Electric war of the Ukrainian oligarchs

Электрические войны украинских олигархов

The lost fight Kolomoisky

Last Thursday, the Kyiv appeal administrative court has satisfied the statement of the National regulatory Commission of energy and utilities (NKREKU) and reversed the decision of the District administrative court of Kiev from October 17, which he invalidated 3 of the decision of the national Commission on the approval of electricity tariffs for non-domestic consumers in may, June and July 2016.

Close to Igor Kolomoisky, the Ukrainian Association of producers of ferro-alloys (Ukrainian Academy of pharmacy) challenged order No. 755 dated 28 April, which the national Commission may have increased the tariffs for non-domestic consumers 5.2-6% (or 6,46-of 9.54 kopecks. per kW/h) – up to 130,68-168,48 kopecks. per kW/h, the resolution No. 826 of 24 may, which the Commission has retained the tariffs in June, and decree No. 1179 of June 24, that the rates were again increased by 8.17-10% (13,07-13, 77 kopecks – to 143,75-182,25 COP. per kWh (all prices are without VAT).

Related news: Retail electricity tariffs for industry in November will remain unchanged, – NKREKU

For Ferroalloy enterprises Igor V. these rates are of paramount importance in the cost structure of ferro-alloys, the share of electricity reaches 40%. And under the control of the Privat group are the largest enterprises of branch – Zaporizhzhia, Nikopol and Stakhanov Ferroalloy plants, Ordzhonikidze and Marganets mining and enrichment plants.

Thus, the efforts of lobbyists Igor Kolomoisky was in vain – current retail electricity tariffs for industrial consumers of power distribution companies in the near future will remain unchanged. Did not help even a systematic media campaign to discredit coal-formula “Rotterdam plus”, the abolition of which the opponents of the tariff policy NKREKU saw the corridor to reduce tariffs for their businesses.

Tariff resentment DTEK

But not only managers Kolomoisky there is a reason for sadness. Last week unexpectedly emotional interview broke the main power Manager Akhmetov, Maxim Timchenko. The General Director of DTEK virtually word for word repeated the recent statement of the head of the Ministry Igor Nasalik that “formula “Rotterdam plus” not working in Ukraine”.

According to the head of DTEK established the national Commission that the principle of the formula “Rotterdam plus” to restrict coal imports to Ukraine from the world markets. The costs of imports fall on thermal generation and not kompensiruet controller.

“The average price of coal in Rotterdam last year was $ 56 without shipping, on this basis there is a formation of the tariff for production of thermal electricity this year, because the reference period previous 12 months. And today, the price in Rotterdam for almost $ 90. Question: how to buy coal if the tariff of 56 dollars, and now the price is $ 90?” – said Timchenko.

News on topic: “Ukrenergo”: the Electricity produced from gas, you get “gold”

Not less claims were made and to the pricing of Ukrainian coal: “They (current prices in Rotterdam) to any Ukrainian mines not applied – neither to the state nor private. Absolutely the correct question that should be addressed to the Minister and the regulator. Why today state mines sell coal at 1370 UAH and say they need 1 or 2 billion UAH of state support in 2017? Why sell in 1370, when the same coal is sold in foreign markets at 2300-2400 hryvnia?”

In fairness it should be noted that “Rotterdam plus” still works. But is not working as we would like the DTEK, but how beneficial the regulator, which is trying to balance between the interests of producers and consumers. In the formula for calculating the wholesale market price of electricity, though inherent orientation to prices in the coal hub ARA (Amsterdam, Rotterdam, Antwerp), but not “today for today”, and the average period. And in the first three quarters of this year in Rotterdam, the prices were far from today’s, they pull down the price of coal for thermal power generation.

“Vovchik” rules

The most interesting thing about this situation is that the national Commission (which is headed by 25-year-old Dmitry Vovk) next month there is the opportunity to reduce ORC and, thus, the tariff for industrial consumers.

December 9, the national Commission reduced the tariff for electricity production for the next year for “Energoatom” of 8.6% for “Ukrhydroenergo” 8.7%.

12 Dec controller the formula of “Rotterdam plus” has established coal cost component for thermal power generation at the level of 63-68 dollars./t (depending on the coal grade). This means that from 1 January will drop the tariff for thermal generation – from the current 1.8 UAH per kilowatt-hour to approximately UAH 1,35 per kilowatt-hour.

Thus, Kolomoisky and other Industrialists can count on some reduction in the price of electricity for their businesses next year. But if it happens, it is not because of lawsuits but because of the “Rotterdam +” (TPP) and at the behest of the regulator (in respect of a fixed rate for NPP, HPP and TPP).

In relative profit and state-owned mines – mounted NKREKU for thermal power plant price of coal grade G (namely, it is extracted gosshahty) at 1641 UAH/t, will raise the selling prices available with 1370 UAH/t. Another thing is that it will only mitigate and not solve the problem of the state mines, the cost of production with an average of 2080 UAH/t. it remains to rely on the allocation of 1.8 billion UAH of subsidies for the next year.

Related news: the electricity Suppliers from 1 January 2017 on a monthly basis allowed to raise prices

The situation could have developed differently if the national Commission has revised the principle of the “Rotterdam” from annual to quarterly lag in the formation of the indicative cost of the coal component in the TPP tariff. This vested interest of producers and consumers of steam coal.

But if the first (“Centrenergo”, – DTEK, “Donbasenergo”) the existing order, above all, clog import capabilities (the money they lose – the September-December rise in world coal prices will be considered in the subsequent periods), the Ministry with the chronically unsolvable problems a pile of unprofitable state-owned mines need correction formula is quite critical. Especially in light of the recent miners ‘ strikes in the Lviv and Volyn regions.

But the regulator, apparently, chose a compromise option for all parties concerned – and for the coal and for thermal power generation and for industrial consumers.

Vitaly KULIK, the project “ЭнергетикаUA”

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