Bulgarian Regulator to Make Additional Checks on CEZ

Bulgaria’s energy regulator will make additional checks during the next two months before ruling on whether to cancel the power-distribution license of CEZ AS (CEZ), the biggest Czech utility.

Bulgaria’s State Energy and Water Commission will seek the opinion of other ministries and municipalities on whether there are grounds to revoke CEZ’s license, Evgenia Haritonova, the regulator’s chairwoman, told reporters in Sofia today. CEZ, along with EVN AG (EVN) and Czech utility Energy-Pro, was investigated by the country’s public prosecutor for allegedly breaching outsourcing contracts.

“The case with CEZ will help set up criteria for revoking the licenses of other power distributors,” Haritonova said. “If the decision to revoke the license is taken, it will be done in strict compliance with the law.”

High utility bills at the beginning of the year triggered violent public protests that helped topple the government of Boyko Borissov and set off the investigations of the power distributors, the regulator and the National Electricity Company. President Rosen Plevneliev appointed an interim government led by Premier Marin Raikov last month to prepare for early elections on May 12.

CEZ is suspected of 21 violations including evasion of public procurement laws, the nation’s energy regulator said Feb. 20 as it started procedures to revoke the company’s license. CEZ, which denied any wrongdoing, had the option to fix breaches until the regulator’s next hearing today.

Fixed Violations

“CEZ has repaired all violations established by the regulator,” Petr Dokladal, CEZ Bulgaria’s regional manager, said at the hearing. “We hope the commission will stop the license revocation procedure after hearing our arguments.”

CEZ filed a complaint against Bulgaria at the European Commission on March 29, claiming the regulator was breaking both national and EU laws. The utility has asked the commission for an independent review.

The company’s local units supply electricity to the capital Sofia and the northern city of Pleven, which together account for 41 percent of Bulgaria’s power consumption.

Bulgaria is the second Balkan country in which CEZ is in danger of losing its license after Albania seized its assets in January. Bulgarian operations account for about 1.5 percent of the Czech utility’s operating income.

To contact the reporter on this story: Elizabeth Konstantinova in Sofia at ekonstantino@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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