[UNOFFICIAL TRANSLATION]

LAW OF UKRAINE “ON THE ELECTRICITY MARKET”

SECTION ІGENERAL TERMS

Article 1. Definitions1. For the purposes of this Law the terms listed below shall be used in the

following meanings:o commercial electricity metering administrator (hereinafter –

“Commercial Metering Administrator”) – legal entity providing organization and administration of commercial electricity metering in the electricity market, which fulfills the function of centralized aggregation of commercial metering data;

o settlements administrator – a legal entity responsible for organization of settlements in the balancing market and ancillary services market;

o money allocation algorithm – procedure of money allocation by an authorized bank from special current accounts without payment orders as set by the Regulator according to this Law;

o money allocation algorithm – procedure of money allocation by an authorized bank from special current accounts without payment orders as set by the Regulator according to this Law;

o balance between supply and demand – the satisfaction of foreseeable demands of consumers to use electricity without the need to enforce measures to reduce consumption;

o balancing group – a union of market participants created based on a relevant agreement, within which one market participant being a member of such a union overtakes electricity balance responsibility of all other market participants being members of such a union;

o balancing group of electricity producers at “green” tariff – a balancing group, where the guaranteed buyer is a balance responsible party;

o balancing electricity market – a market organized by the TSO in order to provide access to sufficient capacity and energy required to balance volumes of electricity generation and import with consumption and export settle system constraints in the Unified Energy System of Ukraine and financially settles electricity imbalances;

o security of electricity supply – the ability of a power system to supply consumers with electricity as provided for under this Law;

o vertically integrated business entity – a legal entity irrespective of the organizational legal form and ownership form, an individual including the individual controlling another legal entity or individual, that performs transmission and/or distribution of electricity and at least one of the functions of generation or supply of electricity, or the group of such entities linked directly or indirectly by

relations of control, that perform transmission and/or distribution of electricity and at least one of the functions of generation or supply of electricity;

o electricity producer (hereinafter – the “producer”) – an business entity producing the electricity;

o electricity generation – economic activity related to transformation of energy of any origin into electricity using technical means;

o balance responsibility – an obligation of market participants to nominate balanced electricity daily schedules, and to be financially responsible for settlement of electricity imbalances from the accepted schedule;

o available transmission capacity – a part of net transmission capacity made available for an auction on the interconnection, for the specific direction and period, excluding the value of transmission capacity allocated at earlier auctions. In case of provision of exemption for new cross-boarder line hereunder, when calculating available transmission capacity, part of transmission capacity so exempted shall not be taken into account. When calculating a daily amount of available transmission capacity, the unused transmission capacity, allocated at earlier auctions, shall be taken into account;

o intra-day electricity market (hereinafter – the “intra-day market”) – a type of organized electricity market involving sales and purchase of electricity on continuous basis after completion of trading on the market “the day ahead” and within the day of physical delivery of electricity;

o guaranteed electricity buyer at “green tariff” (hereinafter – “guaranteed buyer”) – business entity, which according to this Law is obliged to buy electricity from electricity producers, for which the “green” tariff was set, and perform other functions set forth in the legislation;

o guaranteed electricity buyer at “green tariff” (hereinafter – “guaranteed buyer”) – business entity, which according to this Law is obliged to buy electricity from electricity producers, for which the “green” tariff was set;

o dispatching – operational and technical management in the Unified Energy System of Ukraine ensuring reliable and uninterrupted supply of electricity to customers with adherence to terms of energy safety;

o electricity sales and purchase contract in the day-ahead market (hereinafter – the “day-ahead contract”) – simultaneous acceptance by the day-ahead trading participant and market operator of rights and obligations for sale and purchase of electricity resulting from the respective day-ahead trading;

o ancillary services are services set out by this Law and market rules that are purchased by the TSO from ancillary services providers in order to ensure reliable and secure operation of the Unified Energy System of Ukraine and quality of electricity according to the established standards;

o access to the cross-boarder transmission capacity – right to use electricity transmission interconnector capacity for the purposes of export and/or import of electricity, as imposed by this Law;

o third party access – the right of all system users to use the transmission and distribution networks based on the predetermined and publicly announced conditions in conformity with principles of transparency and non-discrimination;

o electricity – energy produced at electricity generation sites and is the saleable product designated for sales and purchase;

o electricity line – aggregate of electric installations for electricity transmission and/or distribution;

o electricity undertaking – business subject carrying at least one of the following functions: production, transmission, distribution, supply, or trade of electricity, but excluding the consumers;

o supplier of consumers – business entity for the supply of electricity to consumers;

o power plant – electric installation or group of electric installations designated for production of electricity or combines production of electricity and heat power;

o electric installation – a set of interconnected equipment and facilities designated for generation or transformation, transmission, distribution, or consumption of electricity;

o energy efficiency and demand-side management – a global or integrated approach aimed at influencing the amount and timing of electricity consumption in order to reduce primary energy consumption and peak loads by giving precedence to investments in energy efficiency and loads management measures instead of investments in increase of generation capacities, if the former are the most effective and economical option, taking into account the positive environmental impact of reduced energy consumption and the security of supply and distribution cost aspects related to it;

o restricted area of hydrotechnical facilities – land plot adjacent to the basic fence from the inside of the hydroelectric technical facility, equipped with the engineering and technical devices and marked with warning signs, as well as the area of water space of upper and down pools 500 meters away from the power dam, marked with signs warning on forbidden access to this territory of unauthorized persons, vessels, and floating objects;

o protected consumers – consumers to which specific mode of disconnection and/or limitation of electricity supply is applied in order to prevent emergencies of man-made and natural character;

o consumer – an individual (including the sole entrepreneur) or legal entity purchasing electricity for its own use;

o electricity market clearing – a clearing system exercised through an authorized bank, dealing with mutual financial claims and liabilities of market participants for electricity and services provided in the electricity market, which is closed with the payment of difference between the amount of claims and liabilities of market participants (settlement), including through provision of financial guarantees;

o commercial electricity metering – a set of processes and procedures for accumulation and management as to the volumes of produced, injected, transmitted, distributed, consumed, imported and exported electricity at a specified time period. Such data shall be used for settlements between market participants;

o control – bears the meaning specified by the Law of Ukraine “On Economic Competition Protection”;

o supervised area of hydrotechnical facilities – territory of concrete and land dams of hydroelectric and technical facilities and land plots located among water reservoirs and drain canals; such territory is marked by the warning signs;

o system users – individuals (including sole entrepreneurs) or legal entities injecting or withdrawing electricity to/from transmission/distribution system or using transmission/distribution systems for electricity transmission/distribution;

o small non-household customer – a small business entity or a budgetary institution that has its facilities connected to a low-voltage distribution network with a nominal voltage level not exceeding 1 kV and buys electricity for its own use;

o cross-boarder line – a transmission line which crosses a border between Ukraine and another country and which connects national transmission systems of both countries;

o interconnector – means a set of cross-boarder lines and electric installations equipment used to link national transmission system with transmission systems of neighboring countries;

o emergency in the unified energy system of Ukraine – situation when operational mode of unified energy system of Ukraine or separate parts thereof is threatened, in particular, due to lack of electricity and/or capacity, frequency lower than the permitted thresholds, violation of mode of accessible flows and overload of line elements, reduction of voltage in control points of the energy system to the action level;

o emergency on the market of electricity – shall mean a situation according to which a market is not able to cover available demand for electricity which results in substantial increase in prices on the market of electricity during a long period of time;

o electricity imbalance – difference between actual volumes of sales or consumption of electricity of the party responsible for balance, registered in accordance with the market rules for each settlement period, and volumes of purchased and sold electricity registered by the settlements administrator;

o non-household customer – an individual (including the sole entrepreneur) or legal entity purchasing electricity which is not a household;

o implicit auction – a mechanism for cross-border trade of electricity which includes simultaneous allocation of rights for use of the interconnection capacity and electricity, calculation of consolidated prices;

o new interconnector – an interconnector not completed by October 01, 2015;

o technical regulative document – norms, rules, guidelines, and standards accepted and registered in accordance with the procedure set by the law, for ensuring the proper technical condition and operation of electric plants and lines;

o Unified Energy System of Ukraine (UES of Ukraine) – aggregate of power plants, electric lines, other electricity sites linked by shared mode of production, transmission, and distribution of electricity in case of centralized control of such mode;

o electricity site – electric power plant (except the nuclear part of nuclear power plant), electric substation, electric line, connected to the Unified Energy System of Ukraine;

o cross-border congestion – a situation in which cross-border transmission capacity cannot accommodate all physical flows of electricity resulting from export and import operations of market participants due to the lack of transmission capacity of interconnectors and/or electricity transmission system;

o market operator – a legal entity ensuring operation of the day-ahead and intraday electricity markets and organization of electricity trade at the day-ahead market and intraday market based on the license;

o transmission system operator – a legal entity responsible for operating, including dispatching, ensuring the maintenance and development of the transmission system and interconnectors, and for ensuring the long-term ability of the system to meet reasonable demands for the transmission of electricity;

o distribution system operator – a legal entity responsible for secure, reliable and efficient operating, ensuring the maintenance and development of the distribution system and ensuring the long-term ability of the system to meet reasonable demands for the distribution of electricity with due regard to environment and energy efficiency;

o operational network security – capacity of the transmission, and where appropriate distribution system to stay in normal operational mode or return to the normal operational mode as soon as possible which is characterized by boundary admissible indicators of temperature, voltage levels, short circuit current, frequency, and stability;

o organized segment of electricity market – day-ahead market, intraday market and balancing market;

o specifically important electricity sites – sites ensuring stable functioning of the unified energy system of Ukraine, damage or destruction of which will result in interruption of electricity supply to business entities and people, possible human victims and significant money losses;

o transmission – the transport of electricity on the 220 kV and higher-voltage lines from power plants to connection spots of distribution systems and electric installations of consumers (but does not include supply), as well as on interconnectors;

o long-term planning – the planning of the need for future investment in generation capacity, capacity of transmission and/or distribution system on a long-

term basis, for the period of 5 years or more, with a view to meeting the demand of the system for electricity and securing supplies to customers;

o household consumer – an individual using electricity for its own domestic needs which do not include professional and/or commercial activities, under the supply contract for electricity concluded with the market participant (including supplier of consumers);

o ancillary services provider means an market participant that complies with the requirements established by the market rules regarding provision of ancillary services and registered according to the market rules for provision of such services, and other entities authorized to provide ancillary services as defined by this Law;

o balancing service provider – a market participant that has concluded the contract for participation in the balancing market with the TSO, in accordance with the market rules;

o commercial metering services supplier – business entity providing commercial metering services in the electricity market in accordance with this Law;

o supplier of last resort – electricity supplier of consumers designated by the Regulator that, in cases defined by this Law, has no right to refuse conclusion of the electricity supply contract for the limited period of time;

o universal service supplier – electricity supplier of consumers on whom the Cabinet of Ministers of Ukraine has imposed the obligation to provide the universal service;

o electricity supply – means the sale, including resale, of electricity;o special current accounts – accounts opened with the authorized bank

intended to ensure conduction of settlements in accordance with this Law;o connection of the electric facility (hereinafter – the connection) –

provision of the service to the customer by the transmission system operator or distribution system operator with respect to creation of technical possibility for transmission (acceptance) at spot of connection of the customer’s electric plant of relevant capacity to the transmission system or distribution system (including those which were newly created) of electricity of necessary volume, with adherence to indicators of quality and reliability;

o direct line – an electricity line linking the producer’s generation facility with electric utilities of consumer and used by them only;

o regulator – national commission performing state regulation in energy and public utilities;

o ancillary services market – system of relations occurring in connection with a purchase of ancillary services by the TSO from ancillary services providers;

o electricity market – a system of relations occurring between market participants in the course of electricity and/or ancillary services sale and purchase, transmission and distribution, electricity supply to consumers;

o day-ahead electricity market (hereinafter – the “day-ahead market”) – type of organized market of electricity which includes sales and purchase of electricity for the day following the day of trading;

o development of UES of Ukraine – new construction, reconstruction, or technical re-equipment of electricity sites;

o electricity distribution (hereinafter – the distribution) – the transport of electricity from power plants or sub-stations of transmission system to installations of consumption, but does not include supply;

o distributed generation – electricity generation plants connected to the distribution system;

o certification of transmission system operator – the process of verifying business entity’s compliance with the requirements on independence and unbundling of the transmission system operator, as prescribed by this Law, where such compliance is confirmed by resolution of the Regulator;

o electricity transmission system (hereinafter – the transmission system) system of lines, ancillary equipment, equipment for transformation and switching used for the electricity transmission;

o distribution system – system of lines, ancillary equipment, equipment for transformation and switching used for distribution of electricity;

o system constrains – circumstances conditioned by the need to ensure functioning of the Unified Energy System of Ukraine within the permissible limits, at which it is allowed to deviate from the optimal load distribution of generating capacities under the contracted electricity output volumes and/or optimal load distribution of generating capacities pursuant to the proposals (bids) in the balancing market;

o balance responsible party – market participant, which assumed an obligation to nominate balanced electricity daily schedules (it own or of its balance group and financially responsible towards the transmission system operator for imbalances;

o trading in the day-ahead electricity market (hereinafter – the “day-ahead trading”) – process of setting volumes and price for electricity for the settlement periods for the day following the day of trading, according to the day-ahead market rules;

o trader – business entity that buys and sells electricity for resale only.o universal service – service of electricity supply to household and small

non-household consumers only, ensuring their right to be supplied with electricity of a specified quality within the entire territory of Ukraine subject to terms prescribed by this Law;

o authorized bank in the electricity market (the authorized bank) – any bank that meets the requirements of set out by the Cabinet of Ministers of Ukraine and the National Bank of Ukraine, included by the National Bank of Ukraine in the list of authorized banks and has the right to service current accounts with special mode of using market players;

o intra-day market participant – business entity that has executed a contract on participation in this market;

o electricity market participant (hereinafter – the “market participant”) – producer, electricity supplier of consumers, trader, transmission system operator, distribution system operator, market operator, guaranteed electricity buyer and consumer that participate to electricity market according to the procedure as set by this Law;

o day-ahead market participant – business entity that has executed a contract on participation in this market;

o net transmission capacity – the maximum transmission capacity, which can be used for cross-border transfer of electricity, in a specific direction and period, providing secure and reliable functioning of the Unified Energy System of Ukraine;

o explicit auction – a mechanism for cross-border capacity allocation which provides access to the cross-border transmission capacity and determines the price of such access but does not involve trade of electricity;

o other terms shall be used bearing meaning specified in Laws of Ukraine "On Alternative Energy Sources", "On Combined Production of Thermal Energy and Electricity (Cogeneration) and Using Waste Energy Potential", Commercial Code of Ukraine, and other laws of Ukraine.

Article 2. Legal framework for electricity market operation1. For performance of Ukraine’s obligations under the Treaty establishing

the Energy Community and Association Agreement between Ukraine, on the one hand, and the European Union, the European Atomic Energy Community and member states thereof, on the other hand, this Law is aimed at implementation of instruments of legislation of the Energy Community in energy domain, in particular: Directive 2009/72/EC concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC; Regulation (EC) 714/2009 on conditions for access to the network for cross-border exchanges in electricity repealing the Regulation (EC) No 1228/2003; Directive 2005/89/EC concerning measures to safeguard security of electricity supply and infrastructure investment.

Legal framework of the electricity market functioning is composed of the Constitution of Ukraine, this Law, the Law of Ukraine "On Alternative Energy Sources", "On Combined Production of Thermal Energy and Electricity (Cogeneration) and Using Waste Energy Potential", ["On National Commission, which performs state regulation in the energy and utilities"], "On Natural Monopolies", "On Economic Competition Protection", "On Environment Protection", international treaties of Ukraine, which are binding as authorized by the Verkhovna Rada of Ukraine, as well as other instruments of legislation of Ukraine.

2. The general basis of functioning of electricity market participants and

their interrelations are governed by the by-laws regulating implementation of this Law, in particular:

1) market rules, which inter alia, determine the rules of the balancing market functioning and ancillary market functioning;

2) day-ahead and intra-day market rules;3) code of transmission system, code of distribution system;4) commercial metering code;5) retail market rules6) other normative and legal acts.Market rules, electricity transmission network code and commercial

metering code are developed and administered by the transmission system operator and are approved by the Regulator.“Day-ahead” and intraday market rules are developed and administered by the market operator and approved by the Regulator.

Distribution network Code and Retail market rules are developed and adopted by the Regulator.

3. Market rules determine, among other things, the procedure of market participants’ registration; procedure and requirements for ensuring fulfillment of obligations in accordance with agreements with the purpose of administering electricity imbalances; balancing rules; rules of ancillary services market functioning; settlements procedure in the balancing market and the ancillary services market; invoicing (billing) procedure; procedure of amending the market rules; procedure for market functioning in case of taking emergency measures.

4. Day-ahead and intra-day market rules determine, among other things, the procedure and requirements to ensure fulfillment of obligations under agreements for electricity sales and purchase at such markets, procedure of day-ahead trading organization and holding;, procedure of electricity pricing, including in the cases of non-competitive behavior; settlements procedure on such markets, procedure of setting the value of services provided by the market operator and settlements procedure with respect to that; procedure for disclosure and publication of information; procedure for settlement of disputes between the market operator and day-ahead and intraday market participants; procedure of amending the day-ahead and intraday market rules.

5. Code of transmission system, code of distribution system codes defines, among other things, methods and criteria for planning the transmission and distribution system development; terms and procedure of access to the transmission/distribution system; terms and procedure of connection to the transmission/distribution system, characteristics and methods for provision of ancillary services in the transmission system, procedure of operational planning; procedure of management and exploitation of the system under normal and emergency modes; criteria applied by the transmission system operator for dispatching generation capacities and use of interconnectors, responsibilities and

procedures for dispatching distributed generation, as well as conditions for prioritization energy plants which use the renewable energy sources.

Electricity transmission code shall comply with the laws of the Energy Community.

6. Commercial metering code contains general provisions on organization of commercial electricity metering in the electricity market, rights and obligations of market participants, suppliers of commercial metering services and commercial metering administrator regarding provision of commercial electricity metering, receiving exact and accurate data on commercial metering and their aggregation (consolidation), procedure of registration of commercial metering services suppliers, points of commercial metering and registration of automated systems used for commercial metering of electricity.

7. Requirements as to the provision, protection, disclosure and publication of information in the electricity market are determined by this Law, the day-ahead and intra-day market rules, code of transmission system, code of distribution system, commercial metering code, and other by-laws and regulatory documents covering implementation of this Law. Requirements for provision, protection, disclosure and publication of information by market participants shall be defined by the Regulator.

8. Market participants shall have a right to submit proposals regarding changes and amendments to the market rules, day-ahead and intra-day market rules, code of transmission system, code of distribution system, commercial metering code and other by-laws, which regulate functioning and operation of the electricity market in Ukraine to respective state bodies and operators, which ensure the development, approval and/or administration of respective acts.

9. When applying terms of this Law authorities and courts shall take into account the legal application practice of the Energy Community and European Union, in particular, resolution of the Court of European Union (European Court, General Court), practice of the European Commission and Secretariat of Energy Community with respect to application of terms of legislation instruments of the European Union as indicated in first part of this article.

10. Resolutions (actions) of authorities adopted in performance of this Law should be taken on the basis of, within the competence and in a manner as prescribed by the Constitution and laws of Ukraine, considering the person’s right to participate in the decision-making process, and correspond to the purpose of provision of such powers, be justified, correspond to principles of impartiality, good faith, reasonability, proportion, transparency, non-discrimination, and timeliness.

Pursuant to the proportion principle resolutions (actions) of authorities should be necessary and minimally sufficient for reaching the objective of satisfaction of common social interest.

Pursuant to the transparency principles resolutions (actions) of authorities should be duly justified and notified to entities which they refer to, in a timely manner in advance of their entry into force or implementation.

