The draft Law of Ukraine #4310-1 “On amendments to certain Laws (regarding improvement of connecting to electricity supply networks)” dated 04/06/2016 that provides for significant simplification of this procedure, considerable reduction of the time required for connecting to electricity supply networks and, accordingly, cost reduction for business. The Better Regulation Delivery Office BRDO experts participated in drafting the law.
“The proposed draft law contains more “reformist” innovations than other draft laws, which are currently under consideration by deputies. It simplifies the procedure of connecting to electrical networks for new consumers and make this procedure clearer, more transparent and predictable in terms of costs. This draft law also increases protection of consumers of connection services from monopolies in the market. When applying to an energy supply organization, a customer will be able to clearly define the time and money he needs to spend for connecting to electricity supply networks, or, connect to networks by himself if he is able and willing. Even based on available statistical data on standard connection procedures, overall business savings can be more than 285 million hryvnas in a year and a half just by introducing electronic document management,” the head of the BRDO Energy sector Oleksiy Orzhel said.
The key feature of this draft law are a clear definition of services of connecting to electrical networks provided by a natural monopoly, the introduction of a partial liberalization of the services market of connecting to electricity supply networks and compliance with today’s requirements. Thus, the draft law:
- Identifies the natural monopoly’s service of connecting to electrical networks, gives clear answers to a customer on how much it will cost and when the “standard” (power range from 0 to 160 kW) or “integrated standard” (power range from 160 to 5000 kW) connection will be done. Eliminates the risk of abusing its monopoly by an energy supply organization when issuing technical specifications to connect in mentioned power ranges.
- Introduces a category of “integrated standard connection” – a procedure of connecting to networks of an energy supply organization, which is outside the standard connection parameters (existing now) of customer’s electricity-generating equipment in the power range of up to 5000 kW. This category allows to establish simplified procedures of connecting the customer’s electricity-generating equipment in the power range from 160 to 5000 kW, taking into account the complexities of such connection. A regulator should introduce basic fee rates of the integrated standard connection as well as initial terms of this connection. Taking into consideration the complexity rates for each connection makes it possible to determine a connection service price, which is as close as possible to actual prices in this category.
- Introduces fines for a failure to comply with the prescribed period of providing “standard” and “integrated standard connection” services for energy supply organizations.
- Reduces the monopoly influence of an energy supply organization and allows a customer to develop the necessary design estimate documentation and actually build electric power lines to the existing network by himself (e.g. with the help of contractors). Energy supply organizations should provide technical specifications for connection free of charge.
- Provides for the submission of a set of documents for connection by email.
- Introduces requirements in terms of information transparency and disclosure for energy supply organizations (natural monopolies) that will simplify making a decision by a potential customer of services of connecting to electrical networks regarding a point of this connection and eliminates the risk of abusing by energy supply organizations.
The law was drafted in accordance with the Roadmap for implementation of best practices of quality and effective regulation to improve Ukraine’s positions in the World Bank’s DoingBusiness ranking approved by the Cabinet of Ministers on December 16, 2015.
Today, Ukraine takes the 137th position in terms of the ease to connect to electricity supply networks in the Doing Business-2016 ranking. This negatively affects the general position of Ukraine in this ranking. The key indicators to assess the country is the time required for connection and affordable costs for consumers, which influence the level of investment attractiveness of any country.
Experts also say that if this draft law on connection to electricity supply networks is adopted in this version, Ukraine will increase its position by 11 points. Moreover, according to the Ministry of Economic Development and Trade of Ukraine, increasing the country’s position on average by 10 points in the Doing Business ranking can attract up to 2 billion dollars of investments.