"At the moment we are working at full capacity and we are thinking about investing more, but we will not make any decisions before the CO2 scheme gets sorted out," he added.
POLITICAL MOTIVES
But some economists and EU experts say fears in the east are overstated, premature and politically tainted by governments pressured by voter anger over rising food and fuel prices.
The bloc's trading scheme has been designed to accommodate growth in the newer members, they say.
"From a political perspective, it's a much a more difficult time to sell anything that is generally viewed as leading to price increases," said Jon Levy, an economist at Eurasia Group.
Much could change after 2012, as the shape of a future global climate pact, including whether big emitters like the United States and China would join it, is uncertain.
Most East European countries are slow to open energy markets for competition, privatize state monopolies and improve efficiency and the carbon dioxide scheme must not be used as an excuse to keep procrastinating, analysts say.
They argue power prices in eastern Europe need to rise anyway to encourage investment in upgrading Soviet-era grids and building new plants to avoid shortages and blackouts.
Poland alone, which has total installed capacity of about 35,000 MW, will have to add 1,000 megawatts a year to feed booming economic growth and replace ageing plants, analysts say.
Most countries also have yet to abolish a communist legacy of state-controlled household power and gas prices that are about 30-40 percent lower on average than those in the West.
"These countries have to do something. It's a long-term policy and they need to start now," said Colette Lewiner, director Energy, Utilities & Chemicals at consultancy Capgemini. "They can do a lot, not just waste energy for nothing."
BLACKOUTS
Rapid steps to improve efficiency, stop leakages and cut transmission losses are badly needed as analysts forecast annual energy demand will grow by an average 2-3 percent in the region.
Earlier this month tourists were trapped in elevators when the Bulgarian Black Sea resort of Sunny Beach had a power blackout because poor infrastructure could not match growing consumption.
Big projects such as Hungary's 2,400 MW gas-fired power plant and nuclear plants in Lithuania, Bulgaria and Romania are not due onstream before 2013-2015.
Even with planned new nuclear capacity, Eastern Europeans say they cannot afford to abandon coal as natural gas - the other cleaner option - would increase dependence on Russia. This contradicts EU efforts to ease reliance on Russian gas, they say.
"We need to find a compromise that should not be at the expense of our energy independence," said Dilovska.
But the switch to gas is happening. Czech power utility CEZ has said it will redirect one third of an up-to $10 billion investment programme from upgrading coal plants to building new gas-fired stations, to tie in with the EU auctioning scheme.
Small projects to build wind and solar parks are also mushrooming in the region, although officials doubt renewable energy would ever play a big role.
Back in Gorno Osenovo, the villagers have been let down by renewables. Three years ago a Bulgarian company erected several solar-powered street lamps but the light went off a few months later.
"No one has ever come to repair them. No one really cares," said Kiril Nikolov, 71.
