Authorization
Dear Volodymyr Oleksandrovych,
Public Union “Ukrainian Wind Energy Association”, which unites all the national wind power producers (hereinafter - UWEA), expresses its sincere gratitude for your attention to the Ukrainian electricity industry, which has began to work effectively in market conditions, and further development of the energy sector. As it is known, since July this year during a meeting with business representatives in Toronto (Canada), you have encouraged Canadian businesses to invest in Ukraine, particularly in the production of “green” energy. You also assured them of the total support for their planned projects and investment protection. However, recently a situation that has a negative impact on the investment climate in the market of “green”energy of Ukraine has arisen.
Please be aware of our concern regarding the decision of the Kyiv Regional Administrative Court, which suspended the regulations of NEURC (National Energy and Utilities Regulatory Commission) No. 954 of 07.06.2019 “On the tariff setting for electricity transmission services of the SE “NPC “UKRENERGO” and No. 955 of 07.06.2019 “On the tariff setting for services of dispatching (operational technological) management of SE “NPC “UKRENERGO” .
As such, Smoliy Ihor Volodymyrovych, a judge of the Kyiv Regional Administrative Court, based on the claim of the “Nikopol Ferroalloy Plant” JSC on June 27, 2019, by his decision in the case No. 640/11330/19 stopped the above mentioned NEURC regulations which made it impossible for the Operator of the transmission system (SE “NPC “UKRENERGO”) to pay for services of share increase of electricity production from alternative sources to the SE “Guaranteed Buyer”. The above, in turn, has deprived the SE “Guaranteed Buyer” of the financial ability to fulfill its state obligation to producers of electricity from alternative sources for payment of purchased electricity at the “green” tariff provided by the terms of contracts concluded with producers and guaranteed in terms of legislation.
We would like to draw your attention to the fact that the vast majority of alternative energy electricity producers are implementing projects involving loans from international financial and banking institutions. The lenders of green energy include the EBRD, IFC, Overseas Private Investment Corporation (OPIC, USA), KfW IPEX-Bank (Germany), China Development Bank (China), Landesbank Berlin AG, Oddo BHF (Bayern Lb (Germany) and dozens of others. The source of the return of borrowed funds is the proceeds from the sale of electricity produced. Producers will not be able to repay loans unless they receive funds from the State Enterprise “Guaranteed Buyer”, and therefore have reasonable grounds to appeal to international tribunals with claims for the recovery of uncollected funds from the State of Ukraine, payment of which is guaranteed nationwide.
Moreover, the violation of the rights of enterprises in the “green” energy sector will be a failure to comply with Ukraine's commitments to the European Energy Community. It also runs the risk of imposing sanctions on Ukraine by the EU for failure to comply with the terms of the Association Agreement between Ukraine, on the one hand, and the European Union, the European Energy Community and their member states, on the other hand, which, in particular, provides for the implementation of EU regulatory acts and the introduction of a new market for electric energy.
Taking into account the above, the decision of June 27, 2019 in the case No. 640/11330/19 was appealed to the appellate instance by NEURC, SE “NPC “UKRENERGO” and SE “Guaranteed Buyer “.
In addition, in order to prevent all the negative consequences of the suspension of the regulations of NEURC No. 954 and No. 955 of June 7, 2019, the NEURC, by the Resolution of July 12, 2019, No. 1411, set the tariff for the SE “NPC “UKRENERGO” from August 1, 2019, for the services of electric energy transmission at the level of 312.14 UAH/MWh (excluding VAT) and the tariff structure for electricity transmission services (at the same time the tariff was lowered compared to the one set by the appealed regulations of NEURC).
However, “Nikopol Ferroalloy Plant” JSC initiated a new claim to the Kyiv Regional Administrative Court on July 22, 2019 (case number 640/13543/19) on the recognition as unlawful the above-mentioned resolution of NEURC and its cancellation.
As noted by SE “NPC “UKRENERGO”, if, by the decision of the court, the resolution of NEURC No. 1411 is also cancelled, it will be impossible for the Operator of the transmission system to work under the new model of the market, especially with regard to the fulfillment of special duties, and this would lead to the bankruptcy of SE “NPC “UKRENERGO”. In turn, the blocking of the company's tariffs, which is one of the key players in the electricity market, may lead to bankruptcy of other market participants and, as a result, lead to the destabilization of the power system operation as a whole. Thus, as a result of the reluctance of a separate participant in the electricity market to pay legal tariffs for the transmission of electric energy, the threat of destruction of the whole sector of alternative energy arises, as well as the undermining of the energy security of the State, and the assistance of international partners of Ukraine and lending institutions is forestalled.
Based on the above, we ask you to support the strategic development of the renewable energy sector in Ukraine, to take measures to protect national producers and investment in the production of green energy in Ukraine and to prevent deterioration of the investment climate in Ukraine due to the breach of State guarantees.
Board Chairman of the Public Union “UWEA”
Vice-president of WWEA A.Ye. Konechenkov
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