Debt to Ukrenergo reaches UAH 59 bln, continues to grow

MOSCOW. Aug 18 (Interfax) - The debt of market participants to Ukrenergo has reached UAH 59 billion and continues to grow, despite increases in electricity charges for households from June 1 and price caps on the electricity spot market from July 1 of this year, CEO Vladimir Kudritsky, said.

"The debt to Ukrenergo is about UAH 59 billion, and Ukrenergo's debt to market participants is UAH 50 billion," Ukrainian media quoted him as saying at a meeting of the parliamentary committee on energy and housing and utility services on Thursday.

Companies owe UAH 28 billion on the balancing market.

"These are companies that consume electricity but do not buy it. They cannot be disconnected for one reason or another. As a rule, there are regulatory reasons, that is, there is a ban on disconnecting the relevant consumers because of their importance, environmental consequences and so on. This debt continues to grow," Kudritsky said.

Ukrenergo owes almost UAH 21 billion for power transmission and UAH 10 billion for dispatch services.

Ukrenergo itself owes UAH 26 billion to the Guaranteed Buyer state enterprise to compensate the green tariff for renewable power generation, about UAH 17 billion to balancing market participants, UAH 3.6 billion for ancillary services financed from the dispatch tariff and UAH 2.5 billion to universal service providers for electric power generated by small rooftop solar power plants.

"The general picture is as follows: since June, after the change in the provision on special obligations for households and after the revision electricity market price caps, the situation has not changed in terms of increasing debt to Ukrenergo," the CEO said.

He said that last month the overall level of settlements to Ukrenergo for power transmission and dispatching services was 68%, and since the beginning of August, about 40%.

"That is, debts continue to build up, and this is one of the biggest risks that we see in preparation for the heating season," Kudritsky said.

Ukrenergo's key debtors for power transmission and dispatch are transmission system operators and universal service providers, as well as large generating companies like Energoatom and DTEK. At the same time, 75% of the debt to Ukrenergo on the balancing market has been accrued by state municipal enterprises, in particular water utilities.

"So we can't pay our bills either. We can't pay balancing market participants - Ukrhydroenergo, our largest creditor in this market - to balance electricity, but there are other public and private companies there. We can't pay green bills in full. Debts for ancillary services are also arising," Kudritsky said.

He said Ukrenergo had borrowed to cover some of the debt, obtaining about $1 billion in loans and grants in 2022.

"We spent some of these funds on transformers and the restoration of damaged substations, and we simply poured some of it into the market, paying off some of the debts. But even with this amount of funding we do not have enough opportunities to attract loans and grants to cover all the debts in the market," Kudritsky said.

He said Ukrenergo planned to raise another loan from the European Bank for Reconstruction and Development amounting to $150 million-$200 million in August-September to repay only part of the obligations to Guaranteed Buyer for green generation and repay all debts for ancillary services.

"As for debts on the balancing market and full settlements with the Guaranteed Buyer, at present, settlements by our debtors with us can be the only means of covering these debts. And this is possible only when the special obligations mechanism for households kicks in, which is why we changed it from June 1," the CEO said.

The government has from June 1 to December 31, 2023 set a single electricity tariff for households at UAH 2.64/kWh including VAT. Prior to that, there was a tariff of UAH 1.44 kWh with VAT for a monthly consumption of 250 kWh and UAH 1.68 UAH/kWh with VAT for consumption above this level.

The National Energy and Utilities Regulatory Commission or NEURC raised price caps in the electricity spot market 40%-80% from July 1, depending on the hour of delivery.