At a meeting on July 25, the National Commission for State Regulation of Energy and Utilities (NCRECU) approved new price caps (price caps) for short-term market segments — day-ahead (DAA), intraday (IDD), and balancing market (BM). The decision comes into effect on July 31.

Ukrainian Energy has found out how justified this decision is.

The updated tariffs on the day-ahead and intraday markets look like this:

00:00–07:00 and 11:00–17:00 — UAH 5,600/MWh

07:00–11:00 and 23:00–24:00 — UAH 6,900/MWh

17:00–23:00 — UAH 15,000/MWh

Minimum price — UAH 10/MWh

It is recommended to minimize consumption from 17:00, because it is during this time range that the tariff is highest.

Price caps are upper and lower limits on the cost of electricity on the electricity market. They directly affect how much we pay for electricity in the cost of goods and services or simply as a business.

Oblenergos receive compensation for residential tariffs through the average RDM, which is also formed on the basis of price caps

Market prices will increase

According to the new rules, during peak evening hours (from 17:00 to 23:00), electricity prices will increase significantly. For RDM and VDM, the maximum limit prices are set at 15,000 UAH/MWh, which is almost twice as high as the previous values. For the remaining periods of the day, lower thresholds are provided, for example, 5,600 UAH/MWh during night and day periods. The minimum price for RDM will remain at 10 UAH/MWh.

In the balancing market, the maximum prices during peak hours will reach 16,000 UAH/MWh, while the minimum threshold will be 0.01 UAH/MWh. The government did not object to this change - the Ministry of Energy stated its support for the gradual liberalization of market restrictions.

However, some market players and public organizations express concern about both the decision itself and the procedure for its adoption. The Public Union "Energy Union" expressed its opinion.

In particular, during the open discussions on July 18, which preceded the decision, reservations were voiced regarding the feasibility and justification of the changes, but these remarks were not included in the minutes.

The main criticism is that the new price restrictions are being introduced without sufficient analytical basis. The participants in the discussions emphasize that in August, daylight hours last until 8:00 p.m., therefore, the justification for high evening price caps looks questionable. The market should be informed in advance, taking into account balance forecasts, and also requires the introduction of long-term planning mechanisms - primarily forward trading.

In addition, the issue of introducing new price caps without reforming the PSO mechanism (imposing special obligations) creates an additional financial burden on Energoatom and Ukrhydroenergo, which provide electricity to the population. Representatives of these companies were not present when the decision was made, and it is currently unclear whether they are ready for new financial conditions.

Another key issue is the connection of the day-ahead market with final prices for consumers. Many budget organizations purchase electricity through the Prozorro system, focusing specifically on the DAM price caps. Therefore, any increase in the price on the DAM directly affects tariffs, the cost of products and services, including basic goods - bread, milk, industrial goods. Thus, the increase in price caps can have a domino effect throughout the economy.

Separate criticism concerns electricity imports. According to the law, only 10% of imports should be sold on the DAM, the rest - on long-term contracts. However, the regulator did not explain why a temporary lifting of this obligation is not being considered in order to reduce the impact of imports on the short-term market.

As a result, critics of the reform point to the danger of price increases without systemic changes. The lack of balance forecasts, weak development of the long-term segment, and a skew in the PSO mechanism all undermine market stability. And while consumers are trying to navigate the new realities, individual market participants may gain advantages against the backdrop of a temporary information vacuum.

All these circumstances raise questions about the transparency of regulation, real competition, and the ultimate goal of the changes. Instead of supporting competition and predictability, the market risks rising prices and losing trust from consumers and investors.

People's Deputy Oleksiy Kucherenko also expressed his extremely negative opinion about such a decision.

"Our regulator is 'independent' in accordance with pro-European reforms - its actions can only be challenged in court, there is no one to complain to, and it is prohibited by law to put pressure on it. Therefore, we simply observe," says the MP.

A vulnerable system in wartime

As emphasized by the head of energy programs at the Ukrainian Institute of the Future NGO, Doctor of Economics Andrian Prokip, this decision was long overdue and has become an objective necessity in the current conditions.

After large-scale Russian attacks on energy infrastructure, the Ukrainian power system remains vulnerable to any disruptions in the balance of generation and consumption. This is especially acute in the evening, when demand is growing rapidly. In addition, some nuclear units are currently under repair - they are preparing for the winter season. At the same time, the deficit is covered by imports, which have increased significantly in recent weeks, Prokip notes.

However, he warns: if electricity prices in EU countries increase, imports may prove economically inexpedient, and Ukraine will be left with a choice - either emergency assistance from abroad or fanned outages. Therefore, the decision to change the price caps seems not only timely, but also extremely important from the point of view of national security.

In addition, Prokip draws attention to Ukraine's international obligations in the context of integration into the European energy space. Full market coupling, planned for 2027, is impossible without a gradual leveling of the rules of the game, including in the area of price caps.

It is obvious that changing the cap rates will be a topic for active public discussion and the object of political interpretations. However, according to the expert, the statement about an automatic increase in prices for consumers is an exaggeration. Even in recent weeks, prices have rarely reached the level of the established limits, therefore, the revision in itself does not mean an immediate increase in tariffs.

