[size=85:2s3zx7qj]novinite 20 June 2010

Audit Report Reveals Violations, Improvements by Bulgaria's Power Utilities

Bulgaria's three power utilities – German-owned E.ON, Czech-owned CEZ, and Austrian-owned EVN – have committed serious violations when outsourcing their services, according to state commission report.

Angel Semerdzhiev, head of Bulgaria's State Commission for Energy and Water Regulation (DKEVR) gave Sunday a news conference in the Council of Ministers in the presence of Prime Minister Boyko Borisov, presenting preliminary conclusions from his institution's audit report on the activities of the three power utilities.

The audit of CEZ, EVN, and E.ON was commissioned by Bulgaria's Prime Minister Boyko Borisov in April when he criticized the countries on a number of issues including what he saw as excessive electricity prices and failing to work according to the standards of their home countries.

“We have found more serious violations with respect to the legal provisions, the way the electricity distribution companies organized their activities, and the contracts that they made with respect to the outsourcing of their services,” Semerdzhiev declared.

According to the DKEVR report, the three utilities broke their licensing terms. CEZ and E.ON are found to have outsourced almost all of their services to their parent companies, which in turn outsourced them to outside entities. This has been described by Semerdzhiev as anti-market and nontransparent behavior.

EVN is discovered to have had its electricity distribution firm provide services to its electricity providing firm and heating utility. The DKEVR is set to give EVN directions about how to delineate their respective expenditures.

“The State Commission for Energy and Water Regulation has allowed the outsourcing of services only on the condition that this does not generate additional expenditures for the power utilities. This is a serious violation and has reduced the incomes of the three companies,” said the DKEVR Chair.

He pointed out that the investment programs of CEZ, E.ON and EVN could be better, and that the time that it takes CEZ to fix some power outages has increased.

At the same time, however, one of the major conclusions of the audit report is that the technical condition of the power grids in Bulgaria has improved, especially in the last two years. It has also found that the three utilities have generally worked according to EU standards.

The DKEVR has discovered certain planning problems with the companies including the fact that CEZ delayed compensating consumers who paid from their own pocket for being connected to the its power grid.

E.ON is found not to have fulfilled its investment program, which affected the quality of the service.

“The number of complaints from the three operators declined sharply during the time of the audit, which shows that these companies have to be audited more often,” Semerdzhiev said.

He has pointed out that the work on the power utilities' auditing report continues as the report is extremely expanses and includes “several bureaus loaded with documents and annexes.” Once the Commission adopts the report, it will be summarized and the major conclusions will be published on its website.

“This is the first there has been such an expansive and in-depth audit report of these companies. The audits were divided in three parts – technical, economic, and legal. Their investment programs, activities, and legal actions have been thoroughly examined,” clarified Semerdzhiev.

He also announced that on Saturday the DKEVR decided to reduce by 3% the recognized maintenance expense for all three power utilities, which meant that Bulgaria's electricity price will be increased by only 2% as of July 1, instead of the previously planned 5%.

“We believe that is this is justified even though the power utilities do not agree. This will lead to a reduction of the electricity prices by 2.5%-3%. The threshold of state-recognized technical spending has to be lowered even further, and this will not affect the activities of the companies,” he explained.