This publication was prepared with the support of the European Union. The contents of this publication are the sole responsibility of NGO “DIXI GROUP”, as well as Civil Network “OPORA”, All-Ukrainian NGO “Energy Association of Ukraine”, Resource & Analysis Center “Society and Environment”, Association “European-Ukrainian Energy Agency”, and can under no circumstances be regarded as reflecting the position of the European Union.
The project “Enhancing impact of civil society in monitoring and policy dialogue on energy and related sectors’ reforms in line with the Association Agreement implementation” aims at strengthening the role of civil society in advocating reforms in the energy and related sectors. The key objectives of the project are: monitoring of the implementation of the energy provisions of the Association Agreement, including relevant environmental and trade-related commitments; strengthening the civic experts’ and local actors’ capacity to track actual implementation of the reforms; facilitation of public dialog to lead in proper implementation of the European energy and environmental reforms; informing stakeholders and the Ukrainian society about the meaning and potential benefits of European reforms in energy and related sectors in order to empower them to keep the government accountable for pursuing these reforms. www.enref.org
Executive Summary In February 2017, experts have noted a certain slowdown of the reforms in the gas sector. Against the background of developed projects, there is lack of adoption of decisions which would actually promote reforms. However, the dynamics of presence of suppliers of natural gas in Ukraine is positive. In the electricity sector, against the backdrop of still no decision on the draft Electricity Market Law and some decisions of the regulator, initiatives on carrying out rotation of the NEPURC members appeared. However, in conditions of blocking the supplies of coal, temporary emergency measures have been introduced in the market and there are no rolling blackouts. In the area of energy efficiency, activities in the field of developing rules and other operational work were carried out. At the same time, issues of the need for decision-making, raised by the experts for a long time, remain unsolved. In particular, the “Energy Voting Day”, which was planned by the Verkhovna Rada, was not organized. The issues of environmental impact assessment and strategic environmental assessment still remain unresolved in the area of environment. However, the relevant legislative initiatives have reached the Parliament once again and wait for their consideration, though in the meantime, experts point to deficiencies. In addition, revival of investors’ interest has been observed in the context of renewable energy sources, although the overall implementation of the National Renewable Energy Action Plan objectives may be under threat. Against the background of active planning of activities in the field of oil and oil products, experts emphasize the lack of analysis and conclusions on the reasons of the lack of implementation progress last year. Progress in the field of business climate is also characterized by problems with the adoption and implementation of laws. The failure to adopt the draft law on transparency in extractive industries and delays in the effective implementation of the law on energy regulator became the key events of the month.
Most Used Abbreviations AA – Association Agreement CcSUP – Complex (Consolidated) Safety Upgrade Program of Power Units of Nuclear Power Plants CMU – Cabinet of Ministers of Ukraine DHC – District Heating Company FEC – Fuel and Energy Complex GDS – Gas Distribution Systems GTS – Gas Transportation System LNG – Liquefied Natural Gas MECI – Ministry of Energy and Coal Industry
NAK – National Joint Stock Company Naftogaz of Ukraine NEPURC – National Energy and Public Utilities Regulatory Commission RW – Radioactive Waste SFSU – State Fiscal Service of Ukraine SAUEZ – State Agency of Ukraine on the Exclusion Zone TPP – Thermal Power Plant UES – United Energy System of Ukraine VRU – Verkhovna Rada of Ukraine WANO – World Association of Nuclear Operators
GAS Summarizing the results of February, it may be stated that reforms of the sector’s legal framework have slightly slowed down since the beginning of 2017. In February, as in the previous month, no law was adopted in this area. Instead, MPs have registered 3 new draft laws and draft resolution on approval of the governmental draft law on the rent for use of public GDS. In February, the NEPURC approved the license conditions of activities in the market of natural gas and published two draft resolutions, which provide for improving a number of regulations. At the same time, the CMU has adopted the decision on defining a new periodicity and mechanism for revising limit retail prices for natural gas for households and district heating companies (Resolution No. 90), which, in our view, lack consistency and reasonableness. The CMU Working Group responsible for accelerating the reform of Naftogaz has developed the list of assets necessary for the operation of a new TSO and the plan of their transfer. Meanwhile, the group of foreign suppliers of natural gas to the internal market of Ukraine was added by another participant – the Azerbaijan company Socar. In February, gas transit to European consumers through the Ukrainian GTS and its imports from Europe for Ukrainian consumers was higher than in February 2016, the volume of transit increased by 30%, the volume of imports - by 13%. Directive 2009/73/EC concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC (Art. 338, 341 Annex XXVII AA) in accordance with Art. 278 AA: At the beginning of February, parliamentary draft law No. 60691 amending the Law “On Natural Gas Market” in the part of extension of the concept of the “household consumers” category was registered in VRU. The draft law proposes to include residents of hostels to this category. The fact is that from 1 January 2017, the obligation to finance the expenses for energy sources (including gas), in particular, of educational institutions, is transferred to local budgets. Although natural gas in hostels is used exclusively for personal household needs of their residents, educational institutions, as legal entities, purchase gas at the rates higher than household ones. According to authors of the draft law, the exercise of rights of residents of hostels as household consumers will allow reducing the load on local budgets. Two other draft laws registered by VRU in February (No. 60732, No. 6073-13) relate to amending the law on the regulator (NEPURC). Considering the urgent need to completely replace the composition of the regulator, the authors of both draft laws propose to change the terms of the first rotation of the NEPURC composition. Instead of the procedure of gradual rotation during 18 months, determined by the current version of the law, the first draft law provides for holding a competition, on the basis of which the simultaneous rotation of all NEPURC members shall be performed within 6 months from the date of entry into force of the proposed changes, the second – not later than within 4 months. In addition, to ensure the open and transparent selection, determining clear professional characteristics and personal qualities of candidates for NEPURC members, authors of the second draft law (No. 6073-1) provide for amendments and clarifications to the Art. 8 of the Law, defining peculiarities of appointment and status of members of the regulator. 1
http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?id=&pf3511=61102 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?id=&pf3511=61113 3 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?id=&pf3511=61143 2
GAS Based on the results of consideration by the VRU relevant committee on FEC (Minutes No. 41 of 08.02.2017) of the government and alternative draft laws (No. 55584 and No. 5558-15) on peculiarities of collection of rent for the use of state GDS, it was recommended that VRU takes the version of CMU as a basis6. Meanwhile, by adopting the Resolution No. 957 on February 21, the government has taken steps to ensure the transition to paid use of state GDS or their components on a leasehold basis after the stated law is adopted. The Ministry of Energy and Coal Industry is determined as the management body of GDS owned by the state, Typical Lease Contract and Model GDS Operation Contract are approved. The government has obliged DSOs to conclude new agreements on gas pipelines operation with the Ministry of Energy and Coal Industry (which should come into effect from 1 April 2017) and the Ministry of Energy and Coal Industry, together with the State Property Fund of Ukraine - to carry out inventory of GDS registered on the balance sheet of operators until 1 December 2017 and their certification - by 31 December 2018. According to the new procedure for revising limit retail prices for natural gas for the population and DHC approved by CMU (Resolution No. 908), the government may make their adjustments every six months (from April 1 and October 1), if the price of imported gas will increase by over 10% for half a year (the price of gas, which Naftogaz buys from the subsidiary of Ukrgazvydobuvannia, will be simultaneously revised). The possibility of a quarterly revision of gas prices for the population was earlier provided for by the resolution on entrusting Naftogaz with special obligations to supply gas to the population at the prices regulated by CMU (No. 758 of 01.10.20159), however, the resolution did not contain the mechanism of recalculation. 2 new concepts – “gas year” (October 1 – September 30) and “gas half a year” (from April 1 till September 30 and from October 1 till March 31) have been introduced, the terms and conditions of recalculation and the body responsible for calculation – the Ministry of Energy and Coal Industry. Revision of prices may take place on 1 April 2017. The proposed mechanism for revision of retail prices, in our opinion, is not thought-out enough. Thus, according to the clause 12, in the calculation of the retail price of gas for household consumers, prospective transportation costs shall be determined as the lower of two values: transport costs from the NCG hub to a virtual point of sale (VPOS) of Slovakia and difference in prices at VPOS of Slovakia and NCG, while according to the clause 12’ (third paragraph) on calculation of the marginal retail price for the same consumers – there is no mention of the difference in prices at VPOS of Slovakia and NCG. By the way, the real cost of transport from NCG to VPOS of Slovakia makes up USD 20-30 per tcm, and the average difference in prices at NCG and VPOS of Slovakia – USD 7-8 per tcm. That is, the marginal retail price increases, compared to the retail price, by USD 12-23 per tcm, which is incomprehensible.
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GAS The government also revised the social norms of consumption of gas taking into consideration the actual consumption by households (Resolution No. 5110). In particular, the standard for use of natural gas for individual heating is also revised - from 5.5 to 5 cubic meters per 1 m2 of the heated area per month during the heating season. The correction coefficients for calculating the amount of gas consumption for heating in apartment buildings was also revised. The relevant decision of the government will enter into force from 1 May 2017. Instead, the Ministry of Energy and Coal Industry has published the draft law amending the Law “On Natural Gas Market�11, which provide for separation of the payment for gas as a product from the payment for the services rendered on the distribution of gas. In order to transfer appropriate funds of payment, suppliers of gas to consumers, which relate to special obligations, and distribution systems operators are required to open current accounts with special regime of use. In the meantime, NEPURC will maintain control over the allocation of these funds. NEPURC adopted the resolution (No. 201 of 16.02.201712) on the approval of new Licensing Conditions for the Business Activity in Transportation, Storage, Distribution and Supply of Natural Gas. Licensees operating in the natural gas market should bring their business activities in compliance with this resolution within 3 months from the date of its publication. However, the regulator has published new draft regulations developed to improve the quality of monitoring of gas market and regime of regulated access to storage facilities, namely: 1) on amending the existing forms of reporting of market entities (in the part of their detailing, removal of unnecessary elements and addition of new ones, as well as introduction of new forms of reporting for a TSO and gas storage operator), along with instructions on filling them in13; 2) on adjusting certain provisions of the Code of Gas Storage, Standard Natural Gas Storage (Injection, Withdrawal) Contract and Methods of Measurement and Calculation of Rates for Storage Services14. According to the results of the monitoring of gas prices, carried out by NEPURC, the regulator informed that the maximum gas price in January 2017 for the consumers, which fall within the scope of the provision on imposing special obligations, totaled USD 10,806.12 per tcm (with VAT)15. From 1 March 2017, Naftogaz has reduced the gas price, compared to the prices of February 2017, by 7%16. According to the new price list of the company17, the gas price was decreased from UAH 10,141.2 to 9,439.2 per tcm. For industrial and other consumers that do not fall within the scope of the provision
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http://www.kmu.gov.ua/control/uk/cardnpd?docid=249717533 http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245182726&cat_id=35082 12 http://www.nerc.gov.ua/?id=23799 13 http://www.nerc.gov.ua/?id=23628 14 http://www.nerc.gov.ua/?id=23711 15 http://www.nerc.gov.ua/index.php?news=5762 16 http://www.naftogaz.com/www/3/nakweb.nsf/0/2DEB97B00FD52A01C22580CF003459C3?OpenDocument&year=2017&mo nth=02&nt=%D0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8& 17 http://www.naftogaz.com/files/Information/Naftogaz-gas-prices-Mar-2017.pdf 11
GAS on imposing special obligations, but have no debts to Naftogaz and purchase from 50 tcm of gas on the terms of advance payment18 – the price in UAH 8,553.6 (instead of 9,214.8) per tcm was suggested. As to the population, according to the official representative of Naftogaz at the VOX-Connector conference19, there is a high likelihood of continuation by government of special obligations of NAK and thus saving gas prices for the population at current levels after 1 April 2017. This is confirmed by the draft provision of CMU, published by the Ministry of Economic Development20, on actual prolongation of validity of the Regulation on Imposing Special Obligations until 1 April 2018. According to this document, Ministry of Energy and Coal Industry is entrusted to provide calculation of gas price at import parity, publish information on some of the conditions of fulfilling special obligations till 1 July 2017. During the last week of February 2017, the total outstanding debt to Naftogaz of heat supply enterprises fell by UAH 1,519 million (5.7%) and as of February 28 totaled UAH 25.4 bn, of which for 2017 – UAH 5.1 bn21. The highest total outstanding debt for the gas consumed in this category was accumulated by the Donetsk region (UAH 5,7 bn). The debt of DHC and CHPP enterprises for natural gas used in the production of heat makes up about 81% of the total debt (direct debt to industrial consumers – about 10%, debt of CHPP for natural gas used in power generation – about 9%). Meanwhile, the government approved the procedure of maintenance of the registry of heating and heat-generating organizations involved in the process of settling debts for consumed energy sources (Resolution No. 9322). Regulation (EC) No. 715/2009 on conditions for access to the natural gas transmission networks and repealing Regulation (EC) No. 1775/2005 (Art. 338, 341 Annex XXVII AA) in accordance with Art. 278 AA, trade issues (Art. 269-274 AA): The main achievements of the CMU working group responsible for accelerating the reform of Naftogaz was the preparation of the preliminary list of assets necessary for the operation of a new TSO and plan of their transfer23, as well as the draft law “On amending some legislative acts of Ukraine on improving corporate governance of legal entities, the shareholder (founder, member) of which is the state”24, adoption of which is provided for by the plan of the reform of corporate governance of NAK Naftogaz of Ukraine. The removal from office of the president of Ukrtransgaz I. Prokopiv carried out by Naftogaz was a significant event. The report of the parent holding refers to the fact of disconfirmation of a number of
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Payment during the calendar month preceding the month of gas supply https://www.epravda.com.ua/news/2017/03/2/622203/ 20 me.gov.ua/Documents/Detail?lang=uk-UA&id=cf82e916-f412-434f-8f90f8e9395fdcf6&title=ProektPostanoviKabinetuMinistrivUkrainiproZatverdzhenniaPolozhenniaProPokladenniaSpetsialnikhObovia zkivNaSubktivRinkuPrirodnogoGazuDliaZabezpechenniaZagalnosuspilnikhInteresivUProtsesiFunktsionuvanniaRinkuPrirodnogoG azu-vidnosiniU2017-2018-Rokakh 21 http://www.naftogaz.com/www/3/nakweb.nsf/0/A25B486DDED027C6C22580D60045F662?OpenDocument&year=2017&m onth=03&nt=%D0%9D%D0%BE%D0%B2%D0%B8%D0%BD%D0%B8& 22 http://www.kmu.gov.ua/control/uk/cardnpd?docid=249774677 23 http://www.kmu.gov.ua/control/uk/publish/article?art_id=249776780&cat_id=244276429 24 http://samopomich.ua/alona-babak-derzhavu-pozbavlyayut-upravlinnya-kompaniyeyu-nak-naftogaz-ukrayiny/ 19
