The provisions of the Law of Ukraine “On the Electric Energy Market”

The provisions of the Law of Ukraine “On the Electric Energy Market” No. 2019-VIII regarding the sale and purchase of electric energy under bilateral agreements and the norms on the functioning of free electric energy market, in particular, “for the day-ahead” and intraday markets, entered into force on July 01, 2019.

The law established obligations for the electricity supplier in a transparent way to inform its consumers on the cost and conditions of electricity supply, on payment methods that shall not discriminate consumers.  So, before conclusion of the contract for the supply of electric energy, information on the essential terms of the contract shall be provided to the consumer, and on the available choice of the procedure and forms of billing and settlements as well.  The terms of the contract shall be fair, transparent, not contain obstructions for the enforcement of consumer rights.

So, the electricity tariff was set by the NERC (National Electricity Regulatory Commission) until July 1, 2019, and it did not change at the end of the month.  However, while analyzing the practical relations of production enterprises with some electricity suppliers, it can be seen that the supplier himself transferred the electricity consumer to new working conditions from July 1.  Non-market conditions continued to apply to the enterprise both in terms of unjustified recalculation of prices and in part of overstating the forecast coefficient as well, concealing margins and overstating it as compared to the average market.  In some cases, it has been identified that the Supplier included the conditions in a unilateral agreement, which impede or limit the transition to another supplier, payment a month in advance instead of payment upon consumption.

It is advisable to delve into the procedure and pricing formula and the procedure for recalculating consumption by conducting an audit of relationships with the supplier.  Otherwise, the company may suffer losses as a result of the unfair actions of the Supplier.  In the case of providing obviously non-market and disadvantageous conditions, such losses can reach, based on  the example of an industrial enterprise (about 1 million kW of consumption per month), up to 50 – 300 thousand hryvnias per month.

The previous norms and the lack of healthy competition at the market for the supply of electric energy determined dishonesty in the actions taken by some Suppliers, but starting from July 1, 1919,  you can see that each of the suppliers is able to consider and offer potential consumers an improved pricing formula and more favorable terms of the contract, as compared with the previous ones.

So, as part of the work done on the audit case, Dynasty Law Firm has already had a positive practice on a successfully implemented audit project of a large industrial enterprise, including successful negotiation support.

As a result of this project implemented by Dynasty Law Firm:

more profitable business offers were received and considered from alternative electricity suppliers with a transparent and more cost-effective pricing formula for consumers;

the amount of payment for the consumed electricity was recalculated in favor of the Client with the return of illegally debited funds to the Client’s personal account in the amount of more than 900,000.00 UAH;

A new bilateral electricity supply agreement has been concluded with the Customer on terms favorable to him in terms of the payment schedule and cost formula per unit of consumption.

– Tetyana Trikoza, attorney at law Dynasty Law Firm.

Publications 29 October, 2019

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