{"id":736,"date":"2019-06-19T13:33:14","date_gmt":"2019-06-19T13:33:14","guid":{"rendered":"http:\/\/project6.webctemp.com\/?p=736"},"modified":"2019-12-05T19:29:46","modified_gmt":"2019-12-05T19:29:46","slug":"alert-president-asks-the-parliament-to-postpone-the-launch-of-a-new-electricity-market-model","status":"publish","type":"post","link":"https:\/\/hillmont.com\/ua\/publ\/alerts\/alert-president-asks-the-parliament-to-postpone-the-launch-of-a-new-electricity-market-model","title":{"rendered":"\u041b\u0415\u0420\u0422: \u041d\u043e\u0432\u0438\u043d\u0438 \u0437\u0430\u043a\u043e\u043d\u043e\u0434\u0430\u0432\u0441\u0442\u0432\u0430: \u041f\u0440\u0435\u0437\u0438\u0434\u0435\u043d\u0442 \u043f\u0440\u043e\u0441\u0438\u0442\u044c \u043f\u0430\u0440\u043b\u0430\u043c\u0435\u043d\u0442 \u0432\u0456\u0434\u043a\u043b\u0430\u0441\u0442\u0438 \u0437\u0430\u043f\u0443\u0441\u043a \u043d\u043e\u0432\u043e\u0457 \u043c\u043e\u0434\u0435\u043b\u0456 \u0440\u0438\u043d\u043a\u0443 \u0435\u043b\u0435\u043a\u0442\u0440\u043e\u0435\u043d\u0435\u0440\u0433\u0456\u0457"},"content":{"rendered":"<p>On June 10, 2019, the President of Ukraine submitted to the Parliament Draft\u00a0Law No. 10376 (<strong>\u201cDraft Law\u201d<\/strong>) on amending the Law of Ukraine \u201cOn the Electricity\u00a0Market\u201d.<!--more--> The Draft Law provides for the postponement of the new electricity\u00a0market model envisaged in the Law for one year, until July 1, 2020.<\/p>\n<p>The President filed the Draft Law with the status of an \u201curgent draft\u201d. Urgent\u00a0drafts must be considered by the Parliament via an expedited procedure: up to\u00a030 days of preliminary consideration, followed by discussion and voting in\u00a0Parliament.<\/p>\n<p>The President argues that the energy sector of Ukraine is not ready to move to\u00a0the new electricity market model. Moreover, the new model may result in a sharp\u00a0increase in tariffs for citizens and businesses.<\/p>\n<p><strong>Background<\/strong><br \/>\nAs of today, electricity prices in Ukraine are determined by resolution of the\u00a0National Energy and Utilities Regulatory Commission (<strong>\u201cNEURC\u201d<\/strong>). NEURC has\u00a0been accused of establishing tariffs that favour electricity sellers to the detriment\u00a0of consumers and of favouring some sellers to the detriment of other sellers.<\/p>\n<p>In 2017, the Ukrainian Parliament adopted the Law \u201cOn the Electricity Market\u201d,\u00a0which provided for a new model, essentially a self-regulating market system of\u00a0interaction of electricity generators, transporters and consumers. According to\u00a0the Law, the new model of the Electricity Market had to enter into operation\u00a0starting July 1, 2019.<\/p>\n<p><strong>Reasoning and proposals of the Draft Law<\/strong><br \/>\nThe introduction of the new electricity market model in Ukraine, which is currently scheduled for July 1, 2019,\u00a0has been subject to a heated debate recently. The President appears to share critics\u2019 view of the proposed\u00a0introduction of the new model.<\/p>\n<p>In particular, the explanatory note to the Draft Law states that:<\/p>\n<ul>\n<li>some of the regulatory acts required for operation of the electricity market have not been yet adopted\u00a0(and may be not ready by July 1, 2019);<\/li>\n<li>market participants do not have the appropriately tested software to operate under the new model;<\/li>\n<li>the Guaranteed Purchaser \u2013 a special state-owned company that is responsible for purchasing all energy\u00a0from renewable sources at guaranteed feed-in tariffs &#8211; has not been established yet (please see <span style=\"text-decoration: underline;\">our\u00a0previous update<\/span> for details on the changes in renewable energy regulation).<\/li>\n<\/ul>\n<p>The President\u2019s Draft Law proposes to run a limited experimental operation of the new model to test the\u00a0system. This \u201ctest mode\u201d shall begin on September 1, 2019, and run until the date of introduction of the new\u00a0electricity market model on July 1, 2020. According to the Draft Law, the rules of the experimental operation\u00a0of the new model, according to the Draft Law, have to be approved by August 1, 2019. The testing of the\u00a0Electricity Market would allow the gathering of statistical information to estimate the maximum price for\u00a0electricity and to identify deficiencies in the market.