Control over public services in 2014: whether Ukraine will be able to avoid the "double" tariff

The issue of municipal tarrifs is one of the most priority for the Ukrainian government as it is the mandatory requirement of the IMF for receipt of $15-20 billion of borrowed funds. For this purpose in the Verkhovna Rada were registered bills No. 4644 and 4644-D "On Amendments to the Customs Code of Ukraine" of improving the system of setting tariffs for energy carriers.

The differences between documents No. 4644-D and No. 4644 concern only the regulations relating to the green tariff which caused some controversy in the Parliament of Ukraine and therefore were taken out beyond the draft law. This bill was passed on April 10, 2014 by 230 voices of People's Deputies.

The main issue of the documents is the distribution of powers over municipal rates between the National Commission of the State Public Utilities Regulation and local authorities. According to the draft laws, local authorities have the right to set tariffs only for domestic, municipal services. Under the supervision of the National Commission there are rates for a centralized water disposal, water supply and heating and waste treatment and disposal.

Besides, in the draft laws it is suggested to recognize the water and heat supply companies responsible for implementing these services to the public, budgetary organizations and legal entities. The Commission has the right to establish not only the cost for transportation, production and energy supply, but also to approve the final consumer tariffs for energy and heat.

Accomplishment of the above regulations will exclude existing procedure of calculation of rates for the population according to "the double standard" when the National commission establishes rates for the licensed entities, which sphere of influence extends "to a house wall", and rates for central water supply and heating and water disposal are established by local authorities.

So when residents need some services of water utilities and heat power plants, there are problems as the companies refer to the license conditions according to which they deliver resources only "to a house wall". As a result, population does not receive necessary heat and water services in time, because they must appeal to the municipal entities instead of water utilities and heat power plants.

It became known for the Ukrainian Biofuel Portal pelleta.com.ua that today in Ukraine there are 270 licensed heating companies and 130 water and sewer enterprises, which control 96% of thermal energy and 90% of water supply and water disposal respectively.

As can be seen, the bills provide the right of the National commission to control the cost of payments for heat energy, taking into account heating services, and also distribute powers which concern cold and hot water supply services between water utilities and heat power plants respectively.

Author: Ivan Prokhorov