Electricity in Ukraine: why prices are inflated by 600% and who profits from it

Electricity in Ukraine: why prices are inflated by 600% and who profits from it

The head of the Union of Consumers of Communal Services, Oleg Popenko, stated that prices for electricity in Ukraine are artificially inflated, leading to significant losses for the economy. He called for the suspension of the electricity market during the war, as the rise in tariffs negatively affects consumers and municipal enterprises.

Electricity prices rose by 40% in October 2023, and in November 2023 - by 6%. The total increase in electricity prices amounts to 46% compared to September 2023. The cost of electricity produced by 'Energoatom', excluding VAT, is about 1.15 UAH per kilowatt, while the weighted average price in the market in November 2023 reached 6.80 UAH per kilowatt. Thus, the difference between production costs and market price creates conditions for super-profits.

'Energoatom' has accumulated 60 billion UAH, indicating possible corruption schemes in the energy sector. Oleg Popenko noted that

“this is an astronomical price that neither municipal enterprises, nor water utilities, nor thermal energy companies can pay”

— Oleg Popenko. He also emphasized that the current electricity market resembles a

“corruption barrier” that every Ukrainian pays for

— Oleg Popenko.

Proposals for solving the problem

In conditions of significant price increases for electricity, Popenko calls for the establishment of a fixed weighted average price that would ensure 'Energoatom' a reasonable profitability, for example, 30% rather than 600%. It should be noted that the law on the moratorium on tariffs for heat and gas has been in effect since August 2022, however, the situation with electricity requires urgent resolution.

In the context of war and economic instability, the decision to 'freeze' the electricity market until the end of the war could be an important step in reducing the financial pressure on consumers and municipal enterprises.

The problem of rising electricity prices in Ukraine poses a serious threat to economic stability and the welfare of the population, especially in times of war. High tariffs may lead to increased debts of municipal enterprises, which may negatively affect the quality of services they provide. In the event of a decision to suspend the electricity market, this could significantly alleviate the financial burden on households and businesses, but it requires careful discussion and analysis. It is important to find a balance between the interests of the state, consumers, and energy producers to avoid further social and economic crises.