The draft Edict "On the Development of Competition in the Electric Power Industry" (hereinafter – the Edict) was submitted for public discussion. The provisions provide owners (or management / supervising authorities) of captive power plants with the right to sell "surplus" electricity to other legal entities or private entrepreneurs for them to ensure their economic activity. Conditions to be met for the sale and the ways of implementation – in our analysis.

The main novelty of the Edict is the possibility to sell electricity by the owner (or management / supervising authority) of a captive power plant to other electricity consumers (legal entities or individual entrepreneurs) in order to ensure their economic activity. This is done on the basis of the electricity sale and purchase agreement.

Note: the current legislation allows the sale of this surplus of electricity only to the state electric power system or to transport it via state power system to other separate subdivisions of legal entities.

The following conditions must be met:

1) the seller’s captive power plant and the consumer’s electric installation shall be connected to the electric network of the power supply company; 2) the seller's captive power plant and the consumer's electric installation shall be unified into a single automated system of electricity control.

To ensure the implementation of the electricity sale and purchase agreement, the State Production Association of Power Industry "Belenergo" will be involved to provide the following services:

  • distribution of electricity within one administrative-territorial unit (hereinafter – ATU) – on the basis of an electricity distribution service agreement (for owners of captive power plants with the capacity of 1 MW and more);
  • electricity transfer and distribution within different ATUs – on the basis of an electricity transfer and distribution service agreement (for owners of captive power plants of 25 MW and more);
  • operational dispatching management system – on the basis of the agreement for provision of operational dispatching management services.

The Council of Ministers shall approve the Rules of Access to Electricity Transfer and/or Distribution Services and the Rules of Access to Operational Dispatching Management System Services within three months from the date of adoption of the Edict. At the same time, the Ministry of Energy will be authorized to introduce departmental reporting on electricity generation and/or its sale, as well as to provide explanations on the application of the Edict.

It is expected that the proposed measures will create prerequisites for electricity sale at freely established prices, therefore will create a basis for competitive relations and formation of the electricity market in the country.