Ukrainian energy regulator approves 12.5%-47.8% hike in Ukrtransgaz tariffs

MOSCOW. May 6 (Interfax) - Ukraine's National Energy and Utilities Regulatory Commission (NEURC) plans to raise the natural gas storage, injection and withdrawal tariffs of Ukrtransgaz, the operator of Ukrainian gas storage facilities, for the first time since 2022, replacing the current "cost plus" model with an incentive-based tariff setting plan.

NEURC approved the corresponding draft order at its online meeting on Tuesday, Ukrainian media reported. If adopted, the new tariffs will be in effect from June 1, 2026 through March 31, 2029.

As reported, the draft document proposes setting Ukrtransgaz's tariffs for natural gas storage at UAH 0.45 per 1,000 cubic meters per day (excluding VAT), for natural gas injection at UAH 360.02 per 1,000 cubic meters per day (excluding VAT), and for natural gas withdrawal at UAH 360.02 per 1,000 cubic meters per day (excluding VAT).

Calculations published on the Energy Reform website indicate that Ukrtransgaz' tariff for natural gas storage is expected to grow by 12.5% from today's UAH 0.40 per 1,000 cubic meters, the tariff for natural gas injection by 47.8% from the current UAH 243.52 per 1,000 cubic meters, and the tariff for natural gas withdrawal by 42.3% from today's UAH 253.03 per 1,000 cubic meters.

Ukrtransgaz tariffs are currently regulated by the "cost plus" model, but the law on natural monopolies allows for the introduction of incentive-based regulation in tariff setting for these services. For this purpose, Ukrtransgaz has submitted an application and the required package of documents.

In order to constrain Ukrtransgaz tariff growth, a proposal has been put forth to use the earnings rate of 3% both for the regulatory asset base existing as of the date of the transition of incentive-based regulation and for the asset base created after this transition is completed, NEURC said.

NEURC also intends to encourage long-term booking of gas storage facilities' capacity, which currently takes place predominantly one day in advance and on a monthly basis. Therefore, NEURC proposes applying a coefficient of 0.9 to booking for a year and a coefficient of 1 to capacity booking for one standard season of gas injection and withdrawal. The coefficients applied to monthly booking and to booking for one day in advance will remain unchanged at 1.1 and 1.2, respectively.

Ukrainian Energy and Natural Resources Association Deputy Director Andrei Zakrevsky said that NEURC's decision to change the tariff model for underground gas storage facilities is long-awaited and is in line with Europe's approach to this issue.

The "cost plus" model should be replaced with a transparent European mechanism envisaging incentive-base tariff setting, Zakrevsky said.

Gas storage tariffs at Ukraine's underground gas storage facilities have not been revised since July 2022 and do not currently cover their maintenance and repair costs, he said.

The proposed earnings rate of approximately 3% is considerably lower than in other segments of the energy sector, he said. For instance, this rate reaches 18% in electric power distribution.