Electricity distribution tariffs will increase from September 1: who will feel it and how
28 August 2025 12:01
ANALYSIS
Ukrainian consumers have long had a strong belief that if there is any increase in tariffs in the energy market, sooner or later ordinary consumers will feel it. To what extent are such fears justified in view of the increase in electricity distribution tariffs starting September 1? Read in the
The National Energy and Utilities Regulatory Commission (NEURC) has decided to increase distribution tariffs for a number of distribution system operators starting from September 1, 2025. The decision is explained by the need to pay off debts to the transmission system operator Ukrenergo and to allocate funds for preparations for the heating season.
Tariffs for distribution services for consumers of the first voltage class will increase by an average of 14%, and for the second voltage class – by 23%. Rivneoblenergo, Kirovohradoblenergo and Khmelnytskyoblenergo will be subject to the largest tariff increases. The smallest increase will be for Chernihivoblenergo, Cherkasyoblenergo and Lvivoblenergo.
We ask to clarify the nuances of this decision
The reason for the NEURC’s decision is explained by the need to pay off debts to the transmission system operator Ukrenergo. What are these debts?
These are debts to Ukrenergo for electricity transmission, dispatching and balancing market services. In total, it is about UAH 20 billion of debts. They arose because, although this tariff was actually financed earlier, the audit showed that it needed additional funding. And, accordingly, a decision was made to revise it. These are debts between business entities. The distribution system operators have contracts and obligations to Ukrenergo, the transmission system operator. Because the distribution system operators did not have enough money to pay under these contracts, it was necessary to increase the tariff.
So this is actually done to balance the internal financial situation?
Yes. Because Ukrenergo is the main, let’s say, company in the electricity market. It is very important that its financial position is stable and it has enough funds. And Ukrenergo is also under a rather heavy credit burden because the company could withdraw funds to increase the liquidity of the Ukrainian electricity market as a whole.
But it should be understood that this does not mean that Ukrenergo’s profits will increase. In fact, the debts to Ukrenergo will simply be repaid, and then Ukrenergo will be able to repay its debts, because they have debts to generating companies and also have debts for the service that covers the green tariff, that is, to green generation. The funds will also be used for the development of the grid in general, as Ukrenergo’s grids are the main arteries, so to speak, in the transmission system and the Ukrainian energy system in general.
And it is worth remembering that Ukrenergo’s facilities were subjected to some of the largest Russian attacks, so a lot of facilities need to be restored. These are transmission system facilities and high-voltage substations. And it is precisely for their repair that the funds should be directed.
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It was also mentioned that the funds received from the tariff increase will be used to prepare for the autumn-winter heating season. What are we talking about?
We are talking about making repairs and improving the reliability of electricity supply. For example, distribution system operators are responsible for substations, let’s say, smaller than Ukrenergo, and for distributing electricity to consumers. I think it is especially important to keep them in good condition before the winter.
In addition, we see that the enemy continues to attack energy facilities. The latest examples are the attacks in Poltava and Sumy regions. The facilities of distribution system operators could have been affected there. The funds raised will help ensure stable energy supply.
Any mention of tariffs and their increase immediately accumulates fears that this may directly affect the end user – businesses and household consumers. To what extent will this September 1 increase in electricity distribution tariffs affect these categories of consumers?
If we talk about business and industry, there will be an impact on the final payment, but it will be insignificant. I think it will be within a few percent, up to 10 percent, because the cost of the distribution as a service share in the final price of electricity for industry is insignificant. The largest share is electricity as a commodity. That is, the purchase price of electricity itself. And the share of its delivery is not that big.
As for household consumers, this tariff increase will not affect the electricity tariff for households in any way. It will remain unchanged. This is because it was fixed earlier and, in fact, there is a different mechanism of compensation for the relevant services.
Conclusions
So, as the expert assured, household consumers have no reason to worry. At least for now. As a reminder, at the end of April this year, the government adopted a resolution to extend the provision on the imposition of special obligations on electricity market participants. It is through this mechanism that Ukrhydroenergo and Energoatom compensate the tariff for the population. Thus, until the end of October 2025, citizens will continue to pay for electricity at the same tariff of UAH 4.32 per kWh.
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Sergiy Vasylevych
