The existence of different tariffs for electricity distribution is economically justified

The unification of tariffs by voltage classes is a very bad signal for investors who value predictability

Unification of tariffs by voltage class, as proposed by the National Energy and Utilities Regulatory Commission (NEURC), is illogical and economically unjustified. Such a decision will harm the Ukrainian economy now and in the future, as one group of consumers will subsidize another.

This was stated by Oleksandr Kalenkov, President of Ukrmetalurgprom, during the roundtable discussion “Differentiation of electricity consumers by voltage classes” held by ICC Ukraine.

According to him, the existence of two classes of consumers is justified, as the costs of energy supply for different groups differ. For example, large enterprises have their own infrastructure, lowering transformers and so on. They maintain their energy infrastructure themselves, and their networks have much lower electricity losses.

“Unification of distribution tariffs is contrary to European practice, where there are different classes. In the European Union, only one country has a unified tariff – Malta. European directives also recommend avoiding the establishment of a single tariff for all types of voltage,” added Kalenkov.

According to him, the implementation of such changes requires discussion with industrial electricity consumers.

“We need a professional discussion where we can discuss whether it should be two classes, three or even more (this is the practice). It is also necessary to correctly estimate the costs, which allows us to come up with a specific tariff,” said the president of Ukrmetalurgprom.

According to Kalenkov, the unification of tariff classes sends a very bad signal to investors, both existing and potential, as they value predictability.

According to GMK Center, the unification of tariffs will lead to duplication of costs for industrial companies. The total increase in costs for iron and steel companies will be about UAH 10 billion per year, and about UAH 26 billion across the economy.

As GMK Center reported earlier, in July, the National Energy and Utilities Regulatory Commission proposed to unify the electricity distribution tariff. However, the regulator abandoned this decision after business outrage. But later there was preliminary information about a possible return to this issue.