Bulgaria: The Impact Of The EU Third Energy Package On Bulgarian Legislation

Last Updated: 17 February 2010
Article by Stefana Tsekova and Elena Rangelova

This article was originally published in the schoenherr roadmap`10 - if you would like to receive a complimentary copy of this publication, please visit: http://www.schoenherr.eu/roadmap.

The third energy package (TEP) aims at the development of the electricity and gas markets, particularly the separation of supply and generation activities from transmission operations. The TEP further aims to harmonise the powers of national energy regulators and to ensure their greater independence, while strengthening cooperation between them.

Independence of network operation (unbundling)

Under the provisions of the TEP, the EU member states will have the opportunity to choose between three different approaches on more effective unbundling.

  • Full ownership unbundling (OU) – The transmission system operator (TSO) owns the electricity/gas network and is not controlled, directly or indirectly, by a vertically integrated undertaking (VIU) that is also active in supply and generation.
  • Independent System Operator (ISO) – VIUs retain ownership of their transmission networks but must hand over the operation, maintenance and development of the transmission system to a separate entity, the ISO.
  • An Independent Transmission Operator (ITO) model (the so-called "third way approach") – The TSO remains within the VIU but additional regulatory conditions are introduced in order to guarantee the independence of the ITO from the VIU.

Bulgaria is one of the eight member states that will develop the "third way approach" in order to avoid implementation of OU and ISO models. The Bulgarian position on unbundling was that the OU option could have negative social consequences due to the fact that Bulgarian customers depend on a single supplier.
Currently, in Bulgaria the main activities in generation, supply and transmission of electricity and gas are controlled by the Bulgarian Energy Holding EAD (BEH EAD).

BEH EAD was incorporated on 18 September 2008 through a Decision of the Minister of Economy and Energy as a shareholding company with 100% state owned participation. Amongst others, the holding includes:

  • NEK EAD – generation and transmission of electrical energy, public supply monopolist, owner of the power transmission network, etc;
  • ESO EAD (100% owned by NEK EAD) – operation, overhaul and maintenance of the transmission network, operational regime planning and control of the electrical power system, etc.;
  • Bulgargaz EAD – natural gas public supply monopolist;
  • Bulgartransgaz EAD – transmission, transit transmission and storage of natural gas, maintenance, operation, management and development of underground gas storage.

The contemplated restructuring of BEH in order to comply with the ITO model is planned to be completed within a year and a half. Such restructuring should aim mainly at transfer of ownership of the electricity transmission network from NEK EAD to Electricity System Operator EAD, as well as legal and organisational unbundling within Bulgartrasngas so as to separate the gas transmission system from the gas storage system. To achieve this, additional amendments to the Bulgarian energy legislation – particularly the Energy Act, the regulations on the prices of electricity and natural gas and trade rules – are required.

Independent national regulatory authority

The State Energy and Water Regulatory Commission (the Commission) is the Bulgarian energy regulatory body for the energy and gas sector.

An element of the TEP is the commitment of each EU country to ensure that its national regulator:

  • is independent from the interests of the government, industry (public and private entities) and the market;
  • has sufficient financial and technical capacity to perform its functions; and
  • is impartial and transparent in its activities.

Pursuant to the provisions of the ACER Regulation, the Bulgarian regulator must obtain greater powers and responsibilities with regard to the separation of activities (transmission and distribution), mandatory investment and abuse of dominant position. Furthermore, the regulator will be entitled to impose "effective, proportionate and dissuasive penalties" against electricity and gas undertakings not complying with their obligations or not performing legally binding decision issued by the Commission. This requires further amendments to the Energy Act as the Commission does not at present have sufficient powers. Such legislative changes will make the Bulgarian regulator the most important energy institution in the state.

The adoption of the TEP enforces the strengthening of the functions of the Commission to control network (grid) operators through approval of long-term plans for their development and future coordination with ACER. Thus, the network (grid) operators can be controlled and the necessary investment in electricity grid provided.

Improved customer protection

Customer protection and the consumer rights are among the main issues of the TEP. The New Electricity and New Gas Directives provide some improved measures on consumer protection. Customers will have the right to:

  • change their electricity or gas supplier, while respecting contractual conditions. The change will be performed by the operator(s) concerned within three weeks. In addition the customers will not be charged for changing suppliers;
  • receive a final closure account following any change of gas or electricity supplier no later than six weeks after the respective change;
  • receive all essential data related with the electricity or gas consumption;
  • be properly informed of actual electricity or gas consumption and costs frequently enough to enable them to regulate their electricity consumption;
  • compensation and refund arrangements, which apply if contracted service quality levels are not met, including in case of inaccurate or delayed billing.

General customer protection provisions are included in the Bulgarian Consumer Protection Act (published State Gazette No. 99/2005 as last amended with State Gazette No. 42/2009). The Energy Act introduces specific measures to protect consumers in terms of full liberalisation of the electricity market – for household users and small to medium-sized enterprises, electricity at regulated prices is guaranteed.

The expected implementation in the national legislation of the provisions related to customer rights and their protection will be one of the main and most important changes in the near future.

The regulator will be entitled to impose 'effective, proportionate and dissuasive penalties' against electricity and gas undertakings not complying with their obligations or not performing legally binding decision issued by the Commission.

This article was originally published in the schoenherr roadmap`10 - if you would like to receive a complimentary copy of this publication, please visit: http://www.schoenherr.eu/roadmap.

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.

Authors
 
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
Tools
Print
Font Size:
Translation
Channels
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.

Disclaimer

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.

General

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