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Bulgaria imposes 20 pct fee on solar and wind power

Source: Reuters - Thu, 5 Dec 2013 11:38 AM
Author: Reuters
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* Govt aims to keep electricity costs low

* Investors object to the fee, seek president's veto (Adds details, background)

By Tsvetelia Tsolova

SOFIA, Dec 5 (Reuters) - Bulgaria's parliament voted on Thursday to impose a 20 percent charge on income from wind and solar power installations next year as the Socialist-led government struggles to keep down electricity bills and reduce deficits related to clean energy.

The government, faced with daily protests over corruption, has pledged to keep power costs low to avoid mass public unrest in a country where energy bills take a big chunk of people's monthly income, especially during the winter.

Protests over high electricity bills - partly the result of investment in green energy - toppled the previous centre-right cabinet in February.

Countries across Europe have also sought to cut subsidies to wind and solar energy that have pushed up consumer electricity bills.

The new fee, taking back some of the generous subsidies the European Union's poorest country pays to the producers of green energy, was approved as part of Bulgaria's 2014 budget.

Wind and solar power producers have attacked the new fee, which was proposed between the two budget law readings without prior debate. They say it will lead to bankruptcies and scare away foreign investors.

Dozens of investors from Germany, Austria, the United States and South Korea have rushed to the Balkan country to take advantage of the subsidies. Their investment of more than 4 billion euros ($5.4 billion) has built 1,600 megawatts in wind and solar power installations.

Bulgaria's parliament also voted to limit the amount of energy that can be purchased at preferential prices, which the green energy sector says will hit their income by 15 to 20 percent on the top of the new fee.

"These measures are only concerning wind and solar energy producers. We will appeal to the president to impose a veto on the 2014 budget to stop that discriminatory move," said Nikola Gazdov, of the Bulgarian Photovoltaic Association.

Prime Minister Plamen Oresharski said on Wednesday that the expected proceeds of about 150 million levs ($104 million) from the fee next year will be used to cut growing deficits in the energy sector, partially related to clean energy.

The state energy regulator has cut electricity costs for households by a total of 13 percent since February, worsening the plight of the public energy supplier NEK, as well as of power producers and distributors.

NEK reported outstanding payments to power producers of 800 million levs ($554.50 million) in the first nine months of 2013. Its net loss stood at 96 million levs through September.

The deficit was mainly due to the gap between the regulated prices at which NEK sells to consumers and the expensive energy it is obliged to buy from renewable sources, high-efficiency generators and under long-term purchase agreements.

Elsewhere in Europe, Germany is to limit the growth of renewables and reform controversial incentives for the sector by next summer to try to slow the rise in electricity costs for households.

The Czech Republic has imposed a 26 percent tax on solar plants that began operating in 2009 and 2010 reduce a drain on government revenue.

The tax was set to expire at the end of 2013, but under a new law it will continue at a lower rate of 10 percent on solar power plants that started in 2010.

Greece introduced a 27 percent tax on revenues of solar power installations and 10 percent tax on wind power farms last year, which is due to expire in June 2014. The taxes can be extended by a year. ($1 = 1.4428 Bulgarian levs) (Additional reporting by Michael Kahn in Prague and Harry Papachristou in Athens; Editing by David Goodman and Jane Merriman)

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