OREANDA-NEWS  On 28 October Valery Kalchenko, the National Electricity Regulatory Committee (NERC) chair, informed that starting from 2009 the regulator plans to introduce a new pricing system for regional energy supplying companies. Under this system they plan to migrate from the cost-based to the stimulating principle motivating energy distributors to cut their costs and improve efficiency.

In practice it will look like as follows: the NERC is to define the maximul allowable income for oblenergo for a long period of time (several years) that will be adjusted on the annual basis depending on inflation and quality of services provided. The adjustment formula will also allow for the company performance, change in electricity transferred volumes and number of connections to the power grid, as well as losses on energy and some other possible unpredictable factors.

Mr Kalchenko stressed that transition to the new pricing model will have several stages. At the first stage, the RAB for profit accrual and depreciation charges will be defined as well as required amendments to some Ukrainian legislative acts will be made. At the second one, the allowable income level for 3-year adaptation period will be set, which subsequently will be prolonged to 5 year. Initially, for all oblenergos they will set the profit rate calculated as the capital weighted average and after that depending on the performance efficiency each distributor will get an individual target for non-efficient costs reduction.

Finally, the NERC plan envisages gradual increase within 10 year in tariffs for electricity transmission to the level that will enable the energy distributing companies to perform a full-fledge reconstruction and modernization of their transmitting infrastructure.

Thus, it can be said that NERC introduces certainty in the future principles of oblenergos operation organization. Earlier, two alternative options were discussed – RAB pricing model and price cap system. Apparently, the latter option became a preferred one, however, the key problem for energy market reforming is the political instability hampering adoption of required legislative changes.