PRICE DISCIMINATION IN THE ELECTRICITY MARKET OF UKRAINE

Abstract

The article is devoted to the problem of price discrimination in the electricity market of Ukraine. The article reveals the essence and degree of price discrimination in the market of production, transmission and distribution of electricity. It is determined that electricity is a standardized product but has a number of features that significantly affect the formation of costs for its production. During the sale, electricity has several prices, which indicates monopoly in the market and the existence of price discrimination. It is analyzed that price discrimination allows market participants to receive higher profits, but for the use of the price discrimination system several important conditions must be fulfilled: concentration of market power; the possibility of differentiation of counterparties; impossibility of resale of goods. It is investigated that the electricity market of Ukraine is characterized by discriminatory pricing of the third degree to a greater extent, and the second – to a lesser extent. It was found that price discrimination concerning producers is represented by different generation of electricity and different purchase prices: thermal, hydro, nuclear, block stations, RES (renewable energy sources). Regarding consumer discrimination, the most common is price discrimination based on day and night prices – this is due to the specifics of electricity generation and consumption – during the day the load on the network is greater due to business, at night consumption falls, but most power plants can not stop generation, therefore, they reduce it to a minimum and still have an excess of electricity. Different electricity tariffs for household and non-household consumers provoke cross-subsidization. Cross-subsidization in electricity is understood as price discrimination: electricity tariffs for industrial and commercial consumers are set above the marginal cost, and for households – lower, so the former are forced to overpay and subsidize the latter. There is a separate price discrimination based on geographical location: for the population living in the 30-kilometer zone of nuclear power stations, distribution of electricity is supplied at a rate of 70 percent of the current tariff for the specific group of population. The consequences of price discrimination are analyzed. High tariffs for businesses translate into higher costs for the production of goods and, consequently, higher wholesale and retail prices for consumers. The social effect of subsidizing the sale of electricity prices for the population is thus largely graded. In our opinion, a number of measures, which have been proposed, are aimed at demonopolizing the electricity market in Ukraine and reducing the level of price discrimination.