Energy market reform in action: USAID ESP joined the meeting between regulators

September 6, 2023

On September 5th, 2023, in Warsaw, representatives of the National Securities and Stock Market Commission (NSSMC), the National Energy and Utilities Regulatory Commission (NEURC), and participants of the USAID Energy Security Project (ESP) and the EU Future of Commodities Market (EU-FCM) project in Ukraine participated in a joint meeting.

Photo by the EU-FCM project in Ukraine.

The purpose of the meeting was to discuss the reform process and implementation of the EU Regulation No. 1227/2011 on integrity and transparency in the wholesale energy market (REMIT), the Law of Ukraine No. 3141-IX, and the further development of energy markets in Ukraine towards standardization of trade and coordination of activities of both regulators. 

USAID ESP experts informed the participants about the current developments of the secondary legislation and safeguarding NEURC’s capability to monitor the energy markets and secure market integrity through the Inside Information Platform, which enables all European market participants to publish urgent market messages.

After the parties presented their work plans and tasks, the first topic of discussion was the need to enhance the cooperation between the NSSMC and the NEURC. Such collaboration is focused on:

– the investigation of abuses in the wholesale energy market and penalization of the abusers,

– promoting further development of markets and ensuring the efficient operation of energy markets (supervision and monitoring of trading platforms and over-the-counter trading, licensing, adoption of trade rules, products, and specifications).

The second topic of discussion was the standardization of trade in the markets and ways to achieve it. The participants discussed the necessity of unifying the rules and standardization of products to improve transparency, stability, and liquidity in markets.

USAID ESP experts presented Four Pillars for Improving the Energy Products Trade, while the EU-FCM Project presented the approaches to standardization in the EU energy markets. 

The third topic was to discuss a clearing (mitigating the counterparty default risk by guaranteeing the fulfillment of the concluded transactions) in energy markets. The participants considered the opportunities of refining this system to ensure the safety and efficiency of Ukrainian energy markets.

Finally, the parties agreed that there is a need to formalize the relationship of both regulators, possibly by way of a memorandum of understanding. USAID ESP recommended maintaining the Agency for the Cooperation of the European Regulators – European Securities and Markets Authority template while developing such an instrument.

This meeting was particularly important for the further development of energy markets in Ukraine and cooperation between both regulators and international partners such as EU, USAID on the one hand, and ESP and EU-FCM on the other hand.

The discussed issues and decisions taken have the potential to enhance the competitiveness and stability of energy markets in Ukraine, and this is crucial for ensuring the energy security of the country.