Regulator rejects General HQ's idea about distribution of electricity, preparing opposite decision

The National Energy and Utilities Regulatory Commission (NEURC) plans to change the formation of electricity distribution tariffs starting in 2026. Instead of the current two voltage classes, there will be three, said Valeriy Tarasyuk, head of the NEURC, in an interview with Forbes.

Two weeks ago, the NEURC rejected the idea of the Supreme Commander-in-Chief's Staff to unify the rate and establish a single tariff for the distribution of electricity at 1.23 hryvnias/kW. ($0.03/kW) This involved raising the tariff for industry fivefold and reducing it for the population and small businesses by 25%.

"I was present at this Staff meeting, but there was no discussion of this particular decision. To be honest, I have the impression that it was the initiative of someone with a very superficial understanding of energy and cause-and-effect relationships in the economy. Why? Because this decision has a lot defects and shortcomings. It is difficult to imagine that people more or less experienced in energy could have proposed such a thing. It looks more like an attempt to throw the president and the country under the bus," said the head of the commission.

Tarasyuk noted that the unified tariff contradicts European legislation, which prohibits subsidizing some consumers by others and defines three classes of voltage – high, medium and low.

Ukraine undertook to implement these EU Directives on the way to joining the European Union no later than in 2025.

"It is correct to switch to the new standards from January 1 and to notify about it in advance so that market players understand what the tariffs will be from next year. We will hardly make it to January 1, 2025, so we are aiming for January 1, 2026. Tentatively, 0.4 kV will be the third voltage class (population and small business), 10-35 kV will be the second class (medium business), 110 kV will be the first class (large business)," Tarasyuk said.

From June 2024, the NEURC increased water tariffs for non-domestic consumers for the first time since 2022.