The transmission system operator is unbundled and certified in line with the Third Energy Package. The storage system operator and the distribution system operators are unbundled in legal, information and accounting terms.
Access to the system
Access to the system
Third party access to transmission, storage and distribution systems is in place, with some space for improvement in terms of tariff cost reflectivity. The gas Network Codes have been implemented to a great extent. The transmission operator started to offer capacity at international platforms. Congestion management and transparency, as required by Regulation (EC) 715/2009, are still not fully implemented.
The deregulated segment of the wholesale gas market increased significantly from 40% to 80% by releasing household customers from the Public Service Obligation regime. A virtual trading point is in operation, and trade takes place on the existing exchange with limited functionalities. The non-implementation of REMIT, due by 29 May 2020, decreases the overall implementation status.
All customers are formally eligible. Household prices are deregulated since 1 August 2020 and only gas for district heating companies has remained under the scope of the Public Service Obligation Decree. Secondary acts, aimed to enable supplier switching, have been upgraded.
The transmission system is well interconnected with vast capacity on all country borders. The majority of interconnection points are covered by interconnection agreements aligned with the Network Code on Interoperability and Data Exchange. Security of supply preparedness is improving continuously, following Regulation (EU) 2017/1938, which is not mandatory yet.
State of compliance
During the last reporting period, Ukraine made significant progress in several areas of the gas market: unbundling of the transmission system operator, deregulation of prices and implementation of the gas Network Codes.
Unbundling of the transmission system operator resulted in the successful certification of the operator under the independent system operator model in December 2019. This was in line with the Secretariat’s Opinion and just in time for the entry into force of the new transit contract with Gazprom. This also enabled the new transmission system operator, GTSO, to sign new interconnection agreements with all neighbouring transmission system operators, thus increasing interoperability and enabling the smooth flow of gas along all routes. The interconnection agreements for the interconnection points at the Russian – Ukrainian border were signed as well as with the Slovakian transmission system operator for the interconnection point Velke Kapushany/ Uzhorod, which seemed impossible for five years.
The newly unbundled transmission system operator progressed well in the implementation of the Capacity Allocation Mechanism Network Code, offering capacity at two regional capacity platforms, RBP and GSA, and establishing a virtual interconnection point at the borders with Hungary and Poland.
The import flow to Ukraine, which comes solely through its western borders, increased by 30% in comparison to the previous year, while 40% of imports came as virtual reverse flow or backhaul. By offering the short haul service as well as a favourable tax regime and storage tariffs, Ukraine managed to increase the use of its vast underground storage capacities by European traders.
Ukraine has continued to work towards a fully functional daily balancing system and gas exchange. Two memoranda of understanding, at political and technical levels, were signed by the Secretariat with the Ukrainian Energy Exchange, EBRD, the new transmission system operator GTSO, the energy regulator and the Ministry of Energy to establish the gas exchange in line with European energy market standards. The work on establishing the exchange will have to continue further, including legislative changes to enable the transmission system operator to purchase balancing services in a dynamic way.
The balancing regime is in line with the Balancing Network Code, including interim measures at the time of publication of this report. Neutrality charges have been widely discussed during the past year, but their full introduction has been postponed for an additional year. The main obstacles to defining the charges are accumulated debts for imbalances and the lack of proper reference prices. A functional gas exchange will ultimately enable the implementation of the Balancing Network Code. Payment discipline for imbalances, together with a solution for accumulated debts, should be fostered. Interventions to the approved distribution tariffs did not contribute to solving the issue of unauthorised offtakes and should be avoided in the future, respecting the cost-reflectivity principle.
The gas supply price for households was deregulated as of 1 August 2020. A customer safety net – including amendments adopted by the regulator to the existing supply switching rules and the supplier of last resort chosen via a tender procedure – was put in place in parallel. Effectiveness and robustness of the household retail market opening are yet to be proved in the upcoming winter season.
Only gas for district heating companies, i.e. 25% of annual consumption, remains regulated under the Public Service Obligation Decree. These gas quantities remain under regulated prices and are not offered on the gas market. The release of that production and comprehensive reform of the district heating sector are challenges for the upcoming period.