EVN plans to pour around 70 million levs ($48.9 million/35.8 million euro) in
the electricity distribution grid it operates in southeast Bulgaria this year
after investing in it 73 million levs in 2013, the CEO of the Austrian group’s
local unit said.
EVN set foot on the local market in 2005 with the
acquisition of power distribution assets. As the power distributor for Plovdiv
city and the region of southeastern Bulgaria, it supplies electricity to some
1.6 million customers.
The size of EVN’s investments in Bulgaria this
year is constricted by the current regulatory framework and - in a long run –
would not be sufficient to cover the normal life cycle of its local assets, Jorg
Sollfelner told SeeNews on the sidelines of a recent media event held near the
central town of Stara Zagora.
Last year, Bulgaria’s State Energy and
Water Regulatory Commission (SEWRC) enforced three energy tariff cuts - in
March, August and December.
In June 2013, EVN AG announced that it has
initiated international arbitration proceedings against Bulgaria saying that the
dispute arose out of actions by Bulgarian regulatory authorities and government
agencies in relation to the pricing of electricity and compensation for public
obligations in respect to renewable energy.
The company will earmark
approximately 25 million levs this year to tackle grid losses. In 2013, EVN
managed to reduce grid losses by 0.5 percentage points to 10.8% and therefore
needs to put a lot of effort to meet the latest regulatory target – set at 8.0%,
in order to then have sufficient funds for investment in grid sustainability,
Sollfelner said.
“In the beginning, it was possible to significantly
decrease grid losses with an investment of 100 million levs but nowadays this is
less feasible as we are at a stage when further optimization costs much more
money,” he added.
The remainder of EVN’s investment funds this year will
target security of supply and new grid connections.
EVN Bulgaria managed
to end last year in the black despite the power tariff cuts that were
introduced, Sollfelner said. “To cope with these conditions, the company was
streamlining to the maximum its operating costs as well as capital
expenditures.”
The goal for this year is to keep profits flat. “.[.] if
there is a tariff hike, results will be better but at the current price levels,
the outlook remains difficult.”
Sollfelner said EVN plans to submit to
SEWRC by the end of February a proposal for an electricity tariff hike of
7.0-9.0% as of July 1 as this is the minimum needed in order to ensure
sufficient funds to keep grid quality at the current level.
In 2007, EVN
Bulgaria entered the local district heating market with the takeover of the
utility serving the Plovdiv area, now operating as EVN Bulgaria
Toplofikatsia.
Sollfelner said that EVN Toplofikatsia last year posted
positive results in terms of earnings before interest, taxes, depreciation and
amortization (EBITDA), earnings before interest and taxes (EBIT) and after-tax
profit.
When asked about EVN Toplofikatsia’s outlook for 2014, the
official said that the current year will be an interesting one because most
probably an electric production balancing mechanism for district heating will be
introduced.
This is interesting, Sollfelner said, because district
heating is producing electricity as a by-product so the electricity is dependent
on the heat load while the heat load is heavily dependent on the temperature
forecast.
“So, if the temperature forecast is wrong then we have
automatic imbalances on the electric energy side and all this will be very
difficult to predict.”