OLEKSANDR HAVVA ON THE INCREASE OF ELECTRICITY TARIFF: ELECTRICITY PRODUCERS NEED FUNDS TO RESTORE AND PREPARE FOR THE NEXT WINTER

The World Bank has estimated the damage of the Ukrainian energy infrastructure from large-scale missile attacks in $ 10 bln. Due to consumption reduction, the electricity market companies cannot now accumulate funds in a natural way, as it happened before, but at the same time, they have much more commitments to prepare for the next winter. This is how Director General of the JSC «Market Operator» Oleksandr Havva commented the need to increase electricity tariffs on the air of the nationwide telethon. 

«The situation on the electricity market is not very favorable now: our domestic demand has not fully recovered, and the power system has a significant surplus. There are no opportunities for Ukrainian electricity market participants where to get funds for restoring in such situation. They have to sell monthly at least 30% more than now to accumulate financial resources», - Oleksandr Havva noted.

He said that power engineers have done impossible after the difficult winter, and the Ukrainian power system has been in surplus since the middle of February. In the first quarter of 2023 the 31,77% less than the offered electricity volume was traded on the day-ahead market, which is the indicative for all electricity market of Ukraine», - Oleksandr Havva emphasized.

He added also that electricity is a product, which cannot be stored, in contrast to gas that can be purchased cheaper and pumped into gas storage for future heating season. As follows, this generated, but not purchased electricity enters the balancing market, where it is sold for extremely low price that does not cover the producers’ costs.

«The newly opened export can partly solve the problem with the liquidity of state-owned companies. So, the market participants will be able to use these financial resources, received from the sale, to prepare for the next winter, considering that the average prices on the spot market of Ukraine were 1,7 times lower than the same prices of neighboring EU countries in the first quarter of 2023», - Head of the JSC «Market Operator» noted.

In addition, he expressed confidence that the decision to support the Ukrainian electricity market participants will be found, and this decision will be balanced as for the social and economic situation in our country.