Ukrainians Will Not See Increases in Utility Rates Until 2026

Until the end of 2023, there are no plans to increase utility rates in Ukraine. However, a review of housing and communal services prices may occur in 2026 due to the challenging situation in the energy sector and the need to reduce the budget deficit. This is stated in the April inflation report of the National Bank of Ukraine (NBU).

This is reported by AgroReview

Prospects for Rate Adjustments and Their Impact on the Economy

The document notes that the timelines and specific parameters for adjusting rates remain uncertain at this time. At the same time, this anticipated rate reset creates risks for the country’s inflation forecast. The NBU predicts that in 2023, gas, heating, and hot water rates will remain unchanged, but gradual adjustments may occur in the following years.

“It is expected that the current rates for gas, heating, and hot water supply will not be reviewed this year. However, the difficult state of the energy sector and fiscal consolidation are likely to lead to gradual adjustments in the coming years. In particular, the beginning of aligning rates with economically justified levels is expected from 2026,” emphasize the authors of the report.

Consequences of Delaying Rate Increases

At the same time, postponing the review of rates may lead to a decrease in inflation indicators, but it will simultaneously worsen the financial condition of state energy companies. This, in turn, will contribute to increased risks of instability in the energy market, deteriorating the investment climate in the sector and merely delaying price pressure in the future.

“Conversely, a sufficiently rapid and significant increase in energy prices to eliminate imbalances in the energy sector will intensify inflationary pressure during that period and necessitate an increase in subsidies for the population,” the NBU emphasizes.

According to the State Statistics Service of Ukraine, as of March 2023, utility rates have risen overall by 20.2% over the year. The most significant increase was observed in the electricity sector – by 63.6%. Prices also increased for:

• services for managing apartment buildings – by 19.1%;
• waste collection services – by 10.7%;
• housing maintenance and repairs – by 3.2%;
• water supply – by 0.7%;
• sewerage – by 0.6%.

Prices for natural gas, hot water, and heating remained unchanged.