NEURC approved transition to incentive pricing for DTEK Odesa Grids

NEURC approved transition to incentive pricing for DTEK Odesa Grids

THERMAL POWER GENERATION18 November 2020

On November 18, 2020, the National Energy and Utilities Regulatory Commission (NEURC) approved a draft decision on tariffs for electricity distribution services in 2021 for DTEK Odesa Grids in accordance with the methodology for incentive pricing.

As per the new methodology, the scope of planned investments in improving the power supply quality by DTEK Odesa Grids will increase by UAH 378 million compared to 2020. Investments in improving the infrastructure of power grids within the area of the company's licensed activity (the city of Odesa and Odesa Region) will amount to UAH 824 million. For comparison, the company's investment program for 2020, formed per the Cost+ system, is 46% less and amounts to UAH 446 million*.

These investments will be used to improve the quality of power supply in accordance with the planned indicators that are determined by the state regulator, NEURC, such as reducing both losses in power grids and the SAIDI indicator (power outage time).

According to the quality parameters defined by the NEURC, thanks to the introduction of incentive pricing, in 13 years, the time of power outage for customers should be reduced from the current 1117 min/year to 150 min/year for a city and 300 min/year for rural areas.

The implementation of automation and digitalization technologies will be the key area of DTEK Odesa Grids’ focus. Such projects are intended to transform the current electric grid infrastructure into a Smart Grid over the long run that meets the needs of today's economy and customers. For example, already in 2021, UAH 28 million will be used to develop an automatic dispatch control system, which monitors the technical condition of electrical equipment in real time. For comparison, only UAH 6 million was earmarked for such project in 2020.

Significant amount of investments earmarked into the automatic dispatch control system will contribute to less emergencies response time, and their elimination at the earliest.

Investments in the development of modern digital customer service channels, such as an online portal, chatbot and mobile application, will ensure that the customers’ interaction with the company is fast, easy and convenient.

*The investment program is a program of work and costs approved by the Regulator for the renovation, modernization and construction of power grid infrastructure. It is approved annually by NEURC for each distribution systems operator.

In August 2020, NEURC adopted a new tariff setting methodology for electricity distribution based on the principle of incentive tariff setting to replace the "Costs +" system. It attracts more investments in power grid infrastructure, which has a positive effect on the power supply quality for customers.