On 23 November 2016, the Ukrainian President signed the
long-awaited Law of Ukraine On National Energy and Utilities
Commission of Ukraine No. 1540-VIII of 22 September 2016 (the Law
on Regulator). It was officially published on 25 November 2016 and
entered into force on 26 November 2017, except for provisions on
the Regulator’s financing, which will enter into force
starting from 1 January 2017.
The Law on Regulator for the first time in Ukrainian history
offers a model of independent regulator in accordance with European
practices. According to the Law on Regulator, the Regulator
regulates, monitors and controls business entities in the energy
and utilities spheres, in particular:
In the energy sector:
Production, transmission, distribution, supply of
Transportation, distribution, storage, LNG services, supply of
Transpiration of oil, oil products and other substances by
In the utilities sector:
Production, transportation, distribution and supply of heat
(above amounts provided in licensing conditions);
Water supply and water sewerage (above amounts provided in
Processing and burial of municipal wastes (above amounts
provided in licensing conditions).
In the aforementioned spheres, the Regulator will be authorized
to (within limits envisaged by the law):
Control business entities and impose sanctions for
Other functions as provided by laws.
All current members of the Regulator shall leave their positions
within 18 months after the Law on Regulator has entered into
Concluding provisions of the Law on Regulator also resolve the
issues related to the discrepancy between the Law of Ukraine On
Natural Gas Market and Law of Ukraine On Licensing Types of
Business Activities by introduction of the respective changes to
Law of Ukraine On Licensing Types of Business Activities, which
will enable the Regulator to approve licensing conditions for gas
suppliers and start issuing respective licenses as envisaged by the
Law of Ukraine On Natural Gas Market.
Furthermore, the Law on Regulator introduces licensing for
processing and the burial of municipal wastes in volumes which
exceed thresholds established in respective licensing conditions to
be approved by the Regulator. The Regulator will issue the
respective licenses and control the license holders’
compliance with them.
It is expected that the entry into force of the Law on Regulator
will unlock other legislative initiatives, such as stimulating
tariff for heat from biomass or reformation of waste processing and
burial system in Ukraine.
The creation of an independent Regulator with all powers vested
by the Law on Regulator will create a more solid legal ground for
its members to elaborate and adopt new methodology for establishing
tariffs, in particular on the basis of a RAB approach, and to set
the respective tariffs. This should become a trigger for the
privatization of respective power facilities (distribution grids
and power plants), because potential investors will feel more
confident about their investment returns in these assets.
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