The Energy Regulation and Markets Review - Stikeman Elliott

Bulgaria
statutory safeguards have been created to guarantee the independence of the ESO
from the NEC as the latter acts in the capacity of a public supplier, power generator
and electricity trader. Overall, both undertakings (NEC and ESO) belong, directly or
indirectly, to the state-owned and controlled BEH.
In light of the foregoing, Bulgaria is falling behind the implementation of the Third
Liberalisation Package (i.e., Directive 2009/72/EC); the final date for its transposition
into national law was 3 March 2011. The unresolved problem that continues to pose a
problem is the fact that the NEC conducts power generation and public supply while it
is also an owner of the transmission grid and a parent company with respect to the ESO.
Directive 2009/72/EC clearly requires separation of transmission (including operation)
services from other activities.
A draft bill for implementation was passed at the first reading in Parliament
on 8 March 2012; there is no indication, however, when the second reading will take
place. 13 Provisionally, the compliance solution revolves around the transfer of ownership
over transmission assets from NEC (currently an owner of the transmission grid) to the
ESO (operator) and safeguarding the ESO’s independence in the context of the ITO
unbundling model.
Bulgaria is moving forward towards effective unbundling that will separate
transmission activities from power generation and public supply. The required autonomy
of the ESO is bound to become a fact sooner or later. The ESO will be equipped with
financial, technical and other resources enabling it to independently conduct transmission
activities. Transmission services will then fit into the framework of unbundling under
Directive 2009/72/EC.
iii Transmission and distribution access
Irrespective of the slow progress on unbundling, the Energy Act 2003 and secondary
legislation strictly adhere to the provisions of Directive 2003/54/EC. Access to
the transmission or distribution grid must be guaranteed under objective and
non‐discriminatory terms by implementing the model of ‘third-party access’. The entities
responsible for access to the grid are the ESO (for transmission) and the respective
distribution operator (CEZ, E.ON or EVN). Access may only be refused on grounds of
lack of capacity, where the provision of access would lead to technical problems, failing
grid security, or deterioration of the conditions of access for other grid users.
IV
ENERGY MARKETS
i Key market players to date
Many market participants are now privately owned companies, most notably in power
generation and distribution. The base load of electricity is delivered by the only operational
nuclear power plant in Bulgaria, Kozloduy NPP. The plans for a second nuclear plant in
Belene have recently been abandoned. In its place, there are plans to expand the capacity
13 To become binding law, a bill must be approved at two readings in Parliament and then
promulgated in the State Gazette.
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