Since the new year, debtors for paying for housing and communal services have again found themselves on the hook from companies providing these services. Shutdowns, fines and even a trial - this is what will await those who are accustomed to consuming electricity or water “for free”
Almost immediately after the start of Russia’s full-scale invasion of Ukraine, the Cabinet of Ministers introduced a moratorium on the disconnection of any housing and communal services for consumers who are in arrears to pay for them. Already at the end of December 2023, this moratorium was canceled, and the accrual of penalties for non-payment was also returned. This does not apply to the occupied regions and communities, which are officially included in the list of territories where hostilities continue.
Why was the moratorium lifted?
In fact, utility tariffs in Ukrainian cities have remained unchanged for almost three years. The fact is that in the fall of 2021, a Memorandum was concluded between the central and local authorities, which assumed that at least until the end of the 2021/2022 heating season, tariffs would not increase. The document fixed the “non-market” price of a cubic meter of gas, which forced local communities to compensate for the difference arising between the cost of services and the price set for the population. However, in order for communities to minimize this financial burden, the state additionally sent another 4% of personal income tax to the localities.
Already with the beginning of a full-scale war, the state prohibited increasing tariffs for gas, heat and hot water, as well as disconnecting consumers from any services, even if they owe it to the supplier company. This helped people who lost their jobs and stable income due to Russian aggression not to get rid of the basic benefits of civilization. However, such a moratorium did not mean that there was no need to pay for utilities at all. Although some part of the population perceived it that way. As a result, a stalemate has arisen: firstly, the tariffs are economically unjustified, and secondly, even so, most consumers simply do not pay for them.
People's Deputy, Chairman of the Verkhovna Rada Committee on Energy, Housing and Utilities Services Andriy Gerus states that payment discipline has indeed deteriorated significantly. He says that a very large number of citizens who could pay for “utilities” did not do so, accumulating debts, because they knew that they would not get anything for it because of the moratorium. In some places, in one region alone, the population's debts for electricity could reach a billion hryvnia, and the lion's share of these debts accumulated after the start of the full-scale Russian invasion. Of course, this led to the expected consequences.
Massive debt, for example, left those same energy utilities without the funds needed to recover from large-scale Russian attacks on critical infrastructure in 2022. At the same time, we should not exclude the fact that the entire sphere of housing and communal services, even if it did not come under fire, is subject to wear and tear and accidents, so it simply needs to be, if not modernized, then simply maintained in working order.
All this forced the Cabinet of Ministers to lift the moratorium on disconnecting utilities, in order, first of all, to encourage the population to pay for utilities.
By the way, as Gerus noted, the most disciplined payers for utilities turned out to be, oddly enough, pensioners and other subsidies, because they are afraid of losing subsidies that are canceled due to debts.
What services can be excluded from?
Director of the Urban Institute analytical and research center Alexander Sergienko says that in most cases, only the debtor’s electricity can be turned off.
“If we delve deeper into the problem, we see that the relationship between the service provider and the consumer is unequal. For example, in fact, it is possible to disconnect the debtor only from electricity if we are talking about apartment buildings. In high-rise buildings, it is impossible to disconnect a separate apartment from water or gas supply,” the expert notes.
However, we should not forget that in addition to apartment buildings there are also houses in the private sector, and here, of course, it is not without difficulty; it is possible to disconnect debtors from the same gas or water supply, but, as practice shows, this is an extreme measure that does not occur very often.
The YASNO company, which is one of the largest suppliers of electricity to the population in Ukraine, assures that it does not immediately disconnect debtor consumers from electricity. This procedure has several stages. First, the consumer is informed about his debt. The message is sent to the consumer’s personal account or via Viber or SMS. Since consumers send meter readings through their personal account or Viber, the company has contacts for most consumers.
At the second stage, the debtor receives an official warning about a possible power outage and its date is indicated. The lights can be turned off no earlier than 10 working days after receiving a warning from the electricity supplier and 5 working days after a warning from the distribution system operator, that is, oblenergo.
After receiving a warning, the client needs to pay the debt as soon as possible. The problem here is that funds transferred through the bank can take up to three days to be credited, and therefore energy workers advise not to delay payment of the debt until the last minute, so that the system has time to credit the funds before the blackout itself occurs. To speed up the crediting of debt, energy workers are advised to use online services: personal account, chat bots in social networks. Once the funds are credited to the account, the electricity supplier notifies the distribution system operator that the outage will be cancelled, since the debt has already been repaid.
