Sažetak
Cilj je ovog rada da upozna čitatelje s osnovnim oblicima, metodama i fazama državne regulacije energetske industrije u Ukrajini tijekom razdoblja prelaska na tržišnu ekonomiju. Posebna je pažnja posvećena sljedećim aspektima:
• Potreba i povijest osnivanja posebnog regulacijskog tijela Ukrajine - Nacionalne komisije za regulaciju elektroenergetske djelatnost (NERC);
• Osnovni zadaci i ovlasti NERC-a prema ukrajinskom Zakonu o energetskom sektoru;
• Regulacijski mehanizmi osnovnih procesa u energetskoj industriji kojima se koristi Komisija na trenutnoj razini razvoja energetskog sektora, i ekonomski rezultati njezinog uvođenja;
• Problemi s funkcioniranjem energetskog tržišta na veliko, posebno kao glavnog dijela energetske industrije u Ukrajini, i tendencije budućeg razvoja (poboljšanje financijske situacije u energetskoj industriji, poticanje konkurencije među proizvođačima i isporučiteljima, poboljšanje tarifne i investicijske politike, itd.);
• Potreba i načini budućeg napredovanja standarda i pravne osnove za regulaciju u Ukrajini.
1. INTRODUCTION
World experience proves the expediency of state regulation of Electricity Sector, due to the fact that electricity, as universal commodity, is used in all spheres of economy, by all layers of population and has large social significance. Power supply companies hold a monopolistic position in their relations with customers; development of competition makes the system of relations in the power market more difficult, leading to necessity of adequate and effective regulation, which shall provide for the balance of interests of participants and stable operation of power market and Power Sector, as a whole.
This report is dedicated to the main reforms in the sphere of Ukraine Electricity Sector regulation, major trends of NERC activities, practical implementation of its regulatory functions in Power Sector, main problems and perspectives of NERC operation.
2. OPERATION EXPERIENCE AND MAIN TASKS OF UKRAINE NERC
Functions of state regulation in Ukraine Electricity Sector have been assigned to National Electricity Regulatory Commission (NERC). NERC was established in 1994 as a permanent body with special status. Special regulatory body, the first one in the history of Power Sector of independent Ukraine, was needed to create a competitive electricity market in conditions of different types of ownership introduction by means of Sector restructuring.
During 7 years of NERC operation, directions and forms of NERC activities have expanded considerably. Key principle of NERC operation remains the same: introduction of competition in all spheres of interaction of power market entities, and oil and gas market entities, and introduction of regulation of their activities in directions, where it is impossible to develop competitive relations (natural monopolies). NERC aims at ensuring the balance of interests of the state, Electricity Sector entities and electricity customers.
Legal foundations of NERC operation are stipulated in the Law of Ukraine "On Electricity Sector" and Decrees of the President of Ukraine.
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NERC is headed by the Chairman. NERC local representation offices operate in each region of Ukraine.
As of today, main functions of NERC are:
• issuance of licenses, elaboration, enforcement and control over the observance of Rules and Conditions for carrying out entrepreneurial activity by power market entities and oil and gas market entities;
• regular monitoring of power market, aimed at improving its operation mechanisms, primarily, ensuring market transparency, developing competitive relations and balancing the interests of participants of market relations;
• regulation of payment-and-settlement relations between Ukraine Wholesale Electricity Market (hereinafter-WEM) participants;
• formation and enforcement of pricing and tariff policy in Power Sector;
• providing for investment attractiveness of Power Sector.
2.1. Licensing
NERC has enforced its own mechanism for licensing and control over the licensees' activities, which is stipulated in Rules and Conditions for carrying out entrepreneurial activity in Electricity Sector and Oil and Gas Sector. As of today, NERC licensees are:
"Energymarket" State Enterprise, National Energy Company "Ukrenergo" State Enterprise, 129 power generating companies, 42 power supply companies, operating at regulated tariff, and 558 suppliers at non-regulated tariff. Licenses are issued, suspended and revoked by NERC public hearings, which are held twice a week.
2.2. Monitoring and improvement of power market operation
Monitoring and improvement of power market operation is one of the most important functions in NERC activities.
