Secretariat examines Regulatory Asset Based distribution tariff setting rules in Ukraine

The Energy Community Secretariat published today a Compliance Note assessing the approach of the National Energy and Utilities Regulatory Commission (NEURC) of Ukraine to distribution tariff setting rules for electricity. Ukraine is in the process of transitioning towards an incentive based methodology for distribution tariffs, the implementation of which is important for setting the right incentives for operators to modernize and develop electricity distribution networks while maintaining fair prices for consumers.

In the Compliance Note, the Secretariat examines whether the distribution tariff methodology and accompanying tariff setting rules adopted by NEURC in August 2020 comply with the key principles of sound tariff regulation of network operators and how they contribute to creating a fair, predictable and stable regulatory framework. The Compliance Note concludes with a number of recommendations how to improve the text regarding the definition of the regulatory assets base (RAB), setting a fair and flexible tariff structure, financing investments and transition period for switching to the new methodology.