GAS purchases, discovered during the audit of Ukrtransgaz financial statements in 201525. As Naftogaz assured, changes in management will not affect gas supplies to Ukrainian consumers and transit. The Azerbaijan state company Socar received a direct access to the internal gas market of Ukraine through its subsidiary Trade House Sokar Ukraine26. This is evidenced by copies of contracts of the company with the TSO Ukrtransgaz (for transporting 180 mcm from January to December 2017) published in the ProZorro state procurement system27. Currently, TH Sokar Ukraine participates in the tender for the supply of 36.6 mcm of gas to Ukrzaliznytsia. Against the background of working out by TSOs of Ukraine and Poland of the joint Open Season procedure for new capacities of the interconnector Ukraine - Poland, to identify previous interest in booking capacities of this pipeline, on 17 February 2017, Ukrtransgaz organized the meeting28 with potential customers of services in gas transportation. This meeting was attended by representatives of traders: DTEK Trading LLC, E.Connect (Ukraine), World Petroleum Group, ERU Trading, PromenergoResurs, PGNIG S.A., Trailstone, Energy Trade Group LLC. They were informed that for making the final investment decision on beginning financing the project, the Polish party (GAZ-SYSTEM) needs market confirmation of the demand for new capacities and signing of relevant long-term contracts for their use with market participants. On February 6, the Energy Community Secretariat published its first monitoring report under the new Action Plan 2.0 CESEC29. The report is devoted to the implementation of specific legislative and regulatory measures by the parties of the Energy Community, which signed the Memorandum of Understanding. The report also tracked the implementation of CESEC priority projects, in which the parties take part. Regarding the assessment of Ukraine, the Energy Community did not record the progress by components: “Ensuring transparent and non-discriminatory access of third parties” and “Creating mechanisms for balancing and distribution costs on borders under Regulation (EC) 347/2013”, noted the continuing dialogue on reverse flows and interconnectors with operators of neighboring countries. Directive 2004/67/EC concerning measures to safeguard security of natural gas supply (Art. 338, 341 Annex XXVII AA), action of “Early Warning Mechanism” (Annex XXVI AA), actions in emergencies (Art. 275-276, 309, 314): Naftogaz sent to the General Court of the European Court of Justice a request for adding to the case involving the lawsuit of PGNiG Supply & Trading30, appealing the decision of the European Commission of 28 October 2016 on allowing Gazprom JSC to increase the use of capacities of the OPAL pipeline
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GAS (Nord Stream-1 extension). In case of a positive decision on the request, the Ukrainian company will be able to submit additional arguments in the case and get official access to its materials. Meanwhile, Poland renews its pressure on the European Commission, so that it did not provide favorable conditions for the construction of Nord Stream 2. On February 27 in Brussels, during the meeting of energy ministers of EU member states, the Deputy Minister of Energy of Poland Michal Kurtyka spoke with such demand31. Poland and other countries (Denmark, Sweden, Lithuania and Romania) addressed the European Commission with a request to provide a written assessment of the case. This request was also supported by influential MEPs from different countries and factions that sent the corresponding letter to Malta, presiding in EU. The document was created on the initiative of the Chairman of the Committee on Energy and Industry of the European Parliament Jerzy Buzek. According to Naftogaz32, Gazprom continues to violate the conditions of the transit contract. During the last two days of February, the specialists of Ukrtransgaz recorded a significant drop in pressure in the GTS of Russia at Sudzha - the main entry point to GTS of Ukraine from Russia. As of 8:00 February 28, the level of pressure at GMS Sudzha fell to the record low one for the last years – 49.7 atm instead of contract 60.0 atm. Gazprom also violates the terms and conditions on maximum level of daily fluctuations of applications for gas withdrawal at the exit points from GTS of Ukraine, which must not exceed 4.5% at the point Uzhgorod according to the contract, but this figure was twice the norm on some days of February. In addition, in certain periods of the current month, the quality of gas supplied to the Ukrainian GTS from Russia, did not meet the physical and chemical parameters stipulated by the contract. The systematic failure of Gazprom to perform the terms and conditions of the transit contract creates risks for uninterrupted gas supply in the European direction. At the same time Ukraine as a reliable partner of the EU, despite numerous violations on the part of Russia, ensures uninterrupted gas transit to European consumers: based on the results of February, 7.6 bcm were transited to Europe, which is by 30% more than the index of the same period of the last year33. For 2 months of 2017, the volume of natural gas transit to EU countries amounted to 16.5 bcm, which is by 4.2 bcm more than in the same months of 2016. In February 2017, not only the volume of transit, but also the volume of gas imports from Europe for the needs of internal consumers of Ukraine was higher than in the previous year: 1.4 bcm or increase by 13%, compared with the index in February 201634. In just two months of the new year, 2.9 bcm (by 0.8 bcm more than in 2016) came from the EU countries to Ukraine. At the end of February 2017, about 8.3 bcm of gas35 remained in Ukrainian GTS, which should be sufficient for the successful completion of the heating season, provided cold weather does not return in
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GAS March. Daily selection from underground storages at the beginning of March amounted to 21-26 mcm36. Since the beginning of the heating season 2016-2017, Ukraine used 6.4 bcm of gas from UGS. This by 0.6 bcm (9%) less than for five months of the heating season of 2015-2016 and by 2.2 bcm (25%) less than for the same period of the heating season of 2014- 2015. ACQUIS UPDATE NEW ACQUIS In late November 2016 in the Official Journal of the EU, Regulation No. 2016/1952 on the European statistics of natural gas and electricity prices and repealing Directive 2008/92/EC was adopted37. The Regulation introduces mandatory mechanisms of reporting on prices both for industrial end consumers and households (household sector). Increasing of complexity of energy markets, which makes it difficult to obtain reliable and relevant data on the prices for natural gas and electricity, especially in the household sector was called the reason for strengthening the legal force of rules. SECURITY OF SUPPLY On 21 December 2016, the European Commission announced a new competition for the selection of infrastructure projects to be included in the list of “projects of common interest”. Applications were accepted before 22 January 2017. After completion of the competition, Regional Groups - special committees of representatives of the EU Member States, the European Commission, operators of transmission networks and associations in the EU, project initiators, regulators and ACER – will evaluate applications. The final list will be sent to the European Commission to the European Parliament and the EU Council, it must be approved before the end of 2017. The first list of “projects of common interest” was adopted in 2013, the second - in 2015. On 17 February 2017, funding under the Connecting Europe Facility program was approved38. 10 of 18 projects are related to the gas sector, with funding of EUR 228 million. Feasibility study of the projects Eastring and Balkan gas hub, the construction of an LNG terminal in Croatia and Interconnector Poland – Slovakia are among the supported applications. Consideration of the proposal of the European Commission on establishing the verification mechanism with regard to intergovernmental energy agreements with third countries (Revised Decision on information exchange and repealing Decision No. 994/2012). According to Slovakia, which was presiding in the EU, on 5 December 2016, the proposal was discussed at the meeting of the EU Council39. The decisions taken include the following: enhanced regional cooperation should focus on groups of EU countries, selected on the basis of risks rather than fixed regional groups; mechanisms of solidarity - measures to ensure gas supplies from neighboring countries in emergency - should be the last resort after exhausting all possible emergency measures; new rules on compensation and burden sharing shall be established;
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GAS
competent authorities should be notified of long-term gas contracts, which provide the equivalent of 40% or more of annual gas consumption in a EU member state, and if they have doubts about the impact of such contracts, they shall report the European Commission. The first trialogue (negotiations between representatives of the European Parliament, the Council and the European Commission) as regards the new Regulation took place on February 6. The introduction of mandatory ex-ante inspections by the European Commission of intergovernmental agreements on gas and oil, as well as a ban on signing these agreements without the position of the European Commission, which should be taken into account became the result of a political compromise40. MISCELLANEOUS On 17 January 2017, the European Commission published the executive decision on approving the annual priority list for development of network codes and rules in 201741. In particular, rules for the implementation of harmonized rate structure for gas transportation, as well as rules on the common European market approach to the distribution of “newly built” facilities of gas transmission networks are determined as a priority for the gas market. On 1 February 2017, the second Report on the Energy Union, which tracks the achieved progress of this strategy, was published42. In particular, the document includes questions of external measurement of performance of the Energy Union.
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Electricity and Nuclear Safety In February, FEC Committee of VRU did not consider the draft law No. 4493 “On Electricity Market” through the decision of NEPURC to set the cost of non-standard connection to electrical grids in 2017 at the level of UAH 3.7-11.3 thousand / kW. This decision elicited extremely negative reaction of MPs, experts and RES producers. A group of MPs registered the draft law No. 6073 on changes to the law on the national regulator. It is proposed to carry out a simultaneous rotation of all NEPURC members within 6 months from the effective date of these amendments to the Law. On February 16, the Decree of the President of Ukraine No. 37/2017 On the Decision of the National Security and Defense Council of Ukraine of 16 February 2017 “On Urgent Measures to Neutralize Threats to the Energy Security of Ukraine and Enhance the Protection of Critical Infrastructure” was issued, and on February 17, the Order of CMU No. 103-p “On the Application of Temporary Emergency Measures in Electricity Market”, which the government adopted in connection with the blockade of rail traffic between Ukraine and non-controlled parts of the Luhansk and Donetsk regions, which will be valid till 17 March 2017, entered into force. The government tried to fight the deficit of anthracite coal group and took all necessary measures to prevent or minimize any power outage, that is why the month has passed without rolling blackouts. Directive 2009/72/EC of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC (Art. 269, Chapter 11, Section IV of the EU - Ukraine Association Agreement) Committee of the Verkhovna Rada of Ukraine on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety (FEC Committee of VRU) postponed consideration of the draft law No. 4493 “On Electricity Market” of 8 February for an indefinite period because of the decision of NEPURC to set the cost of nonstandard connection to electrical grids in 2017 at the level of UAH 3.7-11.3 thousand / kWh (including VAT). This was announced on February 1 by the committee member MP Lev Pidlisetskyi. The Аcting Chairman of FEC Committee of VRU Oleksandr Dombrovskyi and Secretary of the National Investment Council Yulia Kovaliv also severely criticized the decision of NEPURC on the cost of connection to electrical grids. According O. Dombrovskyi, MPs began discussing the resolution on political distrust to all current composition of NEPURC with ban to all current members of the regulator to lay a claim for entry to the new composition of the commission43. On February 9, MPs L. Pidlisetskyi, S. Leschenko, O. Babak, M. Nayyem and others registered the draft law on amendments to the Law of Ukraine “On the National Energy and Public Utilities Regulatory Commission” (No. 6073)44. The project proposes to carry out a simultaneous rotation of all members of NEPURC within 6 months from the effective date of these amendments to the Law. However, the draft law provides guarantees to the active NEPURC members, who shall be allowed to participate in the competition for positions along with other candidates, and in case of early termination 43 44
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Electricity and Nuclear Safety of powers in connection with the appointment of the new composition of the state regulatory authority, shall be entitled to compensation of salary. MP M. Yefimov (member of the faction of the Petro Poroshenko Bloc) registered the draft law on amendments to the Tax Code of Ukraine to stabilize the calculations in the wholesale electricity market of Ukraine (No. 6005 of 30.01.2017)45. The explanatory note to the draft law states that the order of electronic administration of VAT established by the Article 200 of the Tax Code of Ukraine does not take into consideration the peculiarities of business activities in the case of payment by installments (deferment) of VAT monetary obligations. Amounts of installment VAT do not affect the status of such taxpayer in the electronic system of VAT administration. The taxpayer – subject of the wholesale electricity market upon availability of the tax debt may not issue tax invoices while selling electricity to a wholesale supplier of electricity. It is therefore proposed to resolve this issue by amending the Tax Code of Ukraine. On February 15, the order of CMU No. 103-p “On the Application of Temporary Emergency Measures in Electricity Market”, which entered into force on 17 February, was adopted. According to the order, such emergency measures are introduced in the electricity market: - Determining the acceptable level of reduction of reserve of power generation capacities; - Application, if necessary, of schedules of hourly power cut-off and schedules of emergency shutdown with the consent from MECI; - Development of schedules of power system load taking into consideration the requirements of Ukrenergo by the composition of the equipment of thermal electric power stations of energy generating companies; - Accrual of payments for electricity to its producers working under bids, for which schedules and volumes of production of electricity are established, at the marginal price of the system; - Carrying out maintenance of equipment of nuclear power plants, related to the necessity of partial unloading of single power units of nuclear power plants, on weekends and holidays; - Unloading of power units of nuclear power plants as necessary by the balance of power on the weekends and holidays. Order is valid until 17 March 201746. Regulation 714/2009/EC of 13 July 2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation 1228/2003 (Art. 270, Chapter 11, Section IV of the EU - Ukraine Association Agreement) On February 8, NEPURC placed the draft decree "On Approval of the Model Contract on Access to Flow Capacity of Interstate Electrical Grids of Ukraine” on the site47. The regulator considers that this document will improve state regulation of cross-border exchange of electricity and solve the problem of bringing the Model Contract on Access to Flow Capacity of 45
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Electricity and Nuclear Safety Interstate Electrical Grids of Ukraine in accordance with the provisions of the draft resolution “On Approval of the Procedure for Electronic Auctions in Distribution of Flow Capacity of Interstate Electrical Grids” approved at the public meeting of NEPURC on 29 December 2016 and after its entry into before elimination of inconsistencies in the legal framework of NEPURC. On the same day, NEPURC published comments and suggestions to the mentioned Procedure48. At the auction on February 16, NAK Ukrenergo implemented access to export crossing for the supply of electricity to Europe from the Burshtyn TPP Island in March 2017 to four companies: DTEK Pavlogradugol PJSC, Donbasenergo JSC, ERU Trading, Skhid Resurs LLC (Hungary, Romania and Slovakia)49. The maximum price per 1 MW of crossing in the direction of Hungary – UAH 22.32 thousand in the direction of Romania – UAH 5.1 - 5.76 thousand, Slovakia – UAH 3.36 - 9.12 thousand. The marginal price MW for 1 MW of crossing in the direction of Moldova is indicated as zero. Regulation 714/2009/EC of 13 July 2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation 1228/2003 (Art. 271, Chapter 11, Section IV of the EU - Ukraine Association Agreement) On February 23, NAK Ukrenergo brought into action the Standard of the Organization “Technical Policy of SE NAK Ukrenergo in the Development and Operation of Main and Interstate Electrical Grids”. The main goal of the Technical Policy is a synthesis of available operating experience, establishing common technical requirements for the development (technical upgrading, renovation, new construction) of facilities of main and interstate electrical grids. The Technical Policy includes the use of best practices and peculiarities of modern electrical equipment and project solutions of the leading world and domestic manufacturers to improve the reliability and efficiency of functioning of backbone electrical grid50. Directive 2009/72/EC of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC (Article 273, Chapter 11, Section IV of the EU – Ukraine Association Agreement) On February 7, NEPURC published the Resolution of 31.01.2017 No. 148 On Establishing Values of Unit Cost of Non-standard Connection of Electric Plants to Electrical Grids in 201751. The Resolution approved the unit cost of non-standard connection to electrical grids in 2017 at the level of UAH 3.7-11.3 thousand / KW (including VAT). According to NEPURC, this decision will ensure stable functioning of the market of services in connection of electric plants to grids and will improve Ukraine's position in Doing Business rating52.
