On October 7, the NEURC adopted a preliminary decision on the certification of NPC Ukrenergo as a Transmission System Operator (GSP). It confirms the TSO’s overall compliance with the requirements for unbundling and independence.
The final decision on NPC Ukrenergo’s certification, however, will be issued after implementing certain corrective measures and obtaining the opinion of the Energy Community Secretariat. The central measure to be undertaken should address the ownership of the transmission system assets on a legislative level.
According to the NEURC member Oleksandr Formahei, the Regulator has already requested the Cabinet of Ministers and the Ministry of Energy and Environmental Protection to make appropriate amendments to the current law to allow Ukrenergo to be certified as an independent TSO.
So far, the NEURC confirms that Ukrenergo complies with the requirements for unbundling of transmission activities from generation and supply, including in terms of the TSO management, decision-making and functions. Unbundling was completed when Ukrenergo was transferred from the Ministry of Energy and Coal Industry that also had governance over large electricity producers SE NNEGC Energoatom and PrJSC Ukrhydroenergo, to the Ministry of Finance. Ukrenergo also conducted a corporatisation procedure that resulted in the company being transformed into a private joint-stock company with 100% stock owned by the state.
However, Ukrenergo currently owns the transmission system assets under the right of economic control, while the Law on the Electricity Market of Ukraine stipulates that sole the owner of the transmission system can be a transmission system operator. The NEURC Decree also points to a number of items that should be excluded from the Company’s Charter, because under the new model of the electricity market these are not the TSO’s functions, rights and duties.
“The requirement for the certification of a transmission system operator is mandated, first and foremost, by the Law of Ukraine “On the Electricity Market”. Without certification, it is impossible to implement EU Directive 2009/72 into the Ukrainian law and fulfill Ukraine’s international commitments. The TSO certification will give an unequivocal signal that Ukraine is fulfilling its commitments in the energy sector, and that Ukrenergo is a company that operates in full compliance with EU Directives”, said Maksym Yurkov, Ukrenergo’s board member.
“The preliminary decision on the certification of a TSO is the first step to integrate the Ukrainian electricity market into the EU markets and create an independent transmission system operator”, Oksana Kryvenko, the NEURC chairman, noted.
NPC Ukrenergo submitted the package of documents for certification to the NEURC on August 14, 2019, having previously done everything necessary to fulfill the mandatory certification conditions – corporatisation and unbundling (transfer of the company to a different governance body to avoid the conflict of interest).