Law on electricity market of Ukraine - English version

[UNOFFICIAL TRANSLATION]
LAW OF UKRAINE “ON THE ELECTRICITY MARKET”
SECTION І
GENERAL TERMS
Article 1. Definitions
1. For the purposes of this Law the terms listed below shall be used in the
following meanings:
o commercial electricity metering administrator (hereinafter –
“Commercial Metering Administrator”) – legal entity providing organization and
administration of commercial electricity metering in the electricity market, which
fulfills the function of centralized aggregation of commercial metering data;
o settlements administrator – a legal entity responsible for organization of
settlements in the balancing market and ancillary services market;
o money allocation algorithm – procedure of money allocation by an
authorized bank from special current accounts without payment orders as set by the
Regulator according to this Law;
o money allocation algorithm – procedure of money allocation by an
authorized bank from special current accounts without payment orders as set by the
Regulator according to this Law;
o balance between supply and demand – the satisfaction of foreseeable
demands of consumers to use electricity without the need to enforce measures to
reduce consumption;
o balancing group – a union of market participants created based on a
relevant agreement, within which one market participant being a member of such a
union overtakes electricity balance responsibility of all other market participants
being members of such a union;
o balancing group of electricity producers at “green” tariff – a balancing
group, where the guaranteed buyer is a balance responsible party;
o balancing electricity market – a market organized by the TSO in order to
provide access to sufficient capacity and energy required to balance volumes of
electricity generation and import with consumption and export settle system
constraints in the Unified Energy System of Ukraine and financially settles
electricity imbalances;
o security of electricity supply – the ability of a power system to supply
consumers with electricity as provided for under this Law;
o vertically integrated business entity – a legal entity irrespective of the
organizational legal form and ownership form, an individual including the
individual controlling another legal entity or individual, that performs transmission
and/or distribution of electricity and at least one of the functions of generation or
supply of electricity, or the group of such entities linked directly or indirectly by

relations of control, that perform transmission and/or distribution of electricity and
at least one of the functions of generation or supply of electricity;
o electricity producer (hereinafter – the “producer”) – an business entity
producing the electricity;
o electricity generation – economic activity related to transformation of
energy of any origin into electricity using technical means;
o balance responsibility – an obligation of market participants to nominate
balanced electricity daily schedules, and to be financially responsible for
settlement of electricity imbalances from the accepted schedule;
o available transmission capacity – a part of net transmission capacity
made available for an auction on the interconnection, for the specific direction and
period, excluding the value of transmission capacity allocated at earlier auctions. In
case of provision of exemption for new cross-boarder line hereunder, when
calculating available transmission capacity, part of transmission capacity so
exempted shall not be taken into account. When calculating a daily amount of
available transmission capacity, the unused transmission capacity, allocated at
earlier auctions, shall be taken into account;
o intra-day electricity market (hereinafter – the “intra-day market”) – a type
of organized electricity market involving sales and purchase of electricity on
continuous basis after completion of trading on the market “the day ahead” and
within the day of physical delivery of electricity;
o guaranteed electricity buyer at “green tariff” (hereinafter – “guaranteed
buyer”) – business entity, which according to this Law is obliged to buy electricity
from electricity producers, for which the “green” tariff was set, and perform other
functions set forth in the legislation;
o guaranteed electricity buyer at “green tariff” (hereinafter – “guaranteed
buyer”) – business entity, which according to this Law is obliged to buy electricity
from electricity producers, for which the “green” tariff was set;
o dispatching – operational and technical management in the Unified
Energy System of Ukraine ensuring reliable and uninterrupted supply of electricity
to customers with adherence to terms of energy safety;
o electricity sales and purchase contract in the day-ahead market
(hereinafter – the “day-ahead contract”) – simultaneous acceptance by the day-
ahead trading participant and market operator of rights and obligations for sale and
purchase of electricity resulting from the respective day-ahead trading;
o ancillary services are services set out by this Law and market rules that
are purchased by the TSO from ancillary services providers in order to ensure
reliable and secure operation of the Unified Energy System of Ukraine and quality
of electricity according to the established standards;
o access to the cross-boarder transmission capacity – right to use electricity
transmission interconnector capacity for the purposes of export and/or import of
electricity, as imposed by this Law;

o third party access – the right of all system users to use the transmission
and distribution networks based on the predetermined and publicly announced
conditions in conformity with principles of transparency and non-discrimination;
o electricity – energy produced at electricity generation sites and is the
saleable product designated for sales and purchase;
o electricity line – aggregate of electric installations for electricity
transmission and/or distribution;
o electricity undertaking – business subject carrying at least one of the
following functions: production, transmission, distribution, supply, or trade of
electricity, but excluding the consumers;
o supplier of consumers – business entity for the supply of electricity to
consumers;
o power plant – electric installation or group of electric installations
designated for production of electricity or combines production of electricity and
heat power;
o electric installation – a set of interconnected equipment and facilities
designated for generation or transformation, transmission, distribution, or
consumption of electricity;
o energy efficiency and demand-side management – a global or integrated
approach aimed at influencing the amount and timing of electricity consumption in
order to reduce primary energy consumption and peak loads by giving precedence
to investments in energy efficiency and loads management measures instead of
investments in increase of generation capacities, if the former are the most
effective and economical option, taking into account the positive environmental
impact of reduced energy consumption and the security of supply and distribution
cost aspects related to it;
o restricted area of hydrotechnical facilities – land plot adjacent to the
basic fence from the inside of the hydroelectric technical facility, equipped with
the engineering and technical devices and marked with warning signs, as well as
the area of water space of upper and down pools 500 meters away from the power
dam, marked with signs warning on forbidden access to this territory of
unauthorized persons, vessels, and floating objects;
o protected consumers – consumers to which specific mode of
disconnection and/or limitation of electricity supply is applied in order to prevent
emergencies of man-made and natural character;
o consumer – an individual (including the sole entrepreneur) or legal entity
purchasing electricity for its own use;
o electricity market clearing – a clearing system exercised through an
authorized bank, dealing with mutual financial claims and liabilities of market
participants for electricity and services provided in the electricity market, which is
closed with the payment of difference between the amount of claims and liabilities
of market participants (settlement), including through provision of financial
guarantees;

o commercial electricity metering – a set of processes and procedures for
accumulation and management as to the volumes of produced, injected,
transmitted, distributed, consumed, imported and exported electricity at a specified
time period. Such data shall be used for settlements between market participants;
o control – bears the meaning specified by the Law of Ukraine “On
Economic Competition Protection”;
o supervised area of hydrotechnical facilities – territory of concrete and
land dams of hydroelectric and technical facilities and land plots located among
water reservoirs and drain canals; such territory is marked by the warning signs;
o system users – individuals (including sole entrepreneurs) or legal entities
injecting or withdrawing electricity to/from transmission/distribution system or
using transmission/distribution systems for electricity transmission/distribution;
o small non-household customer – a small business entity or a budgetary
institution that has its facilities connected to a low-voltage distribution network
with a nominal voltage level not exceeding 1 kV and buys electricity for its own
use;
o cross-boarder line – a transmission line which crosses a border between
Ukraine and another country and which connects national transmission systems of
both countries;
o interconnector – means a set of cross-boarder lines and electric
installations equipment used to link national transmission system with transmission
systems of neighboring countries;
o emergency in the unified energy system of Ukraine – situation when
operational mode of unified energy system of Ukraine or separate parts thereof is
threatened, in particular, due to lack of electricity and/or capacity, frequency lower
than the permitted thresholds, violation of mode of accessible flows and overload
of line elements, reduction of voltage in control points of the energy system to the
action level;
o emergency on the market of electricity – shall mean a situation according
to which a market is not able to cover available demand for electricity which
results in substantial increase in prices on the market of electricity during a long
period of time;
o electricity imbalance – difference between actual volumes of sales or
consumption of electricity of the party responsible for balance, registered in
accordance with the market rules for each settlement period, and volumes of
purchased and sold electricity registered by the settlements administrator;
o non-household customer – an individual (including the sole entrepreneur)
or legal entity purchasing electricity which is not a household;
o implicit auction – a mechanism for cross-border trade of electricity which
includes simultaneous allocation of rights for use of the interconnection capacity
and electricity, calculation of consolidated prices;
o new interconnector – an interconnector not completed by
October 01, 2015;

