Budget Clients Becoming Too Risky, Say Electricity Suppliers as Many Walk Away

Growing Concerns for Power Suppliers in the Public Sector

According to Главком: Krystyna Yan, Director of Energy Sales at LLC "Energo Resource" RI Group, has voiced serious concerns over the mounting risks electricity suppliers face when working with state-funded institutions. These challenges stem from recent shifts in court rulings and procurement audits that are making it harder to operate in this segment. As a result, a growing number of companies are already pulling out of partnerships with the public sector, signaling deep-rooted problems in the industry.

Contractual Hurdles and Legal Disputes

In response to these pressures, "Energo Resource" is preparing a lawsuit to challenge specific clauses in Cabinet Resolution No. 1178, which governs price adjustments in contracts. According to Krystyna Yan,

“Right now, we are preparing a lawsuit to have Resolution 1178 annulled-specifically the parts dealing with price changes.”

This highlights the severity of the situation, as shifting regulations are making it increasingly difficult for suppliers to secure agreements with public institutions.

The problem is compounded by lawsuits filed by the prosecutor’s office, which claim damages totaling 5 million hryvnias. In their calculations, prosecutors state that the Day-Ahead Market (DAM) price was 5.40 hryvnias, while the actual selling price reached 8.32 hryvnias. Krystyna Yan points out that the prosecution fails to account for the full cost structure of electricity:

“We ask them what goes into the final price for the consumer. They don’t know. They compare 5.40 and 8.32. They have no idea what makes up the 8.32-where VAT is, where transmission costs are.”

This is alarming because courts are ruling in favor of these claims without understanding how the market actually works.

Yan also noted that simply signing a contract with a public entity now carries considerable risk:

“The rules keep changing. Right now, just working with state institutions is a risk in itself. The very act of signing such a contract.”

While other companies have already stopped serving this sector, "Energo Resource" is trying to maintain its partnerships-but the situation is exposing suppliers to major financial hazards.

The current state of the electricity market for public institutions reveals serious challenges for suppliers. The rise in legal claims and ongoing regulatory changes could shrink the pool of companies willing to serve this segment, potentially threatening the stability of power supply to government agencies. In a time of economic uncertainty, finding a balance between protecting consumers and ensuring market stability for suppliers is crucial. These developments could have far-reaching consequences for the entire industry.

The challenges faced by electricity suppliers are not isolated, as evidenced by the struggles within the public sector. Similar issues are highlighted in the context of tender processes for hospitals and municipal utilities, where a significant lack of suppliers has been reported. This growing trend underscores the broader implications for public service contracts and the sustainability of energy supply in the current legal landscape.