: :inin Kyiv (EET)

Ukraine`s Verkhovna Rada votes to introduce competitive electricity market

Ukraine`s Verkhovna Rada has passed a bill on the electricity market, which foresees more competitive relations on the energy market, including the retail one where end consumers will be able to select a power supplier.

Respective bill No. 4493 passed second reading, having scored 277 MPs` votes with the required minimum being 226 votes.

The said bill was passed with amendments prepared by a sectorial committee, the amendments were voted as a package.

”The said draft law introduces market-oriented relations between all the subjects of Ukraine`s electricity market and the European community, starting from power generation and ending with consumption. The consumer is designated as a subject of the market, whereas now it can consume only what one supplier – a regional distribution company – can offer, while power rates are set non-transparently by the National Energy and Public Utilities Regulatory Commission,” member of the Rada`s fuel and energy committee Lev Pidlysetsky said while presenting the document.

Earlier, the Ukrainian parliament on April 6, 2017, sent the draft law on the electricity market for repeat second reading.

The adoption of the law is a mandatory condition for the disbursement of a third EUR 600 million tranche of the European Union`s macro-financial assistance to Ukraine.

The said document meets the requirements of the Third Energy Package and is in line with the current law on the functioning of the electricity market in Ukraine. The latter outlines the structure of the said market in general and foresees incorporation of the Ukrenergo company, which operates the country`s integrated power grids.

The said law foresees simultaneous operation of several markets, namely the market of bilateral contracts, a ”day-ahead” market, the intraday market, the balancing market, the ancillary services market, and the retail market.

On the bilateral market, electricity is purchased and sold under long-term and bilateral contracts concluded between power generators and consumers.

On the ”day-ahead” market, electricity is purchased by the ”day-ahead” market players in organized auctions by entering into respective agreements with operators.

The intraday market supplements the day-ahead market and helps secure the necessary balance between supply and demand.

Balancing refers to the situation after markets have closed (gate closure) in which a transmission system operator (TSO) acts to ensure that demand is equal to supply, in and near real time.

Ancillary services are functions which TSOs contract so that they can guarantee system security. These include black start capability (the ability to restart a grid following a blackout); frequency response (to maintain system frequency with automatic and very fast responses); fast reserve (which can provide additional energy when needed); the provision of reactive power and various other services.

Commenting on the adoption of the bill, Director of the Energy Community Secretariat Janez Kopac said it is expected to ”bring the country`s legal framework into compliance with the Third Energy Package and provides the starting point for the implementation of long-awaited reforms.”

”The Electricity Market Law, which was drafted with the support of the Energy Community Secretariat, will enable the establishment of a truly competitive electricity market for the benefit of Ukrainian energy consumers. The law will deregulate generation and supply prices and remove cross subsidies whilst protecting vulnerable energy consumers. Sustainable mechanisms for integration of renewable energy will be put in place and mechanisms for cross-border trade with neighboring countries will be improved. This will facilitate Ukraine`s integration into the pan-European energy market – one of the key objectives of the Energy Community Treaty,” he said on the same day.

In his words, the key to reaping these benefits is conditioned on the law`s effective implementation in practice.

”The Secretariat with support of the British government, and in cooperation with the Ukrainian authorities, prepared drafts of key pieces of secondary legislation, regulatory acts and market rules needed for the law`s smooth implementation. The Energy Community Secretariat is ready to further support Ukraine in this regard,” he said.


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