Commentary by Emilia Milcheva:
Winter will be hot, even though the government of Rumen Radev has frozen household electricity and district heating prices until July 1, 2027. Or perhaps precisely because of that. De jure, prices were put in the "freezer" by the Energy and Water Regulatory Commission (EWRC). A day after the runoff in the presidential election, it approved a 32.52% increase in the price of natural gas, although it initially believed this would come as a shock to district heating companies and the economy.
De facto, the decisions look more like state pricing from the era of socialism than an act by an independent regulator. There is no difference - under both Zhivkov's regime and Radev's government, the bill for the authorities' temporary political comfort will be paid by all taxpayers.
The state can freeze two regulated prices, but not the rising cost of living. More expensive energy will be passed on to end consumers almost immediately.
A blow across the chain
Higher gas and electricity prices will increase production costs and intensify inflationary pressure. Especially since businesses have to pay the high bills now, while compensation for expensive electricity will not arrive until after June 2027. Interim support is envisaged only under certain conditions, such as an exchange price above €180/MWh. The compensation is not guaranteed in full. It will cover no more than 80% of the difference above €122.71/MWh, while the final percentage will depend on the funds available in the Electricity System Security Fund (ESSF).
Until the compensation is paid in full, companies will have to finance their expenses themselves. Economic logic leaves them with several choices: to reduce their profits, raise the prices of goods and services, limit production or cut labor costs.
The latter means freezing and even cutting wages, reducing working hours and laying off employees. For companies with small financial reserves and high energy dependence, this could become a matter of survival. And the “stability” promised to households will come back like a boomerang in the form of more expensive goods, lower incomes and lost jobs.
The first signals of price increases due to higher gas prices are already coming from producers of bread and bakery products, as well as owners of gas-heated greenhouses. Companies that use natural gas for process steam and heat treatment will also face higher costs - for example, in dairy and meat processing, as well as producers of nitrogen fertilizers, glass and construction materials, whose technologies rely on gas. And that means more expensive output.
Pressure on households, too
The increase will be felt immediately by the 250,000 households that heat their homes with gas.This will intensify inflationary pressure at a time when the national statistics office is already forecastingannual inflation of 6.1% for October. BNB Governor Dimitar Radev warned that the rise in the prices of goods and services continues to be greater in Bulgaria than in the other eurozone countries. In September, annual inflation in the country stood at 5.6%, compared with 3.8% in the eurozone.
And a gap is opening up between the price of expensive gas and the heating bills of Sofia residents - a gap that someone will have to pay, and that will certainly be the taxpayers. At the same time, natural gas in Bulgaria remains relatively cheap by European standards. According to the latest Eurostat data, in the first half of 2026 households in Bulgaria paid an average of 6.54 euro cents per kilowatt-hour, compared with an EU average of 11.03 euro cents, or around 41% less.
Who will pay
When determining district heating prices, the EWRC used an average forecast natural gas price of €37.90 per megawatt-hour for the entire regulatory period. In November, the actual regulated price reached €58.43 - more than 54% above the figure included in the calculations. This raises the question of how district heating companies will cover the difference and whether it will turn into new liabilities, deferred payments or costs for the state.
For the Sofia district heating company, this means the risk of an even heavier debt burden. In September, its liabilities to „Bulgargaz“ and BEH exceeded €1.28 billion. Its debt to „Bulgargaz“ alone is already more than €900 million, and the repayment schedule is not being followed. Around one-third of Bulgaria's annual natural gas consumption is supplied under the long-term contract with Azerbaijan, while the remaining quantities come mainly from liquefied gas delivered through terminals in Greece and Turkey. Thus, the country is no longer dependent on a single supplier, but remains exposed to fluctuations in international markets.
For November, „Bulgargaz“ has also included additional quantities from the Chiren gas storage facility. According to the EWRC, without them the increase would have reached 39.37% instead of the approved 32.52%. At the same time, the expansion of Bulgaria's only gas storage facility continues to be delayed. The project was supposed to be completed in March 2025, but following an investigation by the European Public Prosecutor's Office, a terminated drilling contract and new problems with public procurement, full capacity of 1 billion cubic meters remains a distant goal. For now, it has been increased from 550 million to 650 million cubic meters, while the government program has already postponed completion until the end of 2029. A larger storage facility would make it possible to purchase and store greater quantities of gas at favorable prices, instead of leaving the country so dependent on market fluctuations during the heating season.
The "ESSF" piggy bank
Who pays the difference between the market price of electricity and households' frozen bills? The Electricity System Security Fund, which compensates electricity suppliers for household consumption. It also finances compensation for expensive electricity for businesses.
Rumen Radev promised that the government would provide the fund with the necessary liquidity, but did not specify how much this would cost. Revenues of €1.26 billion are planned for 2026, against €1.49 billion in expenditures. According to the budget approved by the governmenton October 7, the projected balance in the ESSF at the end of the year will be €61.6 million, compared with €251.7 million at the beginning of the year.
In other words, the fund plans to spend most of its accumulated reserve, while the government has not announced what additional resources will be needed to keep electricity prices frozen until July 2027, or where it will secure them. The ESSF, however, does not compensate district heating companies for the higher price of natural gas. Who will absorb their rising costs, given that district heating prices are also frozen?
A bill with a deferred due date
And the new system for supporting energy-poor households remains on paper. According to Energy Minister Iva Petrova, the information system was still in testing mode in July. Existing heating assistance reaches only some of those in need - 340,000 households for this winter season, while the new mechanism, which is supposed to cover the remaining energy-poor households as well, is still not operational.
Thus, the state finds the means to keep prices low for everyone - both poor and wealthy - but not to support people who can barely afford even these prices. The authorities' offer of “cheap” heating is not energy policy, but a bill with a deferred due date. But those in power may end up paying, too.