On 02 July 2023, the Law of Ukraine No. 3141-IX "On Amendments to Certain Laws of Ukraine on Prevention of Abuse in Wholesale Energy Markets" (the "Law") came into force. The Law was developed in accordance with the European Union Regulation on the prevention of abuse in the natural gas and electricity markets, known as REMIT (Regulation (EU) No. 1227/2011 of the European Parliament and of the Council of 25 October 2011).
The Law includes several new definitions, including "wholesale energy market", "wholesale energy products", "insider information", and others. It establishes restrictions on the treatment of insider information in the gas and electricity markets, namely:
The regulator should approve the requirements for disclosure of insider information and the platforms for its disclosure will be operating:
The Law defines the actions that are considered manipulation or attempted manipulation in the energy markets. It is stated that the regulatory authority, the National Energy and Utilities Regulatory Commission (NEURC), must approve a non-exhaustive list of practices that may be recognized as manipulation or attempted manipulation.
In addition, the GTS Operator of Ukraine, NPC Ukrenergo and the market operator, as entities that professionally organize operations with wholesale energy products, should have a monitoring system and procedures to detect violations. In case of violations or suspicious transactions, they should notify the regulatory authority. For example, fines for manipulation or attempted manipulation can reach up to UAH 459 million (more than EUR 11 million). It should be noted that the NEURC will impose fines for two years after consultation with the Energy Community Secretariat.
Additionally, the NEURC will perform the following actions:
In addition to the implementation of the REMIT regulation, the Law solves a long-standing problem. According to the previous version of Article 38 of the Law of Ukraine "On the Electricity Market", NPC Ukrenergo had to simultaneously agree on the procedure for allocating the capacity of cross-border interconnections with all TSOs of neighbouring states – members of the Energy Community. This procedure was very time-consuming and complicated. Now NPC Ukrenergo can submit to the NEURC for approval the Rules for the allocation of cross-border transmission capacity in one or more directions, which will include the approval of the transmission system operator of the neighbouring state. NPC Ukrenergo will also distribute the income it received in 2023 from the distribution of cross-border capacity in the following proportions:
Certainly, the adoption of this Law and the implementation of the REMIT Regulation is a positive step for the energy sector in the process of implementing European legislation. The implementation process does not end there, and there is still much work to be done to bring secondary legislation into compliance.