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share of nuclear fuel in Ukraine to 60%, from 40% last year. The deal means that a Westinghouse plant in Sweden will supply fuel for nine of Ukraine’s 15 reactors. In a case of trading places, the market share of Russia’s TVEL will fall to 40%, from 60% last year. Since the Russia-Ukraine war started in 2014, Ukraine has gradually cut dependency on Russian fuel for its nuclear reactors. Last year, Ukraine spent almost $400 million on nuclear fuel imports. With nuclear supplying 53% of Ukraine’s electricity, Ukraine ranks seventh in the world for installed nuclear power capacity.
Ukraine’s Electricity and Utility Regulation Commission filed a complaint with the State Bureau of Investigation (DBR) alleging illegal political pressure from a group of MPs, said the regulator’s press release on October 9.
The group is placing systemic pressure, public and non-public, on the regulator’s commissioners, they alleged. The commission suspects the MPs are lobbying the interests of energy holding DTEK.
The complaint has been filed against three MPs from the Fatherland faction, according to the epravda.com.ua website, which has the full text of the regulator’s complaint. The pressure is related to the desire of market participants to swell the regulated profit of power distribution companies, aiming to increase their regulated revenue by over UAH10bn aggregately, the complaint said. Also, the pressure is related to the commission’s delay to renew the licenses of power generation companies controlled by DTEK Energy.
DTEK reacted to the regulator’s allegations the same day, alleging them to be groundless and calling them pressure on private business. “We are sure the DBR will provide an objective assessment of the commission’s activity,” DTEK claimed.
Over the last few weeks, the power regulator indeed felt enormous pressure from top officials who have demanded an increase of regulatory profits for Ukrainian power distribution companies (DisCos). The tariff reform for distributors, drafted by the regulator, stipulates that DisCos will receive regulated return on their assets (the so-called regulatory asset base, or RAB regulation). The latest draft of the regulation stipulates that the regulated return will be 3% of power DisCos’ existing (old) asset base and 16.74% of their new asset base.
At the same time, lobbyists have demanded that the return rate on the old asset base should be higher. In early October, the so-called National Reform Council, headed by Mikheil Saakashvili, suggested that the return rate should be as high as 6%.
Moreover, acting energy minister Olha Buslavets wrote a letter to PM Denys Shmyhal asking that he order the regulator to increase the return rate on the old asset base, as reported by the radiosvoboda.org news site. This is clearly an attempt to place illegal pressure on the regulator.
Therefore, we consider the regulator’s complaint against the three MPs as a pre-emptive move aiming to warn top Cabinet officials against any possible plans to pressure the regulator. At this stage, it’s not clear whether it will be helpful as the price of regulatory change – or over UAH10bn p.a., according to
62 UKRAINE Country Report November 2020 www.intellinews.com
