February has been a surprisingly fruitful month for Ukrainian energy market. The beginning of the month was marked by Ukraine finally becoming a full member of the European Energy Community (EEC) and our energy market has started integrating into the European one.
A little later the Ukrainian special envoy to the EU Viacheslav Kniazhnytsky presented the Ukrainian energy security program for 2011-14 at the NATO headquarters. When briefly characterizing this document, the diplomat noted that “he was surprised” by the points on power efficiency, power saving and power supply, however, he didn’t explain why.
The envoy was more specific in an interview to the newspaper Deutsche Welle: he announced that Ukrainian customers will soon be able to choose their electricity suppliers. According to Kniazhnytsky, Ukrainian customers will be able to choose power suppliers like they do petrol stations — filling up at the station offering the lowest prices. The diplomat emphasized that Ukrainians will soon be able to choose electricity suppliers using the same principle.
“In Ukraine it should be just like in Brussels,” says the envoy. “This is already happening in the EU. For example, one of the housing cooperatives in Brussels changed power suppliers three times over the last five years. This way they were able to lower the price by 17 percent this year. Kniazhnytsky believes that this is what is now planned in Ukraine in order to realize the EEC membership requirements. He believes that the main goal of Ukraine’s membership in the EEC is to create conditions on the energy market that would make price manipulation impossible and would stabilize or even lower prices.
The capital’s residents will be first to choose. The envoy assured that Kyiv already has the corresponding possibilities, with energy companies having to compete for their clients and those offering the lowest prices win.
The envoy opines that the government has to work out a special subsidy program in order to resolve the problem of low-income families. “We need a legislative basis, the corresponding infrastructure and monitoring so as to avoid manipulation and discrimination, so that no one is given any preferences and so that the consumers can make their own decision,” says Kniazhnytsky. According to him, the main task for Ukraine now is to implement the practice of Brussels and Kyiv throughout the country.
COMMENTARY
Oleksandr TODIICHUK, president of the Kyiv International Energy Club “R-Club,” board member of the Alliance “The New Energy of Ukraine”:
“We have the conditions that would allow the Ukrainian energy market to work according to the so-called ‘petrol station’ principle. We have a well-developed chain of power suppliers, all of them work on different conditions and use different principles and, accordingly, offer different prices for the electricity. The customers already have what to choose from. However, we don’t have any mechanism that would enable the Ukrainian energy market to work based on market conditions.
“The government has to create a serious legal basis to ensure the adoption of the European experience regarding power supply. This problem cannot be resolved very quickly. It might take a year or even several before we are able to introduce this principle on our energy market. It depends on several factors: political will, the level of material and technical resources and the readiness of the market itself to diversify. So far the level and rates of energy reform in Ukraine leave much to be desired. I’m sure that most of the customers are unhappy with the intensity of the reforms.
“However, if we hear such statements, it gives us hope that the Ukrainian energy market is on the path to European integration. I think that the next step has to be the reorganization of the Ukrainian heating market, however, it’s more problematic. We not only have to prepare the legislation, but also to adapt the heating systems as they were built during the Soviet times, when this market was centralized and didn’t have any competitors like in Europe.”
