The opening of a new liberalized Wholesale Electricity Market (WEM) on July 1st, 2019 was a turning point in the reform of Ukraine’s electricity sector. Competitive markets, which are transparent and effectively monitored offer house-hold consumers stable, quality electricity at lower costs. Competition is also essential to growing Ukraine’s independent energy sector and is a requirement as a signatory to the EU Energy Community.
Since the opening of the electricity market last year, complications often related to insufficient transparency in market operation and instances of market manipulation have affected the stability and growth of the WEM. For any market to operate successfully for all participants, a comprehensive monitoring mechanism must be in place to ensure trading is transparent and unaffected by corruption. In Ukraine, as in many countries, this responsibility lies with the energy regulator.
NEURC as the public authority in Ukraine for the regulation, monitoring and control of energy markets has been granted powers and authorities related to WEM oversight, however the laws in place do not allow for investigation of transparency and integrity abuses, or their enforcement. This effectively leaves the regulatory body without teeth to protect the transparent functioning of the marketplace.
In addition to authority the regulator requires consistent access to quality data to determine if the market is operating as it should along with a transparent register of market participants. A healthy market will produce thousands of information points over a short period of time, including data concerning trade, order records, and contracts. The data on which the market regulator must rely should be generated from integrated, yet secure independent systems functioning within the market (in particular registered reporting mechanisms). Monitoring this data will help identify corruption early on in cases of insider trading and anomalies in bilateral agreements. The USAID Energy Security Project (ESP) is supporting Ukraine in terms of the necessary IT infrastructure crucial to effective market monitoring.
On 22 October USAID ESP organises a stakeholder panel and workshop on ensuring integrity and transparency of Ukraine’s new wholesale markets in electricity and gas in compliance with the EU ACQUIS. In addition to Ukraine-specific analysis from ESP’s technical experts, representatives from international stakeholders including the Agency for the Cooperation of Energy Regulators (ACER), the European Union Delegation (EU) and the Energy Community Regulatory Board (ECRB) present background, context and lessons learned.
Key stakeholders in Ukraine’s energy sector are invited to discuss relevant policy as well as practical and organizational aspects of energy market monitoring and oversight experienced by other European markets. As the implementation of an effective monitoring system is another key turning point for Ukraine, the participation of members of the Office of the Vice Prime Minister of Ukraine for European and Euro-Atlantic Integration, the Verkhovna Rada, the NEURC, the National Securities and Stock Market Commission, the Anti-Monopoly Committee and Ministry of Energy at the event is essential to determine a productive way forward.