Energoatom appeals preferential rates for coal-fired power producers
25 January 2019
Ukraine’s state operator of nuclear power plants,
Energoatom, filed a claim with the Anti-Monopoly Committee of Ukraine in late December
against an alleged breach of competition rules by the power sector regulator
(the NERC), the committee reported on Jan. 24. According to the report,
Energoatom believes that the pricing of electricity of thermal power plants,
which is linked to the costs of imported coal (the so-called Rotterdam Plus
coal pricing), has led to redistribution of money from the wholesale
electricity market to the benefit of coal-fired producers at the expense of
nuclear power producers. In turn, Energoatom is demanding a revision of such a
pricing approach.
Recall, the NERC introduced the Rotterdam Plus
approach to calculate the electricity rates of thermal power plants in March
2016. The average electricity price of thermal power plants was 73% higher in
December 2018, compared to December 2015 (before the new approach introduced),
which contributed much to an increase of the average wholesale electricity
price by 57% for the same time period. The average price of nuclear electricity
only increased 32% for that period. The key beneficiaries of the Rotterdam Plus
approach are the operators of thermal power plants, including DTEK Energy
(DTEKUA), the largest operator. For instance, the holding’s EBITDA reached UAH
12.6 bln in 1H18, up from UAH 0.8 bln in 1H15.
Alexander Paraschiy: This attempt to question the validity of the Rotterdam Plus approach
is not new, and all the previous ones were fruitless. We do not expect any
breakthrough this time again. The committee’s study of the issue will take some
time – about a year, we expect – and its results are unlikely to affect
DTEK or any other thermal plants operator. That’s because the scheduled reform
of the electricity market will require producer prices of electricity to be
deregulated as of July 2019, meaning the Rotterdam Plus approach to regulate
prices will lose its importance in late 2019.
