Ukraine: new licensing conditions for electricity supply

Ukraine

Following the adoption of new licensing conditions for electricity generation[i], new licensing conditions for electricity supply (the “Licensing Conditions”) were adopted by the National Commission for State Regulation of the Energy and Public Utilities Sectors (the “Regulator”) on 13 April 2017[ii].

The Licensing Conditions will apply from 1 September 2017. Any existing licensees engaged in electricity supply on a regulated tariff (“Oblenergos”) will be given until 23 February 2018 to ensure that their activities comply with the Licensing Conditions, and must submit certain prescribed documents and information to the Regulator to evidence this. Any licensees engaged in electricity supply on an unregulated tariff must comply with the Licensing Conditions from 1 September 2017. Failure to comply with the Licensing Conditions (both for private market players and for Oblenergos) may result in compulsory termination of the company’s commercial activity on the electricity market.

In particular, private electricity suppliers delivering electricity to end consumers shall be required to:

  • obtain the electricity supply licence prior to 1 September 2017; and
  • comply with the numerous organisational, technological, professional, staffing and special requirements established by the Licensing Conditions.

In order to obtain an electricity supply licence, applicants (other than Oblenergos) shall be required to submit to the Regulator the following exhaustive list of documents:

  • an application form*;
  • a copy of the passport of the applicant’s representative (or director);
  • a note on the location and availability of the resources required for the performance of the electricity supply activity (prepared by the applicant*), where the applicant shall be required to provide the following information:

a. address of the official web-site;

b. contact details;

c. information on the applicant’s premises and customer centers, including their address, area, working hours, and name of the document evidencing the applicants title to the premises or rights to use the premises; and

  • two copies of a list showing the submitted documents*.

* in accordance with the model forms attached to the Licensing Conditions

The Licensing Conditions contain numerous organisational, technological, professional and special requirements set to apply to the licensees. An overview of the most important requirements for electricity suppliers is provided below. Failure to comply with the requirements may result in the cancellation of the electricity supply license. (Please note that a number of additional requirements are also applicable to Oblenergos.)

1. The set of the organisational requirements (which is the most extensive set) include, in particular:

a) to keep copies of the documents filed with the Regulator by the applicant for the purpose of obtaining the licence;

b) to notify the Regulator in a timely manner (i.e. within a month) and in writing about any changes to information and/or documents filed to obtain the licence;

c) to perform the licensed activity exclusively at the location and with the use of the resources indicated in the application documents;

d) to execute decisions of the Regulator within the defined terms;

e) to pay the regulatory fees established by the Regulator on a quarterly basis;

f) to submit regular regulatory reports to the Regulator;

g) to have an official website containing specific information outlined by the Regulator;

h) prior to signing the electricity supply agreement, to provide customers (at their request) with information regarding essential terms and conditions of the supply agreement, and any available options with respect to invoicing and payment terms;

i) to provide customers with information in respect of electricity prices, payment procedures, applicable terms and conditions, and available regimes of electricity consumption;

j) to ensure compliance with the minimum quality requirements of electricity supply services established by the Regulator;

k) to publish in its invoices (or annexes attached thereto) information regarding its supplier’s address, contact details and email address;

l) to provide customers with information regarding their electricity consumption in line with the procedure established by the Regulator;

m) to ensure customers have free access to information in compliance with the Ukrainian law “On Access to Information in the Spheres of Electricity, Natural, Heat, Hot and Drinking Water Supply and Wastewater Disposal";

n) to ensure the review of and response to claims and complaints filed by customers;

o) to purchase electricity for delivery to its customers and to export/import electricity in compliance with the applicable laws of Ukraine;

p) to execute agreements which are mandatory for the performance of business activities in the electricity market, and to comply with the terms and conditions of such agreements;

q) to provide other market players with the information necessary for their functions within the electricity market as permitted by any applicable legislation;

r) to ensure the safety of IT systems and automatic management systems etc., as well as the protection of information disclosed to and used by suppliers; and

s) to ensure any payments for electricity, services provided by transmission and distribution system operators, dispatching services, or for any other services received by the licensee at the electricity market are made in a timely fashion.

2. The set of staffing requirements include, in particular:

a) to employ a minimum number of employees that have relevant positions, and have the appropriate qualifications, levels of education and/or experience to enable the company to properly carry out its functions and activities; and

b) to engage a workforce in accordance with all relevant Ukrainian legislation.

3. The special requirements include, in particular:

a) prohibition on cross-subsidies - i.e., compensation for low prices paid by certain customers, (e.g. households) at the expense of others (e.g. industrial customers); and

b) applicants must not be under the control of residents of countries that carry out acts of military aggression against Ukraine, or whose actions may give rise to a military conflict in Ukraine or to a use of force against Ukraine.

[i] (Resolution of the National Commission for State Regulation of the Energy and Public Utilities Sectors “On Approval of the Licensing Conditions for the Performance of Business Activities on the Generation of Electricity” No. 309 dated 22 March 2017)

[ii]( Resolution of the National Commission for State Regulation of the Energy and Public Utilities Sectors “On Approval of the Licensing Conditions for the Performance of Business Activities on the Supply of Electricity” No. 504 dated 13 April 2017)