Ukrenergo opposes preferences for investment markups for some power generation segments

The operator of the main and interstate power lines in Ukraine Ukrenergo has said the proposal for heat generation including a requirement to add investment markups to their tariffs until 2020 to the electricity market draft law discussed in parliament is non-market.

"The position of the EU Energy Community, donors and Ukrenergo is unchanged: only the market should determine if new investment into concrete generation segment is required. Any exclusions or preferences worsen this progressive bill," Ukrenergo Head Vsevolod Kovalchuk said on Facebook.

He said that last year this proposal was blocking the approval of the bill on the electricity market by the government for several months.

Earlier Donbasenergo said generating companies propose their own compromise bill. They want to include the investment element to the Ukrenergo's tariff required for modernizing generating facilities and continued financing via targeted payments after the introduction of the new market model.

Donbasenergo said that if the mechanism is not used, generating companies would be deprived of financing of around UAH 4.9 billion. This would put under a threat not only the implementation of new projects, but also the completion of reconstruction of thermal power plants that have been started.

"In addition, the source for paying loans that were earlier raised by generating companies to implement these projects would disappear," the company said.

In addition, according to the proposed amendments to the bill, the Cost Imbalance Re-allocation Fund should be annulled and the feed-in tariff is covered, thanks to Ukrenergo's tariff.