The Energy Management Institute (EMI) presented its opinion on the draft decree published for public discussion, which sets out the conditions and procedures for implementing a compensation program for energy-intensive electricity consumers. The document notes progress towards more targeted support for industry, but also contains a number of provisions that transfer inappropriate administrative and financial obligations to electricity suppliers – an approach that has no parallel in EU member states.
The EMI’s opinion emphasizes that the implementation of state aid should be the sole responsibility of public institutions – the Ministry of Energy and/or the Electricity System Security Fund – in order to ensure transparency, legal certainty, and compliance with European standards. Transferring these functions to licensed supply companies creates a risk of liquidity stress, legal incompatibility, and violation of the principles of market equality.
The full text of the opinion is published below (NB. machine generated translation) and can be downloaded in BG here.
Opinion on the draft Council of Ministers Decree published for public consultation on determining the conditions and procedure for implementing a compensation program for energy-intensive electricity consumers
This opinion of the Energy Management Institute has been prepared in connection with the Ministry of Energy’s proposal for public consultation on a draft Council of Ministers Decree on the conditions and procedure for implementing a compensation program for energy-intensive electricity consumers, published on September 18, 2025 on the website of the Public Consultation Portal[1].
Firstly, we would like to express our support for the gradual positive change in the national approach to supporting non-domestic consumers by compensating their electricity costs. The launch of the measures in Bulgaria a few years ago (prompted by the global energy crisis in the EU in 2021-2022) is fundamentally different from the measures taken by other European countries[2].
Bulgaria is one of the first countries to introduce measures to support industrial and business consumers, while measures in other Member States are primarily targeted at households, hospitals, educational institutions, micro-enterprises, etc. The scope of the aid is too broad—it is available to all non-domestic consumers and is not targeted or differentiated according to those who objectively need it.
There was a clear need to focus subsidies for electricity consumption by non-domestic consumers only on those who need them and to differentiate the amount of aid. This would both free up public resources and increase the effectiveness of the aid.
The draft Council of Ministers decree proposed for public discussion marks progress in this regard, including due to the need for stricter enforcement of the requirements of the newly adopted legislation in the field of state aid. At the same time, the proposed text also has the potential to exacerbate already identified problems and create new risks for some market participants.
The document provides for a number of additional administrative and financial burdens for electricity suppliers that go beyond their statutory functions. Under the proposed texts, suppliers become not only financial intermediaries but also a kind of administrator of state aid, which is contrary to the existing regulatory framework.
Bulgaria already has experience with support programs for companies in energy-intensive industries, namely – Regulation No. E-RD-04-06 of 28 September 2016 on reducing the burden associated with the costs of energy from renewable sources, which is in force from 1 August 2015 to 31 December 2021. Under this support scheme:
- companies that meet the eligibility criteria submit a standard application form to the Ministry of Energy, accompanied by supporting reports, references, certificates, etc.;
- The Ministry of Energy checks the documents received and may request additional information;
- When the application and the accompanying documents meet the requirements, the Ministry of Energy issues an order within the time limit specified in the regulation, containing information about the company, the aid provided, the period of validity, etc.;
- Once a certain amount of expenditure has been reached, the Ministry of Energy issues a certificate.
- In order to benefit from the aid, the beneficiary company sends certified copies of the order and the certificate to the electricity supplier.
Such a program architecture would reduce the administrative burden and responsibility that the draft Council of Ministers decree transfers to commercial companies performing licensed activities. However, it does not change the liquidity risk borne by licensee companies, which is related to the technological time required to purchase energy, issue invoices reflecting the discount, verify invoices, and receive payment from the Electricity System Security Fund.
The new provisions impose obligations on suppliers to verify eligibility, evaluate investment plans, and declare the compliance of enterprises with the support criteria. In practice, this transfers to commercial companies responsibilities that are inherent and statutorily delegated to public authorities.
In addition, the complex calculations required by the compensation calculation formula require significant administrative resources, which suppliers must provide without any guarantee of reimbursement of the costs incurred. This creates a risk of financial strain and unjustified commitment of working capital and expert resources for the purposes of implementing state policies.
