The Bulgarian measures under Council Regulation (EU) 2022/1854 of 6 October 2022 addressing the high energy prices expired at the end of June 2023.
Through a proposal by the Council of Ministers of Bulgaria, the 2023 State Budget of the Republic of Bulgaria Act (2023 State Budget Act) reaffirmed the targeted contributions (i.e. monetary payments) due by energy producers with total installed capacity exceeding 1 MW and electricity traders to the Security of the Electricity System Fund (SESF) for supply transactions from 1 Julyto 31 December 2023. The targeted contributions are due for transactions within Bulgaria, intra-community and for exports.
The 2023 State Budget Act was promulgated on 1 August in the Bulgarian State Gazette. The provisions governing the introduction of target contributions are given retroactive effect. They entered into force on 1 July 2023.
The contributions are recognised as current expenses for the purposes of taxation.
Electricity producers have until the 15th day of the following month to: declare their monthly revenues to the SESF; and pay their targeted contributions for transactions in the previous months. Meanwhile, electricity traders must declare their revenues and pay their targeted contributions until 15 October 2023 for the period from 1 July to 30 September and subsequently until 15 January 2023 for the period from 1 October to 31 December 2023.
If a producer or trader does not file the required declarations within the prescribed period, it may be liable for a monetary sanction of between BGN 10,000 (EUR 5,000) and BGN 20,000 (EUR 10,000).
Moreover, if the contributions are not paid within the prescribed period, a monetary sanction of 10% of the due amounts on the account of the targeted contributions will be imposed.
Electricity sale on free market
Energy producers with total installed capacity exceeding 1 MW, where the energy is produced from wind energy, solar energy (solar thermal and solar photovoltaic), geothermal energy, hydropower without reservoir, biomass fuel (solid or gaseous biomass fuels) excluding biomethane, waste, nuclear energy, lignite, crude petroleum products and peat must pay the SESF targeted contributions for their revenues from the sale of electricity on the free market for each single supply transaction within the period from 1 July to 31 December 2023.
The targeted contributions constitute the positive difference between the revenues from market sales excluding VAT and the revenue cap as set out for each producer group corresponding to the production source. The revenue cap for each separate production source shall be determined by means of Council of Minister’s Decree.
The transactions in balancing energy necessary for the balancing of the electricity system of the TSO are left outside the scope.
Electricity sale with effective contracts for premiums
Energy producers with total installed capacity exceeding 1 MW, where the energy is produced from wind energy, solar energy (solar thermal and solar photovoltaic), geothermal energy, hydropower without reservoir, biomass fuel (solid or gaseous biomass fuels) excluding biomethane, waste, nuclear energy, lignite, crude petroleum products and peat with effective Contract for Premiums in force on 8 December 2022 must also pay targeted contributions for their revenues from the sale of electricity on the free market for each single supply transaction within the period from 1 July to 31 December 2023.
The transactions in balancing energy are left outside the scope of the regulations.
The targeted contributions are calculated as the positive difference between the revenues from market sales excluding VAT and the estimated market price (i.e. reference price) under the regulatory decision of Energy and Water Regulatory Commission (EWRC) for the respective group of producers with determined premium differing from BGN 0.00.
Currently, the reference price for solar producers is BGN 250.27 per MWh and for wind producers BGN 231.83 per MWh. For more details on the reference price and premiums, follow this link Bulgarian regulator sets new reference prices in expectation for a Contract for premium reform (cms-lawnow.com)
For producers with effective contracts for premiums and those determined by the EWRC premium in the amount of BNG 0.00, the targeted contributions are calculated as 90% of the positive difference between the revenues from market sales excluding VAT and the reference price for the respective group of producers.
Electricity traders
Electricity traders are obliged to pay targeted contributions for all transactions concluded at freely negotiated prices for the period from 1 July to 31 December 2023. The target contribution amount is calculated as the positive difference between the revenues (VAT excluded) and all expensed related to the purchase and sale of the electricity, increased by 10% for transactions concluded with wholesale customers (purchasing the electricity with resale purpose) and increased by 15% for transactions concluded with end customers (purchasing the electricity for own use).
For more information on Bulgaria's energy sector, contact your CMS client partner or these CMS experts: Kostadin Sirleshtov, Borislava Piperkova, Viktoriya Dimitrova and Dian Boev.
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