Pursuant to the non-discrimination principle, resolutions, actions, omissions of authorities may not result in:

− legal or actual volume of rights and obligations of the person which are different than the volume of rights and obligations of other persons in similar situations, only unless such difference is necessary and minimally sufficient for satisfaction of common social interest;

− legal or actual volume of rights and obligations of the person which is the same as the volume of rights and obligations of other persons in non-similar situations, unless such similarity is necessary and minimally sufficient for common social interest.

Effect of principles of proportion, transparency, and non-discrimination also covers electricity market participants in cases prescribed by the Law.

Article 3. Principles of functioning of electricity market of Ukraine1. Electricity market functions on a competitive basis, except for activity of

natural monopoly subjects, with restrictions set forth by this Law.

2. Operation of the electricity market is based on the following principles:1) energy security of Ukraine;2) safety of electricity supply to consumers and protection of their rights

and interests;3) creation of terms of safe exploitation of electricity objects;4) preservation of integrity and ensuring efficient functioning of the

Unified Energy System of Ukraine, single dispatching (operational and technological) management thereof;

5) ensuring balance between the demand and supply of electricity;6) development of interconnectors with energy systems of adjacent

countries;7) energy efficiency and environmental protection;8) promotion of alternative and renewable energy development ;9) fair competition;10) equal rights of electricity sale and purchase;11) free choice of electricity supplier of consumers;12) non-discriminatory and transparent access to electricity transmission

and distributions systems ;13) non-discriminatory participation in the electricity market;14) independent regulation;15) non-discriminatory and cost-reflective pricing;16) responsibility of market participants for compliance with the market

rules, day-ahead and intraday market rules, code of transmission system, code of distribution system, commercial metering code, retail market rules, other

regulations and regulatory documents covering functioning of the electricity market and terms and conditions of the contracts concluded in this market;

17) cooperation and integration of electricity markets at regional and European levels.

3. The obligatory condition for participation in the electricity market (except for consumers purchasing electricity under the retail supply contract) is conclusion of the agreement with the transmission system operator on balance responsibility.

Article 4. Contractual support to the electricity market operation1. Electricity market participants operate in the electricity market on a

contractual basis. For the purpose of ensuring the electricity market operation, one or more of the following types of agreements shall be concluded:

1) bilateral contract;2) on participation in the day-ahead and intraday market;3) on sale and purchase of electricity at the day-ahead market;4) on sale and purchase of electricity at the intraday market;5) on participation in balancing market;6) on balance responsibility;7) on provision of distribution services;8) on provision of transmission services;9) on provision of support services;10) on provision of services in dispatching (operational and technological)

management;11) on connection to transmission system;12) on connection to distribution system;13) on access to cross-boarder capacity of interconnectors;14) on supply of electricity to consumer;15) on supply of electricity by supplier of unique services;16) on supply of electricity by supplier;17) on provision of commercial metering services;18) on sale and purchase of electricity at the “green” tariff;19) other contracts concluded according to legal acts that ensure

functioning of the electricity market.

SECTION II.ELECTRICITY SECTOR POLICY AND SECURITY OF SUPPLY

Article 5. National Policy in the Electricity Sector1. National policy in the electricity sector is aimed at:1) ensuring reliable and safe electricity supplies;2) creating conditions for efficient operation of a liquid electricity market ;

3) providing conditions and applying measures for energy efficiency, demand management and energy substitution, and using potential sinergies in the electricity sector;

4) promoting the electricity generation from renewable energy sources and development of distributed generation and electricity storage facilities;

5) promoting environmental protection in the electricity sector;6) creating conditions for investments into the electricity sector, promoting

easy access to information, reliable planning instruments and shorter administrative procedures;

7) promoting application of new technologies;8) promoting measures for protection consumers;9) integration of the national electricity market at the regional and pan-

European levels.

2. The Cabinet of Ministers of Ukraine, the government agency responsible for development and implementation of the national policy in the power sector (Ministry of energy), the government agency responsible for implementation of the national policy on supervision in the electricity sector, and other public authorities under Ukrainian law are responsible for development and implementation of the national policy in the electricity sector.

3. The scope of powers of the Cabinet of Ministers of Ukraine in the electricity sector includes:

1) approval of the Energy Strategy of Ukraine;2) designation, jointly with the National Bank of Ukraine, of an authorized

bank in the electricity market;3) foundation of the Market Operator; 4) designation of a guaranteed buyer entity;5) taking action to ensure security of supply without, or with minimum

interruption of the electricity market;6) decision-making on charging special obligations to ensure general

public interests and terms (order) for fulfillment of such special obligations;7) approval of the procedure of granting exemption under Article 24 of

this Law; 8) approval of the procedure of securing electricity supply to protected

consumers;9) approval of forecasted annual fuel and energy balance;10) approval of the authorization procedure for new generation capacity;11) approval of the procedure of organizing tenders for the construction of

new power plants and energy efficiency/demand-side management measures;12) other powers provided by laws.

4. The scope of powers of the government agency responsible for development and implementation of the national policy in the power sector (Ministry of energy) includes:

1) development and implementation of the national policy in the power engineering complex on the basis of the Energy Strategy of Ukraine;

2) development of the national policy on supervision in the electricity sector;

3) development of specific-purpose government programs;4) approval of and monitoring of compliance with operational safety

standards for the Unified Energy System of Ukraine;5) development and approval of the rules of secure electricity supplies and

monitoring security of electricity supplies;6) approval of normative characteristics of electricity loss during

transmission and distribution by electrical grids;7) formation and approval of forecasted electricity balance of the Unified

Energy System of Ukraine; 8) implementation, within the scope of its competence, of a research and

development policy in the fuel and energy complex;9) other powers provided by Ukrainian law and vested by the Cabinet of

Ministers of Ukraine.The government agency responsible for development and implementation of

the national policy in the power sector has the right to receive information from market participants required to exercise its powers under this Law.

5. In order to improve the electricity sector policy, all business entities engaged in the production, transmission, distribution, supply, export and import of electricity are required to report their performance indicators to the state statistics service to organize and publish energy-related statistics

The list of and procedure of reporting performance indicators are approved by the Cabinet of Ministers of Ukraine.

Article 6. State Regulation on the Electricity Market1. State regulation on the electricity market is provided by the Regulator

within the scope of powers stipulated by this Law and other legislative acts.

2. The Regulator’s main objectives on the electricity market include:1) promoting cooperation with the Energy Community Regulatory Board

and national electricity market regulators of other Energy Community member states, creation of a single competitive electricity market within the Energy Community to ensure security of electricity supplies, protection of the environment and effective opening of the electricity market for all customers in Energy Community Parties;

2) creating proper conditions for efficient and sustained functioning of electricity networks considering long-term development goals;

3) developing competition and ensuring proper functioning of regional (international) markets within the Energy Community, in particular, the Energy

Community’s single market to achieve the goals mentioned in paragraph (1) of this part;

4) removing obstacles and restrictions in electricity trade among the market players of the states party to the Energy Community Parties; in particular, achieving proper level of transmission capacity of inter-country electricity networks to meet demand and enhance integration of electricity markets in individual Energy Community Parties which will foster international electricity trade within the Energy Community;

5) promoting development of a secure, effective and efficient unified energy system of Ukraine geared toward the customer needs to facilitate a nondiscriminatory access to this system by existing and potential users, sufficient capacity to meet the needs of the electricity market and ensure energy efficiency, and integration into the system of transmission and systems distributed generation and producers generating electricity from alternative sources of energy;

6) creating simple and easy conditions of connecting to and accessing electricity networks by new users; in particular, by eliminating barriers which may prevent the access by new users and electricity producers, including producers generating electricity from alternative sources of energy;

7) providing short- and long-term incentives for the transmission system operator, distribution system operators and system users to improve effectiveness of energy system operation and integration of the electricity market;

8) creating preconditions for customers to receive economic benefits from efficient functioning of the electricity market by promoting competition on the electricity market and implementing efficient mechanisms of protecting end users’ rights;

9) ensuring high standard of performing public service obligations, protect vulnerable consumers and set up a data exchange process necessary to exercise the consumer right to switch an electricity supplier.

3. The scope of Regulator’s powers on the electricity market includes:1) licensing of commercial activities in the field of electricity according to

the requirements of this Law and control over licensees’ observance of license terms for conduct of commercial activities;

2) approval of the license terms allowing to conduct types of activities in the field of electricity, licensing of which is the powers of the Regulator;

3) making decision on certification of the transmission system operator or refusal from certification;

4) approval of market rules, rules of the day-ahead market and the same-day market, code of transmission system, code of distribution system, Commercial Metering Code, and retail market rules, rules for management of limitations and the procedure for distribution of capacity of interconnectors, other regulatory legal acts and regulatory documents covering functioning of the electricity market;

5) approval and monitoring of fulfillment of the Unified Energy System development plan for the next ten years and distribution system development plans

and indicative generation development plans in the context of generation adequacy;

6) approval of:o methodology of calculating tariffs for universal services;o methodology (procedure) of calculating budget of the guaranteed

buyer;o methodology of calculating tariffs for last resort supply;o methodology of calculating prices (tariffs) for ancillary services;o methodologies (procedures) of setting (forming) electricity

transmission tariffs;o methodologies (procedures) of setting (forming) electricity

distribution tariffs;o methodology of calculating tariffs for operational and technological

dispatching services;o methodology of establishment of the fee for connection to the

transmission system and distribution system;o connection rates;o list of current accounts with special regime of use;o rules, procedures and terms provided by this Law;o typical and sample contracts provided by this Law;o report forms for market participants prices for unique services and

services of the last resort supplier;7) setting:

o prices for universal services;o tariffs for (operational and technological) dispatching services;o electricity transmission tariffs;o electricity distribution tariffs;o funds allocation algorithms for current accounts with special regime

of use;o minimum amount of obligatory sale and purchase of electricity on the

day-ahead market in accordance with this Law;8) determining:

o the need in and requirements to obligatory audits of the day-ahead market, intraday market, balancing market and ancillary services market and calculations for these markets;

o requirements to the protection, provision, disclosure and promulgation of information by market participants;

9) ensuring performance by the transmission system operator, distribution system operators and other market participants (except consumers) of their obligations under this Law, including obligation to cooperate and interact with electricity market participants from other Energy Community Parties;

10) monitoring:o functioning of the electricity market and its segments;

o the degree and effectiveness of electricity market’s openness, transparency and competition in electricity market segments (including prices under bilateral contracts and prices in organized market segments, prices for households, particularly the practice of using prepayments), electricity supplier switching rate, disconnection practice, maintenance prices and quality, consumer complaints (including complaints from household consumers), and any practices resulting in distortion or limitation of competition on the electricity market;

o the degree of transparency of market participants’ activities, including performance by market participants (except consumers) of their obligations concerning disclosure/promulgation of information;

o actions by the transmission system operator regarding congestion management, including system constraints;

o adherence to the capacity allocation rules;o compliance by the transmission system operator and distribution

system operators with the requirements concerning non-discriminatory access to their electricity networks, connection and repair timeframes;

o application of tariffs and other fees related to electricity network access, and monitoring of the application and observance of methodologies (procedures) of calculating these tariffs and fees;

o use by the transmission system operator of revenues from cross-boarder capacity allocation;

o technical cooperation of the transmission system operator with the European Network of Transmission System Operators for Electricity (ENTSO-E) and implementation of any compensation mechanisms between transmission system operators adopted as part of this cooperation;

o [performance of special obligations under PSO in the course of electricity market’s functioning for the compliance with requirements of this Law and other legislative acts;]

o application of contract provisions restricting competition on the electricity market (in particular, contract provisions preventing non-household consumers from entering into several bilateral contracts simultaneously or restricting their right to choose an electricity supplier);

o observance by electricity suppliers of the procedure of reviewing inquiries and complaints from electricity consumers concerning electricity supply services;

o monitoring investment in generation capacities in relation to security of supply;

o fulfillment by electricity market participants of their functions and obligations in accordance with this Law and other legislative acts

regulating the functioning of the electricity market.11) monitoring compliance by the transmission system operator,

distribution system operators and holders of shares (stakes in the authorized capital) of these business entities and by vertically-integrated business entities with the requirements regarding unbundling and independence provided by this Law;

12) approving, revising and control of implementation of transmission system operator’s and distribution system operators’ investment programs;

13) reporting facts that may prove violation of the law on the protection of economic competition on the electricity market to the Antimonopoly Committee of Ukraine;

14) reviewing complaints and resolving disputes on the electricity market;15) ensuring, together with other public authorities, effective application of

measures of protecting consumer rights, including measures provided by this Law;16) setting and monitoring compliance with the minimum standards and

requirements to quality of electricity supply services, setting the terms, procedure and amount of compensation payable in the event of noncompliance with applicable service quality standards;

17) facilitating consumer access to information regarding amount and other indicators of electricity consumption according to the procedure and on the terms provided by this Law and other legislative acts;

18) participating in ensuring protection to vulnerable consumers within the relevant competence;

19) fostering data exchange to facilitate development of the electricity market;

20) exercising other powers provided by law.

4. The Regulator has the right to:1) receive information required to properly perform functions provided for

in this Law or other legislative acts from any bodies of public administration and participants of the electricity market (except consumers);

2) initiate consultations and public discussions;3) initiate and conduct investigations regarding the functioning of the

electricity market in Ukraine, authorize measures of fostering effective competition on and proper functioning of the electricity market;

4) make decisions binding upon market participants;5) apply sanctions to market participants (except consumers) in breach of

their obligations under this Law or other legislative acts;6) take action to prevent the abuse of monopolistic state, in particular,

when the abuse inflicts economic damages upon consumers, and any forms of overpricing behavior;

7) require responsible operators to prepare changes to the market rules, day-ahead and intraday market rules, code of distribution system and the commercial metering code, rules for management of restrictions and procedure for distribution of capacity of interconnectors to ensure compliance with the proportionality and nondiscrimination principle;

8) set provisional transmission and distribution tariffs, if the transmission system operator or an distribution system operator has failed to submit in due time the calculations of these tariffs to the Regulator, and make decision regarding the compensation mechanism if final tariffs differ from provisional;

9) review complaints and resolve disputes in accordance with this Law;10) supervision of electricity market participants (except consumers) in

accordance with this Law.

Article 7. Pricing (tariff setting) on the electricity market1. The following shall be subject to the state regulation on the electricity

market:o tariffs for electricity transmission services;o tariffs for electricity distribution services;o tariffs for (operational and technological) dispatching services;o prices for unique services;o prices for services of the last resort supplier;o prices for support services in case set forth in this Law;o connection rates;o green tariffs;o other tariffs and prices according to its Law

2 State regulated prices and tariffs on the electricity market (including connection fee) must be:

1) nondiscriminatory;2) transparent;3) set in accordance with the requirements to integrity of the Unified Energy

System of Ukraine, economically-justifiable and transparent expenses of an electricity market player concerned and proper level of profit margin.

3. State regulated prices and tariffs on the electricity market must:1) promote efficient electricity sales and development of competition on the

electricity market;2) create economic incentives for investments in and maintenance of the

transmission system and distribution systems;3) stimulate electricity market participants (except consumers) to improve

effectiveness of the Unified Energy System of Ukraine, integration of the electricity market and ensure security of electricity supplies, and to develop scientific and technical knowledge related to commercial operations of these participants.

State regulated prices and tariffs on the electricity market cannot:1) allow for cross-subsidizing among system users;2) limit electricity market’s liquidity;3) obstruct cross-boarder trade of electricity.

4. Electricity transmission and distribution tariffs cannot depend on the electricity transmission and distribution distance. Tariffs for transmission and distribution may consist of several rates.

5. If the differences in the structure of electricity transmission tariffs or in the balancing rules obstruct inter-country electricity sales, the Regulator shall take action to harmonize tariff structures and balancing rules applicable to this energy system and energy system(s) of neighboring Energy Community Parties.

6. Methodologies (orders) for establishment (formation) of tariffs for electricity transmission and electricity distribution services must ensure fair rates of return on invested capital as well as short-term and long-term incentives for the transmission system operator and distribution system operators to improve effectiveness and must not stimulate increase in the volumes for transmission and distribution of electricity.

7. The Regulator shall approve methodologies (orders) of establishment (formation) of state regulated prices and tariffs on the electricity market (in particular, connection fee) at least 30 days prior to the effective date of the prices and tariffs (in particular, connection fee) calculated in accordance with these methodologies (procedures).

The Regulator’s decision to set these prices and tariffs requires promulgation by publishing it on the Regulator’s website.

Article 8. Licensing Commercial Operations on the Electricity Market1. Production of electricity, transmission, distribution and supply of

electricity to consumers, electricity trading, market operator and guaranteed buyer activities on the electricity market require the appropriate license.

2. The Regulator approves the licensing terms of production, transmission, distribution of electricity and supply of electricity to consumers, electricity trading, market operator and guaranteed buyer activities.

3. The Regulator issues a license for production, transmission, distribution of electricity and supply of electricity to consumers, electricity trading, market operator and guaranteed buyer activities according to the procedure provided by law.

4. A license to conduct certain commercial operations on the electricity market may be denied only for the reasons provided by Law, in a nondiscriminatory manner and on the basis of a complete and objective assessment of the applicant’s documents taking into consideration other relevant information available to the Regulator.

The applicant must be informed about the reasons for denial of his license application.

Article 9. Government energy supervision in the electricity sector

Government energy supervision in the electricity sector is conducted by the government agency responsible for implementation of the national policy on energy supervision in the electricity sector according to the procedure provided by the Cabinet of Ministers of Ukraine.

The subject of government energy supervision in the electricity sector is commercial production, transmission, distribution and supply of electricity and also the use of electricity by electricity market participants (including consumers) for their own needs associated with technical operation of electrical stations and electricity networks, power generating equipment, testing and repair of electrical plants and electricity networks, supply of electricity to consumers, design of electrical plants and electricity networks.

A method of carrying out government energy supervision in the electricity sector includes inspections, examinations, checks, etc. of electricity network equipment of electricity market participants (including consumers) by the government agency responsible for implementation of the national policy on energy supervision in the electricity sector according to the procedure provided by the Law of Ukraine On the Main Principles of Government Supervision (Control) in Commercial Sphere.

The government agency responsible for implementation of the national policy on energy supervision in the electricity sector is tasked with:

o government energy supervision of electrical plants and electricity networks of electricity market participants (including consumers, except household consumers);

o government energy supervision of the compliance by electricity market participants with requirements of regulatory acts governing functioning of the electricity market, in particular, of:

o ensuring reliable and secure supply of electricity to consumers;o technical state and organization of operation of electrical plants and

electricity networks of electricity market participants (including consumers, except household consumers);

o compliance by electricity market participants (including consumers, except household consumers) with requirements of rules and other regulatory acts and documents concerning technical operation of electrical stations and electricity networks, technical state of electrical plants and electricity networks;

o conformance of electricity power supply schemes (external and internal): category of consumers and their electrical installations;

o remedying by electricity market participants (including consumers, except household consumers) of the instances of breach of rules and other regulatory acts and documents concerning technical operation of electrical stations and electricity networks, technical state of electrical plants and electricity networks;

o measures taken by electricity market participants (including consumers, except household consumers) to prevent accidents in and breakdowns of electricity networks;

o organization and frequency of special training of personnel engaged in operation and maintenance of equipment at power generating facilities, frequency of knowledge tests taken by these personnel concerning requirements of the applicable regulatory acts and documents concerning technical operation of electrical stations and electricity networks, technical state of electrical plants and electricity networks;

o observance of the procedure of limiting and/or discontinuing the supply of electricity to consumers by a distribution system operator and electricity supplier, provided by regulatory documents in the electricity sector;

o observance of the special regime of disconnecting and/or limiting electricity supply to prevent occurrence of human-induced or natural emergency situations;

o ensuring proper technical state of elements of automatic emergency response system’s equipment installed at electricity market participants’ facilities;

o the readiness of equipment of electricity market participants’ electricity networks for operation during the fall/winter period and in the conditions of special period or the state of emergency;

o the readiness of autonomous backup power supply sources for operation at the facilities of first-category electricity consumers and the special group of first category of electricity supply reliability;

o development by electricity market participants of measures of ensuring reliable and fault-free electricity supply to consumers;

o participation in the work of commissions investigating the reasons and consequences of accidents and fire at equipment of electricity market participants’ electricity networks, which lead to disruptions in operation of other electricity market participants.