o technical regulative document – norms, rules, guidelines, and standards
accepted and registered in accordance with the procedure set by the law, for
ensuring the proper technical condition and operation of electric plants and lines;
o Unified Energy System of Ukraine (UES of Ukraine) – aggregate of
power plants, electric lines, other electricity sites linked by shared mode of
production, transmission, and distribution of electricity in case of centralized
control of such mode;
o electricity site – electric power plant (except the nuclear part of nuclear
power plant), electric substation, electric line, connected to the Unified Energy
System of Ukraine;
o cross-border congestion – a situation in which cross-border transmission
capacity cannot accommodate all physical flows of electricity resulting from
export and import operations of market participants due to the lack of transmission
capacity of interconnectors and/or electricity transmission system;
o market operator – a legal entity ensuring operation of the day-ahead and
intraday electricity markets and organization of electricity trade at the day-ahead
market and intraday market based on the license;
o transmission system operator – a legal entity responsible for operating,
including dispatching, ensuring the maintenance and development of the
transmission system and interconnectors, and for ensuring the long-term ability of
the system to meet reasonable demands for the transmission of electricity;
o distribution system operator – a legal entity responsible for secure,
reliable and efficient operating, ensuring the maintenance and development of the
distribution system and ensuring the long-term ability of the system to meet
reasonable demands for the distribution of electricity with due regard to
environment and energy efficiency;
o operational network security – capacity of the transmission, and where
appropriate distribution system to stay in normal operational mode or return to the
normal operational mode as soon as possible which is characterized by boundary
admissible indicators of temperature, voltage levels, short circuit current,
frequency, and stability;
o organized segment of electricity market – day-ahead market, intraday
market and balancing market;
o specifically important electricity sites – sites ensuring stable functioning
of the unified energy system of Ukraine, damage or destruction of which will result
in interruption of electricity supply to business entities and people, possible human
victims and significant money losses;
o transmission – the transport of electricity on the 220 kV and higher-
voltage lines from power plants to connection spots of distribution systems and
electric installations of consumers (but does not include supply), as well as on
interconnectors;
o long-term planning – the planning of the need for future investment in
generation capacity, capacity of transmission and/or distribution system on a long-

term basis, for the period of 5 years or more, with a view to meeting the demand of
the system for electricity and securing supplies to customers;
o household consumer – an individual using electricity for its own
domestic needs which do not include professional and/or commercial activities,
under the supply contract for electricity concluded with the market participant
(including supplier of consumers);
o ancillary services provider means an market participant that complies
with the requirements established by the market rules regarding provision of
ancillary services and registered according to the market rules for provision of such
services, and other entities authorized to provide ancillary services as defined by
this Law;
o balancing service provider – a market participant that has concluded the
contract for participation in the balancing market with the TSO, in accordance with
the market rules;
o commercial metering services supplier – business entity providing
commercial metering services in the electricity market in accordance with this
Law;
o supplier of last resort – electricity supplier of consumers designated by
the Regulator that, in cases defined by this Law, has no right to refuse conclusion
of the electricity supply contract for the limited period of time;
o universal service supplier – electricity supplier of consumers on whom
the Cabinet of Ministers of Ukraine has imposed the obligation to provide the
universal service;
o electricity supply – means the sale, including resale, of electricity;
o special current accounts – accounts opened with the authorized bank
intended to ensure conduction of settlements in accordance with this Law;
o connection of the electric facility (hereinafter – the connection) –
provision of the service to the customer by the transmission system operator or
distribution system operator with respect to creation of technical possibility for
transmission (acceptance) at spot of connection of the customer’s electric plant of
relevant capacity to the transmission system or distribution system (including those
which were newly created) of electricity of necessary volume, with adherence to
indicators of quality and reliability;
o direct line – an electricity line linking the producer’s generation facility
with electric utilities of consumer and used by them only;
o regulator – national commission performing state regulation in energy
and public utilities;
o ancillary services market – system of relations occurring in connection
with a purchase of ancillary services by the TSO from ancillary services providers;
o electricity market – a system of relations occurring between market
participants in the course of electricity and/or ancillary services sale and purchase,
transmission and distribution, electricity supply to consumers;

o day-ahead electricity market (hereinafter – the “day-ahead market”) –
type of organized market of electricity which includes sales and purchase of
electricity for the day following the day of trading;
o development of UES of Ukraine – new construction, reconstruction, or
technical re-equipment of electricity sites;
o electricity distribution (hereinafter – the distribution) – the transport of
electricity from power plants or sub-stations of transmission system to installations
of consumption, but does not include supply;
o distributed generation – electricity generation plants connected to the
distribution system;
o certification of transmission system operator – the process of verifying
business entity’s compliance with the requirements on independence and
unbundling of the transmission system operator, as prescribed by this Law, where
such compliance is confirmed by resolution of the Regulator;
o electricity transmission system (hereinafter – the transmission system)
system of lines, ancillary equipment, equipment for transformation and switching
used for the electricity transmission;
o distribution system – system of lines, ancillary equipment, equipment for
transformation and switching used for distribution of electricity;
o system constrains – circumstances conditioned by the need to ensure
functioning of the Unified Energy System of Ukraine within the permissible limits,
at which it is allowed to deviate from the optimal load distribution of generating
capacities under the contracted electricity output volumes and/or optimal load
distribution of generating capacities pursuant to the proposals (bids) in the
balancing market;
o balance responsible party – market participant, which assumed an
obligation to nominate balanced electricity daily schedules (it own or of its
balance group and financially responsible towards the transmission system
operator for imbalances;
o trading in the day-ahead electricity market (hereinafter – the “day-ahead
trading”) – process of setting volumes and price for electricity for the settlement
periods for the day following the day of trading, according to the day-ahead market
rules;
o trader – business entity that buys and sells electricity for resale only.
o universal service – service of electricity supply to household and small
non-household consumers only, ensuring their right to be supplied with electricity
of a specified quality within the entire territory of Ukraine subject to terms
prescribed by this Law;
o authorized bank in the electricity market (the authorized bank) – any
bank that meets the requirements of set out by the Cabinet of Ministers of Ukraine
and the National Bank of Ukraine, included by the National Bank of Ukraine in the
list of authorized banks and has the right to service current accounts with special
mode of using market players;

o intra-day market participant – business entity that has executed a contract
on participation in this market;
o electricity market participant (hereinafter – the “market participant”) –
producer, electricity supplier of consumers, trader, transmission system operator,
distribution system operator, market operator, guaranteed electricity buyer and
consumer that participate to electricity market according to the procedure as set by
this Law;
o day-ahead market participant – business entity that has executed a
contract on participation in this market;
o net transmission capacity – the maximum transmission capacity, which
can be used for cross-border transfer of electricity, in a specific direction and
period, providing secure and reliable functioning of the Unified Energy System of
Ukraine;
o explicit auction – a mechanism for cross-border capacity allocation
which provides access to the cross-border transmission capacity and determines the
price of such access but does not involve trade of electricity;
o other terms shall be used bearing meaning specified in Laws of Ukraine
"On Alternative Energy Sources", "On Combined Production of Thermal Energy
and Electricity (Cogeneration) and Using Waste Energy Potential", Commercial
Code of Ukraine, and other laws of Ukraine.
Article 2. Legal framework for electricity market operation
1. For performance of Ukraine’s obligations under the Treaty establishing
the Energy Community and Association Agreement between Ukraine, on the one
hand, and the European Union, the European Atomic Energy Community and
member states thereof, on the other hand, this Law is aimed at implementation of
instruments of legislation of the Energy Community in energy domain, in
particular: Directive 2009/72/EC concerning common rules for the internal
market in electricity and repealing Directive 2003/54/EC; Regulation (EC)
714/2009 on conditions for access to the network for cross-border exchanges in
electricity repealing the Regulation (EC) No 1228/2003; Directive 2005/89/EC
concerning measures to safeguard security of electricity supply and infrastructure
investment.
Legal framework of the electricity market functioning is composed of the
Constitution of Ukraine, this Law, the Law of Ukraine "On Alternative Energy
Sources", "On Combined Production of Thermal Energy and Electricity
(Cogeneration) and Using Waste Energy Potential", ["On National Commission,
which performs state regulation in the energy and utilities"], "On Natural
Monopolies", "On Economic Competition Protection", "On Environment
Protection", international treaties of Ukraine, which are binding as authorized by
the Verkhovna Rada of Ukraine, as well as other instruments of legislation of
Ukraine.
2. The general basis of functioning of electricity market participants and

their interrelations are governed by the by-laws regulating implementation of this
Law, in particular:
1) market rules, which inter alia, determine the rules of the balancing market
functioning and ancillary market functioning;
2) day-ahead and intra-day market rules;
3) code of transmission system, code of distribution system;
4) commercial metering code;
5) retail market rules
6) other normative and legal acts.
Market rules, electricity transmission network code and commercial
metering code are developed and administered by the transmission system operator
and are approved by the Regulator.
“Day-ahead” and intraday market rules are developed and administered by the
market operator and approved by the Regulator.
Distribution network Code and Retail market rules are developed and
adopted by the Regulator.
3. Market rules determine, among other things, the procedure of market
participants’ registration; procedure and requirements for ensuring fulfillment of
obligations in accordance with agreements with the purpose of administering
electricity imbalances; balancing rules; rules of ancillary services market
functioning; settlements procedure in the balancing market and the ancillary
services market; invoicing (billing) procedure; procedure of amending the market
rules; procedure for market functioning in case of taking emergency measures.
4. Day-ahead and intra-day market rules determine, among other things, the
procedure and requirements to ensure fulfillment of obligations under agreements
for electricity sales and purchase at such markets, procedure of day-ahead trading
organization and holding;, procedure of electricity pricing, including in the cases of
non-competitive behavior; settlements procedure on such markets, procedure of
setting the value of services provided by the market operator and settlements
procedure with respect to that; procedure for disclosure and publication of
information; procedure for settlement of disputes between the market operator and
day-ahead and intraday market participants; procedure of amending the day-ahead
and intraday market rules.
5. Code of transmission system, code of distribution system codes defines,
among other things, methods and criteria for planning the transmission and
distribution system development; terms and procedure of access to the
transmission/distribution system; terms and procedure of connection to the
transmission/distribution system, characteristics and methods for provision of
ancillary services in the transmission system, procedure of operational planning;
procedure of management and exploitation of the system under normal and
emergency modes; criteria applied by the transmission system operator for
dispatching generation capacities and use of interconnectors, responsibilities and

