The independent Bulgarian energy exchange finally started work a week ago, thus launching the long postponed liberalized energy market in this country. However, the steps are timid for the time being and this liberalization is half-hearted since the exchange is state-owned and it offers electricity of state-owned plants and enterprises only. It is true that those are the biggest, but a really free market would mean the stepping in of private companies as well. Besides that, at this stage the exchange offers electricity only, despite the fact that it is presented as “energy exchange”.

However, the initial number of deals for some 5 percent of the electricity used in this country per day came to show that one of the main reasons of the market liberalization’s opponents – larger electricity bills, didn’t quite turn into reality. On the contrary, the first deals showed prices some 25% lower than the ones on the regulated market. Later on however the prices went up, nearly catching up with controlled prices. It is true that citizens and households cannot choose for the moment, as they still cannot opt for their electricity suppliers. At the same time all this is forthcoming after April and it might make electricity producers and suppliers optimize their market policy and pricing practice. The need of this was very clearly reminded three years ago by large-scale civic protests that tore down the first government of incumbent PM Boyko Borissov. The quantities of electricity traded are expected to mark a serious growth then, along with the transfer to long-term deals. This timid start of the energy exchange is not the end of the problems, or at least not in the short term. Both the producers and consumers will have to adapt, the best model is to be found and it is currently being developed by the World Bank’s consultants. Yesterday’s presentation of the first of its kind online platform for contracts on the supply of electricity on the market with freely negotiated prices in Sofia was really useful in this relation.

No matter how vague and partial the liberalization of the energy market still might be, a step into the right direction has already been made and it may contribute to the solving of the problem with the huge debts of the state-owned and practically bankrupted electricity sector, as well as to the overcoming of the alarming fact that actually over 60% of the Bulgarians are electricity-poor. The free market reacts in the most accurate manner to supply and demand, finding most easily the balance of interests within free competition. As far as poor people are concerned, the most proper and suitable decisions will have to be found within the frames of the state’s social policy. It has the experience in this connection, as it provides wood at social prices to hundreds of thousands of Bulgarians.

English version: Zhivko Stanchev