When carrying out government energy supervision, the government agency responsible for implementation of the national policy on energy supervision in the electricity sector has the right to:

o demand that electricity market participants remedy the instances of noncompliance with requirements of the applicable regulatory acts and documents concerning technical operation of electrical stations and electricity networks, technical state of electrical plants and electricity networks;

o issue directives binding upon electricity market participants concerning remedying of the instances of noncompliance with requirements of the applicable regulatory acts and documents concerning technical operation of electrical stations and electricity networks, technical state of electrical plants and electricity networks;

o initiate shutdown of electrical plants and electricity networks by filing a legal complaint in court on the basis of a report on the inspection which discovered the unsatisfactory technical state and/or organization of operation of these electrical plants and electricity networks;

o apply penalties to electricity market participants in accordance with law for violating requirements of regulatory acts and documents concerning technical

operation of electrical stations and electricity networks, technical state of electrical plants and electricity networks;

o receive, in accordance with law, in response to a written inquiry and free of charge, information from electricity market participants and their officials concerning the matters arising in the course of government energy supervision which the agency needs to perform its functions;

o demand that electricity market participants and their officials stop the actions obstructing government energy supervision;

o take samples of parts of damaged electricity network equipment and order technical diagnostics of electricity network facilities (or separate parts thereof);

o provide consulting assistance to electricity market participants and hear disputes between electricity market participants within the scope of its competence;

o provide, at the applicant’s written request, an opinion concerning technical feasibility of requirements of technical specifications for connection;

o draw up protocols and hear administrative offense matters in the cases provided by law;

o record the government energy supervision process or every particular actions using sound and video recording devices;

o receive, free of charge and according to the procedure provided by law, information, documents and materials from central and local bodies of executive power and bodies of local self-governance which the agency needs to perform its tasks and duties and exercise its authority, in particular, receive statistical information from statistics agencies;

o use databases of bodies of public administration, state (including government) communication systems, special communication networks and other technical devices;

o lodge complaints and lawsuits according to the procedure provided by law to protect interests of the state in the electricity sector.

Article 10. Powers of Local Executive Authorities and Bodies of Local Self-Government in Relations with Electricity Market Entities

1. The scope of powers of local executive authorities and bodies of local self-government in relations with electricity market entities includes:

o approval of installation of power engineering infrastructure in the areas under their jurisdiction based on the local community’s interests;

o participation in preparation of distribution system development plans for the areas under their jurisdiction;

o participation in development and implementation of measures concerning operation of power infrastructure in extraordinary conditions;

o promoting development of power industry in the region.

2. Local executive authorities and bodies of local self-government cannot intervene in regulation of electricity consumption regimes.

Article 11. Anti-Monopolistic Restrictions1. The Law of Ukraine On the Protection of Economic Competition prohibits

the business entities whose relations are regulated by this Law from conducting monopolistic activity in any form, with the exception of cases provided by Ukrainian law.

2. Business entities engaged in the production, transmission, distribution or supply of electricity, market operator or guaranteed buyer and recognized, according to the applicable procedure, as being monopolists on (dominating) the electricity market cannot terminate or reduce their operations for the purpose of creating shortage of electricity, unless Ukrainian law provides for this limitation.

Article 12. Particularities of Working Conditions in Power Engineering Industry

1. Entities, institutions and organizations of power engineering industry shall be staffed with highly-qualified personnel, continuously improve their skills and provide reliable social security.

2. Persons controlling production processes in power industry shall undergo special training and knowledge testing (certification) in accordance with law, including regulatory acts of the government agency responsible for development of the national policy in the power sector and other government agencies responsible for development of the national policy in relevant spheres.

3. The list of these fields of specialization and positions is approved by the government agency responsible for development of the national policy in industrial and labor safety sphere upon agreement with the government agency responsible for development of the national policy in the power sector.

4. Persons who did not undergo the required training cannot be admitted to work in power sector.

5. The costs of personnel training and retraining and maintaining specialized training and industry coordination centers are included to gross production and current expenses.

6. Personnel knowledge testing (certification) shall be paid for by the owners of power engineering infrastructure facilities.

7. Personnel of power generating plants exposed to radioactive, thermal or electromagnetic radiation or to other harmful or dangerous factors are required to

undergo special medical examinations and entitled to compulsory insurance payable by the entities they work for.

8. Power enterprises may introduce special rules of safe work to prevent work accidents. Regulations on introduction of special rules of safe work are prepared by the government agency responsible for implementation of the national policy in the power sector and adopted according to the applicable procedure.

9. Power enterprises are required to create jobs for the disabled at the rate of four percent of the number of personnel engaged in nonproduction sphere.

Article 13. Labor Strikes at Power Engineering EnterprisesLabor strikes at electricity undertakings are prohibited in the cases when

they may disrupt the integrity of the Unified Energy System of Ukraine.

Article 14. Environmental Protection1. Electricity undertakings shall comply with the requirements of

environmental protection law, implement technical and organizational measures of reducing environmental impact of power engineering infrastructure, and bear responsibility for violating the environmental protection law.

2. If the environmental protection law is violated, the Cabinet of Ministers of Ukraine may decide to limit, suspend or shut down operation of power plants or power transmission infrastructure.

3. Decisions regarding limitation, suspension or shutdown of operation of other power facilities may be made by local executive authorities, relevant bodies of local self-government and the government agency responsible for implementation of the national policy on the government monitoring (control) of environmental protection, rational use, renewal and protection of natural resources within the scope of their powers provided by Ukrainian law.

4. Sanitary protection zones shall be designated to ensure safety of population living in the area where power infrastructure facilities are located. The dimensions and the procedure of using these zones are set out in regulatory documents and design of these facilities approved according to the applicable procedure.

5. All forms of business activity within sanitary protection zones permitted by the regime of using these zones may be conducted only upon approval by the owner of a power infrastructure facility or his authorized representative.

Article 15. Regional Cooperation1. The government agency responsible for development and implementation

of the national policy in the electricity sector and the Regulator shall cooperate

with the relevant authorities of other Energy Community member states with Energy Community institutions for the purpose of integrating their national electricity markets at the regional level.

Regional cooperation shall promote the development of harmonizing regulatory base and electricity exchange between states, coordinated allocation of cross-border capacity through non-discriminatory market-based solutions, and the regional integration of day-ahead markets, balancing and reserve power mechanisms.

2. The Regulator shall promote the cooperation of the transmission system operator with transmission system operators of Energy Community member states at a regional level, including on cross-border issues, with the aim of fostering the consistency of their legal, regulatory and technical framework.

3. The government agency responsible for development and implementation of the national policy in the electricity sector and the Regulator shall assist the transmission system operator in integrating the Unified Energy System of Ukraine at the regional level with one or several energy systems of Energy Community Parties for capacity allocation and for checking the security of the network.

Article 16. Electricity Supply Emergency Rules1. The government agency responsible for development and implementation

of the national policy in the electricity sector shall develop and approve electricity supply security rules binding upon all participants of the electricity market. The electricity supply security rules shall set the minimum security criteria for electricity supply and include:

O the measures of ensuring security of electricity supply; O the measures to be taken in cases when security of supply is at risk;O the measures to be taken in emergency situations (emergency measures);O criteria/types of electricity supply security breach;O the measures binding upon participants of the electricity market (except

consumers) to ensure security of electricity supply to protected consumers; O the procedure of initiating implementation of required measures;O the procedure of applying and duration of required measures;O the procedure of notification about the application of required measures;O obligations and liability of public authorities and electricity market

participants concerning security of electricity supply.

2. The measures listed in this Article may include, in particular:O price caps on the electricity market;O introduction of special terms for electricity purchase-sale operations;O imposition of special requirements upon electricity market participants

regarding electricity production, supply, purchase and sale;

O introduction of special terms for electricity export and/or import operations;

O introduction of special terms for the disconnection of electricity supply.

3. When developing the rules mentioned in part one of this Article, the government agency responsible for development and implementation of the national policy in the electricity sector shall take into account the economic impact, effectiveness and consequences of these measures for the functioning of the electricity market and their environmental and consumer impact.

These rules must be transparent, cannot be impossible to comply with from the outset and cannot distort competition and affect trade beyond what is absolutely necessary to address the emergency.

These rules cannot put an excessive pressure on electricity market participants and shall minimize the adverse consequences for the functioning of the electricity market.

4. Announcement of occurrence of an emergency situation in the unified energy system of Ukraine shall be carried out by the transmission system operator. Criteria of occurrence of an emergency situation in the unified energy system of Ukraine and the procedure of its announcement shall be provided for in the code of transmission system.

During the period of availability of the emergency mode in the unified energy system of Ukraine the operator of the transmission system shall be provided with the powers to apply emergency measures in compliance with the code of transmission system.

If there are emergency situations in the unified energy system of Ukraine the electricity companies shall act in compliance with the code of the transmission system, standards of operation safety of function of the unified energy system of Ukraine and perform operative commands and instructions of the electricity transmission system operator.

5. Regulator shall announce occurrence of an emergency situation on the electricity market. Criteria for occurrence of an emergency situation on the electricity market and the procedure for announcement of it shall be provided for in the rules of the market.

During the period of availability of an emergency situation on the electricity market the Regulator shall be provided with the powers to apply temporary emergency measures, namely, the following:

- limitation of prices on the electricity market;- establishment of special conditions for sales and purchase of electricity;- setting special terms for the market players concerning production, supply

as well as sales and purchase of electricity;- establishment of special terms for export and/or import of electricity.

6. Emergency measures may be taken and have to be limited in time until the cessation of an emergency situation.

7. Decisions of the Regulator on taking special measures on the electricity market and cancellation of them shall not be deemed to be the regulatory acts.

8. The government agency responsible for implementation of the national policy in the power sector (Ministry) shall inform Secretariat of Energy Community on decisions related to imposing emergency measures and content of these planned measures as well as reasons to impose it.

If the imposed imposing emergency at the national level do not ensure settlement of the crisis situation, the government agency responsible for implementation of the national policy in the power sector (Ministry) should inform Secretariat Energy Community for taking necessary measures at international level.

9. Electricity market participants shall plan and take measures in accordance with the rules of secure electricity supply referred to in this Article and shall be responsible for the security of electricity supply within their scope of activity.

10. If emergency measures are taken on the electricity market no discrimination is allowed between electricity purchase-sale agreements within Ukraine and electricity export-import contracts.

11. If the state of emergency is introduced under the Law of Ukraine On Legal Mode of the State of Emergency, enterprises, institutions and organizations of the power engineering industry located in the areas where the state of emergency was introduced must obey the orders of bodies responsible for maintaining the state of emergency in the area in question concerning electricity supply to consumers regardless of the terms of their contracts.

12. If a special period is introduced, power enterprises shall operate in accordance with the Law of Ukraine On Mobilization-related Preparations and Mobilization and regulatory acts of the government agency responsible for development and implementation of the national policy in the power engineering complex regulating the functioning of power engineering industry in the conditions of special period.

13. The particularities of regulating legal, economic and organizational relations associated with the sale of electricity to the temporarily occupied territories and relations associated with the production, transmission, distribution, supply, purchase, sale and use of electricity in the temporarily occupied territories are set by the Cabinet of Ministers of Ukraine.

Article 17. Operational Security Standards

1. The transmission system operator is responsible for developing operational security standards for Unified Energy System of Ukraine. When developing these standards, the transmission system operator shall hold public hearings and consultations with the stakeholders in Ukraine and abroad (if these standards affect adjacent energy systems).

The operational security standards for Unified Energy System of Ukraine set out the provisions concerning:

O security of electricity networks and connections between the Unified Energy System of Ukraine and energy systems of other countries;

O the planning of development of the Unified Energy System of Ukraine;O definition of technical parameters for operation of electricity network

equipment;O the exchange of information regarding the networks’ performance,

including with the operators of adjacent energy systems;The operational security standards for Unified Energy System of Ukraine are

approved by the government agency responsible for development and implementation of the national policy in the power sector upon agreement with the Regulator. The government agency responsible for implementation of the national policy in the power sector shall monitor the compliance with the operational security standards for Unified Energy System of Ukraine.

2. The transmission system operator shall maintain an appropriate level of technical transmission reserve capacity for the operational network security and shall cooperate with operators of adjacent systems in this respect.

3. The transmission system operator and distribution system operators shall exchange information related to the operation of networks in a timely and effective manner and in accordance with the operational security standards.

4. The transmission system operator and distribution system operators shall comply with the operational security standards.

Article 18. Quality of Electricity Supply1. The Regulator approves electricity supply quality indicators

characterizing the level of reliability of electricity supply, commercial quality of service and electricity quality.

2. The Regulator sets out the procedure and amount of compensation for the failure to maintain the required service quality indicators.

3. The service quality indicators and compensation payment procedure and amount shall be promulgated according to the procedure set out by the Regulator.

Article 19. Electricity Demand and Supply Balance

1. In order to maintain the balance between the demand for electricity and the available generation capacity:

O market rules and day-ahead and intraday market rules shall create conditions to provide appropriate price signals to electricity generators and end buyers;

O the transmission system operator shall maintain the required reserve of generating capacity for balancing purposes and/or to apply the equivalent market-based measures.

2. In order to maintain the balance between the demand for electricity and the available generation capacity, the Cabinet of Ministers of Ukraine may take, in particular, the measures to:

O create preconditions for simplification of the construction of new generating capacities and entry onto market of new producers;

O prevent obstruction to the use of contracts with an interruptible supply clause;

O prevent obstruction to the conclusion of various-duration contracts for producers and buyers;

O encourage implementation of real-time demand management technologies;

O encourage energy conservation measures;O use tender procedures to bring in new investments in generating facilities

on the basis of transparency and nondiscrimination.

3. The transmission system operator shall develop short-, medium- and long-term forecasts of electricity supply and demand taking into account the requirements to security of supply.

Article 20. Monitoring the Security of Supply1. The government agency responsible for implementation of the national

policy in the power sector, jointly with the Regulator, transmission system operator and other institutions concerned, shall monitor the security of electricity supply in Ukraine. This monitoring shall cover:

O the balance of demand and supply on the electricity market of Ukraine;O the level of expected demand for electricity and envisaged additional

generating capacities, either planned or under construction;O the quality and level of network maintenance;O measures of covering peak demand and preventing shortage of generating

capacities.

2. The government agency responsible for development and implementation of the national policy in the power sector shall promulgate an electricity supply security monitoring report every two years, until 31 July. This report shall include:

O results of monitoring of the areas mentioned in part one of this Article and measures planned or taken to handle these issues.

O information regarding the energy system’s aggregate capacity to meet the current and forecasted demand for electricity;

O network security and supply quality;O forecasted balance of electricity demand and supply for the next five (5)

years;O supply security forecasts for a period between 5 and 15 years;O investments planned by the transmission system operator or other parties

for the next five or more years to ensure cross-border transmission capacity;O congestion management principles; O existing and planned power transmission lines;O expected structure of the production, supply, sale, cross-boarder

exchange and consumption to devise demand management measures;O national, regional and pan-European goals of sustained development,

including priority projects of Energy Community’s power engineering infrastructure.

3. In order to monitor the security of supply and prepare a relevant report, the government agency responsible for implementation of the national policy in the power sector shall cooperate with the public authorities concerned, including the Regulator, transmission system operator and other institutions.

4. Public authorities, the Regulator, transmission system operator and other institutions shall, upon inquiry from the government agency responsible for implementation of the national policy in the power sector, provide information which they gather in the course of their activities and which is required to prepare a report.

5. The government agency responsible for implementation of the national policy in the power sector shall ensure nondisclosure of commercial information gathered when monitoring the security of supply and preparing a relevant report.

6. The Ministry shall send an electricity supply security monitoring report to the Secretariat of the Energy Community and publish it on its official website.

SECTION IIICONSTRUCTION AND CONNECTION OF ELECTRICITY FACILITIES

Article 21. Connection of electrical installations to electrical networks1. The transmission system operator and distribution system operators have

no right to refuse the connection of electrical installations of the applicant to the transmission or distribution networks subject to observance of the requirements of the transmission system code and distribution system code by the customer.

2. Connection of electrical installations to the electrical networks should not lead to deterioration of parameters of reliability and quality of electricity.

3. Connection of electrical installations to the electrical transmission system and distribution system shall be carried out according to the connection agreements, templates of which are defined by the transmission system code and distribution system code.

4. Rules of connection to transmission system and distribution systems, including types of connection (standard, non-standard) procedural issues, technical and commercial conditions of connection, templates of connection agreements, templates of technical specifications shall be defined by the transmission system code and distribution system code.

Terms of connection should be transparent, ensure effective and non-discriminatory connection.

The transmission system code and distribution system code shall determine peculiarities of connection of electric installations of the producers of electricity with the use of renewable energy sources in the relevant system, which take into account different types of connections, as well as the costs and benefits related to connection of the producers to the systems, peculiarities as regards the producers located in remote areas with low population density.

5. Design of electrical installations shall be made taking into account the technical terms and conditions for connection.

Specifications for connection of electrical installations shall be time-limited. Their duration shall be determined by the agreement of connection in compliance with the requirements of the transmission system code and distribution system code.

Any individual or legal entity shall be entitled to receive free of charge from the transmission system operator and distribution system operators input data for the development of the feasibility study for the connection in accordance with the transmission system code and distribution system code.

The applicant shall have the right to choose the designer of connection among entities eligible to perform the corresponding activity in accordance with the requirements of the legislation. The costs of the applicant connected with the implementation of project works, shall be considered as a part of total costs of connection.

6. The transmission system operator and distribution system operators will have to provide any new producer of energy from renewable sources wishing to be connected to the system with the comprehensive and necessary information required, including:

1) estimate of the costs associated with the connection;2) a reasonable and precise timetable for receiving and processing the

request for grid connection;

3) a reasonable indicative timetable for any proposed grid connection.

7. If the applicant intends to construct or reconstruct buildings, roads, bridges and other architectural objects, which requires relocation of overhead and underground electricity networks and other energy facilities, such relocation services shall be provided by the transmission system operator and/or operators of distribution systems according to the connection procedure.

8. Fee for connection to the transmission system or distribution system shall be determined in accordance with the methodology of the cost of connections to the grids approved by the Regulator.

Methodology of determining of the fee for connection to the transmission system and the distribution system must be non-discriminatory and transparent, and shall be subject to publishing by the Regulator, transmission system operator and distribution system operators.

9. At the applicant’s written request, the government agency responsible for implementation of the national policy on energy supervision in the electricity sector shall provide a conclusion concerning technical feasibility of requirements of technical specifications for connection for the conformity with the applicable standards, norms and rules.

10. The transmission system operator and distribution system operators shall publish the information on the terms and conditions of connection to the transmission system and distribution systems, as well as information about elements of their systems, according to the requirements of the transmission system code and distribution system code.

Article 22. Access to electrical networks1. Transmission and distribution system operators shall ensure access on a

non-discriminatory and transparent basis to their transmission and distribution networks for all system users. Access to electrical networks shall be provided at the tariffs for transmission and distribution of electricity approved by the Regulator, and shall be published before entry into force by the operator of the transmission system and distribution system according to the determined order.

2. The transmission and distribution system operator may refuse access to their electrical networks where there lacks the necessary capacity with obligatory justification regarding grounds for such refusal, which shall be based on objective and technically and economically justified criteria.