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Electricity and Nuclear Safety It is proposed to set the terms of connection: 160 days for power from 160 kW to 400 kW, 190 days – for units with the power ranging from 400 to 1000 kW, 240 days – for electric plants from 1000 to 5000 kW. Type of connection to electrical grids will be non-standard with the power from 160 kW to 5000 kW. The Resolution No. 148 caused a backlash both on the part of business (especially on the part of RES producers) and MPs, experts and the public53. The acting director of SE NAK Ukrenergo Vsevolod Kovalchuk addressed the Head of NEPURC Dmytro Vovk with a request to consider the possibility of correcting the draft Resolution No. 148, providing for its non-proliferation on the relationship arising under connection to electrical grids of alternative energy objects54. NEPURC, in its turn, considers all the charges groundless55. The Head of the Committee of VRU on Industrial Policy and Entrepreneurship Viktor Galasiuk appealed to the Prime Minister Volodymyr Groysman with a request to prevent publication of this resolution of NEPURC in the government edition Uriadovyi Kurier56. The draft resolutions “On Approving the Licensing Conditions for Carrying out Business Activities in Electricity Supply”57, “On Approving the License Conditions for Carrying out Business Activities in Electricity Generation”58, “On Approving of the Procedure of Formation, Calculation and Setting of Rates for Electricity and Heat Energy Produced by Nuclear Power Plants”59, “On Approval of the Procedure of Formation of the Rate for Electricity Produced by Hydroelectric Power Station60”, “On Approval of the Procedure of Formation of Rates for Electricity and (or) Heat Energy Produced by Combined Heat and Electricity Plants, Heat Power Plants and Cogeneration Plants”61 were developed. NEPURC refers to the need for adopting the resolutions by its powers according to the Law “On the National Energy and Public Utilities Regulatory Commission” and improving the conditions of the licensed activity. In connection with the approval of projects of the above regulations, the draft resolution of NEPURC “On Recognizing Some Decrees of the National Electricity Regulatory Commission to be Invalid”, which provides for recognizing to be invalid regulations of the National Electricity Regulatory Commission of Ukraine of 12.10.2005 No. 895 “On Approving the Guidance on Setting Rates for Electricity of Hydro Power Plants and Pumped Storage Power Plants”, of 12.10.2005 No. 896 “On Approving the Procedure of Calculating Rates for Electricity and Heat Energy produced by CHPP, TPP, NPP and on Plants Using Non-traditional or Renewable Sources of Energy”, of 12.10.2005 No. 897 “On Approving the Procedure for Calculating Rates for Electricity and Heat Energy Produced by Cogeneration Plants”, of 12.10.2005 No. 898 “On Approving the Procedure for Review and Approval of Rates for Licensees in the Production of Electricity and Heat Energy”62, was developed. On February 6, NEPURC published the draft regulation amending the Regulation on Connection of 53
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Electricity and Nuclear Safety electrical plants to electrical grids (Resolution of NEPURC of 17.01.2013 No. 32), in the part of setting strict deadlines for providing by an electricity transmitting organization of services in connecting electrical plants of customers to electrical grids, including connections that are not standard, and the introduction of rules that will allow the customer of the service in connecting through personal account on the website of an electricity transmitting organization to track in the ”on-line” mode a detailed course of events as to organizational and technical measures taken by an electricity transmitting organization to provide connection services to the customer (design, coordination of the issues related to planning of land use, construction, reconstruction and/or technical upgrading of electrical grids, commissioning, etc.)63. On February 6, NEPURC published the draft resolution “On Approving Amendments to the Procedure for Determining the Necessary Income from Carrying out Activities in Supply of Electricity at Regulated Rates in the case of Use of the Incentive Regulation and the Procedure of Determining the Necessary Income from the Activities in Transmission of Electricity by Local Electrical Grids in case of Use of Incentive Regulation”64. The project proposes to amend the formula for determining the regulatory asset base (RAB) after the first regulatory period for the transmission of electricity and the formula for determining the RAB and supply at the regulated rate, under which to change the mechanism for determining the new RAB after the first regulatory period to prevent further increase in rates after the first regulatory period, i.e. not to charge a new rate of return on the old depreciation, which is invested in financing the construction, reconstruction and modernization of electrical grids, from the second regulatory period, i. e. leave the calculation as it is for the first regulatory period. In addition, it is proposed to amend the Procedure for Determining the Required Income from the Activities in Transmission of Electricity and the Procedure for Determining the Needed Income from the Activities in Supply at the Regulated Rate, under which to provide for the formation of payroll in accordance with the Procedure approved by the Resolution of NEPURC No. 2645 of 26.10.2015. On February 10, the draft decree of NEPURC “On Annual Providing of Consumers with Key Information on Services in the Spheres of Energy and Public Utilities” was published. It proposes to provide for bringing by business entities in the spheres of energy and public utilities to the attention of consumers the information on their consumption of energy and public utility services provided, comparison of volumes of energy resources consumption with other consumers, the structure of the relevant rates and other additional information concerning energy resources consumption by 1 April of each year65. On February 10, the draft resolution of NEPURC on the Procedure of Financing Services in Connection of Electrical Plants to Electrical Grids (No. 1467of 21 November 2013) was published in order to simplify the accounting by electricity transmitting organizations of income and expenses as to availability of determining separate current accounts of a regional power distribution company for standard 63
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Electricity and Nuclear Safety connection, for non-standard connection and returnable financial assistance and accounting of income and expenses separately by each connection service66. On February 23, the draft resolution of NEPURC “On Approval of the Procedure for Calculation of Retail Electrical Energy Rates, Rates for Distribution of Electricity (Transmission of Electricity by Local Electrical Grids), Rates for Supply of Electricity at the Regulated Rate” was published. The Procedure will replace “Temporary Methods of Calculating the Retail Rate for the Consumed Electricity, Rate for Electricity Transmission by Local Electrical Grids and Rates for Electricity Supply, approved by the Resolution of NERC of 6 May 1998 No. 564)67. On February 23, the draft of NEPURC “On Amending the Procedure for Calculation of Retail Electricity Rates, Rates for Electricity Transmission by Local Electrical Grids, Rates for Electricity Supply at the Regulated Rate in the Case of Use of Incentive Regulation” was published. According to the regulator, the proposed changes are made to ensure greater predictability of the levels of rates for electrical energy for consumers for a long term and to simplify and improve the existing Procedure and provide for consideration of the coefficient of projected actual technological power consumption for transmission by local electrical grids in the calculation of retail rates68. On February 27, NEPURC reported that from 1 March 2017, the fifth stage of raising electricity rates for the population will take place. The cost of electricity for the population increases, on average, provided consumption per month: 50 kWh – by UAH 9.3; 100 kWh – by UAH 18.6; 150 kWh – by UAH 38.10. To reduce the payment for the consumed electricity, NEPURC advises the public to install a zone registration device, which allows consuming electricity at night with a discount of 50%69. Directive 2009/72/EC of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC (Article 274, Chapter 11, Section IV of the EU-Ukraine Association Agreement) On February 17, MECI approved the Forecast Balance of Electricity of UES of Ukraine for February 201770. On February 20, MECI approved the Forecast Balance of Electricity of the United Electric Energy System of Ukraine in March 2017 taking into consideration implementation of temporary emergency measures in electricity market established by the Cabinet of Ministers of Ukraine No. 103-p of 15.02.2017. Adjusted power consumption demand makes up 13,400 million KWh, which is by 300 million kWh more than the annual forecast of 31.10.2016. The increase in power consumption is caused by the increase in electricity consumption by industry, except for chemical and petrochemical ones (5.5%) and other nonindustrial consumers (9.5%) according to the data for January.
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Electricity and Nuclear Safety At the same time, reduce of exports of Burshtyn Islands by 80 million kWh is provided for and there are no exports to Belarus and Moldova, which was provided for in the annual forecast balance of UES of Ukraine of 31.10.2016, in the amount of 150 million kWh. The difference of flows of electricity from the non-controlled territory is planned at the level of the same period of 2016. Execution of temporary measures will increase electricity production by NPP by 300 million kWh. In addition, in conditions of increased inflow of water, increase of electricity production by HPS by 146 million kWh is planned. The planned reduction of electricity by HPS by 380 million kWh will allow saving coal of up to 240 thousand tons71. On February 23, during a meeting with experts, the Minister I. Nasalyk said that the changes to the annual balance are not planned to be made, regardless of the increase of percentage of nuclear power generation in the power balance, as nuclear energy proficit will be observed by summer, and then the repair campaign will start and it will be necessary to use heat generation. There are no reasons to review the annual balance ... If the share of NPP increased by 59% now, there will be no such opportunities in June, we will “sit” on 50% of nuclear. For the year, we shall reach the same 53%, – he pointed out72. NAK Ukrenergo developed the draft Plan of Development of the United Energy System of Ukraine for 2017-2026 comprising as follows: - plan of development of the United Energy System of Ukraine for 2017-2026; - plan of development of generating capacities at thermal power stations for the period until 2026; - plan of development of generating capacities at hydroelectric power stations (HPS) and pumped storage plants (PSP) for the period until 2026; - plan of development of nuclear power of UES of Ukraine for a period until 2026; - plan of development of generation facilities on alternative sources of energy (WPS, SPS, BioPP) by regions of Ukraine till 2026; - plan of development of main (international) electrical grids of UES of Ukraine for a period until 2026; - action plan for the integration of United Energy System of Ukraine with the union of energy systems of European countries; - evaluation of needs in investment in the development of generating capacities and main (international) electrical grids. The draft was published on February 10, market participants and other interested persons may submit proposals within a month73. Art. 338, Chapter 1, Section V of the EU-Ukraine Association Agreement. Agreements on cooperation with IMF
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Electricity and Nuclear Safety On February 1, the working meeting of NEPURC with representatives of NES Central Europe, Smart Energy Cluster Poland, ICT, the Polish Embassy in Kyiv, Volynoblenergo JSC, Lvivoblenergo JSC, Khmelnitskoblenergo JSC, Galenerho SE, State Innovation Finance and Credit Institution, and Kryvyi Rih City Council took place. Prospects for implementation in the power system of Ukraine of smarttechnologies based on NES AMI Platform to automate and improve the accuracy of consumption records, reduce operational costs of energy companies, reduce electricity losses during its transportation and distribution, providing regulation on the part of a consumer and alignment of the consumption schedule were discussed at the meeting74. On January 30 - February 3, on the basis of the National Technical University of Ukraine "KPI named after Igor Sikorsky”, MECI in cooperation with IAEA held a seminar on the topic “Educational Program in Physical Nuclear Safety in Ukraine: IAEA Practice and Recommendation and Experience of Implementation in Some Universities”. The roundtable meeting on the topic “Specialist Training in Physical Protection, Accounting and Control of Nuclear Materials” was also held at the event. By the results of the seminar and roundtable, draft decisions, the text of which will be additionally available on the MECI website, are being prepared75. On 8 February, the government approved the draft resolution of CMU “On Approval of the Agreement between the Government of Ukraine and the Government of Australia on Cooperation in the Field of Nuclear Energy for Peaceful Purposes”76. Provisions of the Agreement provides that Ukraine and Australia will carry out cooperation in such areas as the transfer of nuclear materials; basic and applied research, development, design, construction, operation and decommissioning of research reactors and other facilities of nuclear fuel cycle, nuclear power plants; management of spent nuclear fuel and radioactive waste; nuclear safety, radiation protection and environmental protection; geological and geophysical exploration, exploitation, production, further processing and use of uranium resources. The said Agreement shall enter into force on the date on which the Parties notify each other in writing through diplomatic channels on execution of the relevant procedures required for the entry into force of this Agreement77. On February 8, the constituent meeting of key donors as to the reform of corporate governance in NAK Ukrenergo with the participation of representatives of the World Bank, EBRD, EIB, the European Commission, the Energy Community Secretariat was held at MECI. International partners supported the reform of corporate governance Ukrenergo and approved the terms of its main stages. The reform will last for 4-6 months and will be a prerequisite for future corporatization of the enterprise. As a result, the government and consumers will receive transparent, efficient and clear company with minimal political influence and corruption risks that will provide quality services and guarantee reliable operation of UES of Ukraine and reliable partner for all counterparties. Implementation of the reform of corporate governance is an important element in the issue of performing the requirements of the European laws regarding ensuring full independence and transparency of the transmission system operator in the
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Electricity and Nuclear Safety electricity sector, which is provided for by the draft law “On Electricity Market of Ukraine”, which is now considered by VRU78. On February 8, NAK Ukrenergo also informed that the government of Ukraine has received a joint loan from IBRR and the Clean Technologies Fund in the amount of USD 378,425 million. Some of these loan funds will be used to make payments under the consultancy contract, which includes the development of guidelines and documents on the implementation of corporate governance in SE Ukrenergo under the Part 2.4 “Support for Institutional Development of Ukrenergo” of the Project79. On February 10, the Prime Minister of Ukraine V. Groysman held talks with the European Commission President Jean-Claude Juncker in Brussels. One of the main topics of the talks was the deepening of EUUkraine cooperation in economic and energy fields80. V. Groysman also met with the European Commission Vice President for Energy Union Maroš Šefčovič to discuss the coordination of joint efforts on issues of energy security81. Within the advisory project as to strengthening the cooperation between Ukraine and the EU in the field of nuclear technology, on February 17, the meeting of the management of SAEZ with the representative of the European Commission Hans Forsstrom, during which the issues of the project activities and the possibility of cooperation in the field of management of radioactive waste (RW) were discussed, took place82. From 21 to 24 February, working meetings within the framework of the Partnership Program in the Sphere of Energy Regulation between NEPURC and the National Association of Regulatory commissioners from US utility companies (NARUC), which is implemented with financial support from the US Agency for International Development (USAID). The main topics for discussion were the quality of electricity service; energy ombudsman (consumer advocates, etc.); regulatory reporting (regulatory accounting) for network companies; call center regulator; information system for handling consumer complaints. Following the discussion on each of the areas, recommendations for NEPURC have been prepared83. On 27 February, the meeting of representatives of MECI with representatives of the Defense Threat Reduction Agency of the US Department of Defense, at which the creation of the Interagency Operational Headquarters to counter the threat of FEC facilities based on MECI was discussed, took place. The main objective of the Interagency Operational Headquarters will be counteraction, prevention and respond to incidents of threats to facilities of fuel and energy complex of the state. The project is implemented within the framework of the Cooperative Threat Reduction Agency Program of
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Electricity and Nuclear Safety the Defense Threat Reduction Agency of the US Department of Defense to strengthen and improve physical nuclear security that would ensure Ukraine’s capacity to respond to nuclear incidents84. Art. 339, Chapter 1, Section V of the EU-Ukraine Association Agreement, Coal Market The main topic of the month, which affected all areas of the energy industry in Ukraine, was blocking the supply of coal from the temporarily uncontrollable territories of Ukraine, which caused the shortage of anthracite coal, of which a third of all electricity in the country is produced. Therefore, in order to minimize costs of anthracite coal at thermal power generation and ensure complete stability of the combined energy system of our state85, on February 15, the government approved the draft decree “On Taking Temporary Emergency Measures in the Electricity Market”, No. 103-p86, which entered into force on February 1787. On February 17, the Forecast Balance of Electricity of the United Electricity System of Ukraine as of March 201788 taking into consideration implementation of temporary emergency measures in the electrical energy market and according to which the planned decrease in electrical energy production of TPP by 380 million kWh will allow saving coal in the volume of up to 240 thousand tons89. With the introduction of emergency measures in the electricity market, the manual control system in the energy sector, enabling maximum to load precisely those thermal power stations operating on gas coal and to reduce the load on those blocks that operate on anthracite, is being implemented. This, in turn, will make it possible to save and reduce coal consumption by 20% since stations will operate on the minimum allowed composition of equipment90. In particular, SE NAK Ukrenergo set the following objectives: reducing the number of operating units on anthracite coal; increasing the share of production of NPP from 50% to 62%; reducing the number of units of “hot” reserve. These measures provide daily basis saving up to 12,000 tons of anthracite coal. According to the information posted on the website of Ukrenergo, actual reserve as of February 22 will enable stable work of power system until March 20 without introducing emergency blackouts91. According to the minister, all the proposed measures together will enable savings of 300-350 thousand tons of anthracite coal per month, which will allow increasing the period while UES will work in a normal mode92. On February 22, during the meeting to resolve issues in UES, the Vice Prime Minister of Ukraine V. Kistion said the government would consider three options of providing the Ukrainian generating companies with the A grade coal according to possible developments to be calculated by MECI and NEPURC: completion of the emergency measures till April, till September and the end of the year. Consequently, three options will be offered to purchase anthracite abroad, impact of coal imports on the electricity price and algorithm of further work of power system is calculated. As the result, the best 84
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Electricity and Nuclear Safety option will be chosen93. B. Kistion made an assumption that the emergency measures in the electricity sector, which entered into force on 17 February for one month through the blockade of supplies of anthracite coal from the ATO zone, may be extended until the end of 201794. As of February 24, due to extraordinary measures, significant saving of coal is appreciable. In particular, according to the information of I. Nasalyk, the generation of 36 thousand tons of anthracite was reduced to 12 thousand tons95. Experts of the Transparent Energy Project using the information of MECI, which is published online in open data96, calculated reduction in consumption of power generating companies of Ukraine of the anthracite coal in 2.5 times during the period from 3 and 24 February97. According to the power system operator of NAK Ukrenergo as of February 24, anthracite reserves without restoration of supplies and depending on the station will be sufficient for 40-101 days of operation98. The position of the government is that there are no alternatives to coal from the ATO zone and will be not in the next 1-3 years99, as time and billions are required for the modernization of the energy system. Measures are being taken and specific consumption of anthracite coal in the medium term will be reduced100. However, with the current situation, there is no possibility even to refuse from anthracite coal because duration of supplies of imported coal is 50-55 days and it is almost twice as expensive, which will lead to higher prices for electricity and heat101. The minister said that Ukraine could lose UAH 15 bn in case of refusal from the coal from the uncontrolled territories of Donbass. At present, coal price makes up UAH 1,730 per ton. In the case of supply from other countries (South Africa, Australia and China) by the Rotterdam+ formula, the price will be UAH 3,000-3,100 depending on supply. Therefore, the difference in price multiplied by 9,000 tons of coal needed by Ukraine will be UAH 15 bn102. According to him, Ukraine has enough resources to refuse from anthracite group coal, which comes from Donbas, in case of making a political decision103, and although this will be a stressful situation, but it will not be a disaster for UES of Ukraine. The Minister explained that in case of full transition to imported coal of anthracite group, the price will increase by 30-40%, and this, in turn, is additional costs that will fall on the shoulders of consumers104. For his part, the Prime Minister of Ukraine V. Groysman supports the need to combat smuggling that goes through the line of demarcation, and, in his opinion, this question has to be strictly controlled. However, in his opinion, everything that relates to a small group of products, such as coal, and that is necessary for the production of metallurgy in the country, should be clearly defined to ensure a
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Electricity and Nuclear Safety transparent and controlled transportation to the territory controlled by Ukraine105. In turn, I. Nasalyk reminds that relations with the uncontrolled territory are governed by a number of legal documents that were adopted in 2014 and controlled by the relevant authorities. He stressed that the supply of coal is carried out with companies that re-registered in the territory controlled by Ukrainian authorities and carry out settlements in the Ukrainian banking system. In addition, this coal is mined from the subsoil which belongs to the people of Ukraine and the miners are paid to Oschadbank cards. Currently, there are about 50,000 workers of the mining industry, which paid taxes in the amount of UAH 1.9 bn to the budget of Ukraine, in the uncontrolled territory106. The issue of blocking the supply of coal takes place in the territory where ATO is being carried out and therefore this issue goes beyond the competence of the government, and is the issue of Ukraine’s NSDC and other law enforcement agencies, as this is an issue of national security107. So on February 15, the Prime Minister of Ukraine V. Groysman appealed to the National Security and Defense Council calling to examine in detail the impact of blocking the supply of coal from the temporarily uncontrolled territories on the lives of Ukrainian citizens and to take all necessary steps to resolve the issue. The head of the government has warned that energy blockade can lead to rolling blackouts108. In turn, NSDC instructed CMU to take steps to diversify the supply of coal in Ukraine and create a reserve of thermal coal109. The President P. Poroshenko has issued the Decree No. 37/2017 On the Decision of the National Security and Defense Council of Ukraine of 16 February 2017 “On Urgent Measures to Neutralize Threats to the Energy Security of Ukraine and Enhance the Protection of Critical Infrastructure”110. As of February 24, the deficit anthracite coal continues to come only to the Luhansk TPP (Schastia, Luhansk region), which is situated in the controlled territory of Ukraine and is a part of the largest private energy holding DTEK. This was reported by the Director of the Department of Electric Power Complex O. Buslavets during the meeting of the Public Council under MECI. She also added that all other rail crossings for deliveries of coal were blocked from 10 February 2017111. Through the situation with the deficit of coal and the threat of heat and power cutoff, accusations of MECI in inaction as to reducing dependence on the anthracite group coal appeared in society. In turn, MECI assured that in preparation for the current heating season, such critical situations that arose last summer, when the load on thermal generation was by 20% more than in December, January and February of the last year, were taken into account. That is why the required amount of coal in storage was accumulated, which allows the generations to work, despite the continued blocking of the supply of anthracite. Due to the timely preparation, the share of nuclear power generation is also brought to 62% in the energy balance of the country today112.
