Experts and market participants discuss the prospects of introducing annual gas prices
On 13 May, the participants of webinar “Annual gas price: would the consumer win?” discussed the course of gas market reform and the ways this situation could unfold. The event, attended by experts and representatives of the NEURC, gas supply companies and mass media, was jointly organized by the NEURC and DiXi Group as part of USAID’s Energy Sector Transparency project.
Recently, the National Energy and Utilities Regulatory Commission (NEURC) adopted a resolution introducing annual gas tariffs effective 1 May 2021. Speaking at the webinar, the regulatory agency’s representative Oksana Kryvenko addressed the reasons for introduction of annual gas prices for household consumers, and explained the procedure of setting the annual price and whether suppliers can change the price. She placed a special emphasis on the possibilities and advantages consumers will receive.
“The main purpose of natural gas market reform is to create a competitive natural gas market offering the free choice of supplier. Beginning from 2015, we as the regulatory agency have been monitoring and improving the market and doing everything to make it more convenient for consumers to navigate through rules, change the supplier and find a better offer,” NEURC member Oksana Kryvenko said.
Mrs. Kryvenko also explained certain problematic aspects occurring in the new market that is presently coming of age.
“If a consumer changes either their supplier or their commercial offer, realizing that, for example, it’s better for them to pay seasonally, the supplier plans their business model accordingly. If this consumer wants to get back but the supplier does not have the resource or the prices or quotas sharply changed and the consumption volumes planned for this model are no longer possible to deliver to that consumer… That’s the main reason why it is sometimes hard to go beyond the planned business model and get the consumer back to this contract,” Oksana Kryvenko explained.
If a consumer has a conflict with the supplier, Mrs. Kryvenko recommends lodging a complaint with the NEURC.
DiXi Group Research Director Roman Nitsovych spoke about development prospects of the retail gas market in Ukraine and what factors have bearing upon it.
“We see a continuous struggle of market factors, which say that we have to develop competition and as a result, offer consumers an affordable product. However, there is another way, which says that price is one of the elements of the government’s social policy, in addition to subsidies. As for the prospects of lowering gas prices, if we are able to contract a cheap resource this summer (either imported or through an agreement with Naftogaz), prices will move into the range of 8-9 hryvnias per cubic meter,” Roman Nitsovych believes.
During the webinar, representatives of several companies told how they formed the annual prices, assuring that they will allow to switch from the annual to the monthly package and get back to the annual package. They also pointed out that if only imported resource is used, they see no possibilities to lower the gas prices.
“For consumers, an annual contract is a good insurance against the price growth. But for suppliers, it’s a big problem. Not having access to the same product in the wholesale market – for we all have index contracts, not contracts with fixed prices – we cannot do forecasting,” Artem Kompan, Chairman of the Board of the Association of Energy Suppliers, said.
In the course of discussion, representatives of companies expressed an opinion that the real opportunity for lowering the price comes from expanding access to domestically produced gas.
The webinar was held within the USAID Energy Sector Transparency Project, implemented by NGO DIXI GROUP.
DIXI GROUP is solely responsible for the content of the views expressed, which does not necessarily reflect the views of the USAID or the Government of the United States.