Manual Regulation of Electricity Prices: An Expert Warned of Serious Consequences

Ukraine needs to abandon manual setting of price caps and move to a European model of energy market operation.

According to him, physically the Ukrainian energy system is already connected with the EU, but full commercial integration — market coupling — still does not exist. "Market coupling means compatibility, commercial compatibility of electricity and gas markets with the European Union markets, because we have technical compatibility, you know, yes," says the expert. Also read: Market, not price caps: the expert explained how electricity prices should be formed. He added that the Ukrainian energy system is fully integrated with the European Union’s energy system since March 22-year, but "there is not yet commercial compatibility, so-called market coupling." According to Omelchenko, even the spring increase in price caps did not solve the problem systematically, since limit prices are still set manually. This makes rules less predictable and is one of the reasons for weak investor interest in Ukraine’s energy market. "And on the eve of winter, somehow we must change the principles of setting price caps or the limit price from manual mode. Everyone loves to have officials operate in manual mode. It’s their dream to control everything manually: prices, tariffs, markets, everything. But the time to abandon this habit has come," the expert stated.

As a reminder, Olga Yevtisthnyeva, head of the Ukrainian Association of Renewable Energy, noted that systemic debts can also hinder Ukraine’s full integration into the European energy market. Additionally, previously the former head of Ukrenergo, Volodymyr Kudrytskyi, stated that artificial price restrictions in Ukraine’s energy market force Ukraine to underutilize imports of electricity from Europe.