Yuriy Katser, Senior Counsel, Head of Legal Services, KPMG in Ukraine, dedicated his speech to the innovation in the market of electric power, introduced by the new Law of Ukraine "On the Electricity Market", adopted within the framework of the reform of the energy sector.
Yuri Katser noted during the forum that in accordance with the new Law of Ukraine "On the Electricity Market", the wholesale electricity market will gradually cease its operation. From July 1, 2019, instead of the wholesale market, the market of bilateral agreements, the market "for the day ahead", the intra-day market, the balancing market, and the market of auxiliary services will be organized.
Also, new "unbundling" schemes for the Ukrainian market, certification of the electricity transmission operator, and regulation of supply and demand imbalances will be introduced.
In addition, the new law introduces significant changes in liability (fines, suspension / cancellation of licenses) for major players in the market. For example, for operators of a distribution / transmission system, a vertically integrated entity, a penalty of up to 10% of their annual income may be imposed for non-compliance with the requirements of "unbundling".
Yuri dwelled separately on the mechanism of "unbundling" for distribution / transmission system operators, which by December 2018 are obliged to stop their production activities, electricity supply and have to conform to the requirements of separation and independence, as well as these requirements, if such operators are part of a vertically integrated entity.
Yuri noted that the independence of such players in the market is ensured by prohibiting top management to occupy similar positions in other power companies, to receive material and other rewards from such enterprises, etc. In addition, in order to enforce "unbundling" conditions, such companies are required to accept the program's compliance and to have the responsible person for their execution.
© 2017 KPMG-Ukraine Ltd., a company incorporated under the Laws of Ukraine, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.