UKRENERGO INITIATES REDUCTION OF TARIFFS FOR ELECTRICITY TRANSMISSION BY SUPERGRIDS IN 2018
Ukrenergo initiates reduction of electricity transmission tariff for company in 2018 by 10% – from 6.933 kopecks per kWh to 6.24 kopecks per kWh. This means that the Ukrainian consumers will pay 800 million UAH less for the Company’s services in 2018.
This is the first fact in the history of power industry and Ukraine, when the tariff company voluntarily takes such a step. “One of Ukrenergo strategic objectives, which is fixed in the strategy of the company, is the optimization of tariff for electricity transmission by supergrids and interstate electric mains“, Vsevolod Kovalchuk, CEO of Ukrenergo, commented this initiative. “The ultimate goal of this task is to reduce the cost of the system operator’s services for the end user. And we managed to achieve this.”
According to our calculations, in 2018 Ukrenergo’s operating expenses will decrease by 6.5% or by 210 mln. UAH. And this without indexing the costs of the projected inflation, so the real decline of operating costs in 2017 prices will be even greater. We succeeded in achieving this result by introducing effective changes in the Company’s activities, primarily through increased operational efficiency.
A major factor is the new approach to investment policy and the investment program formation:
- All capital facilities have been transferred to funding by IFI’s funds (IFI – International Financial Institutions). This allows you not to overload the tariff in the coming years, while providing high rates of company technological upgrading.
- In all cases, except for pre-emergency situations, complex reconstruction of facilities is carried out to provide the fastest economic and technological effect and optimal use of the investment resource.
As a result, we managed to minimize the tariff financing of the Ukrenergo investment program in 2018. Tariffs will be spent only for the following projects:
- completion of replacement transformers that was initiated in previous periods;
- construction of “Kreminska” 500 kV electric substation in Luhansk oblast, which is critical for the country’s energy security, and cannot wait for the allocation of credit funds, which usually lasts for 1-2 years;
- modernization of equipment that is in a critical condition;
- financing of cyber security measures;
- renovation of the technological park in the minimum necessary volume.
At the same time, a 10% lower tariff will not prevent Ukrenergo from increasing its resources to repay the bulk of loans from international financial institutions, as well as for servicing such loans.
In addition, the organizational restructuring of the company, conducted in the first half of 2017, allows paying market salaries to our employees without increasing the wage bill.
“I understand that since the Ukrenergo’s share in the general tariff of the consumer is very small – less than 5%, – the reduction of our tariff by 10% may not be too noticeable for the consumer”, said Vsevolod Kovalchuk, CEO of Ukrenergo. “However, I urge other players on the market to follow the example of Ukrenergo, looking for internal reserves to increase operational efficiency, changing approaches to investing. And then, every consumer in Ukraine will experience the reduction in electricity costs.”
We invite interested bodies and individuals to submit their proposals and remarks to tariff amendment draft for electric energy transmission by supergrids and interstate electric mains, including the fee for the central dispatch control of the Unified Energy System (UES) of Ukraine, for 2018.
Proposals and comments in writing are accepted by August 28, 2017 at address: 25 S. Petliury Str, 01032, Kyiv or by e-mail: firstname.lastname@example.org (contact person: Muraviova Tetiana Matviivna, tel. +380 44 238-30-20).
An open discussion of the comments and suggestions received will be held at 11:00 am on August 29, 2017 at address: 27 S. Petliury Str, Kyiv.
Representatives of executive authorities, local governments, whose competence includes pricing issues, are invited for open discussion.
Also, by the end of August, we will put on open access the Ukrenergo Investment Project for 2018 and initiate its public discussion.