If payment of the debt is not received on time, the subscriber's electricity will be turned off until the debt is fully repaid. And in order to have power again, the consumer will need to pay the bill for disconnecting and connecting the power supply, and sometimes this can cost several thousand hryvnia. And even if you pay all these bills, the power will not appear immediately, because according to the rules, an application to restore power supply is completed within three days if we are talking about subscribers in cities, and within five days if the subscriber lives in a village.
In general, there is no minimum amount of debt after which they will disconnect. Usually we are talking about consumers who have non-payments of thousands or tens of thousands of hryvnia.
Penalties and fines for debtors
Along with the lifting of the moratorium on disconnecting housing and communal services, the accrual of penalties on debt was resumed. By law, the penalty cannot exceed 0.01% of the debt amount for each day of non-payment. All this is stipulated in the agreement concluded between the consumer and the supplier of housing and communal services. Typically, you must pay for consumed services by the 20th or the end of the next month. All this should also be specified in contracts for the provision of utility services.
That is, if a consumer received, for example, an electricity service in January, then he must pay for it by February 20. If this is not done, or payment is not received in full, then a penalty of 0.01% of its amount will be charged daily on the balance of the debt. Let's imagine that the consumer received one or another utility service for 2 thousand UAH and did not pay for it until the 20th, then from the 21st the supplier of this service has the right to charge a penalty of 20 kopecks on the debt amount of 2 thousand UAH. In a month he will receive an additional 6 hryvnia.
However, penalties can only be charged on accumulated debts after the moratorium is lifted. If the consumer has not paid for utilities, say, from the spring of 2022 to the end of 2023, then no penalty will be charged on these debts.
Ultimately, if the consumer refuses to pay the debts even after penalties have been charged, then service providers can collect them through the courts. On the other hand, if the debtor is unable to immediately and fully pay his debts, he can contact the supplier with a request to restructure the debt. Typically service providers take this step.
People accumulated a lot of debts for services that they did not actually consume, for example, when they moved to another country or region, and their apartment at that moment was heated centrally. There is a way out not to pay for this service. If the consumer does not live at his address for more than a month, it is necessary to provide the supplier with a corresponding statement and documentary evidence. These can be certificates from places of temporary residence, work, study, treatment, military service, or serving a sentence. In this case, he will not be billed.
The whole city was almost left without water
In fact, mass disconnections of debtors from communal services have not yet been observed. True, already in January of this year, residents of Poltava could feel the lifting of the moratorium. All because of the millions in debt of the regional utility company Poltavavodokanal for the consumed electricity, which was previously provided by the regional energy company. It did not come to the point of disconnecting the water supply pumps from electricity, but the company’s offices remained without electricity for some time. This exposed a long-standing problem - utility tariffs in Ukraine have long been economically unjustified and, as we wrote above, have not increased for more than three years, which partially leads to the existence of debts among the enterprises themselves to other structures, as in this case.
Director of the Urban Institute analytical and research center Alexander Sergienko says that in December every year, most water utilities across the country increased water tariffs for the population. This is agreed upon by the National Commission, which carries out state regulation in the field of energy and utilities. The expert recalled that during the full-scale invasion of Russia, NEURC has already twice tried to increase cold water tariffs for some cities in the country. Moreover, this would be legal, because the moratorium only concerned increases in tariffs for heating, hot water and gas supply. As a result, the price of water did not increase.
“The costs of the same water utilities are growing every year, because the cost of electricity is rising and the minimum wage is growing. And in such cases, how does the water utility act? They cannot help but raise wages for workers and cannot help but pay taxes, and they must also purchase reagents for water purification, because sanitary standards for water must be observed. And this means that water utilities are starting to not pay for electricity en masse, because there are not enough funds for everything,” the specialist notes.
Last year, the cost of electricity for the population was almost doubled - from 1.44 UAH per kW to 2.64 UAH. However, there is more and more discussion in the information space that these electricity tariffs are not market prices. They say that the real cost of 1 kW of electricity should be at least 5-6 UAH. Of course, for now the Cabinet of Ministers says that no increase in prices is expected. Moreover, there is a resolution of the Cabinet of Ministers, according to which the electricity tariff will not be revised until May 1. However, it is difficult to say what will happen after May 1.
If we imagine that this year electricity will become more expensive, this will automatically increase the cost of almost all utilities, because they contain a fairly large component of electricity. Of course, there is now a moratorium on increasing tariffs for heating, hot water and gas. However, as representatives of the National Bank say in their forecasts, the moratorium may be lifted in 2025, and this actually means that it is worth preparing to increase tariffs now.
