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  • Tariff approved by NEURC prevents Ukrenergo from operating in the new market model after July 1, 2019

    Today NEURC has reviewed projects of new market tariffs of Ukrenergo for the 2nd half of 2019. 

    The regulator is proposing to approve the tariff for transmission of electricity at the level of 11.3 kopecks per kWh and tariff for dispatch control – 0,8 kop/kWh.

    This is three times less than the necessary expenses that were calculated by Ukrenergo and held open discussions on May 6, 2019 and received support from 23 regional state administrations. (Projects of Ukrenergo’s market tariffs – for electricity transmission, for dispatch control).

    It should be noted that in the new model of the electricity market Ukrenergo has key functions of ensuring the operation of the new market, as well as the responsibility of balancing the power system in new terms.

    Tariff plans currently approved by NEURC contain significant risks for launching a new electricity market, reliability of grid operation and can lead to Ukrenergo’s bankruptcy as a TSO.

    Thus, in the tariffs from NEURC, there are no expenses for payment of part of the net profit to the budget (UAH 3.3 billion), the settlement of system limits due to damage to the network in the Donbass (UAH 4.2 billion), more than 13 times reduced purchase costs auxiliary services and almost twice the cost of the services of the administrator of the commercial metering and the settlement administrator.

    In the new electricity market, it is a direct threat to Ukrenergo’s financial stability as a transmission system operator and the reliability of the power grid.

    “If the question arises as to what goals to send money in the event of their deficit – to implement an investment program or to pay taxes and pay wages – we will choose the second option”, – said Ukrenergo CEO Vsevolod Kovalchuk.

    It should be noted that the share of expenses on new market functions, according to Ukrenergo calculations, in total two tariffs will make 63%, of which 41% is redistribution of payments between market participants.

    Therefore, even taking into account other additional components in the company’s tariff design, in the new market conditions they, as now, will not have a significant effect on the final price of electricity for consumers.

    At the moment, the Regulator and Ukrenergo have agreed to continue discussing the company’s tariff plans to avoid the risks identified by Ukrenergo.

     

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