On February 27^th 2010, E.ON Bulgaria Grid and E.ON Bulgaria Sales will publish their proposals for changing of the prices for the licensing activities electricity distribution and electricity supply in North–Eastern Bulgaria. This the first phase of the annual tariff setting process.

The average increase of the final customer’s price as of July 1^st 2010 which is proposing to the State Energy and Water Regulatory Commission is 8.81%. If this tariff level is approved by the Commission, this would mean that out of every BGN100 that a customer pays for electricity, approximately BGN 30 will remain in the company and the residual BGN 70 E.ON Bulgaria will have to pay to NEC and generators. Prior to privatization of the EDCs, in 2005, from every BGN 100 the share of the company was approximately BGN 40. This practically means that in the last 5 years there was a negative price development for the company which could not be witnessed in any other product category on the market. The company withstood that situation only due to strong managerial efforts for conscious cost allocation in order to minimize the general expenditures of the company while constantly improving the services to the clients.

In the proposed price increase, the largest share comes from the proposed higher prices for access and electricity distribution through the distribution grid, as the current prices do not give the possibility to E.ON Bulgaria Grid to make the necessary investments corresponding to the increased obligations to the society and the necessity of sizable funds, in order to increase the quality of supply. As the energy sector is the backbone of every industry, the company believes there is a big need for investment in the sector which is vital for the future development of the country and attracting new investors.

The share of the prices for energy in this change is minimal, as the company takes into account the development of these prices at the time of crisis. The increase here is due to the necessity of the company to cover the costs for purchasing of electricity as well as the additional cost for society obligation as the investments in energy efficiency measures and improved customer service.

The proposed by E.ON increase of the final price for household customers, is 11.60% and will lead to an average increase of the monthly electricity bill by 3.49 BGN.

The proposed increase is necessary in order to cover the loss due to the higher purchase price in this segment comparing to the sale price and is due mainly to the increase of the night tariff, where the company currently sells energy on loss.

The average daily tariff increase is 9.72% and according to the statistic more then 71% of the household electricity consumption is by daily tariff.

The proposed average increase for the business customers connected to low voltage is 5.61%, and for business customers connected to middle voltage – 5.98%. The company proposes a decrease in some of the day tariffs for business customers, which is of significant importance to the small and medium sized business in times of economic crisis.

The new tariffs are calculated based on the current prices of NEK EAD and electricity generators. In case, these prices are changed, the proposed tariffs by E.ON Bulgaria will be amended in accordance with these changes.