Will electricity tariffs increase for households

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It has been revealed what principle will be used to raise electricity tariffs

At the end of February, Yuriy Boyko, an adviser to the prime minister and former acting energy minister, announced an increase in electricity tariffs for households.

Why can't tariff increases be avoided?

According to Boyko, tariff increases are inevitable. One of the main ones is the profitability of energy production for businesses. Also important is the reduction of tariffs for households at the end of 2021, which led to the financial collapse of the energy system.

Today, about 140 billion hryvnias per year are needed to meet the special duties of supplying cheap electricity to the population (SAR).

According to the rules of the SCO, this money must be paid by the state companies Energoatom and Ukrhydroenergo by selling their electricity at market prices. But they do not have anywhere near such revenues.

The war resulted in disproportionate electricity consumption by businesses and households. Before the war, legal entities that bought electricity at market prices consumed about 70% of the country's electricity. The rest was purchased by households. With the start of the invasion, household consumption fell by a notional 20% and legal entities, by 40%. Hence, the JOP model, introduced in 2021, which called for cross-subsidization (businesses pay more so that households pay less) does not work.

According to Boyko and Konstantin Ushchapovsky, head of the National Energy Regulatory Commission (NERC), the regulator has calculated about 10 different tariff increase concepts.

1. Steps instead of subsidies

Most likely the concept of increase will include one or more steps. For example, the first 100 (or 250) kWh per month will be cheaper than the next one.
an alternative to the staggered concept is targeted monetised subsidies for the vulnerable.

The energy companies are more exposed to the subsidies. But in this case there will be a big burden on the Ministry of Social Policy, which does not want to identify the subsidy beneficiaries.
meanwhile, the tiering concept defines "social consumer" by volume of consumption.

2. The total monthly bill for the "social consumer" should not increase

We should remind you that now the maximum monthly cheque for consumption up to 250 kWh a month is 360 hryvnias or less than $10.

3. Gradual increase

The more radical is the increase in tariffs, the more stages will be introduced.

It should be noted that a similar experience has already taken place: in 2015, the NERC increased tariffs in 4 stages with a six-month gap between each increase. But given the experience, the introduction of market prices for households, when the tariff is about 6 UAH/kWh, should not be expected.

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