3. Users of electrical systems, which were denied access to electrical networks shall have the right to file a complaint with the Regulator pursuant to the order of dispute resolution determined by this Law and other regulatory and legal acts.

4. When refusing access to electrical networks, the transmission system operator and distribution system operators shall, according to transmission system code and distribution system code, at the request of the potential or current user of the electrical system, provide relevant information on measures necessary for strengthening of electric network.

Article 23. Interconnection with other power systems1. The transmission system operator should develop interconnections of

United Energy System (UES) of Ukraine with neighbouring power systems by building the interconnectors, in accordance with the investment programs approved by the Regulator.

2. Construction of interconnectors, can be carried out by the investors other than the transmission system operator according to the procedure approved by the Cabinet of Ministers of Ukraine in accordance with this Law.

3. The control of UES of Ukraine during parallel operation with interconnected systems must be carried out in consideration of contracts with operators of transmission systems and in compliance with the technical requirements, operational safety requirements, operational safety standards.

Article 24. New interconnectors1.The new direct current interconnectors and their capacity and additional

capacity of reconstructed existing direct current interconnectors may, upon submission of the relevant request from investors, be exempt from the provisions of Articles 38,39 of this Law in case of simultaneous fulfillment of the following conditions:

1) investment should increase the level of competitiveness on the electricity market;

2) the level of risk associated with investing in the construction of interstate line, such that the investment will not take place if the exemption is granted;

3) interconnector is owned by entity, which is a separate legal entity with respect to transmission system operators, which plan to build an interconnector;

4) for use of transmission capacity of interconnector its users shall pay;5) no part of capital or operating costs for the creation and/or operation of

interconnector was covered by the tariff for transmission services or the distribution of electricity transmission system operator or distribution system operator of Ukraine or operator of power transmission system of the state, with which interconnector is being built.

6) exemption does not detriment competition or the effective functioning of electricity market and electricity system of the state, with which interconnectors is being built.

2. The exemption provided for by the first paragraph of this Article may also be used in exceptional cases to alternate current interconnectors, provided that the costs and risks associated with investments in their building are significantly higher compared with the costs and risks that, as a rule, may be incurred when connecting two joint systems with alternate current line.

3. The exemption may cover the entire amount or a portion of the capacity of the new interconnectors or reconstructed existing interconnectors, which capacity was significantly increased.

4. Unused capacity of interconnectors to which the exemption is applied, should be exhibited at the auction on capacity allocation.

5. The decision on the exemption shall be taken by the Regulator in each individual case and it should be published with the appropriate grounds.

When deciding on exemption, the Regulator should determine the amount of cross-boarder capacity that is exempted, the duration of the exemption, considering the capacity line that will be built, or increasing the capacity of the existing line, the term of the project and investment risks.

A decision on exemption shall be taken after consultation with the regulatory authority of the state, with the power system of which interconnector is being built. In case of achievement of agreement within six months between regulators on granting exemption, the relevant decision must be notified to the Energy Community Regulatory Board.

6. If the Regulator and regulating authority of the state, with the power system of which it is planned to build the interconnector, within six (6) months from the date of receipt of the relevant request to release to the last of the regulatory authorities have not reached agreement on the exemption, the Regulator may apply to the Regulatory Board of the Energy Community for the decision to exempt.

The Regulator together with the regulating body of the state with the power system of which it is planned to build an interconnector, may apply to the Energy Community Regulatory Board for the decision to exempt before the expiry of the six-month period.

7. The Regulator shall provide a copy of every request for exemption to the Energy Community Regulatory Board and the Energy Community Secretariat.

The Regulator decision on exemption, together with all the relevant information must be provided to the Secretariat of Energy Community. Such information should contain, in particular:

1) the grounds on which exemption was granted or refused the exemption, including the financial information justifying the need for exemption;

2) analysis of influence on competition and the efficient functioning of the electricity market as a result of granting exemption;

3) justification of the duration and amount of cross-boarder capacity of interconnector, on which exemption is provided;

4) the results of consultations with interested regulatory authorities.

8. The Regulator should take into account the recommendations of the Energy Community Secretariat regarding amending the decision on exemption or cancellation. In case of taking decision that is not consistent with the recommendations of the Energy Community Secretariat, the Regulator should provide and publish, together with that decision, its justification.

9. The decision on exemption shall expire two (2) years from the date of such decision if the investor failed to start construction works or after five (5) years if the interconnector was not put into operation.

10. The procedure for granting exemption provided for by this Article shall be approved by the Cabinet of Ministers of Ukraine.

11. Operation of new (reconstructed) interconnectors built at the expense of the investor shall be carried out by the operator of the transmission system by the relevant agreement with the owner/investor.

Dispatching (operational and technological) management of new (reconstructed) interconnectors cross-boarder lines shall be carried out by the operator of the transmission system as a component of the united energy systems of Ukraine.

Article 25. Direct line1. Producers can ensure electricity supply of their own premises, subsidiaries

and final customers in a direct line.Final customers can receive electrical energy from producers in a direct line.

Electrical installations of the final customer may be attached to a direct line and to the transmission or distribution system, but physically separation of connection and metering points should be in place.

2. Construction of direct line shall be carried out after receipt of authorization from the Regulator.

Grounds for approval of construction of a direct line are:1) denial of access to electricity networks;2) opening dispute settlement procedure for access to electricity networks. The construction of direct lines may be refused if the construction of direct

lines interferes with fulfillment of PSO and/or provisions on consumer protection pursuant to this Law. Refusal in construction of direct lines must be justified.

3. Electric supply of the final customer through the direct line does not limit his/her right to enter into an agreement on retail supply with electricity supplier of its choice.

4. Expenses for construction and operation of direct line shall be borne by the party that received approval for the construction of a direct line, if not otherwise provided for in the agreement between the parties which electrical installations are connected by the direct line.

Article 26. Unbundling of account1. The transmission system operator and distribution system operators in

order to avoid discriminatory behavior, cross-subsidization and distortion of competition in the electricity market, shall maintain separate accounting for each of the activities on transmission and distribution of electricity.

Accounts for economic activity in the electricity market, except for activities on transmission and distribution of electricity, may be consolidated, except as provided by this Law.

Accounts for other economic activities not related to the activity in the electricity market can also be consolidated.

2. The transmission system operator and distribution systems operators, which carry out other economic activities in the electricity market and/or any other economic activities, shall make and submit to the Regulator separate accounts for each activity, in the order and form approved by the Regulator in accordance with the requirements specified in the first paragraph of this Article.

3. Electricity undertakings shall be obliged to provide the Regulator, upon its request, with financial statements (together with the independent auditor’s report), which is subject to mandatory inspection by an independent auditor, particularly in terms of compliance to avoid discriminatory behavior and cross-subsidization and distortion of competition specified in the first paragraph of this Article.

Article 27. Protection areas of electricity facilities and protection of electricity facilities

1. Especially important electricity facilities listed by the central executive body that ensures the formation and implementation of the state policy in the electricity sector and are approved by the Cabinet of Ministers of Ukraine including the territory of the restricted area and controlled areas of hydrotechnical and technical structures, are protected by departmental militarized guard involving, if necessary, the relevant departments of the state government.

Protection of other electricity facilities is carried out according to the laws of Ukraine.

2. At the electricity facilities a special mode of access is set. At the territory of restricted area of hydrotechnical structures a special mode (intra-facility and bypass) is effective.

3. The personnel of departmental militarized guard of electricity facilities are equipped with firearms and special means of self-defence. Use of firearms and special means of self-defence shall be governed by the laws of Ukraine.

The personnel of the departmental militarized guard are equipped with uniforms at the cost of electricity undertakings.

4. In the protected areas of electrical networks and other critical electrical facilities operate limitations provided for by the legislation of Ukraine on land use. Placement of buildings and other facilities in the protected areas of electrical networks without taking technical precautions provided for by the regulatory and technical documents are not allowed.

5. Within the territory of the restricted area and controlled area of hydrotechnical structures a special mode of protection shall be established.

Access of third parties and all modes of transport in the area is possible only according to the procedure provided for by the owner of hydrotechnical structures or authorized body.

Works by third parties in the territory of restricted area of hydrotechnical structures shall be performed according to the procedure determined by the Cabinet of Ministers of Ukraine and in the territory of controlled area of hydrotechnical structures – according to the procedure provided for by the owner of hydrotechnical structures or authorized body.

Special aspects of the mode of the territory of the restricted area and controlled of hydrotechnical structures shall be determined by the Cabinet of Ministers of Ukraine.

The provisions of this Article shall not apply to micro, mini and small hydropower. Subjects of micro, mini and small hydropower industry independently ensure necessary measures on protection of micro, mini and small hydropower industry facilities and independently perform in the surrounding area the necessary precaution measures.

6. Nuclear power plants are protected according to the Law of Ukraine “On Nuclear Energy Use and Radiation Safety” and the Law of Ukraine “On Physical Protection of Nuclear Facilities, Nuclear Materials, Radioactive Waste and Other Sources of Ionizing Radiation”.

Article 28. Authorization procedure for construction of new generation plants

1. Construction of new generating capacity shall be carried out in compliance with the laws on regulation of city development activities.

2.In granting an authorization for the construction of new generation capacity the following criteria must be taken into account while developing project documentation:

1) security and reliability of the power system, installations and auxiliary equipment;

2) protection of public health and safety;3) protection of the environment;4) land use and siting;5) use of land of the relevant intended use;6) energy efficiency;7) type of the primary sources of energy (fuel);8) information regarding technical and economic and financial capabilities;9) compliance with the provisions on public service obligation and/or on the

customer protection;10) influence of generating capacity on development of electricity

production from renewable energy sources;11) Influence of generating capacity on reduction of greenhouse gas

emissions.

3. The right to construct a small distributed generation shall be received according to the procedure which, in accordance with the criteria set forth in the laws in the field of city development, take into consideration peculiarities of a small distributed generation related to a minor value of the established capacity.

4. Procedure for the receipt of the right to construct generating facilities shall be posted on the official website of the central body of the executive power which ensures development of the state policy in the electricity complex.

5.This Article shall not apply to the construction of nuclear power plants, which is carried out according to the Law of Ukraine “On the Decision-Making Procedure on Placement, Design, Construction of Nuclear Installations and Facilities Intended for Treatment of Radioactive Waste that are of National Importance” and the Law of Ukraine “On Nuclear Energy Use and Radiation Safety”.

Article 29. Tender procedure for construction of new generating capacity and implementation of the demand management measures

1. If for covering projected demand for electricity of existing generating capacity (including the construction of which for covering of projected demand is carried out on the basis of the received authorizations for construction of new generating capacity) and demand management measures are not enough for the security of supply of electricity, tender procedures for the construction of new generating capacity and implementation of measures on demand management are used.

The amount of the required generating capacity shall be determined on the basis of the indicative plan for development of generating capacities from the point of view of their sufficiency according to the results of monitoring of supply safety.

2. Decision on the tender on construction of a new generating capacity and fulfillment of the measures on management of demand shall be made by the Cabinet of Ministers of Ukraine as provided by the central body of the executive power which ensures development and implementation of the state policy in the electricity complex.

3. The conditions of tenders for construction of new generating capacity and implementation of measures of demand management should consider the requirements of environmental protection and the need to encourage innovation.

4. Information and conditions of tenders for construction of new generating capacity and implementation of demand management measures shall be published on the website of the Energy Community Secretariat not later than six (6) months prior to the end date for submission of proposals. Tender documentation should be available to any interested person.

5. Tender documentation should include details of contract terms, procedures to be followed by all tender participants, as well as an exhaustive list of criteria by which participants are selected and determination of the winner, including incentives provided for by the tender.

6. The following can be used as a motivation:o compensatory payment per unit (MW) of an additional generating

capacity;o fiscal motivation;o simplification of the procedure for allotment of a land plot/allocation of a

site;o ensuring preferential terms of lending.If a compensatory payment is used as a motivation, the Cabinet of Ministers

of Ukraine shall charge the operator of the transmission system with special obligations in order to ensure general public interests in the process of functioning of the market of electricity in terms of payment of it in favour of the investor.Compensatory payments shall be made by the operator of the transmission system after commissioning of new generating capacities during the period set forth in the terms of the tender but no more than ten years.

7. The invitation for participation in the tender for construction of new generating capacity and implementation of measures of demand management should consider electricity proposal for increasing of capacity of existing generating units, provided that additional requirements can thus be met.

8. Procedure for tenders for construction of new generating capacity and implementation of demand management measures shall be approved by the Cabinet of Ministers of Ukraine and shall include the following:

o tender initiation procedure;o tender holding procedure;o list of criteria according to which participants of the tender are selected

and a winner is determined;o requirements to a minimum amount of proposal of an additional capacity;o procedure for selection and application of motivation;o procedure for calculation of a compensatory payment;o procedure for formation of the tender committee.

9. Monitoring investor’s fulfillment of obligations on ensuring additional generating capacity established based on results of the tender shall be conducted by the central body of the executive power which implements state policy on energy supervision in the field of electricity.

SECTION IVGENERATION

Article 30. Rights and obligations of producers1. Electricity production activity is subject to licensing in accordance with

the law.

2. Electricity producers shall sell and purchase electricity under bilateral contracts, day-ahead market contracts, at the intraday market and at the balancing market in accordance with this Law.

Peculiarities of the sales and purchase of electricity of the producers and/or which volume of sales is lesser than the minimum indicators set out by the Regulator shall be established by the market rules.

3.Electricity producers shall have rights to:1) free choice of the counterparty under the bilateral contract;2) timely and full receipt of funds for electricity they have sold based on

contracts concluded at the electricity market and for ancillary services;3) non-discriminatory access to electric lines in case of compliance with

relevant terms of the electricity network codes;4) access to information on operation at the electricity market in a manner

and subject to volumes specified by market rules and other regulations ensuring functioning of the electricity market;

5) export and import the electricity;other rights prescribed by the law and contracts concluded with them at the

electricity market.

4. Electricity producers shall:1) comply with terms and conditions of commercial activity in electricity

generation in accordance with the received license and regulations ensuring functioning of the electricity market;

2) enter into agreements obligatory for conduction of activities at the electricity market, and adhere to terms of such contracts;

3) provide the settlement administrator with notification of contractual volumes of electricity sale and purchase under the concluded bilateral contract, including imported and exported electricity in a manner specified by the market rules;

4) be balancing service provider in cases specified by the market rules;5) offer all the non-used generation capacity at the balancing market in

accordance with market rules;6) offer and provide ancillary services to the transmission system operator

in cases and in accordance with the procedure set by the market rules;7) nominate balanced daily schedules of electricity for the day of supply

based on notification on contractual volumes of sale and purchase of electricity and provide them to the transmission system operator in accordance with the market rules;

8) comply with daily schedules accepted by the transmission system operator;

9) pay/be paid for electricity imbalances at prices determined in accordance with the market rules, in case of their non-compliance with daily schedules as accepted by the transmission system operator;

10) pay for the electricity purchased at the electricity market in time and in full, as well as pay for services provided at the electricity market;

11) provide information to market participants which is required for their performance of functions at the electricity market subject to volume and procedure specified provided for in the market rules, code of transmission system, code of distribution system, electricity network code, commercial metering code and other regulations ensuring functioning of the electricity market;

12) subject to the procedure set by the Regulator – make public the information at its web site on the internet about share of each energy source which they used for electricity generation, as well as impact on the environment effected by electricity generation for the past year.

5. Producers possessing and/or utilizing the energy generating equipment with the set capacity of over 200 MW (inclusive) shall store, for five years, information required for verification of operational dispatching decisions and behavior during submission of bids (propositions) at the day-ahead market, intraday market, balancing market, ancillary service market, and in the course of allocation of the cross-boarder capacity, including among other things hourly data on each power plant with respect to available generation capacities and obligatory reserves, including the break-down of such reserves by stations at moment of submission of bids/propositions and actual data.

Producers shall keep at the disposal of the Regulator, the Antimonopoly Committee and the Energy Community all data abovementioned.

6. Producers generating electricity using the hydrocarbons shall have necessary reserves of respective fuel in order to ensure secure supply of electricity.Type and volumes of reserves of fuel for some types of electric stations should be approved by the central executive body ensuring formation and implementation of the government policy in electric power sector. Such decisions should correspond to Rules of Secure Supply.

Costs of fuel reservation should be attributed to operating expenses.

SECTION VTRANSMISSION

Article 31. Transmission System Operator1. The transmission system operator shall be a business entity holding a

license for the electricity transmission License for electricity transmission shall be issued upon the final decision on certification of transmission system operator in accordance with this Law.

2. The organization legal form of the transmission system operator shall be public joint stock company. One hundred per cent (100%) of corporate rights of the transmission system operator is owned by the state and is not subject to privatization or alienation otherwise.

Article 32. Unbundling of transmission system operator1. The transmission system operator shall be organised as an independent

legal entity outside of the vertically integrated undertaking, independent of the other activities in the electricity sector namely generation, distribution, trade and supply of electricity.

Transmission system operator may not carry out the activities of generation, distribution, supply of electricity, and trading.

2. Only the owner of the transmission system may be the transmission system operator.

3. For the purposes of ensuring independence of the transmission system op-erator the same person or persons shall not be entitled in the same time:

1) to directly or indirectly exercise sole or joint control over at least one business entity (including foreign ones), which carries out activities of production (extraction) and/or supply of electricity (natural gas) and to directly or indirectly exercise sole or joint control over the transmission system operator (including to own transmission systems) or enjoy any right on the transmission system operator (including any rights to the transmission system);

2) to directly or indirectly exercise sole or joint control over a transmission system operator (including to own transmission systems) and to directly or indi-rectly exercise sole or joint control over at least one business entity (including the foreign one), which carries out activities of production (extraction) and/or supply of electricity (natural gas) or to enjoy any right with respect to at least one business entity (including the foreign ones), which carries out activities of production (ex-traction) and/or supply of electricity (natural gas);

3) to appoint at least one staff member of the transmission system operator and to directly or indirectly exercise sole or joint control over at least one business entity (including the foreign ones), which carries out activities of production and/or supply of electricity, or to enjoy any right with respect to at least one entity that carries out activities of production and/or supply of electricity; and

4) to be the staff member of transmission system operator and of at least one business entity (including the foreign ones), which carries out activities of produc-tion and/or supply of electricity.

4. Where the person or persons referred to in paragraph 3 of this Article is the State or another public body, two separate public bodies that exercise control over a transmission system operator or over a transmission network on the one hand, and over the electricity undertaking that performs any of the functions of generation or supply on the other, shall be deemed not to be the same person or persons.

