State aid for businesses, power companies in Bulgaria may reach EUR 1 billion

The Bulgarian government has secured an additional EUR 650 million for businesses and energy companies to partly offset the impact of high electricity prices amid the energy crisis. Its intention is to lower costs businesses and power companies and prevent a price increase for all consumers. The total amount allocated by the state from the start of the energy crisis in October is estimated at EUR 768 million, but it could easily reach EUR 1 billion.

Prime Minister Kiril Petkov stressed businesses have difficulties in covering electricity costs, while power distribution companies experience problems that can affect household prices. Petkov confirmed the total amount distributed to businesses, energy companies, and consumers is set to reach EUR 1 billion for the entire winter season.

Minister of Energy Alexander Nikolov said the scheme for granting aid for businesses would be the same as in October and November 2021. The aid will be paid for December and the first three months of 2022.

The support is expected to be around EUR 66 per MWh for December 2021

Businesses would receive 75 percent of the difference between the base price of EUR 95 per MWh and the average monthly price at power exchange IBEX day-ahead market for the respective month, but not more than 30 percent of the market price, according to the Ministry of Energy.

In December alone, the support is expected to be around EUR 66 per MWh, translating to EUR 128 million in total for last year and an additional EUR 343 million for the first quarter of 2022.

Aid for power companies, network operator to lower the increase of price for consumers

Power distribution companies and transmission system operator ESO EAD are envisaged to receive EUR 120 million for October and November 2021, and EUR 61 million for the first quarter of 2022. The aid for 2021 would be paid after the European Commission approves the move.

The aid scheme for network companies, including ESO EAD, would partly reduce their financial gap and limit the need to significantly increase the prices of network services for all end-users, the ministry said.

The move lowers grid service charges

It lowers the costs by EUR 2.3 per MWh on average for consumers connected to the transmission network and EUR 10.2 per MWh on average for those connected to the distribution network.

The government also earmarked EUR 102 million in aid to natural gas consumers.

Of note, in December the Bulgarian parliament decided to freeze prices of electricity, heating and water for households until the end of March 2022.