The draft law on the principle of the operation of Ukraine's electricity market is not the kind of reform of the energy market that Europe is expecting from Ukraine, according to the director of the Energy Studies Institute, Dmytro Marunich.
“The cross-subsidy of the sector, as stipulated in the law via the
creation of the cost disparity settlement fund, which will redistribute
profits between generating facilities, actually replaces the notion of
the energy market,” he told Interfax-Ukraine.
The expert said that the bill should not be passed in its present wording.
“If the bill were not to be reworked, this would prompt the
conclusion that the market is being reformed in a non-transparent way
for certain business groups that obtained control over assets in the
energy sector,” he said.
He said that the law in its present wording would not encourage the
dynamic development of all types of generation, as initially the cost
disparity settlement mechanism is disproportionate, and the state-run
nuclear energy, which generates 50% of the electricity in the country,
will be financed on the leftover principle.
As reported, draft law No.10571 on the principle of the operation of
Ukraine’s electricity market, prepared by MPs Ihor Hluschenko and Mykola
Martynenko, suggests, among other things, the creation of a specialized
non-profit public institution – a cost disparity settlement fund.
The draft law proposes the creation of such a fund, which would be
financed at the expense of nuclear and hydroelectric power plants only,
which means that the cost disparity of electricity market players of
different forms of ownership, including private ones, will be covered
solely at the expense of state-owned companies.
The fund is to handle settlements for electricity sold at feed-in
tariffs, and compensate for guaranteed suppliers’ losses from the sale
of electricity to consumers at regulated prices, as well as the cost of
the purchase of electricity generated by thermal power plants and other
co-generation electricity plants at regulated prices, and its sale at
market prices.
