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Oleksandr Vizir: RAB-tariff is needed, but after coordination with all market participants
17 July, 2020
Oleksandr Visir

The introduction of an incentive pricing (RAB-tariff) for distribution system operators (RSOs) will allow the modernization of worn-out power grids, but its methodology must be agreed with all market participants.

This was stated by the head of the Public Union “Smart Grids of Ukraine” Alexander Vizir on the air of the TV channel “Ukraine 24”.

According to him, the RAB tariff is aimed at modernizing power grids. “Unfortunately, our networks are not in the best condition. Most of them were built in the 60s and 70s of the last century, so they are in dire need of modernization and renovation, ”Vizir said.

He said that according to the SAIDI coefficient, Ukrainian consumers are without electricity for about 700 minutes a year.

He added that the deterioration of networks leads to current fluctuations and large electricity losses.

“We need to change the methodology that operates in the electricity market. There is now a “Cost Plus” method, which provides a fixed profit for distribution. And with the RAB-tariff, the entity that will raise funds for infrastructure modernization will receive a certain fixed profit, “the head of the SGU explained.

He added that the deterioration of networks leads to current fluctuations and large electricity losses.

“We need to change the methodology that operates in the electricity market. There is now a “Cost Plus” method, which provides a fixed profit for distribution. And with the RAB-tariff, the entity that will raise funds for infrastructure modernization will receive a certain fixed profit, “the head of SGU explained.

Oleksandr Vizir stressed that the transition to the RAB tariff is necessary, and this position has been discussed repeatedly with all 14 DSOs that are members of the Union. “But there are some nuances. We will look at what the Commission wants from the entity. After all, money will not give just like that. Every regional power company, every DSO must attract these funds, it must fulfill certain requirements set by the Commission, ”the expert explained.

According to him, now there are great doubts that the proposed method will allow to attract the necessary funds for the modernization of networks.
“The commission is doing a good job by introducing RAB tariffs, but, unfortunately, without discussion and agreement with market participants, we may not achieve the goal,” said Oleksandr Vizir.
He added that the Union had asked the NERC to postpone this implementation and set up working groups to discuss with market players, which is not possible during quarantine.

“We need to have a healthy discussion between the Regulator and business, identify key concepts for reform and move forward. We will save time and nerves of all involved in this process “, – the head of” Smart electric networks “summed up.

Public Union «Smart Grids of Ukraine» unites 14 operators of electricity distribution systems (DSOs), which are located throughout Ukraine.

Due to debts of water utilities for electricity, residents of Dnipropetrovsk region may be left without water and electricity

The debt of water utilities in Dnipropetrovsk region for the distribution of electricity is 484 million hryvnias, which could lead to the deprivation of consumers of water supply and electricity. This was stated by the head of the Public Union “Smart Grids of Ukraine” Оleksandr Vizir, reports Liga.Net.
“In this situation, the operators of electricity distribution systems are forced to stop providing electricity distribution services to water utilities. This causes the pumps and water pipes to stop working. That is, those people who consistently and regularly pay for water supply and sewerage services may be deprived of these services, “said the head of the public association.
The expert added that the problem of water utilities is not only in debts.
According to the Dnipropetrovsk mass media, regarding the level of losses in water supply systems, they say that, for example, in the Kamyansk city water supply system of the Dnipropetrovsk region the level of water losses reaches 46%, with the standard set by the National Commission for Water Supply and Sewerage in the tariff 29.1%. Which indicates an extremely unsatisfactory technical condition of the equipment. And the fact that most of the transferred water is not paid by anyone.

The situation is similar for most municipal water utilities in Dnipropetrovsk region.

According to Vizir, the reasons for this critical situation are: inefficiency of water supply management, manual appointment of mayors of cities who are unable to ensure the efficient operation of their enterprises, tariff regulation of the National Commission for Regulation of Economic Competition, which does not meet market requirements.

According to the expert, to solve this problem requires:

First, the Ministry of Community and Territorial Development and the Cabinet of Ministers should introduce accounts with a special regime for the use of water utilities, which are intended for crediting funds for electricity distribution services.

Secondly, it is necessary to “revive” the work and ensure proper implementation of the resolution of the Cabinet of Ministers “Some issues of electricity supply to protected consumers and recognition as invalid of some resolutions of the Cabinet of Ministers of Ukraine” dated 27.12.2018 № 1209. According to which, water utilities or their owners (city and regional councils) must provide the SRCs with appropriate financial guarantees to pay for the cost of electricity distribution services. The implementation of this resolution should be monitored by the Ministry of Community and

Territorial Development.

Third, mayors and heads of regional administrations need to “take the lead” and start monitoring this problem on the ground until a comprehensive solution is found.

It should be noted that before the reform of the electricity market, the debts of water utilities for electricity amounted to approximately UAH 3.8 billion.

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