Bulgaria: IBEX: One Year Of Power Exchange In Bulgaria

Last Updated: 26 January 2018
Article by Yassen Spassov

IBEX (the Independent Bulgarian Energy Exchange EAD) was established in January 2014. The license to operate as a power exchange was issued two months later and the company has been officially entrusted to develop the exchange for electricity in Bulgaria which should be based on competitive, transparent and non-discriminatory principles. IBEX should turn into a one-stop shop for the physical trading that consists of day-ahead, intraday and OTC for longer term contracts. In order to meet these objectives, IBEX has been powered by the Electricity System Operator EAD (the "ESO") - the independent system operator in Bulgaria. The two companies entered into a bilateral agreement according to which IBEX relies on technical support, equipment, qualified and experienced personnel being provided by the ESO. Financial support has been secured from IBEX parent company – the Bulgarian Energy Holding EAD ("BEH" is a state owned enterprise and also a parent company of the ESO).

Furthermore, a valuable experience has been drawn from the mature electricity markets in Western Europe. Nord Pool Consulting and Nord Pool Spot have been contracted for consultancy; IT related services and the operation of the day-ahead market. Nord Pool Spot acts as an independent service provider with substantial first-class expertise in the operation of power exchanges, and for IBEX they operate the day-to-day market functions of the day-ahead platform.

IBEX has also requested and it has been appointed as a Nominated Electricity Market Operator ("NEMO") under Regulation № 2015/ 1222/ EU to perform the single day-ahead and/ or intraday market coupling. The national regulator (EWRC) notified the EU Commission that IBEX would be the national legal monopoly for trading services on the Bulgarian electricity market, and there would be no option for designating other NEMOs since the Bulgarian Law on Energy expressly establishes the granting of a single and exclusive license for the operation of a power exchange in Bulgaria.

Promises to the EU Commission

The position of IBEX parent company came under fire as it drew attention from the EU Commission which initiated an antitrust procedure in 2014. The reason for the inquiry was that BEH owns 100% of the shares of market incumbents in power generation (NPP Kozloduy, TPP Maritsa East II, National Electricity Company – large hydro) and the ESO. The EU Commission accused BEH and came to the preliminary conclusion that BEH exercised "a decisive influence" over their conduct in power generation. BEH was also found to hold a dominant position and abuse its dominance, where the total market share of all competitors on the electricity market "remains at least two times smaller than BEH's market share."

In light of this, the objectives for setting up a viable and independent trading platform stand awkward and rather stilted. Nevertheless, as part of its commitment to cease and desist the abuse of its dominance, BEH agreed that the power generation incumbents would enter into liquidity agreements with IBEX making part of their supplies available through an auction on the day-ahead platform of IBEX.

Another major commitment from BEH has been the undertaking to divest its ownership in IBEX. Unfortunately, this has been just a compromised solution as the proposal was to have IBEX shares transferred to the Bulgarian Ministry for Finance. Although safeguarding measures were proposed to restrain BEH's influence over IBEX, the exchange would continue to be exclusive property of the Bulgarian state.

Against this background, IBEX undertook lengthy preparations and conducted a dry-run period in 2014 and 2015. The exchange commenced its actual operations in the beginning of 2016 marking its first anniversary around January 2017.

First Year Self-Assessment

Half way through the first year of actual operations, the CEO of IBEX already announced a very positive assessment of IBEX operational record. With more than 30 members on the exchange nearly all of them actively participate on a daily basis. Approximately 500,000 MWh were exchanged through IBEX in the first two quarters of 2016. Although this figure may be dwarfed by well-established power exchanges in Europe, it is interpreted as a positive outlook for the local market which very small by definition.

The CEO proudly declared that it was not only the state-owned incumbents on the Bulgarian market that stand on the supply side of the exchange – NPP Kozloduy, TPP Maritsa East II and the National Electricity Company (hydro). There had been numerous other suppliers whether participating directly (power generators) or indirectly (intermediated by registered electricity traders).

