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ENERGY SECTOR REFORM AND AFFORDABILITY OF UTILITY SERVICES IN BULGARIA

ENERGY SECTOR REFORM AND AFFORDABILITY OF UTILITY SERVICES IN BULGARIA. April 2006 Dimitar Doukov Bulgaria. Energy Tariffs and Subsidies. EUR 1 = BGL 1,955. The social effects were managed through two- block tariff s Social energy support for low-income consumers

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ENERGY SECTOR REFORM AND AFFORDABILITY OF UTILITY SERVICES IN BULGARIA

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  1. ENERGY SECTOR REFORM AND AFFORDABILITY OF UTILITY SERVICES IN BULGARIA April 2006 Dimitar Doukov Bulgaria

  2. Energy Tariffs and Subsidies EUR 1 = BGL 1,955 • The social effects were managed through two-block tariffs • Social energy support for low-income consumers • Energy efficiency measures in final consumption

  3. Electricity Sector Reform and Electricity Tariffs EUR 1 = BGL 1,955 Source: Bulgarian energy sector 2001 – 2004, MEER, 2005 • Market based tariff structure was introduced • Cross-subsidy of the electricity price for households was phased out

  4. Heat and Electricity Pricing EUR 1 = BGL 1,955 Source: Bulgarian energy sector 2001 – 2004, MEER 2005 • The trend is towards increase of energy tariffs • Full abolishment of budget subsidies for heat energy for residential consumers • Individual heat energy accounting introduced in 2002

  5. Impact of Tariff Reforms on Households’ Budgets Source: Household Budgets in Bulgaria 2004, NSI For the past ten years the burden of utility costs on average household budgets has almost doubled – from 6.5% in 1995 up to 13.8% in 2004.

  6. Utility Costs Share in Household Budgets • Relatively equal percentage of utility expenditure in household budgets • For Bulgaria 15% of the household budget for utilities payments seems to be marginal in terms of social acceptance

  7. Utility Costs and Affordability EUR 1 = BGL 1,955 • Relatively equal percentage of utility costs in household budgets; • However, big disparity in real affordability of services

  8. Income Level of Households EUR 1 = BGL 1,955 • Insignificant increase of income of most vulnerable groups of population • Social energy assistance for low-income households makes possible the market participation

  9. Low-income Burden • Official poverty line supported by social energy assistance • About 50% of households are on the real poverty line

  10. Social Energy Assistance Coverage • Reducing number of supported households • Lack of energy efficiency home improvement programs

  11. Social Energy Assistance 2005 - 2006 • 450 000 households (15%) will receive energy assistance during the 2005/2006 heating season. • 60 BGL/month for heating with DH and power. • 32 BGL/month for heating with coal and wood. Eligibility requirements: • Up to 105 BGL monthly income for a pensioner living alone • Up to 237 BGL monthly income for a 4-member family with 2 children.

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