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

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

3. Electricity Sector Reform and Electricity Tariffs 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 EUR 1 = BGL 1,955

4. Heat and Electricity Pricing 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 EUR 1 = BGL 1,955

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  Relatively equal percentage of utility costs in household budgets;  However, big disparity in real affordability of services EUR 1 = BGL 1,955

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

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.