It was on the day of the launch of the new market, July 1, that the District Administrative Court of Kyiv decided to satisfy the administrative action of JSC Nikopol Ferroalloy Plant (No. 640/11330/19). The court suspended the effect of NEURC Resolution #954 and #955 of June 7, 2019, which set tariffs for Ukrenergo for the services of electricity transmission and dispatch control for the second half of the year.
Ukrenergo CEO Vsevolod Kovalchuk provides explanations on the consequences of the court decision:
“The decision of the District Administrative Court of Kyiv will lead to a collapse of the new electricity market, as the suspended Regulator’s resolutions were adopted precisely to ensure new market algorithms.
Why? Previously, in our tariff, electricity losses in transmission grids were not accounted for. They were covered at the expense of SE Energorynok, which is no longer present in the new model of the market.
Compensation to electricity producers operating at a guaranteed green tariff (WPP, SPP and other RES) was also paid through Energorynok .
In addition, our tariff covers the cost of support services provided by the IPS of Ukraine to ensure the required level of reserves.
It is precisely in order to ensure the functioning of the new market model the Regulator included the said costs in Ukrenergo’s transmission and dispatch tariffs, essentially transferring the responsibility from SE Energorynok to the TSO. Therefore, these tariffs do not affect the calculation of the projected cost of electricity.
Failure to apply these tariffs will make it impossible to pay for electricity lost in backbone networks, compensation to producers operating under the green tariffs, as well as payment of ancillary services fee, i.e. keeping the reserves in the IPS of Ukraine. In other words, it undermines the operation of the new market model!”