OREANDA-NEWS. June 09, 2009. A decision to cut investment programmes for regional energy supplying companies is only of little assistance for resolving the current shortage of funds at thermal generating companies.

A decision to cut investment programmes for regional energy supplying companies is only of little assistance for resolving the current shortage of funds at thermal generating companies, said Yulia Nosulko, the Head of DTEK’s Regulatory Policy Department, commenting the respective resolution made by NERC on 27 May, 2009. By this decision the National Electricity Regulatory Commission (NERC) has reviewed the structure and level of tariffs for electricity transmission by local networks under the regulated tariff since 1 June 2009. The NERC has taken the ‘operational investments’ line out of profits. The total amount of the released funds is UAH300m.
 
According to Yu.Nosulko, this measure will give just slightly more than UAH40m to the thermal generation sector, which is obviously not enough for resolving the backlog of problems.
 
To that end, a balanced approach to the formation of investment programmes of regional energy supplying companies (oblenergos) should have been taken as early as late last year, at the stage of their original approval when the crisis scale was already quite evident. Today, they tar all the oblenergos with the same brush. In this situation, the statements made by Kievenergo as to disrupted preparation of energy infrastructure for the Euro-2012 seem well justified. After all, if some funds are allocated next year, taking into account the stages of designing, land allocation, construction and commissioning, it could already be of no need and, alas, the final game of the championship would take place not in our capital city.  
 
In Yulia Nosulko’s opinion, the most adequate step in the current conditions, which would ensure the required income for generating companies to prepare for the winter season, to pay to coal miners and settle their financial liabilities to the total amount of over UAH3.2bn, is to overcome psychological barriers, reject populism and make a decision to increase electricity tariffs for households. This would alleviate a huge burden of subsidies, which account for over 30% in the wholesale electricity price. In such a case it would be possible to prevent the collapse of thermal generation without raising retail tariffs for industrial consumers, which would significantly deteriorate the prospects of the latter to recover from the crisis.
 
As Ms Nosulko said, if an electricity price for households were to be increased at least by 25%, the energy sector would have got up to UAH900m by the year end.  It should be noted that such a tariff raise would not make the position of Ukrainian families much worse as monthly average electricity bills would be just UAH10–15 up. The poorest citizens are protected by the mechanism of housing subsidies. While literally the survival of the national generation and stable energy supplies for Ukrainian consumers are at the other end of the scale.