procedures for dispatching distributed generation, as well as conditions for
prioritization energy plants which use the renewable energy sources.
Electricity transmission code shall comply with the laws of the Energy
Community.
6. Commercial metering code contains general provisions on organization of
commercial electricity metering in the electricity market, rights and obligations of
market participants, suppliers of commercial metering services and commercial
metering administrator regarding provision of commercial electricity metering,
receiving exact and accurate data on commercial metering and their aggregation
(consolidation), procedure of registration of commercial metering services
suppliers, points of commercial metering and registration of automated systems
used for commercial metering of electricity.
7. Requirements as to the provision, protection, disclosure and publication of
information in the electricity market are determined by this Law, the day-ahead
and intra-day market rules, code of transmission system, code of distribution
system, commercial metering code, and other by-laws and regulatory documents
covering implementation of this Law. Requirements for provision, protection,
disclosure and publication of information by market participants shall be defined
by the Regulator.
8. Market participants shall have a right to submit proposals regarding
changes and amendments to the market rules, day-ahead and intra-day market
rules, code of transmission system, code of distribution system, commercial
metering code and other by-laws, which regulate functioning and operation of the
electricity market in Ukraine to respective state bodies and operators, which ensure
the development, approval and/or administration of respective acts.
9. When applying terms of this Law authorities and courts shall take into
account the legal application practice of the Energy Community and European
Union, in particular, resolution of the Court of European Union (European Court,
General Court), practice of the European Commission and Secretariat of Energy
Community with respect to application of terms of legislation instruments of the
European Union as indicated in first part of this article.
10. Resolutions (actions) of authorities adopted in performance of this Law
should be taken on the basis of, within the competence and in a manner as
prescribed by the Constitution and laws of Ukraine, considering the person’s right
to participate in the decision-making process, and correspond to the purpose of
provision of such powers, be justified, correspond to principles of impartiality,
good faith, reasonability, proportion, transparency, non-discrimination, and
timeliness.
Pursuant to the proportion principle resolutions (actions) of authorities
should be necessary and minimally sufficient for reaching the objective of
satisfaction of common social interest.

Pursuant to the transparency principles resolutions (actions) of authorities
should be duly justified and notified to entities which they refer to, in a timely
manner in advance of their entry into force or implementation.
Pursuant to the non-discrimination principle, resolutions, actions, omissions
of authorities may not result in:
− legal or actual volume of rights and obligations of the person which are
different than the volume of rights and obligations of other persons in similar
situations, only unless such difference is necessary and minimally sufficient for
satisfaction of common social interest;
− legal or actual volume of rights and obligations of the person which is the
same as the volume of rights and obligations of other persons in non-similar
situations, unless such similarity is necessary and minimally sufficient for common
social interest.
Effect of principles of proportion, transparency, and non-discrimination also
covers electricity market participants in cases prescribed by the Law.
Article 3. Principles of functioning of electricity market of Ukraine
1. Electricity market functions on a competitive basis, except for activity of
natural monopoly subjects, with restrictions set forth by this Law.
2. Operation of the electricity market is based on the following principles:
1) energy security of Ukraine;
2) safety of electricity supply to consumers and protection of their rights
and interests;
3) creation of terms of safe exploitation of electricity objects;
4) preservation of integrity and ensuring efficient functioning of the
Unified Energy System of Ukraine, single dispatching (operational and
technological) management thereof;
5) ensuring balance between the demand and supply of electricity;
6) development of interconnectors with energy systems of adjacent
countries;
7) energy efficiency and environmental protection;
8) promotion of alternative and renewable energy development ;
9) fair competition;
10) equal rights of electricity sale and purchase;
11) free choice of electricity supplier of consumers;
12) non-discriminatory and transparent access to electricity transmission
and distributions systems ;
13) non-discriminatory participation in the electricity market;
14) independent regulation;
15) non-discriminatory and cost-reflective pricing;
16) responsibility of market participants for compliance with the market
rules, day-ahead and intraday market rules, code of transmission system, code of
distribution system, commercial metering code, retail market rules, other

regulations and regulatory documents covering functioning of the electricity
market and terms and conditions of the contracts concluded in this market;
17) cooperation and integration of electricity markets at regional and
European levels.
3. The obligatory condition for participation in the electricity market (except
for consumers purchasing electricity under the retail supply contract) is conclusion
of the agreement with the transmission system operator on balance responsibility.
Article 4. Contractual support to the electricity market operation
1. Electricity market participants operate in the electricity market on a
contractual basis. For the purpose of ensuring the electricity market operation, one
or more of the following types of agreements shall be concluded:
1) bilateral contract;
2) on participation in the day-ahead and intraday market;
3) on sale and purchase of electricity at the day-ahead market;
4) on sale and purchase of electricity at the intraday market;
5) on participation in balancing market;
6) on balance responsibility;
7) on provision of distribution services;
8) on provision of transmission services;
9) on provision of support services;
10) on provision of services in dispatching (operational and technological)
management;
11) on connection to transmission system;
12) on connection to distribution system;
13) on access to cross-boarder capacity of interconnectors;
14) on supply of electricity to consumer;
15) on supply of electricity by supplier of unique services;
16) on supply of electricity by supplier;
17) on provision of commercial metering services;
18) on sale and purchase of electricity at the “green” tariff;
19) other contracts concluded according to legal acts that ensure
functioning of the electricity market.
SECTION II.
ELECTRICITY SECTOR POLICY AND SECURITY OF SUPPLY
Article 5. National Policy in the Electricity Sector
1. National policy in the electricity sector is aimed at:
1) ensuring reliable and safe electricity supplies;
2) creating conditions for efficient operation of a liquid electricity market ;

3) providing conditions and applying measures for energy efficiency,
demand management and energy substitution, and using potential sinergies in the
electricity sector;
4) promoting the electricity generation from renewable energy sources and
development of distributed generation and electricity storage facilities;
5) promoting environmental protection in the electricity sector;
6) creating conditions for investments into the electricity sector, promoting
easy access to information, reliable planning instruments and shorter
administrative procedures;
7) promoting application of new technologies;
8) promoting measures for protection consumers;
9) integration of the national electricity market at the regional and pan-
European levels.
2. The Cabinet of Ministers of Ukraine, the government agency responsible
for development and implementation of the national policy in the power sector
(Ministry of energy), the government agency responsible for implementation of the
national policy on supervision in the electricity sector, and other public authorities
under Ukrainian law are responsible for development and implementation of the
national policy in the electricity sector.
3. The scope of powers of the Cabinet of Ministers of Ukraine in the
electricity sector includes:
1) approval of the Energy Strategy of Ukraine;
2) designation, jointly with the National Bank of Ukraine, of an authorized
bank in the electricity market;
3) foundation of the Market Operator;
4) designation of a guaranteed buyer entity;
5) taking action to ensure security of supply without, or with minimum
interruption of the electricity market;
6) decision-making on charging special obligations to ensure general
public interests and terms (order) for fulfillment of such special obligations;
7) approval of the procedure of granting exemption under Article 24 of
this Law;
8) approval of the procedure of securing electricity supply to protected
consumers;
9) approval of forecasted annual fuel and energy balance;
10) approval of the authorization procedure for new generation capacity;
11) approval of the procedure of organizing tenders for the construction of
new power plants and energy efficiency/demand-side management measures;
12) other powers provided by laws.
4. The scope of powers of the government agency responsible for
development and implementation of the national policy in the power sector
(Ministry of energy) includes:

1) development and implementation of the national policy in the power
engineering complex on the basis of the Energy Strategy of Ukraine;
2) development of the national policy on supervision in the electricity
sector;
3) development of specific-purpose government programs;
4) approval of and monitoring of compliance with operational safety
standards for the Unified Energy System of Ukraine;
5) development and approval of the rules of secure electricity supplies and
monitoring security of electricity supplies;
6) approval of normative characteristics of electricity loss during
transmission and distribution by electrical grids;
7) formation and approval of forecasted electricity balance of the Unified
Energy System of Ukraine;
8) implementation, within the scope of its competence, of a research and
development policy in the fuel and energy complex;
9) other powers provided by Ukrainian law and vested by the Cabinet of
Ministers of Ukraine.
The government agency responsible for development and implementation of
the national policy in the power sector has the right to receive information from
market participants required to exercise its powers under this Law.
5. In order to improve the electricity sector policy, all business entities
engaged in the production, transmission, distribution, supply, export and import of
electricity are required to report their performance indicators to the state statistics
service to organize and publish energy-related statistics
The list of and procedure of reporting performance indicators are approved
by the Cabinet of Ministers of Ukraine.
Article 6. State Regulation on the Electricity Market
1. State regulation on the electricity market is provided by the Regulator
within the scope of powers stipulated by this Law and other legislative acts.
2. The Regulator’s main objectives on the electricity market include:
1) promoting cooperation with the Energy Community Regulatory Board
and national electricity market regulators of other Energy Community member
states, creation of a single competitive electricity market within the Energy
Community to ensure security of electricity supplies, protection of the environment
and effective opening of the electricity market for all customers in Energy
Community Parties;
2) creating proper conditions for efficient and sustained functioning of
electricity networks considering long-term development goals;
3) developing competition and ensuring proper functioning of regional
(international) markets within the Energy Community, in particular, the Energy

Community’s single market to achieve the goals mentioned in paragraph (1) of
this part;
4) removing obstacles and restrictions in electricity trade among the market
players of the states party to the Energy Community Parties; in particular,
achieving proper level of transmission capacity of inter-country electricity
networks to meet demand and enhance integration of electricity markets in
individual Energy Community Parties which will foster international electricity
trade within the Energy Community;
5) promoting development of a secure, effective and efficient unified energy
system of Ukraine geared toward the customer needs to facilitate a
nondiscriminatory access to this system by existing and potential users, sufficient
capacity to meet the needs of the electricity market and ensure energy efficiency,
and integration into the system of transmission and systems distributed generation
and producers generating electricity from alternative sources of energy;
6) creating simple and easy conditions of connecting to and accessing
electricity networks by new users; in particular, by eliminating barriers which may
prevent the access by new users and electricity producers, including producers
generating electricity from alternative sources of energy;
7) providing short- and long-term incentives for the transmission system
operator, distribution system operators and system users to improve effectiveness
of energy system operation and integration of the electricity market;
8) creating preconditions for customers to receive economic benefits from
efficient functioning of the electricity market by promoting competition on the
electricity market and implementing efficient mechanisms of protecting end users’
rights;
9) ensuring high standard of performing public service obligations, protect
vulnerable consumers and set up a data exchange process necessary to exercise the
consumer right to switch an electricity supplier.
3. The scope of Regulator’s powers on the electricity market includes:
1) licensing of commercial activities in the field of electricity according to
the requirements of this Law and control over licensees’ observance of license
terms for conduct of commercial activities;
2) approval of the license terms allowing to conduct types of activities in the
field of electricity, licensing of which is the powers of the Regulator;
3) making decision on certification of the transmission system operator or
refusal from certification;
4) approval of market rules, rules of the day-ahead market and the same-day
market, code of transmission system, code of distribution system, Commercial
Metering Code, and retail market rules, rules for management of limitations and
the procedure for distribution of capacity of interconnectors, other regulatory legal
acts and regulatory documents covering functioning of the electricity market;
5) approval and monitoring of fulfillment of the Unified Energy System
development plan for the next ten years and distribution system development plans

and indicative generation development plans in the context of generation
adequacy;
6) approval of:
o methodology of calculating tariffs for universal services;
o methodology (procedure) of calculating budget of the guaranteed
buyer;
o methodology of calculating tariffs for last resort supply;
o methodology of calculating prices (tariffs) for ancillary services;
o methodologies (procedures) of setting (forming) electricity
transmission tariffs;
o methodologies (procedures) of setting (forming) electricity
distribution tariffs;
o methodology of calculating tariffs for operational and technological
dispatching services;
o methodology of establishment of the fee for connection to the
transmission system and distribution system;
o connection rates;
o list of current accounts with special regime of use;
o rules, procedures and terms provided by this Law;
o typical and sample contracts provided by this Law;
o report forms for market participants prices for unique services and
services of the last resort supplier;
7) setting:
o prices for universal services;
o tariffs for (operational and technological) dispatching services;
o electricity transmission tariffs;
o electricity distribution tariffs;
o funds allocation algorithms for current accounts with special regime
of use;
o minimum amount of obligatory sale and purchase of electricity on the
day-ahead market in accordance with this Law;
8) determining:
o the need in and requirements to obligatory audits of the day-ahead
market, intraday market, balancing market and ancillary services
market and calculations for these markets;
o requirements to the protection, provision, disclosure and promulgation
of information by market participants;
9) ensuring performance by the transmission system operator, distribution
system operators and other market participants (except consumers) of their
obligations under this Law, including obligation to cooperate and interact with
electricity market participants from other Energy Community Parties;
10) monitoring:
o functioning of the electricity market and its segments;

o the degree and effectiveness of electricity market’s openness,
transparency and competition in electricity market segments
(including prices under bilateral contracts and prices in organized
market segments, prices for households, particularly the practice of
using prepayments), electricity supplier switching rate, disconnection
practice, maintenance prices and quality, consumer complaints
(including complaints from household consumers), and any practices
resulting in distortion or limitation of competition on the electricity
market;
o the degree of transparency of market participants’ activities, including
performance by market participants (except consumers) of their
obligations concerning disclosure/promulgation of information;
o actions by the transmission system operator regarding congestion
management, including system constraints;
o adherence to the capacity allocation rules;
o compliance by the transmission system operator and distribution
system operators with the requirements concerning non-
discriminatory access to their electricity networks, connection and
repair timeframes;
o application of tariffs and other fees related to electricity network
access, and monitoring of the application and observance of
methodologies (procedures) of calculating these tariffs and fees;
o use by the transmission system operator of revenues from cross-
boarder capacity allocation;
o technical cooperation of the transmission system operator with the
European Network of Transmission System Operators for Electricity
(ENTSO-E) and implementation of any compensation mechanisms
between transmission system operators adopted as part of this
cooperation;
o [performance of special obligations under PSO in the course of
electricity market’s functioning for the compliance with requirements
of this Law and other legislative acts;]
o application of contract provisions restricting competition on the
electricity market (in particular, contract provisions preventing non-
household consumers from entering into several bilateral contracts
simultaneously or restricting their right to choose an electricity
supplier);
o observance by electricity suppliers of the procedure of reviewing
inquiries and complaints from electricity consumers concerning
electricity supply services;
o monitoring investment in generation capacities in relation to security
of supply;
o fulfillment by electricity market participants of their functions and
obligations in accordance with this Law and other legislative acts

regulating the functioning of the electricity market.
11) monitoring compliance by the transmission system operator,
distribution system operators and holders of shares (stakes in the authorized
capital) of these business entities and by vertically-integrated business entities with
the requirements regarding unbundling and independence provided by this Law;
12) approving, revising and control of implementation of transmission
system operator’s and distribution system operators’ investment programs;
13) reporting facts that may prove violation of the law on the protection of
economic competition on the electricity market to the Antimonopoly Committee
of Ukraine;
14) reviewing complaints and resolving disputes on the electricity market;
15) ensuring, together with other public authorities, effective application of
measures of protecting consumer rights, including measures provided by this Law;
16) setting and monitoring compliance with the minimum standards and
requirements to quality of electricity supply services, setting the terms, procedure
and amount of compensation payable in the event of noncompliance with
applicable service quality standards;
17) facilitating consumer access to information regarding amount and other
indicators of electricity consumption according to the procedure and on the terms
provided by this Law and other legislative acts;
18) participating in ensuring protection to vulnerable consumers within the
relevant competence;
19) fostering data exchange to facilitate development of the electricity
market;
20) exercising other powers provided by law.
4. The Regulator has the right to:
1) receive information required to properly perform functions provided for
in this Law or other legislative acts from any bodies of public administration and
participants of the electricity market (except consumers);
2) initiate consultations and public discussions;
3) initiate and conduct investigations regarding the functioning of the
electricity market in Ukraine, authorize measures of fostering effective competition
on and proper functioning of the electricity market;
4) make decisions binding upon market participants;
5) apply sanctions to market participants (except consumers) in breach of
their obligations under this Law or other legislative acts;
6) take action to prevent the abuse of monopolistic state, in particular,
when the abuse inflicts economic damages upon consumers, and any forms of
overpricing behavior;
7) require responsible operators to prepare changes to the market rules,
day-ahead and intraday market rules, code of distribution system and the
commercial metering code, rules for management of restrictions and procedure for
distribution of capacity of interconnectors to ensure compliance with the
proportionality and nondiscrimination principle;

8) set provisional transmission and distribution tariffs, if the transmission
system operator or an distribution system operator has failed to submit in due time
the calculations of these tariffs to the Regulator, and make decision regarding the
compensation mechanism if final tariffs differ from provisional;
9) review complaints and resolve disputes in accordance with this Law;
10) supervision of electricity market participants (except consumers) in
accordance with this Law.
Article 7. Pricing (tariff setting) on the electricity market
1. The following shall be subject to the state regulation on the electricity
market:
o tariffs for electricity transmission services;
o tariffs for electricity distribution services;
o tariffs for (operational and technological) dispatching services;
o prices for unique services;
o prices for services of the last resort supplier;
o prices for support services in case set forth in this Law;
o connection rates;
o green tariffs;
o other tariffs and prices according to its Law
2 State regulated prices and tariffs on the electricity market (including
connection fee) must be:
1) nondiscriminatory;
2) transparent;
3) set in accordance with the requirements to integrity of the Unified Energy
System of Ukraine, economically-justifiable and transparent expenses of an
electricity market player concerned and proper level of profit margin.
3. State regulated prices and tariffs on the electricity market must:
1) promote efficient electricity sales and development of competition on the
electricity market;
2) create economic incentives for investments in and maintenance of the
transmission system and distribution systems;
3) stimulate electricity market participants (except consumers) to improve
effectiveness of the Unified Energy System of Ukraine, integration of the
electricity market and ensure security of electricity supplies, and to develop
scientific and technical knowledge related to commercial operations of these
participants.
State regulated prices and tariffs on the electricity market cannot:
1) allow for cross-subsidizing among system users;
2) limit electricity market’s liquidity;
3) obstruct cross-boarder trade of electricity.