5. For purposes of part 3 of this Article the “right” means:1) the right to vote in bodies of the legal entity, if the formation of such

body is prescribed by the charter or other constituent documents of the legal entity;2) the right to appoint officials of bodies of the legal entity;3) ownership of 50% or more of corporate rights of legal entity;

Article 33. Functions, rights, and obligations of transmission system operator

1. The transmission system operator shall:1) provide non-discriminatory access to the transmission system;2) ensure non-discrimination as between system users or classes of system

users3) provide services for the electricity transmission on a non-discriminatory

basis in accordance with the requirements established by this Law and the Transmission System Code, meeting the established parameters of quality of service;

4) provide services on connection to the transmission system in accordance with this Law and the Transmission System Code;

5) ensure the maintenance of transmission system, its operational ability and development to ensure long-term ability of the system to meet reasonable demand for electricity transmission under economic conditions secure, reliable and efficient transmission systems with due regard to the environment;

6) contribute to security of supply through adequate transmission capacity and system reliability

7) perform the dispatching (technological and operational) management of modes of UES of Ukraine under this Law, Transmission System Code and other legal acts that regulate functioning of the electricity market;

8) ensure operational security UES of Ukraine;9) plan modes of operation of UES of Ukraine according to market rules

and Transmission System Code;10) receive and accept the daily schedule of electricity of the market

participants;11) procure balancing services in the market-based, non-discriminatory

and transparent way and ensure functioning of the balancing market in the manner prescribed by this Law, market rules and Transmission System Code, and perform the sale and purchase of electricity imbalances;

12) analyze the system constraints and solve them by using non-discriminatory practices based on market mechanisms, according to market rules and Electricity Network Code;

13) ensure operation of ancillary services market and purchases ancillary services in order to maintain operational safety of the UES of Ukraine;

14) monitor implementation of commitments of ancillary services providers with respect to ancillary services;

15) allocate cross-boarder capacity of interconnectors according to this Law and procedure of cross-boarder capacity allocation;

16) cooperate with transmission system operators of adjacent countries, provide coordination and information exchange with them;

17) develop market rules, transmission system code, commercial metering code, congestion management rules and the procedure of cross-border interconnector capacity allocation and submit them for approval by Regulator;

18) develop operational safety standards of UES of Ukraine and submit them for approval by the central executive body that ensures the formation and implementation of state policy in the electric power sector;

19) prepare a development plan for the transmission system for the next ten years, and indicative generation development plans and submit it for approval by the Regulator;

20) control of parallel operation of the UES of Ukraine with adjacent energy systems;

21) ensure commercial metering of electricity and commercial metering data exchange under this Law, market rules and the commercial metering code, other legal acts and regulations that regulate functioning of the electricity market;

22) give market participants the information required for efficient access to the system and for performing their functions on the electricity market, to the extent and in the manner determined by market rules, Transmission System Code, commercial metering code and other regulations that regulate functioning of the electricity market;

23) analyze the electricity losses for its transmission and measures for reduction thereof;

24) perform other functions provided by this Law and other regulations that regulate functioning of the electricity market.

2. The transmission system operator is entitled to:1) give binding operational commands and orders to business entities,

electricity objects of which are connected to the UES of Ukraine, according to the Transmission System Code, market rules and operational safety standards;

2) obtain from market participants the information required to perform it’s functions, in the form and manner specified by the market rules and Transmission System Code;

3) timely and fully receive payments for transmission and dispatching (operational and technological) control services provided;

4) timely and fully receive payments for the electricity sold in the balancing market;

5) carry out the necessary inspection and/or testing of equipment of ancillary and balancing services providers in the manner prescribed by Transmission System Code.

6) other rights provided by the law.

3. Transmission system operator shall:1) comply with license conditions for conducting commercial activity in

electricity transmission in accordance with the received license and regulations that regulate functioning of the electricity market and requirements of the government agency responsible for implementation of the national policy on energy supervision in the electricity sector;

2) provide notifications to the settlements administrator on contractual volume of sale and purchase of electricity under the bilateral contracts concluded in the manner prescribed by the market rules;

3) draw up daily schedules of electricity to compensate for technological losses of electricity on its transmission network for day of supply based on notification registered by the settlements administrator with respect to contractual volume of sale and purchase of electricity under the bilateral contracts, at the day-ahead and intraday market;

4) purchase/sell imbalances of electricity at prices determined according to the market rules, in case of failure to perform daily schedules of electricity consumption to compensate for technological losses of electricity for its transmission;

5) when applying the procedures for switching/replacing the electricity supplier – provide information to the new supplier on consumers connected to the transmission system and to which the previous supplier supplied, to the extent and in the manner determined by the Regulator;

6) enter into agreements that are binding for activities in electricity market, and comply with terms of these agreements;

7) publish on its official website information in accordance with this Law, market rules, Transmission System Code, and other information provided by law;

8) keep the information necessary to analyze the quality of the electricity supply, including the information regarding the electricity supply reliability and quality of electricity, commercial quality of service, in the manner prescribed by the Regulator;

9) provide information to the regulator which is necessary for the performance of its duties and powers;

10)open special current accounts with the authorized banking institution to carry out settlements according to this Law;

11)keep separate accounts for activities of electricity transmission and dispatching (operational and technological) control.

12)keep separate records of costs and revenues for the purposes of fulfillment of special obligations to ensure general public interests in the process of the electricity market functioning;

13)provide all information necessary for implementation of inter-transmission system operator compensation mechanism to the institution responsible for management of this mechanism.

14)ensure the avoidance of conflicts of interest when exercising functions of dispatch (operational and technological) control, electric power transmission, settlements administrator and commercial metering administrator;

15)execute binding administrative documents of the central executive body that implements the state policy on energy supervision in the electricity sector;

16) suspend electricity supply to the consumer at the request of electricity supplier in the manner prescribed by the Transmission System Code;

17)restore electricity supply to the consumer at the request of electricity supplier in the manner prescribed by the Transmission System Code.

4. The transmission system operator provides services on electricity transmission and dispatching (operational and technological) control to market participants under contracts awarded on the basis of standard agreements on services of transmission and dispatching (operational and technological) control.

Typical forms of contracts on provision of services on transmission and dispatching (operational and technological) control are approved by the Regulator.The order of such contracts conclusion is determined by the Transmission System Code.

5. Payment for electricity transmission and services of dispatching is made at the tariffs determined by the Regulator in accordance with the methodology it has approved.

Tariffs for dispatching, in particular, include expenses of transmission system operator for purchasing ancillary services and settlement of system constraints within the UES of Ukraine.

Tariff for electricity transmission services shall include, in particular, as a separate component, the expenses of the transmission system operator for

compensation payments made by him in case of imposing on it of special duties to ensure general public interests in the process of the electricity market functioning.

Tariffs for electricity transmission and dispatching are published by the transmission system operator in the manner and within the time specified by regulations that ensure functioning of the electricity market.

6. The transmission system operator has no right to sale and purchase of electricity, with the exception of the purchase and sale of electricity to compensate technological electricity losses for its transmission,, balancing and settlement of electricity imbalance.

Purchases of electricity for operation of the transmission system operator, excluding electricity to compensate technological electricity losses for its transmission, balancing and imbalances settlement are performed by TSO at the retail market.

The cost of electricity purchased to compensate for technological electricity losses on its transmission network is taken into account in determining the tariffs for electricity transmission.

7. The transmission system operator shall ensure the confidentiality of information obtained from market participants which it uses to carry out its functions on the electricity market and which is a commercial secret in accordance with legal requirements.

The transmission system operator also ensures confidentiality regarding its own activities, the disclosure of which could provide commercial benefits to market participants.

Article 34. Certification of Transmission System Operator1. During the certification procedure the Regulator checks compliance of

the business entity after the submission of request for certification, with requirements on unbundling and independence of the transmission system operator under this Law.

If the request for certification is submitted by the business entity controlled by an entity (s) from the State (s) that is(are) not a party to the Energy Community, or by the state itself which is not a party to the Energy Community, the certification process is carried out in accordance with this Article with the specifications provided by Article 36 hereof.

2. The certification procedure which contains requirements for notices, documents, data and information provided by the entity submitting the request for certification, timing, amount and manner of charging for the certification, terms of validity of decision on certification, are approved by the Regulator.

3. During the certification procedure the Regulator may require all necessary information relating to the functions of the Regulator under this Article, from the

business entity submitting a request for certification, as well as entities that carry out activities of production and/or supply of electricity. The regulator is required to maintain the confidentiality of the information received.

4. Within four months from the date of receipt of the request for certification in accordance with the procedure of certification the Regulator takes a preliminary decision on certification or denial of certification.

5. The Regulator shall immediately provide the Secretariat of the Energy Community with:

1) information on receipt of the request for certification; and2) Regulator’s preliminary decision on certification or denial of certification

with all the information that is relevant to the decision.

6. The Regulator has two months from receipt of the conclusion of Energy Community Secretariat for preliminary certification decision to consider such conclusion and make final decision on certification or denial of certification. In the absence of the conclusion of the Energy Community Secretariat within four months the Regulator makes final decision on certification.

7. If the Regulator makes final decision on certification or denial of certification, which takes into account the conclusion of the Energy Community Secretariat for preliminary certification decision or denial of certification, such final decision is subject to the official publication by posting on the website of the Regulator together with the conclusion of the Energy Community Secretariat.

If the Regulator makes final decision on certification or denial of certification, which does not take into account the conclusion of the Energy Community Secretariat for preliminary certification decision or denial of certification, such final decision is subject to the official publication by posting on the website of the Regulator together with the conclusion of the Energy Community Secretariat as well as the Regulator’s justification of causes of neglect of such conclusion.

Article 35. Monitoring of the unbundling of the transmission system operator

1. The Regulator shall monitor the continuing compliance of the designated transmission system operator with the requirements for its independence and un-bundling stipulated in this Law.

2. The Regulator initiates verification of the transmission system operator’s adherence to requirements for the unbundling and independence of the transmission system operator under this Law in the following cases:

1) receipt of notice from the transmission system operator pursuant to paragraph 3 of this Article;

2) the reasonable assumption that the planned change of control or rights of other persons over the transmission system operator can lead or has led to a breach of requirements for the unbundling and independence of the transmission system operator under this Law;

3) receipt of reasonable request from the Energy Community Secretariat.

3. The transmission system operator shall notify the Regulator of any planned measures that might lead to a breach of requirements for the unbundling and independence of the transmission system operator under this Law.

4. The procedure of verification of the transmission system operator’s adherence to requirements for the unbundling and independence of the transmission system operator under this Law shall be carried out in accordance with Article 32 hereof with the specifications provided by this Article.

5. The Regulator checks the compliance of the transmission system operator with requirements for the unbundling and independence of the transmission system operator under this Law, within four months from the date:

1) of the notification by the transmission system operator – in the case referred to in paragraph 1) of part 2 of this Article;

2) notice to the transmission system operator to start verification initiated by the Regulator - in the case referred to in paragraph 2) of part 2 of this Article;

3) receipt of relevant request from the Energy Community Secretariat – in the case referred to in paragraph 3) of part 2 of this Article.

6. The Regulator notifies the transmission system operator of violations of requirements for the unbundling and independence of the transmission system operator under this Law.

Transmission system operator is obliged to eliminate detected violations during the period specified by the Regulator which may not exceed two months, and to provide documents, data and information on the elimination of such violations.

7. If the transmission system operator has not eliminated the violation found by the Regulator with respect to requirements for unbundling and independence of the transmission system operator under this Law, the Regulator decides on the non-compliance of transmission system operator with requirements for the unbundling and independence under this Law. In this case, the Regulator decides to revoke the license to transmission or to apply financial sanctions (fines) as stipulated by the law.

In case of revocation of the license for electricity transmission the business entity is not exempt from the obligation to carry out full and proper quality functions and responsibilities of transmission system operator till the moment of obtaining a license by the new transmission system operator.

8. The Regulator shall immediately inform the Energy Community Secretariat about any circumstances that may lead to the transition of control over the transmission system operator to the person (s) from the State (s) that is not a party to the Energy Community, or the state itself which is not a party to the Energy Community.

Transmission system operator shall notify the Regulator of any circumstances which may lead to transition of control of the transmission system operator to the person (s) from the State (s) which is not a party to the Energy Community, or to the State (s) which is not a party to the Energy Community

Article 36. Certification of business entity controlled by the person(s) from the state(s) which is not party to the Energy Community, or by the state itself which is not the party to Energy Community

1. If certification is requested by the business entity controlled by the per-son(s) from the state(s) which is not party to the Energy Community, or by the state itself which is not party to the Energy Community, the Regulator shall notify the Energy Community Secretariat about that.

2. The Regulator makes a preliminary decision to refuse certification of the business entity controlled by persons (s) from the state(s) which is not party to the Energy Community, or by the state itself which is not party to the Energy Community in the following cases:

1) the entity does not fulfill the requirements for unbundling and independence of the transmission system operator as stipulated in this Law;

2) the decision on certification of such entity would cause harm to the security of electricity supply of Ukraine or Energy Community taking into account:

a) the rights and obligations of the Energy Community in relation to the state which is not a party to the Energy Community on the basis of international law, including international treaties on security of electricity supply to which the Energy Community and the concerned State are parties;

b) the rights and obligations of Ukraine with respect to the State which is not a party to the Energy Community on the basis of international treaties concluded with the State on the condition that such rights and obligations do not contradict Treaty establishing the Energy Community;

c) the rights and obligations assumed by Ukraine under the Association Agreement between Ukraine, on the one hand, and the European Union, the European Atomic Energy Community and their Member States, on the other hand; and

d) other facts and circumstances relating to such entity and/or States that are not party to the Energy Community and relevant for the determination of the compliance with the requirements for unbundling and independence of the transmission system operator under this Law.

3. The Regulator may request a central executive authority, which ensures development and implementation of state policy in the electric power sector, and other government entities for conclusions on the issues listed in paragraph 2 of this Article. The Regulator considers these conclusions in the decision on certification or refusal of certification.

4. Before taking a decision on the certification the Regulator should obtain the opoinion of the Energy Community Secretariat on:

1) the entity’s compliance with requirements of the independence;2) absence of risk to the security of electricity supply with respect to the

Energy Community.

5 The final decision on certification of the entity controlled by person(s) from the state(s) which is not party to the Energy Community, or the state itself , which is not party to the Energy Community, shall be published in the order provided by Article 34 hereof.

6. The Regulator makes a final decision to refuse certification to the entity controlled by person(s) from the state(s) which is not party to the Energy Community, or the state itself , which is not party to the Energy Community without the conclusion of the Energy Community Secretariat when the decision on certification of such entity poses a threat to the security of electricity supply in Ukraine or is a threat to national security of Ukraine.

Article 37. Development of transmission system1. Each year, by May 1st, the transmission system operator, in accordance

with the procedure approved by the Regulator, develops and submits for the Regulator’s approval the ten-year development plan for the transmission system. Development plan for the transmission system for the next ten years should ensure the transmission system’s meeting needs of electricity market and the interests of security of electricity supply.

2. The ten-year development plan for the transmission system shall contain, in particular:(1) measures to ensure security of supply of electricity;(2) the main infrastructure the transmission system, the construction or

reconstruction of which is appropriate for the next ten years;(3) confirmed investments and list of new investments to be made over the

next three years;(4) timing of all investment projects.

3. Transmission system development plan for the next ten years is developed based on existing and forecast indicators of demand and supply of electricity made on the basis of reasonable assumptions of transmission system operator for the

development of generation, consumption of electricity (including the volume of cross-border commercial exchange) future development of electricity production from renewable sources and development plans of interconnected electricity transmission systems, distribution systems.

4. In preparation of development plan for the transmission system for the next ten years the transmission operator shall ensure public discussions and consultations with market participants concerned.

5. The Regulator shall hold public consultations with existing and potential system consumers on development plan for the transmission system for the next ten years in a transparent and non-discriminatory way.The Regulator shall post report on its web site on results of consultations where, among other things, it specifies the investment needs.

6. The regulator shall examine compliance of measures prescribed by the development plan of UES of Ukraine for the next ten years with requirements of this Law.

7. The Regulator shall monitor and evaluate the implementation of the ten-year development plan for the UES of Ukraine.

Article 38. General principles of congestion management1. When there are congestions, access to cross-boarder capacity is granted

based on the market-based principle where the access to the capacity is given to market participants that offer the highest price. In the absence of capacity constraints, the transmission system operator takes all commercial exchanges to export or import electricity in full and provides access to interconnectors free of charge.

2. Where scheduled commercial transactions are not compatible with secure network operation, the transmission system operators shall alleviate congestion in compliance with the requirements of network operational security while endeavouring to ensure that any associated costs remain at an economically efficient level. Curative re-dispatching or counter trading shall be envisaged in case lower cost measures cannot be applied.

3. If structural congestion appears, appropriate pre-determined and pre-approved congestion-management methods shall be implemented by the transmission system operator.

4. Congestion shall be addressed with non-discriminatory market based solutions which give efficient economic signals to the market participants and transmission system operators and facilitate cross-border trade.

5. Transmission system operators shall develop specific rules for congestion management and cross-boarder interconnector capacity allocation and submit them for the Regulator’s approval. Such rules should also contain provisions on use of revenue from the capacity allocation.

6. The congestion-management methods shall ensure that the physical power flows associated with all allocated transmission capacity comply with network security standards.

7. No transaction-based distinction shall be applied in congestion management.

8. The transmission system operator may deny access of the market participant to cross-boarder capacity in simultaneous occurrence of the following conditions:

1) the incremental physical power flows resulting from the acceptance of that request imply that secure operation is violated;

2)the price offered by the market participant for access to the cross-boarder capacity is lower than all other prices offered by market participants, to which access to the cross-border capacity shall be granted.

9. Curtailment shall be used only in emergency situations where the transmission system operator must act immediately and no re-dispatch or countertrade is possible. Such curtailments should be of non-discriminatory nature.

10. Except in cases of events of the force-majeure, market participants who have been allocated capacity shall be compensated for any curtailment by the transmission system operator.

11. The maximum cross-boarder capacity of the interconnectors shall be made available to market participants, complying with safety standards of secure network operation.

12. The transmission system operator shall not limit cross-boarder capacity to address constraints in the UES of Ukraine, except for operational security reasons. If such a situation occurs, this shall be described and transparently presented by the TSOs to all system users.

13. When balancing the UES of Ukraine through operational measures and re-dispatching, the transmission system operator shall take into account the effect of those measures on interconnected energy systems.

Article 39. Allocation of available transfer capacities at interconnections

1. Available cross-boarder interconnector capacity shall be allocated at the explicit and/or implicit auctions. Both methods may coexist on the same interconnection.

2. The congestion-management mechanisms shall allow for both long and short-term transmission capacity allocation.

3. Capacity allocation shall not discriminate between market participants that wish to acquire cross-border transmission capacity rights. All market participants shall be permitted to participate in the allocation process.

4. Other than in the case of new interconnectors which benefit from an exemption under Article 24 of this Law, establishing reserve prices in capacity-allocation procedure shall not be allowed

5. Each capacity-allocation procedure shall allocate a fraction of the net transmission capacity prescribed for such auction plus any remaining capacity not previously allocated and any capacity released by capacity holders from previous allocations.

6. The transmission system operator shall determine the amount of firmed capacity, taking into account the obligations and rights of the transmission system operator and the obligations and rights of operator of the interconnected energy system and electricity market participants. A reasonable fraction of capacity may be offered to the market at a reduced degree of firmness, but the exact conditions for cross-border transfer of electricity, at all times, be made known to market participants.

7. At capacity allocations for the long-term and medium-term periods only guaranteed transmission capacity is allocated.

Market participants who have access to the transmission capacity in the long and medium term, have the right to transfer or sell to other electricity market participants access to capacity by notifying the transmission system operator in due course.

At the time of notification the use of the purchased capacity on a long-term and the medium term should be covered by the principle of "use or sell it".Where the transmission system operator refuses any secondary transaction, this must be clearly and transparently communicated and explained to all market participants and notified to the regulatory authority.

Before each cross-boarder capacity allocation the transmission system operator shall make public the volume of capacity to be allocated, and time periods during which the capacity will be reduced or not available.

8. Market participants shall firmly nominate to the transmission system operator on use of the capacity they have acquired by a defined deadline for each timeframe.

Having regard to the requirements for operational safety, notify of use of acquired capacity must be given prior to trading at the day-ahead market and intraday market and to the publication of the volume of capacity that will be allocated for the next day and in the day of delivery, so that transmission system operator is able to reassign unused capacity for reallocation in the next relevant timeframe-including intraday session.

9. Intra-day allocations of available transmission capacity for delivery day shall take place one day prior to the delivery day and on the delivery day after acceptance of the daily schedules for the delivery day.

10. The transmission system operator shall define an appropriate structure for the allocation of capacity between different timeframes. This may include an option for reserving a minimum percentage of interconnection capacity for day-ahead or intra-daily allocation. Such an allocation structure shall be subject to review by the Regulator. In drawing up it’s proposals, the transmission system operator shall take into account:

1) the characteristics of the markets;2) the operational conditions, the level of harmonisation of the percentages

and timeframes adopted for the different capacity allocation mechanisms in place.

