The launch of the new electricity market on July 1, 2019 could create significant risks for consumers.
At the same time, delaying the launch of the market may lead to complete discarding of the reform and does not guarantee the appropriate decisions would be adopted at a later period.
This was stated by Vsevolod Kovalchuk, CEO of Ukrenergo, at the press conference in Kyiv. He stressed that Ukrenergo is currently fulfilling all requirements of the law regulating the reform implementation, and on July 1, the company will be ready to work in the new market environment, but will also be ready to decide on the transfer of the start of the operation of the new market on any other date.
Key risks are the low competition due to the high concentration of electricity producers, which may lead to an uncontrolled increase in electricity prices in the absence of adequate consumer protection, as well as the lack of a well-established system for the presentation of reliable commercial metering data from distribution system operators.
“In Ukraine, 76% of electricity is generated by only two producers (55% NNPC Energoatom and 21% DTEK). At the same time there is no import of electricity able to create competition for national producers, and the new market model does not yet provide any direct effective safeguards that could affect producers with a significant share in the market. Yet, these problems are the result of an outdated model that has been working in the power industry for the last 20 years. Therefore, it is important not only to introduce the market, but do it properly, taking into account all the risks and nuances brought to light while preparing for the launch”, Vsevolod Kovalchuk noted.
Another issue is failure to adopt all necessary regulations and measures that will enable the introduction of the new electricity market from July 1, 2019. For example, there is still no complete list of regulations for the launch of the ancillary services market. Also, for half a year, the problem of blocking payments for software developers for the balancing market and the market of ancillary services remains unresolved.
Taking into account that little time is left until the planned launch of the new market model on July 1, 2019, there, Ukrenergo proposes to consider and analyse three scenarios for possible developments lively discussed today by experts and participants of the electricity market. The first one is to launch the market in accordance with the Law of Ukraine On the Electricity Market on July 1, 2019, the second one – to postpone the launch to October 1, 2019, and the third – with the start date of April 1, 2020.
“Each scenario has its own specific risks, which are clearly identified by us and other colleagues. There are specific mechanisms for minimising or eliminating them, we have discussed them today. In any case, the decision to launch the new market from July 1, 2019 will be made by the Government and the NEURC, and, should the launch date be postponed – by the Parliament. In any of the above scenarios you need a coordinated effort by all key stakeholders without exception. Without properly prepared and approved decisions, there is a high probability that in the market will not be sufficiently competitive, which means that the consumer will keep facing all the issues in the new market on his own,” Kovalchuk summarised.
You can get the presentation at the link.