The next and last pre-election service of the State Electricity Regulatory Commission or the transparent account scheme

Electricity bills are truly unique to the market (heavily state-controlled) – grid access surcharge, electricity distribution surcharge, green energy surcharge, etc. Unique because I have not noticed in my receipt at the hairdresser that there is access to a beauty salon, a hairdryer surcharge or “unreimbursed shampoo costs” (yes, something like that is present in the slips that are sent to us every month). In fact, I have not noticed it when I buy anything else. Why is that?

The explanation that the supply of electricity is so different from any other business is quite superficial. Human civilization has long learned to do much more complicated things than just transmit electricity through wires. The more Machiavellian thesis is that, in fact, this way of presenting costs is “for the benefit of the consumer” – the wonderful, concerned Bulgarian regulator (SKEVR) makes sure that we are not deceived and do not pay more than we should.

At its last meeting, the State Electricity Regulatory Commission (SEWR) added another fee to our bill. The new rule is for network imbalances, which are formed by the difference between the declared and consumed amount of energy by energy customers. For example, if a given neighborhood was planned to consume 100 units of electricity for the month of July, but it consumed 70 units because 30% of its residents went to the seaside, this will be an imbalance that will have to be paid for. At the same time, these 30% of the neighborhood's residents will cause greater consumption, for example in seaside resorts. Which will cause more electricity consumption than planned there, which will also have to be paid for.*

It is not difficult to remember that all this balancing and unbalancing can only exist as such a problem in the heavily regulated and centrally planned electricity market in its current form, since with free negotiation between all agents and without forcibly established monopolies, forecasting and planning would be much more accurate and much more flexible.

The regulator's special plan, however, is revealed upon a deeper reading of the text. It turns out that we will pay the new fee to the private ERPs, but nothing will remain in them. On the contrary, the entire amount collected will go to the state-owned Electricity System Operator (ESO) for its intended purpose. The purpose of all this is twofold. First, ESO has not yet published its financial report for 2013, but preliminary data in March showed that it is at a loss. And while the state can afford and it would even be useful to let NEK go bankrupt and practically be liquidated (the loss will be for politicians, who will not be able to use it to finance corrupt projects), this is impossible for ESO. There, the infrastructure and tasks relative to the current system are too vital (for the system itself) and in case of critical losses, it will be necessary to proceed to urgent privatization (which would be a good step, combined with liberalization) or another unplanned reform, and both are politically unpopular. That's why the state will not let ESO go bankrupt. On the other hand, the new fee raises electricity bills right during the elections. It powers the state-owned company, but is collected from private ones. Which is a perfect prerequisite and service for socialist formations in Bulgaria such as the BSP and ATAKA to exercise pre-election.

But as already mentioned, the consumer is not particularly interested in the cost structure of the entrepreneurs he buys from. We do not expect McDonald's to tell us what it costs them to produce a burger before we buy it. Quite naturally, since the exchange occurs based on our subjective perception of how much a good or service costs - i.e. no matter how much it cost the entrepreneur to create something, we will not pay more than we think it is worth to us.

In fact, as is evident from the analysis and objectives of the decision, the purpose of this “detailed” account has more to do with the state than with the market. And more specifically - with the interests of the extremely powerful regulator - SEWRC. Like any political institution with a lot of power, the Commission’s aspiration is to have the maximum amount of influence while bearing the minimum responsibility. By breaking down the price, this can be achieved in an easy way - “look, citizens, the problem is not that we have a centrally planned energy system, the high prices are due to the green contribution, the electricity distribution companies, “technical factors”, etc.” Whatever the bad thing is, SEWRC and the gigantic state intervention are certainly not to blame for it.

And so things are in a wonderful corruption balance. The eyes of the payers are blurred and through the "transparency" of the accounts, the system remains in a constant imbalance (i.e. open to all kinds of schemes), the political mentors with the strongest positions in the energy sector cash in and through this resource win more elections so that the cycle can continue. It will also help the elections that the political parties that are most deeply involved in the energy quagmire are also the ones that will shout the loudest against the evil ERPs/imperialist interests. At the same time, all consumers pour money into completely bankrupt institutions such as NEK (which is even redundant for the energy system, serving only to finance corruption projects) and the Electricity System Operator (ESO).

The question is how long will bureaucrats and politicians manage to hide behind populist rhetoric while they refine the system and bring it closer to serious problems, and most importantly, who will be to blame when the bankruptcy can no longer be covered by the end user?

* The information is a light retelling (almost a quote) from the newspaper Standart - http://paper.standartnews.com/bg/article.php?d=2014-07-14&article=498600

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