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  • Ukrenergo’s tariff allows to offset one-third of refund to Guaranteed Buyer

    Funds in Ukrenergo’s 2020 electricity tariff intended for payment of the feed-in tariff allow to offset only about 30% of the monthly needs of Guaranteed Buyer for fulfilling special obligations to RES producers. 

    The transmission tariff provides for monthly expenditures for this purpose in the amount of UAH 700-800 million, while the invoices issued by Guaranteed Buyer to Ukrenergo amount to UAH 2-2.5 billion. The situation is complicated by the low level of settlements of market participants for electricity transmission services under quarantine conditions. 

    In January-March 2020, the level of payments by market participants for electricity transmission services of Ukrenergo amounted to 76%, and in March – it did not exceed 60%. As of today, the total debt of market participants for the transmission tariff amounts to UAH 2.4 billion (VAT included), including UAH 644.5 milliondebt for the ІІ half of 2019. In addition, Ukrenergo has not received UAH 422.7 million (VAT included) due to suspension of transmission tariff by the court of law for certain large consumers.

    So, lack of tariff funds and low level of settlementsone of the reasons of Ukrenergo’s debt for offsetting feed-in tariff to Guaranteed Buyer in the amount of UAH 5.7 billion. In addition, the situation is affected by a decrease in electricity consumption by an average of 7-10%, and complicated by the low level of payment discipline.

    The crisis of non-payments is gaining momentum in the electricity market, and as a result – the growth of debt. This situation is only partially caused by quarantine. There are several more factors, which are currently affecting the electricity market. The first one is the surplus of electric power and the PSO model currently in force, which causes high price volatility in the wholesale electricity market. Recently, the electricity price has renewed its historical minimum and reached UAH 600/MWh. In such circumstances, Guaranteed Buyer, which ensures the fulfillment of special obligations for the population and RES, does not accumulate sufficient funds for offset payment and has a deficit that needs to be covered by Ukrenergo tariff”, – explained acting CEO of NPC Ukrenergo Volodymyr Kudrytskyi.

    Another reason for the deficit of funds in the electricity transmission tariff to offset the feed-in tariff is the significant increase in actual RES production compared to the forecast. In particular, this trend caused adjusting on 13 March 2020 of the forecast electricity balance for 2020. As a result, RES production at the feed-in tariff for the I quarter of this year amounts to 2.04 billion kWh, that currently does not take into account Ukrenergo’s electricity transmission tariff, therefore, objectively creating the deficit of costs

    Thus, in the nearest time, Ukrenergo is planning to address NEURC with initiative to revisit the electricity transmission tariff in order to  be able to fulfill obligations to offset the costs for the feed-in tariff for Guaranteed Buyer.

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