Secretariat works to improve electricity network tariff setting methodology in Ukraine

4 June 2018

The Secretariat assessed the regulations and methodologies for electricity network tariff setting in Ukraine, with a particular focus on the regulatory asset based (RAB) methodology. In close cooperation with the National Energy and Utilities Regulatory Commission (NEURC) of Ukraine, the Secretariat developed a set of recommendations to align the RAB methodology with the Energy Community acquis.

The guiding principle for every tariff methodology is to ensure that tariffs are non-discriminatory, consider fairly the legitimate interests of investors and network users and reflect economically justified costs. The Secretariat considers that Ukraine’s current RAB methodology does not entirely follow these principles, especially as it allows the possibility of windfall profits for operators.

Network tariff setting methodologies have a direct impact on the operational and investment efficiency of electricity utilities and thus the resulting consumer benefits. It is the job of the regulator to strike a balance between seemingly conflicting objectives, namely improving cost efficiency against maintaining high quality network services.

On 4 April, the Secretariat published Policy Guidelines that outline the best practises in distribution network tariff regulation.

In Scope:

  • Ukraine Ukraine