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Problems of the Law “On the Principles of the electricity market in Ukraine” implementation

Kostyukovskyi B.A., PhD (Engin.), Senior Research Scientist, Leshchenko I.Ch., PhD (Engin.), Senior Research Scientist
Institute of General Energy of the National Academy of Sciences of Ukraine, 172 Antonovycha St., Kyiv, 03680, Ukraine
Language: Ukrainian
Source: The Problems of General Energy, 2014, 3(38):43-49
Section: Development, organization and functioning of energy markets
UDC: 621.311
Received: 12.06.2014
Published: 03.11.2014


In October 2013 the Verkhovna Rada of Ukraine adopted the Law № 663 - VII “On the bases of functioning electricity market in Ukraine” (the Act), which entered the country in the new electricity market model, called the market model of bilateral contracts and balancing market. But the presence of the fundamental contradiction between the physical and technical features of the operation of integrated power systems (IPS), in which all elements work in a single process, which requires central planning and development of electric power industry, and market-based approaches to the regulation of the IPS, when competition between separate business entities in the electricity market should be the driving force behind the development and effective operation, causes principal impossible to create an effective model of market regulation activities in the power that puts developers an appropriate legal framework for state regulation of activities in this area in a difficult situation - the need to provide both market competition between companies and reliability of electricity supply and IPS works.
The authors analyzed the provisions of the Act, which identified a number of important problems of its implementation, the main of which is that the introduction of a new model of growth of the market will determine the price of electricity. This is due to the necessity of significant additional costs for implementation and maintenance of the new market model, in fact the appearance of fines for alleged evasion of consumption and production of electricity, resulting in overpayments of consumers and generate losses that it can cover only due to price increases, and so etc.
The article shows that the law there are a number of provisions which allow virtually complete replacement of competitive market mechanisms using administrative methods of forming the structure of generating capacities and regulatory practices.
Therefore, the introduction of a new model of the electricity market will bring huge losses the country's economy and further reduce the standard of living of the population, will not give any positive results from its implementation.

Keywords: power market, the Law, power sector market model, price, efficiency.


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