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Parliament passes energy market bill

Lawmakers changed the rules of its functioning.

Parliament passes energy market bill
Photo: Photo: Max Trebukhov

The Verkhovna Rada by 277 votes passed on Thursday morning a bill on the nation's electricity market.

The draft legislation aims to provide reliable and safe supply of electric energy to consumers taking into account their interests and minimizing the costs of supply services setting the organizational structure and principles of the functioning of the electricity market, and the fundamentals and prerequisites for its reform.

Currently, all the electricity that is produced in Ukraine is sold at a regulated price in the wholesale electricity market, operated by SE Energorynok. The energy is delivered to consumers through oblenergos, energy companies occupying a monopoly position in each region. According to a study by the Antimonopoly Committee, the current situation has led to the absence of price competition between electricity producers and its importers. They are not interested in competing for the consumer, which affects the price and quality of services.

The new legislation provides that manufacturers will sell their energy at different markets in different periods of time (the market of bilateral contracts, the day ahead market, the intra-day market, the balancing market, the market of ancillary services, etc). The price, therefore, will be set not by the national regulator but by the market while consumers will be able to choose "tariff packages".

The bill introduces the concept of a trader, a business entity engaged solely in the resale of electricity, except for the retail sale to consumers. The manufacturer, trader and electricity supplier cannot belong to the same owner.

The purpose of the bill is to create market conditions along the European model in the electricity sector. It is expected to allow Ukraine to integrate into the European energy grid instead of the Russian one, and remove the "manual" pricing for electricity and coal.

The reform of the electricity market is one Ukraine's commitment before Western partners.

The first reading of the bill was adopted in September 2016. On April 6, 2017, the parliament made the first attempt to approve it as a whole, but the votes were enough only to return it for a second reading.