Ukraine’s Federation of Employers opposes unjustified increases in power transmission, dispatching tariffs

Ukraine's Federation of Employers of Ukraine (FEU) strongly opposes the tariff hikes for electricity transmission and dispatching services proposed by the National Energy and Utilities Regulatory Commission (NEURC).

In an official statement, the FEU announced that it has submitted objections to NEURC, NPC Ukrenergo, the Ministry of Economy, and the Ministry of Energy, offering a compromise solution. This proposal includes optimizing the structure of tariffs for these services.

The statement recalls that on November 13, NEURC approved a draft tariff for electricity transmission services set at UAH 665.27/MWh, representing a 26% increase. Additionally, the dispatching (operational and technological management) tariff was raised to UAH 95.07/MWh. The FEU considers these hikes unacceptable and detrimental to the country's economy.

"These tariff increases impose an additional burden on Ukrainian enterprises, which, under wartime conditions, could lead to catastrophic consequences. For instance, just the increase in the electricity transmission tariff alone would raise energy costs by over UAH 13 billion, reducing the competitiveness of Ukrainian products," the statement asserts.

The FEU highlights that the situation is exacerbated by the war, which has inflicted significant losses on many Ukrainian businesses, including the destruction of infrastructure and production facilities. Higher tariffs will decrease production output, negatively affecting foreign exchange earnings and tax revenues in a time of budget deficits.

The FEU also argues that some expenses included in the proposed tariffs are excessive. For example, the dispatching tariff draft allocates UAH 11.4 billion for ancillary services, while 2024 data shows significantly lower actual expenditures. Over the first nine months of 2024, only UAH 2.6 billion was spent on dispatching, and just UAH 67 million on reserve capacity procurement. Given the rise in electricity prices and the lack of need for subsidizing gas power units, these costs could be significantly reduced.

The FEU proposes optimizing the 2025 tariff structure by setting the electricity transmission tariff at no more than UAH 530/MWh and the dispatching tariff at no more than UAH 60/MWh.

The statement emphasizes the need to consider economic realities and ensure stability in the energy sector. Increasing tariffs during these challenging times would impose an unbearable burden on manufacturing businesses and worsen the socio-economic situation in the country, the FEU concludes.