On August 22, the roundtable devoted to the improvement of the electricity sector regulation “How to achieve a balance in the energy- and gas supply market” was held in the Sumy Regional State Administration office within the framework of #PRODialogue. During the event, Oleksiy Orzhel, the Head of the Energy Sector at the Better Regulation Delivery Office (BRDO), presented the White Paper on areas of optimization of the retail electricity market regulation.
This document was developed as a result of a comprehensive analysis of market issues based on the Green Paper, its submission to public consultations with representatives of regulatory bodies, businesses and the public and finalization taking into account positions of all market participants during May-July 2017. In such a way, according to the results of the analysis of state goals and relevant regulatory instruments in the sector by using the Rolling Review methodology, 20 regulatory cases were developed and 30 main problems of their application, which lead to failure in achieving regulatory goals in 96% of cases, were identified.
The White Paper includes the concept of regulatory reform in the sector, a list of necessary actions to promote it for the VRU, the Cabinet of Ministers, the Ministry of Energy, the National Commission for State Energy and Public Utilities Regulation and others. In addition, the document contains a series of BRDO proposals to empower the electricity consumers, create competitive principles in the market and increase the efficiency in the sector.
In particular,
- The problem of complexity, non-transparency and cost of the connection to electricity networks can be solved by implementing Art. 21 of the Law of Ukraine “On Electricity Market”, introducing online maps of existing networks and online monitoring of the connection, simplifying the land allocation, creating a unified unit for connection to networks and changing approaches to tariff setting.
- Unstable electricity supply and electricity losses should be minimized by increasing the personal responsibility of officials for non-compliance with quality parameters, increasing the financing for measures to modernize and re-engineer electricity networks.
- Monopoly supply will be changed through the separation of electricity supply activities from distribution activities, providing consumers with the opportunity to choose a provider of services related to the installation of metering units and commercial electricity metering as well as establishing common rules for market players.
The BRDO Office offers an approach based on economic modeling of business processes and the application of regulatory instruments. “To ensure the effective functioning, the market should operate according to system rules and instruments, the impact of which could be mathematically calculated regardless of lobbying preferences. In addition, the driving force, which comes from regions and from the bottom – from consumers and businesses, is crucial for promoting the reform. Therefore, the activity of the Sumy region to find a balance in the energy market is a very positive signal,” the BRDO expert Oleksiy Orzhel said.
In view of the adoption of the Law “On Electricity Market” by the VRU, a significant change in the legislative regulation of the market and the need to implement about 50 subordinate acts that should be fully implemented within 2 years, the approach proposed by the BRDO provides the basis to apply a comprehensive and systematic approach to the development of secondary legislation.
The Head of Sumy Regional State Administration Mykola Klochko, the Head of Sumy Regional State Administration apparatus Dmytro Zhyvytsky, the Chairman of the Board of the PJSC “Sumyoblenergo” Ihor Dyrbavka, the Chairman of the Board of the Association of co-owners of apartment buildings “Sumschyna” Roman Hurchenko and other energy market representatives participated in the event.