Bulgaria: Energy Regulator's Decision Adverse To Wind Res Producers Repealed By Court

Last Updated: 15 March 2018
Article by Radoslav Mikov, Anna Rizova and Oleg Temnikov

On February 23 2018, the Administrative Court–City of Sofia ("ACCS") rendered a Judgment repealing two chapters of Decision P-1/31.07.2015 ("Decision SP-1") of the Bulgarian Energy and Water Regulatory ommission ("EWRC"), which had considerable adverse effects on producers of electricity from wind energy, commissioned before the July 1 2011. This long waited positive development has the potential for a major positive impact on the wind RES business in Bulgaria and to a certain extent mitigates the series of adverse measures adopted by the State in the last 3 years.

The case, argued by the Wolf Theiss Sofia office on behalf of a leading wind GenCo, is expected to confirm the positive trend in respect of appeals against Decision SP-1 before the Bulgarian courts.

Decision SP-1

The Decision SP-1 was adopted by EWRC in 2015 following an amendment of the Bulgarian Energy Act ("EA") adopted in July 2015 requiring EWRC for the first time to setup the Net Specific Generation of Electricity ("NSGE") of RES GenCos. The claimed aim of the EA amendment was to reduce the imbalances in the energy sector, in particular by limiting the amounts of electricity subject to mandatory off-take under Feed-in Tariffs
("FiTs"). According to the amendments, the electricity produced by RES GenCos would be purchased by the end suppliers and the public supplier under the FiTs up to a predetermined amount (the NSGE) to be set by EWRC, where any surplus would be either sold on the liberalized market on freely negotiated prices or to the end suppliers/public supplier at a significantly reduced (almost 8 times) purchase price (i.e. the price for surplus on the balancing market).

The NSGE provided under Decision SP-1 represents a specific amount of electricity per 1 kW installed capacity to be purchased by the end suppliers and the public supplier under the FiTs. In practice it considerably reduced the revenues from the amounts of electricity sold under FiTs for most RES GenCos as some of the RES GenCos reached the NSGE already in August of the same year.

Decision SP-1 was rendered by the EWRC in great rush - within only 1 week of the adoption of the amendments to the EA and it was not subject to public discussion. After publishing a first draft on the website of the EWRC on July 31 2015, it disappeared from the official website and a new draft was published on August 3 2015 with some prices for PV power plants being amended. As a result, the adopted NSGE values were very controversial and led to a number of court cases.

The Court Procedures

Most of the RES GenCos on the Bulgarian market initiated court appeals against Decision SP-1 in 2015. In addition, the Bulgarian Public Prosecution Office also filed an appeal requesting the courts to declare the nullity of the decision due to some suspicions for manipulation of the NSGE levels evident from the decision versions published in two different days. All of the cases initiated by RES GenCos were suspended until the
termination of the case initiated by the Public Prosecution Office. The latter, obtained and initial success at first instance, where Decision SP-1 has been declared null and void, but afterwards this first instance judgment was revoked by the Supreme Administrative Court ("SAC") and consequently terminated by the ACCS.

After the termination of the appeals filed by the Public Prosecution Office, the panels of the ACCS reinitiated the pending cases initiated by RES GenCos. The EWRC defended the legality of the decision using numerous procedural tricks and irrelevant requests to courts, which slowed down the proceedings.

The Judgment

Judgment No. 1177 of February 23 2018 issued under administrative case No. 8522/2015 revokes Chapters 1.7 and 1.8 of Decisions SP-1, which set the NSGE for wind RES GenCos, commissioned before July 1 2011. Although this is not the first ACCS judgment revoking chapters of Decision SP-1, it is of paramount importance as it is the first to concern the majority of wind GenCos and it is one of the firsts rendered in cases where an economic expert report has been admitted as evidence.

The ACCS panel has considered that Decision SP-1 is entirely deprived of factual grounds and argumentation, which is a serious breach of administrative procedural rules and of the rules relating to the form of the decision. The ACCS has fully reproduced claimant's arguments in respect of the full lack of data on how and on the basis of which data
EWRC has determined the NSGE thresholds.

Further, the ACCS panel also entirely rejected the attempts by the EWRC to justify the decision by presenting a so called "financial model", which allegedly served as a ground and argumentation when rendering Decision SP-1. The panel also considered that the economic expert report requested in the court proceedings by the EWRC also did not satisfied the evidentiary burden of the EWRC to prove all legal prerequisites for rendering the decision, including factual and legal grounds, arguments, motivation etc.

Comment

Although the Judgment is not final and may be subject to appeal by the EWRC or the National Electricity Company NEK (participating as interested party) before the SAC, it is based on solid and well-articulated arguments, which should provide a clear and persuasive message to the EWRC that when adopting decisions, affecting RES GenCos, the rule of law is still applicable and the legal framework should be strictly respected.

If this Judgment and other judgments concerning different chapters of Decision SP-1 should be confirmed by the SAC, the revocation of the decision should have a retroactive effect – i.e. it should be considered as revoked as of its adoption back in year 2015. This could allow RES GenCos to initiate damages or specific performance claims against end-suppliers and the public supplier.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions