News

18 September 2023

The State's vision of how full liberalisation of the electricity market will be achieved in practice is not clear. This was stated by Ombudsman Diana Kovacheva in an opinion to the Chairman of the Energy Committee of the National Assembly Delyan Dobrev on the initiated amendments to the Energy Act (EA).

It should be recalled that during the public debate on the bill, Prof. Kovacheva has already stated her opinion to the Energy Minister, and some of her proposals have been accepted.

The Ombudsman is adamant that there is no thorough economic, social and legal analysis of the benefits and risks for households on leaving the free market.

According to Diana Kovacheva, the planned amendments do not ensure the rights and interests of household electricity consumers. She points out that no measures have been designed for the protection and financial support of vulnerable groups and the energy poor people, that no smart metering systems (SMSs) have been introduced for household customers, and no information and communication strategy has been provided to prepare household consumers for their participation in the free electricity market.

In her opinion, the Ombudsman presents arguments on the bill, which was voted on in the first reading in the Energy Committee.

She also raises specific questions as to why the application of a flexible element is left to discretion as a possibility and asks for a definition of peak and off-peak load. It concerns the envisaged possibility, in fixed-term electricity supply contracts, of including a flexible element, such as price fluctuations at peak and off-peak load (§ 46 in § 1 of the Additional Provisions, item 13b).

She notes that as a condition for individuals to be considered a household, the bill requires that they must live and be registered in the same dwelling or part of a dwelling (§ 1 of the Additional Provisions, item 13c).

“It is not specified which address registration is considered – permanent or current address. Once again, I would like to emphasize that there are a number of problems with the address registration as citizens cannot register at the address where they actually live, because: they live in illegal buildings, their residential address is marked in a way different from the address set out in the Civil Registration Act (CRA), they live in studios or villa buildings, they live on rent and the landlord does not provide them with a declaration of consent to be registered at that address, there are more people living in the apartment than the number specified in the CRA”, writes the public defender.

Diana Kovacheva points out that it is intended to take into account the current prices of energy carriers to determine a “household in a situation of energy poverty” (§ 1 of the Additional Provisions, item 13d). She draws attention to the fact that it is not clear what kind of energy carriers are meant.

“At the same time, the disposable average monthly income of a household member for the previous year will be essential. I consider incorrect to compare current prices and income from a previous year, as the latter will not reflect the actual needs in terms of heating costs of a household. It is also unclear what is included in the concept “energy performance of a dwelling” and “typical energy consumption”, the Ombudsman points out.

  Prof. Kovacheva categorically objects to the charging of a “termination fee” and a “switching-related fee” to household customers (§ 1 of the Additional Provisions, item 63a and item 63b).

“There is no basis for charging a fee for terminating a fixed-term contract at the end of its term. Moreover, electricity supply contracts are to provide for penalties for non-compliance with the agreed conditions (§ 33,  §1, item 14  of the Additional Provisions). A switching-related fee should not be charged either, since Article 12 (2) of the Directive reads: “Member States shall ensure that at least household customers and small enterprises are not charged any switching-related fees”, emphasises Prof. Kovacheva.

In her opinion, she also points to other significant shortcomings. Among these are the criteria, conditions and procedure for determining the status of an energy-poor household and/or vulnerable customer for electricity supply, to be set out in an Ordinance adopted by the Council of Ministers (§ 17, Article 38e, paragraph 2). She stresses that the transitional and final provisions do not provide for a deadline for its drafting.

“It is unacceptable to postpone the drafting of this Ordinance to an uncertain future date. The three-month period provided for in §47 for the adaptation of the by-laws applies to the by-laws in force. It is necessary to determine a specific time limit for issuing the Ordinance under §17, Article 38e, paragraph 2”, emphasizes the Ombudsman.

The Ombudsman urges the transposition of Annex I, Minimum requirements for billing and billing information, of Directive (EU) 2019/944 of the European Parliament and of the Council on common rules for the internal market for electricity and amending Directive 2012/27/EU.

She also draws attention to the fact that Article 12, item 5 of Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 has not been transposed either, providing for household customers to be entitled to participate in collective switching schemes. Member States shall remove all regulatory or administrative barriers for collective switching, while providing a framework that ensures the utmost consumer protection to avoid any abusive practices.

The public defender emphasizes that it is necessary to pay special attention to certain groups of household customers in order to guarantee their rights and interests when they enter the free market. These are vulnerable consumers, the energy poor people, the elderly, people without computer literacy and Internet access and living in small and remote settlements.

“A special programme of the Government for awareness and preparation for the liberalisation of the retail electricity market is needed. Here, the role of local government bodies should also be envisaged,” concludes the Ombudsman.