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  • Ukrenergo calls for anti-crisis measures to be implemented as soon as possible to curb the growth of the electricity transmission tariff

    NPC Ukrenergo emphasizes the need to implement, as soon as possible, the measures developed by the Anti-Crisis Energy Headquarters to resolve the crisis in the electricity market. This will allow to curb the increase of the tariff for electricity transmission services in August-December 2020.

    It is worth mentioning that the structure of Ukrenergo’s tariff for electricity transmission services lacks funds to cover Ukrenergo’s special obligations to SE Guaranteed Buyer. For the whole 2020, the Company’s tariff provides for Guaranteed Buyer only 8.6 bln UAH, while the current debt already exceeds 16 bln UAH. The situation is complicated by the fact that the amount of this debt takes into account not only the difference between the purchase and sale of “green” electricity, but also the offset of costs of Guaranteed Buyer for the sale of electricity to universal service providers (USPs) for the needs of population. Such costs have not beenprovided for in the Company’s tariff.

    One of the key tools for balancing the current situation in the electricity market due to the crisis of non-payment between its participants is the revision of Ukrenergo’s tariff. However, such a tool should be used only in combination with other anti-crisis measures.

    In particular, the measures that require immediate implementation are as follows:

    • Changing the current legislation for implementation of provisions of the governmental Memorandum with renewable energy sources (RES) producers; adopting by the Parliament the laws that unblock the process of certification of Ukrenergo as an independent system operator and provide for the possibility of using revenues from auctions for cross-border allocation capacity to partially repay the debt of SEGuaranteed Buyer. Besides, the power industry needs to adopt other laws that provide for amendments to the Laws “On Electricity Market”, “On Alternative Sources of Electricity” to regulate settlements withRES producers, the sale of electricity by Guaranteed Buyer in the “market of bilateral contracts”, etc.
    • Necessary implementation by the Government of a new mechanism of placing special obligations (PSO), under which Ukrenergo’s tariff for electricity transmission services will offset only the difference between the electricity purchased by SE Guaranteed Buyer at the feed-in tariff and electricity sold in the day-ahead In addition, NNEGC Energoatom will be able to freely trade its own electricity volumes in competitive market segments covering PSO for the population at the expense of additional income.
    • Attracting external financing to cover debts in the electricity market, which were formed during the first half of 2020.

    The rapid implementation of these and other measures provided by the decisions of the Anti-Crisis Energy Headquarters will significantly curb the growth of the financial burden on industrial and other non-household consumers. According to Ukrenergo, in this case, the transmission tariff required to balance the situation in the electricity market from August 1, 2020 will amount to 317.4 UAH/MW*h. Subject to the implementation of the above measures, such a tariff will allow the Company to perform its special obligations, carry out operational activities and deductions to the state budget.

    In case the abovementioned measures are non-fulfilled, it will be possible to balance the financial situation in the market only if the electricity transmission tariff exceeds 600 UAH/MW*h. 

    Ukrenergo believes that such a scenario should be avoided. That is why it is necessary to consolidate the efforts of all market participants and authorities to resolve the crisis in the electricity market as soon as possible in the least burdensome way for the consumer.

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