The government has repeatedly warned that tariffs for basic utilities such as heating, electricity and gas for the population will remain unchanged until the end of the heating season. Typically, this period ends in April, so tariff “surprises” will soon await Ukrainian consumers.
Starting April 1, tariffs for water and sewerage will be changed in Ukraine. In general, according to official statistics, over the past year utility bills have risen in price by almost 13%. What services have risen in price the most over the past year and what should Ukrainians expect in the near future?
Tariffs are changing: what has become more expensive over the past year
According to the State Statistics Service, over the year (February 2024 to February 2023) utility tariffs increased by 12.7%. Statistics say that over 12 months, garbage collection has risen in price by 4.5%, management services for apartment buildings - also by 4.5%, and the cost of maintaining and repairing housing - by 3%.
The most expected price increase was for electricity: by 69.7%. The reason for this increase in the cost of electricity was the tariff increase in June 2023. If earlier, in case of consumption up to 150 kWh per month, the tariff was 1.44 UAH, and with greater use - 1.68 UAH, then from June 1, 2023 it increased to 2.64 UAH per 1 kWh, regardless on the volume of consumption.
Despite this rapid increase in costs, consumers continue to be assured that tariffs have not reached an economically justified level. Previously, energy market experts told Focus that the cost of electricity for the population should not be less than for industry and business, which means that the economically justified tariff should be at least 5-7 UAH per kWh. Experts say debts in the energy sector are one of the main reasons for raising tariffs.
“The new electricity market model had to comply with European rules. But our model was burdened by regulations that were unnatural for the European model, which led to the accumulation of debt. When the model was introduced, it was hoped that it would not generate debt. But it didn’t work out - new debts accumulate. Companies do not receive enough funds, cannot invest, invest in repairs, have no interest in investing, and in the end this will lead to a deterioration in the quality of power supply. The key problem of the market is debt,” said Andrian Prokip, an expert in the Energy program at the Ukrainian Institute of the Future.
Despite the rapid growth, consumers continue to be assured that tariffs have not reached economically justified levels
Spring has come: getting ready for a promotion
As Prime Minister of Ukraine Denis Shmygal noted at the end of January, the state continues to support Ukrainian families and maintains a “preferential tariff” for electricity for the population. According to him, the government did not plan any tariff changes in winter. But winter is already over, so the population should prepare, and not only morally.
Answering the question whether we should expect another tariff increase to an “economically justified level,” Vladimir Omelchenko, director of energy programs at the Razumkov Center, noted that the decision on an increase will be made taking into account the state of the economy and market conditions, and there are no justified tariffs at all. According to him, the tariff should be such as to cover all costs and create profit, which stimulates work in this sector of the economy.
“The main thing is to understand the principle: for all categories of consumers there must be market tariffs that cover all costs. And for low-income people, part of their payments should be covered from the state budget in the form of a subsidy,” Omelchenko explained.
In general, experts believe that there will be no tariff increase to 6 UAH per kWh, which is constantly being discussed, this year. This would be another shock to consumers and lead to a further increase in debts that are already sky-high. According to the chairman of the Union of Utility Services Consumers Oleg Popenko, the tariff increase will probably take place in May-June to a level of about 3.5-4 UAH per kWh. Energy expert Yuriy Korolchuk predicts that the electricity tariff will rise to approximately 3.5 UAH per kWh.
Gas: third payment and possible change in tariff for the population
The statistics released by the State Statistics Service did not include an increase in gas fees. Formally, gas has not become more expensive: 98% of Ukrainian household gas consumers, who are clients of the gas supply company Naftogaz of Ukraine, continue to buy fuel at a guaranteed price of UAH 7.96 per cubic meter. However, since February, some consumers are still paying more due to the introduction of the so-called “third gas payment.”
“Ukrainians will pay for the maintenance of in-house gas supply systems. In simple words, this is a payment for the maintenance of pipes and gas supply equipment to the house,” noted Elena Voronkova, a lawyer at the Ivan Khomich Law Office, in a comment to Focus.
As for the amount, it depends on the specific building, its height, and the number of apartments. According to Yuriy Korolchuk, approximately one apartment should pay about 300 UAH in three years.
Unfortunately, it's not all bad news. Experts do not rule out that after the end of the heating season, the price of gas may well rise to 10-11 UAH per cubic meter. Tariffs for the population may begin to be reviewed as early as April, and new ones may be approved in May 2024.
Water supply: it's time to raise prices
The National Commission for State Regulation in the Spheres of Energy and Utilities (NCRECU) announced a planned update of tariffs for water supply and sewerage. The increase in tariffs is explained by long-term underfunding of water utilities, which also deepened as a result of the full-scale war in Ukraine.
“Today, consumer debts for services in the field of water supply and sanitation exceed 8.5 billion, enterprises’ debts for electrical energy also already reach almost 8 billion hryvnia. In general, losses from the war in the water supply and sanitation sector today are tentatively calculated at more than $7 billion,” Natalya Khotsyanovskaya, director of the Department of Public Utilities of the Ministry of Infrastructure, recently said.
It was planned to review the cost of drainage and water supply last year, but as a result of a loud outcry, the matter was postponed “for later.” But in 2024, the problems of water utilities have not disappeared: rising electricity tariffs, consumer debt, increasing the minimum wage. Therefore, local water utilities are planning a two-stage increase in water prices.
The first increase in tariffs for water supply and sewerage will occur from April 1, 2024. Due to the fact that each water utility independently decides on changing tariffs, the amount of increase in the cost of services may differ in different cities.
“There are no accepted tariffs yet, but overall the growth will be serious,” says Oleg Popenko. “It will be 20-30%, and in some cities consumers will even receive +60% in the tariff.” At the same time, at the expense of consumers, the issue of debts of water utilities for electricity will be resolved, where the total debts amount to more than UAH 3 billion.”
Within a year, water in Kyiv will rise in price by more than one and a half times
In Kyiv, from April 1, the tariff will increase to 40.8 hryvnia per cubic meter, which means an increase of 34% (currently the sum of tariffs for centralized water supply and sewerage in Kiev is 30.38 UAH). The next increase in the cost of water should take place on July 1: then the price per cubic meter will increase by another 15%, reaching 46.9 UAH. As a result, water in the capital will rise in price by more than one and a half times over the course of the year.
