19:44 02.01.2014

Energy market liberalization law takes effect from January 1

The law on the functioning of the electricity market of Ukraine, which foresees the liberalization of the country's wholesale electricity market, took effect on January 1, 2014.

The law was passed in parliament on October 24, 2013; it was published the government's Uriadovy Kurier newspaper on December 18, 2013.

Some clauses of the law will take effect after January 1, 2014.

Before the law became effective, Ukraine had an energy market with a single buyer, while the new law foresees the introduction of a model of direct contracts, a market of contracts "for the next day" and a balancing market, which will enable imbalances in electricity production to be corrected. It also assumes the creation of a market of additional services for the purchase of flexible capacities.

The most contentious issue in the law is the creation of a fund to regulate cost imbalances and its filling exclusively at the expense of funds from nuclear and hydroelectric power plants.

According to representatives of the nuclear industry, the main function of the fund will be receiving funds from energy generating companies that are owned by the state (nuclear, hydro and pumped storage hydro power plants) for their further use to cover losses of thermal generation, which is mainly privately owned, as well as guaranteed suppliers.

Payments for electricity sold at feed-in tariffs will be carried out through the fund, and the losses of guaranteed suppliers will be reimbursed from the sale of electricity to consumers at regulated rates and charges from the purchase of electricity generated by combined heat and power plants and other stations with a combined production of electricity at regulated prices, and its sale at market prices.

The authors of the document are Members of Parliament Ihor Hluschenko and Mykola Martynenko.

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