DTEK Energy penalized by UAH 275 mln for abusing monopoly power

The Antimonopoly Committee of Ukraine (AMCU) reported
on Dec. 15 that it had fined two subsidiaries of DTEK Energy (DTEKUA) for a
total of UAH 275 mln (USD 9.8 mln) for abusing their market power in 2019.
Namely, the AMCU penalized power GenCo Zakhidenergo for UAH 176 mln (0.8% of
its 2019 revenue) and trader D.Trading for UAH 99 mln (about 0.6-0.7% of its
2019 revenue, we estimate). The maximum penalty for such commitment could have
reached 10% of the companies’ 2019 revenue. DTEK called the AMCU’s decision as
biased and groundless and promised to challenge it in courts.

The AMCU alleges the two companies were manipulating
prices and volumes of electricity sold to consumers on the so-called Burshtyn
Energy Island (a separate energy system of Ukraine that it connected to the EU
energy system) in July-October 2019. The committee initiated its investigation in October 2019
and issued its preliminary conclusions in June.

Alexander Paraschiy: The good news is that the penalty is about 10x below its possible
maximum amount. However, the risk remains that the total losses for DTEK won’t
be limited by this amount, as electricity consumers who suffered (if any) have
now been granted their right to demand compensation of up to 2x of their damage
as a result of DTEK’s abuse. Therefore, it is important for DTEK to challenge
the ruling. In our view, the company has a high chance for that.