The refusal of the national Commission to reduce price caps justification, restrictions barely cover the price of coal, – Volynets

Отказ НКРЭКУ снижать price caps обоснованый, действующие ограничения едва покрывают цену угля, - Волынец

Existing constraints (price caps) in the electricity market barely cover the price of coal, therefore, the refusal of the national Commission to reduce them is justified. As reported by Ukrainian news, this was written by the Chairman of the Independent trade Union of miners of Ukraine Mikhail Volynets on his page in Facebook, commenting on criticism of the decisions of the regulator by the Minister of energy Alexey Orzhel, who stated that the coal price last year declined.

“The Minister erroneously equates the concept of wholesale market price of electricity ORC and prices of coal generation. Indeed, ORC, as a price mix of account coal component. In the formula of orts for 2019 to the rate of thermal generation (based on average price index API 2) in 2019 was to be 2,07 UAH kWh. From 1 July, when they introduced new electricity market, price caps (including GK TPP) was established at the level of 1.64 kWh. But from this amount we must subtract the excise tax and tariff of NEK “Ukrenergo” on scheduling. As you can see, the dynamics of reduction of prices in Rotterdam, which says Alexey Orzhel already factored into the existing price caps,” — said Wolyniec.

The leader of trade Union of miners also noticed that the price on electricity produced by coal-fired power plants, it is not only the cost of fuel. It is also semi-fixed costs of power plants (wages, repairs, depreciation, etc.). In terms of the 10% return to cover the coal component of its generating companies is only 0.99 UAH kWh. This is only 1834 UAH / ton without delivery from the port to the station by rail. Shipping “eats” 260 UAH per ton. Thus, on the boundary of the coal should be not more expensive 1524 UAH / ton. And real contracts — starts from 1900 UAH / ton! And regulatory the price of coal mines even more — 2500 UAH / tonne!

Volynets expressed surprise that a Minister under such conditions he sees an opportunity to reduce price constraints, because the existing price caps barely cover the price of coal. And called the position NKREKP quite reasonable.

“For what means the generating company thermal power plant needs to buy coal? Where, under such circumstances, the Minister of Oriel sees the potential to reduce price caps? I’d love to hear the answer to these specific questions, not a stream of well-known facts about the decline in the price of coal on world markets compared to last year and the recent strengthening of the hryvnia,” — wrote Wolyniec.

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

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Earlier the authorities reported that they consider necessary to review the price caps on the electricity market, the so-called rgse caps, namely, fluorescent to reduce the price by 15-20%. A number of experts have stated that the intention to reduce the marginal price in the electricity market will significantly complicate the possibility of purchase of coal and can provoke a crisis in the energy sector.