10:06 05.07.2021

NEURC sets lower price cap on DAM of UAH 734 per MWh, limits electricity purchase-sale within one VIC to 50%

3 min read
NEURC sets lower price cap on DAM of UAH 734 per MWh, limits electricity purchase-sale within one VIC to 50%

The National Energy and Utilities Regulatory Commission (NEURC) has set the lower price cap on the day-ahead market (DAM) at UAH 734.9 per MWh until July 8 inclusive and set a limit on the sale electricity under bilateral agreements within one vertically integrated company (VIC) in 50% of the monthly sales volume.

The regulator made this decision at an urgent meeting on Sunday evening in response to a sharp drop in the price of the day-ahead market, which lasted from July 2 to July 4.

In addition, the regulator obliged the distribution system operator and the transmission system operator to buy all electricity for their engineering costs for DAM, and also started the process of investigating the market situation.

"For the first time we are going so late, especially on Sunday, but we must urgently react to the situation and act. First, we are starting an investigation of what happened at DAM. We must study all aspects of this, including suspicious DTEK generation auctions and all subsequent actions on June 29," Head of NEURC Valeriy Tarasiuk said at the meeting.

According to him, the commission will use the right granted to it by legislation to restrict the purchase and sale of electricity within the framework of one vertically integrated company 50%.

"Why is understandable. Since it was trading within the same group that led to the market decline. At least, this was the main reason," the head of the regulator said.

Regarding the obligation of the distribution and transmission system operators to buy electricity for their losses on DAM, Tarasiuk said this is the right of the regulator, and it uses it to fill DAM with liquidity.

"We oblige them to the maximum. Not 100%, but 95%, we leave the rest for balancing. But in fact, all losses will be purchased at DAM," he said.

According to him, the bilateral agreements that have already been made by the operators must be terminated if no penalties follow. In parallel with this, NEURC will "sooner or later" check all operators so that there is no abuse.

"But I think they will cooperate with us," the regulator's head said.

"And fourth, as an emergency action, we set the lower price cap on the DAM at the level of Energoatom's tariff multiplied by the genrators' price index until Thursday [July 8] inclusive. This is not a market action, but a forced one, we actually set the lower price cap is at the level of the cost price of Energoatom," Tarasiuk said.

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