The existing regulation can not ensure the balance of interests in the electricity market


In Ukraine, the connection to electricity networks takes on average 281 days for representatives of SMEs, and sometimes it is even not possible at all. According to the “Getting electricity” index, Ukraine currently takes the 130th place of 188 countries in the Doing Business ranking. The cost of non-standard connection to electricity networks in the Vinnytsya region is one of the highest in Ukraine – 8.2 ths. UAH/kW, which is an excessive burden for businesses.

Representatives of the local government, business, public and expert circles discussed the problems of the electricity market regulation at the Roundtable “Retail electricity market: regulation without thinking?” as part of the Public dialogue #PRODialogue in Vinnytsya on June 22.

“We can implement an effective strategy for the energy sector development on a competitive basis only through the quality regulatory impact assessment. The market should operate on the basis of instruments, the effect of which can be mathematically calculated regardless of lobbyist preferences. The business needs transparent conditions to access the networks, and consumers – the opportunity to choose a service provider,” Oleksiy Orzhel, the head of the BRDO’s Energy sector, said presenting the results of the rolling review of the market regulation quality.


According to the research, one in four of 94 legislative acts defining the rules of the market operation is illegal or outdated. The state regulation of the electricity sector does not achieve its goals in 96% of cases. The electricity supply quality in Ukraine is 14 times worse than in the EU and losses – 2 times more. For example, the current legislation can not ensure the balance of interests in the retail electricity market: provide an easy access to electricity supply and reasonable electricity prices for consumers as well as the efficiency of energy companies.

The Director of the Department of Housing and Communal Services, Energy and Infrastructure of the Vinnytsya regional state administration Serhiy Volkov emphasized the importance of working out joint decisions in the sector: “One of our priorities is to promote the development of small and medium-sized businesses as the basis for the region’s economic growth. In 2016, the amount of revenues to the budgets of all levels from the SME’s activities in the region was about 2.5 million hryvnas, which is 34% of the total amount of revenues. It is critical for the development of local business to resolve the issue of connection to electricity networks and access to infrastructure.”


Taking into account the Law “On Electricity Market” adopted by the VRU in May of this year and the need to implement about 50 subordinate acts to it within 2 years, the analysis conducted by the BRDO provides the basis to apply an integrated approach to the development of secondary legislation.

Olesya Danilova, the spokeswoman for the State Regulatory Service in the Vinnytsya region, is also convinced of the need for a systematic approach to regulation, taking into account the interests of all market participants: “We need to identify and review the regulatory provisions that hinder the business development. Only effective decisions will stimulate the entrepreneurship and economic growth.”

Joshua Badakh, the representative of EU4Business / FORBIZ in Ukraine, also expressed support for the regulatory reform. “European experience shows that the Public dialogue between the state and market participants is an essential element of the effective regulatory reform. Constructive exchange of ideas and targeted engagement of business owners into the process of making decisions is a way to creating effective regulatory changes,” he said.

The decisions worked out on the basis of discussion results will be used as the basis to develop particular legislative changes in the electricity market.