Guest contribution – Untangling the puzzle of energy policy in Bulgaria

Continuing our previous discsussion about the (de)politicization of energy policy, this month’s last guest contribution takes a closer look at the current political and energy crisis in Bulgaria. It is written by Ralisa Hiteva – an energy geographer at the School of Environment and Development at the University of Manchester, whose doctoral research titled Geographies of energy governance – negotiating low carbon and energy secure infrastructure in the European Union compares the energy governance of Bulgaria and the UK.

Untangling the puzzle of energy policy in Bulgaria

In February 2013, prompted by nationwide protests, the Bulgarian Government stepped down because of a complete loss of public confidence and trust in the ability of the state to manage the energy sector. At the centre of protests was public outrage about increasing electricity prices and the conduct of the three foreign electricity distribution companies (EDCs) – EVN, CEZ and Energo-Pro. Normally protest-shy (in comparison with neighbouring Greece) Bulgarians have been protesting ever since, and although protests after the elections in May have shifted more towards political parties, a strong connection with energy politics still exists.

Snapshots of protests in cities in Bulgaria in February 2013

Snapshots of protests in cities in Bulgaria in February 2013

Bulgarian households are more reliant on electricity than households in other EU Member States. However, in terms of purchasing power parity, electricity prices in Bulgaria are among the highest in the EU. The Bulgarian energy sector is one of the strongholds of the material and management legacy of the communist regime. Politicians have proven to be highly sensitive to increases in electricity prices and electricity arrears of whole neighbourhoods and villages are often written off during pre-election. Considering that numerous governments have successfully managed to navigate between the competing interests of the EU, foreign investors, state energy companies and consumers to maintain control over energy prices (despite processes of privatisation, liberalisation and unbundling which started in the mid 1990s) what changed in February 2013?

European Commission and World Bank (2013) reviews found that the political crisis resulted from inadequate and undermined regulatory and legal frameworks; widespread mismanagement and abuses in the governance of state-owned companies like the Natzionalna Elektricheska Kompania (NEK) and Bulgargaz. The energy sector is governed through a complex, convoluted and non-transparent web of unofficial and deep-rooted allegiances between companies within the Bulgarian Energy Holding Company (BEH), the Ministry of Energy and the regulator the State Energy and Water Regulatory Commission (SERWC). It is through the control over strategic parts of the energy infrastructure, such as the high-voltage transmission grid (responsibility of NEK) and the natural gas transit pipelines (responsibility of Bulgargaz) that these structural problems of energy governance in Bulgaria manifest as problems of energy supply and security.

The rapid growth of installed wind and solar power at high feed-in tariffs between 2007 and 2011 required significant updating and development of the national electricity transmission network by the state-owned NEK. Following years of financial mismanagement of NEK’s liabilities to alleviate a range of social problems and hide budgetary imbalances, NEK was unable to undertake such level of grid construction. The demands of the newly installed renewable capacities compounded by chronic insufficient transmission capacity, making regimes of scheduled energy plant closures a regular occurrence in Bulgaria. A steady reduction in domestic and export energy demand – exports in the first quarter of 2013 fell by 40% on a year-on-year basis – coupled with warmer than usual weather in April 2013 forced the introduction of prolonged curtailment measures for nuclear, coal-fired and renewable power plants nationwide (EC, 2013; WB, 2013). The repeated curtailment measures for energy generation and stranded wind and solar farms made it clear that Bulgaria has no energy champions left.

Although the public protests in Bulgaria commenced with chants against the “energy mafia” there seemed to be confusion within the public discontent as to whom that entails. The opposition to the energy regime seemed to be focused on the distribution end of the energy supply chain, where EDCs sell electricity to consumers. As EDCs are the only direct interface between the whole energy supply chain and consumers, they became the face of the energy crisis, and the reason for the increase in energy prices. The protesters were calling for revoking EDCs licences and nationalising the electricity distribution network. At the same time, international institutions pressed the need for further liberalisation of the whole energy market. The determinist conditions in energy generation and transmission in the rest of the energy infrastructure network have, however, remained invisible.

Parts of the hidden web of interlinkages between the state, the regulator and the hub of state energy champions within BEH are now becoming gradually exposed, becoming more visible in the (gaps of) energy infrastructure within the country. The hidden nature and complexity of the Bulgarian energy sector make it difficult to untangle the web of informal and formal interconnections responsible for the crisis of energy security in Bulgaria. Entanglements like the one on the photo below are not limited to the inner city distribution cables but span throughout the length of the energy supply chain. Without untangling them, placing the spotlight on snippets of the energy supply chain in the country will only help the case of de-politicising the Bulgarian energy sector by swinging in-between extreme solutions like nationalisation and full liberalisation.

To start, one needs to follow the infrastructure trail: the tangled up connections and missing parts are the telltale signs.

Electricity cables in Veliko Turnovo city centre (Hiteva, 2011)

Electricity cables in Veliko Turnovo city centre (Hiteva, 2011)

References

The European Commission, 2013, Findings and recommendations related to Bulgarian energy policy, accessed on 20th June 2013 at: http://www.sofia.diplo.de/contentblob/3916400/Daten/3321512/EUFundings.pdf

The World Bank, 2013, Republic of Bulgaria: Power Sector Rapid Assessment, accessed on 20th June 2013 at: http://www.worldbank.org/content/dam/Worldbank/document/eca/Bulgaria/Bulgaria-Power-Sector-Rapid-Assessment_%20May27_final.pdf

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