Parliament

Two draft laws on certification of Ukrenergo according to the ISO model were registered:

Draft laws introduced by parliament members, with the participation of Andriy Gerus:

Draft Law on amendments to some laws of Ukraine in connection with the separation of activities for the transfer of electric energy (regarding the introduction of the ISO separation model) №3267 from 26.03.2020.

Later, the draft law on amendments to some laws of Ukraine (regarding the settlement of the crisis of non-payments in the electric energy market and certification of the transmission system operator) №3364 from 21.04.2020. This draft law expanded on the use of funds received by the Transmission System Operator from the distribution of interstate cross-section.

A draft law aimed at solving current problems in the field of energy has been registered:

Draft Law on Amendments to Section XVII “Final and Transitional Provisions” of the Law of Ukraine “On the Electricity Market” on Overcoming the Crisis State of Settlements Due to Coronavirus Disease (COVID-2019) №3388 from 24.04.2020, by Liudmyla Buimister.

The draft law proposes a mechanism for settlements of NPC “Ukrenergo” with a Guaranteed Buyer at the expense of revenues received by the transmission system operator as of May 1, 2020, from the allocation of interstate cross-section capacity.

The procedure for obtaining the European Commission’s conclusions on energy draft laws is published on Parliament’s site:

All draft laws, acts of the Cabinet of Ministers and other central executive bodies in the field of energy will undergo mandatory examination by the European Commission to confirm their compliance, according to updated Annex XXVII to the Association Agreement between the European Union and the European Atomic Energy Community and their Member States. If the draft laws do not comply with EU law, their adoption will, therefore, contravene Ukraine’s obligations under the Association Agreement.

President

President of Ukraine Volodymyr Zelenskyy signed the Laws:

–  “On Amending the Law of Ukraine “On the State Budget of Ukraine for 2020” № 553-ІХ, which the Verkhovna Rada supported at an extraordinary plenary meeting on April 13, 2020. According to the law, the Coronavirus Foundation in the amount of 64.7 billion UAH is being formed as part of the state budget. These funds will be directed to the top-priority areas of counteraction to the spread of COVID-19.

–  “On Amending Certain Legislative Acts of Ukraine with the Purpose of Preserving the Environment (Concerning Strengthening Responsibility for Actions aimed at Air Pollution and Destruction or Damage to Plant World Objects)” № 556-ІХ, which the Verkhovna Rada adopted at an extraordinary plenary meeting on April 13, 2020. In particular, the fine for air pollution increases from 1700-3400 UAH to 30 600 thousand – 51 000 UAH.

Government

An Economic Development Council of Ukraine was established:

To develop proposals and specific mechanisms of economic growth, to ensure the competitiveness of Ukrainian manufacturers and enterprises. The Council will be headed by the Prime Minister of Ukraine.

The New Head of the Minecoenergo has been appointed:

At the Government meeting on 16 of April 2020, Olga Buslavets was appointed First Deputy Minister (order of the CMU of 16.04.2020, №429-р). and the execution of the duties of the Minister of Energy and Environmental Protection of Ukraine was temporarily entrusted to the First Deputy Minister (order of the CMU of 16.04.2020, № 430-р).

Anti-crisis Energy Staff set up led by Prime Minister Denys Shmyhal, by the Cabinet of Ministers Resolution from 24.04.2020 р. № 312.

Ministry of Economy

Together with the UNICEF Office in Ukraine prepared the thematic issue of the Consensus forecast “Ukraine in 2020-2021: the consequences of the pandemic”:

The consensus forecast “Ukraine in 2020-2021: the consequences of the pandemic” was developed to highlight a consensus vision of future trends and to objectively assess the challenges facing both the global economy and the Ukrainian economy as a result of the global recession and the introduction of restrictive measures in Ukraine during the fight against the COVID-19 pandemic.

According to experts, Ukraine will show a deeper decline than the global economy, in 2020 – by 4.2%. In 2020, inflationary processes will accelerate to 7% against 4.1% (calculated from December to December of the previous year) in 2019. All elements of demand will be negative dynamics, but most will be a drop in investment, which will amount to 14.8%.

The greatest threat to the economic recovery in Ukraine, according to experts, is the prolonged continuation and strengthening of internal quarantine measures. Two factors shared the second place: (1) the lack of a clear anti-crisis plan of measures to support the economy and citizens during the pandemic and (2) the deep decline in economic activity in the countries – the main trading partners of Ukraine, in accordance with a significant deterioration in the situation on world commodity markets.

NEURC

NEURC approved the new regulation documents at the meeting on April 3, 2020:

– “Limitations Management Rules”, and new wording of “Cross-border intersections capacity allocation procedure”.

The Rules establish the procedure and requirements for limitations management, the procedure for the determination of the capacity allocation structure, the procedure for releasing information on cross-border capacity, etc. The new Cross-border intersections capacity allocation procedure determines the auctioning rules for cross-border intersections capacity allocation.

– Transmission System Development Plan for 2020-2029. According to the plan of Ukrenergo in the next 10 years, it plans the construction of 8 new substations, renovation of 102 active substations; construction of 3 thousand km of transmission lines 220-750 kV, renovation of over 1.5 thousand km of 220-330 kV power transmission lines. The implementation of such large-scale plans will require 69 billion UAH.

Resolution “On the actions of electricity market participants during the quarantine period and restrictive measures related to the spread of coronavirus disease (COVID-19)

The Resolution provides for the non-application of the administrative measures provided for by NEURC regulatory acts to electricity suppliers and distribution system operators in the event of late payment of their financial obligations to the transmission system operator; the organization of a number of measures by the electricity suppliers to ensure that consumers can be paid for electricity; taking temporary measures that, in their totality, will limit import operations from states that are not parties to the Energy Community.

