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Non-household electricity consumers will enter the free electricity market as of 1st of October 2020

As of 1st of October 2020 all non-household customers connected to the electricity distribution network should enter the free electricity market according to the amendments in the Energy Act, in force from 26th of June 2020, which amendments are result of the implementation of Directive (EU) 944/2019 imposing obligations for member states to fully liberalize their electricity market.

What are the deadlines for joining the free electricity market?

In 30-day term period since the entry into force of the new Energy Act, i.e. by 26th of July 2020 the final suppliers of electricity in the respective regions- the companies CEZ Electro Bulgaria AD, EVN Bulgaria Elektrosnabdyavane EAD, Energo-Pro Sales AD and ESP Golden Sands OOD- should send to each of their non-household customers a notification for termination of electricity supply to sites connected to the low voltage electricity distribution network as from 1st of October 2020, and in the same time period (26th of July 2020) the electricity companies must publish on their websites a list of these customer in the relevant licensed territory.

Until 30th of September 2020 each non-household customer should sign a contract with an electricity supplier at freely negotiated prices or stay with the existing supplier. In case the customer doesn’t comply with that time period the supply of electricity will continue to be carried out by its current supplier but in this case, the existing supplier concludes a standard contract with term period from 1st of October 2020 to 30th of June 2021. A model of that standard contract will be prepared by the ENERGY AND WATER REGULATORY COMMISSION by 31st of August 2020 and it will regulate the rights and obligations of the parties, the conditions for supply of electricity and termination of the contract.

In case the customer does not conclude a contract even after 30th of June 2021 he will be supplied with electricity by the same supplier but at that time the supplier will already be acting as a “supplier of last resort”, which in simple language would mean that he will be supplying electricity at significantly higher prices. This is due to the fact that the function of the supplier of last resort is to supply electricity incidentally, until the choice of another supplier is made.

What should the customer be aware of when concluding a contract at freely negotiated prices?

Each customer should carefully study both the reliability of the supplier and the contractual terms of the offer.

Firstly, the customer must check whether the trader is licensed to perform that activity, i.e. “trade with electricity”. Currently, that information can be found on the website of ENERGY AND WATER REGULATORY COMMISSION- https://portal.dker.bg/registri/litsenzii.

Secondly, the customer must thoroughly study the offer and the terms and conditions of the contract, and most importantly how the price of the services is determined which undoubtedly is the most essential element of the contract.

It should be taken into account that when supplying electricity on the free market the parties enter into a contract for combined services which also affects the way the price is formed. The subject of this contract is the sale of electricity and all services used by the end customer, including network services and the payment of «balancing liability» for example. However, the price for “liabilities to society” is charged on the invoice separately from the price of electricity. Therefore, when reviewing and comparing offers the customer must carefully examine whether the submitted offer contains information about the value of all components of the service and what is the final price he will pay to the provider. It should check whether the price for the supply of electricity is fixed or the contract provides that it can be changed, in the latter case it must be clearly defined under what conditions the change in the price takes place or within what limits.

And lastly, when reviewing the proposed contract, the client should check whether it provides for penalties in case he decides at some point to change his supplier and what is their amount; under what conditions the supply of electricity will take place; what are the responsibilities of the supplier if he does not fulfill his obligations under the contract; whether access to electricity can be denied and under what conditions; when the invoices will be received and what the reporting period will be..

As of 31st of December 2020 the ENERGY AND WATER REGULATORY COMMISSION should create a uniform Platform where the clients could compare offers of all suppliers and make an informed choice. Until the Platform is created this information can be found on the website of ENERGY AND WATER REGULATORY COMMISSION.