11. In order to avoid abuse of monopoly (dominant) position of a market participant in terms of access to capacity the Antimonopoly Committee of Ukraine shall have the right to apply a common (for all market participants) or individual (for a particular market participant) restrictions on access to capacity.

Article 40. Information on cross-boarder capacities1. Transmission system operators shall publish1) the safety, operational and cross-border operation planning requirements

applied. The information published shall include a general algorithm for the calculation of the total transfer capacity and the transmission reliability margin based upon the electrical and physical features of the network. Such algorithm shall be subject to the approval of the Regulator;

2) аll relevant data related to network availability, network access and network use, including a report on where and why congestion exists, the methods applied for managing the congestion and the plans for its future elimination;

3) relevant data concerning cross-border trade (export and import) on the basis of the best possible forecast. The manner in which such information is published shall be subject to approval by the Regulator. The transmission system operator shall publish at least:

o annually: information on the long-term evolution of the transmission infrastructure and its impact on cross-border transmission capacity

o monthly: forecasts of the transmission capacity available to the market for the following month and the following twelve months, taking into account all relevant information available to the transmission system operator;

o weekly: forecasts of the transmission capacity available to the market for the following week, taking into account all relevant information available to the transmission system operator;

o daily: available day-ahead and intra-day transmission capacity available to the market for each market time unit, taking into account all day-ahead nominations, day-ahead generation schedules;

o information on the capacity already allocated, by the settlement period at the electricity market and relevant conditions of use of the capacity so as to identify any available capacity;

o allocated capacity after each allocation, as well as its prices;o total capacity used per each settlement period at the electricity market

immediately after receipt of notice on use thereof;o as closely as possible to real time: aggregated realised commercial and

physical flows, by market time unit, including a description of the effects of any corrective actions taken by the transmission system operator (such as curtailment) for solving network or system problems.

o information on planned and actual outages;o a quantitative indication of the expected reliability of the available

capacity.o unplanned and/or emergency outages of generation units larger than 100

MW.4) close to real time aggregated commercial and physical flows, including

the description of corrective actions taken for solving network or system problems, and ex ante and ex post information on outages;

relevant data on aggregated forecast and actual demand, on availability and actual use of generation and load assets, on availability and use of the networks and interconnections, and on balancing power and reserve capacity.

relevant information necessary for the cross-border balancing market;the interconnection capacity congestion management and capacity-allocation procedures applied by the transmission system operator;

2. All relevant information shall be available for the electricity market in due time for the negotiation of all agreements.

3. When forecasts are published, the ex post realised values for the forecast information shall be published by the transmission system operator.

4. All information published by the transmission system operator shall be made freely available. All the data should contain information for the past two years.

Article 41. Exchange of information on cross-boarder capacities1. Transmission system operator shall put in place coordination and

information exchange mechanisms to ensure the security of the networks in the context of congestion management.

2. The transmission system operator shall exchange regularly a set of sufficiently accurate network and load flow data with operators of interconnected energy systems. Subject to the relevant request these data shall be submitted to the Regulator.

3. When preparing day-ahead network operation, the transmission system operator shall exchange information with neighbouring energy system operator, including their forecast network topology, the availability and forecasted capacities of generation units, and load flows in order to optimise the use of network

4. Electricity market participants shall provide the transmission system operator with data required for exchange of information on the cross-boarder capacity, as required by this Law, market rules and other by-laws that ensure operation of the electricity market.

Article 42. Cross-border coordination of capacity allocation1. Cross-boarder interconnectors’ capacity allocation shall be coordinated

and implemented using common allocation procedures by the transmission system operators involved. In cases where commercial exchanges between two countries (energy systems) are expected to affect physical flow conditions in any third-country (energy system), congestion-management methods shall be coordinated between all the transmission system operators so affected.

2. A common coordinated congestion management method and procedure for the allocation of cross-border capacity with member states of the Energy Community shall be applied.

3. Coordination of allocation of the transmission capacity shall include, in particular:

1) the use of a common transmission model dealing with interdependent physical flows and having regard to discrepancies between physical and commercial flows;

2) allocation and nomination of cross-boarder capacity;3) identical obligations of market participants to provide information on

their intended use of the capacity,(for explicit auctions);

4) identical timeframes for which the capacity is allocated, as well as timeframes of the allocation;

5) identical structure of allocation of the cross-boarder capacity for different time periods and characteristics of the transmission capacity;

6) consistent contractual terms and conditions with market participants;7) verification of flows to comply with the network security requirements

for operational planning and for real-time operation;8) settlement procedure resulting from congestion management;9) procedure of information exchange between the transmission system

operators.

Article 43. Use of congestion income1. Any revenues resulting from the cross-boarder capacity allocation shall be

used for the following purposes:1) guaranteeing the actual availability of the allocated capacity; 2) maintaining and increasing cross-boarder capacities through network

investments, in particular in new interconnectors.

2. If the revenues can not be efficiently used for the purposes specified in the first paragraph of this article, they are transferred to a separate current account of the transmission system operator as long as they can be effectively used for the purposes specified in the first paragraph of this article.

3. The transmission system operator shall agree with the concerned operators of interconnected energy systems the procedure of distribution of income from the congestion management, which is subject to approval of Regulator.

4. Transmission system operators shall establish beforehand the use they will make of any congestion income they may obtain and publish report on the actual use of that income.

5. Regulatory authority shall verify that the use is in compliance with purposes specified in the first paragraph of this article and that total amount of congestion income is devoted to at least one of those purposes. On an annual basis, and by the 31st of July each year, the Regulator shall publish a report on the amount of revenue collected for the period of twelve (12) months up to the 30 th of June of the same year and the use made of the revenues in question, together with verification that that use complies with this Law.

Article 44. Dispatching1. Electricity system of Ukraine has a unified dispatch system of operational

and technological control of generation, transmission, distribution and consumption of electricity. Functions of dispatching of the UES of Ukraine and the

parallel work with energy systems of other countries are performed by the transmission system operator.

The dispatching applies to business entities, power facilities of which are connected to the UES of Ukraine.

2. Dispatching is based on principles of objectivity, transparency and non-discrimination, and should ensure the proper functioning of electricity market.

3. Dispatching of installed generating capacities and use of cross-border interconnectors should be in accordance with the Transmission System Code, market rules and other regulations based on economic criteria and taking into account the technical constraints of the system

4. When dispatching installed generation capacities, the transmission system operator must give preference to producers that use renewable energy sources, subject to operational safety. Transmission system operator must take appropriate technical and market measures aimed at minimizing the limitations of power generation from renewable energy sources.In the case of restrictions of electricity generation from renewable energy sources in order to ensure operational safety and security of electricity supply, the transmission system operator or distribution system operator should provide the Regulator with information on such restrictions specifying the measures they plan to take to prevent such restrictions.

5. For reasons of security of supply, the central executive body responsible for formation and implementation of state policy in electricity sector may decide that priority be given to the dispatch of generating installations using energy fuel sources produced in Ukraine, to an extent not exceeding in any calendar year 15% of the overall primary energy necessary to produce the electricity consumed in the country.

6. All operational commands and orders transmission system operator, are subject to indisputable execution by all entities, objects of which are connected to the UES of Ukraine. Interference with the dispatching of the UES of Ukraine by state bodies, political parties and other civil society organizations is prohibited.

7. Business entities, power facilities of which are connected to the UES of Ukraine are required to submit information to the transmission system operator, as provided for by the market rules, Transmission System Code and other regulations.

SECTION VIDISTRIBUTION

Article 45. Distribution of electricity

1. Electricity distribution shall be carried out by distribution system operator. Activity on electricity distribution shall be licensed according to the legislation.

2. The distributions system operator shall provide services on electricity distribution on non-discrimination basis according to this Law, Distribution System Code and other regulations, which regulate functioning of electricity market.

3. The electricity distribution system shall be developed on cost-effective principles, in compliance with urban planning, the right of ownership, environmental protection, energy efficiency, protection of people’s lives and health, and the rational use of energy, according to the technical and safety rules included in the technical regulations in force.

Article 46. Functions, rights and obligations of the distribution system operator

1. The distribution system operator shall:1) ensure non-discriminatory access to the distribution system;2) provide services on electricity distribution following the determined

services quality standards;3) provide services on connection to the distribution system according to the

Distribution System Code;4) perform planning of development of distribution system in consideration

of energy efficiency, demand management and possibilities of use of distributed generation;

5) ensure long-term capability of distribution systems to satisfy justified demand for distribution using perspective planning of measures and investments for ensuring sufficient capacity of the distribution systems and reliability of its functioning;

6) ensure safe, reliable and efficient functioning of distribution systems considering measures of environment protection;

7) provide system users with information necessary for the efficient access and use of distribution system;

8) ensure commercial metering according to this Law, market rules and commercial metering code, other regulations, which regulate functioning of the electricity market;

9) develops typical schedules (profiles) of loads for separate categories of consumers according to the commercial metering code;

10) perform other functions provided for by the regulations, which ensure functioning of the electricity market.

2. The distribution system operator shall have the right to: 1) timely and in full receive payment for provided distribution services;

2) receive from market participants information necessary for performance of its functions, in the form and order determined by the market rules and Distribution System Code;

3) and other rights provided for by the legislation and in the agreements concluded by them on the electricity markets.

3. The distribution system operator shall be obliged to: 1) comply with license conditions for conducting commercial activity in

electricity distribution in accordance with the received license and regulations ensuring functioning of the electricity market and requirements of the government agency responsible for implementation of the national policy on energy supervision in the electricity sector;

2) provide the settlements administrator with notification of contractual volumes of electricity sale and purchase according to concluded bilateral contracts according to the procedure determined by the market rules;

3) make daily schedules on electricity to compensate losses of electricity in its network on its distribution for the day and provide them to the TSO according to the market rules;

4) pay/be paid electricity imbalances at prices determined according to the market rules in case of their failure to fulfill accepted by the TSO of daily schedules on electricity to compensate electricity losses to its distribution;

5) using procedures of swithing/replacement of electricity supplier provide the new electricity supplier with information regarding consumers assigned to its distribution system and to which sale was made by previous electricity supplier, in volumes and according to the procedure determined by the Regulator;

6) store information necessary for analysis of quality of services on electricity supply including information regarding reliability of electricity supply, quality of electrical energy, commercial quality of provision of services according to the procedure determined by the Regulator;

7) disclose on its official web-site information regarding the terms and conditions for provision of services on electricity distribution and services on connection to the distribution system, services quality standards and other information according to the legislation;

8) provide electricity market participants with information necessary for fulfillment by them of functions on the market in the volumes and according to the procedure determined by the market rules, transmission system code, distribution system code, commercial metering code and other regulations, which ensure functioning on the electricity market,;

9) provide to the Regulator and the government agency responsible for implementation of the national policy on energy supervision in the electricity sector with information necessary for fulfillment by it of duties and powers determined by the legislation;

10) conclude agreements, which are obligatory for performance of activity on electricity market and fulfill the terms and conditions of these agreements;

11) perform separate accounting of expenses and income from performance of activity on distribution of electricity from any other activity.

12) execute binding administrative documents of the central executive body that implements the state policy on energy supervision in the electricity sector;

13) suspend electricity supply to the consumer at the request of electricity supplier in the manner prescribed by the Distribution System Code.

14) restore electricity supply to the consumer at the request of electricity supplier in the manner prescribed by the Distribution System Code.

4. Payment for distribution services shall be carried out at tariffs, which are regulated by the Regulator, according to the methodology approved by it. Tariffs on services on electricity distribution shall be published by the distribution system operators according to the procedure, in the manner and within term determined by the regulations, which ensure functioning of the electricity market.

5. Relations concerning technical support of electricity distribution shall be settled by the distribution system operator with the consumer pursuant to the Distribution System Code on a contractual basis.

6. The distribution system operator shall have no right to carry out activity on generation, or sale and purchase of electricity on the electricity market, except for sale and purchase of electricity to compensate electricity losses to its distribution and settlement of electricity imbalances.

Cost of electricity acquired to compensate technological electricity losses to its distribution and settlement of electricity imbalances, shall be considered during determination of tariffs for distribution of electricity according to the methodology of calculation of distribution tariffs.

Purchase of electricity for ensuring activity of the distribution system operator except for volumes of technological electricity losses to its distribution and settlement of electricity imbalances, shall be performed by it as a consumer on the retail market.

7. The distribution system operator shall ensure confidentiality of information received from electricity market participants used by it for performance of its functions on the market and shall constitute commercial secret according to the requirements of the legislation.

The distribution system operator shall also ensure confidentiality of information regarding its own activity, disclose of which may provide commercial benefits to the electricity market participants.

Article 48. Unbundling and independence of the distribution system operator

1. The distribution system operator is prohibited to perform other types of economic activity not related to distribution , except in cases defined in paragraph 10

2. The distribution system operator is prohibited to have on ownership right or control shares (share in the share capital) of the business entity, which performs activity on production and/or supply, or transmission of electricity and entities, which carry out activity on production and/or supply or transmission of electricity is prohibited to have as ownership or control shares (shares in the share capital) of the distribution system operator.

3. The distribution system operator must be independent from entities, which carry out other types of activity not related to distribution and from vertically integrated entity, to which it belongs, during taking decisions regarding:

1) management of assets necessary to ensure efficiency of activity on electricity distribution including those necessary for operation, maintenance and development of distribution system;

2) connection to the distribution system; 3) provision of services on electricity distribution.

Independence during taking decisions is ensured as follows:1) officials of the executive body and managers of all levels of management

of the distributions system operator cannot hold positions in the management bodies of business entities, which carry out other types of activities, not related to distribution and vertically integrated entity;

2) executive body of the distribution system operator, its members and managers of all levels of management do not have a right to receive material or other benefit from business entities, which carry out other types of activities not related to distribution and vertically integrated entity;

3) officials responsible for management of the distribution system operator, have authorities regarding taking the managerial decisions related to operational activity of the distribution system operator, operation, maintenance and development of the distribution system of the distribution system operator, as well as staff resources irrespective of economic entities, which carry out other types of activities not related to distribution and vertically integrated entity.

4. Vertically integrated entity should ensure independence of the distribution system operator, according to the requirements of this Law and shall have no right to interfere with:

1) activity of the distribution system operator on development of the distribution system provided that such activity is carried out with the annual financial plan of the distribution system operator approved by the vertically integrated entity;

2) operational activity of the distribution system operator;

3) activity of the distribution system operator on maintenance and operation of the distribution system;

4) activity of the distribution system operator on human resources.

5. Vertically integrated entity may take a decision on approval of the annual financial plan and determine general limitations regarding levels of debt liabilities of the distribution system operator.

6. Officials of the vertically integrated entity and business entities, which carry out other types of activities not related to distribution, are prohibited to hold positions in the executive body of the distribution system operator as well as managerial positions of the distribution system operator.

7. The distribution system operator during performance of its functions according to the legislation is prohibited to create any benefits for the business entities, which carry out activity on supply and/or production of electricity as part of vertically integrated entity, in comparison to other business entities, which carry out activity on supply and/or production of electricity.

8. In case of purchase by the distribution system operator of goods and services from the vertically integrated entity or business entities, which are part or related to of such vertically integrated entity and/or provision by the distribution system operator of goods and services to the vertically integrated business entity or business entities, which are part of or related to such vertically integrated entity and/or joint use of goods and services by the distribution system operator and vertically integrated entity or business entities, which are part of such vertically integrated entity, such purchasing and/or provision and/or use should be carried out based on the relevant agreements in compliance with the requirements regarding:

1) absence of conflict of interests;2) no interference with competitiveness;3) prevention of cross-subsidization between the distribution system

operator and vertically integrated entity (or entities that are part of vertically integrated entity).

Terms and conditions of such agreements, including regarding the price (value) of goods and services should be available to the Regulator.

9. The distribution system operator, which is a part of a vertically integrated entity, during performance of its activities and during use of its name and brand (logo) shall not make an impression that it is associated with electricity supplier as part of this vertically integrated entity.

10.Vertically integrated enterprises, distribution system operators and electricity suppliers should ensure continuity of the distribution and supply of electricity.

Vertically integrated enterprises should give the distribution system operator

sufficient proprietary, technical, financial, information and human resources for its activities in the distribution of electricity as required by law.

During separation the distribution system operator is acknowledged as the assignee of the rights and duties:

1) to recover debts from consumers for delivered electricity, which occurred as of the time of separation of activities, under contracts on electricity supply and electricity utilization.

2) under concluded contracts on connection to electricity networks;3) under concluded contracts of shared technological electric networks;4) under contracts with wholesale supplier of electricity;5) under commitments confirmed by court rulings.

11. Where the distribution system operator has less than 100000 connected consumers and its end average volume of distribution of electricity does not exceed 20 mln. kWh, the Regulator may decide on the release of such distribution system operator from the requirements of this Article.

Article 49. Compliance Program and compliance officer1. The distribution system operator, which is a part of vertically integrated

entity shall develop and implement a compliance program and shall appoint, with approval by the Regulator, compliance officer.

2. The compliance program should include measures that will be mandatory for staff of the distribution system operator in carrying out their functions and relationships with electricity market participants. Such measures should relate in particular to ensuring of non-discriminatory, order of handling confidential information and provide responsibility of the staff for non-compliance.

3. Compliance program shall be reviewed and approved by regulator and made publicly available in the manner defined by the Regulator, according to the procedure defined in Article … (reference to NRA authority)

4. A candidate for the position of the compliance officer should, during the last three years prior to his/her appointment, not take positions in vertically integrated entity and/or entities that are part of the vertically integrated entity (except for distribution system operator), have a direct or indirect interest in or relationship with the vertically integrated entity and /or entities that are part of vertically integrated entity (except for distribution system operator), and/or controlling shareholders of vertically integrated entity and /or entities that are part of the vertically integrated entity (except for distribution system operator).

Information on the person for the position of the compliance officer and proposals to the terms and conditions of the employment contract shall be provided to the Regulator by the distribution system operator.

Terms and conditions of employment contract of the compliance officer shall ensure his/her independence in exercising his/her functions and powers from

the distribution system operator, the vertically integrated entity and/or entities that are part of vertically integrated entity, and include, in particular, the term of the employment contract, rights, duties and responsibilities of the parties, salary and organization of work, an exhaustive list of conditions (grounds) for termination of the contract.

The Regulator has a right not to agree with the proposal of the distribution system operator for the person nominated for position of a compliance officer and conditions of the employment contract in the event of non-compliance of such person with the requirements, and if the proposed terms and conditions of the employment contract does not provide for the requirements of independence, rights and powers, determined by this Law.

5. In order to ensure the independence of the compliance officer, such person shall not:

1) hold positions in vertically integrated entity and/or entities that are part of the vertically integrated entity (except for distribution system operator), have a direct or indirect interest in or relationship with the vertically integrated entity and/or entities that are part of the vertically integrated entity and/or controlling shareholders of vertically integrated entity and/or entities that are part of the vertically integrated entity;

2) obtain, directly or indirectly, a financial remuneration from the vertically integrated entity and/or entities that are part of the vertically integrated entity other than wages, which should not depend on the results of activity of the vertically integrated entity and/or entities that are part of the vertically integrated entity.

6. Within four years after termination of authorities of the compliance officer, such person is forbidden to take positions in vertically integrated entity, have a direct or indirect interest in or relationship with the vertically integrated entity and/or entities that are part of the vertically integrated entity and/or controlling shareholders of vertically integrated entity and/or entities that are part of the vertically integrated entity.

7. The executive body of the distribution system operator, after approval of the Regulator may discharge the compliance officer in case he violates the terms and conditions of the employment contract and the provisions of this Law. The executive body of the distribution system operator shall, at the request of Regulator, discharge the compliance officer in case of violation of the terms and conditions of the employment contract and the provisions of this Law.

