Direct lines - problem in Bulgaria ENERGY AND WATER REGULATORY COMMISSION Direct lines - problem in Bulgaria

ENERGY AND WATER REGULATORY COMMISSION CAUSES OF THE PROBLEM The development of gas networks in Bulgaria began in the communist era. After the changes in 1990s in Bulgaria these enterprises have been privatized and in some cases ownership of the site has been divided between several buyers. Usually there is one direct line that connects a large industrial enterprise to the transmission network but to this line several other users have been connected and that has happened over time and continues to happen now. In some cases companies acquire property shares of the direct line and become its owners. In other cases, they sign contracts with the owner of the direct line for paid use.

Gasification in the country is not yet well developed: ENERGY AND WATER REGULATORY COMMISSION According to Bulgarian legislation, the country is divided into separate territorial areas and for each of them only one license shall be issued to a distribution company for the activity “natural gas distribution”. Gasification in the country is not yet well developed: major part of the consumption is realized by the industry domestic gas supply covers only 3% of households (about 2% of natural gas consumption). According to Bulgarian legislation closed distribution systems are not allowed.

Scheme of direct lines ENERGY AND WATER REGULATORY COMMISSION Commercial metering device, property of the transmission company Non commercial metering device Companies that use the direct line Customers of the distribution company Industrial user - owner of the direct line Transmission network Direct line

to the distribution network; ENERGY AND WATER REGULATORY COMMISSION The supplied to all customers in this cluster natural gas is paid according to the readings of one commercial metering device, which is owned by the transmission network operator. The readings of all other (non-commercial) metering devices within the cluster, which are owned by the customers, but cannot be used in commercial payments, are summarized and the sum must equal the reading of the transmission operator’s commercial metering device. If there are differences they are proportionally allocated over the consumption of all customers. The displayed clusters are not regulated in any way by the Bulgarian law, which allows only two types of connection: to the distribution network; to the transmission network through direct lines, but only for one client.

Problems: Measurement of natural gas: ENERGY AND WATER REGULATORY COMMISSION Problems: Measurement of natural gas: - Natural gas is payable according to the commercial metering device owned by the transmission company. Not always the sum of the control metering devices of individual customers is equal to the readings of the transmission company metering device. Difference must be paid by all customers (proportional to their consumption), which is a premise for disputes. - Where such a direct line is used by the distribution company to reach its customers, the problem is even more serious, because the distribution company has reason to claim that its devices are legitimate (under the Energy Act) and does not want to pay differences of redistribution. Control over these lines - these lines as energy objects and the activities run along them should be subject to regulation and control in terms of access prices and in terms of compliance with safety requirements. Gas thefts - there are cases of gas thefts (by inaccurate control metering devices) and thus the amounts consumed must be paid by other customers who use the same direct line.

Obstacles to solving the problem ENERGY AND WATER REGULATORY COMMISSION Obstacles to solving the problem Distribution of natural gas is legally regulated, but the activity over these lines, if treated as a distribution network, is not regulated, because these clusters are not part neither of the transmission nor distribution networks. Obstacles to solving the problem are the opposite interests of the two sides: - Owners of direct lines and of lines connected to the direct lines do not want to sell them or to give them for operation by the distribution companies, because this would increase the price they must pay for natural gas. - Underdeveloped domestic gas supply in Bulgaria - distribution companies want to buy or to operate those lines because they rely primarily on business users to make a profit.

Energy and Water Regulatory Commission (EWRC), Bulgaria Please, send your ideas for solving this problem to email msirkova@dker.bg Mariana Sirkova Chief Expert "Natural Gas" Division Energy and Water Regulatory Commission (EWRC), Bulgaria