Reform in the branch of electricity: new opportunities entrepreneurs in the sphere of power industry
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The adoption of the Law of Ukraine “On the electricity market” in 2017 became the beginning of the reform in the sphere of electric utility industry, which is aimed at transferring of functions of electric energy supply for the consumers to the privately held companies. Previously only Oblenergo performed the functions of distribution, commercial accounting and supply of electricity. In other words, prior to the adoption of the above law all the functions that covered the supply of electricity to the consumer were performed by Oblenergo, and the consumer had no practical opportunity to choose an electricity supplier, which limited him in choice of price, supply order and payment procedure.
The essence of the reform is to create competition in the sphere of electricity supply due to choosing a supplier among a wide range of competitors on the market, since electric suppliers provide electricity to consumers at free, unregulated prices.
In order to become an electricity supplier for the consumer the company first of all must obtain the appropriate license, since conducting such activities without a license threatens with a fine in the amount of UAH 17 thousand. Upon obtaining a license, the company can begin its activities on electricity market of Ukraine on compelling legal grounds.
However, based on the practice of our firm, many of our clients begin their activities as a supplier after the inclusion in the list of members of the Wholesale Electricity Market (Energorynok, SE). And this is clearly enough, since members of the Wholesale Electricity Market buy electricity from Energorynok, SE at wholesale prices that is merchantable.
In the case when the company has a license for the supply of electricity and is included in the list of members of the Wholesale Electricity Market, the company has the opportunity to compete with other electricity suppliers not only due to the established price, but also by creating more favorable conditions for the supply of electricity: payment terms, order of payment, electricity supply schedule and so forth.
In order to begin the actual supply of electricity the electricity supplier should make sure that the consumer separately concluded an electricity distribution agreement with the distribution system operator. The electricity supplier and the distribution system operator should also enter into agreement on electricity distribution services. If such agreements are not signed, then it is impossible to conclude an electricity supply agreement between the supplier and the consumer and, as a consequence, to supply the electricity in actual fact.
The distribution system operator provides the supplier with non-discriminatory access to its networks for the purpose of implementation of his functions by the supplier and fulfillment of obligations to the consumers whose electrical installations are connected to the electricity networks within the territory of distribution system operator’s activities.
The final stage before the supply of electricity is the signing of agreement between the electricity supplier and the consumer. Such agreement regulates the commercial aspect of electricity trading: price, payment arrangements and due dates and so forth.
Generally, the consumer signs such agreement by accession to the public joining agreement, which is usually posted on the official website of the electricity supplier. You can begin to supply electricity to the consumer only after performing of specified steps.
Entrepreneurs who are interested in carrying out of such entrepreneurial activities on the electricity market of Ukraine must first obtain a license for the supply of electricity. If the supplier is interested to buy electricity at wholesale prices from Energorynok, SE he should also become a member of the Wholesale Electricity Market of Ukraine. After the fulfillment of the above requirements, the supplier can begin its activities on electricity supply.