“This is primarily about strengthening energy stability, and not about changing the tariff policy,” Prokip emphasizes. According to him, increasing the price caps will ensure more flexible and efficient operation of the market in conditions of capacity shortages and does not mean a long-term increase in the price of electricity.

Prior to this, on December 4, 2024, the National Commission for the Regulation of Energy and Power Generation of Ukraine had already initiated the procedure for reviewing the ceiling prices on the electricity market, but no final decision had been made at that time. Subsequently, a number of experts and representatives of the parliamentary energy committee publicly called for the abolition of restrictions that, in their opinion, restrain electricity imports from Europe at a critical period for the country.

Market position: price restrictions harm the energy system

The introduction of ceiling prices for electricity, consistent with European standards, should become one of the main goals for the new management team of the Ministry of Energy. This was emphasized by the European Business Association (EBA), emphasizing that energy plays a strategic role for the country's economic stability, strengthening energy security, and advancing integration processes with the EU.

One of the key initiatives that business considers critically important for further harmonization with the European energy market is the establishment of price caps at a level that meets European practices. Such a step, according to EBA representatives, will not only simplify the process of European integration, but also provide predictability for investors.

Also among the priorities are the systematic settlement of the problem of accumulated debts in the market, deregulation of permitting procedures in the field of construction and environmental protection, preservation of tax benefits for the import of energy equipment, activation of the domestic market for guarantees of origin of electricity, postponement of the introduction of SVAM (carbon duty), as well as protection of critical infrastructure and its reconstruction.

The EBA notes that all these proposals are the result of a deep analysis of the current challenges faced by the business environment. Their implementation will contribute to the formation of an open, stable and investment-attractive model of the functioning of the energy sector in Ukraine.

The state-owned company Ukrhydroenergo also expressed its point of view on price restrictions. The company supported the initiative of the National Commission for the Regulation of Energy and Utilities of Ukraine on the Adjustment of Limit Prices, especially in the evening hours, when the load on the system is greatest.

The company explained that price caps should not interfere with market pricing, which is formed in accordance with real supply and demand. Their main task is to prevent price speculation, and not to artificially restrain the cost of electricity.

According to representatives of Ukrhydroenergo, the current maximum prices during peak hours actually make it impossible for the day-ahead and intraday markets to function properly. As a result, producers have no economic motivation to cover demand, and imported electricity loses its financial attractiveness. This creates a deficit that often has to be covered by emergency assistance, which is the most expensive and unstable option.

The company also emphasizes that updating the price limits will allow attracting more imported supplies during peak hours. Such a change will create favorable conditions for covering the deficit in situations where domestic production does not keep up with demand.

Viktoriya Hryb, the head of the Verkhovna Rada Subcommittee on Energy Security, holds a similar opinion. She publicly supported the intention of the National Commission for the Regulation of Energy and Utilities of Ukraine to review the maximum prices in the evening, considering this a necessary step to stabilize the market.

Temporary and permanent

Restrictions on the formation of electricity prices were introduced back in 2019 as a temporary tool. This was recalled by Olga Savchenko, a partner at the Altelo law firm and head of the legal committee of the Ukrainian Wind Energy Association.

According to her, the price cap mechanism was introduced during the launch of the new energy market model on July 1, 2019. The idea was to ensure a stable transition period.

“This was supposed to be a short-term regulation that would allow the market to adapt to new conditions,” she explained.

However, the restrictions remained after the end of the peaceful period. The expert emphasizes that martial law is not the only reason for the existence of price caps, because for almost three years before the full-scale invasion, the restrictions were not properly reviewed. “Even in the pre-war period, these mechanisms operated without the necessary updating. The increases began already in war conditions, when it became clear that the market would not withstand artificially low prices,” she notes.

Savchenko also emphasized that the permanent operation of price caps contradicts the principles of European law. Such restrictions can be applied only in exceptional cases and on the basis of a clear and substantiated analysis. “Any interference with competition must be balanced, time-limited and legally justified. In our case, unfortunately, this has not been observed,” she noted.

In addition, the Energy Community has repeatedly drawn attention to the problem, pointing to Ukraine’s failure to fulfill its obligations to dismantle market restrictions. “Yes, it is recognized that raising price caps is a step forward. But the EU clearly emphasizes: there should be no such restrictions at all. This distorts the market and violates international agreements,” the lawyer added.

The problem was also voiced by Vladyslav Sokolovsky, Chairman of the Board of the Solar Energy Association of Ukraine. In his opinion, the current system hinders the development of industrial generation from renewable sources, in particular solar power plants, and negatively affects the investment climate in the industry.

After all, on the one hand, the revision of price caps is another stage of increasing the cost of electricity tariffs at all levels, increasing the cost of prices and services, another stage of increasing the expenses of all budgetary institutions and another step towards the bankruptcy of water utilities and heating and power utilities. On the other hand, Ukraine has been living in war conditions for the fourth year and the enemy regularly destroys the energy system, causing considerable losses. And ordinary Ukrainians do not want to live in conditions of blackouts and regular restrictions.

Olena Marchenko, specially for "Ukrainian Energy"