Ukraine raises electricity price for industry from July 1

Wednesday, June 29, 2016 - 22:40 (EEST) Section: Latest news

Today, the National Energy and Utility Regulation Commission (NEURC) raised the tariff for industrial consumers – by 10% for Class 1, by 8.2% for Class 2.
The NEURC has increased from July 1 the cost of electricity for industry by 8-10%, according to a Facebook posting by former Commission member Andriy Herus.
”Today, the NEURC raised the tariff for industrial consumers: by 10% for Class 1, by 8.2% for Class 2,” he wrote.
Electricity tariff for consumers of Class 1 voltage is set at 35 kV and above, for Class 2 consumers – under 35 kV.
At this, Herus recalled that on June 24, the Commission raised the wholesale market price of electricity, which was supposed to lead to an increase in tariffs for the households or the industry.
”They chose the industry,” ex-member of the Commission said.
”This is the largest one-time increase in tariffs for the industry in the history of the NEURC. And this while the elimination of cross-subsidization has been declared,” said Herus.
As UNIAN reported earlier, Herus said the NEURC from July 1 increased the wholesale market price (WMP) of electricity to UAH 1,358 / kWh, although earlier it was supposed to be increased to UAH 1,280. This will lead to a substantial increase in the price of electricity for the industry, the expert says.
Meanwhile, head of the NEURC Dmytro Vovk neither denied nor confirmed this information, saying that the main reason for the change of the WMP is a significant reduction in nuclear generation (by 10%).
Also, according to Vovk, the decreased cost of coal by $3 per tonne was also taken into account in calculations, as well as the strengthening of the hryvnia exchange rate from UAH 25.3 to UAH 24.9 to the dollar.
UNIAN memo. In late April of this year, the NEURC approved a market methodology of calculating the  wholesale price of electricity, based on the European index of coal prices.
According to NEURC chief Dmytro Vovk, using a new formula, the ceiling price of coal will be formed on the basis of price (API 2 index), which is formed in trading on the stock exchange in Rotterdam (Netherlands), along with the cost of coal transportation to the national market (the so-called ”Rotterdam plus shipping” formula). The NEURC believes such calculation method will eliminate manual price regulation, ensure the independence of supplies from the ATO zone and save Ukraine from the problems with the accumulation of sufficient quantities of coal for the heating season.
Meanwhile, a number of experts sharply criticized the proposed formula for forming a price of a Ukrainian-produced coal because, in their opinion,  the coal gets overprices in this way, therefore making it possible for Rinat Akhmetov`s DTEK energy company, which controls a number of Ukrainian thermal power plants and coal-mining enterprises, to get more profit. They pointed out that because of this, the question may arise of further increase in prices of electricity for the industry and the households.
At the same time, coal stocks in warehouses of thermal power plants began to actively decline since mid-May. The TPPs at the time had at their disposal more than 2 million tonnes of coal, of which about 870,000 tonnes was a share of anthracite coal. As of June 21, coal reserves at TPP warehouses across Ukraine were at 1,484 million tonnes, including anthracite brand at 405,400 tonnes.
Responding to criticism of the NEURC decision, Prime Minister Volodymyr Groysman June 24 instructed the Energy Ministry and other relevant ministries to consider the feasibility of using the ”Rotterdam plus shipping” formula submit the results of their assessments within a week. Energy Minister Ihor Nasalik has been opposing the introduction of the ”Rotterdam plus shipping” formula, instead offering to launch a coal exchange in the domestic market, obliging the state-owned coalmines to sell 30% of coal in this exchange.