8. The compliance officer shall have the right to:1) access to the premises of the distribution system operator without prior

notice;2) access to all data and information of the distribution system operator, of

vertically integrated entity and/or entities that are part of or related to vertically integrated entity, required to carry out its tasks;

3) attend all meetings of the management of the distribution system operator, including on access to the distribution system, its operation, maintenance and development, sale and purchase of electric power to compensate technological electricity losses to its distribution;

4) attend all meetings, including executive board, supervisory board and general meeting of shareholders of the distribution system operator;

5) apply to the Regulator with a complaint on violation of the terms and conditions of employment, particularly regarding his/her early dismissal as a compliance officer;

6) regularly provide information to the executive body of the distribution system operator regarding implementation of the compliance program.

The compliance officer shall ensure the confidentiality of information to which he has access under the terms of the employment contract.

9. The tasks of the compliance officer shall include:1) monitoring of implementation of compliance program;2) submission of the report to the Regulator on violation of compliance

program, any commercial and financial relations arising between the vertically integrated entity and distribution system operator, proposed by the executive body of the distribution system operator to the Supervisory Board decisions on investment in the distribution system and blocking of such decisions by vertically integrated entity at a general meeting or by voting of the members of the Supervisory Board;

3) regular provision of information to the Regulator regarding implementation of compliance program;

4) development of the annual report of the implementation of compliance program and its provision to the Regulator;

5) provision of an annual report on implementation of the compliance program to the executive body of the distribution system operator and recommendations for improvement of the program and its implementation;

10.Annual Report on the implementation of the compliance program shall be made public on the official website of the distribution system operator.The procedure of the development, presentation and disclosure of compliance program and its implementation report shall be approved by the Regulator.

Article 50. Closed distribution system1. Electrical networks that distribute electricity in a limited area of industrial

facilities, commercial institution, public service institution, housing complexes, etc. may be classified by the Regulator as closed distribution system if:

1) these distribution networks do not carry out distribution for household consumers, except for small number of consumers who are in employment or other legal relationship with the owner of the system;

2) the production processes of users of such system are interrelated for technological reasons or safety reasons;

3) these networks carry out distribution mainly for the network owner or to legal entities related to it by control relationships.

2. Fees for services on distribution by closed distribution systems shall be determined by an agreement. At the request of a user of the closed distribution system the Regulator may approve the tariff for the distribution of a closed distribution system calculated according to the method of calculating tariffs for distribution.

3. Operators of closed distribution systems (owners or authorized persons) provide non-discriminatory access to their distribution systems according to this Law, Distrubution System Code and other regulatory and legal acts.

4. Operators of closed distribution systems are responsible for safe and reliable functioning of their systems.

Article 51. Distribution network development1. The distribution system operators shall develop and submit to the

Regulator for approval the network investment plans for the next five (5) calendar years, taking into account the transmission system development plan for the next ten years.

2. When planning the development of the distribution network, distributions system operator shall consider the necessity of construction and/or reconstruction of the distribution system for implementation of energy efficiency/demand-side management measures and/or development of distributed generation. The distribution system development plans shall include the financial means, taking also into account relevant plans and planning maps of the areas at the national, regional and local levels as well as environmental standards and regulations.

3. The distribution system operators shall develop investment program based on the distribution system development plan and shall submit it to the Regulator together with calculation of tariffs for the services on distribution.

4. The procedure for the development and submission for approval of plans of development of distribution systems and investment programs shall be approved by the Regulator.

SECTION VIIELECTRICITY MARKET OPERATOR

Article 52. Electricity Market operator

1. The market operator shall ensure operations of the day-ahead and intraday electricity market and carry out organisation of electricity purchase and sale for the day of delivery based on license received.

2. The market operator shall establish organizational, technological, informational, legal and other conditions for carrying out regular trading for the day-ahead in accordance with the day-ahead market and intraday market rules, conclusion and fulfillment of contracts and settlements, including clearing.

3. Market operator shall:1) ensure equal conditions for participation in the day-ahead and intraday

market;2) register the day-ahead and intraday market participants, and maintains the

relevant registry and make it public;3) ensure compliance by day-ahead and intraday market participants with

the requirements for provision of guarantees concerning fulfilment of financial obligations in accordance with the day-ahead and intraday market rules;

4) based on the results of the day-ahead and intraday trading, determine the amounts of electricity purchase and sale of the day-ahead and intraday market participants and the prices for electricity, and determine financial obligations of day-ahead and intraday market participants;

5) make settlements for the purchased and sold electricity, including clearing;

6) provide the settlements administrator with the notifications on contractual volumes of electricity sold and purchased in the day-ahead and intraday market for each settlement period;

7) publish information about trading in the day-ahead and intraday market, including about the prices and volumes of the electricity purchase and sale and other information to the extent and within the terms defined by the ahead and intraday market rules;

8) provide market participants with the information needed for them to perform their functions in the electricity market within the scope and in the manner determined by the day-ahead and intraday market rules and other regulations governing operation of the electricity market;

9) provide the Regulator with the information necessary for performance of functions and authorities determined by the law;

10)ensure confidentiality of the information received from market participants that is used for performance of its functions in the electricity market and which constitutes commercial secret according to the legal requirements as well as ensure confidentiality of information regarding its own activity, disclosure of which may provide commercial advantages to the market participants;

11)perform other functions provided for by this Law, market rules and day-ahead and intraday market rules;

4. The market operator has a right to carry out activities as to the organization of electricity purchase and sale after obtaining the appropriate license and entering into agreement on the settlement of imbalances with the transmission system operator.

5. The market operator has no right to carry out activity of generation, transmission, distribution and supply of electricity as well as trading .

6. The activity of the market operator shall be financed by the participants of the day-ahead and intraday market in line with the day-ahead and intraday market rules. The procedure for calculation of the cost of market operator’s services and the procedure for payment thereof shall be established by the day-ahead and intraday market rules.

7. The market operator shall have other powers, rights and obligations pursuant to this Law and other regulations governing functioning of the electricity market.

8. The market operator shall be incorporated as a public joint-stock company, 100 % per cent of corporate rights shall belong to the state and shall not be subject to privatization or alienation otherwise.

SECTION VIIISETTLEMENTS ADMINISTRATOR

Article 53. Settlements administrator1. The settlements administrator shall ensure organization of the functioning

of the electricity market in accordance with this Law, market rules and commercial metering code.

2. The settlements administrator’s function shall be delegated to the transmission system operator.

3. The settlements administrator according to the market rules shall:1) register electricity market participants, ensure maintenance of the register

and publish it;2) register notice of contractual volumes of sale and purchase of electricity

under the bilateral contracts in the day-ahead and intraday markets, keep the relevant register and provide this information to the transmission system operator;

3) register the parties responsible for balance, and providers of balancing services and keep the relevant registers;

4) ensure compliance by the market participants with the requirements regarding granting of financial guarantees under the balance responsibility agreements according to market rules;

5) establish and maintain a database of contractual volumes of sale and purchase and actual volumes of supply and/or use and/or export and/or import of the electricity market participants (except for consumers);

6) calculate payments for electricity of the transmission system operator and providers of balancing services and prices of electricity imbalance, imbalance volumes and corresponding payments for them and issue the appropriate accounts;

7) calculate payments for ancillary services acquired by the transmission system operator;

8) provide the Regulator with information regarding the electricity market in volumes within and according to the procedure determined by the market rules and other regulations that regulate functioning of electricity market;

9) provide market participants with the information necessary to perform their functions on the electricity market, to the extent and according to the procedure determined by the market rules and other regulations that regulate functioning of electricity market;

10)perform other functions provided by this Law, market rules and Commercial Metering Code.

4. The settlements administrator shall not be entitled to carry out activities on electricity generation, electricity distribution, electricity supply and trading.

5. The responsibility of the settlements administrator shall be determined by the market rules and other regulations that regulate functioning of the electricity market.

6. The settlements administrator shall ensure confidentiality of information received from electricity market participants that is used to carry out its functions on the market and which constitutes commercial secret in accordance with the requirements of the legislation.

The settlements administrator shall also ensure confidentiality of the information regarding its own activity, disclosure of which may provide commercial advantages to electricity market participants.

7. The cost of services of the settlements administrator shall be approved by the Regulator and shall be included as a separate component into the tariff component on the services of dispatching.

The transmission system operator shall be obliged to keep separate accounting of expenses and income from fulfillment of functions of the settlements administrator from other types of activities.

8. The settlements administrator shall have other powers, rights and obligations provided for by this Law, market rules and other regulations that ensure functioning of the electricity market.

SECTION IX

COMMERCIAL METERING ADMINISTRATOR

Article 54. Commercial metering administrator1. The functions of the commercial metering administrator shall be

performed by the transmission system operator.

2. On the electricity market, in accordance with the market rules, in the manner and to the extent defined by the commercial metering code, commercial and other regulations and normative documents metering administrator shall:

1) administer relations on electricity commercial metering through registration of commercial metering service providers, commercial metering points of automatedsystems, control of compliance by market participants with the requirements set by the commercial metering code;

2) coordinate informational exchange on electricity market by approving regulations and protocols of informational cooperation between marke participants in respect of electricity commercial metering data exchange;

3) obtain electricity commercial metering data from commercial metering service providers, define its applicability for use and ensure its aggregation;

4) provide electricity commercial metering data to the settlements administrator and other electricity market participants;

5) create and manage databases of electricity commercial metering, as well as centralized registers of the providers of commercial metering services, commercial metering points and automated systems which ensure commercial metering of electricity;

6) perform other functions provided by the market rules and the commercial metering code.

3. Cost of services of the commercial metering administrator shall be approved by the Regulator and shall be included as a separate component of the tariff on services of dispatching.

The transmission system operator shall maintain separate accounting of expenses and income resulting from the discharge of functions of the commercial metering administrator from other types of activities.

4. The commercial metering administrator shall not be entitled to carry out activities of electricity generation, distribution and electricity supply, trading.

5. The commercial metering administrator shall ensure confidentiality of information received by it from electricity market participants that is used to carry out its functions in the electricity market, which constitutes commercial secret in accordance with the requirements of the legislation.

The commercial metering administrator shall also ensure confidentiality of information regarding its own activity, disclosure of which may result in commercial advantages to electricity market participants.

6. The commercial metering administrator shall have other powers, rights and duties provided for by this Law, market rules, Commercial Metering Code and other regulations that ensure functioning of electricity market.

SECTION XTRADING

Article 55. Trading at the Electricity Market1. Trader shall be subject to licensing if the business entity has no other

licenses, required for the exercise of activities at the electricity market.

2. Traders shall perform the purchase and sale of electricity under the bilateral contracts and at the organized segments of electricity market,

Article 56. Rights and Obligations of Traders1. Traders shall have the right to:1) buy and sell electricity on the electricity market, export and import

electricity at unregulated prices;2) be free in selection of the counterparty under the bilateral contract;3) timely and full receipt of funds for the sold electricity under contracts

concluded;4) access to information regarding the electricity market in the manner and

volumes as determined by the market rules and other regulatory legal acts that regulate operation of the electricity market;

5) other rights stipulated by regulatory legal acts that regulate operation of the electricity market, and conditions of contracts they have concluded on the electricity market.

2. Traders shall be obliged to:1) comply with license conditions for conducting economic activity of

trading subject to regulatory legal acts that regulate operation of the electricity market;

2) enter into agreements that are binding, for conduction of activities on the electricity market, and perform terms of these agreements;

3) provide notice to the settlement administrator on contractual volumes of electricity purchase and sale under bilateral contracts, including imported and exported electricity in the manner prescribed by the market rules;

4) pay/be paied for electricity imbalances in accordance with the market rules;

5) pay promptly and in full for electricity purchased on the electricity market and services provided on the electricity market;

6) provide the Regulator with information necessary for the exercise of statutory functions and powers.

SECTION XISUPPLY TO CONSUMERS

Article 57. Electricity supply to consumers1. Supply of the electricity in the retail market shall be carried out by

electricity supplier who received the relevant license.

2. Electricity shall be supplied at non-regulated market prices subject to electricity supply contract to consumer concluded between the electricity supplier and the consumer. The subject of such contract shall be supply of full amount of actual electricity consumption of consumer from one supplier of consumers.

3. When imposing obligations on the supplier of consumers of the universal services or “last resort”, electricity shall be supplied at regulated prices.

4. Imposing of the obligations on supply of the universal services at regulated prices shall not restrict the rights of electricity supplier of consumers to supply electricity at non-regulated market prices.

5. To ensure supply of electricity to electricity consumers electricity suppliers of consumers shall carry out electricity sale and purchase according to bilateral contracts and/or in the day-ahead market and intraday market and in the balancing market as well through import.

6. Electricity suppliers shall supply electricity in compliance with a general conditions for supply electricity to consumers. .

7. Terms and conditions of electricity supply, rights and obligations of the electricity supplier and consumer shall be determined by the electricity supply contract to consumer. The electricity supply contract to consumer shall determine:

1) name and location of the electricity supplier;2) list of services provided by the electricity supplier;3) price of electricity and services provided;4) offered quality levels of electricity supply services including electricity

quality;5) types of services on maintenance offered by the electricity supplier; 6) terms and conditions and procedure of reimbursement (compensation)

used in case the electricity supplier fails to follow quality levels determined by the agreement including in case of issuing of incorrect invoice and/or untimely issuing of invoice;

7) procedure and means of provision of the actual information about the

effective tariffs, cost of services on maintenance, expected change in prices and terms of electricity supply;

8) procedure of organization of electricity commercial metering and provision of electricity commercial metering data;

9) procedure of submission of applications, claims and complaints of a consumer and their consideration by the electricity supplier, methods of initiation of dispute settlement procedures;

10) duration of the contract, terms of termination, prolongation and early termination of contract, including unilaterally by consumer in order to switch to another supplier as well as, if any, terms and conditions of early termination of the agreement without imposing contractual sanction (fine);

11) obligations of the electricity supplier regarding provision the consumer with information on consumers’ rights protection including in settlement documents(invoices);

12) rights and obligations of the electricity supplier and consumer in case of impossibility to fulfill his/her obligations and in case of temporary suspension of supply;

13) other provisions depending on character and types of services provided by the electricity supplier.

8. Prior to conclusion of the electricity supply contract with the consumer the electricity supplier of consumers should provide the consumer with the information on essential terms and conditions of the electricity supply contract and on available choice and forms of issuing an invoice and making settlements.

9. General terms and conditions of the contract should be fair and transparent, made in clear and understandable form, and should not include procedural obstacles, which complicates exercising of the rights by the consumer, in particular, excessive volume of contractual documentation.

10. Neither provision of the electricity supply contract to consumers should restrict the consumer’s right to switch the electricity supplier nor shall the contract contain provisions, which impose additional financial obligations on the consumer who exercises the mentioned right.

11. The Regulator shall approve sample electricity supply contract to consumers, typical supply contract to consumers on terms of provision of universal service and typical contract on electricity supply to consumers by the supplier of “last resort”.

Article 58. Rights and obligations of electricity suppliers1. Electricity suppliers of consumers shall have the right to: 1) purchase and sell electricity in the electricity market at non-regulated

prices;

2) freely choose the contractor under bilateral contract;3) receive, timely and in full, the payments for sold electricity and

electricity supply services according to the agreements concluded; 4) address the transmission or distribution operator with the request

regarding electricity supply disconnection if the consumer fails to fulfill his/her contractual obligations, except for certain case of supply to vulnerable consumers determined by the retail market rules;

5) address the transmission or distribution system operator with the request to renew electricity supply to the consumer who fulfilled his/her contractual obligations, non-fulfilment of which resulted into electricity supply disconnection;

6) non-discriminatory access to the transmission system, distribution systems based on the agreements concluded with the transmission system operator, distribution system operator according to the requirements of the corresponding electricity network code;

7) access to the information regarding activity in the electricity market according to the procedure and in volumes determined by the market rules and other regulations ensuring functioning of the electricity market;

8) other rights provided for by the regulations, which ensure functioning of the electricity market and the terms and conditions of agreements concluded by them in the electricity market.

2. Electricity suppliers shall be obliged to:1) comply with license conditions for conducting commercial activity in

electricity supply to consumers in accordance with the received license and regulations ensuring functioning of the electricity market

2) conclude agreements obligatory for performance of activity in the electricity market and fulfil the terms and conditions of these agreements;

3) provide the settlements administrator with notification on contractual volumes of the electricity sale and purchase according to the bilateral contracts, including imported and exported electricity according to the procedure determined by the market rules;

4) nominate balanced daily schedules for day of supply based on notifications registered with the settlements administrator on contractual volumes of the electricity sale and/or purchase according to the bilateral contracts in the day-ahead / intraday market and provide them to the transmission system operator according to the market rules;

5) execute the accepted by the transmission operator daily schedules of electricity consumption and/or export and/or import;

6) pay/be paid for electricity imbalances at prices determined according to the market rules, in case of failure to perform daily schedules accepted by the transmission system operator;

7) pay timely and in full for electricity purchased in the electricity market and services provided in the electricity market;

8) open in the institutions of the authorized bank the current accounts with special mode of use to make settlements according to the requirements of this Law;

9) provide in the invoice issued to the electricity consumer (or annexes thereto) in form and according to the procedure determined by the Regulator, information about:

a) share of each electricity source which they used for electricity generation in the general electricity balance structure, purchased by him/her (an/or produced on own electricity facilities) for the previous year.

b) reference to available information sources (web-site etc.) about impact on environment caused by production of electricity by all electricity sources from the electricity balance purchased by him/her for the previous year. Regarding electricity purchased in the day-ahead market and/or intraday market, and/or balancing market and/or imported, may be applied consolidated data regarding electricity balance, provided accordingly by the market operator, transmission system operator, importer;

c) addresses, telephones, web-pages for receipt of information regarding submission of applications, claims and complaints regarding quality of electricity supply and provision of notifications on electricity safety threat;

10) provide the customers according to the procedure determined by the general conditions for supply to consumers, data regarding their consumption;

11) provide at the request of the electricity customer information necessary for switching to the other electricity supplier according to general conditions for supply;

12) send to the customer the final invoice no later than six weeks after switching of the electricity supplier;

13) handle according to the procedure determined by the Regulator, applications, claims and complaints of the electricity customers regarding provision of electricity supply services and provide justified replies;

14) provide electricity supply services following the determined quality level of services;

15) reimburse (compensate) the relevant amount to the customer in case of failure by the electricity supplier to meet the quality levels of services determined by the agreement and according to the standards on quality of service approved by the Regulator;

16) keep separate account of expenses and income from performance of activity on provision of the universal services, services of the supplier of the “last resort” at prices that are subject to state regulation and at non-regulated market prices;

17) not later than fifteen (15) days prior to the beginning of performance of activity on electricity supply to publish on its web-site the general conditions for supply to consumers;

18) provide the market participants with the information necessary for performance by them of functions in the electricity market in volumes and according to the procedure determined by the market rules, transmission system

code, distribution system code, commercial metering code and other regulatory and legal acts, which regulate functioning of the electricity market.

19) provide the Regulator with information necessary for the exercise of statutory functions and powers.

3. The electricity supplier shall, in an understandable and transparent way, to inform its customers about:

1) cost and terms and conditions of provision of their services; 2) different payment methods, which should not allow discrimination

between customers. Systems of the previous payment should be true and should correctly display forecasted consumption;

3) their rights to freely choose and change the electricity supplier; 4) change of any terms and conditions of the electricity supply agreement

no later than twenty days prior to their application including information on the customer right to terminate the agreement.

The electricity suppliers should notify the customers directly about any increase of the price and about their right to terminate the agreement if they do not accept the new terms and conditions.

