Energoatom disputes text of market rules
The Cabinet of Ministers had approved the resolution On Amendments to the Regulation on Imposing Special Duties of Electricity Market Participants to Ensure Public Interest in the Process of the Electricity Market Operation on 5 August, and Energoatom waited for this to be published in order for it to come into force.
When the final version of the resolution was published on 12 August, the company noticed that a clause had been added regarding the pricing formula it must use to sell electricity. This formula "has nothing to do with the functioning of a free market and is openly discriminatory towards Energoatom", it said yesterday in a statement on the website of one of its power plants, Zaporozhe NPP.
Ukraine launched an electricity market in July last year, but this tied Energoatom to selling 85% of its electricity production to the Guaranteed Buyer (GarPok) at a fixed low price within the PSO mechanism. The other 15% could be sold on the day-ahead market. On 20 May, the Cabinet of Ministers approved two resolutions on regulations governing PSOs and electronic auctions for bilateral contracts. The first reduces the 85% restriction to 80%, meaning Energoatom may sell 5% of the electricity it produces under bilateral contract via electronic auctions.
The latest version of the resolution, before the new clause was added, permitted Energoatom to increase the percentage of electricity it produces for sale under bilateral contracts via electronic auctions from 5% to 40%, and increase the price of the power it sells to GarPok. Energoatom was ready to adopt these changes at auctions on 10-11 August, but the delay to publication of the resolution meant it had to cancel them.
The new clause states that Energoatom and hydropower producer Ukrhydroenergo must use a new pricing formula. The last-minute addition of the clause is "most likely evidence of open lobbying and manipulation of information on the electricity market in order to mislead the leadership of the Cabinet", Energoatom said, adding that it "cannot agree with the final version of the resolution on the introduction of a new PSO model and reserves the right to defend the interests of the state company in all ways provided for by the current legislation".
Preliminary calculations worked out according to the new formula indicate that Energoatom will not be able to sell electricity below UAH1.38-1.4/kWh. Herman Halushchenko, Energoatom's vice president of development, told Energy Club that this is higher than the current market price, adding it was "absurd to set pricing for the company's resource, with which it should enter the market".
According to the text of the resolution, Energoatom and Ukrhydroenergo must ensure the weighted average price of electricity sales in all commercial segments are at a level not lower than the 'cost coverage price calculated according to the new formula.
