On 17 March 2020, the Parliament of Ukraine adopted the Law “On Amending Certain Legal Acts of Ukraine aimed at Preventing the Onset and Spread of Coronavirus Disease (COVID-19)” (the “Law”). The Law banned for the period of quarantine and 30 days from the day of its cancellation any sanctions or administrative measures for untimely payments of housing and communal services. Furthermore, the Law prohibited termination and/or suspension of the provision of housing and communal services to citizens of Ukraine in case of non-payment (or a failure to pay in full). The above amendments and introduction of the quarantine led to a significant reduction of payments for electricity from consumers to the electricity suppliers and the universal services suppliers. In turn, the electricity suppliers and the universal services suppliers reduced payments to the distribution system operators, while electricity producers and distributions system operators reduced payments to the transmission system operator – Ukrenergo. As a result, all market participants experience delays in payments and a daily increase of debts.
What measures have been applied?
On 8 April 2020, the National Energy and Utilities Commission of Ukraine (NEURC) adopted Resolution No. 766 “On Actions of Electricity Market Participants during the Quarantine and Restrictive Measures Related to the Spread of Coronavirus Disease (COVID-19)” (the “Resolution”), as amended on 15 April 2020. The Resolution includes the following measures to stabilise the situation with a decrease in consumer payments and debts of other participants on the electricity market:
The transmission system operator, Ukrenergo, shall not apply to electricity suppliers the Default Status measures under the Market Rules. In particular, Ukrenergo shall not apply the following measures to electricity suppliers in case of the Default Status:
Therefore, for the period of quarantine electricity suppliers are exempted from the above measures in case of Default Status due to increase of consumer debt.
The transmission system operator is allowed not to apply the following conditions to the distribution system operators within the framework of the model agreement for the provision of electricity transmission services and the model agreement for the provision of dispatch (operational and technological) management services:
Electricity Suppliers acting as universal services suppliers shall:
At the same time, consumers shall take comprehensive measures to pay for electricity and other services received on the electricity market according to the relevant contracts. In case of technical or economic impossibility of payment due to the quarantine and the restrictive measures, consumers shall notify the electricity supplier and, in order to prevent an immediate shutdown, initiate the conclusion of a debt repayment schedule after the quarantine is over.
NEURC changed the order of pricing bids by the Guaranteed Buyer as follows:
According to the Rules of the day ahead market and intraday market, the electricity prices indicated in the tender bids on the day ahead market shall be within the minimum price of UAH 10.00 / MWh and the maximum price of 50,000.00 UAH / MWh. Thus, in accordance with the Procedure, the Guaranteed Buyer must indicate in the applications for the day ahead market the price of 10.00 UAH / MWh. However, due to the temporary quarantine changes, the Guaranteed Buyer will apply bids for the day ahead market at the price of 566.7 UAH / MWh.
Timing: these measures apply for the period of quarantine and 30 days after the date of its cancellation.
We hope the above will help you to deal with the impact of the quarantine on your business. To avoid negative impact of increased debts on the electricity market due to the quarantine measures, please contact the SK Energy practice team:
If you want to discuss the above issues in more detail, please contact us.
Information contained in this legal alert is for the general information purposes only, does not constitute legal or other professional advice, and should not be relied upon as a substitute for the specific professional advice tailored to the particular circumstances.