The conclusion of the European Energy Community Secretariat on charging transmission fees for electricity exports reaffirms DTEK’s position

The conclusion of the European Energy Community Secretariat on charging transmission fees for electricity exports reaffirms DTEK’s position

DTEK03 June 2020

The conclusion of the European Energy Community Secretariat on charging transmission fees for electricity exports reaffirms DTEK’s position

The secretariat of the European Energy Community (EEC) in the document “Ukraine – electricity transmission and dispatch tariff with respect to the tariffs for export and import” provided clarifications and recommendations on the payment of tariffs for the transmission of electricity by exporters. The recommendations of the EEC fully coincide with the position of DTEK regarding inconsistencies prevalent in the requirements of the Regulator to pay the transmission tariff for the export of electricity to European legislation and the international obligations of Ukraine.

In February 2020, the regulator - the National Energy and Utilities Regulatory Commission (NEURC) - obliged exporters to pay the transmission tariff for electricity export at the same rate as for domestic consumption and generation. Corresponding changes were made to the Code of the transmission system.

This norm reduces the competitiveness of national electricity producers. Therefore, DTEK Zakhidenergo appealed the decision in court.

In particular, the conclusions of the EEC Secretariat also state that the Regulator’s decision contravenes Article 41 of the Energy Community Treaty, which provides that customs duties and quantitative restrictions on the import and export of electricity, and all measures that have an equivalent effect are prohibited.

“The current tariff for the transmission of electricity should not be applied to export and import operations, because it leads to overpricing and does not comply with the Association Agreement,” the EEC mentioned in a statement.

In accordance with the case-law of the European Court, this prohibition also applies to all measures contrary to the principles of free trade. In particular, the document provides an example of Slovakia. In a similar situation a few years ago, the European Court of Justice ruled that any additional material costs, even insignificant, on exported goods are an obstacle to the movement of such goods.

“The regulator, which ensures the European integration of the Ukrainian energy system, must be guided by applicable European norms and rules. DTEK works in strict accordance with the laws of Ukraine and expects the same from other participants in the electricity market. The company pays the tariff of the transmission system operator in accordance with all applicable requirements. We continue to judicially defend the wrongfulness of charges for the export transfer tariff. The Secretariat of the European Energy Community has unequivocally pointed out the illegality of the application of the transmission tariff for exporter companies. In my opinion, such a decision of the Regulator is open discrimination against exporting companies. I hope that the motivated opinion of the EEC Secretariat will become the basis for the revision of erroneous decisions by the Regulator”, said D.Trading CEO Vitaly Butenko.

Profile

DТЕК is the largest private investor in Ukraine’s energy sector.

DTEK Group produces coal and natural gas, generates electricity at thermal, solar and wind power plants, distributes electricity, supplies electricity to end consumers, provides energy efficient solutions and develops a network of EV charging stations.
In 2019, DTEK’s capital investments totalled UAH 23 bln. Moreover, the company paid UAH 23.4 bln of taxes. DTEK employs 70 thousand people.

The company is 100% owned by SCM Limited. Ultimate beneficial owner – Rinat Akhmetov.

 

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