Article by Tetiana Tugolukova, Associate, Salans, Kyiv
On 1 February 2012
So where does
In this article, we try to analyse the implementation state of each of the EU Directives and Regulations as specified in the Accession Protocol.
In light of its commitments under the Energy Community Treaty, the Ukrainian Government approved two action plans in August 2011 (a full six months after the ratification of the Accession Protocol):
(a) Action Plan on Fulfillment of Commitments within the Framework of the Energy Community Treaty (CMU Order No. 733-p of 3 August 2011); and,
(b) Action Plan on Fulfillment in 2011 of the National Programme of Adjustment of Ukrainian Legislation to EU Legislation (CMU Order No. 790-p of 17 August 2011).
The main objective of both Action Plans is to organise the regulatory work of the responsible authorities for harmonising Ukrainian legislation in line with EU legislation.
Ironically enough, the action plans on regulatory work for 2011 and 2012 of some of the responsible authorities (in particular, the Ministry of Energy and Coal Industry of Ukraine (the “Energy Ministry”) and the National Electricity Regulation Commission (the “NERC”)) do not appear to contain any reference to the implementation of the above-mentioned CMU Order No. 733-p or the EU Directives.
The Accession Protocol contains a list of the primary European Directives and Regulations to be implemented by
(1) Directive 2003/54/EC concerning common rules for the internal market in electricity (the “Electricity Directive”)
The key objective of the Electricity Directive is the creation of a fully operational, liberalised and competitive internal electricity market across the whole of the EU. To that effect, the Directive enforces minimum requirements for establishing a competitive electricity market. These requirements include: public service obligations and customer protection, supply monitoring, authorisation and tendering of new capacity, tasks for transmission and distribution system operators, unbundling of network operation and transparency, third-party access to networks, eligibility and market opening, and regulatory powers.
The deadline for the implementation of the Electricity Directive expired on 1 January 2012. Under the Accession Protocol, the electricity market has to be open for all non-household customers as of 1 January 2012, and for all households as of 1 January 2015.
(2) Regulation 1228/2003 on conditions for access to the networks for cross-border exchanges in electricity (the “Electricity Regulation”)
The key objective of the Electricity Regulation is to develop a harmonised framework for cross-border exchanges in electricity. The Regulation sets basic principles for regional market integration. Building on the Electricity Directive, the Electricity Regulation lays down rules for the use of interconnectors and for the coordinated management of cross-border electricity flows. These cover compensation for costs, imbalance and network access charges, availability of information, capacity allocation and congestion management on interconnection including secondary trading of capacity rights and exemptions for new interconnectors. The implementation deadline for the Electricity Regulation expired on 1 January 2012.
(3) Directive 2005/89/EC concerning measures to safeguard security of the electricity supply and infrastructure investment (the “Electricity Supply Security Directive”)
The key objective of the Electricity Supply Security Directive is to safeguard the security of the electricity supply to ensure the EU’s internal market for electricity functions correctly; that there is an adequate level of interconnection between Member States, an adequate level of generation capacity and a balance between supply and demand. The Electricity Supply Security Directive provides a common legal platform for the Contracting Parties to develop coherent, transparent and non-discriminatory security of supply policies that are compatible with operating a competitive electricity market. Building on article 4 of the Electricity Directive (“Monitoring of Security Supply”), the Directive indicates further measures that can be taken to safeguard an adequate level of electricity supply. These measures will encourage new investments in generation, transmission, distribution and the interconnection infrastructure in order to maintain a sustainable balance between supply and demand. This will enable the quality of supply and network security to be set, met and monitored while contributing to the correct functioning of both regional and internal electricity markets.
The implementation deadline for the Electricity Supply Security Directive expired on 1 January 2012.
Key Findings on Implementation of the Electricity Acquis in
(i) Primary electricity legislation in
(ii) The Ukrainian electricity market still operates under a ‘single buyer’ model, which does not comply with EU legislation. The Action Plan on Realisation of the Provisions of the Concept on Functioning and Development of the Wholesale Electricity Market envisaged a gradual shift to a bilateral market with a balancing mechanism and was approved by the Cabinet of Ministers of Ukraine in late November 2007. However, since that time not much progress has been achieved in relation to this. Elaboration and adoption of a number of relevant regulatory acts that will ensure this progresses is still pending;
(iii) There are still barriers in the way of the electricity market opening up in
(iv) The process of
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