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Electricity and Nuclear Safety The subject of the government inaction has become so acute, that on February 7, the press conference “Blockade of Donbass and Providing the Power System of Ukraine with Coal”, at which the head of MECI tried to explain the action taken, was specially organized113. In particular, he said that projects that have been already implemented and will be implemented this year, make it possible to save 3.5 million tons of the A grade coal, which is 1/3 supply from the uncontrolled territories114: - implementation of the project for construction of the overhead line “Rivne NPP – Kyivska”, which will allow saving 1 million 400 thousand tons of coal annually, was completed. - the project for construction of overhead line 750 kV “Zaporizhzhia NPP – Kakhovska” , which will allow saving 750 thousand tons of coal, goes on115. - implementation of the project for the construction of the Dniester PSP, which will allow saving 700 thousand tons of coal per year. Currently three hydroelectric generators have been commissioned and commissioning of the fourth one is being planned. - implementation of the project on the transfer of two units of Zmiyivska TPP to burning of coal of gas group is going on. It is planned that the 2nd and 5th units will be commissioned this year, and it will enable to replace about 1,300 thousand tons of anthracite coal per year by coal of gas group. - the task to transfer units of the Trypilska TPP from anthracite coal to gas coal is set now. The cost of the project for transferring Zmiyivska TPP makes up UAH 240 million and replacement of power units of the Trypilska TPP, according to the minister, will cost about UAH 1 bn and will take 1.5-2 years116. MECI previously made public that the reequipped power units of the Zmiyivska TPP were planned to be launched in spring of 2017. However, according to the updated information, Zmiyivska TPP will switch to gas coal six months later than it was promised in MECI. The Prime Minister V. Groysman said that from the next heating season, Ukraine, at the expense of all the measures taken, will reduce annual consumption of anthracite coal from 9 to 6 million tons117. In particular, CMU is considering the possibility of reducing the consumption of anthracite group coal in the next heating season by 2.5-3 million tons by increasing the share of nuclear power and hydropower in the energy balance of the country118. According to MECI, increase of coal production by almost 60-80% is planned. To improve the efficiency of the coal industry, MECI invited NGO representatives, deputy corps to analyze the cost of procurement conducted by mines. According to the analysis conducted by a working group under the Ministry, reduction of the cost of maintaining the new longwall faces was possible. I. Nasalyk noted that the first funds have been already allocated, but some technical re-equipment programs will not be launched until the working group will give confirmation and relevant conclusions119. 113
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Electricity and Nuclear Safety Another of the hot topics for discussion was the Rotterdam+ price formula. The main justification for the need of precisely the Rotterdam+ price was to ensure coal independence from deliveries from the ATO zone. However, the current crisis of anthracite group coal has caused considerable tension and resentment in society. Therefore, on February 15, at a meeting of CMU, the head of MECI refuted the information on the use of the Rotterdam+ price, by which the cost of coal would make up UAH 3,100120. Instead, the price of coal for thermal power generation makes up UAH 1,730121. NEPURC also officially denied the information on taking into consideration by NEPURC of current prices of coal at the Rotterdam+ level122. NEPURC noted that it takes into account the price of coal at the extreme level of UAH 1,730/ton in the current electricity rates, which is substantially lower than UAH 2,500/ton at current quotations of API2 index taking into consideration logistics for providing with the imported coal. MECI uses a separate procedure for determining the price of coal by state mines, which is based on the quotation of coal exchanges in Poland (PSCMI1 and PSCMI2), and corresponds to the level of UAH 1,700/ton, which is also significantly lower than UAH 2,500/ton at the current quotations of the API2 index considering logistics for providing with the imported coal123. A. Gerus, a former NEPURC member, informed that on February 28, the Kyiv Appeal Administrative Court left the decision of the lower court standing and refused to satisfy its claim for cancellation of the Rotterdam plus shipping pricing formula for thermal coal124. On February 21, the Prime Minister V. Groysman entrusted MECI with creation of an electronic platform for coal trading for the pricing to take place clearly and transparently125. On the same day, CMU adopted the Resolution “On Approval of the Procedure for Use of Funds Provided by the State Budget to Offset the Costs of Coal Mining Enterprises included in the Cost Price of Finished Сoal Product”126. On February 3, the draft law “On Amendments to Some Laws of Ukraine on Lease Concession” was registered under No. 6018 in VRU and as of February 28, it is being under consideration in Committees127. This draft law aims to provide revenue to the state budget of Ukraine from paying concession and lease payments and the formation of a financial reserve for the closure of coal mining companies128. Art. 342, Chapter 1, Section V of the EU-Ukraine Association Agreement, Cooperation in the nuclear field, Council Directive No. 2014/87/Euratom, Council Directive No. 2013/59/Euratom, Council Directive No. 2006/117/Euratom
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Electricity and Nuclear Safety On February 13, the draft resolution on the taking as the basis the draft law of Ukraine on amendments to some laws of Ukraine in the field of use of nuclear energy was registered under number 5550/П129. In order to bring the field of radioactive waste management in line with international safety requirements, on February 15, the draft law “On Amendments to Some Laws of Ukraine concerning Improvement of Legislation on Radioactive Waste Management” was registered under number 6089 in VRU130. The changes proposed by the draft law provide for upgrading the existing classification of radioactive waste which will be divided into classes according to the criteria of acceptability of RW disposal in four types of storages (surface, subsurface, at intermediate depths and in geological storage, which is a European practice)131. In general, the issue of RW, especially in the context of “historical” RW repositories, is serious in Ukraine. To address this issue, the international support, through which Ukraine makes successful steps towards the elimination of “historical” RW repositories, is involved. In particular, the project “Radioactive Waste (RW) Disposal of the Vakulenchuk Repository” has successfully completed and on February 13, the ceremony dedicated to the completion of the project was held. This project was pilot and implemented to bring repositories into an environmentally safe state under the Implementation Agreement between CMU and NATO132. A three-day seminar within technical support of WANO to improve the system of accounting, collection and analysis of insignificant events was held at the Zaporizhzhia NPP at the initiative of the department of reliability and operating experience. Such seminars are planned to be conducted at other nuclear power plants too. This is related to the new state of the industry and communicating information on international practice133. In February, at the Rivne nuclear power plant (RNPP), the implementation of the measures of CcSUP (Comprehensive (Consolidated) Program for Safety Enhancement of Power Units of Nuclear Power Plants) and Program for Extension of the Operating Period of the Unit No. 3, the operating period of which expires in December 2017. Experience of operating period extension of two Rivne, two Yuzhnoukrainsk and two Zaporozhzhia power units confirms the fact that reactors of the Ukrainian NPP have a sufficient margin of safety134. CcSUP at RNPP is implemented at the expense of EBRD and Euratom credit funds in the amount of EUR 600 million135. On February 22, at the central office of Energoatom, a final meeting on the results of the first ever WANO exchange peer review, which was conducted by the inspection team WANO Paris Center in autumn of the last year. During the meeting,
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Electricity and Nuclear Safety the head of the inspection team John Merfin handed over the official report drawn up by the audit136, the information of which is confidential137 to the President of Energoatom Yurii Nedashkovskyi. In February, as part of the International Agreement on the Application of Safeguards under the Treaty on the Non-Proliferation of Nuclear Weapon, IAEA inspection, which, according to RNPP, was held successfully, without comments and in the time planned by the Agency, took place at RNPP138. Speaking at the Hour of Questions to the Government on February 10, the head of MECI noted that due to the efficient work of power engineers, share of nuclear energy generation currently makes up 60% compared to 47% in May of the last year. A great job is done in terms of diversification of supply of nuclear fuel. All this made it possible to reduce the wholesale market price of electricity by 10% from 1 January and next price decrease by 5.7% is expected from March 1139. On February 17, the Forecast Electricity Balance of UES of Ukraine for March 2017140 was approved based on implementation of temporary emergency measures in electricity market introduced by the order of CMU of 15.02.2017 No. 103-Ń€. It is expected that during the period of validity of the decree, the share of electricity generated by nuclear power generation will be increased by 60-61%141, which will allow increasing the production of electricity by NPP by 300 million kWh142. Art. 342, Chapter 1, Section V of the EU-Ukraine Association Agreement, Cooperation in the nuclear sphere. Cooperation is aimed at solving the problems caused by the Chernobyl accident and decommissioning of the Chernobyl NPP On 8 February, a working meeting of A. Dyriva with the director EBRD Nuclear Safety Department V. Novak and representative of the Chernobyl Shelter Fund and the Nuclear Safety Account in Ukraine O. Slavis for discussion of a series issues concerning the state of international projects at the Chernobyl NPP site took place in the Committee of VRU on Environmental Policy, Environmental Management and Liquidation of the Consequences of the Chernobyl Disaster. V. Novak informed on the meetings with representatives of the Group of Seven, at which the discussion of international projects at the Chernobyl NPP site is provided for, planned for this year. The EBRD representatives noted that 2016 was outstanding for Chernobyl projects, and this gives rise to fruitful cooperation between the EBRD and Ukraine in 2017143. The participants of the meeting also discussed the completion of works according to the schedules of the contracts under international projects on construction of a new safe confinement, 136
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Electricity and Nuclear Safety spent nuclear fuel repository, processing plant for liquid RW and industrial complex for the management of solid waste RW. Attention has been paid to the question of funding of operation of these facilities from the State Budget of Ukraine in 2018. ACQUIS UPDATE In February 2017, the EU Council began discussing draft amendments to Regulation No. 714/2009, the Directive on the Common Energy Market No. 2009/72/EC and Regulation concerning establishing ACER No. 713/2009. The latest version of the amendments is set forth in COM (2016) 861 final/2 2016/0379 (COD) of 23 February 2017. Changes are related to the main provisions of the so-called Fourth Energy Package. Proposals are aimed at: establishing a framework for efficient achieving the objectives of the European Union in energy and in particular climate and energy base in 20-30 years, including market signals that will be delivered to enhance flexibility, decarbonization and innovations; establishing the basic principles of wellfunctioning, integrated electricity markets, which will allow non-discriminatory market access for all providers of resources and electricity consumers, extending rights and capabilities of consumers, allow demand response and energy efficiency. Discussion on the proposed changes still lasts.
