New Ukrainian Electricity Market Law now in force

Ukraine economy, business in Ukraine: New Ukrainian Electricity Market Law now in force

The #Ukrainian #Parliament has recently adopted a new #Electricity #Market #Law #drafted on the basis of the #EU #Directive 2009/72/EC. The Law, inter alia, provides for the #reorganization of the #electricity #market #structure and the #dissolution of old #monopolies.

Visit our website if you are interested in the #Ukrainian_economy or #doing_business in Ukraine.Visit our website if you are interested in the #Ukrainian_economy or #doing_business in Ukraine.

Ukraine has taken an important step towards establishing a competitive energy market: the Ukrainian Parliament (the Verkhovna Rada) passed the draft law No. 4493 “On the Electricity Market of Ukraine”. The Law was signed by President Petro Poroshenko on 8 June 2017, and entered into force on 11 June 2017. The Electricity Market Law is especially important in the light of the fact that it was drafted on the basis of the EU Directive 2009/72/EC. The Law applies a new approach to the generation and distribution of electricity, introduces new market participants and a new procedure for setting tariffs.

On 22 September 2016, the Verkhovna Rada adopted the draft law “On the Electricity Market of Ukraine” in the first reading. For the second reading, the respective Parliament committee proposed about 1,200 amendments. On 13 April 2017, the Law was finally adopted with 277 votes in favour.

The new electricity market law provides for the introduction of a new electricity market structure which significantly differs from the old one. The electricity market structure is being redesigned in order to dissolve the old monopolies. The new electricity market model introduced by the Law, unlike the old one, focuses on the free formation of market prices. The old model of the “electricity pool” had only two market segments: wholesale and retail. The wholesale market in which the entire electricity generated in Ukraine was sold used to be dominated by one state-owned company. In the retail sector, on the other hand, regional monopolies had a dominant position. The new electricity market model, in contrast, comprises five new segments: a market for bilateral sale contracts with market participants (commercial consumers), a day-ahead market, an intraday market, a balancing market and a market of ancillary services.

However, the implementation of the new electricity market model will follow a transitional period of two years during which Ukraine has to take all necessary preparatory measures.

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