Cabinet raises household electricity prices as of January

Ukraine’s cabinet adopted on Dec. 28 a decision to
raise electricity prices for households as of January 2021, local media
reported the same day. Namely, the government amended a resolution to cancel
the discounted price for the first 100 kWh of monthly electricity use (UAH
0.9/kWh). In this way, all the electricity consumed by households will be
priced at a flat rate of UAH 1.68/kWh. The last time electricity prices for
households were increased was in March 2017.

Alexander Paraschiy: In this
way, the average price of electricity consumed by households will increase by
over 40% as of January 2021, which more or less corresponds to accumulated
consumer inflation since 2017 (about 36%). If the regulation is not cancelled
in the near future, this will benefit the state energy trading company
Guaranteed Buyer, whose budget gap will be significantly reduced. In turn,
Guaranteed Buyer will have much more funds to improve its payment discipline to
green energy producers like DTEK Renewables (DTEREN).

In 11M20, Guaranteed Buyer paid only UAH 22.1 bln
to green energy producers while having purchased electricity from them for UAH
45.6 bln. With the higher household rates and with the 2021 state budget
foreseeing state financing for Guaranteed Buyer of up to UAH 24 bln, the
problem of poor payments to renewable energy producers should significantly
improve next year. All this should improve the price of the DTEREN-2024 bond,
which trades at 11.6% YTM currently.