Electricity tariffs have been raised: why this happened and what other surprises can be expected from the government

Tariffs are still being raised. Starting today, a kilowatt-hour of electricity for the population will cost 2.64 hryvnias. This is 57-83 percent higher than today. For an average family, the monthly electricity bill will increase by approximately UAH 250.

Moreover, the tariff will be made uniform, regardless of consumption volumes. Previously, there were the so-called “levels” where the first 250 kWh per month went at a lower price. Now the “one size fits all” approach is used for all people, whether with electric stoves, or without them. Only the night tariff will remain – 50 percent of the basic one, but for that one needs a modern zonal, aka two-tariff, electric meter, which is rare in our country.

All this will definitely not gladden the population, so they delayed rising tariffs as much as they could. Only this year it was postponed twice: in April, then in May, and later it was postponed until summer.

As a result, they lost the best time to change the tariffs – immediately after winter, when the total check for utility services is significantly lower and the additional 250 hryvnias do not catch the eye.

Unfortunately, now we cannot deal with consumer psychology. The tariff increase would be postponed further, but there is simply no money in the system. The upper bar of the current tariff of UAH 1.68 per kilowatt-hour has actually been in place for six years since the spring of 2017. Even without the need to restore the power system and with single-digit inflation, not like we have now, the issue is urgent.

They could no longer delay the increase, as a result they convened a meeting with President Zelenskyy and came up with a cunning plan: the evil regulator National Commission for State Regulation of Energy and Public Utilities goes public with an official proposal to raise the tariff to UAH 2.88, and the good government represented by Minister Galushchenko will approve the tariff with a ten percent discount.

As a result, in the second half of the year, at the new prices, the population will pay an additional billion dollars for electricity (with a consumption of 32 billion kWh). That is, for a year at the old price they paid about fifty billion hryvnias, now at the new price they’ll pay UAH 85 billion. To cover the cost of electricity for protected categories of Ukrainians, that is, for subsidies, 3.8 billion hryvnias were provided, now this amount is doubled.

We have already written about the reasons for the increase. The main donor in the country was and remains Energoatom, which supplied electricity at discounted prices. But its capabilities in the wartime fell sharply.

In 2021, out of the 86 billion kWh output of Energoatom National Nuclear Energy Generating Company, almost half was provided by the Zaporizhzhia NPP, which is currently occupied by the ruscists. The power of the stations remaining controlled cannot make the current tariff work...

The hydroelectric power stations of Ukrhydroenergo slightly softens the blow, but the volumes of production there are several times smaller. On top of that, the flood on the Dnipro has already ended, and the warmer it is, the lower the level of water will be.

Frankly speaking, even the new price level will solve the problem only partially, at best preventing the financial hole from growing. After all, another donor of low prices for people before the war was industry, which subsidized the population through its high tariffs. But the industry is no longer the same. In 2022, business consumption fell from fifty billion kilowatt-hours to three dozen. It is practically impossible to squeeze something else out of them.

In addition, large-scale destruction of the energy system was superimposed on all this. The number of raids is calculated by tens of missiles that hit the target, and hundreds of drones – and this is considering the fact that about 80 percent were eventually shot down. Dozens of units are damaged, several cannot be restored. Even Kinzhal hit one of the Western Ukrainian units.

The situation is not better with main power transmission lines. Neither Moscow nor the West believed that the system would last. Even Kyiv was not sure... In some electric substations, the impacts are already counted in dozens, and high-voltage transformers have been damaged hundreds of times. Enemy artillery periodically hits the Kurakhove Power Station. This is not considering the lost large power stations (such as Vuhlehirska or Zaporizhzhya).

Ahead, there is a real prospect that the raids will intensify, especially next winter. In Russia, the assembly of the Iranian Shahed drones has been fully established, and not very expensive surface-to-air missiles have already hit several substations.

Actually, exactly when the tariff was considered, several main power lines were cut down, leaving almost two million consumers in 12 regions without electricity. The system is very busy. It needs to be repaired while there is still some time. And here an additional two or three billion a month will certainly not be out of place.

Will the consumer agree with this? Hardly. Especially if the tariff increase coincides... with the start of power outages. There are all chances. The NPP units are under repair – less than half of them are currently operational. The hole of three and a half million kilowatts is partially covered by renewable energy sources. But this source of energy is quite unstable. At dusk, there is a clear fiasco with the sun. As a result, there is already a shortage of energy in the system in the evenings.

Considering a shortage of money, it all creates a dangerous mix. Opportunities to export electricity, which were in the spring, when it was in excess, have been successfully blocked. The window of opportunity turned out to be a window leaf – in fact, the sales lasted only a few days. Until the spring of next year, it is better not to expect anything more than one-time sales of minimum volumes on a sunny day. It’s a pity, as in Central Europe, electricity costs twice as much on the wholesale market, which is a lot of money. According to the official version, they passed us by, because the system reserve must be saved in case of a sudden increase in domestic consumption. According to unofficial information, traders found a loophole in the National Bank’s ban on withdrawing money from the country and began to use export-import operations, let’s say, not for their intended purpose.

As a result, if I can’t have it, neither can you...

In short, the need for money is acute. Only a lazybone has not written about the huge debts accumulated in the system (about four billion dollars). Even new tariffs will not close such debts, they will only slow down their accumulation.

Western partners are not eager to cover the tariffs of the population, rightly pointing out that they provide huge assistance with equipment anyway. And in general, they have a market there with market prices for everyone, and not our issues. By the way, according to National Commission for State Regulation of Energy and Public Utilities calculations, the market tariff for the population is UAH 5.5 per kilowatt-hour, i.e., the current increase is not final either.

In general, there are no good and easy scenarios. What’s more, this year there will probably be more damage, outages, and work using generators. No matter what the Ministry of Energy says on this matter, the war is going on.

To keep that in mind, by the way, not only the energy system suffers from this war, but people also do – no less. And they want to require additional tens of billions from them. It turns out that by increasing the tariff, the efficiency of using this money should also be increased. But the habit of buying from the “right” people at the “right” prices has not gone anywhere... No one doubts the ability of money grabbers to master any amount and wish even more. But here the case is a bit different. The population has definitely not become richer since 2021, there is not enough money, and it is at least unreasonable to give it away just like that. We have already written about the miracles of trading of the aforementioned Energoatom.

Giving control to our officials alone means to fail it most definitely. Public organizations and media, despite all possible mistakes, track suspicious movements noticeably more effectively. The rearguards of the Ministry of Defense will not let you lie. The main thing here is not to let it be concealed later.

And this is not the case when “everything will be lost in the fog of war.” At least not for everyone.

Read this article in Ukrainian and russian.