt the effects of the economic crisis later than the other members of the EU, and it is still ongoing with some bleak signs of hope on the horizon. Raising the prices for electricity and heating at a time of this would be devastating for small and medium-sized businesses and private consumers. The prices are already considered to be rather high, and another spike could cause many to reach the tipping point and tumble off the cliff.

Interestingly enough, the Minister for Economics, Energy and Tourism announced on June 9th that these new price-changes might lead many people to stop using central heating and begin warming their homes with electricity-based appliances. That would reduce demand for natural gas but increase the strain on the electricity network. With these two facts in mind, the problem that the government has with all the controversy surrounding the new nuclear power plant at Belene would suddenly turn into a solution since it would provide the energy required for this transformation.

The central heating system in Bulgaria is a relic of the pre-1989 period which seems to appeal only to those who grew up in those times. Switching to electric-based heating has its advantages and many people have already opted for this. If gas and heating prices continue to rise because of arguments scoring high on the absurdity scale, many would make the transformation to other sources of heat for their homes and businesses. The government has to recognize this and make the appropriate adaptations to the system to accommodate the change.

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