Electricity price

Iron and steel enterprises emphasize that this threatens to stop production facilities

On June 8, 2023, the National Commission for state regulation in the energy and utilities sector (NCSREUS) approved a draft resolution on increasing marginal prices (so-called price caps) by 35%. Interfax-Ukraine reports about it.

Mining and steel enterprises have already warned the regulator that this may lead to the shutdown of production facilities and propose to leave the price caps at the current level until the end of the war.

Currently, it is proposed to establish the following maximum limit prices on the day-ahead and intraday markets:

  • UAH 2,706.63/MWh (for minimum load hours, from 00:00 to 07:00 and from 23:00 to 24:00);
  • UAH 5,413.26/MWh (for hours of maximum load, from 07:00 to 23:00);
  • the minimum marginal price for the day-ahead market will be UAH 10/MWh.

For the balancing market, the maximum marginal price will be 125% of the day-ahead market price, the minimum price will be UAH 0.01/MWh.

The new price caps, if approved, may enter into force on June 30, 2023.

Director of economics and labor at the Nikopol Ferroalloy Plant Oleksandr Zavhorodniy at the meeting of the regulator noted the lack of analysis of the impact on industrial consumers in the draft decision. According to him, the ArcelorMittal Kryvyi Rih steel mill has currently suspended steel production, and problems may arise in the region where the enterprises are located (Dnipropetrovsk region) if the NFP is stopped. Zavhorodniy proposed not to raise the price caps until the end of the war, as this is a way to increase electricity prices in the day-ahead and intraday markets.

«Although we are now unprofitable, the decision was made to work anyway, but the new level of losses due to the increase in the price of electricity will lead to the shutdown of the enterprise,» he said.

Director of economics and finance of Marganetsk Mining Volodymyr Bodnar reported that the increase in price caps may not allow the company to get out of idle time.

Chief Energy Engineer of the Zaporizhia Ferroalloy Plant (ZFP) Maxim Musatov called additional costs of the enterprise in the amount of UAH 43 million per month as a consequence of the likely increase in prices for day-ahead and intraday markets after the increase in price caps.

As GMK Center reported earlier, iron and steel enterprises have already been forced to suspend or reduce production due to the consequences of the explosion of the Kakhovska HPP. NFP reduces volumes of production due to the need to reduce water consumption for the production process.

ArcelorMittal Kryvyi Rih were forced to suspended production of steel and rolled steel to reduce water consumption. Only the blast furnace and coke chemical production, as well as Minings will remain in operation. The situation at the Kryvyi Rih enterprises of the Metinvest Group remains under control.

Interpipe Niko Tube after the explosion of Kakhovska HPP works in regular mode. The production of products did not stop, the management of the company constantly monitors the situation.