Media: electricity price may go up by 10% because of Rotterdam+

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NEURC plans to raise by 26% the indicative coal price for thermal power stations’ tariffs, up to 83.08 dollars per ton.

This decision will be made at the Commission’s meeting of 28 December, Nashi Groshi reports.

The explanatory note to the draft NEURC resolution on the approval of forecasted wholesale market price for 2018 states that the indicative coal price was calculated for the period from December 2016 to November 2017, and the calculated amount for this period is 83.08 dollars per ton. This figure is 26% (or 16.4 dollars) higher than the coal price used to revise the forecasted electricity price for 2017.

In addition, the average freight rate for shipments from the ports of Amsterdam – Rotterdam – Antwerp to a Ukrainian port may be raised by 31% or by 2.9 dollars per ton.

According to the forecasted balance of Ukraine’s IPS for 2018, thermal power stations will generate 49.8 billion kWh, or 31.2% of the total electricity output. Therefore, the revision of the coal price and freight rate may result in the 10% increase of the total electricity price.

The increase of the coal price in thermal power generation tariffs by 20 dollars would bring generating companies additional 500 million dollars in revenue in 2018, because to generate electricity, they combust 25-26 million tons of coal.

Rinat Akhmetov’s DTEK Group controls almost 80% of thermal power generation, and during 11 months of 2017, it has produced 84% of Ukraine’s total power station coal output.

In other words, DTEK would receive almost UAH 10 billion of the total amount which energy companies would receive.

In March 2016, the National Commission for Regulation of Energy and Utility Sectors has approved a new methodology of calculating the wholesale market electricity price. This is the price at which thermal power stations sell electricity on the market, and it takes into account, in particular, the coal price.

According to the new methodology, the price of coal in electricity generation by coal-fired thermal power stations is calculated based on the formula “coal price at the Port of Rotterdam plus the cost of delivery to Ukraine”.

Because of the application of the new formula, thermal power stations, including Rinat Akhmetov’s DTEK and state-owned Centerenergo, began selling electricity at a higher price.