President Signs Law On Heat Supply.

The new law outlines regulations on heat production and supply. It stipulates that heat tariffs must be set to guarantee profitability for heat producers and will transfer the power to set heat tariffs for co-generating units (including combined heat and power plants, CHPPs) from regional authorities to the National Energy Regulation Commission (NERC). Concorde Capital: CHPPs, including those operated by Kievenergo (KIEN: HOLD) and Poltavaoblenergo (POON: HOLD) supply heat at rates below their costs. Nevertheless, we doubt that changing the tariff regulator will lead to an increase in heat tariffs for these companies, as the combined heat and power production make CHPP profitable even with current tariffs.