4. Electricity transmission and distribution tariffs cannot depend on the
electricity transmission and distribution distance. Tariffs for transmission and
distribution may consist of several rates.
5. If the differences in the structure of electricity transmission tariffs or in the
balancing rules obstruct inter-country electricity sales, the Regulator shall take
action to harmonize tariff structures and balancing rules applicable to this energy
system and energy system(s) of neighboring Energy Community Parties.
6. Methodologies (orders) for establishment (formation) of tariffs for
electricity transmission and electricity distribution services must ensure fair rates
of return on invested capital as well as short-term and long-term incentives for the
transmission system operator and distribution system operators to improve
effectiveness and must not stimulate increase in the volumes for transmission and
distribution of electricity.
7. The Regulator shall approve methodologies (orders) of establishment
(formation) of state regulated prices and tariffs on the electricity market (in
particular, connection fee) at least 30 days prior to the effective date of the prices
and tariffs (in particular, connection fee) calculated in accordance with these
methodologies (procedures).
The Regulator’s decision to set these prices and tariffs requires promulgation
by publishing it on the Regulator’s website.
Article 8. Licensing Commercial Operations on the Electricity Market
1. Production of electricity, transmission, distribution and supply of
electricity to consumers, electricity trading, market operator and guaranteed buyer
activities on the electricity market require the appropriate license.
2. The Regulator approves the licensing terms of production, transmission,
distribution of electricity and supply of electricity to consumers, electricity trading,
market operator and guaranteed buyer activities.
3. The Regulator issues a license for production, transmission, distribution of
electricity and supply of electricity to consumers, electricity trading, market
operator and guaranteed buyer activities according to the procedure provided by
law.
4. A license to conduct certain commercial operations on the electricity
market may be denied only for the reasons provided by Law, in a
nondiscriminatory manner and on the basis of a complete and objective assessment
of the applicant’s documents taking into consideration other relevant information
available to the Regulator.
The applicant must be informed about the reasons for denial of his license
application.

Article 9. Government energy supervision in the electricity sector
Government energy supervision in the electricity sector is conducted by the
government agency responsible for implementation of the national policy on
energy supervision in the electricity sector according to the procedure provided by
the Cabinet of Ministers of Ukraine.
The subject of government energy supervision in the electricity sector is
commercial production, transmission, distribution and supply of electricity and
also the use of electricity by electricity market participants (including consumers)
for their own needs associated with technical operation of electrical stations and
electricity networks, power generating equipment, testing and repair of electrical
plants and electricity networks, supply of electricity to consumers, design of
electrical plants and electricity networks.
A method of carrying out government energy supervision in the electricity
sector includes inspections, examinations, checks, etc. of electricity network
equipment of electricity market participants (including consumers) by the
government agency responsible for implementation of the national policy on
energy supervision in the electricity sector according to the procedure provided by
the Law of Ukraine On the Main Principles of Government Supervision (Control)
in Commercial Sphere.
The government agency responsible for implementation of the national
policy on energy supervision in the electricity sector is tasked with:
o government energy supervision of electrical plants and electricity
networks of electricity market participants (including consumers, except household
consumers);
o government energy supervision of the compliance by electricity market
participants with requirements of regulatory acts governing functioning of the
electricity market, in particular, of:
o ensuring reliable and secure supply of electricity to consumers;
o technical state and organization of operation of electrical plants and
electricity networks of electricity market participants (including consumers, except
household consumers);
o compliance by electricity market participants (including consumers,
except household consumers) with requirements of rules and other regulatory acts
and documents concerning technical operation of electrical stations and electricity
networks, technical state of electrical plants and electricity networks;
o conformance of electricity power supply schemes (external and internal):
category of consumers and their electrical installations;
o remedying by electricity market participants (including consumers,
except household consumers) of the instances of breach of rules and other
regulatory acts and documents concerning technical operation of electrical stations
and electricity networks, technical state of electrical plants and electricity
networks;

o measures taken by electricity market participants (including consumers,
except household consumers) to prevent accidents in and breakdowns of electricity
networks;
o organization and frequency of special training of personnel engaged in
operation and maintenance of equipment at power generating facilities, frequency
of knowledge tests taken by these personnel concerning requirements of the
applicable regulatory acts and documents concerning technical operation of
electrical stations and electricity networks, technical state of electrical plants and
electricity networks;
o observance of the procedure of limiting and/or discontinuing the supply
of electricity to consumers by a distribution system operator and electricity
supplier, provided by regulatory documents in the electricity sector;
o observance of the special regime of disconnecting and/or limiting
electricity supply to prevent occurrence of human-induced or natural emergency
situations;
o ensuring proper technical state of elements of automatic emergency
response system’s equipment installed at electricity market participants’ facilities;
o the readiness of equipment of electricity market participants’ electricity
networks for operation during the fall/winter period and in the conditions of special
period or the state of emergency;
o the readiness of autonomous backup power supply sources for operation
at the facilities of first-category electricity consumers and the special group of first
category of electricity supply reliability;
o development by electricity market participants of measures of ensuring
reliable and fault-free electricity supply to consumers;
o participation in the work of commissions investigating the reasons and
consequences of accidents and fire at equipment of electricity market participants’
electricity networks, which lead to disruptions in operation of other electricity
market participants.
When carrying out government energy supervision, the government agency
responsible for implementation of the national policy on energy supervision in the
electricity sector has the right to:
o demand that electricity market participants remedy the instances of
noncompliance with requirements of the applicable regulatory acts and documents
concerning technical operation of electrical stations and electricity networks,
technical state of electrical plants and electricity networks;
o issue directives binding upon electricity market participants concerning
remedying of the instances of noncompliance with requirements of the applicable
regulatory acts and documents concerning technical operation of electrical stations
and electricity networks, technical state of electrical plants and electricity
networks;
o initiate shutdown of electrical plants and electricity networks by filing a
legal complaint in court on the basis of a report on the inspection which discovered

the unsatisfactory technical state and/or organization of operation of these
electrical plants and electricity networks;
o apply penalties to electricity market participants in accordance with law
for violating requirements of regulatory acts and documents concerning technical
operation of electrical stations and electricity networks, technical state of electrical
plants and electricity networks;
o receive, in accordance with law, in response to a written inquiry and free
of charge, information from electricity market participants and their officials
concerning the matters arising in the course of government energy supervision
which the agency needs to perform its functions;
o demand that electricity market participants and their officials stop the
actions obstructing government energy supervision;
o take samples of parts of damaged electricity network equipment and
order technical diagnostics of electricity network facilities (or separate parts
thereof);
o provide consulting assistance to electricity market participants and hear
disputes between electricity market participants within the scope of its
competence;
o provide, at the applicant’s written request, an opinion concerning
technical feasibility of requirements of technical specifications for connection;
o draw up protocols and hear administrative offense matters in the cases
provided by law;
o record the government energy supervision process or every particular
actions using sound and video recording devices;
o receive, free of charge and according to the procedure provided by law,
information, documents and materials from central and local bodies of executive
power and bodies of local self-governance which the agency needs to perform its
tasks and duties and exercise its authority, in particular, receive statistical
information from statistics agencies;
o use databases of bodies of public administration, state (including
government) communication systems, special communication networks and other
technical devices;
o lodge complaints and lawsuits according to the procedure provided by
law to protect interests of the state in the electricity sector.
Article 10. Powers of Local Executive Authorities and Bodies of Local
Self-Government in Relations with Electricity Market Entities
1. The scope of powers of local executive authorities and bodies of local
self-government in relations with electricity market entities includes:
o approval of installation of power engineering infrastructure in the areas
under their jurisdiction based on the local community’s interests;
o participation in preparation of distribution system development plans for
the areas under their jurisdiction;

