Banner top

The decision on the tariffs for water utilities should be made only after the economic impact assessment

07 August 2019260
%d1%82%d0%b0%d1%80%d0%b8%d1%84%d0%b8

Both the Regulator and the Government should be involved in developing the tariff decision for water utilities, since it is possible to raise water tariffs for end consumers or to change the PSO.

Any solution that addresses the problem of electricity tariffs for water utilities can only be made after an economic impact assessment. Both the Regulator and the Government should be involved in the developing this decision, since it is possible to raise water tariffs for end consumers or to change the PSO. DiXi Group expert, Candidate of Sciences (Economics), Bohdan Serebrennikov said about this in the commentary for online media "Ukrainian Energy".

"Any tariff-related regulatory decision-making, especially concerning vulnerable consumers, should be preceded by an economic assessment of the consequences of their introduction and an appropriate benchmarking study. It is a common practice, especially in EU countries, to provide economic feasibility for alternative solutions, to identify and evaluate the possible effects for different stakeholder groups (manufacturers, suppliers, consumers, etc.) and to choose the best compromise option that balances their economic interests," said Serebrennikov.

According to him, both the National Commission for State Regulation of Energy and Public Utilities and the Government have to join the process of regulating tariffs for water utilities.

"This is a direct task of the Regulator, enshrined in the Law of Ukraine "On the National Commission for State Regulation of Energy and Utilities." However, in this case the Cabinet of Ministers should be also involved in solving the problem as it defines the mechanism of PSO related to electricity tariffs for certain categories of consumers," the expert added.

As it was reported, the Ukrainian Association of Water Supply and Sewerage Enterprises “Ukrvodokanalekologiia” said recently that after the electricity market started on July 1, tariffs for water utilities for electricity have increased significantly – by 30%. As a result, the enterprises incurred UAH 200 million of losses in 1 month.

In order to offset the cost of electricity, the association suggested increasing the water tariff by 20%.

Alternatively, the water utilities propose to extend the PSO mechanism and reduce their electricity tariffs to UAH 1.68 per 1 kWh. In this case, the water utilities will buy low-priced electricity from the SE “Guaranteed Buyer“. Hennadii Zubko, the Minister of Regional Development, Construction and Housing and Public Utilities, also offers a similar option.

Yesterday Andrii Herus, the Presidential representative in the Government, said that a draft decision is being developed that will reduce the price of electricity for water utilities by 10%. According to him, the situation can be fixed in a few weeks.


Comment
Energy banner