Legislative initiatives impacting RES producers

for 1 April – 15 April 2021: https://cutt.ly/Xb9zM9P

for 15 April – 10 May 2021: IMEPOWER Legal Monitoring 15 April_10 May_2021_eng

The Verkhovna Rada of Ukraine

Adopted laws, others instruments of the VRU

On 29 April 2021, the Verkhovna Rada of Ukraine adopted the Resolution “On appealing to the Cabinet of Ministers of Ukraine to take urgent measures to reduce the price of electricity for household consumers who permanently reside in the 30-kilometer zone of nuclear power plants”. Draft Resolution was registered with No. 5382.

The Resolution contains the recommendations to the Cabinet of Ministers of Ukraine to promptly set fixed price (tariff) of electricity for household consumers who permanently reside in the 30-kilometer zone of nuclear power plants at the level of 70% of constant set tariff for the respective population group.

The legislator provided no sources to cover the losses of electricity suppliers resulting from supply of electricity based on preferential terms.

On 28 April 2021, the Law of Ukraine “On Amendments to the Land Code of Ukraine and Other Legislative Acts to Improve the System of Management and Deregulation in the Sphere of Land Relations” was adopted. Draft Law was registered with No. 2194.

According to the authors, the Law was drafted and adopted in order to reform the management system in the land sector and to remove artificial restrictions on economic activity and simplify access to land resources for private individuals and legal entities, to cancel redundant permits and duplicate procedures, in order to eliminate bribery and corruption risks.

In particular, the Law:

  • specifies reallocation of state and communal lands. State-owned lands outside settlements (except for lands that the state needs to perform its functions) are transferred to the communal property of village, settlement, and city councils.

Transfer of land plots from state property to communal property is not a ground for termination of the lease right and other proprietary rights derived from the ownership right to such land plots. No amendments shall be introduced to agreements on lease, superficies, emphyteusis, land easements indicating a new body.

Issued before the effective date of the Law, permits for land management documentation for state-owned land plots (becoming communal property in accordance with this clause) remain valid.

  • authorizes local self-government bodies to approve plans for detailed planning of the territory outside settlements;
  • simplifies the procedures for changing the designated purpose of privately owned land;
  • simplifies the procedure for the transfer of rights under land easements (rights and obligations of the person in whose favor the land easement is created) within alienation of facilities of energy generation, electricity transmission, for the placement of which a land easement is created;
  • the Land Code of Ukraine is altered with the provision that linear energy infrastructure facilities may be located on land plots of all categories without changing their designated purpose, including easement agreements (similar to the current provision of the Law of Ukraine “On energy lands and the legal regime of special zones of energy facilities”);
  • simplifies the procedure for removing and transferring the soil cover of land plots. It is not necessary to obtain a special permit for soil removal as it is based on detail land development design drafted in accordance with the procedure established by the laws;
  • abolishes the institutes of state examination of land management documentation and agrochemical certification of lands;
  • ensures transition to drafting of land development documentation and technical documentation for land valuation in electronic form and certification with electronic digital signature of the author;
  • simplifies access to the State Fund for Land Management and Land Valuation Documentation, in compliance with the legislation on personal data protection;
  • strengthens administrative liability for violations of legislation in the field of land relations;
  • introduces termination of the right to use land plots used in violation of land laws in court (in current version, it is upon decision of the authorized body);
  • other changes.

As of 12 May 2021, the Law has not been signed by the Chairman of the VRU. The VRU registered 12 draft resolutions repealing the decision of the Verkhovna Rada of Ukraine on the adoption of this Law. Therefore, signing of the law shall not be expected before the VRU adopts a separate decision (decisions) concerning these draft resolutions.

Main Legal Department of the VRU submitted a number of comments on the Law within its preparation for the second repeated reading. Among others, there were identified the provisions of the Law that do not comply with the Constitution of Ukraine, the laws of Ukraine and do not take into account the legal opinions of the Constitutional Court of Ukraine. Given this fact, as well as the negative attitude of some political forces to the Law, a group of MPs may appeal to the Constitutional Court of Ukraine to declare the provisions of the Law unconstitutional.

Registered draft laws

On 28 April 2021, the draft Law with No. 5436 was registered on Amendments to the Laws of Ukraine to the issue of introduction of energy storage systems.

