Retaining the licenses of CEZ in Bulgaria

Situation:

In the beginning of 2013 social discontent, provoked by higher than expected electricity bills, lead to massive protests and unprecedented political, institutional and media attacks against power distribution company CEZ, which supplies electricity on the territory of Western Bulgaria, including the capital Sofia. Senior government officials and politicians have made serious allegations against the company – non-compliance with laws, breach of licensing obligations, manipulation of electricity meters and bills, violations in the replacement and metering of electricity meters, political affiliations and the accumulation of huge profits exported abroad.

Dozens of inspections of the company’s activities were carried out by various state institutions – the State Energy and Water Regulatory Commission, the State Agency for National Security, the State Financial Inspection Agency, the National Revenue Agency, the Prosecutor’s Office and others. The crisis reached its climax when the prime minister announced in February 2013 that CEZ’s licenses would be revoked, and a day later the state energy regulator opened a procedure.

Mass demonstrations led to the government’s resignation and the calling of early elections in May 2013. The company was held hostage to political opposition in the election campaign. CEZ’s image was ruined, its business in Bulgaria was threatened and it became the target of massive media attacks.

Goals:

• Adequate response to the allegations made against CEZ
• Preservation of the licenses and business of CEZ companies in Bulgaria
• Reduction of media and political attacks against the company
• Restoration of public trust in CEZ and restoration of the company’s reputation

Strategy and tactics:

• Calming the tension from the protests and quick reaction:

– 22 meetings with mayors, protesters and civil society organizations

– over 50 mobile reception offices in Western Bulgaria

– introduction of facilitations for clients in covering their monthly obligations – extension of the term for payment of interest-free bills and offering flexible rescheduling schemes

• Breaking the myths that CEZ manipulates electricity meters and electricity bills of consumers:

– an event to demonstrate how electricity meters are read and to refute allegations of bill manipulation

– “Myths and Facts” section of the corporate website cez.bg

• Communication with key stakeholders

– meetings with responsible institutions and local authorities

– information letters to the representatives of the institutions, the local authorities in Western Bulgaria, the National Ombudsman, business and consumer organizations – response to the accusations and presentation of the benefits of CEZ’s activities

• Reforming customer service

– introduction of the institution of energy ombudsman in CEZ and holding of 13 meetings of the ombudsman with clients and representatives of the local authorities

– setting up of a Consumer Council to the company with the participation of experts, consumer organizations and representatives of the protesters

– introduction of a new service “Personal Advisor” – personal consultations of clients on the possibilities for rescheduling the accounts

– program for loyal customers

– revision of the General Terms and Conditions

• “Be informed” customer campaign

– sending to up to 2 million household customers of CEZ 3 brochures with information on how the price of electricity is formed, what is CEZ’s share in it and what are the company’s investments to improve the quality of services

– the creation of a special subsection of the corporate website www.cez.bg.

– a proposal to introduce a new unified form of the electricity invoice, which should be valid for the entire territory of the country, and not only for the one serviced by CEZ

• Transparency

– publication of documents that have been the subject of public attacks – privatization contracts and contracts for “shared” services, the so-called SLA contracts

• Involvement of independent experts in communication

– interviews and comments from third parties to present the bigger picture in the sector

– presence of independent experts at CEZ hearings in parliament and before the regulator

• Strategic consulting

– preparation of a strategy for action in the crisis situation and ongoing adaptation to developments

– establishing a crisis management procedure

• Regular activities

– daily media monitoring, analysis of publications

– identification and profiling of stakeholders

– preparation of information materials

– answering media inquiries

• From January to November 2013, CEZ established regular and proactive communication, including:

– 168 press releases

– 180 interviews in national and regional media

– 90 events and meetings

– 224 materials – key messages, scenarios, etc.

Results:

• CEZ’s active communication led to calming down of negative moods and gradual cessation of protests
• The company responded to the negative allegations by providing fact-based and expert information
• It became clear that the companies from the CEZ group are not guilty for the high bills. The public debate on high electricity bills shifted its focus to the problems of the energy sector as a whole
• Lack of transparency and myths about incorrect practices on the part of CEZ ceased to be a public topic
• Institutional, media and public pressure to revoke CEZ’s licenses was reduced
• In the period from February to November 2013 the tone of the publications changed from negative to neutral:

– Negative publications decreased by 93%

– 90% of the publications were neutral or positive

– 45% of the publications in the period are result of proactive communication

• Key civil servants (former Chairman of the regulator and former Energy Minister) supported CEZ
• On November 14, 2013 SEWRC announced that there were no grounds for revoking CEZ’s license and completed the procedure against the company
• The regulator’s decision to terminate the procedure was accepted as an expected development and did not provoke a new wave of attacks.