CPC adopted a Sector inquiry of the competitive environment on the markets of production, transmission, supply and share distribution of heating power in the Republic of Bulgaria.

By Decision № 1072/22.12.2022, ruled on case № KZK-318/2020, CPC adopted a Sector inquiry of the competitive environment on the markets of production, transmission, supply and share distribution of heating power in the Republic of Bulgaria.

 The inquiry reviews the relevant legislation, the structure of the markets, the main market participants, the barriers to entry of new competitors, as well as the way of functioning of each of the vertically connected markets.

The inquiry identified some problems related to the competitive environment.

 With regard to the market of production of heating power, CPC has found that the main reason for the lack of competition are the economic barriers, including a high amount of initial investments and a long period of their return.

In connection with the transmission of heating power, CPC has identified in its practice competition law problems concerning the connection of clients of heating power for household needs to the heat transmission network.  The problems are related to the unilateral imposition by the transmission network operators of unfair commercial conditions on the customers and the assumption of additional obligations.

Regarding the heat supply market, the Commission has found that the discounts and marketing strategies, offered by the heat transmission companies, could constitute a competition law problem. For example, fixing marginal prices for heated area or volume, or for heating 1 m3 of hot water, could have a negative impact on the related market of heating power share distribution.

A number of competition law issues have been identified in relation to the heating power share distribution market, which can be summarized as follows:

- The entry in the register under Art. 139a of the Energy Sector Act requires that the company is a producer of individual allocators of heat power or duly authorised representative of such person;

- Lack of public information in the register under Art. 139a of the Energy Sector Act, regarding the individual heat and water meters, that the heating power share distribution companies handle;

- Obligation for re-equipment of the devices for heating power distribution when changing the heating power share distribution company;

- Lack of publicly available information about the potential customers in the heating power share distribution market;

- Problems with the procedure for changing the heating power share distribution company, leading to possibility of distributing the delivered heating power by volume and/or maximum power of the heating appliances and the possibility of dismantling them;

- The pricing of the heating power share distribution market implies proving costs before and negotiating a rate of return with the heating company, which is a competitor of the heating power share distribution companies;

- Problems with fixing the percentage of heating power to be allocated to a building installation, based on the decision of the owners in a condominium.

 In connection with the problems identified in the sector, CPC makes some recommendations to the competent authorities, aimed at improving the competitive environment.

 The full text of the decision is available in the public electronic register of CPC at the following internet address: 

https://reg.cpc.bg/Dossier.aspx?DossID=300055573