New measures to reduce mutual debts on the electricity market

On 8 January 2024, the Ministry of Energy of Ukraine issued the order "On Measures to Reduce Mutual Debts on the Electricity Market" (the "Order"), which sets out the methods for dealing with the situations where market participants have unpaid bills to each other. The purpose of the Order is to stabilize the operation of the electricity market and reduce debts in its specific segments.

The Order regulates mutual debts on the electricity market that have accrued from 1 January 2020 to 30 November 2023.

According to the Order, the transmission system operator (NPC "Ukrenergo") and electricity market participants must offset the homogeneous counterclaims, i.e., those involving simultaneous participation of the parties in two obligations where the creditor under one obligation is the debtor under another. The claims are considered homogeneous if the obligations of the parties towards each other are to be performed similarly, while the grounds for the obligations may vary.

The offsetting of homogeneous counterclaims occurs only within the limits of the debts recognized by NPC "Ukrenergo" and electricity market participants based on electricity purchase and sale agreements and/or acceptance and transmission of services acts, for which there are no disputes arising from the following agreements:

  • on the settlement of electricity imbalances and participation in the balancing market
  • on the provision of ancillary services for frequency and active power regulation
  • on the provision of ancillary services (for frequency and active power regulation in the power system of Ukraine, specifically for reserve replacement – tertiary regulation) to ensure supply safety
  • on the provision of ancillary services to ensure the restoration of the functioning of the power system of Ukraine
  • on the provision of services for frequency and active power regulation by offsetting the homogeneous counterclaims regarding debts of electricity market participants to the transmission system operator for dispatch (operational-technological) management services.

NPC "Ukrenergo" is required to draw up and sign relevant agreements (acts) with electricity market participants and settle obligations under payment documents.

For more information, please contact Asters Partner Yaroslav Petrov and Associate Olena Sichkovska-Chornobyl.

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