The Antimonopoly Committee of Ukraine has announced that is launching an investigation into the electricity market in order to investigate potential economic competition violations. This was reported in a message posted on the Committee’s website.
According to the Committee, the investigation was launched following a spike in the volume of purchases and sales conducted in the market over a period of a few days, especially in the Day-Ahead Energy Market (DAM), where customers buy and sell energy at binding prices for the following day.
Notably, the report says that there was a large decrease in the purchase of electricity at the Day-Ahead rate accompanied by a simultaneous increase in the volume of purchases made on the bilateral electricity market.
Bilateral markets do not rely on binding prices for the day ahead, but rather rely on short-term negotiated wholesale contracts or agreements between buyers and sellers. Bilateral markets can use hourly, daily, or weekly agreed rates and can rely on third-party electricity generators when it is cheaper than generating power themselves. Savings from these purchases should be used to lower utility costs for consumers.
According to the State Enterprise Market Operator, the price of electricity on the Ukrainian DAM plummeted by 35.9% on July 4 compared to day before, which was almost 3.5 times lower than the price which was reported on July 1. This large collapse was attributed to a “withdrawal of demand” from the DAM caused by an increase in bilateral trading.
The National Commission for State Regulation of Energy and Public Utilities has levelled blame at Ukrainian energy oligarch Rinat Akhmetov, who had recently reduced the volume of Day-Ahead purchases by 74%, sparking a war of words between the DTEK group owner and the state regulator.
A statement issued by the State Energy Regulator decried the “excessive power of individual players in the electricity market,” which it accuses of threatening the “efficient, competitive, and stable function,” of Ukraine’s energy infrastructure.
On July 4, the State Energy Regulator convened an emergency meeting to discuss the collapse of the Ukrainian electricity market. The regulator stated that it was obliged to place a limit on monthly sales conducted under bilateral agreements between producers and customers at 50% of their monthly sales in electricity.
The National Commission for Regulation of Economic Competition has also stepped in to introduce a price floor for the DAM. These limits are scheduled to be lifted on July 8.
