ABEO INSISTS ON POSTPONING THE MARKET UNIFICATION ON THE BULGARIAN-GREEK BORDER

TO

MRS. TEMENUZHKA PETKOVA

MINISTER OF ENERGY OF

REPUBLIC OF BULGARIA

MR. LACHEZAR BORISOV

MINISTER OF ECONOMY OF

REPUBLIC OF BULGARIA

MR. IVAN IVANOV

CHAIRMAN OF

ENERGY AND WATER REGULATION COMMISSION

MR. KONSTANTIN KONSTANTINOV

EXECUTIVE DIRECTOR OF

BULGARIAN INDEPENDENT ENERGY EXCHANGE /Sole Joint Stock Company/

SUBJECT: Insistence on postponing a market union on the Bulgarian-Greek border for the last quarter of 2021, when the market union between Bulgaria and Romania is expected

Madams and Sirs,

The Association of Bulgarian Employers' Organizations (ABOE) supports all efforts to create a transparent and competitive electricity market in Bulgaria. One of the main priorities of the Bulgarian Independent Energy Exchange/Sole Joint Stock Company/ in recent years, for which the exchange operator receives the full support of trading participants, is the implementation of market mergers with neighboring market areas.

According to the latest publicly available information, the first market merger on the Day-Ahead market on the Bulgaria-Greece border is planned for mid-May 2021. It is important to note that the Italian and Greek markets with which we will merge are the most -the most expensive electricity markets throughout continental Europe. The planned merger will inevitably lead to the equalization of price levels in the direction of rising electricity prices on the free market in Bulgaria, despite the partial increase in competition in supply and demand.

For this reason, the Association of Bulgarian Employers' Organizations calls for a review of the planned start date and its postponement for the last three months of 2021, when the market unification of the Bulgarian-Romanian border is planned. This is of the largest national importance for the Bulgarian energy and industry, as through it Bulgaria will have access to 6 other market areas with lower price levels than the current ones on the Bulgarian electricity market.

Among our main motives for requesting this postponement are the many cumulative factors that affect upward electricity prices such as increased demand due to the exit of all business consumers, record-high prices of CO2 allowances, planned annual repairs of Kozloduy NPP EAD, the forthcoming new price decision of the energy regulator from 01.07.2021, as well as the fact that we are the only market in the EU whose consumers pay a fixed surcharge for long-term contracts. Although the transmission capacity between Bulgaria and Greece will not increase after the market unification, in the forthcoming implicit distribution the trade exchange between the two countries will increase severely, as so far it is used to a limited extent by trade participants due to the lower Bulgarian price levels market during most delivery intervals.

Given the circumstances, ABOE believes that it is of national interest to focus all efforts on the process of unification of the markets "Day-ahead" on the Bulgarian-Romanian border, which will lead to a serious increase in efficiency, liquidity, and competition on the electricity market. Only after its implementation should the subsequent integration of the national market with that of Greece and Italy proceed. By adopting this sequence, possible market shocks and further increases in the wholesale price of electricity in Bulgaria will be avoided. We reiterate that our members support, in principle, the unification of the southern border, but it must be done in the best way and at the right time.

WITH RESPECT,