Draft Law offers the amendments to the Law of Ukraine “On the Electricity Market”, “On the National Energy and Utilities Regulatory Commission” in terms of the following:

  • introduction of definitions of new terms, i.e., “energy storage systems”, “energy storage” and “energy storage operator”;
  • assignment of a new participant of the electricity market (energy storage operator) and its rights and responsibilities;
  • setting requirements for energy storage operators to obtain a license to conduct energy storage activities and identification of cases for which license is not required;
  • setting restrictions for combining licensed activities of the energy storage operator with the activities of the guaranteed buyer, market operator, transmission system operator and distribution system operator;
  • authorizing the transmission system operator and distribution system operators to use energy storage systems exclusively to ensure the reliable and safe operation of the relevant transmission system or distribution system, provided that the energy storage systems are fully integrated network elements;
  • determining the peculiarities of the use of energy storage system by electricity producers, including producers who sell electricity at FiT or auction price: a) activities without obtaining respective license; b) at any time, the power supply of electricity from the storage system shall not exceed the installed capacity of the electrical installation generating electricity; c) keeping FiT or auction price regardless of the time of installation of the storage system).

On 21 April 2021, a draft Law with No. 5407 was registered on Amendments to the Law of Ukraine “On the Electricity Market” (to enhance protection of vulnerable electricity consumers).

According to the draft Law, list of vulnerable consumers shall include, in particular:

1) population residing in 30-kilometer zone next to nuclear power plants;

2) population consuming up to 100 kWh of electricity per month (inclusive);

3) population living in residential buildings (including hotel-type residential buildings, apartments and dormitories), equipped in the prescribed manner with electric heating installations (including in rural areas), consuming up to 3 000 kWh of electricity per month (inclusively);

4) population living in apartment buildings, not supplied with natural gas and without installed or operating district heating systems (including in rural areas), consuming up to 4 000 kWh of electricity per month (inclusively);

5) multi-member, foster families and family-type orphanages, regardless of electricity consumption volumes;

6) dormitories (defined as “population that pays to the energy supply organization according to data of general metering device”).

The Cabinet of Ministers of Ukraine is obliged to adopt the procedure for protection of vulnerable consumers. Prior to adoption of the procedure for the protection of vulnerable consumers for the above categories of vulnerable consumers, the legislator has stipulated the designated aid in the amount of:

30 percent of the current tariff level for population living in 30-kilometer zone next to NPP;

46 percent of the current tariff level for other categories of vulnerable consumers defined by this law.

The legislator failed to specify the sources for financing designed aid for certain categories of vulnerable consumers. Thus, adoption of the Law may condition the necessity of adjustment of special obligations assigned to SE NNEGC Energoatom and SE PrJSC “Ukrhydroenergo” in accordance with the Resolution of the Cabinet of Ministers of Ukraine No. 483 dated 05 June 2019 and increase the financial burden on these entities.

On 19 April 2021, a draft Law with No. 5399 was registered on amendments to the Tax Code of Ukraine on stabilization of settlements in the electricity market.

The draft Law stipulates some current tax issues that have arisen in connection with the long-term non-payment of existing debts in the electricity market. In particular, it is proposed to apply the cash method (temporarily, until 01 January 2026) for the payment of income tax by RES producers in terms of volumes of electricity that has not been paid. The relevant provision is aimed at temporarily reducing the tax burden on RES producers systematically not receiving the payment from the SE Guaranteed Buyer for delivered commodity.

The Cabinet of Ministers of Ukraine

Made decisions

On 28 April 2021Resolution No. 427 was adopted “On Amendments to the procedure for conducting inspections of construction facilities accepted for commissioning”.

Amendments, in particular, provide for the following:

  • mandatory inspection is required for energy facilities, which in accordance with the project design documentation, according to the class of consequences (responsibilities), refer to the facilities with CC2 (medium) and CC3 (high) classes of consequences;
  • facility shall be inspected by its owner or manager through engagement of responsible contractors for certain types of works related to the creation of construction facilities;
  • date of the next inspection is indicated in the facility data sheet. Site shall be inspected at least one time per 10 years.

On 28 April 2021, the Resolution No. 439 was adopted “On Amendments to the Resolution of the Cabinet of Ministers of Ukraine No. 483 dated 05 June 2019”. These amendments introduce a new version of the Regulation on imposition of special obligations on public service in the electricity market on the market participants (the “PSO Regulation”). According to new PSO scheme, the Guaranteed Buyer is excluded from the PSO scheme on meeting the electricity needs of household consumers. Electricity is sold to the universal services providers by SE NNEGC “Energoatom”, PrJSC “Ukrhydroenergo” under bilateral contracts in hourly volumes necessary to meet the needs of household consumers. SE NNEGC “Energoatom” shall sell electricity in volumes necessary to cover the needs of the consumers in the IPS trade zone of Ukraine; PrJSC Ukrenergo shall sell electricity in volumes necessary to cover the needs of the consumers in Burshtyn TPP Island trade zone.

