Ryabtsev says whether gas and electricity prices for households will change
1 May 2024 13:56
The government has approved a decree according to which the price of gas for heat and hot water suppliers to households will remain unchanged until the end of the summer. Energy expert Gennadiy Ryabtsev told Kommersant Ukrainian 
what Ukrainians should expect with utility tariffs.
Electricity and gas tariffs: how they will change from 1 May
Prices for electricity, gas and water for most household consumers will not rise in May 2024.
“Naftogaz has extended the preferential gas price for households. It will remain at UAH 7.96 per cubic metre of natural gas.
The Government has decided to extend the preferential electricity price for households at UAH 2.64 per kilowatt. This price is currently set to remain in place until 31 May.
It is worth noting that Ukraine has lifted the moratorium on the charging and collection of penalties and fines for non-payment of utility bills. Therefore, in May, debtors may be charged fines and penalties, have their debts enforced, and even have their services terminated.
Should we expect an increase in electricity prices from 1 June?
To discuss the likelihood of an increase in the cost of electricity, "Komersant Ukrainian" spoke to energy expert Gennady Ryabtsev.
Under what conditions can the price of gas and electricity for households change? Is the government artificially holding back the price or not?
Yes, it is artificially restraining prices. I can’t say that about gas, but as for electricity as a commodity and, accordingly, the tariffs for electricity distribution and transmission for household consumers, the price is artificially kept down. Because the cost of the relevant services, the generation of electricity itself, especially taking into account the costs that companies need to incur to ensure the restoration of damaged infrastructure, the price of electricity is now much lower than this cost. The cost of electricity generation is around 3.70. This is, of course, the average for the chamber, but it is not lower than 3.50, that’s for sure. That’s why this statement that the price of electricity for households and the corresponding tariffs for distribution and transmission will be maintained until 31 May – I don’t know what it is about.
In fact, the situation is complicated, and I think the power engineers should at least be supported in this, because further continuation of this populist policy threatens to result in a lack of funds to restore the power system.
Under what conditions can the price of gas and electricity for households change?
All the conditions have been in place for a long time. The only condition is that the government pretends that… I don’t know. Moreover, changing the relevant tariffs and prices is one of the country’s obligations. And this obligation has simply not been fulfilled for a long time. Obligations to the EU, to the IMF, to all creditors – this is described as one of the first conditions in all requirements, memoranda, and agreements on the provision of relevant financing. And this, by the way, is one of the problems that makes it impossible for the energy sector to function properly.
The second problem is the debt problem, which is simply being sabotaged by the government. I don’t know the reasons why this is happening, but the debts that have accumulated now, particularly in the balancing market, simply do not allow the companies, which are already in a very difficult situation, to function properly. This is despite the fact that both tasks 1 and 2 were set out in certain decrees of the President of Ukraine, which implemented the NSDC decisions.
What is the real cost of gas and electricity now?
As for gas, I would not say that the cost of production is higher than the price. Naftogaz of Ukraine has taken very good care of this, and the price is not much different from what we pay. Yes, this price could be adjusted there by decoupling it from European prices, to which it is rigidly tied, and by taking into account the Ukrainian production cost in the price structure. If we replace the external price in this price formula, which is formed at the Dutch hub, with the internal price, which will be formed on the exchange, through which at least 15% of the gas will be sold, and it would be great if at least a quarter of the gas produced in Ukraine is sold, then we will see that the real price of gas for both households and industry is comparable to the current price for households.
But again, this is not happening. This will hit the profits of Naftogaz Group. Here, it is not so much the government that is interested in populist measures, but Naftogaz Group that is interested in preserving its own profits.
And in the electricity market, it is the price of electricity that is underestimated, and significantly so. If we take into account, for example, the cost of generating solar power plants in the general energy sector, we will see a heyday of costs from UAH 2.5, which corresponds to nuclear power plants, and somewhere up to UAH 10-12 in solar power plants. If you look at the mix, you get a price of UAH 3.5 to 4, depending on how you calculate it and what you consider to be the cost.
How effective is the procedure for the state to cover the difference in tariffs?
It does not cover the difference in tariffs, it only declares that it will cover the difference in tariffs.