It should be emphasized that, under European law, state aid must be implemented in a transparent manner, with a clear distribution of responsibilities and the guaranteed participation of the competent public authorities. In particular, state aid for energy-intensive industries is a specific instrument in European Union law aimed at mitigating the adverse effects on competition of high energy costs and the transfer of carbon prices to industry. Under Articles 107 and 108 of the Treaty on the Functioning of the EU, such schemes are only permissible if they strictly comply with the principles of necessity, proportionality, and limitation of distortions of competition. In addition, the Framework for State Aid Measures in Support of the Clean Industry Pact (CISAF) requires Member States to implement mechanisms that ensure a minimum administrative burden (simplification of procedures and reduction of the administrative burden on businesses), predictability of the rules, and effective public control. In this sense, assigning administrative functions to private entities does not comply with established standards and creates legal uncertainty.
The Bulgarian State Aid Act (Article 9) also clearly defines that only a public authority or public enterprise can be an aid administrator. The declarative designation of the Minister of Energy as the administrator of the aid provided in no way fulfills the activities envisaged. On the contrary, the delegation of his functions to market participants—electricity suppliers contradicts not only Article 9, but also Article 18 of the law, which sets requirements for institutional capacity, accountability, and legal responsibility that suppliers, by their very nature, cannot provide.
The logic behind the inclusion of these problematic elements in the draft Council of Ministers’ decree cannot be found even when reviewing European models for supporting industrial consumers.
In the practice of Member States, three sustainable models for the administration and payment of compensation for energy-intensive industries can be identified. What they have in common is that they retain responsibility for eligibility, assessment, and control within the remit of public institutions—ministries, specialized agencies, or tax administrations. This ensures legal certainty, transparency, and accountability to the public, as well as avoiding potential conflicts of interest when private intermediaries are involved in the aid.
The analysis of these models is a good starting point for shaping the Bulgarian legal and institutional environment to support industrial electricity consumers in the country. A comparison with European practices clearly shows that the transfer of administrative and financial risks to commercial companies, as currently provided for in the draft Council of Ministers decree, has no equivalent in the EU and creates a risk of legal incompatibility and violation of market equality.
Particular attention should be paid to one specific circumstance: electricity suppliers in Bulgaria are not simply commercial companies, but operate under licenses issued by the Energy and Water Regulatory Commission (EWRC) to perform a strictly defined activity—the supply/trade of electricity. Their licenses set out specific rights and obligations that outline the framework of their main function: to ensure uninterrupted and reliable electricity supply to their customers.
However, the draft decree imposes on these energy companies administrative tasks that are not specific to them and go far beyond their licensed powers. On the one hand, this hinders their ability to focus their efforts and resources on their licensed activity – ensuring supply and market functioning. On the other hand, the new obligations create unforeseen and inappropriate costs that harm their financial interests.
It should be emphasized that electricity suppliers do not have the necessary working capital to finance the implementation of state policies in advance. The scale and nature of their activities do not allow them to maintain reserves to cover such financial burdens, and there is no mechanism for obtaining extraordinary funds at short notice. This would lead to significant liquidity pressure and risks to the normal performance of their core function – electricity supply.
In this regard, it is necessary for the national energy regulator, the Energy and Water Regulatory Commission (EWRC), to make an unambiguous statement on the extent to which it is permissible to involve suppliers in the performance of the administrative activities provided for in the draft decree. The regulator should objectively assess the extent to which this approach burdens licensed companies with functions that do not derive from either the law or their licenses, and the extent to which they would jeopardize both their financial stability and the smooth performance of their licensed activities.
Last but not least, it should be noted that these companies do not have expertise in the areas in which the draft decree aims to impose new obligations on them, such as eligibility checks, investment project evaluation, or state aid administration. This creates a real risk of errors that would harm not only their interests but also the interests of the enterprises themselves – the beneficiaries of the aid, who could be placed in a position of legal uncertainty or unjustified delay in receiving support.
In view of the above, we believe that the texts of the draft should be substantially revised. Verification of eligibility, administration of applications, and monitoring of compliance with the conditions must remain the sole responsibility of a state institution such as the Ministry of Energy and/or the Electricity System Security Fund. This is the only way to ensure compliance with both European and national law and to avoid burdening suppliers with inappropriate functions and financial risks.
In conclusion, we express our willingness to cooperate in finding a balanced approach that guarantees support for the industry, legal certainty, and sustainability of the mechanism applied.
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[1] https://www.strategy.bg/PublicConsultations/View.aspx?lang=bg-BG&Id=9563
[2] See the study by the Institute for Energy Management, “Measures to support businesses in compensating for high energy prices in the EU.”
[3] “Framework for State aid measures in support of the Clean Industry Pact (State aid framework in relation to the Clean Industry Pact – the Framework/CISAF)” – Commission Communication C(2025) 7600 final of 25.06.2025.
