COMPETITIVE DISTRICT HEATING

L.GEORGIEVA

BULGARIA

WHAT WAS DONE

Energy prices in line with the justified economic costs and phasing

Financial recovering and establishment of energy companies operating on a commercial bases

Property functioning regulatory authorities and mechanisms

Market rules and structures

Strategy

A review of the governmental role in the provision of energy services

Reforms with the main goal of deregulation - replacement of regulation with competition

BENEFITS- economic (cost minimization) and social (shift of savings to end prices)

Strategy

Strategy DocumentContents of this document -district heating sector status

-reforms - financial restructuring,

institutional changes, deregulation, legal changes, privatization

Pricing policy

Medium- term prioritiesReduction and phasing out of

subsidies for energy Introduction of regulatory rules for

setting energy prices - electricity, heat and natural gas

Indicative schedule for the increase in electricity prices for the household sector

Pricing policy

Schedule for the increase in heat prices for household purposes

Block Tariff for heat Implementation of measures for

improved efficiency (substation and individual metering and controlling devices)

To keep the bills at the current level

Pricing policy

Prices are controlled by the State Energy and Water Regulation Commission.

They 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

District heating is the most cost effective and environmentally friendly option for densely populated areas

It should be provide by flexible and cost effective systems whose development and introduction is a strategic objective

Competitiveness

Alternatives

The local fired heating plants and the direct burning of natural gas is a serious alternative to district heating

The new gas networks is not competitive if compared with the already constructed district heating network

Alternatives

Investments 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

Electricity was an acceptable alternative for the consumers disconnected from the district heating system.

Due to the price, today the electricity is not acceptable alternative, especially for multi-family houses.

The 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.

This was one important step to make the cost of heating affordable and competitive.

Basically, this can be supported by installing efficient heat regulators (such as thermostatic valves) and cost allocation.

Economic analysis of district heating rehabilitation

DH 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

Two cities, Sofia and Pernik are under

implementation the investment programs with loans by the EBRD and the World Bank.

Network rehabilitation in Sofia-36 km of pipes, valves and compensators, variable flow pumps

Sub-station - about 8 000 -installation of regulators and equipment

This was one important step to make the cost of heating affordable and competitive.

EU Directives

Promotion of Combined heat and power production - high efficiency cogeneration

new initiatives - a directive on heat from renewable source and energy services

EU requirements on technical institutions