Electricity exchange trade can be introduced for all participants of electricity market in Ukraine

Electricity exchange trade can be introduced for all participants of electricity market in Ukraine

On 12 March 2019, in order to develop competition and transparent pricing of electricity, the Anti-Monopoly Committee of Ukraine appealed to the Ministry of Energy and Coal Mining of Ukraine with a proposal to develop a draft resolution regarding the introduction of electricity exchange trade with the possibility of selling electricity on the exchange not only for enterprises whose state share in the authorized capital is at least 50%, but also for other participants of the electricity market, and to submit the draft resolution for approval to the Cabinet of Ministers of Ukraine.

 In its proposal, the competition authority notes the need for organizing electricity trading on a single electronic platform, by small lots, in compliance with the principle of anonymity, with the possibility to participate in electronic exchange trading for non-state enterprises and foreign traders.

Taking into account the best European practices, exchange trade will be able to create a competitive environment in the market, eliminate displays of price discrimination, monopoly pressure and shadow schemes of market transactions.

Thus, if the Cabinet of Ministers of Ukraine adopts the relevant legislative act regarding the introduction of exchange trading in the bilateral agreement market, the price for electricity in the bilateral agreement market will be market price, i.e. the price developed under the conditions of free competition.

Note that from 1 July 2019, a new model of the electricity market based on competition and transparency in the electricity pricing will take effect in Ukraine. In the new market model, electricity shall be traded under bilateral agreements and in the generated market segments. The Law of Ukraine “On Electricity Market” stipulates the right of market participants to freely choose counterparties under bilateral agreements, to enter into these agreements in any form on the conditions determined by agreement of the parties, taking into account restrictions set by law. At the same time, in order to ensure openness and transparency of transactions in the market of bilateral agreements, electronic auctions shall be conducted with the participation of electricity producers with the state share in the authorized capital of at least 50%. On the other hand, the Law does not introduce exchange trading of electricity in the bilateral agreement market for other electricity producers that do not have a state share in the authorized capital. However, in order to ensure real competition in the bilateral agreement market, equal access to exchange trading of electricity should be provided to all electricity producers, regardless of their form of ownership.