Ukraine provides conditions for development of distribution service operators, waiting for positive results of their activities – official

KYIV. Sept 17 (Interfax-Ukraine) – The state has created conditions for improving the work of distribution service operators (so-called regional suppliers), first of all, thanks to the introduction of the RAB-tariff and expects positive results of their activities, First Deputy Energy Minister Yuriy Vlasenko has said.

"On the part of Ukraine, all steps have been taken. We are waiting for results from the very activity of the distribution service operators, since they have a RAB tariff since 2021. We do not see any other incentives, except for encouraging them to fulfill and use the funds provided for by RAB tariffs," Vlasenko said at an online roundtable entitled "Distribution service operators on the path of Ukraine’s energy transition: new challenges, regulatory changes and investment opportunities" held on Thursday.

He said that distribution service operators are on the way to reform, focusing on the fact that this is primarily due to the introduction of RAB tariffs.

According to him, RAB tariffs not only allowed to increase investments in the development of networks on average in Ukraine by 40%, but also established appropriate obligations for distribution service operators, in particular, to reduce losses in networks and a threefold decrease in the SAIDI indicator (System Average Interruption Duration Index, from 466 to 150 minutes in urban and from 966 to 300 minutes in rural areas) in 13 years.

Vlasenko said that the deterioration of networks, which on average is 50%, and for some operators reaches 70%, leads to losses of electricity by 10%. At the same time, the SAIDI indicator has grown by 19.6% since 2020 compared to 2019.

"From the point of view of the Ministry of Energy, the lion’s share of investments within the framework of investment programs should be channeled to the renewal of existing assets and the construction of new networks," he said.

He also drew attention to the fact that other mechanisms that stimulate distribution service operators to improve the quality of work are the law adopted by the parliament on simplifying connections to power grids, as well as the change of the public service obligations (PSO) model to provide affordable electricity to households, according to which distribution service operators within PSO will buy electricity for technological losses at a price of UAH 1,700 per MWh, which is much lower than the market price.

"I hope that all this will allow operators to implement their investment programs," Vlasenko said.

In addition, he said that the Ministry of Energy will soon submit a draft concept for the integrated implementation of smart grids, developed with the support of the World Bank, as well as a mid-term plan of measures for its implementation to the government for approval.