Ukrenergo

Ukrenergo launches a new product in the Balancing Market:

On April 1, 2020, a new product began to operate on the balancing market – the “two-minute reserve”. Today, this product will be relevant mainly for hydropower plants and in the future for other highly maneuverable generation.

NEC “Ukrenergo” forwarded to NKREKP proposals for amendments to a number of regulatory documents on balancing renewable energy in the energy system, which was developed jointly with market participants and industry associations, including EUEA. Among those documents was a Methodology for calculating the amount of electricity that was not released by renewable energy producers as a result of a supervisory limitation.

NPC Ukrenergo has developed and introduced the Glossary of terms in use in the power industry legislation of Ukraine and Europe:

The Glossary will help all market participants and other interested parties quickly and easily find the definition of the term used in Ukrainian energy industry laws together with the corresponding definition from the ENTSO-E legal framework.

NPC “Ukrenergo” notes a violation by some electricity producers from renewable energy sources of their obligations to fulfill dispatch teams aimed at ensuring operational security of the country’s power system:

Ukrenergo asks NEURC to prevent unreasonable refusals of renewable energy operators to carry out dispatch commands, NEURC decided to conduct unscheduled inspections.

Ukrenergo’s tariff allows one to offset one-third of the refund to Guaranteed Buyer. Ukrenergo comments on the debt situation:

Funds in Ukrenergo’s 2020 electricity tariff intended for payment of the feed-in tariff allow offsetting only about 30% of the monthly needs of Guaranteed Buyer for fulfilling special obligations to RES producers: the transmission tariff provides for monthly expenditures for this purpose in the amount of UAH 700-800 million, while the invoices issued by Guaranteed Buyer to Ukrenergo amount to UAH 2-2.5 billion.

The situation is complicated by the low level of settlements of market participants for electricity transmission services under quarantine conditions: in January-March 2020, the level of payments by market participants for electricity transmission services of Ukrenergo amounted to 76%, and in March – it did not exceed 60%. As of today, the total debt of market participants for the transmission tariff amounts to UAH 2.4 billion (VAT included), including UAH 644.5 million – debt for the ІІ half of 2019.

Guaranteed Buyer

The Guaranteed Buyer appealed to the Regulator to facilitate the execution of Ukrenergo’s financial obligations to the company:

Guaranteed Buyer appealed to the NEURC to take measures to resolve the debt situation of  NPC Ukrenergo before the state-owned enterprise.

On April 15, 2020 partially paid off electricity producers from renewable sources (RES) for the first ten days of April. The payment was made using funds received from the sale of organized energy from renewable energy sources on organized markets. The total transfer amount amounted to 100 million UAH.

Recall that the Regulator provided the “Guaranteed Buyer” opportunity in its application on the Day-ahead market (DAM) to indicate a price no higher than the average weighted actual price for electric energy produced at nuclear power plants in April-May 2019, that is, the maximum the value for applications of the GB is the price at which the Energoatom sells the electricity to the Guaranteed Buyer to fulfill its obligations to ensure the availability of electric energy for the population – 566.7 UAH / MWh.

Energoatom

In May, Energoatom will limit the supply of electricity Guaranteed Buyer for debt:

Due to the violation of the terms of payment and the debt of the Guaranteed Buyer for electric energy (UAH 4.2 billion), from May 1, 2020, Energoatom limits 40% of the planned supply of electric energy Guaranteed Buyer during the delivery period 01.05.2020-31.05.2020, – it says in a letter to the Ministry and the Regulator.

Security Service of Ukraine

Addressed a letter to the Chairman of the Verkhovna Rada Dmytro Razumkov in which notes the existence of a threat to the energy security of the state through the destabilization of the functioning of the United Power System of Ukraine due to an increase in the share of renewable energy sources objects. To avoid the threat, it is proposed to accelerate the transition to a new RES support system, introducing liability for imbalances for renewable energy facilities and prohibiting the issuance of technical conditions for connecting renewable energy facilities to networks in places where this will impede the output of existing generating facilities, especially maneuvering.

Energy Community

Energy Community published its “COVID-19: Security of energy supply monitoring” report:

About Ukraine was stated: “Electricity supply, market functioning and cross-border trade on interconnections with EU Member States and Energy Community Contracting Parties are ensured. Due to the decrease in consumption, the import of electricity from Belarus and Russia was curtailed. A set of preventive measures to ensure continuity of service and protect dispatchers was defined by a special team for critical situations established by Ukrenergo. All planned maintenance works were delayed”.

EC Secretariat held a new live energy webinar series:

The Energy Community Secretariat held a series of free training webinars every week starting Thursday, April 16, 2020. The online conferences were attended by energy experts from the Secretariat, who discussed current energy issues, followed by questions with questions. The webinars have been recorded and will be published on the Energy Community website.

USAID Energy Security Project

Published it Report on Risks in the Electricity Market

USAID Energy Security Project published a Report on Risks in the Electricity Market, Emerging from the Implementation of Measures to Combat COVID-19, identified and prioritized a list of measures aimed at mitigating the negative impacts of recent events, as well as addressing some of the structural problematic issues that existed in the wake of the pandemic. Among such measures are reducing costs (slowing down or freezing investment programs of licensees), streamlining regulatory rules (payment algorithms), supporting the Guaranteed Buyer, and making changes to the PSO.

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