Kyiv, October 21, 2016. A necessary complement to the existing mechanisms for protecting Ukrainian electricity and heat consumers is an energy ombudsman required by European legislation. Experts of the Kyiv Institute for Energy Research (KERI) arrived at this conclusion in their research. The view was supported by foreign experts, MPs and a NKREKP representative at a discussion held at Ukraine Crisis Media Center.
“This is one way to resolve the issue of how residential consumers should respond to tariffs and the quality of service provided by monopolist companies. This institution is relatively new to Europe but we already have several positive examples of how it works,” said Svitlana Golikova, member of KERI Strategic Council. Oleksiy Ryabchyn, MP, head of the Subcommittee on Energy Saving and Energy Efficiency, Parliamentary Committee on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety, added that this is one of Ukraine’s opportunities under the Third Energy Package.
The existing mechanisms for consumer protection do not solve the problem
Svitlana Golikova reminded that currently Ukraine has two mechanisms for consumer protection – legal and regulatory. Given the statistics of consumer complaints, problems in public services are quite serious and they are not being solved. Oleksiy Ryabchyn said that state energy company in Kyiv, “Kyivenergo,” alone had received 742,938 oral and over 20,000 written complaints in 2015. “Last month, about 150,000 people phoned the government hotline. Among them, 13.5 percent complained about the problems in the utilities sector, more – only on social protection issues,” added Roman Vybranovskyy, director of UCMC Strategic Communications Project.
Energy ombudsman’s functions are to analyze consumer complaints and offer solutions
Mr. Ryabchyn noted that the energy ombudsman’s role is broader than mediation or dispute resolution. “One of the energy ombudsman’s functions is to collect information, analyze it and give suggestions to the regulator, ministries and departments. This institution communicates with people and sees the number of complaints on particular issues,” he explained.
Svitlana Golikova stressed that energy ombudsman is not an alternative to the NKREKP. “It’s not that energy ombudsman is to replace the regulator – on the contrary, this institution can help the regulator and will promote a good image of the regulatory commission,” she explained.
Lev Pidlisetskyi, MP, said that the question of an independent arbitration is especially important now that people have little confidence in the NKREKP after it raised tariffs for industry and adopted the “Rotterdam plus” formula. According to him, the law on the national regulator, even a good one, will not solve the problem by itself. “There should be alternative grounds for appealing decisions, explaining decisions and the energy ombudsman institute would be focused on these particular problems,” noted Lev Pidlisetskyi. He added that its effective work does not need many people: in Germany, for example, 11 professionals consider 6,000-7,000 complaints a year.
Step I: to choose the model that best works in the Ukrainian realities
There are three basic models of the energy ombudsman in the world now, informed Oleksiy Ryabchyn. He can function as an autonomous structure (e.g. France, UK), as an ombudsman for a number of sectors – for example, energy and air transportation (e.g. the Netherlands, Sweden), or as part of a national regulator (e.g. Austria, Poland).
Miriam Kosmel, project director for Ukraine and Belarus of Friedrich Naumann Foundation for Freedom, noted that Ukraine is to analyze the international experience and choose one of the existing models or develop their own model, taking into account the specifics of the Ukrainian realities.
“The issue of an energy ombudsman is the national issue. We have to find such a model that will work,” emphasized Oleksiy Ryabchyn. He noted that in Ukraine the regulator was frequently a hostage to political pressure of certain players, so the energy ombudsman should be granted the right to veto decisions of the regulator. “I think that this institution should be part of the NKREKP and have the right to veto decisions of the regulator, […] which can be defied by a certain number of votes. This will help protect the rights of small consumers under conditions of our unsteady democracy,” noted Oleksiy Ryabchyn.
Oleksiy Ryabchyn noted that institution of an energy ombudsman has already been envisaged in the final provisions of the draft law on the NKREKP. The government has to develop the corresponding draft law within three months. “We will try to do this faster, because the consumer protection issues require an urgent solution,” noted the MP.
Miriam Kosmel noted that institution of an energy ombudsman will be obviously time-consuming. That is why it is advisable to consider the mechanisms that could provide effective consumer protection at this stage.
The formula of a quality energy ombudsman is independence, impartiality, confidentiality
The panelists stressed that to perform its functions competently the new institution should be as independent and impartial as possible. This should be provided even at the stage of its creation. As an example we can focus on the positive case of the Business Ombudsman Council – both in terms of the authorities involved in its creation, its status as a non-governmental non-profit organization and in terms of sustainable independent funding, noted Jaroslav Gregirchak, Deputy Business Ombudsman. “First of all, there should be a clearly defined mandate. I think, it is not a problem. It should cover all complaints of consumers of services provided by natural monopolies […]. The second aspect is sustainable funding to ensure its quality work,” noted Jaroslav Gregirchak.