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Experts: If NKREKP does not approve the necessary documents, the new law on connection to the electricity grid will not work

Kyiv, October 05, 2017.

In mid-2019 Ukraine will introduce a new law on the electricity market. Implementation of Article 21 of the law will make electricity more affordable and connection to grids – simpler. However, for the new law to work concerning connection to grids, the National Commission for State Regulation in the Field of Energy and Utilities (NKREKP) should develop all methods and determine the cost of connecting consumers to grids by March 11, 2018. If the regulator does not do this, the law will not work in this part. This was stated by Lev Pidlisetskyi, People’s Deputy of Ukraine (faction “Samopomich”), at a press briefing at Ukraine Crisis Media Center.

New rules are supposed to provide consumers with attractive rates of connection. However, NKREKP has the last word on determining methods and tariffs. Inter alia, NKREKP is to adopt three basic acts – the Code of Distribution System, Methods for the formation of the connection payment and Rates of connection payment. A special coordination center was set up for monitoring NKREKP’s activities in order to prevent abuse. “In a month, if everything is done in accordance with the schedule, and there are at least draft documents, we will see what is written there and what to do with it. Fortunately, so far, we are trying to ensure that the Coordination Center has access to all documents,” said Lev Pidlisetskyi.

Another problem is that, in 2 months, NKREKP may become incapacitated due to the lack of a quorum. “That is, we will not examine the technical solutions that are to be examined by the Regulator, and we altogether inhibit the development of the necessary documents concerning connection to grids. On the one hand, Art. 21 of the Law of Ukraine on the Electricity Market is a big step. On the other hand, it is necessary to make the second step – we must demand its implementation,” said Oleksii Orzhel, Head of the energy sector of the Better Regulation Delivery Office (BRDO).

Oleksii Orzhel stressed that the new rules for connection to grids are especially important for small and medium businesses. “On January 31 of this year, we were all shocked by NKREKP’s decision to introduce very high rates for non-standard connection. The market simply could not accept those rates proposed by the regulator. And we have the situation when there is actually no connection within the power ranges of 160kW – 5MgW. We have NKREKP’s letters to regional power distribution companies stating that they must do this according to the old rules.

However, as evident from the facts at the local level, this is often not the case. So, they try to exploit the position that there is no charge of such connection, and they are ready to sign the connection contracts, but without indicating the certain value. Then a logical question arises why there is no connection at a certain power ranges, in particular, at those of medium businesses, construction business and small industrial production. That is, we have no connection for a year and even more. We can state such a problem today due to the actions of the regulator,” explained the expert. “The grid connection indicator is one of the indicators of whether it is easy for a business to work and whether it will work. Businesses want transparency, we want equality among the participants, and that the best conditions, especially as we rank 80th in the Doing Business rating,” emphasized Andriy Yerashov, Head of the Committee on Business Development of the Union of Ukrainian Entrepreneurs.

To maximally protect the interests of consumers and businesses, representatives of government bodies and businesses jointly with the Better Regulation Delivery Office have developed a number of additional decisions. “We have managed to systematize the best decisions for implementation. We have included them in the “White Book” and offer it for further implementation,” noted Oleksii Orzhel. In particular, the decisions concern the simplification of connection to the grid, competitive supply, transparent electricity prices, and the downloading of licensing of electricity distributing companies. “As to the optimization of power, in the “White Book” we propose that energy supervision should be handed over directly to the regulator. And I hope that this idea will provide Ukraine with the effective regulator,” said Oleksii Orzhel.

“The issue of the energy regulator is now extremely important. If it is not settled, then the implementation of the electricity market law and the initiative on simplifying the connection to grids  will remain questionable. We call on both the President, Cabinet of Ministers and Verkhovna Rada to establish a nomination commission,” stressed Tetiana Temniuk, Policy Officer (Energy Issues), American Chamber of Commerce in Ukraine.

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