Ukraine electricity regulator asks for legislation to unblock its work

Ukraine’s electricity and utility regulator, the NERC,
was not able to meet a quorum of four commissioners last week to adopt
decisions needed for the sector. As one of the four commissioners has been
absent from the meetings since Nov. 13, the regulator wasn’t able to adopt 154
decisions, including approving utility rates, granting licenses and adopting
secondary legislation, according to a Nov. 24 presentation posted on the NERC
website. To unblock its activity, the NERC has proposed to amend Ukrainian
legislation, possibly to reduce the quorum.

Recall, the tenures of three (out of seven) NERC
commissioners expired in May 2017, with no replacement, leaving the regulator
with only four valid commissioners (amid a quorum of four). Yet one of these
four commissioners has not signed up for the regulator’s meetings since Nov.
13, blocking its work. On Nov. 26, the tenure of two of these four NERC
commissioners expired (among them the one who hasn’t been showing up), making
quorum impossible. The election procedure for new commissioners (a process that
takes at least 75 days, by law) has just started, meaning the NERC will get a
quorum no earlier than February.

Alexander Paraschiy: Uncertainty
around the NERC adds risks for DTEK Energy (DTEKUA), which is awaiting a new
regulation that will effectively boost prices for its thermal power plants as
of January 2018 (that regulation should be adopted ten days ahead of the new
year).

So far, the risk that new rates will not be adopted
is low, given that blockage of the NERC is very risky for Ukraine’s entire
energy system. We expect Ukrainian power brokers will find some solution soon,
enabling all the pending regulations to be adopted by the end of the year.