Experts predict a sharp rise in price of electricity

Experts told why the rates will rise again.

The Verkhovna Rada approved the law “On electricity market”, thus concluding the Saga with the adoption of a package of energy laws.

Will there be real changes in the power sector and what this means for the average Ukrainian, said the experts.

The document provides for the introduction of new market model that includes several segments: the market of bilateral contracts, the market “day ahead”, vnutricletocny market, balancing market and ancillary services market. In fact, we are talking about liberalization of the electricity market in accordance with European standards, in particular the Third energy package of the European Union, including the question of separation companies in the areas of distribution and transmission of electricity. The implementation of the law provides for a two-year transition period.

In light of the adoption of the law on the electricity market in the near future we can expect further increase in tariffs. “Given the fact that we are entering a new era of electrification, the importance of electricity increases. Therefore, prices will rise. There is an objective factor that is associated with the growth of demand for electricity in General. Moreover, the new legislation will in fact help to ensure that electricity tariffs will rise, because it will happen the same as in the gas market – the allocation of the price of gas as a commodity, which is delivered to the end user, and the allocation rate for the shipping of this product. The same thing will happen in the electricity market”, – said the President of the Center for global studies “Strategy XXI” Michael Gonchar.

Director of energy programs of the Center for world economy and international relations of the NAS of Ukraine Valentyn Zemlyansky also allows the growth of electricity tariffs, however, believes that there are no objective grounds for this. “If you then start to rise rates, then wonder why they grew in the last two years. When introduced five-stage increase in tariffs, he said that it’s all done to create conditions for market liberalization. If you think that is not enough, then create the necessary socio-economic base – the level of income that would allow you to pay higher rates,” he said, noting that in terms of the actual functioning of the market – whether it’s electricity or any other commodity, you must have effective consumer, “otherwise, the vendor will simply be burned up”.

But over time, the level of electricity tariffs may be reduced, and the quality of services provided in this sector to improve.

“In the future, if you go to the logic of the law, the situation of consumers should improve, because they will need to have the opportunity to choose an alternative supplier to choose a higher-quality product,” – says Valentin Zemlyansky. According to him, the contracts for the supply of electricity with consumers will need to be spelled out penalties to the supplier for providing poor quality services.

Michael Potter also hopes for quality changes in the electricity market in the future.

“In the future, approximately five years old, when the competitive market (if it will work), then there may be some changes occurring on the energy markets of Central Europe, where also a reform initially led to the growth of tariffs, and in recent years when actually earned competition, in some countries there is a rather nominal reduction in electricity prices in several countries,” – said the expert.

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