RAB-tariff: is it worth hurrying?
23 July, 2020
Oleksandr Visir

On April 29, the NERC initiated the discussion of the regulatory framework necessary for the implementation of the RAB tariff for electricity distribution system operators (SRS).

The regulator decided to approve and publish on the official website of the National Commission a draft decision in order to receive comments and suggestions.

What is a RAB tariff and why is it needed?

Incentive tariff formation or RAB-regulation (Regulatory Asset Base) is a system of long-term tariff formation, the main purpose of which is to attract investment in the development and modernization of electricity networks.

The introduction of RAB regulation in Ukraine is provided by the Association Agreement between Ukraine and the EU in terms of implementation of Directive 2009/72 / EU.

In particular, in order to launch the stimulating tariff formation, it is necessary to make changes in four previous resolutions of the National Commission:

– NERC Resolution of July 11, 2013 № 899 “On Approval of the Procedure for Determining the Regulatory Base of Assets of Natural Monopolies in the Field of Electricity”,

– NERC Resolution of July 23, 2013 № 1009 “On establishing regulatory parameters that have a long-term validity for the purposes of incentive regulation”,

– NERC Resolution of July 26, 2013 № 1029 “On the application of incentive regulation in the field of electricity transmission by local (local) electricity networks”,

– Resolution of the National Commission for Electricity Market Regulation of October 5, 2018 № 1175 “On Approval of the Procedure for Establishing (Forming) Tariffs for Electricity Distribution Services”).

Quarantine is not the best time to make decisions

Let me remind you that consideration of this issue was twice postponed by the regulator in April – 08.04.2020 and 22.04.2020.

Due to quarantine, it is extremely problematic to ensure the preparation of quality proposals and calculations in such a short time, as well as to agree on positions between all stakeholders.

Therefore, it would be appropriate to remove this issue from consideration and return to its consideration after the end of the restrictive measures. And during the quarantine – to create a working group to process existing proposals and agree on the parameters of the transition to the RAB-tariff between market participants, the Regulator, the Ministry of Energy and other stakeholders. This would make it possible to create “parameters” of the reform, which would be further filled with the necessary parts.

To date, the DSO has no comprehensive idea of ​​the parameters of the reform. Also, SRFs do not understand how the existing proposals correlate with Ukraine’s Energy Strategy until 2035. All these aspects require detailed and professional discussion, and quarantine is not the best time to do so.

The goals and objectives set by the NERC for distribution system operators are extremely ambitious. Establishing stricter (compared to today) requirements for the quality of services provided by distribution system operators, such as SAIDI / SAIFI and technological cost efficiency indicators, requires significant investment in the infrastructure of distribution system operators. SRFs understand and accept these challenges. But at the same time, there is a great risk that the approach to investment proposed by the NERC will work.

The regulatory framework for the introduction of incentive regulation is a comprehensive system and to discuss its individual elements without agreed and, most importantly, understandable parameters can have extremely negative consequences.

Also, keep in mind that we must follow the procedures prescribed by law. And in this case, holding an open discussion of the project in the manner prescribed by the resolution of the NCRECP from 30.06.17 №866, all stakeholders was impossible due to traffic restrictions, and the open hearings themselves lasted less than four minutes.

Therefore, I urge everyone to make careful and considered decisions in the power industry!



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