Ukraine president fails to dismiss power sector commissioner

Ukrainian President Poroshenko issued a decree on Nov.
27 to dismiss Boris Tsyganenko from his positon of commissioner of the NERC,
Ukraine’s power sector regulator. At the same time, he did not publish any
decree to dismiss another commissioner, Viktoria Morozova. According to
Ukrainian legislation, the terms of these two NERC commissioners (of four
remaining) had to expire on Nov. 26, meaning that only two valid commissioners
should have remained. Quorum for the NERC to adopt any regulations is four
commissioners.

Tsyganenko had not been attending the NERC sessions
since week of Nov. 13, leaving the commission short of its quorum of four. That
prevented the commission from adopting important regulations for the
electricity sector, including setting the forecasted wholesale electricity
price for 2018, which will allow raising the electricity price for DTEK
Energy’s (DTEKUA) thermal power plants as of January. Ukraine will be ready to
elect new NERC commissioners only in late February, based on legislation.

Alexander Paraschiy: It looks
like Ukraine’s power brokers will try to amend legislation very soon to reduce
the quorum for NERC hearings to three and prolonging power of Morozova until
new commissioners are elected. That will allow for unblocking the work of the
regulator. Most likely, parliament will agree to such changes, as there is a
threat that the absence of a valid power sector regulator endangers the
stability of the entire energy sector.

Such a development would
be positive for DTEK, which is awaiting the adoption of a forecasted price for
the electricity produced by its thermal power plants (TPPs). Recall, the NERC
was planning to adopt a price hike for 2018 last week, but failed
to do so due to lack of quorum. If this regulation
will be adopted in December, DTEK can count on even an higher price for its
electricity, compared to what was drafted last week. This is because the key
component of the electricity price for the next year is the historical coal
index API2 for the last 12 months. If the regulation is adopted in December,
the average API2 price will be taken from Dec. 2016-Nov. 2017. That average
price is higher than for Nov. 2016-Oct. 2017, based on which the NERC was
drafting its 2018 price last week.