Energy Efficiency and Social Issues During February, government agencies and institutions in general were quite active in making operating decisions, but almost did not show results that are important for long-term structural reforms in increasing energy efficiency and social security of the population. Thus, in particular, taking, although with a significant delay, the decision to extend the “warm loans” program, active work on the development of the text of the framework draft law “On Energy Efficiency” and reducing social standards for consumers that are not equipped with heat metering means may be assessed positively. At the same time, there was no decision made regarding the monetization of social benefits and subsidies for utilities. VRU, which failed to do a single step for the adoption of necessary laws, without which no activity of executive authorities and local governments may be effective enough, deserves separate criticism. Directive 2012/27/EC on energy performance At the beginning of this month, the State Agency on Energy Efficiency and Energy Saving started regular meetings on the processing of comments and suggestions on the draft Law of Ukraine “On Energy Efficiency”. According to the Director of Strategic Development of the Agency V. Buchyk, the text of the draft law takes into account all the recommendations of experts of the Energy Community Secretariat. Subject to proper implementation, the level of performance by Ukraine of its obligations will be significantly increased. Meetings of the working group are held weekly and include a large number of public energy efficiency experts, including a representative of the Energy Efficiency and Social Issues direction in this project. Energy audits and energy management systems (Article 8) On 23 February 2017, the Government Committee on European, Euro-Atlantic Integration, International Cooperation and Regional Development approved the draft regulation of the Cabinet of Ministers of Ukraine “On Approval of the Action Plan for Implementation of Energy Management Systems in Budget Institutions”. The Head of the State Agency on Energy Efficiency and Energy Saving noted: Introduction of Energy Management will allow ensuring monitoring of energy consumption and taking management decisions for their effective use. This, in turn, will have positive effects: reduction of energy dependence, reduction of budget expenditures for utilities and energy sources and, in general, improvement of the material base of public sector institutions144. The purpose of the act is to create financial and organizational tools of the energy management functioning at regional, local levels and at separate budget institutions. The adoption of the regulation will allow introducing energy management system based on a systematic approach and creating appropriate incentives for the further implementation of energy efficiency measures. However, it should be noted that the draft Act does not fully meet the obligations of Ukraine in field of the European integration and EU law as it is limited by the introduction of the appropriate system only on the scale of budgetary institutions. Instead, the Annex VI of the Directive 2012/27/EC refers to the entire housing stock145. In addition, the draft regulation provides for the introduction of the energy 144 145
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Energy Efficiency and Social Issues management system only after adoption the draft law “On Energy Efficiency”. Meanwhile, the draft regulation does not provide a clear sequence of actions regarding the introduction of the energy management system at budgetary institutions, but only acceptance of the defined list of documents that ultimately will not probably ensure effective implementation of the energy management system. Introducing the energy management system at budgetary institutions is important and necessary in the present circumstances, when one of the priority goals is energy independence of the state. Introducing the energy management system should not be delayed until the adoption of the Law “On Energy Efficiency”. Accounting (Article 9) After sending the version of the draft law “On Commercial Accounting of Utilities” (reg. No. 4901 of 06.07.2016) prepared for the second reading by the results of the meeting of the Committee on Construction, Urban Development and Housing on 18 January 2017, for approval to the editorial department and the Main Legal Department of the Verkhovna Rada of Ukraine, the draft bill was never submitted for consideration in February. The expected Energy Day in the Parliament did not take place. Adopting the draft law is an important and necessary step in reforming the housing sector and energy efficiency in the housing stock. However, the lack of systematic and comprehensive approach in the process of implementation of the state housing policy leads to restraining the process of reformation of this sector. In addition to the mentioned draft law, the draft law “On Amendments to the Law of Ukraine “On Ensuring Commercial Natural Gas Metering” concerning the Procedure for Installation of Natural Gas Meters to Consumers" (reg. No. 5722) was registered in the Verkhovna Rada of Ukraine. Recently, we have observed stress situation as regards the installation of collective gas meters to household consumers, carried out pursuant to the Law of Ukraine “On Providing Commercial Natural Gas Metering”. However, the said Law does not specify which gas meters must be installed - individual or collective ones. Through the legal uncertainty, legal entities carrying out the distribution of natural gas in the respective territory (DSOs) began to massively install in apartment buildings collective gas meters instead of individual ones. Thus, the DSOs almost forced residents to pay for the volume of gas consumed by the building in the whole, regardless of the actual consumption of specific customers. In order to protect the rights and interests of the population of Ukraine – household consumers of natural gas, the above-mentioned draft law makes it clear that a collective gas meter may be installed only with the consent of owners of an apartment building; provides for self-installation of individual gas meters by household consumers with further compensation of such costs at the expense of the funds they pay for natural gas to DSOs; established prohibition for DSOs as to stopping gas supply to an apartment building if co-owners did not gave consent to establish a collective gas meter. Adoption of the draft law will allow protecting the rights and interests of household natural gas consumers (population), will allow reducing the social tension caused by rising of prices/rates for public utilities and facilitate rapid equipping of the population with individual gas meters as fast as possible and increase energy security of the state. However, the conclusion of the Main Scientific Expert Department (MSED) indicates the presence of outstanding issues, in particular, in the part of compensation of the cost of
Energy Efficiency and Social Issues purchase and installation of gas meters for the population which installed them at own expense, until the introduction of the proposed mechanism of compensation. In this regard, MSED points out the need for finalization of the draft law146. National Energy Efficiency Fund, financing and technical assistance (Article 20) The draft law “On the Energy Efficiency Fund" (reg. No. 5598 of 26.12.2016) has not been approved by the relevant Committee on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety for 2 months from the date of registration in the Verkhovna Rada of Ukraine. In general, such an institution as the Energy Efficiency Fund is urgent. However, the wording of the draft law needs some finalizing and making the necessary adjustments for transparent operation of the Fund. Thus, the inconsistency in the provisions of the Fund is that the draft law stipulates that the Fund is a financial institution that can provide loans and grants for energy efficiency measures. To implement this objective, only a credit institution may be entitled to provide financial loans at the expense of raised funds under the relevant license, as defined by the Law of Ukraine “On Financial Services and State Regulation of Financial Services”. In addition, the providing of grants by the Fund also requires regulation, because such service as a grant is not classified as a financial service. The draft law provides for that funding measures for thermal modernization and considerable reconstruction of buildings should be carried out subject to availability of a certificate of energy performance of buildings. The introduction of certification of buildings is provided for by the draft law on energy performance of buildings (reg. No. 4941-д of 14.12.2016). In particular, it defines the provision on mandatory certification for specific facilities. If, for example, a condominium plans to use the help of the Fund, such condominium should receive such certificate at its own expense on a contractual basis. Only then it can qualify for a loan or grant for energy saving measures. A brief analysis of the draft law only on certification of buildings allows stating the fact of the lack of the necessary legal framework for the effective functioning of the Fund147. Therefore, if adopted without major draft laws, it will be only declarative. In addition, on February 8, the government has officially extended the “warm loans” program for 2017 by a corresponding resolution 148. However, the program has received a number of improvements improved mechanisms for verification of the implementation of measures under such financing, particularly in the part of borrowers-condominiums were provided for in the Procedure for Use of Funds Provided for in the State Budget for the Implementation of Measures for Energy Efficiency and Energy Saving, approved by the Resolution of the Cabinet of Ministers of Ukraine of No. 1056 of 17 October 2011149. Adding to the list of banks participating in the PrivatBank program, which was recently nationalized, also became one of the innovations. According to the State Agency for Energy Efficiency
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Energy Efficiency and Social Issues and Energy Saving of Ukraine, the connection of another bank will increase competition in this sector and will help to reduce the cost of loans and attract more participants150. Directive 2010/31/EC on energy performance of buildings The draft law “On Energy Performance of Buildings" (reg. No. 4941-д of 14.12.2016), agreed by all committees, including the relevant committee on housing, was put on the agenda on February 23, but MPs have not considered it. The expected “Energy Day”, the main ambition at which was to be the adoption of the compromise draft law, did not take place. The draft law provides for new construction facilities, the obligation of making the energy certificate of a building shall be entrusted with the building owner before accepting it into operation. Attention should be drawn to the fact that the draft law provides for that non-correspondence of data in a certificate to the actual parameters of energy performance provides for responsibility under the laws. However, a clear procedure for bringing to conformity of certain parameters of energy performance for new buildings by a developer is not provided for. In other words, if a person buys an apartment in a new building, and the level of energy consumption does not match data in an energy performance certificate, the law does not provide for that the developer should bring into conformity such parameters as stated in a certificate. The procedures for a developer as to returning a part of the funds spent on purchasing a house of a higher class, if for example it appears that the parameters in a certificate are not true, is not provided for. According to the draft law, technically and economically reasoned recommendations for improving economically suitable energy performance of a house should be provided for. The energy performance certificate should be a part of a building passport. A unified system of data on the energy performance of buildings and control over observance of the laws on energy performance of buildings is proposed, a database of energy certificates of buildings is being created. Access to it will be free of charge, transparent and open. The volume of the funds for services relating to the audit and certification is likely to be too high for ordinary citizens. The high price of a certificate cannot motivate co-owners of apartment buildings to carry out energy audit, but rather will cause social tension. Therefore, the certification should become an accessible service for all sections of the population. The relevant Deputy Prime Minister predicted that a certificate will cost about UAH 3-4 thousand for a private house, while the energy audit and certification of a multistoried building will cost UAH 10-15 thousand151. According to the revised edited draft law, certification of energy performance of buildings shall be mandatory in the following cases: - construction facilities with medium and considerable class of effects, as determined by the requirements of the law; 150 151
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buildings, in the premises of which with a total heated area of 250 square meters the following authorities are located: public authorities, funded from the state budget, which are often visited by citizens to exercise their right to appeal for and receive administrative services in accordance with the law; or local government authorities, enterprises, institutions and organizations of communal ownership of respective territorial communities, funded from relevant local budgets in case of carrying out of reconstruction and modernization of such buildings by them; implementation of measures to ensure (raise the level) the energy performance of buildings subject to receiving a state support (unless such measures are carried out by individuals who are not business entities).
Under the draft law, a certificate should include technically and economically reasoned recommendations for improving economically suitable energy performance of a house. An energy performance certificate should be a part of a building passport. A unified system of data on the energy performance of buildings and control over observance of the laws on energy performance of buildings is proposed, a database of energy certificates of buildings is being created. Access to it will be free of charge, transparent and open. Directive 2010/30/EC on indication of labeling and standard product information of the consumption of energy and other resources by energy-related products During a public report “Energy Efficiency and Renewable Energy in Ukraine: Results of 2016 and Plans for 2017�, held on 28 February, the Head of the State Agency on Energy Efficiency and Energy Saving S. Savchuk informed that within two further years, development of 15 technical regulations as to the establishing ecodesign requirements is planned152. In particular, in 2017, in addition to the development and approval of the Framework Technical Regulation as regards Determining Ecodesign Requirements, the agency plans to introduce specific energy labeling for the ventilators, directed radiation lamps, electric motors, water and circular pumps, power transformers. Subject to performance of this work program, the relevant EU Directive will be practically implemented. At the same time, it is difficult to predict to what extent the reported rates will correspond to the reality considering the very slow pace of work in this area during previous periods. Social issues In the absence of tangible progress in introducing a comprehensive system of metering of heat energy consumption, the government is taking steps to reduce uneconomic consumption by reducing social norms. According to the Minister of Social Policy A. Reva, during the previous heating season, the government spent on subsidies for households by UAH 14.5 bn more than it could153. To solve this problem, the Cabinet of Ministers adopted the Resolution No. 51 of February 6 On Decreasing Social Norms for Heating from 1 May 2017:
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thermal energy for district heating (heat supply) by consumers, houses of which are equipped with house and/or apartment measuring equipment – 0.0431 Gcal per 1 sq. m of the heated area per month during the heating season; electricity for individual heating – 51 kWh per 1 sq. m of the heated area per month during the heating season; natural gas for individual heating – 5.0 cub. m per 1 sq. m of the heated area per month during the heating season.
However, we should admit the lack of progress in choosing the subsidies monetization model as a decisive factor in the optimization of the system of social support in power supply and housing and public utilities. The corresponding term that the Deputy Prime Minister for Social Affairs P. Rozenko set for himself in December154 expired in late February, but no information on the final decision was published. In addition to that, the community once again urges the government to develop a long-term plan for a phased transition to monetization of subsidies, followed by a gradual decrease in social norms, and provide the opportunity for subsidy recipients to use the funds saved as a result of the difference between the normative and the actual level of consumption of this heating season155. ACQUIS UPDATE The European Commission proves the priority of energy efficiency as an engine of changes in the energy sector not in words but by concrete actions. In the updated strategy for reforming the energy sector, known as the “Clean Energy for All Europeans”, the EU Commission paid special attention to such aspects of energy performance as: further improvement of energy performance in buildings; energy performance of products (Ecodesign) and informing consumers through energy labeling; “reasonable” financing of buildings. Together such measures should ensure even greater energy savings, in support of which the European Commission has proposed to increase the mandatory energy performance indicator for 2030 by 30% from the current level of 27%. The new target is included in the package of measures to improve energy performance, which include upgrading the existing Directive on Energy Performance. For the construction sector, 40% of energy consumption in Europe is attributable to which, the Commission approved the renewal of energy aspects of the Directive on Energy Performance of Buildings (EPBD). This step is aimed at promoting the use of innovative and intelligent technologies to ensure the effective operation of buildings and helps to speed up the pace of their upgrades while depriving the Directive the measures that were not implemented by the Member States. In addition, the planned rate of compulsory renovation of housing increases considerably. A new database of information on housing in the EU for monitoring the energy performance of buildings was launched. The database called “EU Building Stock Observatory” provides information about characteristics of buildings, namely the period of construction, energy use, installed renewable generation and renovation indicators. The observatory monitors the level of energy performance in buildings of certain EU countries and the EU as a whole, different energy certification schemes and ways 154
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Energy Efficiency and Social Issues to implement them, levels of energy poverty. The new observatory was launched together with a package of measures to accelerate the transition of the EU to renewable energy. The Commission adopted a new action plan labelling electrical products. It includes a list of new product groups and describes how it will contribute to achieving the objectives of circular economy. Appropriate measures provide the possibility of selling only energy efficient appliances in the EU market. New guide for cost-effective introduction of individual metering in buildings with several residents. The European Commission has published the guide with efficient practices to help Member States in the implementation of the EU Directive on energy performance. The Directive requires individual gauge, “heat meters” or “heat cost distributors” to be installed in buildings containing several apartments and provided with central heating systems and water supply. This system, known as “sub-metering”, allows individual customers to pay only for their own consumption. This system introduces more energy efficient behavior among some residents and provides significant energy savings for the building as a whole. This guide provides recommendations to governments and building owners on how to determine which buildings can be exempted from the requirements of the Directive, since in some cases it may be inefficient from an economic or technical point of view. After the initial publication of this document in June 2016, it was updated and finalized after a series of seminars with representatives of national authorities and parties concerned.
Environment and Renewable Energy Sources The issue of introduction in Ukraine of European models of environmental impact assessment and strategic environmental assessment is still not resolved. The draft law “On Environmental Impact Assessment”, which was vetoed by the end of 2016, is returned to the relevant committee by the Parliament for revision. A new draft law “On Strategic Environmental Assessment” was registered in the Verkhovna Rada. On 14 February 2017, the government approved the Report on the Progress and Results of the Program of Activities of the Cabinet of Ministers of Ukraine in 2016. As to the harmonization of environmental laws, the government reported on two targeted indicators – as to the watershed management of water resources and conservation of natural habitats and species of flora and fauna on the protection of wild birds. As to the latter indicator, it cannot be categorically agreed, because the preparation of “the scheme of amendments to national laws to approach the requirements of the Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats, wild flora and fauna, with amendments by the Directive 97/62/EC, 2006/105/EC and Regulation 2003/1882/EC (the Habitats Directive) and Directive 2009/147/EC of the European Parliament on the protection of wild birds (the Birds Directive) “does not mean progress in preservation of habitats and species of flora and fauna. As for renewable energy, the 2016 results show a gradual revival of the industry, compared with indicators of 2015, and the revival of investor interest in running “green” business in Ukraine, but in rate, Ukraine lags far behind from the objectives stated earlier.
Directive 2011/92/EC on the assessment of the effects of certain public and private projects on the environment (codification) (Article 363 AA): On 7 February 2017, the Verkhovna Rada of Ukraine sent back for revision the draft law of Ukraine “On Environmental Impact Assessment”156, which was vetoed by the President of Ukraine in late 2016. Now the Committee on Environmental Policy, Environmental Management and Liquidation of the Consequences of the Chernobyl Catastrophe should finalize the draft law and re-submit it for consideration to the Verkhovna Rada of Ukraine. Directive 2001/42/EC on the assessment of the effects of certain plans and programs on the environment (Article 363 AA): On 21 February 2017, the group of MPs registered in the parliament the draft law “On Strategic Environmental Assessment” (No. 6106)157. Compared with the previous one, which was rejected by VRU after the veto of the President of Ukraine, there are both advantages and disadvantages of the proposed model of strategic environmental assessment (SEA).