<\/p>\n<p><strong>Perspectives of the Draft Law<\/strong><br \/>\nThe new President, who has just taken office, has been in conflict with Parliament and, to a considerable\u00a0extent, with the Parliament-appointed Cabinet of Ministers. The launch of the new electricity market model\u00a0on July 1, 2019 has been defended, inter alia, by the current Prime Minister. Furthermore, Members of\u00a0Parliament are mostly preoccupied with the parliamentary election campaign, which started a few weeks ago.\u00a0For these reasons, the President\u2019s Draft Law is unlikely to be passed prior to the formation of the new\u00a0Parliament.<\/p>\n<p>Both the EBRD and the World Bank have stated that Ukraine is not ready to launch the new electricity market\u00a0model and have both joined calls to postpone its introduction. Taking into account that the President\u2019s\u00a0initiative is unlikely to be passed by Parliament, it seems that from July 1, 2019 there is a significant chance\u00a0that the electricity market will be affected by teething problems that may ultimately be felt by consumers.<\/p>\n<p>For example, today the electricity market is highly monopolized with more than 75% of the belonging to only\u00a0two participants \u2013 SE \u201cEnergoatom\u201d and DTEK group of companies. Introducing power auctions in such an\u00a0environment is unlikely to allow competition to thrive, and in fact may lead to the reverse. Furthermore, the\u00a0technical state of the grid means that changes in consumption habits or supply, which a new model is likely to\u00a0create, may lead to power outages if corrective measures are not quickly put in place.<\/p>\n<p><strong><em>Disclaimer<\/em><\/strong><br \/>\n<em>Our views and recommendations are based on information obtained from, or are based upon public information\u00a0sources that we consider to be reliable but for the completeness and accuracy of which we assume no liability. All\u00a0estimates and opinions included in the report represent the independent judgment of the analysts as of the date\u00a0of the issue. We reserve the right to modify the views expressed herein at any time without notice. Moreover, we\u00a0reserve the right not to update this information or to discontinue it altogether without notice.\u00a0<\/em><br \/>\n<em>This information is given without any warranty on an &#8220;as is&#8221; basis and should not be regarded as a substitute for\u00a0obtaining individual advice.<\/em><br \/>\n<em>Neither Hillmont Partners, nor any of their respective directors, officers or employees nor any other person accepts\u00a0any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document\u00a0or its contents or otherwise arising in connection therewith.<\/em><br \/>\n<em>This analysis is being distributed by electronic and ordinary mail to professionals, who are expected to make their\u00a0own decisions without undue reliance on this publication, and may not be redistributed, reproduced or published\u00a0in whole or in part for any purpose.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>On June 10, 2019, the President of Ukraine submitted to the Parliament Draft\u00a0Law No. 10376 (\u201cDraft Law\u201d) on amending the Law of Ukraine \u201cOn the Electricity\u00a0Market\u201d.<\/p>\n","protected":false},"author":5,"featured_media":1377,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false},"categories":[29,31],"tags":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/hillmont.com\/ua\/wp-json\/wp\/v2\/posts\/736"}],"collection":[{"href":"https:\/\/hillmont.com\/ua\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hillmont.com\/ua\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hillmont.com\/ua\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/hillmont.com\/ua\/wp-json\/wp\/v2\/comments?post=736"}],"version-history":[{"count":5,"href":"https:\/\/hillmont.com\/ua\/wp-json\/wp\/v2\/posts\/736\/revisions"}],"predecessor-version":[{"id":1031,"href":"https:\/\/hillmont.com\/ua\/wp-json\/wp\/v2\/posts\/736\/revisions\/1031"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/hillmont.com\/ua\/wp-json\/wp\/v2\/media\/1377"}],"wp:attachment":[{"href":"https:\/\/hillmont.com\/ua\/wp-json\/wp\/v2\/media?parent=736"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hillmont.com\/ua\/wp-json\/wp\/v2\/categories?post=736"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hillmont.com\/ua\/wp-json\/wp\/v2\/tags?post=736"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}