21:20 30.05.2024


REMIT Implementation Will Help Develop Ukrainian Energy Markets and Attract Investments

4 min read
REMIT Implementation Will Help Develop Ukrainian Energy Markets and Attract Investments

Valerii Tarasiuk, Chairman of the National Energy and Utilities Regulatory Commission (NEURC)

European Energy Integration

Ukraine is actively working to strengthen its energy security by aligning its energy system with the EU.

Harmonizing Ukraine's energy legislation with European best practices ensures the electricity and gas markets participants operate equally under clear rules of the game, resulting in a level playing field for all. A level playing field will, in turn, foster competition and create favorable conditions for innovation and investment, which consequently will have a positive impact on the end consumers.

European energy integration also means expanding the opportunities for market participants to buy and sell electricity and natural gas with the energy systems of European countries, in addition to ensuring the exchange and/or sharing of reserves. This is a significant contribution to ensuring the balance reliability and flexibility of Ukraine's energy systems. 

Key Tasks of NEURC as the Energy Markets Regulator

First, is the creating the necessary regulatory environment for integrating Ukraine's electricity and gas markets with those in Europe by adapting Ukrainian legislation to European standards and requirements.

Second, NEURC implements these regulations by ensuring compliance, monitoring, and control mechanisms based on European requirements and best practices.

The Regulator's most important functions are in-depth monitoring of the behavior of wholesale energy market participants, rapid identification of market participants' misconduct, prompt response, and appropriate follow-up actions.

REMIT is about Integrity and Transparency.

REMIT (the EU Regulation on Wholesale Energy Market Integrity and Transparency) is a set of rules that strengthen transparency in the energy market by preventing price manipulation and holding energy actors responsible for misconduct.

The purpose of REMIT is to prevent manipulation and using insider information to obtain illegal profits and foster competitive prices. REMIT is about the integrity, transparency, and trust of consumers, buyers, and sellers in the electricity and natural gas markets. 

How REMIT Implementation Will Change Ukrainian Energy Markets.

REMIT Implementation is essential for honest energy actors and investors in Ukraine. Without robust and transparent regulation, manipulative actors have unjust advantages. Secondly, Ukraine needs to implement REMIT because it is one of our key EU Integration commitments, facilitating further integration and coupling of the Ukrainian wholesale energy market with the EU energy market.

Ukraine, as a party to the Energy Community, has implemented Regulation 1227/2011 of the European Parliament and of the Council of October 25, 2011, on wholesale energy market integrity and transparency in its adapted version. The first step has been taken: the Law of Ukraine, "On Amendments to Certain Laws of Ukraine on Prevention of Abuse in Wholesale Energy Markets," was adopted and entered into force on July 2, 2023.

With the full implementation of REMIT, we expect positive changes in the Ukrainian energy markets. These changes will make it possible to ensure a high level of transparency in energy markets, facilitate the timely detection and, most importantly, prevention of potential abuses, and contribute to increased trust in market participants through clear rules that will encourage proper behavior and work to improve the level of integrity. 

Phased Implementation

The Law of Ukraine, "On Amendments to Certain Laws of Ukraine on Prevention of Abuse in Wholesale Energy Markets," provides for a phased implementation of its provisions, lasting until January 2, 2025. However, given the challenges posed by the war, we do not rule out the need to revise the timeframe for implementing certain provisions of the Law.

The Regulator has already taken some steps. The first step is to draft the main regulatory acts and amend the existing ones as the basis for implementing the Law’s requirements. NEURC has already approved regulations based on the relevant European legislation, guidelines, and practices. 

The next step involves launching and operating insider information publication platforms and functioning data transfer administrators under the procedures approved by NEURC. The last step envisages an effective monitoring system, which will, in particular, allow for the rapid identification of a market participant's manipulative behavior and the misuse of insider information. The implementation of REMIT II should be the next step, which can be carried out in parallel with the above steps.  

REMIT and Consumers

The implementation of REMIT is intended to ensure transparency and predictability of prices in the wholesale energy market, strengthening measures to combat and prevent market manipulation so that consumers can fully benefit from energy trade (buy gas and electricity at prices set by market competition). Ukraine's European energy integration strengthens the EU Commission's work on protecting consumers and improving the service quality of gas and electricity markets. This work helps ensure average Ukrainians can access more reliable, affordable, and secure gas and electricity for years.