NERC raises electricity tariff by 3.8-4.9%

The National Electricity Regulatory Committee approved a decision on October 26 to raise retail electricity tariffs by 3.8-4.9% to UAH 45.72-60.68/KWh depending on the category of user as of November 1. The NERC last increased retail tariffs in October 2008. Yegor Samusenko: Thetariff increase should allow for a ~4% upgrade in the wholesale electricity price, which is, on the consumer side, the weighted average of the tariffs for industrial consumers and for households (fixed). On the supplier side, the wholesale electricity price is the weighted average of supply prices by thermal, nuclear and hydroelectric power plants. As we do not expect any changes in nuclear and hydroelectric power station tariffs, we anticipate thermal and co-generation power plants would be allowed to raise their supply prices. We estimate that on average thermal power plants will raise their rates by 7%, which will allow them to increase their EBITDA margins by 6-7 pp in 4Q09.