Liberalization of the electricity market
With a change in the energy law made in Bulgaria on 1 October 2020, another step was taken towards a liberalized electricity market. This change already covers all legal persons or so-called legal entities. In general, the law predicts that those companies that do not choose a new supplier will be transferred of their own motion to the electricity trader by the group of their previous supplier at regulated prices (CEZ, EVN or Energo-Pro). However, this will only be permissible until 30 June 2021, after which, in the absence of a new contract with an electricity trader, the so-called “electricity trader” will be switched to a supplier of last resort. However, it has significantly higher prices than it has been before.
Choice of electricity supplier
But what does it actually mean the change of the electricity provider or transitioning to a free market? Let’s begin with what the regulated and the free markets are. A regulated electricity market means that the price of electricity is determined legally by the EWRC (Energy and Water Regulatory Commission), according to its methodology, regardless of market price levels and the electricity market in general. The free market, on the other hand, implies that the Bulgarian Independent Energy Exchange is a platform on which producers and suppliers can conclude electricity contracts at market prices, which will be reflected in the optimization and reduction of electricity bills of customers.
Energy exchange – free or regulated market? What are the customers’ benefits?
First of all, leaving the free market is related to optimising costs. Electricity prices for the regulated market, where all household consumers are now and until recently were small businesses, are set administratively only once a year (on 1 July) and do not depend directly on what is happening on the market and in the economy as a whole. This, on the one hand, provides some certainty for consumers but, on the other hand, deprives them of the opportunity to reduce their costs in times of crisis or favourable market developments.
No more unnecessary expensive electricity
Most competition on the free market will inevitably lead to better prices. Moreover, the free market directly reflects what is happening in the economy, and the current situation is a good example of this – because of the restrictions around the coronavirus and the closure of businesses, electricity prices have fallen dramatically. An effect that consumers in the regulated market did not feel, but they continued to pay an unnecessarily high price for the electricity used during the period. For example, a neighborhood grocery store’s electricity bill, which is usually about $200, would fall to an average of $150 between April and September, if the store is supplied at freely negotiated prices.
How and when does the electricity supplier change happens?
The choice and the change of the electricity supplier on the free market can happen every single month,as long as no other agreement has been made in the existing contracts of the customer. If the application is submitted by the 10th of the month, the change will take place from the 1th of the following calendar month. However, if the application is submitted after the 10th, the change will take place on the 1st of the month after that.
Practically from the customer’s point of view, the change looks like this: gets familiar with the offers available on the market for products and prices, chooses a supplier, contacts them and signs a contract. That’s it. From there, all documentary procedures and technical processes are the concern of the chosen trader, who literally transfers the customer from the respective electricity supply company at regulated prices to himself.
The change is entirely commercial and does not require any additional devices, electricity meters or any network settings. There is certainly no change in the quality of the electricity supply. There will be a change only in the company issuing the invoice.
More choice for the business
Currently, a relatively small part of non-household customers have chosen a different electricity supplier, but this is understandable, taking into account the short period from the start of the campaign, as well as the pandemic situation in 2020. However, these legal entities, who have chosen to change supplier, enjoy much more optimized electricity bills. TOKI customers, for example, have on average about 20% lower invoices with the new supplier compared to what they would pay under the ERP’s type contracts.
Business now has the opportunity to choose from a much larger range of services, subscription plans and opportunities on the free market. There are currently 50 licensed electricity suppliers. Customers can view and compare their offers, as well as choose different plans according to their specific needs.
TOKI offers four subscription plans- Fixed/Standard; Exchange; Green and Free. The fixed package provides certainty that for the selected period the price of electricity will not change and the customer can plan their costs long-term, while paying lower electricity bills. The stock package is designed for clients who wish to carry market risk and believe that the stock price will be lower than the fixed price, which at a certain part of the year is usually a fact. The Green Energy subscription is designed for companies that tend to pay a few pennies per kwh more but want to reduce their carbon footprint and get involved in the fight against climate change. In response to the demand, in recent months TOKI has also offered a subscription plan without a long-term commitment from the customer – delivery can be terminated at any time with 30 days’ notice, but also with the option to change the price by the trader once a quarter.
We believe that many companies will choose TOKI, because with us all this becomes digital, without the need to visit an office or exchange documents on paper.
One of the great advantages of leaving electricity companies and the regulated market and switching to an alternative supplier is expected to be full transparency of consumption and opportunities for more active consumption management. TOKI focuses precisely on the needs of small and medium-sized business customers and develops the first digital platform for electricity supply in Bulgaria, with the whole process happening entirely online.
All costs of energy consumption, payments and any commercial information can be monitored online and through the dedicated mobile application, giving full transparency to the service. If a final invoice is provided by the current electricity supplier, the procedure is further facilitated. The TOKI contract is then generated entirely electronically and the customer can sign it with an electronic signature, including a mobile one, currently issued online.
All costs for energy consumption, payments and any commercial information can be monitored online and through a special mobile application that provides full transparency of the service.