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Environment and Renewable Energy Sources The proposed model is generally consistent with the EU Directive 2001/42/EC, which Ukraine is obliged to implement. However, two key types of planning documents are practically deleted from the scope of action of SEA: local programs of economic and social development (annually accepted for use of public funds) and urban planning documentation (planning of areas, including public discussions). The vast majority of SEO at the local level in the EU is performed as regards planning areas. The fact that not all other sectoral plans and programs will require SEA, but only those that subject to “approval” is important. In fact, a number of documents are endorsed but not approved. For example, the last sector program that causes a violent reaction among the environmental community – “Program of Hydropower Development for the Period till 2026” – was endorsed, but not approved by CMU. On the other hand, compared with the directive, the draft law extends the scope of use of SEA by reference to the objects of environmental impact assessment and inclusion of documents of state planning, which is not mandatory under the national law. This means that various local strategies (in particular, in the area of energy sector, waste), which are voluntarily developed at the initiative of local communities may come across additional administrative obstacles and additional needs in financial resources. In terms of the financial resources needed to implement SEA, an explanatory note to the draft law again misleads MPs and the government, arguing that the funds are not needed. In fact, carrying SEA will require funds of state and local budgets, because state agencies and local government authorities are the customers of plans, programs and strategies. In the EU, the financial cost of SEA is about 7-10% of the estimate of the development of a plan or program. For example, in Estonia, carrying out of one SEA costs from EUR 4 to 30 thousand, in Hungary – from EUR 20 to 40 thousand. These are the direct costs of customers. Directive 2009/147/EC on the protection of wild birds (Art. 4.2) (Article 363 AA): On February 7th, the Verkhovna Rada of Ukraine adopted in the second reading and as a whole: - Draft Law on Amendments to Certain Legislative Acts of Ukraine (regarding the implementation of the 1979 Convention on the protection of wild flora and fauna and natural habitats in Europe (No. 2023)158. The objectives of the draft law is to protect the habitats of rare species listed in the Bern Convention, particularly all habitats in the forests and in the territories of the state natural reserves; strengthening measures to protect bottlenose dolphins, brown bears, bats, black stork, osprey; the prohibition to use indiscriminate means of obtaining animals – traps; strengthening the fight against poaching. This draft law has caused a mixed reaction of the ecological society and scientists159. - Draft Law on Amendments to Certain Legislative Acts of Ukraine (regarding the implementation of European environmental rules on environmental protection of rare animals and plants) (No. 2604)160. The purpose of the Act is the implementation of European environmental rules on environmental protection of rare animals and plants. The objectives are
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Environment and Renewable Energy Sources protection from destruction of habitat (growth) of types of fauna and flora listed in the Red Book of Ukraine. The laws adopted, in the case of proper performance, can contribute to the protection of wild birds, but it does not ensure regulatory approximation of the law to the requirements of the Directive on the protection of wild birds. On 9 February 2017, the group of MPs registered the Draft Law on Amendments to Certain Legislative Acts of Ukraine (regarding harmonization with European standards and requirements of the protection of biodiversity)161. Although the authors refer to the Directive on the conservation of wild birds in the explanatory note to the draft law, among other things, the draft law will not ensure the implementation of the requirements of the Directive by its provisions partially or fully. Directive 2010/75/EU on industrial emissions (integrated pollution prevention and control) (Article 363 AA): On February 7, the Verkhovna Rada of Ukraine adopted in the second reading the draft law of Ukraine “On amendments to some legislative acts of Ukraine governing relations connected with obtaining of permits (as regards special water use)” (No. 3323)162. The draft law proposes to simplify the procedure for issuing permits for special water use, in particular, provide authority for issuing permits for special water use to a central executive body that implements the state policy in the field of water resources development (State Water Resources Agency of Ukraine), depriving regional, Kyiv and Sevastopol city administrations and the Council of Ministers of the Autonomous Republic of Crimea of such authorities; not to attribute to the special water use the water users who take and use less than 5 cubic meters of water per day, except of that, which is used for the production of beverages and bottled water; to reduce and determine a comprehensive list of documents, which shall be submitted by a water user for registration of a right to special water use; to establish comprehensive grounds for termination of the right to special water use and determine the procedure of termination of such right. The issue of introduction of permits in the area of water use is a part of the obligations under the Directive 2010/75/EC on industrial emissions. Directive 2009/28/EC on the promotion of the use of energy produced from renewable sources and amending and subsequently repealing Directive 2001/77/EC and 2003/30/EC (Article 338 AA) The results of 2016 show a gradual revival of the industry and the revival of interest of investors, but it all happens at very low rates, because of which Ukraine lags far behind achieving the goals set in the National Renewable Energy Action Plan by 2020. At the end of 2016, the total installed capacity of all “green” electric power stations in the country amounted to 1,117.692 MW. It should be noted that if by the results of 2015 the total installed capacity of RES has grown barely by 30 MW, in 2016, the growth of the installed capacity reached 120.649 MW: 161 162
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Environment and Renewable Energy Sources 99.1 MW – solar power stations, 11.6 MW – wind power stations, 3.5 MW – biomass power plants, 3.1 MW – facilities that produce electricity from biogas and 3.3 MW of capacities of small HPS163. By 2016, all types of renewable generation produced 1.775 bn kWh of electricity, which allowed reducing CO2 emissions in the atmosphere by approximately 1 million 315 thousand t. However, in accordance with the objectives of the National Renewable Energy Action Plan up to 2020, the total installed capacity of all “green” power plants should already have reached 7,977 MW. Thus, at present, capacity of power stations that run on RES is in 7.1 times less than the planned one. Meanwhile, one of the main obstacles to more active development of alternative energy in Ukraine is the complexity of connection of new “green” facilities to networks. The draft law “On Amendments to the Law of Ukraine “On Regulation of Urban Planning” as to Improving Investment Opportunities in the Field of Power Generation from Alternative Sources” (No. 6081), which was registered in the Verkhovna Rada of Ukraine on February 13, was called to solve this problem. The said document is supposed to limit the term of the technical conditions for connecting of facilities to electrical networks up to 3 years. Meanwhile, the Ministry of Regional Development stressed the need for forming and setting the rates for heat production on plants using nontraditional or renewable energy sources164. The Ministry also stressed that the draft law “On Amendments to the Law of Ukraine “On Heat Supply” as to Stimulation of the Heat Production from Alternative Energy Sources” (No. 4334), which is currently awaiting a second reading, is called to introduce rate stimulation of heat production “not of gas”. At the same time, Ukraine and Kazakhstan signed the Treaty on the participation of our country in the International Specialized Exhibition “EXPO-2017”165 to be held in summer and autumn of this year and at which the Ukrainian party will have an opportunity to present the resource potential and prospects of running “green” business in our country to potential investors.
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Oil During the reporting period, the efforts of the authorities have focused primarily on the preparation and presentation of action plans for 2017, including in the implementation of international obligations of Ukraine in the oil sector166. At the same time, the reasons for failure of previously set deadlines were left not analyzed and persons responsible for non-performance of the tasks set were not identified, in particular in the formation of minimum stocks of oil and oil products, the adoption of a new Code on Subsoils, approving the Technical Regulation on the requirements for storage, transportation and handling of fuel, relevant equipment and service stations, as well as approval of the Energy Strategy of Ukraine till 2035. The Report on Implementation of the Agenda of the Association and European Union and Ukraine Association Agreement for 2016167 did not acknowledge the lack of progress in the implementation of international commitments of the state in the oil sector. Directive 2009/119/EC imposing obligation on Member States to maintain minimum stocks of crude oil and/or oil products (Art. 338 AA) According to paragraph 1.1.2 of the Plan for the Implementation of the Directive 2009/119/EC, the Ministry of Energy and Coal Industry had to develop the draft law of Ukraine on maintenance of minimum stocks of oil and oil products168, and the Verkhovna Rada - to adopt the act as a whole in December 2016. However, as of 5 March 2017, it is known only about the draft law “On Strategic Reserves”, prepared by the State Agency of Reserve and rejected by the Ministry of Economic Development in 2016, which, according to assessment of independent experts, is imperfect and contains “a large number of conceptual errors”169. There is no information on the implementation of paragraph 1.2.2 of the Implementation Plan, under which the Ministry of Energy and Coal Industry undertook to submit monthly to the Secretariat of the Energy Community the statistics on oil and oil products, as provided for in the Article 4 (a) and (b) of the Regulation (EC) 1099/2008 and paragraph 1.2.5, which provides for full-scale functioning of the system of minimum stocks of oil and oil products and reporting to the European Commission and the Energy Community Secretariat in January 2017. As of 5 March 2017, fulfillment of these requirements is not provided for by any regulatory document of the Ministry of Energy and Coal Industry. Nevertheless, on February 9, the head of the State Reserve V. Mosiychuk informed that the priority in 2017 will be the implementation of the Directive 2009/119/EC. According to him, this year, together with experts, the Kantor consortium is involved in search of which, we should develop a legislative framework, financing model of accumulation and storage of emergency stocks of oil and oil products, as well as the model of the emergency reserve structure”170. The Work Plan of the State Reserve for 2017 provides for: - development of the draft law of Ukraine “On Strategic Reserves”; 166
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determination of the State Reserve as a chief coordinator of the working group on the implementation of the Directive 2009/119/EC in Ukraine; organization of the “first round table under the auspices of assistance to Ukraine in implementing reforms in the energy sector”; development of “the model of the emergency reserves structure” and "financial model for collecting and storing emergency reserves”.
In addition, the following issues cause concern: - attempts of the Ministry of Energy and Coal Industry to shift authorities as to development of the draft law “On Strategic Stocks” on the State Agency of Reserve, although subject to the Provisions171 the mentioned authority may only implement the state policy in the area of state material reserve. Therefore, determining it responsible for forming the policy in this area is a violation of the paragraph 2 of the Article 1 of the Law of Ukraine “On Central Executive Bodies”172; - attempts of the State Reserve management to turn this authority to “the main initiator”173 and a single performer of the plan of implementation of the Directive 2009/119/EC; - focusing attention of the State Agency of Reserve only on “emergency reserves”, i.e. stocks of crude oil within the meaning of (j) the Article 2 of the Directive 2009/119/EC, while this document provides for the ability to store oil products too. It is possible that we are dealing with another confusion since as a result of the unsettled Ukrainian terminology, domestic politicians and government employees do not always distinguish the concept of state reserve and minimum stocks of oil and/or oil products, stabilization stock and mobilization reserve, which leads to errors in the formation and implementation of the state policy in this area. The state system of storage of petrol, diesel and aircraft fuel currently has six integrated plants - Astra (Chernihiv region), Rekord (Zhytomyr region), Estafeta (Khmelnytsky region), Planeta (Kharkiv region), Zirka and Berdiansk (Zaporizhzhia region) – the total amount of storage is “up to 1 million tons”174. While: - capacities of power plants are used “less than 10%”; - a part of integrated plants “has already started working with a commercial resource”; - capability of fuel storage at the Planeta integrated plant is limited because of its location near the ATO area; - the Estafeta integrated plant is considered as an enterprise for future placing of “the strategic reserve”. According to the head of the State Reserve, in 2016, “technical audit, diagnostics of tanks, defectoscopy are carried out and new technological nodes started to be introduced at all integrated plants”175. In the future, these enterprises “are planned to be united into a single state-owned company with the working title Naftorezerv, which “should be corporatizationed, transformed into a public joint stock company 171
http://zakon2.rada.gov.ua/laws/show/517-2014-п http://zakon5.rada.gov.ua/laws/show/3166-17 173 http://www.kmu.gov.ua/control/uk/publish/article?art_id=248887547&cat_id=247229077 174 http://www.gosrezerv.gov.ua/reserv/control/uk/publish/article?art_id=169769&cat_id=45334 175 Ibid. 172
Oil and then partially sold, reserving the controlling stake for the state”. The capacities of the consolidated company will be able to provide storage of about a half the volume of reserves established by requirements of the Directive 119/EC (1 million tons of oil equivalent). The rest, according to V. Mosiychuk, “should be placed in the market”176. However, despite previous statements of the State Agency of Reserve of intent to purchase 103 thousand tons of diesel fuel, 51 thousand tons of motor petrol and 580 thousand tons of crude oil177 in 2017, the purchase of only “20 ... 30 thousand tons of fuel of all makes” is planned178. According to V. Mosiychuk, “in 2017, we made a request to finance the accumulation of fuel – UAH 1.6 bn, but this money, despite the request, was not allocated”179. Directive 2003/96/EC on restructuring the Community system of taxation of energy products and electricity (Annex XXVIII, Art. 353 AA) From 1 January 2017, the excise tax rates on motor petrol, middle distillates (diesel fuel) and liquefied petroleum gas increased to EUR 213.50; 139.50 and 52/1000 liters respectively with simultaneous abolition of the tax on the retail sale of these goods in the amount of EUR 0,042/l180. Thus, the rates are brought closer to the minimum stipulated by the Directive (respectively EUR 359 and 330 per 1,000 l or EUR 125 per 1,000 kg). On 8 February 2017, at the meeting of the Cabinet of Ministers of Ukraine, the Procedure for Crediting the Fuel Excise Tax to Local Budgets181 was approved, which, in particular, provides for: crediting a part (13.44%) of the excise tax on manufactured and imported fuel to local budgets; - daily distribution of a part of the fuel excise tax between local budgets in accordance with shares determined on the basis of actual charges in fuel retail trade in the relevant territory. However, as of 5 March 2017, the stated document was not available in Legislation database of the Verkhovna Rada of Ukraine182. Council Directive 98/70/EC relating to the quality of petrol and diesel fuels and amending Directive 93/12/EEC, as amended by Directive 2000/71/EC, 2003/17/EC and 2009/30/EC and Regulation (EC) 1882/2003 (Annex XXX, Art. 360-363, 365, 366 AA) According to the Plan of Implementation of the Directive 98/70/EC (Articles 7 and 8; paragraph 1.3), the Ministry of Energy of Coal Industry undertook to report on the operation of the oil products quality and safety monitoring system in Ukraine from December 2015183. As of 5 March 2017, no document was circulated. In addition, after the liquidation of SE Research Institute of Oil Refining and Petrochemical Industry MASMA, the main contractor of all tasks stipulated by the plan, further works on the implementation of the Directive 98/70/EC in Ukraine were stopped.
176
http://www.gosrezerv.gov.ua/reserv/control/uk/publish/article?art_id=169841&cat_id=45334 http://www.gosrezerv.gov.ua/reserv/control/uk/publish/article?art_id=167629&cat_id=45334 178 http://www.gosrezerv.gov.ua/reserv/control/uk/publish/article?art_id=169841&cat_id=45334 179 http://www.gosrezerv.gov.ua/reserv/control/uk/publish/article?art_id=169769&cat_id=45334 180 http://zakon4.rada.gov.ua/laws/show/1791-viii 181 http://www.kmu.gov.ua/control/uk/publish/article?art_id=249722377 182 http://zakon3.rada.gov.ua/laws 183 http://www.kmu.gov.ua/document/248091869/Dir_98_70.pdf 177
Oil Directive 94/63/EC on the control of volatile organic compound emissions resulting from the storage of petrol and its distribution from terminals to service stations, as amended by Regulation (EC) 1882/2003 (Annex XXX, Art. 360-363, 365, 366 AA): The term for performing the objectives provided for in paragraphs 1.1.1, 1.1.2 and 1.2.1 of the Plan of Implementation of the Directive 94/63/EC184 expired in November 2016. Nevertheless, as of 5 March 2017, the Cabinet of Ministers has not adopted the resolution “On Approval of the Technical Regulation on the Requirements for Fuel Storage, Transportation and Handling, Relevant Equipment and Service Stations” and the Ministry of Environment has not approved recommendations for controlling operation of gas stations and no inventory of oil handling terminal is conducted. Directive 94/22/EC on conditions for granting and using authorization for the prospection, exploration and production of hydrocarbons (Annex XXVII, Art. 279, 280, 341 AA) According to the Plan of Implementation of the Directive 94/22/EC, by the end of 2016 was to be a new version of the Code of Ukraine on Subsoils185. It, in particular, provides for defining the concepts “the operator’s functions”, “contractual joint venture”, “special permits transmission mechanism”, "the concept of minimum work program and minimum work commitments”, “obligation of regulating specificity of extraction of unconventional hydrocarbons” and also to resolve issues of disclosure of geological information of strategic resources such as oil and gas, to the extent provided for by the laws. According to the Cabinet of Ministers as of 20 February 2017, the developed draft Code of Ukraine on Subsoils is formulated by the authorities concerned”186. As of 5 March 2017, regulations of oil and gas fields exploration are not approved and harmonized with the EU norms, although on 14 January 2017, the Minister of Environment and Natural Resources of Ukraine signed the Decree No. 11 “On Approval of the Rules of Oil and Gas Fields Exploration”. According to the Ministry of Justice, the document is returned “without government registration for finalization” for a period of 1 month at the request of the Ministry of Environment (the letter of 27 January 2016 No. 5/ 1-6/907-16)187. On 15 February 2017, the draft resolution of the Cabinet of Ministers of Ukraine “On Amendments to the Procedure for Granting Special Permits for Subsoil Use” (approved by the Cabinet of Ministers of Ukraine of 30 May 2011 No. 615) prepared by the Ministry of Environment and its regulatory impact analysis were published188. The corresponding resolution proposes: - to return the paragraph of the Regulations, under which subsoil users are entitled to use the subsoil without an auction if under the legislation they own the entire property complex built (reconstructed) for the extraction and processing of minerals from the subsoil, for the use of which a permit is granted, or such property complex is let on lease (concession) to subsoil users; 184
http://www.kmu.gov.ua/document/248091862/Dir_94_63.pdf http://www.kmu.gov.ua/document/248102926/Dir_94_22.pdf 186 http://www.drs.gov.ua/deregulation/plan-deregulyatsiyi-2016-2017-rr/ 187 https://minjust.gov.ua/ua/news/48085 188 http://search.ligazakon.ua/l_doc2.nsf/link1/NT3128.html 185
Oil -
to establish the availability of the subsoil user’s debt to pay rent for use of subsoil (instead of availability of his “arrears in taxes and mandatory payments” or “national taxes and charges”) as a ground for refusal in providing or extension of, or termination of the permit for use of subsoil. As it is stated in the accompanying documents, such changes will allow “resolving some problematic aspects of granting, refusal to grant or extension of, or suspension of special permits for subsoil use, and resolve the issue of special permits for subsoil use in carrying out activities by integral property complexes"189. Article 276 of the Association Agreement in the part of preventing disruption of transit and transportation of oil and oil products On 16 February 2017, the Resolution No. 202 of the National Energy and Public Utilities Regulatory Commission approved the License Terms of Running Business in Oil, Oil Products Transportation by Pipelines”190. According to it, the licensee, shall undertake to: - in the event of planned or unplanned termination of the licensed activity, inform the party, with which a contract for the transportation is concluded, of the date and reasons for termination, and the approximate date of recovery of these activities; - ensure equal rights of access to the pipeline for all customers of services, and in case of insufficient throughput capacity of the pipeline - compliance with the established mechanism of its distribution; Licensee shall have no right to: - refuse to transport oil, oil by pipeline, if his technical possibilities allow this, except cases: of non-payment by the customer for the relevant services; lack of documents proving ownership; non-conformity of quality of oil, oil products to specified requirements; differences between the characteristics of the resource proposed for transportation and the transferred one; - licensee shall have no right to stop his activity or decrease the volume of oil and oil products for the purpose of artificial creating of their shortages if the need for such restrictions is not established by the laws of Ukraine. Article 338 of the Association Agreement in part of prolongation and intensification of cooperation in the energy sector Pursuant to the paragraph “a” of the Article 338 on implementation of energy strategies and policies, development/processing of corresponding forecasts and scenarios in Ukraine, discussion of the draft Energy Strategy of Ukraine till 2035 continued, although according to preliminary government plans, that document had to be approved in the fourth quarter of 2016191. According to the draft Medium Term Plan of Priority Actions of the Government till 2020192, the Ministry of Energy and Coal Industry must finalize the work on the Energy Strategy in March 2017, and in September 2017 - to “create conditions” for implementation of the measures determined by it. 189
http://www.menr.gov.ua/docs/normbaza/regulatory/proekty%20rehuliatornykh%20aktiv/proekt_nakazu_30122016.rar http://zakon2.rada.gov.ua/laws/show/v0202874-17 191 http://www.kmu.gov.ua/document/249113344/R0418-00.doc 192 http://www.kmu.gov.ua/control/uk/publish/article?art_id=249634799&cat_id=244828445 190
Oil ACQUIS UPDATE In order to harmonize EU legislation on energy and climate, the European Commission proposed to make the following amendments: in the Directive 2009/119/EC: - to extend from February 25 to March 15 deadline of providing to the European Commission by Member States of copies of the report on the amount and structure of reserves of oil and oil products as of the last day of the previous calendar year; in the Directive 98/70/EC: - to stop the annual publication by the European Commission of the information on the quality of oil products and distribution in the EU Member States of fuel with a share of sulfur more than 10 mg/kg; - to limit the information provided to the institutions of the EU Member States responsible for controlling greenhouse gas emissions, by volumes of consumption of each type of oil products, by stopping informing about its origin and place of purchase; - to update references to specific volumes of greenhouse gas emissions during the life cycle of oil products refined by the Directive 2015/652/EC. Achieving the agreement on ensuring compliance of international agreements in the field of energy with the EU laws. Participants of the negotiations of the European Parliament and the Council agreed that intergovernmental agreements in the field of oil and gas are estimated by the European Commission before their signing. A new research dedicated to the study of properties of mixtures of biological kerosene was carried out. It analyzes the properties of mixtures of kerosene used as aviation fuel, high in advanced biofuels. Types of biofuels and mixtures which are most suitable for use in the aviation sector are analyzed. EU takes measures to increase the use of biofuels in all transport modes, as they are a renewable alternative to fossil fuel. By 2020, energy component used in the transport sector in each country of the EU from renewable energy sources such as biofuels shall be brought to 10%. Since biofuel creates less greenhouse gases emissions than fossil fuel, it will help the EU to perform its long-term goals to reduce greenhouse gas emissions by 85-90% (compared with 1990) by 2050.
