Is it the right time to destroy the financial base of the electricity distribution system operators during the war?

August 25, 2022

Preparation for the autumn-winter period will be very peculiar this year. It will differ significantly by region, by resource supply, and by the problems faced by local authorities and energy companies.

There is only one common thing for all the regions: this heating season will be particularly difficult and unpredictable. But now, one more problem can be created artificially. A draft decision is circulated in the government offices, that takes the funds used for network repairs away from distribution system operators.

There are indications that NERC plans to cancel the preferential RAB tariff for distribution system operators. At the same time, the authors of the decision did not take into account that the RAB tariff came into effect only in 2021, and provided financing for huge amounts of work on the repair of electrical networks, which were destroyed and continue to be destroyed by the invaders. After all, the aggressor seeks maximum destruction of the energy infrastructure on the eve of the heating season.

Now, cancellation of the RAB regulation creates additional risks critical for the passage of the 2022–2023 autumn-winter period, since lack of funds will hinder timely restoration of power grids, creating conditions for energy collapse in many regions. In addition, RAB is a driver of recovery in power engineering, according to the European methodology. It gives impetus to new construction and reconstruction of networks.

Before the war, the wear and tear of power grids reached 70% across the country. The year of 2021, when the RAB regulation was implemented, was the first year when substantial upgrading of the networks was started. However, a year later, the war began. Distribution system operators simply did not have the time to upgrade the networks to the point where it would be possible to leave them to their own devices.

One should jeep in mind that for many regions, especially the frontline ones, electricity is the only source of energy. There are huge problems with gas and heat supply. Moreover, no matter how the country stocks up coal and gas, permanent accidents and even blackouts on the power grids may pose a threat to the health and life of thousands of people, and the socio-political tension in the country will rise.

Inflation is high, and the scope of repair programs does not cover their cost. No matter how amazing it sounds, distribution system operators channel all the available funds to network restoration. Abolition of the RAB regulation means leaving war-torn areas without electricity.

All this suggests that this initiative was not discussed with experts in the power engineering industry. Let’s hope that the plans of cancellation of the RAB tariff will remain on paper. Otherwise, lighting of the homes of Ukrainians may become a luxury.

Volodymyr Omelchenko

Director, Energy Programmes

Born in 1967 in Kyiv

Education: Kyiv Politechnic Institute, Department of Chemical Engineering (1992)

Author of over 50 scientific works and op-ed publications. Took part in development and implementation of international energy projects and scientific research in international energy policy


1992 – 1996 — worked in different positions in the mechanical engineering industry

1997 – 1998 — Head Expert of the Division of Oil, Gas and Petroleum Refining Industry of the Ministry of Economy of Ukraine

1998 – 2003 — Naftohaz Ukrayiny National Joint-Stock Company, in Charge of Oil Transportation Section

2004 – 2007 — Chief Consultant at the National Institute of International Security Problems of Ukraine’s NSDC

since February, 2007 — Leading Expert, Razumkov Centre. Director of Energy Programmes since 2013

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