ArcelorMittal Kryvyi Rih calls on the government to prevent unification of electricity distribution tariffs

PJSC ArcelorMittal Kryvyi Rih calls on the government to prevent the introduction of a unified tariff for electricity distribution. This is stated in the company’s letter, which is available to GMK Center.

According to ArcelorMittal Kryvyi Rih, large industry, including iron and steel companies, is the key to the functioning of the Ukrainian economy during the fight against the aggressor. Only under stable operating conditions can they continue to support the economy and pay billions in taxes, which are used to buy weapons, drones, equipment, and supplies for the Ukrainian military. However, recently, decisions have been made and planned that not only do not contribute to this, but may also lead to a halt in the production of the industry.

Currently, it has become known that a decision is being prepared that, according to the company, will cause even more damage to such large strategic energy-intensive enterprises as ArcelorMittal Kryvyi Rih. The business has been informed that the National Energy and Utilities Regulatory Commission (NEURC) has already developed a decision to introduce a unified electricity distribution tariff for large industry, small and microbusinesses.

«Currently, the electricity distribution tariff is divided into voltage classes 1 and 2, which is in line with the existing practice of tariff setting for electricity distribution services in the EU. The first class is for large industries that are connected to high-voltage power grids and consume much more electricity. The tariff for the 1st voltage class is about 5 times lower than for the 2nd. The tariff is divided and this is logical, because much less infrastructure is used to supply electricity to large enterprises, and electricity losses in the power grids for its distribution are much lower than in the 2nd class, while the tariff for the 2nd class allows covering the costs of electricity supply to small and microbusinesses,» ArcelorMittal Kryvyi Rih noted.

According to the information received, the NEURC wants to set a single tariff for both groups of consumers, meaning that a one-time decision is proposed to increase the tariff for large industry by 5 times.

«This will be a devastating blow to large industry, which forms the state budget, and will have an extremely negative impact on the economy of the country at war,» the company said in a statement.

ArcelorMittal Kryvyi Rih is asking the government to intervene and prevent the regulator from making a decision that will harm the domestic economy and contradict European rules that Ukraine is actively integrating into its energy sector.

In addition, the company hopes for an objective review of the Cabinet of Ministers’ decision to increase from 30% to 80% the mandatory volume of imported electricity purchases from the total hourly consumption to ensure its supply without restrictions.

Recently, energy-intensive enterprises, including ArcelorMittal Kryvyi Rih, asked the Cabinet of Ministers to review the CMU Resolution No. 611 of May 30, 2024, which increased this volume. As noted, this decision has led to a significant increase in electricity purchase costs, which negatively affects further production, which becomes significantly unprofitable, and products are uncompetitive on the global market.

In such a situation, ArcelorMittal Kryvyi Rih will be forced to significantly reduce production and put its employees on idle time, which will have a negative multiplier effect on both the revenues to the budgets of all levels and foreign exchange earnings in the country, as well as on the social aspect. So far, the government has not responded to this appeal.

As a reminder, unification of tariffs for electricity distribution services will lead to discrimination against large domestic consumers, according to a letter from Ukrmetalurgprom addressed to the head of the National Commission. This step will also contradict the practice of tariff setting for these services in the EU and will have serious negative consequences for the competitiveness of the mining and metals industry.