Business is for cheaper electricity grid connection

16/ 10/ 2020

At the end of August, the National Energy and Utilities Regulatory Commission adopted and approved an incentive tariff setting methodology for distribution system operators (RAB). The methodology assumes a rate of return of 16.74% on the “new” asset base and a rate of return of 3% on the “old” asset base. Notably, 50% of the funds which are return on the old asset base should be reinvested in the modernisation of networks of the distribution system operators.

At the same time, after the adoption of the Methodology, the Government raised an issue before the operators regarding the reduction of the cost of connecting new consumers to the grid. The European Business Association noted that the National Regulator did not listen to experts and representatives of the business community that insisted on the use of European best practices during the implementation of the incentive-based regulation. After all, a cheaper grid connection is an important step towards improving the Doing Business rating.

It is worth mentioning that the connection procedure has a significant impact on the international Doing Business ranking compiled by the World Bank on an annual basis. This rating reflects the ease of doing business in the country and is a benchmark for international investors and businessmen.

Also, the issue regarding the grid connection was raised by the National Reform Council led by the President of Ukraine on September 29, 2020. At the meeting, it was proposed to transfer the payment for connection capacity from the consumer to the investment program of distribution system operators. To do this, it is necessary to revise the incentive tariff and set the rate of return on the “old” base at 6%, which will reduce the cost of connection for new consumers.

That is why, the European Business Association consistently supports a smart approach and adheres to the position of using the best European practices and reducing the cost of grid connection, which will help improve the country’s rating of Doing Business.


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