Industrial enterprises are asking the National Commission for State Regulation in the Spheres of Energy and Public Utilities (NEURC) not to increase the marginal prices (so-called price caps) for electricity on the day ahead market (RDA), intraday market (HRV) and the balancing market to avoid stopping production.
Sources in the market told Interfax-Ukraine that there is a significant possibility of stopping production, in particular, such statements were made on October 12 during a public discussion of the draft decision at the NEURC.
Thus, Alexander Zavgorodniy, Director for Economics and Finance of the Nikopol Ferroalloy Plant (NFP), said that electricity is the main component of the cost of the plant’s products, so the rise in prices will significantly affect the economy of the enterprise.
“Given the likely increase in price caps, rising prices in the electricity market, as well as intentions to increase the cost of transportation and dispatching of electricity, we have decided to stop the operation of the enterprise from November,” the top manager said, adding that the enterprise plans in advance in this case is idle in the winter.
In turn, Oleg Kachko, Deputy Chairman of the Board for Finance of the Zaporozhye Ferroalloy Plant (ZZF), stressed that an increase in price caps will inevitably lead to an increase in electricity prices and, as a result, will lead to an increase in production costs and an inevitable shutdown of the enterprise.
According to him, the increase in price caps will cost the company an additional UAH 1 billion per year. “It is not known where to get these funds, when there are problems with logistics within the country, you need to keep staff, pay salaries. Therefore, in a war, this is not a very right decision,” said the representative of the ZZF.
At the same time, the Dniprozot plant, the only producer of chlorine for Ukrainian water utilities, has been idle since the very beginning of the war. However, due to the technological danger of the production cycle, the enterprise maintains minimal economic activity. However, according to the representative of the company, due to the increase in price caps for electricity costs, Dniproazot will have to stop completely, and the resumption of work will no longer be possible.
The mining industry is also under threat of a complete shutdown. In particular, Alexander Petrovets, Deputy Chief Power Engineer of the Pokrovsky Mining and Processing Plant (PGOK), said that there is a high probability that the enterprise will shut down in November due to an increase in price caps.
“PGOK is a city-forming enterprise, the existence of the city of Pokrovsk depends on our work. We try to work in extremely difficult conditions: the demand for our products is decreasing, the cost of production is growing, there are problems with the purchase of materials for repairs and maintenance of equipment. Therefore, our enterprise can no longer withstand this difficult situation,” the top manager stated.
Vladimir Bodnar, Deputy Chairman of the Board for Economics and Finance of the Marganets GOK (MGOK), recalled that the enterprise is constantly under fire from enemy artillery. However, due to rising costs, the work of the enterprise may stop. “And if price caps rise, then due to the shutdown of a large number of enterprises, there will be no one to sell this electricity to,” Bodnar concluded.
electricity tariffs, INDUSTRIAL ENTERPRISES
