EVN Threatens to Sue Bulgaria over Electricity Dispute

Energy company EVN has announced that it will take legal action against Bulgaria if it is unable to negotiate concessions over an electricity dispute.

EVN AG has informed Bulgaria that it intends to to commence proceedings pursuant to the "Agreement Between the Republic of Austria and the Republic of Bulgaria for the Promotion and Protection of Investments" and the "Contract Regarding the Energy Charter" in order to safeguard its Bulgarian investments in EVN Bulgaria Elektrosnabdiavane EAD and EVN Bulgaria Elektrorazpredelenie EAD.

The date of the announcement marks the beginning of the 3 to 6 month consultation and negotiation period under the agreements. During the course of such period, the parties are obliged to enter into negotiations and attempt to amicably resolve the dispute.

"This announcement comes as the result of various actions taken by the regulatory authorities and other state agencies of the Republic of Bulgaria compromising the EVN companies," the Austrian energy group has stated in a press release.

"These actions reduce the proceeds from the sale of electric energy. Moreover, by not acknowledging actual financing costs, the payment of feed-in compensation to which producers of renewable energy are entitled is reduced," EVN has argued.

"Finally, today's announcement is in response to the repeal of a special levy for network access of renewable energy production installations by the recent decision of the Bulgarian administrative court in March 2013."

Bulgaria's energy watchdog recently reduced electricity costs for households by an average of 7 percent, mainly at the expense of power distributors EVN, Czech CEZ and Energo-Pro. The move was triggered by nationwide protests against high utility bills and corruption that led to the resignation of Prime Minister Boyko Borisov and his center-right GERB government.

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