The Proximate Objective: Market Transparency

Setting up and running a day-ahead market is expected to provide a desired market results – a credible wholesale market reference price, transparency, and liquidity. These are the key ingredients for a competitive wholesale electricity market whereas lack of transparency may only create barriers to effective competition. The role of IBEX also includes supervisory functions as the exchange platform monitors the market and the incidence of market abuse, anticompetitive conduct, inside trading or market manipulations.

In fact, IBEX adopted the approach of full transparency regarding its operations and the conduct of its members. Special rules for proper conduct on the exchange have been prescribed. According to the Rules of Conduct on the Exchange, all information shall be disclosed publicly as soon as it becomes available and no later than 60 minutes from the occurrence of an event generating relevant information subject to disclosure.

IBEX rules are aimed at creating market practices allowing an equal access to information that may affect the demand and supply, pricing of traded commodities and/ or the behaviour of market participants. As part of the process to ensure transparency in market operations, IBEX has offered reporting services for transaction data in compliance with the REMIT Regulation.

Future Prospects

The Bulgarian electricity market is currently shaped as a hybrid model. The supply of electricity at wholesale and retail level operates with both 'regulated' transactions (tariffs are determined by the electricity regulator) and liberalized segment for 'free' transactions, where electricity is supplied at freely negotiated prices.

For the regulated segment, household and non-household customers connected to the low voltage electricity distribution network are supplied at regulated tariffs, yet the regulated segment has diminished substantially over the years.

According to World Bank reports issued in 2015 and 2016, about 60% of generated electricity was traded on the deregulated segment of the Bulgarian market, and the scale of the regulated segment has shrunk and will continue further. For this and other reasons, the dual structure of the market is considered unsustainable in the longer run as there are other issues underpinning the market model – tariff deficits, long-term contracts and alleged state aid.

As of 2017 all customers may exercise the right to switch their supplier and become exposed to the market forces of supply and demand. The obstacles even for household customers have been completely removed in 2016. However, the market incentive continues to be weak as the tariffs on the regulated market so far have proved quite of a challenge to match on the deregulated segment.

The 2017 Winter Test for IBEX

This winter became a real challenge for the electricity system when the outside temperatures dropped below "–10 OC" for a prolonged period of time in January 2017. Average prices on IBEX skyrocketed in response to unexpected lower supply on the deregulated segment. The root reason for lower supply is commonly suspected to be that state-owned power generation incumbents had to divert their capacity in Djingov, Gouginski, Kyutchukov & Velichkov order to satisfy the demand on the regulated segment of the market. As a result, the IBEX price on 9 January 2017 was driven upwards by additional 45% increase from the highest price on IBEX by that time. Of the other side, the demand on the IBEX also increased which paved the way and contributed to the price spike.

There have been no conclusive reports, evidence or public statements for the drastic price increases. IBEX did not cast much light on this incidence, and neither the state owned incumbents did. However, the market data seemed self-explanatory since the quantities of electricity on offer in the period with the price increase were half of what had been supplied through IBEX in earlier periods. Media reports indicated that neighbouring exchange platforms also registered price increases, though in Romania and Hungary those were much more moderate.

A couple of days later, the Minister for Energy issued an order temporarily suspending all exports of electricity from Bulgaria with effect from the 13th January 2017. The rationale behind the order related to the incurred imbalance between domestic supply and demand arising out of the extreme winter conditions.

Naturally, the actions of the Minister for Energy brought about the opposite extreme causing severe surpluses in power generation capacity. IBEX prices plummeted to the bottom on the 14th and 15th of January 2017, going down more than four times below the prices in Romania and Hungary.

Needless to say, the state intervention resulted in dramatic losses for exporters, but the Minister for Energy denied any connection between IBEX and the suspension of exports. The EU Commission inquired immediately about all circumstances related to the export suspension.

Transparent and Independent or Not

Despite all suspicions the record from the first year does not allow unambiguous reading, though the actions of Bulgarian authorities do so as their interference with the market has been openly manifested. On the other hand, even an optimistic approach requires assessments to take account of the privileged position of IBEX as a legal monopoly and the state-funded support.

Within the larger context, IBEX should be seen merely as a reflection of market reality – demand has been liberalized to a significant extent, whereas supply has been dragging behind being strongly consolidated in state owned assets.

Previous publisher: TerraLex Connections, March 2017

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions