Bulgaria: EU accession - energy issues

What changes have already been made to Bulgarian energy law?

The major objectives of new legislation are to prepare for the planned liberalisation of the energy market, the unbundling of energy-related undertakings, addressing environmental considerations through energy efficiency and the promotion of renewable energy. Bulgaria has adopted new legislation in the energy sector that implements several EU Law requirements.

Bulgaria is also a signatory to the Athens Memoranda and a member of the South Eastern European Regional Energy Community, which aims at transposing EU Law and community standards in the energy sector throughout the region, whilst enhancing the regional energy market.

The 2005 Comprehensive Monitoring Report on Bulgaria identified the security of the energy supply, energy efficiency and renewable energy, and nuclear energy as the three non-problematic areas that were subject to ongoing development, but would meet the requirements at the time of accession provided that change continued at the same pace. At the same time, competitiveness and the internal energy markets were identified as areas where increased efforts and an accelerated pace of reform were needed. The report identifies that the energy sector is still dominated by heavy monopolies and although legislation is being scheduled or is in draft, much work remains to be done in the sector. Furthermore the restructuring of existing legal and industrial structures will have major economic implications.

The important provisions of the Bulgarian Energy Act are as follows:

• electricity generation, transmission, distribution and trading, as well the operation of an electricity market are subject to licensing by the competent regulatory authority - the State Energy and Water Regulation Commission;
• as a result of the gradual market liberalisation, certain electricity consumers will qualify as "eligible customers" and be entitled to choose their electricity suppliers and negotiate market based electricity prices. Rules adopted by the competent energy regulation authority provide for a full opening of the market from 1 July 2007, and from which all customers shall be considered "eligible" and thus able to choose the most attractive electricity supplier;
• unbundling of the activity and the accounting of all energy-related undertakings;
• providing for the new concepts of electricity market operator, transmission system operator, distribution system operator and regulation of their activities;
• introduction of certificates of origin;
• promotion of renewable energy sources by mandatory off-take, preference prices and preference access to grids.

The important provisions of the Energy Efficiency Act are as follows:

• establishment of the Energy Efficiency Agency as a competent body implementing the energy saving actions and measures under the law, and establishment of the Energy Efficiency Fund, responsible for managing funds granted to energy efficiency projects;
• new energy saving measures include energy efficiency assessments in investment design and construction process, as well as in exploitation of existing buildings, energy certification of buildings and energy audits of undertakings with high energy consumption.

With regard to building up of mandatory oil stocks, Bulgaria has been granted a transitional period until 31 December 2012.

What changes to Bulgarian energy law are expected to come into effect on accession?

• Legal and actual opening of electricity and gas market shall continue; further implementing legislation needs to be adopted with regard to the opening of gas market;
• Restructuring of the National Electricity Company and Bulgargaz;
• Construction of the Nabucco gas pipeline project – a priority EU project , which has received support from the programme for Trans-European energy networks

• What can you do to ensure that you comply with the new law and prepare for accession?

• Licence holders should make sure that they continually comply with the conditions provided for by the law, since the State Energy and Water Regulation Commission is entitled to withdraw licences;
• All entities should be prepared for the planned liberalisation of the energy market;
• Energy-related projects should be scrutinised for eligibility under the Kyoto flexible mechanisms.