One of the key contact points of consumers and the energy sector is connecting to electricity supply networks. Every consumer wants to be sure in both the quality and reliability of energy supply as well as in passing the connection procedure quickly and easily. This is the point we currently have problems with and the World Bank’s DoingBuiness 2016 ranking confirms that. According to this ranking, Ukraine takes the 137th of 188 positions in terms of the indicator “Connecting to electricity supply networks”.
For example, today the time to connect electricity-generating equipment of consumers is 263 days and the number of procedures that need to be passed through is 5. The cost of connecting to the electricity supply network is almost 800% of GDP per capita. This makes it virtually impossible to develop businesses, especially the small and medium ones, and implement investment projects in Ukraine.
In general, this situation can be harmful to the country’s image and scare away potential investors as well as contribute to the creation of non-transparent schemes on the energy supply market.
The government, business and experts jointly worked out a number of initiatives to solve this problem last year. In particular, the draft law #4310-1 “On Amendments to Certain Laws (regarding improving the procedure of connecting to electricity supply networks)” aimed at reforming the procedure of connecting to electrical networks was developed with direct involvement of the Better Regulation Delivery Office (BRDO) experts.
The draft law provides for:
– reducing the time of standard connection to electricity supply networks: the time to connect electricity-generating equipment of a consumer to electrical networks cannot exceed 15 working days for the first power level, 25 working days – for the second power level and 35 working days – for the third power level;
– introducing a category of “integrated standard connection” that introduces the principle of reducing the procedure time, its unification and the possibility of simplified determination of a service fee to connect in the power range of up to 5000 kW. Introduction of basic rates and complication indexes of the integrated standard connection: consumers who need to connect to electrical networks, including small and medium businesses, will be able to clearly determine the cost and time of the connection procedure and pay only for actual ordered power;
– implementing principles of openness and transparency – all information regarding the connection to electricity supply networks will be open and published on the website of the National Commission for State Regulation of Energy and Public Utilities as well as on official websites of energy supply organizations. Energy supply organizations have to publish and update the information on all existing and planned transformer substations and electricity networks linked to the map on their website every six months. The information on existing spare capacities of electricity supply networks should also be available and public.
– establishing liability for non-publishing or providing false information. Sanctions will be also applied for non-fulfillment of monopolists’ obligations regarding the work performance terms with standard and integrated connection to electrical networks. This step significantly increases the level of trust between a customer and a contractor for connection and removes the possibility for a monopolist to manipulate the data.
It also provides for introducing the electronic document flow system and simplifying requirements for documents that can be submitted electronically.
In addition, a major step towards simplifying the connection procedure is signing an electronic contract between the parties by including the customer to a public contract. Thus, the relationship between the customer and the energy supply organization is established in such a way that it prevents personal contacts between them to the greatest possible extent, and consequently – reduces the likelihood of abuse at the human factor.
The innovation is also the fact that the customer will be able to draft project estimates by himself and construct electric power lines. This will provide the customer with the right to determine the contractor by himself that significantly liberalizes existing rules limiting the choice of the consumer to the energy supply organization only.
The adoption of this draft law will finish with the “imperfections” of existing legal mechanisms in this area and contribute to implementing a transparent and open procedure of connecting to electrical networks. Accordingly, this will stimulate the investment activity and the development of domestic entrepreneurship.
However, the Committee of the Verkhovna Rada of Ukraine on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety sent for reworking last week a number of draft laws on connection to electricity supply networks, including the draft law #4310-1.
Unfortunately, the postponement of a decision on simplifying the procedure of connecting to networks and implementing this component of the market reform by including it to the major project of the Law of Ukraine “On Electricity Market of Ukraine” puts all the risks that the introduction of a new electricity market carries.
The Better Regulation Delivery Office expects that members of parliament will support the initiatives after the finalization of the draft law by including the best positions of other draft laws under consideration and Ukraine will obtain a long-awaited optimization of the connection procedure and improved positions in the World Bank’s Doing Business ranking.