COMPETITIVE DISTRICT HEATING L.GEORGIEVA BULGARIA

WHAT WAS DONE zEnergy prices in line with the justified economic costs and phasing zFinancial recovering and establishment of energy companies operating on a commercial bases zProperty functioning regulatory authorities and mechanisms zMarket rules and structures

Strategy zA review of the governmental role in the provision of energy services zReforms with the main goal of deregulation - replacement of regulation with competition zBENEFITS- economic (cost minimization) and social (shift of savings to end prices)

Strategy zStrategy Document zContents of this document z-district heating sector status z-reforms - financial restructuring, institutional changes, deregulation, legal changes, privatization

Pricing policy zMedium- term priorities zReduction and phasing out of subsidies for energy zIntroduction of regulatory rules for setting energy prices - electricity, heat and natural gas zIndicative schedule for the increase in electricity prices for the household sector

Pricing policy zSchedule for the increase in heat prices for household purposes zBlock Tariff for heat zImplementation of measures for improved efficiency (substation and individual metering and controlling devices) zTo keep the bills at the current level

Pricing policy zPrices are controlled by the State Energy and Water Regulation Commission. zThey are proposed by the Energy Production and Distribution Facilities and, after revision and correction of the expenses, and following the procedure of public discussions, a decision for their approval is taken.

District heating zDistrict heating is the most cost effective and environmentally friendly option for densely populated areas zIt should be provide by flexible and cost effective systems whose development and introduction is a strategic objective zCompetitiveness

Alternatives zThe local fired heating plants and the direct burning of natural gas is a serious alternative to district heating zThe new gas networks is not competitive if compared with the already constructed district heating network

Alternatives zInvestments in construction of distribution networks for low pressure gas and the costs of their maintenance make the cost per heat unit significantly higher than are the costs of the existing district heating network are modernized

Alternatives zElectricity was an acceptable alternative for the consumers disconnected from the district heating system. zDue to the price, today the electricity is not acceptable alternative, especially for multi-family houses.

zThe preparation of financial recovering plans for the selected companies has shown, that reducing the heat consumption of the final consumer is a matter of survival for the district heating companies. zThis was one important step to make the cost of heating affordable and competitive. zBasically, this can be supported by installing efficient heat regulators (such as thermostatic valves) and cost allocation.

Economic analysis of district heating rehabilitation zDH Companies had to perform cost-benefit analyses of investment programs to support the financial recovery of DH systems and to demonstrate an efficient district heating system zTwo cities, Sofia and Pernik are under implementation the investment programs with loans by the EBRD and the World Bank.

zNetwork rehabilitation in Sofia-36 km of pipes, valves and compensators, variable flow pumps zSub-station - about installation of regulators and equipment zThis was one important step to make the cost of heating affordable and competitive.

EU Directives zPromotion of Combined heat and power production - high efficiency cogeneration znew initiatives - a directive on heat from renewable source and energy services zEU requirements on technical institutions