From the second half of 1997 Ukraine WEM has been operating according to Single Buyer Model. This model of power market organisation provides for signing by all its entities of the multilateral Agreement (WEM Members Agreement, hereinafter - WEMMA), according to which all the large generators (with installed capacity more than 20 MW) shall sell their electricity to the single wholesale supplier - "Energymarket" SE, and all the power supply companies shall purchase it from wholesale supplier. Electricity transmission via high voltage lines is carried out by NEC "Ukrenergo" SE, which is also a system operator. Any entrepreneurial entity that obtained NERC license and signed the WEMMA may become WEM participant. Figure 1. shows the scheme of current power market model.
I'd like to emphasise that it was due to primarily NERC's effort that Ukraine could establish a comprehensive normative-and-legal base for state regulation of power market
and oil and gas market within a short period of time, and in such a way create necessary pre-requisites for normal operation of power market.
Wholesale Electricity Market of Ukraine (WEM)
Generating companies
TPP NPP
1
HPP
| CHPs || Electricity importers
«Energoryn» State
Electricity suppliers at regulated tariff
Electricity suppliers at non-regulated tariff Electricity exporters
NERC or Ukraine
Figure 1. Scheme of current power market model
Five-year experience of WEM operation proves that selected market model is feasible.
Figure 2. shows main positive results of WEM functioning.
Positive Results Ukraine Power Market :
•Simple and transparent system of the WEM entities relationship reasoned by the existence of:
-single wholesale buyer;
-single average hourly wholesale price for electricity;
-single distribution account of power market
-equal conditions of business entities access to the WEM
•Development of competition between generators (thermal power plants) plants) and power suppliers (monopolists, working in an assigned) territory, and independent suppliers);
•Considerable increase on the level of electricity settlements with monetary funds;
•Creation and development of the bodies, providing for self-regulation of the WEM: WEM Board, Market Auditor.
NERC of Ukraine
Figure 2. Positive results of WEM functioning
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System of pricing and settlement-and-payment relations between power market participants is simple and transparent. Wholesale electricity market price - price, at which electricity is sold to suppliers in the WEM - is formed according to Market Rules (an integral part of the WEMMA) on hourly basis as weighed average of prices of thermal generation, operating on competitive basis, and electricity prices, for other generation types, approved by NERC (nuclear, hydro, CHPs, unconventional sources of power). The latter form the wholesale price surcharge. Wholesale price surcharge also accounts for subsidy certificates (amounts to compensate the costs of power suppliers, carrying out electricity supply to privileged groups of customers in an assigned territory), payments for power system dispatch, services for high voltage electric networks, providing for power market functioning etc. Figure 3. shows WEM pricing mechanism.
Formation of hourly wholesale price for electricity sale to power suppliers in the WEM
Price of electricity
Wholesale price for electricity sale to power suppliers in power market
Figure 3. WEM pricing mechanism
Competitive generation - thermal power plants (TPPs) - sell their electricity to the market at hourly prices, calculated based on power units price bids for day ahead. Mechanism of electricity price formation for TPPs envisages payment to all power units at the price of the most expensive unit of all units included in forecasted load schedule. Therefore, aimed at maintaining thermal generation tariffs at the level of reasonable costs, NERC carries out regulation setting up fixed cost coefficient for computation of operating capacity price, and coefficients of power units flexibility. In order to provide economic incentives for lowering power consumption in peak hours, in the event of capacity shortage in power system, NERC applies mechanisms for differentiation of wholesale price over the 24 hours period (i.e. price increase in peak load and price decrease in minimum load).
The latter is carried out in the way of including some payments, which are the price components, in certain, mostly peak hours, but not uniformly over the 24hour period.
2.3. Regulation of payment-and-settlement transactions
NERC pays specific attention to the issues of increasing electricity payment level. The latter is explained by the fact that electricity settlements in full volume are essential in ensuring funding for Power Sector operation and development. If payments are not carried out regularly and in full volume, any power market model will not be successful.
In 1999 the level of cash payment for electricity, purchased in the WEM, constituted 7-10 percent of commodity value. In the year 2000, changes to the Law of Ukraine "On Electricity Sector" and other normative acts made fundamental modifications to the procedure for WEM settlements, introducing the requirements of solely cash payment for electricity via special distribution accounts of wholesale supplier and power supply companies. The latter allowed putting an end to barter and other substitute forms of settlements. As a result, the level of cash payments to power generating companies increased considerably, and now it constitutes more than 80 percent (Figure 4.).