Two subsidiaries of oligarch Rinat Akhmetov’s power producer DTEK have allegedly abused their market power, according to a preliminary conclusion announced by the Anti-Monopoly Committee of Ukraine on June 2.
DTEK Group said the committee’s preliminary conclusions were “unfounded and baseless” and called them “public administrative pressure on a domestic electricity producer.” The company said it acts in full accordance with the rules of the market and that the power industry’s regulator has no complaints against it.
The case was opened in October 2019. DTEK is accused of abusing its market power by boosting electricity prices at the Burshtyn Energy Island in Ivano-Frankivsk Oblast in July through October 2019.
DTEK’s Burshtyn power plant is the dominant producer of electricity on the island, which comprises several power plants. Unlike most of Ukraine’s energy system, the island is integrated into Europe’s Union for the Coordination of Transmission of Electricity. Ukraine’s current Prime Minister Denys Shmyhal was the director of the Burshtyn power plant in 2018-2019, before entering public service.
According to the preliminary conclusions, DTEK deliberately reduced the supply of power to the island in the day-ahead and intraday market segments. As a result, consumers had to buy power on the balancing market, where prices are higher.
The committee also accused DTEK of offering unjustifiably high prices on the island’s day-ahead segment in July through October 2019. DTEK’s intermediary, D.Trading, purchased most of the import capacity to the island, thus limiting alternative sources of electricity for consumers, according to the conclusions.
The committee submitted its evidence against the company to DTEK. The committee will consider the case and make a final conclusion when DTEK’s lawyers prepare their response.
The committee said that it would fine DTEK up to 10% of its revenue for 2019 if the alleged violation is confirmed.
“As before, we see DTEK’s ability to withstand the committee’s pressure in this case as the more likely outcome of this conflict,” said Alexander Paraschiy, an analyst at investment bank Concorde Capital. “But we do not rule out the adverse outcome, which might result in up to an $85 million penalty for DTEK Energy. The risk of such a penalty may add more arguments for the company in its ongoing talks with creditors on new debt conditions.”
DTEK is Ukraine’s largest electric power company. It controls up to 90% of Ukraine’s coal output and up to 80% of Ukraine’s thermal power production.