Business Climate The law on independent Regulator adopted in late November of the last year has not yet started to be implemented in the part of the rotation of NEPURC members, so VRU registered two draft laws with amendments to the current law. They provide for the abolition of gradual rotation of members of the regulator and immediate introduction of change of the whole composition. Voting in the first reading of two draft laws – on the Extractive Industries Transparency Initiative (EITI) and on the harmonization of the law on statistics with the European law – but the first one did not get enough votes, and the other was not voted. Against this background, the second EITI report, which had attracted the attention of both the public, business community and politicians, was presented in February. Completion of the process of Ukraine’s accession to the European program COSME was positive in February, which will give impetus to the development of small and medium businesses. AMCU also continues to prepare for entry into force of the Law of Ukraine “On State Assistance to Business Entities” in August of this year: procedures for granting state aid, the criteria for evaluating its acceptability and more are published.
Article 277 of Regulator (Directive 2009/72/EC and Directive 2009/73/EC in parts on regulator) It has passed more than 3 months since the adoption of the Law of Ukraine “On NEPURC”. During this time, the Competition Commission has to be formed, but this is not done. Taking into consideration the terms established by the Law, there may be almost no time to make the rotation of the first three members of the Regulator during the first 6 months from moment of entry into force of the law. In view of this situation, as well as some high-profile decisions of the current composition of the regulator, two draft laws that propose to amend the effective Law were registered. According to the first one, the entire composition of the Regulator may be changed during the first 6 months for the entry into force of the Law, not gradually, as now defined. It is also proposed to change in the future the NEPURC members in the defined periods depending on the rating position of each at the time of their election by the competition commission: one member in three years, two in four, five and six years respectively193. The other draft law proposes to select 21 candidates that meet the requirements and successfully passed the interview. After that, select 7 of them by casting of lots. But the plan of rotation of current members of the regulator is not defined194. NEPURC draft resolution “On Approving Amendments to the Rules of Connection of Electrical Plants to Electrical Grids” was published for discussion until March 9. The document defined the terms of connection, where there were not these ones, and the terms of performance of certain procedures were reduced195.
193
http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=61113 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=61143 195 http://www.nerc.gov.ua/?id=23556 194
Business Climate The Standard Contract on Access to Transfer Capability of Interstate Electrical Grids of Ukraine, which is developed to implement the provisions of the Resolution “On Approval of the Procedure of Electronic Auctions in Distribution of Transfer Capability of Interstate Electrical Grids”196, was published for discussion till March 10. Suggestions and comments to the draft resolution “On Submitting Financial Statements to NEPURC by Entities in the Areas of Energy and Utilities”197 will be accepted till March 31. It is proposed to oblige all companies that operate in the areas of NEPURC regulation to submit the following information quarterly and annually: 1. Balance sheet – statement of financial position; 2. Income statement (statement of comprehensive income); 3. Statement of cash flows; 4. Statement of Owner’s Equity. Articles 255-256 Anticompetitive actions and mergers AMCU held the round table “State of Competition Development in Market of Natural Gas Supply for Domestic Consumers”. During the discussion, the basic obstacles to development of competition in the natural gas market were discussed. In particular, tax incentives, received by NAK Naftogaz, combining the supply and sale of gas by NAK Naftogaz to suppliers with activities in the wholesale market, the existing subsidies compensation mechanism. However, it was noted that creation of a competitive market in natural gas for satisfying the needs of household customers will have a positive impact on the gas market as a whole, although it will lead to a price increase approximately by 10%198. AMCU considered the case on violation by JSC Kyivenergo (controlling interest belongs to DTEK) of requirements of the laws on protection of economic competition. It was found that the power company prevented the work of two suppliers at the unregulated rate, creating obstacles in unjustified requirements to the draft contract. It is considered a violation of the laws, namely abuse of monopoly, so the fine in the amount of UAH 17 million was imposed199. AMCU has also planned to hold the Forum on Competition in March 2017. It is expected that representatives of the Presidential Administration, Verkhovna Rada, central executive authorities, international experts and others200. Articles 263-267 on state aid AMCU has developed the draft law “On Amending Some Laws of Ukraine as to Bringing Them into Compliance with the Laws on State Aid to Business Entities”. The introduction of requirements for
196
http://www.nerc.gov.ua/?id=23625 http://www.nerc.gov.ua/?id=23900 198 http://www.amc.gov.ua/amku/control/main/uk/publish/article/133091 199 http://www.amc.gov.ua/amku/control/main/uk/publish/article/133076 200 http://www.amc.gov.ua/amku/control/main/uk/publish/article/133390 197
Business Climate receiving state aid by different categories is among main changes. AMCU will collect all comments and suggestions during the month201. The Committee also drafted the resolution of CMU “On Approval of the General Criteria for Assessing the Admissibility of State aid to Entities and Amending the Resolution of CMU of Ukraine No. 950 of 18 July 2007” in February. This Resolution defines the criteria for establishing whether the mechanism is state aid or not, the terms of compatibility of state aid are determined and state aid mechanisms that cannot be assessed are described202. AMCU has not left unattended small and medium enterprises. The draft resolution of CMU “On Approving the Criteria for Assessing the Admissibility of State aid to Business Entities for Ensuring the Development of Regions and Support of Small and Medium Enterprises” was developed. The Resolution defines the forms and categories of assistance, the volume of assistance and rules for its obtaining and which entities may apply for it203. Article 379 VRU finally completed the ratification of the Agreement between Ukraine and the EU on Ukraine’s participation in the EU program “Competitiveness of Small and Medium Enterprises (COSME)”, which Ukraine joined in May last year204. The program provides for EUR 2.3 bn of financing for development of small and medium enterprises (SMEs). Read more in the annual monitoring report for 2016. In early February, the Ministry of Economic Development initiated discussion of the renewed draft Strategy of Development of Small and Medium Enterprises (SMEs) by 2020, which lasted until midFebruary. Within three months after the adoption of the Strategy, development of the Action Plans for its implementation will be carried out. It is expected that representatives of associations and all interested market participants will take part in working groups205. The draft law on disclosure of information in extractive industries206 has not gained enough votes of MPs for the adoption in the first reading. At the same time, the second report under the EITI standard, covering the extraction of natural gas, oil, coal, as well as iron, titanium and manganese ore for 2014-15 was presented207 and published208. The report was prepared on the basis of the information voluntarily disclosed by mining companies on their financial statements, namely taxes and fees. When the relevant draft law is adopted, mandatory providing of this information will be fixed by the law. Articles 355-359 of statistics (Directive 2008/92/EC) 201
http://www.amc.gov.ua/amku/control/main/uk/publish/article/133374 http://www.amc.gov.ua/amku/control/main/uk/publish/article/133376 203 http://www.amc.gov.ua/amku/control/main/uk/publish/article/133378 204 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_2?id=&pf3516=0130&skl=9 205 http://www.me.gov.ua/News/Detail?lang=uk-UA&id=9022a81e-37df-4c96-8ee036bc35cbc997&title=MinekonomrozvitkuProdovzhuObgovorenniaProektuStrategiiuRozvitkuMalogoTaSerednogoPidprimnitstva 2020 206 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_2?id=&pf3516=4840&skl=9 207 http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245180278 208 http://mpe.kmu.gov.ua/minugol/control/uk/publish/article?art_id=245182405 202
Business Climate The draft Law on Amendments to Some Laws of Ukraine Governing State Statistical Activities was put on the agenda of VRU for taking as a basis in the first reading for the third time since registration in May of the last year, but it did not came to voting. The draft law harmonizes the Law of Ukraine “On State Statistics” with the requirements of the European Statistical System209. Articles 27-49 as to access of goods to markets In February, work on improving customs work is continuing. Currently, the budget funds will be aimed at bringing all customs offices to a single sample, such as improving infrastructure, installation of video surveillance and installation of other equipment required for customs. DFS also developed proposals to State Customs Reformation Concept, which plans to discuss with the public in order to improve the document for the actual implementation of customs development plans210. ACQUIS UPDATE The Regulation (EC) 2017/352211 as regards providing port services and general rules of financial statements ports was signed on 15 February 2017 and will enter into force on March 23 this year. First of all, it is aimed to facilitate for companies the access to services provided by the ports – reduction of the number and establishing clear and non-discriminatory customs procedures. This Regulation is developed under the EU directives, including the Directive 2014/25/EC in the part of the Article 34 as regards the activities exposed to competition.
209
http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_2?id=&pf3516=4584&skl=9 http://www.kmu.gov.ua/control/uk/publish/article?art_id=249702168&cat_id=244277212 211 http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1489054531343&uri=CELEX:32017R0352 210
Methodology The Project is being implemented by five partners and two invited permanent experts. The Project is being implemented by the following five partners: NGO “DIXI GROUP”, Resource & Analysis Center “Society and Environment”, Civil Network “OPORA”, Association “European-Ukrainian Energy Agency”, and All-Ukrainian NGO “Energy Association of Ukraine”. Among the project permanent members are L. Unigovskyi, General Director of Naftogazbudinformatyka LLC, and G. Riabtsev, Social Program Director of Psycheа Scientific and Technical Centre. For the purpose of monitoring the implementation of the Association Agreement, the project participants have been divided into six working groups. These are, in particular, Gas group: L. Unigovskyi and R. Nitsovych (DiXi Group); Electricity group: S. Golikova (Energy Association of Ukraine) and O. Shumilo; Energy Efficiency and Social Issues group: T. Boyko (OPORA) and D. Nazarenko (DiXi Group); Environment and Renewable Energy Sources group: N. Andrusevych (Society and Environment) and N. Yermakova (DiXi Group); Business Climate and Investments group: V. Beliakova (EuropeanUkrainian Energy Agency) and A. Bilous (DiXi Group), Oil group: G. Riabtsev (Psychea) and T. Tkachuk (DiXi Group). The Project participants identified the monitoring framework for each working group based on the results of their analysis of the Association Agreement. This framework is described in Annex 1. The main source of information for monitoring purposes is official information provided by public authorities. These include, in particular, adopted regulatory and legal acts, statements by top officials, information about meetings and events with the participation of representatives of public authorities. Also, monitoring could be based on messages by key energy market players, their decisions and initiatives. Other sources of information can include published articles, interviews, news, as well as results of bilateral meetings between experts and energy market players. The subject of monitoring is transposition and, if appropriate, implementation of Directives. The groups and experts monitor, first of all, transposition of acquis into the Ukrainian legislation and compliance therewith. If appropriate, but only as an option, the quality of implementation of acquis and the effect of their implementation on the market and/or consumers can be subject to monitoring.
Methodology ANNEX 1. List of Articles of the Association Agreement and Acquis Subject to Monitoring The group Electricity and Nuclear Security conducts monitoring and assessment of issues relating to electricity, nuclear energy, coal and elimination of consequences of the Chornobyl accident. Acquis concerned: Article 269, Chapter 11, Title IV, Directive 2009/72/EC (market-related provisions) Article 270, Chapter 11, Title IV, Regulation (EC) 714/2009 Article 271, Chapter 11, Title IV, Regulation (EC) 714/2009 Article 273, Chapter 11, Title IV, Regulation (EC) 714/2009, Directive 2009/72/EC Article 274, Chapter 11, Title IV, Regulation (EC) 714/2009, Directive 2009/72/EC Article 305, Chapter 14, Title IV, Directive 2009/72/EC, Directive 2005/89/EC Article 338, Chapter 1, Title V Article 338, Chapter 1, Title V, Cooperation Agreements with IFIs Article 339, Chapter 1, Title V, coal market Article 342, Chapter 1, Title V, cooperation in the nuclear safety sector, Council Directive 2014/87/Euratom, Council Directive 2013/59/Euratom, Council Directive 2006/117/Euratom Article 342, Chapter 1, Title V, cooperation in the nuclear safety sector The group Gas conducts monitoring and assessment of issues relating to gas, in particular, the implementation of the following acquis: Articles 338, 341, Directive 2009/73/EC (market-related provisions) Articles 338, 341, Regulation (EC) 715/2009 Articles 338, 341, Directive 2004/67/EC + Annex XXVI (Early Warning Mechanism), Articles 275 (Unauthorised taking of energy goods), 276 (Interruption), 309 and 314 (resolution of disputes) of the Association Agreement Chapter 11 Trade-related energy, in particular Articles 269 (Domestic regulated prices), 270 (Prohibition of dual pricing), 271 (Customs duties and quantitative restrictions), 272 (Transit) and 273–274 (Transport, cooperation on infrastructure) Annex XXVII to Chapter 1 Energy cooperation, including nuclear issues — Directive 94/22/EC + Articles 279–280 (Access to and exercise of the activities of prospecting, exploring for and producing hydrocarbons, and licensing conditions) The group Energy Efficiency and Social Issues conducts monitoring and assessment of the implementation of the following acquis: Directive 2010/30/EU Directive 2010/31/EU Directive 2006/32/EU Directive 2012/27/EU Directive 2009/72/EC (social issues) Articles 338, 341 of the Association Agreement
Methodology Directive 2009/73/EC (social issues) Articles 338, 341 of the Association Agreement The group Environment and Renewable Energy Sources conducts monitoring and assessment of the implementation of the following acquis: Article 363, Directive 2011/92/EU Article 363, Directive 2001/42/EC Article 363, Directive 2003/42/EC Article 363, Directive 2003/35/EC Directives 85/337/EEC and 96/61/EC Article 363, Directive 2008/50/EC Article 363, Directive 1999/32/EC Article 363, Directive 94/63/EC Article 363, Directive 2009/147/EC Article 363, Directive 2010/75/EU Article 338, Directive 2009/28/EC The group Oil conducts monitoring and assessment of the implementation of the following acquis: Directive 2009/119/EC Directive 94/22/EC Directive 98/70/EC Articles 274, Chapter 11 of the Association Agreement (Trade-related energy) Articles 275, Chapter 11 of the Association Agreement (Trade-related energy) Articles 276, Chapter 11 of the Association Agreement (Trade-related energy) Articles 279, Chapter 11 of the Association Agreement (Trade-related energy) Articles 280, Chapter 11 of the Association Agreement (Trade-related energy) Article 337 of the Association Agreement Article 338 of the Association Agreement Article 339 of the Association Agreement The group Business Climate conducts monitoring and assessment of the implementation of the following acquis: Article 27, Chapter 11 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 28, Chapter 11 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 29, Chapter 11 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 88, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 93, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Articles 97-102, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 104, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement
Methodology Article 105, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 107, Chapter 6 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Articles 144-147, Chapter 7 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Chapter 8 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement and the Directive 2014/25/EU Article 255, Chapter 10 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 256, Chapter 10 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 258, Chapter 10 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 263, Chapter 10 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 267, Chapter 10 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement Article 277, Chapter 11 (Title IV TRADE AND TRADE-RELATED MATTERS) of the Association Agreement and Directives 2003/54/EC and 2003/55/EC (as regards the regulatory authority) Articles 355-359, Chapter 5, (Title V ECONOMIC AND SECTOR COOPERATION) of the Association Agreement and Directive 2008/92/EC Article 379, Chapter 10 (Title V ECONOMIC AND SECTOR COOPERATION) of the Association Agreement
Glossary ANNEX 2. Glossary (Short Description) of EU Acquis Subject to Implementation Monitoring
Gas Directive 2009/73/EC concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC This Directive establishes common rules for the transmission, distribution, supply and storage of natural gas. The rules established by this Directive apply to natural gas, liquefied natural gas (LNG), biogas and gas from biomass. They aim to achieve a competitive, secure and environmentally sustainable market. This Directive provides for compulsory functional unbinding (supply) of transmission system operators (TSO) in vertically integrated undertakings. EU Member States must ensure that all customers are entitled to freely choose natural gas supplier and can easily change supplier within three weeks. At the same time, Member States may impose on suppliers selling gas to household customers obligations which may relate to security, including security of supply, regularity, quality and price of supplies, and environmental protection, including energy efficiency. Regulation (EU) No. 715/2009 on conditions for access to the natural gas transmission networks and repealing Regulation (EC) No. 1775/2005 This Regulation sets common rules for access to gas transmission systems, LNG terminals and storage facilities taking into account the special characteristics of national and regional markets. The document establishes the procedures of certification of transmission system operators, as well as development, elaboration and implementation of network codes (with the participation of the European Network of Transmission System Operators — ENTSO — for Gas). The key objective of this Regulation is to ensure that all market participants have free and non-discriminatory access to relevant infrastructure and capacities. Directive 2004/67/EC concerning measures to safeguard security of natural gas supply This Directive establishes a common framework within which Member States must define general, transparent and non-discriminatory security of supply policies compatible with the requirements of a competitive market, and clarify the roles and responsibilities of market players (including in case of emergency). The government must specify minimum security of supply standards to be complied with by the market players, prepare and update national emergency measures, identify “vulnerable” customers and ensure adequate security for them, establish cooperation with the European Commission and other stakeholders.
