International perspectives on the importance of electric tariff transitioning to cost-based levels in Bulgaria

摘要

The traditional cost-of-service approach to power pricing has been replaced in many countries by market pricing mechanisms that compensate power producers at the marginal cost of production established collectively in the marketplace. The paper stresses the importance of cost-based tariff setting pointing out two main pricing principles of utility services: (1) Revenues must meet or exceed the utility average cost of production; (2) Marginal cost pricing for incremental consumption must ensure efficient allocation of resources. Examples describing the factors encouraging transition to economically efficient tariffs at a small utility are given for: Northwest U.S., MINENERGO in Belarus, Pacific Gas and Electric Co in California and the National Electric Co (NEK) in Bulgaria.The analysis of the Bulgarian electric sector is based on ongoing work being funded by the U.S. Agency for International Development. Each of the four utilities described faces a different challenge for transitioning tariffs to cost- based levels. However, one and the same broad conclusion applies in all cases: utility pricing must take into account the underlying average and marginal cost structures of the regional power industry. Bulgaria needs transition to cost-based tariffs to recover the electricity cost-of-service and to ensure that the electric sector operates efficiently and consumers are treated fairly. Measures that facilitate the process of tariff transitioning include: (1) Developing a transparent process of tariff setting with clear objectives, a plan and timetable, and roles of organizations; (2) Establishing of independent regulation to ensure that tariff setting objectives are achieved; (3) Instituting mechanisms to reward organizations for performance that achieves electric sector objectives. 3 figs. (Atomindex citation 28:031618)