Government Program for Compensation of Non-household Electricity Consumers
The government has approved a program for compensating non-household electricity consumers, which covers the difference between the average monthly price in the “Day Ahead” segment above the threshold of 180 BGN/MWh. This measure was urgently requested by businesses due to the increase in electricity prices on the exchange at the beginning of the month.
The National Assembly has tasked the government to draft the document within a 7-day deadline with its decision dated 26.07.2024. The compensation program will be valid for the period from July 1, 2024, to December 31, 2024, while complying with the rules for state aid.
Compensation for Non-Household Customers on the Bulgarian Energy Exchange
Compensation for non-household customers on the Bulgarian Independent Energy Exchange will be calculated based on the difference between the actual average monthly market price for the base commodity in the “Day Ahead” segment of the exchange for the respective month and the base price of 180 BGN/MWh for non-household customers, regardless of the network to which they are connected.
No compensation will be paid to non-household customers with prices below the base price. For customers with prices exceeding the base price by an amount less than the compensation, a reduced compensation in MWh will be paid so that the resulting price is equal to the base price.
Government Program to Compensate Non-Household Electricity Consumers
The government has introduced a new program to compensate non-household electricity consumers for part of their energy expenses. The program aims to ensure that the compensation is not lower than the basic rate. The Ministry of Energy specifies that the program will cover some of the costs for non-household end-users, excluding operators of electricity transmission and distribution networks. This is due to the fact that the Energy Act regulates a mechanism for compensating unrecoverable costs, as well as for non-household end-users who receive compensation under a program approved by the Council of Ministers with Decision No. 294 of April 23, 2024.
New Economic Program for Economic Stability
Decision No. 481 of 4.07.2024 introduces a new program aimed at protecting economic balances and macroeconomic stability by maintaining the competitiveness of enterprises and limiting inflation, as stated in the decision. The funds for compensations will be provided from the contributions made to the “Electricity System Security Fund”, and it has been made clear that there are funds allocated for this measure in the Fund. By the end of the year, it is estimated that it will cost around 230 million BGN, according to calculations by the FSEC.
Rising Energy Prices in Bulgaria and the Region
From the beginning of July 2024, the prices of electricity in Bulgaria and the region have been on the rise. The average cost of electricity in the country is the third highest in the EU, following Hungary and Romania. This increase is attributed to the electricity deficit in some regional markets, reduced interconnection capacities in the region, accidents, planned maintenance of power plants, and extreme temperatures.
These high prices create an economically unfavorable environment, negatively impacting the industry and the general population. It is crucial for governments and energy regulators to address these challenges and find sustainable solutions to ensure affordable and stable energy prices for consumers.
The Impact of Inflation on the Economy
Inflation is a phenomenon that has a significant impact on the economy. When prices rise steadily over time, consumers may find it more difficult to afford goods and services, leading to a decrease in purchasing power. This can result in a decrease in consumer spending, which can ultimately slow down economic growth.
Additionally, inflation can also have a negative impact on investments. As the value of money decreases, the returns on investments may not be able to keep up with the rate of inflation, resulting in a loss of real value for investors.
In order to combat the negative effects of inflation, central banks often implement policies to control inflation and stabilize the economy. These policies may include increasing interest rates or implementing other measures to reduce the money supply in the economy.
Overall, it is important for policymakers to carefully monitor inflation and its effects on the economy in order to ensure sustainable economic growth and stability.