Electricity and Nuclear Security Council Directive 2014/87/Euratom of 8 July 2014 amending Directive 2009/71/Euratom establishing a Community framework for the nuclear safety of nuclear installations The Directive establishes a European framework for maintaining and promoting consistent improvement of nuclear safety and its regulation. It sets an ambitious safety goal across the EU in order to prevent accidents and avoid radioactive waste from nuclear installations. The directive applies to any nuclear installation subject to licensing. Council Directive 2013/59/Euratom laying down basic safety standards for protection against the dangers arising from exposure to ionising radiation The Directive establishes basic safety standards to protect the health of employees, the general public, patients and others from the dangers of exposure to ionising radiation. The Directive applies to any planned, existing or emergency situation which involves a risk to ionising radiation. In particular, it applies to: the manufacture, production, processing, handling, disposal, use, storage, holding, transport,
Glossary import to and export from the EU of radioactive material; the manufacture and operation of electrical equipment emitting ionising radiation; human activities withnatural radiation sources that could lead to a significant increase in the exposure of employees or the public, such as the exposure of space crew to cosmic radiation; domestic exposure to radon gas in indoor air and external exposure to gamma radiation from building materials; managing emergency exposure situations that require measures to protect the public and workers. Directive 2009/72/EC concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC This Directive establishes common rules for the generation, transmission, distribution and supply of electricity. It also lays down universal service obligations and the rights of electricity consumers and clarifies competition requirements. Open internal market enables all consumers freely to choose their suppliers and all suppliers freely to deliver to their customers (free movement of goods, the freedom of establishment and the freedom to provide services). At the same time, this Directive sets stricter requirements to unbundling of transmission system operators (TSO) in vertically integrated undertakings. It also contains consumer rights provisions, reinforces and clarifies the functions and powers of regulatory authorities. Regulation (EC) No. 714/2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation (EC) No. 1228/2003 This Regulation establishes the rules for cross-border exchanges of electricity with the view to enhancing competition and achieving harmonization within the internal market in electricity. Comparing to the previous Regulation No. 1228/2003, this Regulation contains additional provisions on certification of transmission system operators (TSO), introduction of network codes and publication of information by system operators. It also clarifies that the European Network of Transmission System Operators for Electricity (the ENTSO for Electricity) is responsible for the management of electricity transmission networks to allow trading and supplying electricity across borders within the EU. Directive 2005/89/EC concerning measures to safeguard security of electricity supply and infrastructure investment This Directive establishes measures aimed at safeguarding security of electricity supply so as to ensure the proper functioning of the internal market for electricity, an appropriate level of interconnection between Member States, an adequate level of generation capacity and an adequate balance between supply and demand. It establishes a framework within which Member States are to define general transparent and non-discriminatory policies on security of electricity supply compatible with the requirements of a competitive market for electricity. They must define and publish roles and responsibilities of competent authorities and all relevant market actors. In implementing these measures, Member States are supposed to guarantee continuity of electricity supplies, explore possibilities for cross-border cooperation in relation to security of electricity supply, reduce the longterm effects of the growth of electricity demand, ensure diversity in electricity generation, encourage energy efficiency and the adoption of new technologies, ensure regular renewal of networks. Council Directive 2006/117/Euratom on the supervision and control of shipments of radioactive waste and spent fuel This Directive authorizes transboundary shipments of spent fuel between Member States for processing, requires prior authorization for transboundary shipments of radioactive waste and spent fuel where such fuel is moved from, through the territory of or to a Member State. This Directive also requires return of radioactive waste to its country of origin.
Energy Efficiency and Social Issues
Glossary Directive 2010/30/EU on the indication by labelling and standard product information of the consumption of energy and other resources by energy-related products This Directive regulates labelling of energy-related products and provision of information to consumers relating to their consumption of electric energy. It applies to products which have a direct or indirect impact on the consumption of energy and on other resources during use. Suppliers placing products on the market must ensure that such products are labelled with the information about their consumption of energy and other resources. Suppliers must also produce technical documentation to include: a general description of the product; the results of design calculations carried out; test reports; the references allowing identification of similar models. The technical documentation must be available for inspection purposes for a period ending five years. Suppliers must provide the labels and productrelated information free of charge to dealers, and the latter must display labels properly, in a visible and legible manner. Directive 2010/31/EU on the energy performance of buildings This Directive promotes the improvement of the energy performance of buildings within the Union, taking into account outdoor climatic and local conditions. It lays down minimum requirements, common general framework for a methodology and covers energy used for heating, hot water, cooling, ventilation and lighting. National authorities must establish reasonable minimum requirements to energy efficiency to be reviewed every five years. They also establish a system of certification of the energy efficiency. Such certificates provide information to prospective buyers or tenants on the energy performance of buildings, and advice on enhancing it. Directive 2012/27/EU on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC This Directive establishes a common framework of measures for the promotion of energy efficiency within the Union in order to ensure the achievement of the Union’s 2020 20% headline target on energy efficiency. Such measures include: annual 1.5% energy savings resulting from implementing energy efficiency measures by distribution network operators and suppliers; enhancing energy performance of heating systems, installation of double-glazed windows and roof insulation; purchase of buildings, products and services with high energy-efficiency performance by public bodies; annual energy modernization of at least 3% of the total floor area of buildings owned and occupied by public bodies; expanding rights and possibilities of consumers in the area of energy management which includes easy and free access to the metering data on the actual consumption; national incentives for small and medium-sized enterprises to conduct energy audit that should be mandatory for all large enterprises; monitoring of the energy performance of new energy generating capacities.
Environment and Renewable Energy Sources Directive 2011/92/EU on the assessment of the effects of certain public and private projects on the environment (codification) This Directive introduces an important instrument of the environmental policy — environmental impact assessment. Member States must ensure, first of all, that projects likely to have significant effects on the environment (by virtue, inter alia, of their nature, size or location) are made subject to a requirement for development consent and an assessment with regard to their effects. This Directive contains two lists of projects subject to environmental impact assessment (from nuclear power stations, gas pipelines,
Glossary etc., to large pig farms). An important element is stricter publicity requirements, including to the public participation in the environmental impact assessment. Directive 2001/42/EC on the assessment of the effects of certain plans and programmes on the environment This Directive introduces an important instrument of environmental policy — strategic environmental assessment. An environmental assessment must be carried out of certain plans and programmes during their preparation. Such assessment includes preparation of the environmental report (that must contain detail information on the likely significant environmental effects and reasonable alternatives) and consultations with the relevant authorities and the public. Where a transboundary effect is possible, an assessment and consultations in a transboundary context must be carried out. Directive 2003/4/EC on public access to environmental information and repealing Council Directive 90/313/EEC This Directive implements the provisions of the Aarhus Conventions relating to public access to environmental information. It aims to guarantee public access to environmental information owned by public authorities — both upon request and through active dissemination thereof. Environmental information must be made available to an applicant within one month after the receipt by the public authority of the applicant’s request. A request for environmental information may be refused if the request is manifestly unreasonable, or formulated in too general a manner, concerns an unfinished document or internal communications. Directive 2003/35/EC providing for public participation in respect of the drawing up of certain plans and programmes relating to the environment and amending with regard to public participation and access to justice Council Directives 85/337/EEC and 96/61/EC This Directive addresses the implementation of the Aarhus Convention in respect of public participation and access to justice. It sets the requirements to the introduction of mechanisms of informing the public, holding consultations with the public and taking account of comments and proposals of the public in decision-making. Member States must ensure that the public is given early and effective opportunities to participate in the preparation and modification or review of the plans or programmes required to be drawn up under the provisions listed in Annex I of the Directive. Directive 2008/50/EC on ambient air quality and cleaner air for Europe This Directive establishes ambient air quality and ambient air quality management standards. For this purpose, it establishes upper and lower assessment thresholds, target and threshold values, sets objectives for the reduction of the effect of particulate matters, defines and classifies zones and agglomerations, introduces the systems of informing the public and ambient air quality assessment with respect to various pollutants. Where, in a given zone or agglomeration, there is a risk that the levels of pollutants will exceed the alert thresholds, short-term action plans must be drawn up. Directive 1999/32/ЕС relating to a reduction in the sulphur content of certain liquid fuels and amending Directive 93/12/EEC, as amended by the Regulation (EC) No. 1882/2003 and Directive 2005/33/EC The purpose of this Directive is to reduce the emissions of sulphur dioxide resulting from the combustion of certain types of liquid fuels and thereby to reduce the harmful effects of such emissions on man and the environment. It sets the maximum sulphur content in heavy fuel oil, gas oil and marine gas oils. It also specifies methods of sampling and analysis of sulphur content in fuel to check compliance with the requirements. Directive 2009/147/EC on the conservation of wild birds (Article 4.2)
Glossary This Directive relates to the conservation of all species of naturally occurring birds in the wild state in the European territory of the Member States. The mechanism of conservation of wild birds provides for the protection of their habitats; protection and use of birds; prevention of harm that can be caused by invasive species; research and reporting. According to Article 4.2, special protection areas need to be established based on ornitological criteria. Special measures also need to be taken to protect migratory species naturally occurring in the territory of a particular state, especially in wetlands. Directive 2010/75/EU on industrial emissions (integrated pollution prevention and control) This Directive lays down rules on integrated prevention and control of pollution arising from industrial activities. It requires using the integrated approach to activities referred to in Annex I thereto. All installations covered by this Directive must prevent or reduce pollution due to using best available techniques, efficient energy use, prevention and control of emissions. Transparency of the integrated approach is ensured by the public participation. Directive 2009/28/EC on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC This Directive provides for setting mandatory national targets for the overall share of energy from renewable sources in the overall energy balance to take account of statistics and potential of each particular country. These targets include the achievement of a 20% share of energy from renewable sources in overall Energy Community energy consumption by 2020 and a 10% target to be achieved for the share of RES in the transport sector. This Directive, among other, establishes rules for joint green energy projects between Member States and third countries and access to the grid-system of electricity produced from renewable energy sources.
Oil Directive 2009/119/EC imposing an obligation on Member States to maintain minimum stocks of crude oil and/or petroleum products This Directive lays down rules aimed at ensuring a high level of security of oil supply in the Community through reliable and transparent mechanisms based on solidarity amongst Member States. It provides for the adoption of such laws, regulations or administrative provisions as may be appropriate in order to ensure that the total oil stocks maintained at all times within the Community for their benefit correspond, at the very least, to 90 days of average daily net imports or 61 days of average daily inland consumption, whichever of the two quantities is greater. Directive 98/70/EC relating to the quality of petrol and diesel fuels The EU introduced rules prohibiting leaded petrol and limiting the permitted sulphur content in diesel fuel with the view to improving air quality and reducing greenhouse gas emissions. This Directive sets technical specifications applicable to petrol, diesel fuels and biofuels used in vehicles, as well as to gas oils used in non-road mobile machinery. Apart from the prohibition of marketing leaded petrol, Member States must conduct assessment of national consumption of fuel, adopt laws and identify the authorized body (bodies) to introduce the fuel quality monitoring system. Directive 94/63/EC on the control of volatile organic compound (VOC) emissions resulting from the storage of petrol and its distribution from terminals to service stations, as amended by Regulation No. 1882/2003 212 This Directive provides for the registration of all terminals used for storage, loading and unloading of oil products, installation of technical means allowing reduction of VOC emissions from mobile containers with oil products, bringing all stationary tanks, rail, marine and motor vehicle tanks and loading installations in compliance with the established requirements. 212
The official translation has a lot of mistakes resulting from inaccurate translation
Glossary Directive 94/22/EC on the conditions for granting and using authorizations for the prospection, exploration and production of hydrocarbons This Directive establishes common rules to ensure the non-discriminatory access to and pursuit of activities relating to the prospection, exploration and production of hydrocarbons. These objective and transparent rules reinforce integration of the internal energy market, encourage greater competition and improve security of supply. The document provides for the implementation of measures to ensure: equal access to all organizations possessing necessary resources for prospecting, exploring for and producing hydrocarbons; granting authorizations on the basis of objective, published criteria; communication of all necessary information to all organizations participating in the established procedures.
Business Climate Directive 2014/25/EU on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC This Directive aims to ensure market openness, as well as fair procurements, in particular in the energy sector: extraction (production), transmission and distribution of gas, heat, electricity. Directive 2009/72/EC concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC This Directive provides for the implementation of laws on the electricity market which defines electricity as an energy-related product to be purchased/sold/produced/transmitted/stored. These operations may be carried out by all licensed companies on equal competitive conditions. The state also ensures non-discriminatory access to the existing infrastructure, creates favourable conditions for electricity producers to invest in new forms of energy (wind, solar, etc.). Directive 2009/73/EC concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC This Directive provides for the implementation of laws on the gas market which defines gas as an energy-related product to be purchased/sold/produced/transmitted/stored. These operations may be carried out by all licensed companies on equal competitive conditions. The state also ensures that companies have non-discriminatory access to distribution networks, gas storage facilities and crossborder gas pipelines. Directive 2008/92/EС concerning a Community procedure to improve the transparency of gas and electricity prices charged to industrial end-users Pursuant to that Directive, open, generally accessible mechanisms of providing information on the prices of energy resources for customers must be introduced. A particular methodology of collection of respective information about gas and electricity prices is to be drawn up and the respective mechanism to that effect is to be introduced.