Why a Full Shift to Market-Based Utility Pricing Fails in Europe: Expert Analysis

Market-Based Utility Tariffs Face Criticism

According to ХВИЛЯ: During a live broadcast on February 18, expert Oleh Popenko criticized the concept of a complete transition to market-based pricing for housing and communal services (HCS), drawing on the experience of European nations. He emphasized that market prices for gas are operational in only five European countries, highlighting the limited applicability of this model.

Popenko pointed out that in Poland, property managers are exempt from Value Added Tax (VAT), which helps reduce maintenance costs. Furthermore, he noted that the VAT rate for water utilities in Poland is just 9%. According to the expert, these factors make the HCS system more resilient to market fluctuations and enable governments to maintain the affordability of utilities for citizens.

'A full transition to market prices is not an effective solution in many European countries.' Oleh Popenko

The Ongoing Relevance of Utility Affordability

This debate over market-based utility tariffs reflects the broader, pressing issue of service affordability for populations, a concern relevant to many nations, including Ukraine. In the context of economic instability, finding a balance between market mechanisms and state regulation is crucial to ensure stability in the housing and utilities sector and to support socially vulnerable groups. The discussion is particularly timely as countries globally grapple with energy security and the cost of living.