STATE ENERGY AND WATER REGULATORY COMMISSION IDENTIFIED 2690 VIOLATIONS BY THE ELECTRICITY DISTRIBUTION COMPANIES FOR 4 YEARS

“The three electricity distribution companies operating in Bulgaria, ‘EVN Bulgaria Electricity Distribution’, ‘CEZ Distribution Bulgaria AD’ and ‘Energo Pro Grid EOOD’ have inappropriately increased their expenses by 818 million BGN”, stated the Chairperson of the State Energy and Water Regulatory Commission (SEWRC), Boyan Boev, on 14th May. The findings of an audit undertaken by the regulator revelaed 2690 violations made by the EDCs during the 4 years 2008 to 2012.

The audit identified irregularities in the readings of electricity meters resulting in inaccurate bills, frauds related to replacement of meters and in respect of the voltage of the electricity supplied to customers, which was lower or higher than the approved standards.

The analysis of the financial indicators of EVN, CEZ and Energo Pro showed that they reported more revenue than the approved and that the technological losses were less than the ones they reported to the regulator. However these amounts of money were not reported as profit, but were used to inappropriately inflate the administrative expenses.

The Chairperson of the regulator explained that the three companies used loopholes and re-assigned to related entities, most frequently to the parent holding companies, purchasing from them goods, materials and services. The holding companies bypassed the procedures under the public procurement law and directly signed contracts with subcontractors. This made it possible to redirect significant amounts of money to third parties without conducting the relevant procurement procedure.

The audit also found that the companies did not separately record the readings for day and night rates and manipulated the readings of the meters. Boev added that the readings were for a period longer than the 31 days as stipulated by law, which resulted in higher electricity bills for the customers.

SEWRC has already issued 2 690 statements of establishment of administrative violations to the three companies. Under the law, they have three days to present their objections regarding each statement. The EDCs will face a potential sanction of between 50 million and 2 billion BGN if the regulator issues penal decrees for the violations.

SEWRC were definite that there was no connection between the regulator’s decisions and the forthcoming European elections on 25th May.

In response to the findings, EVN and CEZ said that the regulator inspected the voltage of the electricity only in regions where customers submitted complaints and therefore the conclusions were not representative. EVN said the audit was conducted unprofessionally, chaotically and intentionally and selected isolated mistakes which were not constant practice of the company, but these mistakes were skillfully taken out of context and the scale of work in order to be presented this way.

CEZ responded in writing and said the violations could be remedied. According to them, they resulted from the pressure exercised on EDCS to work with minimum expenses and from unfavourable decisions made by SEWRC. CEZ has described itself as a regular taxpayer that makes a considerable contribution to the Bulgarian budget.

Energo Pro also said they worked in compliance with the law and they would present their official position on the audit report after having made themselves familiar with the facts revealed in it.