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Experts call to unblock the NEURC reform

28 September 2017

Implementation of the reform has become at risk of disruption, because according to the NEURC Rotation Plan, another two commission members will be dismissed on November 26, and no Competition Commission has been created yet to select new ones.

Consequently, the regulator will lose the quorum for decision making and Ukraine will have no chief "arbitrator" for energy markets.

This was the topic of the round table "Two Months without the NEURC: What Is to Be Done by the Energy Sector?" initiated by DIXI GROUP experts in order to discuss the ways to prevent disruption of the reform and institutional collapse of the National Energy and Utilities Regulatory Commission of Ukraine.

"For the energy sector, this means significant risks, because in fact it will operate without the management body: without licensing, without approving investment programs, without approving new regulatory acts, in particular in pursuance of the Law of Ukraine "On the Natural Gas Market" and the Law of Ukraine "On the Electricity Market", to be complied with for the purpose of completion of the transposition of the Third Energy Package standards into the Ukrainian legislation", emphasized Olena Pavlenko, the President of the DIXI GROUP Think Tank.

The participants of the discussion also pointed out that if the Competition Commission is created and the competition to fill the vacancies of the NEURC members starts on October 15, the NEURC will again have the necessary composition for decision making from January 28, 2018. Therefore, the energy markets will operate in "autonomous mode" for two months.

"Delay by the VRU, CMU and the President in forming the Competition Commission to select candidates for vacancies of the NEURC members will inevitably result in missing quorum within the Regulator, which will render impossible the passing of any decisions by it. This situation will have negative effects for the energy sector, in particular will slow down the process of implementation of the modern model of the electricity market, as a substantial number of regulatory acts in pursuance of the Law of Ukraine "On the Electricity Market" are to be developed and approved by the NEURC", summarized Andriy Bilous, analyst from DIXI GROUP.  

Note that on November 26, 2016, the President signed the Law of Ukraine "On the National Energy and Utilities Regulatory Commission (NEURC)". Upon coming into effect, the Law approved the powers and functions of such independent and impartial, both politically and financially, arbitrator for energy markets – the NEURC.

The Law determined the 18 months' transitional period for rotation of the current NEURC members – selection of candidates on a competitive basis, who, as expected, will not represent the interests of specific political forces and/or companies operating in energy sectors.

Another key objective is to ensure financial independence. From the beginning of 2018, the NEURC would have to start working on the basis of the budget to be filled due to contributions of the companies whose activities are regulated by the Commission.

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