Energy Lawyer Consulting: Electricity Supply And Trading

In the summer of 2019, Ukraine has introduced a new law reforming its electricity market. This reform has partially changed the Ukrainian businessmen’s understanding of the rules and procedures of doing business in Ukraine, created new rules of the game and supplemented them with the European standards.

However, as with any issue, whether it’s a legal work or a power grid connection, you need technique, skills and knowledge of your business. The same techniques are used by our lawyers.

Every day, we:

• Provide services to join the electricity market;
• Provide advice on accessing the operator’s transmission, distribution agreements;
• Deal with energy companies and help the enterprises to become participants of the electricity market of bilateral agreements, day-ahead market, balancing market or intraday market.

Thanks to this practice, we have identified the main issues of interest to our Clients in the energy sector and are ready to answer to them.

Related article: Procedure For Registering As A Supplier On The New Electricity Market

Main issues that are considered at the Energy Lawyer’s Consultation

• What are the requirements for the premises, the executive manager, the material and technical base for the electricity supply?
• What does it take to start an electricity company?
• What is the difference between electricity trading and electricity supply?
• How to enter the electricity market? What does it take?
• Can I do without the electricity market and sign agreements directly with electricity producers such as Energoatom?
• What does the platform on which the bidding takes place look like? How does the bidding work?
• Do I need to somehow prove my ability to buy electricity and transmit it?
• How can I save on electricity and can I buy electricity on the market and supply it myself?
• Can I buy and sell electricity from abroad?

Most of these questions can be answered right now, but some require an individual approach. After all, each business is individual, each entrepreneur has his/her own vision of doing business, so it is necessary to take into account both their wishes and capabilities.

Related article: Agreements Of Natural Gas Market Participants

Our answers to electricity supply or energy trading issues

The first and most common issue concerns the requirements for the executive manager and the material and technical base.

The most important thing here is the availability of a customer service room and a web resource (website), which contains all the necessary information required by law and practice of the licensing authority.

However, there are no special requirements to the executive manager and his/her special education or special experience in the sphere of  electricity supply.

Related article: Website Requirements For Electricity Suppliers 

The next frequently asked question is the type of license to be obtained. Of course, you need to decide what kind of license to apply for: electricity supply, trading or distribution license?

Actually, in most cases, it is enough to obtain an Electricity Supply License. The difference is that suppliers can supply electricity to the end consumer, as well as to other suppliers and traders. As for electricity traders, they can only purchase and sell electricity from/to other sellers in the electricity market.

Can I work without joining the electricity market?

The Law “On Electricity Market” provides that all market participants shall carry out their activities on the basis of contractual relations. The legislation defines the list of agreements to be signed by the company, but this list is not exhaustive. In practice, we have developed a minimum list of agreements needed to ensure comfortable work in the market. It includes:

Agreements with Ukrenergo:

• The Balancing Market Agreement;
• The Imbalance Settlement Agreement;
• The Electricity Transmission Agreement.

Agreement with the market Operator.

• Day-Ahead (DAM) and Intraday Market (IDM) Agreement

Agreement with the Ukrainian Energy Exchange.

• Agreement on Bilateral Contracts;

Agreement with Obenergo and DTEK.

• Electricity Distribution Agreement;

Agreement on Access to Interstate Crossings.

This Agreement allows to freely import or export electricity from some European and CIS countries. In order to participate in the auction, it is necessary to make a guaranteed deposit, which now amounts to UAH 417,300, and register on the appropriate platform, then choose the type of auction:

• daily;
• monthly;
• annual.

and make the appropriate sale/purchase transactions. After that, Ukrenergo shall issue invoices based on the auction results for actually performed transactions, which shall be paid for.

Related article: How To Connect To the Distribution System Operator (Oblenergo)?

Of course, questions arise not only at the start of activities, but also during the operation on the market.

For example, we often hear questions related to the special reporting of energy companies. Since this is also a long studied issue for us, we provide a list of mandatory reports based on the letter received from the National Energy and Utilities Regulatory Commission (NEURC).

This is just a part of the issues that are considered during the legal consultation at our company. Each situation is unique and we try to provide the information, which will be useful exactly to you.

So, if You want to simply and quickly organize the work of your company in the energy sector, get all the necessary permits and become a participant of the electricity market, don’t hesitate to call us!