Amendments to the Energy Act

Limitation of the preferences in favour of renewable energy producers

Through amendments in the transitional and final provisions of the Energy Act the legislator explicitly cancelled the preferences provided for renewable electricity producers. The incentives related to mandatory purchase of electricity under preferential prices were generally cancelled for all energy sites that have not been commissioned as at 06 March 2015 – the date the amendments entered into force, except for a few types of power plants as described below.

In addition to the operating power plants commissioned prior to 06 March 2015, the following types of new power plants to be commissioned after the said date will also benefit from the compulsory purchase of electricity at preferential prices:

a. with total installed capacity up to 30 kW constructed over roofs or façades of buildings connected to the distribution grid and situated in urbanized territories;
b. with installed capacity up to 1,5 MW for production of energy with combined cycle and indirect use of biomass as 50% of the overall weight of the biomass shall be animal manure, situated and constructed in urbanized territories, agricultural sites and production areas;
c. with installed capacity of up to 500 kW for production of energy with combined cycle and indirect use of biomass of vegetable waste form own production constructed in urbanized territories.

The power plants producing electricity from biomass may benefit from a newly introduced incentive – they shall have priority operation status in cases of energy excess in the grid.

Purchase of electricity from highly effective cogeneration

With the amendments to the Energy Act the public supplier (NEC) and the end suppliers are no longer obliged to purchase the entire amount of electricity produced by cogeneration plants. The obligatory purchase under preferential prices was limited only to electricity produced by highly effective cogeneration of heat and electricity, registered with a certificate of origin.

Such electricity shall be purchased under preferential prices up to the projected amount, as approved by the Regulator with the resolution determining the individual preferential price for the respective cogeneration unit. Any electricity produced by cogeneration plants in excess to the approved projected amounts may be sold on the free market or on the balancing energy market.

Changes in the energy Regulator

A large part of the amendments in the Energy Act concern the State Energy and Water Regulation Commission which shall be divided into two departments and which name shall be changed to Energy and Water Regulatory Commission (EWRC). One department shall be responsible for the energy sector and the other shall be in charge for the water and sewerage sector, while the Chairman shall govern both departments.

The number of members is increased from seven to nine members. The new members shall be elected amidst the water supply and sewerage industry.
The members of the EWRC shall be appointed and dismissed by the parliament and no longer by the government. This change aims to increase the publicity in the process of nomination and election of members of the Regulator.

In order to increase the publicity in the work of EWRC, the amendments in law introduce the general principle that all sessions of the Regulator shall be open, i.e. publicly held, except for discussions concerning confidential information protected by law. The commission shall publish in its official Internet site the suggestions by the energy and water operators concerning changes in prices, as well as all minutes of its sessions, including the manner of voting of each commission member and the motivation for each disapproval vote.

The procedure for appeal of EWRC resolutions has also been changed. The resolutions of the commission shall be appealed before the competent Administrative Court under a procedure including two court instances, as per the rules of the Administrative Procedure Code. Before the amendments the resolutions were appealed directly before the Supreme Administrative Court.

Decrease of green energy levy for large industrial enterprises

The changes in the Energy Act have opened the way for possible decrease of green energy levy for some industrial enterprises. The ministers of economy, energy and finance are assigned to draft jointly an ordinance, which is expected to introduce the rules for decreasing the financial burden related to green energy levy. The ordinance should consider the European regulations concerning state aid.

Increase of monetary sanctions for braches of the law

The minimal amounts of sanctions applied in cases of breaches of the Energy Act, the regulations concerning its application and the conditions under licenses issued to energy companies have been increased. The minimal amount of the sanction is increased from BGN 20 000 to BGN 200 000. The amendments to the law empower the Public Financial Inspection Agency to monitor all energy sites with production capacity over 1 MW.