The liberalization of the electricity market for households — meaning that residential consumers would join the free electricity exchange where businesses have traded for years — is being postponed. At least for now.

The reform was supposed to take effect on July 1st this year, following an initial 365-day delay approved by Parliament in 2024. In the end, at least at first reading, the National Assembly voted: the liberalization of household electricity is postponed — though for now, the exact timeline remains unclear, writes Novinite.

There were three proposals regarding the postponement — two from the ruling parties and one from the opposition. The Bulgarian Socialist Party (BSP) proposed a 2-year delay; “There Is Such a People” party wanted a 5-year postponement; and the “Revival” party, whose proposal was rejected, sought to fix prices for another decade. A compromise between the first two proposals is expected to be sought before the second reading of the legislative changes.

The main reason behind these political maneuvers is the overwhelming public opposition to liberalization and the fear among many experts that it could cause a sharp increase in electricity prices. On the other hand, liberalization is a requirement for Bulgaria to receive funding from the EU’s Recovery and Resilience Plan, and the country has already committed to the European Commission to open the market to households. This means that failure to implement it could trigger sanctions from Brussels.

“For the current state of our energy system, this is a step that prevents a sudden surge in household prices. Even though exchange prices in Europe are decreasing and stable, liberalization would still likely cause a 10–15% increase. So, this is the right move. A 1- or 2-year delay is not fatal, but it sends a negative signal to Europe,” said Ivan Hinovski, energy expert and Chairman of the Bulgarian Energy and Mining Forum, as well as a former MP.

With the right approach by Bulgarian authorities, and a well-grounded explanation of why the transition to a free market is being postponed, sanctions from Brussels might be avoided, Hinovski believes.

“It depends heavily on how the reasoning is presented. If Bulgaria highlights that it’s undergoing a transitional phase with heavy investments — in the Chaira Pumped Storage Hydro Plant, new PSHPs, solar power, new nuclear capacities — the European Commission might understand. Still, the risk of infringement procedures cannot be ruled out.”

In the end, joining the free market is a positive step, Hinovski is convinced, but he stresses:

“There must be a massive public information campaign to educate citizens on how to take advantage of the benefits of market liberalization. Most importantly, a compensation mechanism for energy-poor households must be put in place.”