o participation in development and implementation of measures concerning
operation of power infrastructure in extraordinary conditions;
o promoting development of power industry in the region.
2. Local executive authorities and bodies of local self-government cannot
intervene in regulation of electricity consumption regimes.
Article 11. Anti-Monopolistic Restrictions
1. The Law of Ukraine On the Protection of Economic Competition prohibits
the business entities whose relations are regulated by this Law from conducting
monopolistic activity in any form, with the exception of cases provided by
Ukrainian law.
2. Business entities engaged in the production, transmission, distribution or
supply of electricity, market operator or guaranteed buyer and recognized,
according to the applicable procedure, as being monopolists on (dominating) the
electricity market cannot terminate or reduce their operations for the purpose of
creating shortage of electricity, unless Ukrainian law provides for this limitation.
Article 12. Particularities of Working Conditions in Power Engineering
Industry
1. Entities, institutions and organizations of power engineering industry
shall be staffed with highly-qualified personnel, continuously improve their skills
and provide reliable social security.
2. Persons controlling production processes in power industry shall undergo
special training and knowledge testing (certification) in accordance with law,
including regulatory acts of the government agency responsible for development of
the national policy in the power sector and other government agencies responsible
for development of the national policy in relevant spheres.
3. The list of these fields of specialization and positions is approved by the
government agency responsible for development of the national policy in industrial
and labor safety sphere upon agreement with the government agency responsible
for development of the national policy in the power sector.
4. Persons who did not undergo the required training cannot be admitted to
work in power sector.
5. The costs of personnel training and retraining and maintaining
specialized training and industry coordination centers are included to gross
production and current expenses.

6. Personnel knowledge testing (certification) shall be paid for by the
owners of power engineering infrastructure facilities.
7. Personnel of power generating plants exposed to radioactive, thermal or
electromagnetic radiation or to other harmful or dangerous factors are required to
undergo special medical examinations and entitled to compulsory insurance
payable by the entities they work for.
8. Power enterprises may introduce special rules of safe work to prevent
work accidents. Regulations on introduction of special rules of safe work are
prepared by the government agency responsible for implementation of the national
policy in the power sector and adopted according to the applicable procedure.
9. Power enterprises are required to create jobs for the disabled at the rate of
four percent of the number of personnel engaged in nonproduction sphere.
Article 13. Labor Strikes at Power Engineering Enterprises
Labor strikes at electricity undertakings are prohibited in the cases when
they may disrupt the integrity of the Unified Energy System of Ukraine.
Article 14. Environmental Protection
1. Electricity undertakings shall comply with the requirements of
environmental protection law, implement technical and organizational measures of
reducing environmental impact of power engineering infrastructure, and bear
responsibility for violating the environmental protection law.
2. If the environmental protection law is violated, the Cabinet of Ministers of
Ukraine may decide to limit, suspend or shut down operation of power plants or
power transmission infrastructure.
3. Decisions regarding limitation, suspension or shutdown of operation of
other power facilities may be made by local executive authorities, relevant bodies
of local self-government and the government agency responsible for
implementation of the national policy on the government monitoring (control) of
environmental protection, rational use, renewal and protection of natural resources
within the scope of their powers provided by Ukrainian law.
4. Sanitary protection zones shall be designated to ensure safety of
population living in the area where power infrastructure facilities are located. The
dimensions and the procedure of using these zones are set out in regulatory
documents and design of these facilities approved according to the applicable
procedure.

5. All forms of business activity within sanitary protection zones permitted
by the regime of using these zones may be conducted only upon approval by the
owner of a power infrastructure facility or his authorized representative.
Article 15. Regional Cooperation
1. The government agency responsible for development and implementation
of the national policy in the electricity sector and the Regulator shall cooperate
with the relevant authorities of other Energy Community member states with
Energy Community institutions for the purpose of integrating their national
electricity markets at the regional level.
Regional cooperation shall promote the development of harmonizing
regulatory base and electricity exchange between states, coordinated allocation of
cross-border capacity through non-discriminatory market-based solutions, and the
regional integration of day-ahead markets, balancing and reserve power
mechanisms.
2. The Regulator shall promote the cooperation of the transmission system
operator with transmission system operators of Energy Community member states
at a regional level, including on cross-border issues, with the aim of fostering the
consistency of their legal, regulatory and technical framework.
of the national policy in the electricity sector and the Regulator shall assist the
transmission system operator in integrating the Unified Energy System of Ukraine
at the regional level with one or several energy systems of Energy Community
Parties for capacity allocation and for checking the security of the network.
Article 16. Electricity Supply Emergency Rules
of the national policy in the electricity sector shall develop and approve electricity
supply security rules binding upon all participants of the electricity market. The
electricity supply security rules shall set the minimum security criteria for
electricity supply and include:
O the measures of ensuring security of electricity supply;
O the measures to be taken in cases when security of supply is at risk;
O the measures to be taken in emergency situations (emergency measures);
O criteria/types of electricity supply security breach;
O the measures binding upon participants of the electricity market (except
consumers) to ensure security of electricity supply to protected consumers;
O the procedure of initiating implementation of required measures;
O the procedure of applying and duration of required measures;
O the procedure of notification about the application of required measures;
O obligations and liability of public authorities and electricity market
participants concerning security of electricity supply.

2. The measures listed in this Article may include, in particular:
O price caps on the electricity market;
O introduction of special terms for electricity purchase-sale operations;
O imposition of special requirements upon electricity market participants
regarding electricity production, supply, purchase and sale;
O introduction of special terms for electricity export and/or import
operations;
O introduction of special terms for the disconnection of electricity supply.
3. When developing the rules mentioned in part one of this Article, the
government agency responsible for development and implementation of the
national policy in the electricity sector shall take into account the economic impact,
effectiveness and consequences of these measures for the functioning of the
electricity market and their environmental and consumer impact.
These rules must be transparent, cannot be impossible to comply with from
the outset and cannot distort competition and affect trade beyond what is absolutely
necessary to address the emergency.
These rules cannot put an excessive pressure on electricity market
participants and shall minimize the adverse consequences for the functioning of the
electricity market.
4. Announcement of occurrence of an emergency situation in the unified
energy system of Ukraine shall be carried out by the transmission system operator.
Criteria of occurrence of an emergency situation in the unified energy system of
Ukraine and the procedure of its announcement shall be provided for in the code of
transmission system.
During the period of availability of the emergency mode in the unified
energy system of Ukraine the operator of the transmission system shall be provided
with the powers to apply emergency measures in compliance with the code of
transmission system.
If there are emergency situations in the unified energy system of Ukraine the
electricity companies shall act in compliance with the code of the transmission
system, standards of operation safety of function of the unified energy system of
Ukraine and perform operative commands and instructions of the electricity
transmission system operator.
5. Regulator shall announce occurrence of an emergency situation on the
electricity market. Criteria for occurrence of an emergency situation on the
electricity market and the procedure for announcement of it shall be provided for in
the rules of the market.
During the period of availability of an emergency situation on the electricity
market the Regulator shall be provided with the powers to apply temporary
emergency measures, namely, the following:
- limitation of prices on the electricity market;

- establishment of special conditions for sales and purchase of electricity;
- setting special terms for the market players concerning production, supply
as well as sales and purchase of electricity;
- establishment of special terms for export and/or import of electricity.
6. Emergency measures may be taken and have to be limited in time until
the cessation of an emergency situation.
7. Decisions of the Regulator on taking special measures on the electricity
market and cancellation of them shall not be deemed to be the regulatory acts.
8. The government agency responsible for implementation of the national
policy in the power sector (Ministry) shall inform Secretariat of Energy
Community on decisions related to imposing emergency measures and content of
these planned measures as well as reasons to impose it.
If the imposed imposing emergency at the national level do not ensure
settlement of the crisis situation, the government agency responsible for
implementation of the national policy in the power sector (Ministry) should inform
Secretariat Energy Community for taking necessary measures at international
level.
9. Electricity market participants shall plan and take measures in accordance
with the rules of secure electricity supply referred to in this Article and shall be
responsible for the security of electricity supply within their scope of activity.
10. If emergency measures are taken on the electricity market no
discrimination is allowed between electricity purchase-sale agreements within
Ukraine and electricity export-import contracts.
11. If the state of emergency is introduced under the Law of Ukraine On
Legal Mode of the State of Emergency, enterprises, institutions and organizations
of the power engineering industry located in the areas where the state of
emergency was introduced must obey the orders of bodies responsible for
maintaining the state of emergency in the area in question concerning electricity
supply to consumers regardless of the terms of their contracts.
12. If a special period is introduced, power enterprises shall operate in
accordance with the Law of Ukraine On Mobilization-related Preparations and
Mobilization and regulatory acts of the government agency responsible for
development and implementation of the national policy in the power engineering
complex regulating the functioning of power engineering industry in the conditions
of special period.
13. The particularities of regulating legal, economic and organizational
relations associated with the sale of electricity to the temporarily occupied

