The price of natural gas is likely to stay unchanged or go down rather than up as supplier Bulgargaz expects, under the influence of current favourable conditions, The head of the Bulgarian energy regulator said on Tuesday. "Oil prices continue to fall on international markets, and if this trend persists, we will all be able to get some relief about the gas price as of October 1, 2010 - we will be able to either keep it unchanged or bring it down," State Energy and Water Regulatory Commission (SEWRC) Chairman Angel Semerdjiev told journalists on Tuesday.
Bulgargaz said earlier this month that it plans to up the gas price by 3 per cent as of October 1 to adjust it to the pricing factors. SEWRC expects Bulgargaz to provide information around September 10 substantiating its request for a new price for the fuel.
The price which will become effective on October 1 will be influenced by new pricing guidelines which were considered at a public discussion at the SEWRC. These guidelines, which will be approved as soon as possible, will change the recognized revenues of Bulgargaz, Semerdjiev said.
According to the proposal, the prices at which the public supplier sells gas to end deliverers and consumers will be formed on the basis of the costs of supply of projected amounts of imported gas and of locally extracted gas, plus a trade discount which will be up to 2 per cent of the gas price at the entrance point to the gas supply network.
The pricing guidelines will bring transparency and clarity in determining any costs overcharged or undercharged by Bulgargaz and will streamline the impact of the US dollar exchange rate on the gas price. When determining the dollar rate, additional factors will be taken into account, such as the day the currency was exchanged and whether it could be made in a more optimal way, Semerdjiev said.
Bulgargaz said, however, that the guidelines contravene the effective gas pricing ordinance and create non-transparency. It also argues that the proposed guidelines do not conform to the effective gas pricing ordinance, which is legally unacceptable.
The difference between the opinions of the regulator and the distributor stems from a change of the method of reporting the amount of natural gas in the underground storage facility at Chiren, which influences the price level.
Semerdjiev was evasive about when Bulgargaz will be compensated for undercharged costs, which the distributor puts at 78 million leva (39.9 million euro). The pricing ordinance provides for the theoretical possibility of delaying the compensation to Bulgargaz until a later period, he said. After the new guidelines become effective, the amount of the undercharged costs will be different from the amount calculated by Bulgargaz, he said. According to him, the SEWRC will make sure that Bulgargaz does not experience big financial difficulties.
The guidelines also introduce a charge for natural gas users which do not follow their tentative gas consumption schedule and thus cause imbalances along the gas transmission network. The SEWRC will discuss the document at a closed-door meeting on August 30.
Semerdjiev expects the new guidelines to take effect from the start of next year.