28 December 2023
The Ombudsman Diana Kovacheva recommended to the Chairperson of the Energy and Water Regulatory Commission (EWRC) Ivan Ivanov that the Commission reduce hot water and central heating prices from 1 January 2024. The reason is that the heat prices approved for the current heating period (1 July 2023 – 30 June 2024) have been significantly increased and that a balance between the interests of the district heating companies and the customers has not been achieved. Thus, in practice the prices are not fair and economically justified for customers, but, in addition, they are highly distorted and entirely to the benefit of the district heating companies that make unfair gains to buy the main fuel, natural gas, and to pay the carbon emissions quotas.
“Pursuant to the Ombudsman Act and premising on Art. 22 of Regulation No. 5/2014 on the adjustment of the central heating prices, I make the recommendation that the EWRC urgently reconsider the current fixed prices of central heating so as to reduce the tariffs in line with the long-term reduction of the natural gas price and of the carbon emissions quotas prices in the international markets and in Bulgaria,” Prof. Diana Kovacheva wrote.
She quoted specific data from the first six months of the price period that prove that the households paid the district heating companies in excess to the projected gas prices.
In the off-heating period:
- in July 2023: customers paid BGN 72.22/MWh for natural has instead of the real market price that was BGN 60.58/MWh, or made an overpayment of 19.21%;
- in August 2023: customers paid BGN 72.22/MWh for natural gas instead of the real market price that was BGN 59.67/MWh, or made an overpayment of 21.03%;
- in September 2023: customers paid BGN 72.22/MWh for natural gas instead of the real market price that was BGN 63.35/MWh, or made an overpayment of 14.00%;
- in October 2023: customers paid BGN 93.34/MWh for natural gas instead of the real market price that was BGN 60.41/MWh, or made an overpayment of 54.51%.
Data about the heating period:
- in November 2023: customers paid BGN 93.34/MWh for natural gas instead of the real market price that was BGN 82.12/MWh, or made an overpayment of 13.66%;
- in December 2023: customers paid BGN 93.34/MWh for natural gas instead of the real market price that was BGN 87.50/MWh, or made an overpayment of 6.65%.
The application of the public provider Bulgargaz EAD to the EWRC for approval of the price of natural gas in the amount of BGN 80.77/MWh for the month of January 2024 has been made known to the general public. For comparison, the projected price of fuel for the district heating companies in the first quarter (Q1) of 2024 is 27.70% higher and amounts to BGN 103.14/MWh+, the Ombudsman pointed out.
In the opinion of Diana Kovacheva, it is very unfair that the household customers of the district heating companies continue to pay, by means of their heating bills, the significantly inflated projected prices of natural gas compared to the actual market prices that are tangibly lower. Thus, the district heating companies make unfair profits to the detriment of the customers who, again during the current heating period, pay high prices for their central heating, without any valid economic reason.
Also, the Ombudsman draws attention to the fact that between July 2023 and December 2023 there was a drop in the carbon emissions prices at the European Energy Exchange (EEX) and that the drop was particularly steep in the first two months reckoned from the beginning of the current heating period.
“According to EEX data, the average price of 1 ton of carbon dioxide (СО2) is EUR 84.246 in Q3 of 2023 and EUR 76.193 in Q4 of 2023 (until 18 December 2023). By way of comparison, the projected price of carbon emissions as set by the EWRC when the regulated prices for the heat in the price period in question is EUR 88.00/ton CO2 (as per the EWRC’s Decision Ц-12 of 30 June 2023 on the approval of the heat prices and the determination of preferential prices and premiums for electricity generated from high-efficiency co-generation by combined heat and power plants). Also, it is important to bear in mind that a trend can be observed at the EEX for the СО2 prices to go down (on 19 December 2023 the actual price was EUR 73.438/ton СО2),” Prof. Kovacheva wrote further.