DTEK Odesa Grids switches to incentive tariff setting methodology

Thermal power generation09 December 2020

On December 9, 2020 the National Energy and Utilities Regulatory Commission (NEURC) has approved transition to incentive tariff setting methodology starting January 1, 2021 for DTEK Odesa Grids.

Incentive tariff setting is a new, more efficient method of setting tariffs for electricity distribution. The scope of investments in improving the power supply quality in Odesa Region will increase by 46% (UAH 378 million) compared to 2020. Thus, the 2021 investment program* for Odesa Region will amount to UAH 824 million. For comparison, the company's 2020-investment program formed per the Cost+ system, amounts only to UAH 446 million.

A significant portion of investments will be used to improve the electricity supply quality to our customers as per performance indicators defined by the state regulator; namely, reducing electricity losses in the grid and improving the SAIDI (power outage time).

According to the NEURC requirements, after 13 years of operation of the distribution system operator under the incentive tariff-setting mode, the power outage time for customers should be reduced from current 1117 min/year to 150 min/year for urban areas, and 300 min/year for rural areas. And the electricity loss level should improve from 12% to 7.5%. At the same time, the improvement could have been achieved more quickly if the incentive tariff setting was implemented according to the European model.

The implementation of automation and digitalization technologies is one of the key focus areas for the DTEK Odesa Grids. In the long term, they will transform the current power grids infrastructure into a Smart Grid system that meets the needs of the modern economy.

As early as in 2021, UAH 28 million will be earmarked for the development of an automated dispatch control system, which monitors the technical condition of electrical equipment in real time. Using this system, we will be in a position to track and resolve emergencies more quickly.

In addition, the company plans to improve the quality of customer service using modern digital channels and services, such as an online portal, a chat bot, as well as create new channels that will make customer interaction with the company faster, simpler and user-friendly.

Reference:

*In August 2020, NEURC adopted a new methodology for forming an electricity distribution tariff based on the principle of incentive tariff setting to replace the Costs+ system. It allows attracting more investment in power grid infrastructure, which will have a positive effect on the power supply quality for customers.

The investment program is a program of work and work costs approved by the Regulator for the renovation, upgrade and construction of power grid infrastructure. NEURC is to approve it annually for each operator of distribution systems.