Photo from UNIAN
This year, a new formula will be introduced, "Rotterdam –," which will regulate tariffs of coal-fed power plants.
President of Ukraine Volodymyr Zelensky will submit to the Verkhovna Rada a draft law on the abolition of the Rotterdam + coal pricing formula and postpone the launch of the new electricity market from July 1, 2019 to July 1 2020, the president's envoy to the Cabinet of Ministers, Andriy Gerus, told a Kyiv briefing Friday.
"The Presidential Administration prepared a draft law, which on Monday will be submitted to the Verkhovna Rada. It is being proposed that the Rotterdam+ formula be abolished, and another formula be introduced instead, which can be called Rotterdam –," Gerus said.
According to the official, the cost of coal delivery from Rotterdam to Ukraine will be removed from the formula, and a discount on poor quality of coal will be introduced – the worse the quality of coal, the less its cost is included in the tariff. Such a discount could range from 1% to 10%.
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Also, Gerus said this bill proposes to postpone the launch of a new electricity market in Ukraine for 12 months.
"In addition, the bill proposes the postponement of [the launch of] a new electricity market for one year. In our opinion, it is wrong to introduce such an unprepared market from July 1. During this year, there will be a Rotterdam – formula that will regulate tariffs of coal-fed power plants," he said.
The "Rotterdam Plus," or Rotterdam+, is a method of forming a price of a coal in power generation by thermal power plants in Ukraine. It was introduced in March 2016 and became effective in May 2016.
The introduction of the "Rotterdam Plus" formula was predetermined by the loss by Ukraine of its coal-producing area in Donbas after Russia unleashed war in the east of Ukraine.
Almost all coal mines producing anthracite consumed by most of Ukraine's thermal power plants are now located on the territory beyond Ukraine government control.
Resolution No. 289 of the National Energy and Utilities Regulation Commission introducing the formula determines the indicative price of coal based on the average market price at the ports of Amsterdam-Rotterdam-Antwerpen for 12 months.
NEURC officials claimed that the measure would help Ukraine ensure energy independence and accumulate enough coal for a heating season. They also stated this method of calculation should eliminate manual price regulation, and ensure independence from supplies from the warzone.
The formula has been criticized by experts, as well as by the government.