territories and relations associated with the production, transmission, distribution,
supply, purchase, sale and use of electricity in the temporarily occupied territories
are set by the Cabinet of Ministers of Ukraine.
Article 17. Operational Security Standards
1. The transmission system operator is responsible for developing
operational security standards for Unified Energy System of Ukraine. When
developing these standards, the transmission system operator shall hold public
hearings and consultations with the stakeholders in Ukraine and abroad (if these
standards affect adjacent energy systems).
The operational security standards for Unified Energy System of Ukraine
set out the provisions concerning:
O security of electricity networks and connections between the Unified
Energy System of Ukraine and energy systems of other countries;
O the planning of development of the Unified Energy System of Ukraine;
O definition of technical parameters for operation of electricity network
equipment;
O the exchange of information regarding the networks’ performance,
including with the operators of adjacent energy systems;
The operational security standards for Unified Energy System of Ukraine are
approved by the government agency responsible for development and
implementation of the national policy in the power sector upon agreement with the
Regulator. The government agency responsible for implementation of the national
policy in the power sector shall monitor the compliance with the operational
security standards for Unified Energy System of Ukraine.
2. The transmission system operator shall maintain an appropriate level of
technical transmission reserve capacity for the operational network security and
shall cooperate with operators of adjacent systems in this respect.
3. The transmission system operator and distribution system operators shall
exchange information related to the operation of networks in a timely and effective
manner and in accordance with the operational security standards.
comply with the operational security standards.
Article 18. Quality of Electricity Supply
1. The Regulator approves electricity supply quality indicators
characterizing the level of reliability of electricity supply, commercial quality of
service and electricity quality.
2. The Regulator sets out the procedure and amount of compensation for the
failure to maintain the required service quality indicators.

3. The service quality indicators and compensation payment procedure and
amount shall be promulgated according to the procedure set out by the Regulator.
Article 19. Electricity Demand and Supply Balance
1. In order to maintain the balance between the demand for electricity and
the available generation capacity:
O market rules and day-ahead and intraday market rules shall create
conditions to provide appropriate price signals to electricity generators and end
buyers;
O the transmission system operator shall maintain the required reserve of
generating capacity for balancing purposes and/or to apply the equivalent market-
based measures.
2. In order to maintain the balance between the demand for electricity and
the available generation capacity, the Cabinet of Ministers of Ukraine may take, in
particular, the measures to:
O create preconditions for simplification of the construction of new
generating capacities and entry onto market of new producers;
O prevent obstruction to the use of contracts with an interruptible supply
clause;
O prevent obstruction to the conclusion of various-duration contracts for
producers and buyers;
O encourage implementation of real-time demand management
technologies;
O encourage energy conservation measures;
O use tender procedures to bring in new investments in generating facilities
on the basis of transparency and nondiscrimination.
3. The transmission system operator shall develop short-, medium- and long-
term forecasts of electricity supply and demand taking into account the
requirements to security of supply.
Article 20. Monitoring the Security of Supply
policy in the power sector, jointly with the Regulator, transmission system operator
and other institutions concerned, shall monitor the security of electricity supply in
Ukraine. This monitoring shall cover:
O the balance of demand and supply on the electricity market of Ukraine;
O the level of expected demand for electricity and envisaged additional
generating capacities, either planned or under construction;
O the quality and level of network maintenance;
O measures of covering peak demand and preventing shortage of generating
capacities.

of the national policy in the power sector shall promulgate an electricity supply
security monitoring report every two years, until 31 July.
This report shall include:
O results of monitoring of the areas mentioned in part one of this Article
and measures planned or taken to handle these issues.
O information regarding the energy system’s aggregate capacity to meet the
current and forecasted demand for electricity;
O network security and supply quality;
O forecasted balance of electricity demand and supply for the next five (5)
years;
O supply security forecasts for a period between 5 and 15 years;
O investments planned by the transmission system operator or other parties
for the next five or more years to ensure cross-border transmission capacity;
O congestion management principles;
O existing and planned power transmission lines;
O expected structure of the production, supply, sale, cross-boarder
exchange and consumption to devise demand management measures;
O national, regional and pan-European goals of sustained development,
including priority projects of Energy Community’s power engineering
infrastructure.
3. In order to monitor the security of supply and prepare a relevant report,
the government agency responsible for implementation of the national policy in the
power sector shall cooperate with the public authorities concerned, including the
Regulator, transmission system operator and other institutions.
4. Public authorities, the Regulator, transmission system operator and other
institutions shall, upon inquiry from the government agency responsible for
implementation of the national policy in the power sector, provide information
which they gather in the course of their activities and which is required to prepare a
report.
policy in the power sector shall ensure nondisclosure of commercial information
gathered when monitoring the security of supply and preparing a relevant report.
6. The Ministry shall send an electricity supply security monitoring report to
the Secretariat of the Energy Community and publish it on its official website.
SECTION III
CONSTRUCTION AND CONNECTION OF ELECTRICITY FACILITIES
Article 21. Connection of electrical installations to electrical networks

1. The transmission system operator and distribution system operators have
no right to refuse the connection of electrical installations of the applicant to the
transmission or distribution networks subject to observance of the requirements of
the transmission system code and distribution system code by the customer.
2. Connection of electrical installations to the electrical networks should not
lead to deterioration of parameters of reliability and quality of electricity.
3. Connection of electrical installations to the electrical transmission system
and distribution system shall be carried out according to the connection
agreements, templates of which are defined by the transmission system code and
distribution system code.
4. Rules of connection to transmission system and distribution systems,
including types of connection (standard, non-standard) procedural issues, technical
and commercial conditions of connection, templates of connection agreements,
templates of technical specifications shall be defined by the transmission system
code and distribution system code.
Terms of connection should be transparent, ensure effective and non-
discriminatory connection.
The transmission system code and distribution system code shall determine
peculiarities of connection of electric installations of the producers of electricity
with the use of renewable energy sources in the relevant system, which take into
account different types of connections, as well as the costs and benefits related to
connection of the producers to the systems, peculiarities as regards the producers
located in remote areas with low population density.
5. Design of electrical installations shall be made taking into account the
technical terms and conditions for connection.
Specifications for connection of electrical installations shall be time-limited.
Their duration shall be determined by the agreement of connection in compliance
with the requirements of the transmission system code and distribution system
code.
Any individual or legal entity shall be entitled to receive free of charge from
the transmission system operator and distribution system operators input data for
the development of the feasibility study for the connection in accordance with the
transmission system code and distribution system code.
The applicant shall have the right to choose the designer of connection
among entities eligible to perform the corresponding activity in accordance with
the requirements of the legislation. The costs of the applicant connected with the
implementation of project works, shall be considered as a part of total costs of
connection.
6. The transmission system operator and distribution system operators will
have to provide any new producer of energy from renewable sources wishing to be

connected to the system with the comprehensive and necessary information
required, including:
1) estimate of the costs associated with the connection;
2) a reasonable and precise timetable for receiving and processing the
request for grid connection;
3) a reasonable indicative timetable for any proposed grid connection.
7. If the applicant intends to construct or reconstruct buildings, roads,
bridges and other architectural objects, which requires relocation of overhead and
underground electricity networks and other energy facilities, such relocation
services shall be provided by the transmission system operator and/or operators of
distribution systems according to the connection procedure.
8. Fee for connection to the transmission system or distribution system shall
be determined in accordance with the methodology of the cost of connections to
the grids approved by the Regulator.
Methodology of determining of the fee for connection to the transmission
system and the distribution system must be non-discriminatory and transparent,
and shall be subject to publishing by the Regulator, transmission system operator
and distribution system operators.
9. At the applicant’s written request, the government agency responsible for
implementation of the national policy on energy supervision in the electricity
sector shall provide a conclusion concerning technical feasibility of requirements
of technical specifications for connection for the conformity with the applicable
standards, norms and rules.
publish the information on the terms and conditions of connection to the
transmission system and distribution systems, as well as information about
elements of their systems, according to the requirements of the transmission
system code and distribution system code.
Article 22. Access to electrical networks
1. Transmission and distribution system operators shall ensure access on a
non-discriminatory and transparent basis to their transmission and distribution
networks for all system users. Access to electrical networks shall be provided at
the tariffs for transmission and distribution of electricity approved by the
Regulator, and shall be published before entry into force by the operator of the
transmission system and distribution system according to the determined order.
2. The transmission and distribution system operator may refuse access to
their electrical networks where there lacks the necessary capacity with obligatory
justification regarding grounds for such refusal, which shall be based on objective
and technically and economically justified criteria.

