PM calls on the leadership of NEURC to review RAB formula for tariffs

Prime Minister of Ukraine Volodymyr Groysman urges the leadership of the National Energy and Utilities Regulatory Commission of Ukraine (NEURC) to reconsider tariff calculation as the said RAB formula is insufficient and may lead to unreasonably high electricity tariff rates for the population.

"The introduced RAB-tarrifs are unfair, said the Head of Government. I do not see any sound argument for such calculations. This is my position. I urge the revision of this approach."

Background

The introduction of a new stimulating tariff regulation, so called RAB formula for regional energy companies is an exclusive prerogative and competence of the NEURC, which is an independent regulatory body for tariffs setting. The Government bears no relation to the adoption of the said decision or to its publication.

Under existing legislation, the publication of the decision adopted by the NEURC in the government newspaper "Uriadovyi Kurier" (Government Courier) is obligatory and for this purpose the Government's approval is not required. As regards the said issue, the Cabinet of Ministers of Ukraine supports the idea of stimulating tariff formula, which envisages attraction of additional investments for the construction and modernization of the infrastructure of electric grids and stimulating the cost effectiveness of electricity distributing companies. However, the Government does not back the form of the decision in which it was adopted by the National Energy and Utilities Regulatory Commission, and this position has been repeatedly voiced publicly. The equal earnings yield to the tune of 12.5 % set by NEURC both for the former and new assets will lead to groundless increase in tariffs for industry, which will directly affect consumers through rising prices for goods and services.