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Aug 30, 2019

The Commission for Protection of Competition (CPC) found that the National Electricity Company (NEC EAD) has violated the competition rules

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CPC has found that NEC has violated the competition rules by imposing unfair trading conditions on the producers of renewable energy sources (RES).

The Commission imposed a penalty payment in the amount of BGN 315 612 (approximately EUR 161 422) to NEC for committed violations under Art. 21, item 1 of the Competition Protection Act, constituting of an abuse of a dominant position on the balancing market.

The balancing market has been introduced as of 01.06.2014 with the Rules for electricity trading and is administered by the transmission operator ESO EAD. The allocation of costs for imbalances in the special balancing group of electricity producers from renewable sources (RES) and from high-efficiency cogeneration production of heat and electricity (HEG) is carried out by NEC EAD as a public supplier and a coordinator of the balancing group.

The text of the CPC decision is available in the public electronic register at: http://reg.cpc.bg/Decision.aspx?DecID=300055594.

With its decision, the Commission found that:

  • The public provider NEC EAD unilaterally and ungrounded changed the forecast production schedules of the producers, thus creating imbalances and additional costs for the producers respectively;
  • The public provider NEC EAD has distributed to the producers additional unjustified imbalance costs by applying the Methodology for allocating imbalance obligations in the special balancing group;
  • The public provider NEC EAD has distributed to the producers imbalance costs which have not been reported by the electricity system operator (ESO EAD) and accordingly has not been charged to NEC EAD.

Therefore, NEC EAD has assigned additional financial burdens to the RES producers, which do not represent distribution of imbalances in the special balancing group of NEC EAD and do not objectively reflect costs, incurred for the electricity system and are, consequently, unduly paid.

If the CPC decision enters into force (be it confirmed by court or not appealed), all producers affected by the unfair practice will be entitled to monetary compensation before court. The RES and HEG producers have this right to this date. The Supreme Court of Cassation in Decision No. 250 of 07.11.2018 under commercial case No. 1513/2017 has explicitly ruled that NEC EAD has no right to correct the production schedules submitted to it. In the court proceedings, initiated under Art. 290 Civil Procedure Code before Supreme Court of Cassation, Georgiev, Todorov & Co. represented a HEG producer, as it was established that the producer does not owe costs for imbalances to NEC EAD. Under the decisive reasoning of the court, producers of electricity from renewable sources and high-efficiency cogeneration will only pay costs for imbalances in case of a difference in their submitted schedules and the actual production.

The text of the court decision is available on the website of the Supreme Court of Cassation under reference of the case file: http://www.vks.bg.