Please be informed that on 30 June 2017 Procedure on Carrying Out Open Discussion of Draft Decisions of the Ukrainian Regulator No. 866 (the “Procedure”), was adopted by the Ukrainian Regulator (please see the respective information and text of the Procedure here). The Procedure enters into force as of the date of its official publication. As of 6 July 2017 the Procedure has not yet entered into force. Nonetheless, the Regulator has already started enforcing the Procedure against all licensees according to statements of its officials, except for producers under “green” tariff.

These changes might have a considerable impact for both oil and gas, namely various tariffs for gas system operators, and power industry, including renewables.

For instance, the process of adoption of long awaiting tariffs for storage and transportation of gas for PJSC Ukrtransgaz, a Ukrainian gas storage operator, given the changes will most likely last not less than 3 months according to statements of Tetyana Ryabuha, a head of oil and gas department of the Regulator, at the meeting at European Business Association on 6 July 2017.

In case of establishment of “green” tariff, the licensees will wait at least one more month. Potentially, the results of the open discussion may be a ground to deny adoption of “green” tariff.

The Procedure covers all licensees of the Regulator, including operators of gas systems, power grids, producers of electricity under “green” tariff etc., when the Regulator, in particular, when the Regulator sets tariffs for them.

The Procedure envisages the following steps for open discussion of draft decisions of the Ukrainian Regulator regarding setting tariffs:

  • The licensee shall publish at its official web-site notification and substantiation to establish tariffs in order to receive comments and suggestions (the term for submitting comments and suggestions shall be not less than 14 calendar days and not more than 20 calendar days from the date of publication of such). Results of discussion shall be documented by minutes which are subject to publication by the licensee at its official web-site and submitted to the Regulator. Even though it is unclear, most likely the Regulator will also require a formal meeting for open discussion with participation of local state and self-government authorities. Establishment/changes to tariffs initiated by the Ukrainian Regulator are not subject to this step.
  • The respective department of the Regulator shall draft a decision on establishment of the tariff; the Regulator shall approve the draft decision and place at the official website the draft decision together with the minutes of open discussion prepared at the previous step and certain other documents. The approved draft shall be placed at the Regulator’s web site not later than 20 business days before the adoption of the decision.
  • After the mentioned 20 business day period open discussion of the draft decision shall be held at the location of Regulator’s central agency, except for discussion of tariffs for utility services which are held locally, where head of the respective department of the Regulator, authorized representative of the respective licensee, representatives of certain local self-governing authorities, if the draft concerns certain territories or utility services (or local state authorities in case of utility services), and other interested persons who have submitted an application to participate. In case the representative of the licensee or, if applicable, local self-governing or state authorities are absent the discussion shall be postponed. In case of numerous suggestions/comments the discussion may be continued on the next business day. Results of open discussion are documented by the respective minutes which shall include suggestions and motives for their acceptance/denial.
  • The mentioned minutes shall be placed at the Regulator’s website not later than 3 business days before the respective Regulator’s meeting.