“Servants of the people” addressed to the controller due to azarovskiy methodology

«Слуги народа» обратились к регулятору из-за «азаровской» методологии

A group of MPs from the servants of the people appealed to the national Commission of regulation of energy and utilities with the requirement to enter the European methodology of formation of tariffs for power companies, instead of the outdated azarovskiy. This is stated in an open letter published by the Chairman of the Subcommittee on development of competition and equal conditions for business of the Verkhovna Rada Committee on issues of economic development Lyudmila Buimister in Facebook.

According to her, active in Ukraine, the methodology has led to the fact that the mains of the country is worn out by 80% and need 17.5 billion dollars of investment.

“Of particular concern is the fact that the conditions that the regulator proposes today — suspiciously similar to those offered by Azarov’s government in 2013: the division of all assets of the power companies at relatively “old database” and “new base”, charging different rates of return on those bases. In this relatively “old” was offered a very low rate of return of 0-5%. Today NKREKU does almost the same, at the rate of 1%,” — said buymister.

In her opinion, precisely because of these conditions investors were not interested to invest in the power grid.

In particular, the deputies propose to abandon the section of the regulatory asset base at the “new” and “old” to count one’s asset base as is the case in most EU countries. And also, to apply the regulatory rate of return on the regulatory asset base as an indicator of the weighted average cost of capital (WACC), and the recalculation of WACC should be performed either once a year or before the start of the regulatory period.

“In our opinion, these 2 criteria are the key for successful implementation of incentive tariff that will ensure the successful privatization of the state operators of distribution systems, a transparent and acceptable conditions for investors, and will provide the necessary investment in the distribution network, which will significantly improve the Ukrainian figures of losses and SAIDI”, — said in the letter.