3. Users of electrical systems, which were denied access to electrical
networks shall have the right to file a complaint with the Regulator pursuant to the
order of dispute resolution determined by this Law and other regulatory and legal
acts.
4. When refusing access to electrical networks, the transmission system
operator and distribution system operators shall, according to transmission system
code and distribution system code, at the request of the potential or current user of
the electrical system, provide relevant information on measures necessary for
strengthening of electric network.
Article 23. Interconnection with other power systems
1. The transmission system operator should develop interconnections of
United Energy System (UES) of Ukraine with neighbouring power systems by
building the interconnectors, in accordance with the investment programs approved
by the Regulator.
2. Construction of interconnectors, can be carried out by the investors other
than the transmission system operator according to the procedure approved by the
Cabinet of Ministers of Ukraine in accordance with this Law.
3. The control of UES of Ukraine during parallel operation with
interconnected systems must be carried out in consideration of contracts with
operators of transmission systems and in compliance with the technical
requirements, operational safety requirements, operational safety standards.
Article 24. New interconnectors
1.The new direct current interconnectors and their capacity and additional
capacity of reconstructed existing direct current interconnectors may, upon
submission of the relevant request from investors, be exempt from the provisions
of Articles 38,39 of this Law in case of simultaneous fulfillment of the following
conditions:
1) investment should increase the level of competitiveness on the electricity
market;
2) the level of risk associated with investing in the construction of interstate
line, such that the investment will not take place if the exemption is granted;
3) interconnector is owned by entity, which is a separate legal entity with
respect to transmission system operators, which plan to build an interconnector;
4) for use of transmission capacity of interconnector its users shall pay;
5) no part of capital or operating costs for the creation and/or operation of
interconnector was covered by the tariff for transmission services or the
distribution of electricity transmission system operator or distribution system
operator of Ukraine or operator of power transmission system of the state, with
which interconnector is being built.

6) exemption does not detriment competition or the effective functioning of
electricity market and electricity system of the state, with which interconnectors is
being built.
2. The exemption provided for by the first paragraph of this Article may also
be used in exceptional cases to alternate current interconnectors, provided that the
costs and risks associated with investments in their building are significantly
higher compared with the costs and risks that, as a rule, may be incurred when
connecting two joint systems with alternate current line.
3. The exemption may cover the entire amount or a portion of the capacity of
the new interconnectors or reconstructed existing interconnectors, which capacity
was significantly increased.
4. Unused capacity of interconnectors to which the exemption is applied,
should be exhibited at the auction on capacity allocation.
5. The decision on the exemption shall be taken by the Regulator in each
individual case and it should be published with the appropriate grounds.
When deciding on exemption, the Regulator should determine the amount of
cross-boarder capacity that is exempted, the duration of the exemption, considering
the capacity line that will be built, or increasing the capacity of the existing line,
the term of the project and investment risks.
A decision on exemption shall be taken after consultation with the regulatory
authority of the state, with the power system of which interconnector is being built.
In case of achievement of agreement within six months between regulators on
granting exemption, the relevant decision must be notified to the Energy
Community Regulatory Board.
6. If the Regulator and regulating authority of the state, with the power
system of which it is planned to build the interconnector, within six (6) months
from the date of receipt of the relevant request to release to the last of the
regulatory authorities have not reached agreement on the exemption, the Regulator
may apply to the Regulatory Board of the Energy Community for the decision to
exempt.
The Regulator together with the regulating body of the state with the power
system of which it is planned to build an interconnector, may apply to the Energy
Community Regulatory Board for the decision to exempt before the expiry of the
six-month period.
7. The Regulator shall provide a copy of every request for exemption to the
Energy Community Regulatory Board and the Energy Community Secretariat.
The Regulator decision on exemption, together with all the relevant
information must be provided to the Secretariat of Energy Community. Such
information should contain, in particular:

1) the grounds on which exemption was granted or refused the exemption,
including the financial information justifying the need for exemption;
2) analysis of influence on competition and the efficient functioning of the
electricity market as a result of granting exemption;
3) justification of the duration and amount of cross-boarder capacity of
interconnector, on which exemption is provided;
4) the results of consultations with interested regulatory authorities.
8. The Regulator should take into account the recommendations of the
Energy Community Secretariat regarding amending the decision on exemption or
cancellation. In case of taking decision that is not consistent with the
recommendations of the Energy Community Secretariat, the Regulator should
provide and publish, together with that decision, its justification.
9. The decision on exemption shall expire two (2) years from the date of
such decision if the investor failed to start construction works or after five (5) years
if the interconnector was not put into operation.
10. The procedure for granting exemption provided for by this Article shall
be approved by the Cabinet of Ministers of Ukraine.
11. Operation of new (reconstructed) interconnectors built at the expense of
the investor shall be carried out by the operator of the transmission system by the
relevant agreement with the owner/investor.
Dispatching (operational and technological) management of new
(reconstructed) interconnectors cross-boarder lines shall be carried out by the
operator of the transmission system as a component of the united energy systems
of Ukraine.
Article 25. Direct line
1. Producers can ensure electricity supply of their own premises, subsidiaries
and final customers in a direct line.
Final customers can receive electrical energy from producers in a direct line.
Electrical installations of the final customer may be attached to a direct line and to
the transmission or distribution system, but physically separation of connection and
metering points should be in place.
2. Construction of direct line shall be carried out after receipt of
authorization from the Regulator.
Grounds for approval of construction of a direct line are:
1) denial of access to electricity networks;
2) opening dispute settlement procedure for access to electricity networks.

The construction of direct lines may be refused if the construction of direct
lines interferes with fulfillment of PSO and/or provisions on consumer protection
pursuant to this Law. Refusal in construction of direct lines must be justified.
3. Electric supply of the final customer through the direct line does not limit
his/her right to enter into an agreement on retail supply with electricity supplier of
its choice.
4. Expenses for construction and operation of direct line shall be borne by
the party that received approval for the construction of a direct line, if not
otherwise provided for in the agreement between the parties which electrical
installations are connected by the direct line.
Article 26. Unbundling of account
1. The transmission system operator and distribution system operators in
order to avoid discriminatory behavior, cross-subsidization and distortion of
competition in the electricity market, shall maintain separate accounting for each
of the activities on transmission and distribution of electricity.
Accounts for economic activity in the electricity market, except for activities
on transmission and distribution of electricity, may be consolidated, except as
provided by this Law.
Accounts for other economic activities not related to the activity in the
electricity market can also be consolidated.
2. The transmission system operator and distribution systems operators,
which carry out other economic activities in the electricity market and/or any other
economic activities, shall make and submit to the Regulator separate accounts for
each activity, in the order and form approved by the Regulator in accordance with
the requirements specified in the first paragraph of this Article.
3. Electricity undertakings shall be obliged to provide the Regulator, upon
its request, with financial statements (together with the independent auditor’s
report), which is subject to mandatory inspection by an independent auditor,
particularly in terms of compliance to avoid discriminatory behavior and cross-
subsidization and distortion of competition specified in the first paragraph of this
Article.
Article 27. Protection areas of electricity facilities and protection of
electricity facilities
1. Especially important electricity facilities listed by the central executive
body that ensures the formation and implementation of the state policy in the
electricity sector and are approved by the Cabinet of Ministers of Ukraine
including the territory of the restricted area and controlled areas of hydrotechnical

and technical structures, are protected by departmental militarized guard involving,
if necessary, the relevant departments of the state government.
Protection of other electricity facilities is carried out according to the laws of
Ukraine.
2. At the electricity facilities a special mode of access is set. At the territory
of restricted area of hydrotechnical structures a special mode (intra-facility and
bypass) is effective.
3. The personnel of departmental militarized guard of electricity facilities are
equipped with firearms and special means of self-defence. Use of firearms and
special means of self-defence shall be governed by the laws of Ukraine.
The personnel of the departmental militarized guard are equipped with
uniforms at the cost of electricity undertakings.
4. In the protected areas of electrical networks and other critical electrical
facilities operate limitations provided for by the legislation of Ukraine on land use.
Placement of buildings and other facilities in the protected areas of electrical
networks without taking technical precautions provided for by the regulatory and
technical documents are not allowed.
5. Within the territory of the restricted area and controlled area of
hydrotechnical structures a special mode of protection shall be established.
Access of third parties and all modes of transport in the area is possible only
according to the procedure provided for by the owner of hydrotechnical structures
or authorized body.
Works by third parties in the territory of restricted area of hydrotechnical
structures shall be performed according to the procedure determined by the Cabinet
of Ministers of Ukraine and in the territory of controlled area of hydrotechnical
structures – according to the procedure provided for by the owner of
hydrotechnical structures or authorized body.
Special aspects of the mode of the territory of the restricted area and
controlled of hydrotechnical structures shall be determined by the Cabinet of
Ministers of Ukraine.
The provisions of this Article shall not apply to micro, mini and small
hydropower. Subjects of micro, mini and small hydropower industry independently
ensure necessary measures on protection of micro, mini and small hydropower
industry facilities and independently perform in the surrounding area the necessary
precaution measures.
6. Nuclear power plants are protected according to the Law of Ukraine “On
Nuclear Energy Use and Radiation Safety” and the Law of Ukraine “On Physical
Protection of Nuclear Facilities, Nuclear Materials, Radioactive Waste and Other
Sources of Ionizing Radiation”.

Law on electricity market of Ukraine - English version

Law on electricity market of Ukraine - English version

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