Reducing price caps would jeopardize the continued existence of thermal generation in Ukraine, Donbasenergo

Уменьшение price caps поставит под угрозу дальнейшее существование тепловой генерации в Украине, - Донбассэнерго

Reduction of price caps is unacceptable, because it would jeopardize the continued existence of thermal generation in Ukraine because of the loss of electricity production power plants. This is stated in the statement of PJSC “Donbasenergo” on the company’s page in Facebook.

As reported by “Ukrainian news”, the statement noted that the main argument of the proponents of reducing the level of price caps (price caps) on the market “day ahead” and vnutricletocnam market is that the actual API 2 index and the exchange rate of the US dollar against the hryvnia has significantly decreased in comparison with the indicators that were taken into account NKREKP when forming the forecast wholesale price of electricity (ORC) for the year 2019. However, “Donbasenergo” pay attention that the price of coal on world markets (including API 2) is characterized by seasonality and in the autumn-winter period, it is significantly higher than other periods of the year. At the rate of the U.S. dollar against the hryvnia, in fact previous years, he has a tendency to increase in the last quarter of the year compared with the second-third quarters.

The company also noted that the price of electricity on the market “day ahead” below the price of thermal generation in the first half of this year.

“For three months of the new market model the weighted average price of electricity on the market” for days forward “amounted to 1648 UAH / MW * h, which is 6.4% below the price of thermal generation in the first half of 2019. At the same time the generation additionally the responsibility of payment of excise duty amounting to 3.2% of the value of the electricity sold.
Thus, now the price of electricity for thermal power generation is 22% less than what was considered NKREKP in the forecast wholesale market price of 2019 and is 1595 UAH / MW * h, ” — said in a statement.

Also highlights that the cost of electricity thermal generation does not change directly from a change in the fuel component (the fuel component constitutes about 70-75% of the cost). Thus, the cost reduction of 22% is the decrease of the fuel component to 25-30% at constant constant cost, consistent with the global trends in the coal market ( “the Average price of coal in accordance with the exchange API 2 index for 9 months of 2019 30.7% less than the average rates corresponding 9 months of 2018 and is 63.6 US dollars per ton”).

In “Donbassenergo” said that the reduction of price caps is unacceptable, because it will jeopardize the continued existence of thermal generation in Ukraine because of the loss of electricity production by thermal power plants.

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We will remind, the national Commission, carrying out state regulation in spheres of power and utilities (NKREKU) did not support the lower limits maximum prices in the electricity market “day ahead” and vnutricleternmu market (price caps).

Previously commercial Director of OJSC “Donbasenergo” Donbass said that the increased price caps in the electricity market will lead to termination of Slavyanskaya TPP, and 15,000 residents of the front of Nikolayevka will be left without heating.