If the estimated price for electricity sold by these producers to universal services providers is less than UAH 10 per 1 MWh, the electricity producers shall also pay to the universal services providers for the service on electricity affordability for household consumers. The service is provided based on respective agreement concluded between SE NNEGC Energoatom/PrJSC Ukrhydroenergo and universal services provider.

New PSO scheme shall come into force starting from 01 June 2021. By 15 May 2021, universal services providers shall conclude agreements with SE NNEGC Energoatom, PrJSC Ukrhydroenergo in respect to the provision of services to ensure electricity affordability for household consumers, bilateral purchase and sale contracts in hourly volumes necessary to meet the needs of household consumers. The deeds shall come into force on 01 June 2021. In addition, agreements previously concluded by the Guaranteed Buyer and universal services providers on the provision of services to ensure electricity affordability for household consumers remain valid after 01 June 202 until completion of obligation fulfilment for final settlements under these agreements.

The National Energy and Utilities Regulatory Commission

Made decisions

On 28 April 2021, the NEURC adopted the Resolution No. 716, which amended the Distribution System Code approved by the NEURC Resolution No. 31 dated 14 March 2018.

Amendments to the Distribution System Code, in particular, include the following:

  • there are defined new terms “small distribution system users”, “small distribution system operator”;
  • on a regular basis, the DSO shall publish on its own website information on grid connection services, specifying the list and scope of information to be published;
  • procedure for conclusion of agreements on standard/non-standard connection to electricity networks has been simplified. Contracts are public connection agreements, the standard form of which is approved by the NEURC. Such agreements shall be concluded via accepting (endorsement) the terms of the agreement on standard/non-standard connection to electricity grid in the manner prescribed by Articles 633, 634, 641, 642 of the Civil Code of Ukraine;
  • standard forms of agreements are approved for standard/non-standard connection to the electrical networks of the distribution system (“turnkey” or with designing of the linear part by the customer);
  • list of documents attached by customers to the connection application has been changed (for optimization);
  • certain amendments were introduced to the procedure for approval by the consumer and DSO of connection of electrical installations of the customer to electric networks of the consumer, to the procedure for providing technical conditions for standard/non-standard connection, procedure for provision of a service for standard connection/non-standard turnkey connection or non-standard connection with designing of the linear part of the connection;
  • DSO is obliged to inform consumers about scheduled and unscheduled power outages;
  • other changes.

 

Draft regulatory decisions published for discussion

On 29 April 2021, the NEURC published the draft Resolution “On approval of amendments to the Market Rules” (draft Resolution).

The draft Resolution provides, in particular, for the following amendments to the Market Rules:

some terms are defined;

terms of acquiring the status “Pre-default” and “Default” have been specified;

procedure for submitting commercial metering data and procedure for operating the market management system are clarified;

approaches are stipulated for the transmission system operator to estimate the maximum sales volume under bilateral contracts in case of receiving erroneous values from the Balance Responsible Party;

lower limit of mandatory sale of electricity in DAM has been set for electricity producers (except for RES producers). Electricity producers shall sell in DAM at least 10% of the total volume of electricity supply by all output units;

obligation is imposed on balancing services providers for minimum bids in the balancing market. Minimum bid/offer for the balancing electricity by each unit of equipment of the balancing service provider that will be in operation on day d, for loading shall not be less than 10% of its installed (nominal) capacity in relation to the billing period, and for shedding – not less than 5% of its installed (nominal) capacity in relation to the billing period;

procedure for settlement by the parties of the mutual obligations is specified;

procedure for drafting payment documents as well as list of information to be specified in the payment document are clarified;

amendments are introduced to the standard agreement on electricity imbalances settlement and annexes thereto; introduction of a new adjustment (settlement) act;

introduction of amendments to the agreement on participation in the balancing market.

Draft is published on the NEURC website:

http://www.nerc.gov.ua/data/filearch/Proekty/2021/pr_87/pr_87-2021.zip

Comments and suggestions to this act are accepted by the NEURC on or before 25 May 2021.