USAID ESP Will Help Develop a Comprehensive Indexing Methodology for Energy Markets in Ukraine

February 5, 2024

On February 1, 2024, the USAID Energy Security Project (ESP) announced the launch of the project “Analysis and Development of a Comprehensive Indexing Methodology for Energy Markets in Ukraine.”

Participants in the project presentation included representatives of the National Energy and Utilities Regulatory Commission (NEURC), Ukrainian Energy Exchange (UEEX) and JSC “Market Operator”.

The goal of the project is to analyze the best European practices for developing indices and price indicators for energy products and the current approaches of the UEEX and the MO to calculating indices and price indicators. Based on the analysis, USAID ESP will propose a general approach to these indices and price indicators and provide practical recommendations for improving existing methodologies.

The USAID ESP Deputy Chief of Party Dmytro Ingul noted that fair and transparent calculation of indices will facilitate the creation of new long-term instruments (derivatives) and the use of clearing in Ukraine’s wholesale energy markets.

During the presentation, Ernst & Young (EY) experts, who will help implement the project, introduced the main provisions of Regulation (EU) 2016/1011 of June 8, 2016, on indices used as benchmarks in financial instruments and financial contracts, or for the performance assessment of investment funds, and on amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No. 596/2014. A separate discussion was also held on EU practices regarding the specifics of supervision of the formation of indices in energy markets.

Next steps:

  • In-depth analysis of existing index calculation practices in Ukraine;
  • Bilateral consultations with stakeholders;
  • Recommendations on the establishment and use of reliable price indicators in the gas and electricity markets of Ukraine.

At the end of the presentation, the participants had the opportunity to share their views on the functioning of the indices and receive answers to questions regarding the methods of calculation and practical use of indices in Ukrainian energy markets.