Economy and Energy Minister Petar Dimitrov’s decision to revert to last December’s heating prices triggered allegations that it was a politically motivated decision ahead of this summer’s elections.

Heating prices were raised by the State Water and Energy Regulatory Commission (SWERC) on January 1 2009 by 16.6 per cent to 79.89 leva a MWh because of the hike in natural gas prices supplied by Russia.

Close to 370 000 households use the services of Sofia’s heating utility Toplofikatsiya. Under normal circumstances they could have expected January’s heating bills to be much higher than usual. But Bulgaria’s six days without supply, following the Russia-Ukraine gas dispute, allied to the extremely low temperatures, put a question mark around January’s heating bills. Some people claimed that bills would be higher because alternative and more expensive sources of energy had had to be found during the crisis. Prime Minister Sergei Stanishev and Toplofikatsiya executive director Petko Milevski, on the other hand, promised that bills would be lower because of the disruptions to supply.

Stanishev was proven wrong the moment Toplofikatsiya sent out its heating bills in mid February. As with previous years many subscribers blamed Toplofikatsiya for the higher bills, claiming that the company was not calculating prices objectively and transparently.

On February 21 the company denied responsibility for the higher bills, which represented a leap of 30-40 per cent. The firm cited its version of the facts: even though consumption in January 2009 was 11.5 per cent lower on the same month of 2008, natural gas prices had increased by a whopping 68.4 per cent on the previous year. Heating prices, meanwhile, had only increased by 34.7 per cent, Milevski told a news conference.

Subscribers, however, continued blaming the utility, especially after authorities revealed that natural gas prices in Bulgaria were expected to fall by 12 per cent from April. And since natural gas prices have always been cited as the reason for the heating price hike, people demanded that the cost of Toplofikatsiya’s services also be reduced.

At this point Dimitrov announced that heating bills would indeed be reduced in February, much to the amazement of SWERC’s head, Konstantin Shoushoulov. Some suspected that Dimitrov’s decision, in his capacity as Cabinet minister, was taken without the state regulator’s approval. At the end of 2008 Sofia city hall decided to transfer its shares to the state after a dispute over who was to blame for the company’s poor finances. According to Shoushoulov, however, the reduced bills threatened to send Toplofikatsiya into a deep financial collapse. Speaking to reporters on February 25, Shoushoulov expressed surprise at Dimitrov’s decision. "Reverting to the old prices is good for subscribers but it’s unclear how Toplofikatsiya’s losses, following a three-month price cut will be compensated," he said. He was referring to Dimitrov’s expectations that prices would fall by 12 per cent in April.

If Toplofikatsiya’s subscribers paid their bills promptly it probably would not have been such a problem. But Toplofikatsiya is constantly in debt to state natural gas provider Bulgargas because customers regularly default on their bills regardless of prices. As of February 24 2009 the company is owed 201 million leva in unpaid bills. The company said it is taking 36 000 of its subscribers to court as a consequence. Unfortunately, the system is built in such a way that, even if subscribers stop paying their bills, Toplofikatsiya cannot disconnect them without cutting supply to the whole building. This could be viewed as a form of discrimination against those who pay their dues on time.

How the rest of the country should react to Dimitrov’s decision to cut prices is another issue. Toplofikatsiya Sofia is the country’s only state-owned heating utility. The others were privatised years ago. It may be the largest heating utility but it also has the largest debt to Bulgargas (110 million leva at the end of 2008). When SWERC decided to raise the price of heating in Sofia on January 1 2009 by 16.6 per cent, it also raised the price in Plovdiv by 15 per cent, in Varna by 12.8 per cent and in Bourgas by four per cent. These private heating utilities have refused to follow Dimitrov’s move and cut back their prices in spite of his requests. The heating utilities made it clear that their decision is based on the simple laws of supply and demand. Dimitrov, on the other hand, described his decision as "an anti-crisis and socially orientated measure supported by the entire Government".