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  • The NEURC has approved NPC Ukrenergo tariffs for transmission and dispatching services in 2022

    The NEURC has approved tariffs for NPC Ukrenergo services to be in effect from January 1, 2022. In particular, the tariff for electricity transmission via trunk networks will be UAH 345.64/MWh (excluding VAT), the tariff for dispatch (operational and technological) control services will be UAH 62.13/MWh (excluding VAT).

    In 2021, the tariff for transmission services was UAH 293.93/MWh, and for dispatch (operational and technological) control services – 39.41 UAH/MWh.

    The change in the transmission tariff in 2022 is due to an increase in the total amount of funds required to repay loans and other borrowings raised to repay NPC Ukrenergo’s debt to Guaranteed Buyer to pay for the service of increasing the RES share. Therefore, in 2022, it is necessary to pay UAH 1.76 billion of interest on “green” bonds that NPC Ukrenergo placed in the international stock markets in early November 2021. In addition, in 2022, the company will repay UAH 6.3 billion (loan body and interest) to three state-owned banks (Oschadbank, Ukreximbank, and Ukrgasbank), which in mid-2021 issued a loan of UAH 10.25 billion to repay the debt to Guaranteed Buyer.

    In the structure of the transmission tariff in 2022, all expenditures for fulfilling public service obligations (PSO) related to the increase in the RES share are set at UAH 22.65 billion (UAH 25.92 billion in 2021). Of this amount, UAH 18.04 billion (UAH 21.94 billion in 2021) will be paid for Guaranteed Buyer’s services (industrial RES), and UAH 4.61 billion – for the services of universal service suppliers (private household RES) (in 2021 – 3.99 billion UAH). The total amount of costs for PSO in the approved tariff does not take into account the funds to be provided for financing RES in the state budget (not less than 20% of the total amount).

    For 2022, the transmission tariff determines the operating costs in the amount of UAH 13.5 billion. The main reason that led to the adjustment of the amount of operating costs compared to the previous year was the determination of the cost of purchasing electricity to compensate for technological losses during its transmission in the amount of UAH 8.35 billion (UAH 4.73 billion in 2021), which is due to a significant increase in market electricity prices. When calculating these costs, it is taken into account that electricity to compensate for losses will be purchased in the following ratio: 85% – in bilateral contracts market, 12% – in DAM, and 3% – in balancing market.

    The main reason for changing the dispatching tariff in 2022 is the need to adjust the cost of purchasing ancillary services to regulate the frequency and capacity to balance the power system. This cost item is set at UAH 16.74 billion (UAH 5.69 billion in 2021). The amount of costs was determined based on the fact that, firstly, next year, marginal prices for ancillary services are expected to increase by 30%  (given the fact that they are linked to the growing weighted average price in DAM – the resolution of the NEURC № 635 dated 26.04.2019). Secondly, it will be necessary to increase the volume of procurement of reserves (ancillary services) for the operation of the Ukrainian power system in isolated mode, which precedes the synchronization of the power system of Ukraine with ENTSO-E scheduled for 2023.

    The expenditures on capital investments (at the expense of profit and depreciation) in two tariffs combined are set at UAH 1.6 billion due to the need to increase the volume of actions related to new construction and technical re-equipment and reconstruction of trunk network facilities. In particular, the largest reconstruction projects implemented at the tariff costs are modernization of SS 750 kV Vinnytska, SS 330 kV Yuvileina, SS 330 kV Adzhalyk, etc.

    According to the decision of the NEURC, the growth of the salary fund in the tariff structure of NPC Ukrenergo is limited to 5.3%, which should become the cap for other companies with regulated tariffs in the energy sector.

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