Changes in energy legislation: Electricity import

Author : Andriy Gerus

Source : 112 Ukraine

Last week, Ukrainian parliament made changes to energy legislation that made the electricity market a little more open and competitive
09:21, 24 September 2019

Open source

Last week, Ukrainian parliament has made changes to energy legislation that made the electricity market a little more open and competitive.

MPs removed the current restriction that the import of electricity from countries – non-members of the Energy Community can only be carried out to the “day ahead” market (bilateral agreements were banned).

Today, the electric power industry of Ukraine operates in the regime of two islands: the Burshtyn energy island and the United Energy System of Ukraine. UES of Ukraine is merged with Moldova, Belarus and Russia.

Moldova is scarce and sometimes takes electricity from Ukraine. There is no import from the Russian Federation, although formally it has long been allowed (and I think it will not appear in the future). But there is already import from Belarus - to our “day ahead” market.

The whole idea of changes is to allow deliveries from Belarus under bilateral agreements. Belarus already exports electricity to the Baltic countries and Ukraine.

Changes in legislation will affect the supply volumes insignificantly (possibly by 10% -15%), because today all available volumes are imported into Ukraine on the day-ahead basis, and this is about 300 MW (the total consumption of the Ukrainian energy sector is about 18 000 MW).

Who will be affected by such a law?

Energoatom gives 90% of its electricity to cover green tariffs and tariffs for the population. The remaining 10% is sold on the day-ahead market. It does not participate in the segment of bilateral agreements.

Thermal generation companies (DTEK, Centerenergo, Donbasenergo) sell up to 70% of their electricity under bilateral agreements. DTEK controls about 70% of the bilateral contract segment.

Everyone who wants to receive energy under bilateral agreements is now forced to buy only from these three companies. Now it will be possible to ask for Belarusian electricity. Obviously, some "non-monopolists" do not like this, because they will have to compete a little more.

But if our non-monopolist will reduce prices, then I am sure that all Ukrainian consumers will buy from them.

Related: How does Ukrainian electricity market work?

Each consumer (Kyivvodokanal, a chemical plant, a metallurgical plant or a bakery) gets a wide choice when buying electricity.

Today, there are some traders who buy electricity in Belarus, in particular, Naftogaz Ukraine. Now they will be able to sell it not only to the “day ahead” market, but also directly to their customers under bilateral agreements. This improves the functionality and liquidity of the market.

In approximately the same way, in 2005 the oil products market was demonopolized. Although, obviously, the Ukrainian oil refinery would like to ban the import of gasoline and diesel from Belarus.

This decision is also important now, in anticipation of the heating period, because our coal reserves in warehouses are almost 50% lower than a year ago. Why non-monopolists create tension in anticipation of cold weather - this is obvious question. But we should act despite this.

Thanks to all the colleagues who supported this decision. Also thanks to those who were against, this information is also useful and instructive for a correct understanding of the situation already at the start.

Thanks to all “the ideal factions and MPs” who selflessly struggle with the monopolists and oligarchs on Facebook, but can’t do this when voting in parliament.

This is just one small step to demonopolize the market; we are working on the following steps. But we will certainly fulfill election promises to demonopolize Ukrainian energy sector.

Related: President's Representative tells how to reduce price of electricity for Ukrainians by 20%

Система Orphus

If you find an error, highlight the desired text and press Ctrl + Enter, to tell about it

see more