About reform
WHAT DOES THIS MEAN FOR UKRAINIAN ENERGY?

CREATING A COMPETITIVE WHOLESALE MARKET

Now

All power generated is bought by the state-owned enterprise Energorynok. Then Energorynok resells it to suppliers, mainly to regional power distribution companies (oblenergo), which supply it to customers. Oblenergo customers' payments return to Energorynok and are distributed among the generation companies. This system does not create incentives for investing and improving production efficiency.

CREATING A COMPETITIVE WHOLESALE MARKET

How it will be

Instead of a single monopolistic purchaser, there will be several segments of the market for purchasing and selling power: the market of direct contracts, the day-ahead market, and intraday and balancing markets. Manual management in the energy sector will give way to entrepreneurship and market pricing. Competition should encourage power producers to ensure more efficient and reliable supplies.                                                                  

SEPARATING THE BUSINESS OF SUPPLYING POWER FROM THE BUSINESS OF DISTRIBUTING IT

How it is now

Oblenergo companies combine the functions of distributing and supplying power within their regions. They service the distribution grids and work with customers: enterprises and domestic consumers. Domestic consumers do not have the right to choose a supplier. Oblenergo companies have no incentives to improve the quality of service or increase efficiency.                                                                                                                                                          

SEPARATING THE BUSINESS OF SUPPLYING POWER FROM THE BUSINESS OF DISTRIBUTING IT

How it will be

The law stipulates that all oblenergos shall be functionally and legally divided into two independent companies: a distribution system operator and a supplier company. 
The distribution system operator, the owner of the grid infrastructure, will provide services for power distribution to all suppliers within its territory, as well as services to connect new customers to grids.
Both suppliers separated out from oblenergos and completely new, independent suppliers will sell power to customers. In essence, a competitive retail power market is being formed.                                             

SYNCHRONIZATION WITH THE EUROPEAN ELECTRICITY SYSTEM

How it is now

The Ukrainian electricity system is synchronized with the Russian, Belarusian, and Moldovan electricity systems, and in part (Burshtynsky Island) with the the European electricity system. This severely restricts possibilities for trade with European states, as well as possible sources of emergency assistance in the event of a need to protect the security of the electricity system.               

SYNCHRONIZATION WITH THE EUROPEAN ELECTRICITY SYSTEM

How it will be

The transition to the competitive market model and the synchronization of the Ukrainian electricity system with ENTSO-E, Europe's unified network of system operators, will create the possibility of trading freely in power with EU countries. It is expected that this will increase competition in the Ukrainian market, create incentives for domestic business, and bring global electricity companies to the Ukrainian market.                                                                                                                                                                                              

THE CONSUMER'S RIGHT TO CHOOSE

How it is now

Consumers are significantly limited in their choices. Domestic consumers can buy power only from oblenergos. Large commercial consumers are also limited in their ability to change to a new supplier. This leads to low standards of service, frequent trips, and failure to attain a level of service typical for other areas.                               

THE CONSUMER'S RIGHT TO CHOOSE

How it will be

The new law guarantees the basic principle of the right to choose a supplier. The reform entails the division of oblenergos and the establishment of a competitive retail market. It will allow customers both to choose a supplier and switch to a new one at any time. The level of service will improve significantly under these conditions. New supplier companies are expected to appear on the market, with new offers and services for customers and different tariff plans.