Ukraine`s Energy Regulation Commission cancels introduction of delivery charge for gas

Ukraine`s National Energy and Utilities Regulation Commission (NEURC) has canceled its resolution on the introduction of a delivery (customer) charge for the population from April 1, 2017.

The relevant decision was unanimously supported by the members of the commission at an extraordinary meeting of the regulator.

”Today we must take a decision, which was announced by the department in order to cancel the resolution, to hold additional consultations, to ensure that there are no increases [of payments] for Ukrainians as a result of this decision,” NEURC chief Dmytro Vovk said.

”We want to announce that our decision was taken publically, in accordance with the law. If we failed to provide quality explanation the first time, we take a time-out in order to hold consultations with the participation of the public, hold consultations with the Cabinet of Ministers, to cover with subsidies what is in its competence. For now, the decision will be studied and revised in detail,” Vovk said.

Answering the clarifying question of Ukrainian MP Oleh Liashko, Vovk confirmed that the commission canceled its decision on the introduction of a customer charge for gas from April 1, 2017.

Earlier, NEURC on March 28 adopted a new methodology to calculate natural gas rates for consumers, including for households: starting from April 1, the gas tariff was expected to include two components: the gas charge (about UAH 6 per cubic meter) and the delivery charge, i.e. costs related to transportation of gas via mains and regional distribution networks (the so-called customer charge). The latter will be calculated based on the maximum capacity of a customer`s gas meter.

Experts calculate that the costs for those consumers who have only a gas stove (without a gas boiler) and a G 1.6 gas meter will grow by 1-4 times on the average, while the charge for owners of gas stoves without a meter will soar by 5-8 times on the average. The new methodology will also allow regional gas distributors to additionally earn about UAH 7.7 billion, or US$283.6 million, per year.

On April 3, Prime Minister Volodymyr Groysman announced plans to officially ask NEURC to review the introduction of the delivery charge for households. In turn, NEURC invited the Cabinet to take measures to prevent the growth of the final gas rates for the population.

On the same day, NEURC announced it would initiate a reduction in central heating tariffs for residents of apartment buildings with gas stoves in order to balance out growing gas rates after the introduction of the delivery charge.

On April 4, Ukrainian President Petro Poroshenko`s administration published a statement saying that the NEURC decision should be suspended. The president also appealed to NEURC and the Cabinet to come to a coordinated decision, which would prevent growing gas rates. Following that, NEURC announced this decision would be suspended on April 10.

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