Energy explained, how will it affect Ukraine’s law on electricity market

The adoption by the Verkhovna Rada on April 13 of the law “On electricity market” opens up opportunities for market development, growth of competition and investment, however, will take time and professional work on regulations to implement this potential, according to respondents resource “Energoinform” market participants.

“From the introduction of the electricity market will benefit every Ukrainian, because the consumer will be the main. He will be able to choose a supplier would receive a fair price and new quality of services”, – said the main advantages of the adopted act the Director General of the market’s biggest private energy holding DTEK, Maxim Timchenko.

In his view, a transparent European rules of the game will remove any speculation about the formation of coal prices, connection fees, or the role of the regulator.

“The market will be the key to the price regulator. It will allow Western companies to invest in Ukraine’s energy sector, introduce modern technologies and new standards of doing business”, – said Timchenko.

He pointed out that the new model will allow Ukraine to become energy-independent, energy-efficient country, which is consistent with the DTEK, which is more than 10 years developing the coal, gas, traditional and “green” energy.

The Director of the center for implementation of new market model of GP NAEK “Energoatom” Sergey bidyn among the advantages of the new law has indicated the rejection of the point cost imbalance, according to which “Energoatom” up to 2030 was forced to pay into the Fund. “The new law on electricity market we are completely free and work in all segments of the market. One year will support it “green” instead of the system operator, but it’s not scary,” – said the representative of “Energoatom”, which now accounts for about half of total electricity production in the country.

Bidyn suggested that by the autumn of 2017 will be prepared a package of amendments to the law together with the drafting of secondary normative acts.

“The devil, as they say, is in the details. We do not expect that there will be many (changes – Ed.) but we believe that they will,” said the Director of the center of “Energoatom” for the implementation of new market model.

In his opinion, at the initial stage, the appearance of competition among manufacturers is in question, as in the market production will remain the same players as before.
“And among suppliers competition definitely will, because it will leave the monopoly of power companies. I think the price will remain in the same limit. May increase by 10-15%”, – prognozirovanii.

Director of communications and international cooperation of the operator of the main lines of elektroperedacha “Ukrenergo” Mikhail BNO-Ayriyan called the adopted law is one of the most important decisions in the energy sector over the past few years along with the law “On gas market”.

“I think the importance of the law “On electricity market” even more, because today’s market is not a market at all: this market is a single buyer, where no one has the right choice – neither the seller nor the consumer,” – said the expert.

He recalled that during the recent work at the Ministry coordinated the preparation of this bill, which took four months, but then a year and a half it took for making it to the Parliament because of the enormous opposition from the oligarchic groups trying to preserve the status quo.

“It is clear that from the adoption of the law, the market itself will not appear on 100%. But clearly, we have cemented the Foundation. And it is important that everyone who needs to prepare the secondary legislation, it has developed and adopted. And the state has sustained its commitments in the context of the timing of the introduction of a new model of the market is 2019,” – said BNO-Ayriyan.

He predicted that by the end of 2017 – beginning of 2018 implementation of the law will affect “Ukrenergo”, as the company has large commitments in its secondary legislation.

“This is the code of the transmission system, and control system, the balancing market. In fact, the changes will not begin in two or three years, and, literally at the end of this and early next year”, – said the representative of the backbone operator.

In his opinion, this process will be difficult, because the new law requires the separation of energy companies, direct contracts for the sale of a market “day ahead”, which entails the reformatting of market players.

First Deputy head of the Ukrainian energy Assembly Yuriy sakva also drew attention to the importance of realizing the potential of the law through the adoption of transparent and credible regulations, however, pointed to two barriers: “as long as we do not eliminate cross-subsidies and do not repay debts, the implementation of the new market will be impossible.”

He added that the national Commission should give a detailed programme will be implemented such as the elimination of cross-subsidies and where the money comes from her.

“The results should appear in the next five to six years. If you are now in the transition period will be implemented the correct administrative decision and proper pricing policy, then we will have good chances of seeing results fast enough,” said Sakwa.

As pointed out earlier the energy Ministry, the main purpose of the law is to ensure reliable and safe supply of electricity to consumers based on their interests, minimize cost of service delivery by defining at the legislative level, the organizational structure and principles of functioning of the electricity market, the basic principles and prerequisites to reform it.

The law provides that the basic conditions of activities of market participants and the relationships between them are regulated by normative-legal acts regulating its implementation.

In particular, we are talking about the rules of the market, including the balancing market and ancillary services market “day ahead” and vnutrikletochnogo market. In addition, it is necessary to adopt codes of transmission system, distribution systems, commercial accounting rules and the supply of electric energy to consumers.

The adopted document, the Ministry also expands the list of participants of the market traders.

“The presence of traders should positively affect the liquidity of the market, will help to limit significant price fluctuations in the market”, – consider in the Ministry.

At the same time, the law introduces the system of special duties to ensure that the public interest in the operation of the market.

The document envisages the introduction of a certain period (up to 24 months from the date of entry into force), within which must be created the necessary technical, organizational, economic and legal preconditions for the implementation and smooth functioning of the electricity market.