770 state-financed organizations in Odesa Region pay for electricity at an overinflated rate

Thermal power generation03 February 2021

From January 1, 2021, state-financed organization in Odesa and the Odesa region with a capacity of more than 50 kW, which failed to choose an electricity supplier on the competitive market, became customers of a supplier of last resort (SoLR). As a result, these organization pay for electricity at an inflated electricity tariff, which is on average 25% higher than the price of electricity suppliers in the free market. Among them are the Main Police Department in Odesa Region, City Children's Hospital No. 2 of the Odesa City Council, and the Odesa Regional Hospital for the Disabled and War Veterans of the Odesa Regional Council.

From January 1, 2021, 770 state-financed organizations in Odesa and around the region have not chosen a suitable supplier on the free electricity market, since they did not carry out tender procedures to select a supplier in a timely manner. According to the requirements of the Law "On the Electricity Market", they became customers of a supplier of last resort (SoLR). However, they cannot be their customers for more than 90 days. At the same time, the tariff for electricity from the supplier of "last resort" is on average 25% higher in comparison with other suppliers* Note that 1,420 state-financed organizations in Odesa region have already chosen a supplier on the free market.

The distribution system operator, DTEK Odesa Grids, is concerned that a significant part of state-financed organizations failed to select an electricity supplier on the free market timely. Based on the two-year experience in the new electricity market, the company is afraid that the state-financed organizations will run into debts caused by the SoLR tariff. In turn, the debts can cause the power supply to be cut off both at the initiative of the last resort supplier and the distribution system operator.

In order to buy electricity from an independent supplier on a free market at a market price, all state-financed organizations should conclude an agreement on the electricity supply at free prices. Customers can choose an electricity supplier on the DTEK Odesa Grids website or on the NEURCU website. After selecting a supplier, they should contact the selected supplier with a list of documents required by the Supplier. We underline that the distribution system operator provides the electricity distribution service and interacts with all licensed suppliers on equal non-discriminatory terms.

DTEK Odesa Grids draws the attention of state-financed organizations that contracts for the electricity distribution and supply (based on the choice of a supplier) and payment for electricity is a requirement of the Law "On the Electricity Market".

We urge the management of state-financed organizations to complete the procedure for choosing suppliers of electricity on the free market (tender procedures) and conclude contracts with them. And budget administrators of these organizations - the Odesa City Administration and the Odesa Regional Administration - should enhance control over paperwork and payment for electricity by subordinate organizations.

*Resolution No. 1698 dated September 9, 2020, "On setting the tariff for the service of a supplier of last resort for IVQ 2020".