June 15, 2017 / 11:35 AM / 2 months ago

Bulgaria accused of illegal aid to fossil fuel power providers

LONDON/SOFIA (Reuters) - Bulgaria has given 1.3 billion euros ($1.5 billion) in illegal aid to coal-fired and other power plants, according to a complaint filed with the European Commission by London-based lawyers ClientEarth on Thursday.

European Union state aid rules are designed to support a shift towards a lower carbon economy, though they allow some support for fossil fuel if it is needed to prevent blackouts or if it cuts emissions by improving efficiency.

ClientEarth lawyer Sam Bright said the activist lawyers had spent more than a year investigating Bulgaria's practice of requiring public power provider NEK and distribution companies to buy all the electricity produced by plants classified as "high-efficiency co-generation" that produce heat as well as power.

These operators are paid a surcharge, which comes from a levy on consumer bills.

ClientEarth, whose campaigning successes include exposing Britain's breach of EU air quality legislation, said its research found the aid flouted EU rules and the plants did not qualify for such help.

"Bulgaria is giving these plants an unfair and unlawful subsidy, which is helping to prop up coal power plants, amongst others, and hindering the transition from fossil fuels to cleaner energy," Bright told Reuters.

He said the lawyers had made a conservative estimate of the amount of aid paid between 2007 and 2016 and it could be higher.

Bulgaria's energy minister told Reuters she did not believe the Commission would find any problem.

"Until now we have not seen any obstruction, including from the European Commission," Temenuzhka Petkova said.  

Since 2015, Bulgarian legislators have passed a number of legal changes to limit the access to preferential prices and strengthen controls over high-efficiency electricity production.

If the Commission finds aid has been given illegally, it can order the country to recover it.

It has yet to decide on another complaint about Bulgaria filed by ClientEarth in April over free emission allowances handed out to coal-fired power plants under the EU Emissions Trading System (ETS).

In that complaint, ClientEarth alleges four power plants, which will receive permits to pollute worth 197 million euros between January 2013 and December 2020, had not met all the criteria to qualify.

The Commission in an email confirmed it was dealing with that complaint and would assess any further complaints.

The Bulgarian government has made no comment on the emissions case.

($1 = 0.8959 euros)

Additional reporting by Foo Yun Chee; Editing by Mark Potter

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