In execution of NEURC Resolution No. 866 dated 30 June 2013, on 10 August 2018 SE NPC Ukrenergo held an open public hearing of changes in the draft tariff for the transmission of electricity through trunk and interstate power grids, including the fee for centralised dispatching management of the IPS of Ukraine for 2019, as well as the draft Investment Programme of SE NPC Ukrenergo for 2019.
Serhii Yermak, the Financial Director at SE NPC Ukrenergo, presented the draft tariff changes, while Volodymyr Kudrytskyi, Deputy CEO for Investments at SE NPC Ukrenergo, presented the draft Investment Programme.
The discussion was attended by the authorised representatives of the Ministry of Energy and Coal Industry of Ukraine, a number of regional state administrations and other interested parties having responded to the public invitation to participate in the event.
Upon the results of the discussion, it was decided to approve the draft structure of the tariff for the transmission of electricity through trunk power grids, including the fee for the centralised dispatching management of the integrated power system of Ukraine by SE NPC Ukrenergo for 2019, and the draft Investment Programme for 2019, publish the minutes of the open discussion on the company’s official website and send them to the NEURC.
“In 2018, Ukrenergo’s tariff sharply declined by 30 percent to 4.894 kop. This was not our initiative. Today, however, we are lacking in the funds to ensure our successful functioning. This is why the company has already submitted the draft changes to the tariff for 2018, which has to be increased to 5.65 kop. This question is currently considered by the NEURC,” said CFO Serhii Yermak.
It was proposed to increase the tariff for services provided by Ukrenergo in 2019 to 7.486 kop/kWh, which is only 6 percent higher compared with the actual tariff for 2017. This increase was caused by such factors as a high percentage of the wear and tear of fixed assets, an increase in repair expenses and maintenance of the fixed assets, a necessity to raise wages and bring them to an average market level, as well as an increase in depreciation and amortisation costs, etc.
Moreover, in 2019, in accordance with the Law of Ukraine “On Electricity Market,” SE NPC Ukrenergo will perform the functions of a transmission system operator (TSO). As specified by this law, the TSO has to trade electricity to compensate for the technological losses of electricity required for its transmission through trunk power grids (p. 6 of Article 33), and also buy ancillary services (p. 5 of Article 33 and p. 12 of Article 69) to ensure the stable and reliable operation of the integrated power system of Ukraine. Taking these two factors into account, the final tariff of Ukrenergo will increase to 17.034 kop. At present, the expenses for technological losses of electricity and ancillary services are paid at the expense of other market participants and are included in the structure of the wholesale price for electricity. Thus, we have an actual redistribution of expenses among market participants, which will not affect the final tariff for consumers.
“Ukrenergo is currently moving from occasional to integrated investments in the reconstruction of facilities. This approach provides an opportunity to receive a powerful economic and technological effect since all significant financial resources are concentrated in sequence on a small number of projects, instead of “smearing” the available funds at once on a huge number of facilities. The main directions of the Investment Programme of Ukrenergo in 2019 will cover the comprehensive automation of substations, rehabilitation of overhead lines, as well as the construction of new overhead lines and substations,” said Deputy CEO for Investments Volodymyr Kudrytskyi.
The materials concerning the draft and substantiation of the tariff structure of SE NPC Ukrenergo for 2019 and the Investment Programme can be found on the corporate website of Ukrenergo.