SECTION XIICONSUMER

Article 59. Rights and obligations of the consumer1. The consumer shall have the right to:1) purchase electricity for own consumption in the electricity market on

condition of conclusion of balance responsibility agreement and agreement on provision of electricity transmission services with the transmission system operator and, in case of connection to the distribution system, agreement on provision of electricity distribution services with the distribution system operator; or

2) conclude electricity supply agreement to consumers with any electricity supplier of consumers;

3) switch the supplier at any time under terms and conditions defined in this Law and the rules adopted by the Regulator;

4) perform as a supplier of ancillary and balancing services according to the terms and conditions of this Law and the grid code and market rules;

5) receive electricity of proper quality as defined in the power purchase contract or supply agreement and in the standards adopted by the Regulator;

6) receive reimbursement (compensation) of losses applied in cases of failure to follow the quality levels of services determined by the concluded agreements;

7) receive reimbursement of costs resulting from failure by its contractors to fulfill the terms and conditions of agreements concluded in the electricity market;

8) non-discriminatory access to the transmission system, distribution systems under agreements with transmission system operator, distribution system

operator in accordance with the requirements of the relevant Code;9) access information regarding activity on the electricity market according

to the procedure and volume determined by the market rules and other regulations ensuring functioning of the electricity market.

10) submit appeals, complaints and claims to its electricity supplier regarding the provision of electricity supply services and, thus, receive reasoned responses or notifications of measures to eliminate the causes of complaints taken by the electricity supplier in the manner prescribed by law;

11) submit complaints to the Regulator according to the procedure for complaint processing and dispute settlement;

12) receive from its electricity supplier the information required by law and terms and conditions of the contract of electricity supply to the consumer;

13) receive from its electricity supplier notifocations of intent of the latter to amend any of the terms and conditions of the contract of electricity supply to the consumer no later than 20 days prior to application, and terminate the contract with electricity supplier according to the procedure provided in the contract, in case of disagreement with the proposed amendmets;

14)other rights under the laws and contracts concluded.

2. Household consumers and small non-household consumers shall have the right to receive “universal services.

3. Consumer shall be obliged to: 1) pay for electricity and services provided to it according to the agreements

concluded; 2) provide suppliers of commercial metering service, with which it

concluded the agreement, access to its electricity facilities to perform mounting, maintenance and metering data reading;

3) follow maintenance rules, safety rules during operation of own electricity facilities, regulations, which ensure functioning of the electricity market and the terms and conditions of the concluded agreements.

Resolve, in cases specified by the distribution system code, the relations regarding technical support of electricity distribution with the distribution system operator.

Article 60. Electricity supplier switching1. A consumer may switch an electricity supplier of consumers free of

charge according to the procedure regulated by general conditions for supply to consumers.

The electricity supplier switching procedure shall stipulate, in particular:1) electricity supplier switching terms and procedures;2) the procedure of resolving consumer’s commercial metering-related

matters when switching an electricity supplier of consumers; 3) the procedure of exchanging information when switching an electricity

supplier of consumers;4) rights and obligations of electricity suppliers, the transmission system

operator and/or a distributor system operator and consumers when switching an electricity supplier of consumers.

2. The switching of an electricity supplier of consumers at the consumer’s request shall be completed within three weeks after the date of the consumer’s notice of intent to switch an electricity supplier of consumers.

3. The disputes between consumer and electricity supplier during electricity supplier switching shall be considered according to the complaint processing and dispute resolution procedure approved by the Regulator. The existence of a dispute between a consumer and an electricity supplier of consumers does not warrant a delay in the performance of the electricity supply contract to consumers with a new electricity supplier of consumers.

4. Until the electricity supply contract to consumers is terminated, the existing electricity supplier of consumers shall continue to supply electricity to the consumer on the terms of the valid supply contract.

The regulator monitors the electricity supplier switching practice.

Article 61. Consumer protection1. In order to protect consumer rights the market participants should not use

unfair methods of competition in relation to the consumer. The terms and conditions of the agreements with consumers should be transparent and easy to understand.

2. Electricity shall be supplied on non-discriminatory basis.

3. Consumers may be disconnected only according to the procedure determined by the legislation.

Protection of the rights of electricity consumers as well as mechanism of protection of these rights shall be regulated by this Law, laws of Ukraine “On Protection of Consumer Rights”, “On Protection of Economic Competition”, other regulations.

4. Protected consumers shall be disconnected subject to the requirements of the procedure for ensuring electricity supply to protected consumers, which should, in particular, determine the following:

o the procedure for drawing up the list of protected consumers; o the procedure for restriction, disconnection of electricity supply to

protected consumers; o mechanisms of compensation of debt for electricity of such protected

consumers.

Article 62. Protection of vulnerable consumers1. The Cabinet of Ministers of Ukraine shall determine criteria for assigning

of consumers to the category of vulnerable.

2. Vulnerable consumers shall have the right to subsidy for reimbursement of expenses for electricity consumed and other address support provided according to the procedure determined by the Cabinet of Ministers. Procedure of protection of vulnerable consumers should:

1) identify categories of vulnerable consumers;2) identify the procedure of listing of vulnerable consumers;3) identify measures on monitoring and state control over assignment to the

category of vulnerable consumers;4) contain special measures of protection of vulnerable consumers regarding

disconnection at certain periods in order to satisfy the electricity needs of such consumers;

5) provide for amount of address support for categories of vulnerable consumers.

Address support shall be provided to vulnerable consumers in a way ensuring its target use.

CHAPTER XIIIPUBLIC SERVICE OBLIGATION

Article 63. Special obligations to pursue general public interests in the course of functioning of the electricity market

1. In order to respect common public interests in course of operation of the electricity market, the Cabinet of Ministers of Ukraine may impose special obligations on market participants (other than consumers) in cases prescribed by this Article and for the definite period, subject to the scope and terms as specified by the Cabinet of Ministers of Ukraine based on this Article.

In order to prevent disorder of the electricity market operation only the Regulator may impose special obligations on market participants by limiting market pricing subject to the scope and terms specified by the Regulator based on this Article.

2. Sspecial obligations shall include, in particular, the following:- buying electricity at "green" tariff;- provision of universal services;- performing functions of the "last resort" provider;- making of compensation payments;- provision of support services at the price set by Regulator in cases under

this Laws.

To ensure general public interests under part four of this article the Cabinet of Ministers of Ukraine and the Regulator may impose other special obligations in compliance with this article.

3. Special obligations imposed by the Cabinet of Ministers of Ukraine or the Regulator on the market participants have to be clearly defined, transparent, non-discriminatory, and of temporary character.

4. The scope and terms of performance of special obligations imposed by the Cabinet of Ministers of Ukraine or the Regulator on market participants have to be necessary and proportional to the purpose of meeting the lawful common public interest and creating the least obstacles for development of the electricity market.

5. General public interests in the course of functioning of the electricity market include:

1) national security and security of supply;2) stability, proper quality and availability of energy, including for

vulnerable consumers;3) protection of the environment, including energy effectiveness, increase of

the share of energy from alternative sources and reduction of greenhouse gas emission;

4) protection of life, health and property of the broad public;The common public interest enforceable by the Regulator through the price

regulation in the electricity market includes stable and proper operation of the electricity market.

6. Resolution of the Cabinet of Ministers of Ukraine placing special obligations upon market participants must stipulate:

1) general public interests in the course of functioning of the electricity market, in pursuit of which it places special obligations upon market participants;

2) the scope of special obligations;3) the scope of market participants upon which special obligations are

placed;4) the scope of rights of market participants upon which special obligations

are placed, which are necessary to fulfill these obligations;5) consumer categories whom special obligations concern;6) special obligations area and timeframe;7) sources of financing and procedure of calculating reimbursements paid to

market participants upon which special obligations are placed, considering provisions of part seven of this Article.

7. Market participant(s) upon which special obligations are placed under part one of this Article shall be selected in a transparent and nondiscriminatory manner on the basis of criteria approved by the Cabinet of Ministers of Ukraine, and cannot obstruct realization of the consumer right to free choice of electricity

supplier.

8. Conditions for performing of special obligations must provide cover of economically justified costs of a market participant arising out of performing such obligations in accordance with the procedure approved by the Cabinet of Ministers of Ukraine.

9. Special obligations concerning security of supply, environmental protection, including energy efficiency and demand management, increase of the share of energy from alternative sources and reduction of greenhouse gas emission may be placed for a long-term period,.

10. The government agency responsible for development and implementation of the national policy in the electricity sector shall communicate to the Secretariat of the Energy Community information regarding the measures taken pursuant to this Article, including possible consequences of these measures for the level of competition on Ukraine’s electricity market and the Energy Community’s electricity market.The government agency responsible for development and implementation of the national policy in the electricity sector shall update information regarding the measures taken pursuant to this Article communicated to the Secretariat of the Energy Community once every two years.

Article 64. Universal services1. Universal services shall be provided solely to household and small non-

household consumers.2. Universal service provider shall be appointed by a decision of the Cabinet

of Ministers of Ukraine, based on the results of a competition organized under the procedure approved by the Cabinet of Ministers of Ukraine.

If the competition was not held, the Cabinet of Ministers of Ukraine in order to pursue general public interests, may place an obligation to provide universal services upon any electricity supplier who meets the qualification requirements and criteria.

The boundaries of the territory of a universal service provider shall be established by the Cabinet of Ministers of Ukraine. The activities of one universal service provider shall not be allowed within the territory of the other universal service provider.

3. The procedure for the appointment of a universal service provider shall include, in particular, a list of qualifications to electricity supplier and criteria on which the winner is determined.

4. Universal service provider must supply electricity to consumers at economically reasonable, transparent and non-discriminatory prices, calculated

according to the methodology approved by the Regulator. Prices of the universal service provider shall be subject to approval by the Regulator.

Universal service provider must disclose prices for universal services no later than fifteen days prior to their application.

5. If universal services cannot be provided on the basis of market principles, the Regulator will set the prices. Regulated prices of universal services must reflect costs and be economically justified.

6. Regulator’s decision to introduce regulated prices of universal services must be substantiated.

7. The Regulator shall annually revise the prices for universal services and the need to regulate these tariffs for certain consumer categories. The Regulator shall provide the relevant information to the Secretariat of the Energy Community.

8. If regulation of the tariffs for universal services is introduced, the Regulator shall approve a schedule of phased abolition of regulated tariffs.

9. Universal service provider shall carry out the supply in the manner prescribed by the rules of electricity supply to consumers and under conditions of a model contract of universal services supply approved by the Regulator.

10. In addition to the obligations specified in Article 57 hereof, universal service provider shall be obliged to do the following:

1) inform consumers of their right to receive universal services and conditions for receiving the services;

2) provide universal services in accordance with legislation;3) conduct separate accounting of costs and revenues from business

activities of the universal services provision.

Article 65. Supplier of last resort1. The supplier of last resort shall supply electricity in the following cases:1) bankruptcy or liquidation of the previous electricity supplier;2) expiration, suspension or revocation of electricity supply license of the

previous electricity supplier;3) violation of electricity supply license terms by the previous electricity

supplier;4) a consumer has failed to select an electricity supplier, including after

termination of the contract with the previous electricity supplier;5) in other cases stipulated by the rules of supply of electricity to

consumers.

2. Supplier of last resort shall be appointed by a decision of the Regulator, based on the results of a competition organized according to the procedure approved by the Cabinet of Ministers of Ukraine.

If the competition was not held, the Regulators in order to ensure general public interests, may place on any electricity supplier who meets the qualification requirements and criteria, the obligations for performing functions of the supplier of last resort.

The boundaries of the territory of a supplier of last resort shall be established by the Regulators. The activities of one supplier of last resort shall not be allowed within the territory of the other supplier of last resort.

3. The procedure for appointing supplier of last resort should include, in particular, a list of qualifications to electricity suppliers and criteria on which the winner is determined.

4. Supplier of last resort shall be appointed for a period of up to three (3) years.

5. Supplier of last resort shall be obliged to supply electricity to consumers at prices calculated according to the methodology approved by the Regulator. The prices of the supplier of last resort shall be approved by the Regulator.

Prices at which the supplier of last resort supplies electricity should take into account economically justified costs associated with a special mode of operation and risks of conducting the activities of the supplier of last resort, as well as profit margin taking into account the specifics of activities of such a supplier, and shall not hinder competition in the electricity market.

6. Supplier of last resort shall carry out the supply according to the procedure established by the rules of electricity supply to consumers and under terms and conditions of a model contract of supply by the supplier of last resort approved by the Regulator.

7. An electricity supplier unable to supply electricity shall notify the supplier of last resort, consumers, the Regulator, the transmission system operator and a distribution system operator about electricity supply suspension date.

8. The supplier of last resort shall automatically start supplying electricity at the moment the previous electricity supplier has suspended electricity supply. An electricity supply contract between the supplier of last resort and a consumer shall be considered effective as of the date of the actual beginning of electricity supply to the consumer.

9. The period during which the supplier of last resort supplies electricity to a consumer cannot exceed 90 days. After expiry of this period the supply of electricity to the consumer is cut off.

10. The procedure of replacing an electricity supplier with the supplier of last resort is regulated by the retail market rules.

11. The supplier of last resort shall notify consumers about the terms and conditions of its supply service, electricity prices and the consumer’s right to choose an electricity supplier. The supplier of last resort is required to publish the above information on its website.

12. In addition to the obligations specified in Article 58 of this Law, the supplier of last resort shall do the following:

1) supply electricity to consumers in cases determined by this Article until selection of electricity supplier by consumers, but for a period not exceeding ninety (90) days;

2) inform consumers about the conditions of electricity supply by the supplier of last resort in the manner prescribed by law.

3) maintain separate accounting of expenses and income resulting from the economic activity of the supply of last resort.

13. The supplier of last resort shall prepare and post on its website an annual report on the performance results of the supplier of last resort. The report shall include information about the number of consumers serviced by the supplier of last resort, total quantity of electricity supplied to them and average duration of supply service.

Article 66. Guaranteed buyer1. In order to ensure general public interests and enforcement of state

guarantees as for purchase of all the electricity generated at the power plants operating under the "green" tariff the Cabinet of Ministers of Ukraine shall determine the state enterprise for performing the functions of a guaranteed buyer of electricity. The activities of a guaranteed buyer shall be funded within the estimate approved by the Regulator.

2. Once appointed the guaranteed buyer is obliged to buy from business entities for which the "green" tariff is set, purchasing all the supplied electricity generated at the power plants operating under the "green" tariff set for them, including surcharge to it, for the duration of application of "green" tariff, if such business entities are part of the balancing group of "green" tariff producers. Provided however, that in each settlement period (month) the volume of supply of electricity generated at the power plant from renewable energy sources (and when using hydropower - only micro-, mini- and small hydropower plants) shall be determined less the volume of electricity consumption for its own needs in electricity of the relevant electric power facility.

3. Purchase and sale of such electricity at "green" tariff, including surcharge to it, is based on the bilateral contract between the producer, for which the "green" tariff was set and the guaranteed buyer. Such agreement is based on a model contract for the sale of electricity at "green" tariff for the duration of the "green" tariff application as set for the producer. Standard form of contract for electricity sale by at "green" tariff shall be approved by the Regulator.

4. The guaranteed buyer shall pay for electricity purchased from producers at the "green" tariff for the actual amount of electricity released at the power plants operating under the green tariff on the basis of metering data obtained from the metering administrator, in a manner and under terms determined by relevant agreements.

5. The procedure for purchasing electricity at "green" tariff, including rules of operation of the balancing group of "green" tariff producers shall be determined by the regulator.

6. To ensure coverage of economically justified costs of the guaranteed buyer to perform special obligations for the purchase of electricity at "green" tariff, Cabinet of Ministers of Ukraine shall impose on the transmission system operator a special obligation to make a compensation payment to the guaranteed buyer.

Compensation payments shall provide for the guaranteed buyer a coverage of the difference between the cost of electricity purchased by it at "green" tariffs and the cost of this electricity sold at prices of the "day ahead" market, the costs associated with the settlement of electricity imbalances of the balancing group os producers at "green" tariff, ant the estimate of the guaranteed buyer.

Compensation payments shall be calculated by the guaranteed made by the buyer according to the procedure of purchase of electricity at "green" tariff. Amount of the compensation payment shall be approved by the Regulator.

7. The guaranteed buyer shall have the right to:1) timely and in full receipt of funds for the electricity sold under contracts

concluded;2) obtain from producers, from which it purchases electricity at "green"

tariff, their daily schedules of electricity delivery in the manner and form specified by relevant contracts;

3) receive from metering administrator data on actual volumes of electricity supply by producers, from which the guaranteed buyer purchases electricity;

4) access to information about activities on the electricity market in the manner and to the extent determined by the market rules and other regulatory legal acts that ensure operation of the electricity market;

5) other rights stipulated by regulatory legal acts that ensure operation of the electricity market, and by conditions of the contracts concluded on the electricity market.

8. The guaranteed buyer shall be obliged to:1) enter into agreements that are binding for activities on the electricity

market, and perform terms of such agreements;2) purchase from business entities for which the "green" tariff is set, all the

supplied electricity generated at power plants operating under the "green" tariff, including surcharge to it, set for them;

3) be the party responsible for balancing of the balance group of "green" tariff producers, with which it has concluded the bilateral contract;

4) pay promptly and in full for electricity purchased from the "green" tariff producers ;

5) provide market participants with the information needed to perform their functions on the electricity market, to the extent and in the manner prescribed by regulations that ensure operation of the electricity market.

9. The Guaranteed buyer shall keep confidential the information obtained from the electricity market participants which it uses to carry out its functions on the electricity market and which is a commercial secret in accordance with legal requirements.

The guaranteed buyer shall also protect the privacy of information on its activities, the disclosure of which could provide commercial benefits to market participants.

10. The Cabinet of Ministers of Ukraine may impose on the guaranteed buyer other special obligations to ensure general public interests in accordance with this Law.

11. Electricity generated from solar energy and/or wind energy by electric power facilities (generating installations) of private households, with an installed capacity not exceeding 30 kW, shall be purchased by universal service providers at "green" tariff in the volume that exceeds monthly electricity consumption by such private households. Household consumer shall have the right to install in his/her private household a generating installation designed for the production of electricity from solar energy and/or wind energy with installed capacity not exceeding 30 kW but not exceeding the capacity permitted to consume under contract of accession. Electricity generation from solar energy and/or wind energy by private households shall be carried out without relevant license. The pocedure for the sale and metering of such electricity as well as for payments for it shall be approved by the Regulator.

CHAPTER XIVELECTRICITY MARKET

Article 67. Bilateral contracts1. Electricity may be purchased and sold under bilateral contracts by

electricity producers, electricity suppliers of consumers, the transmission system operator, distribution system operators, traders, guaranteed buyer and consumers.

2. Market participants have the right to freely choose counterparties to bilateral contracts and conclude the seagreements in an arbitrary form and on the terms agreed upon by the parties thereto, considering the following limitations:

1) producers have the right to sell electricity under bilateral contracts, with the exception of quantities which this Law requires them to sell on the day-ahead market;

2) market participants have the right to sell electricity under bilateral contracts for imported electricity, with the exception of quantities which this Law requires them to sell on the day-ahead market;

3) the transmission system operator, distribution system operators cannot sell electricity under bilateral contracts;

4) the transmission system operator and distribution system operators may purchase electricity under bilateral contracts to compensate electricity losses to it’s transmission and distribution, respectively, with the exception of quantities which this Law requires them to buy for that purpose on the day-ahead market;

5) companies producing electricity at hydroaccumulation stations have the right to buy electricity under bilateral contracts to facilitate technological processes at hydroaccumulation stations,with the exception of quantities which this Law requires them to buy for that purpose on the day-ahead market;

3. Bilateral contract shall stipulate:1) subject of the contract;2) electricity price and/or price calculation (pricing) procedure; quantity of

electricity and electricity quantity purchase-sale schedules3) electricity delivery terms and procedure;4) procedure of notifying the settlement administrator about the agreed-

upon electricity purchase-sale volumes under a bilateral contract;5) settlement procedure and form;6) terms and procedure of drawing up electricity purchase-sale quantity

delivery-acceptance acts;7) rights, obligations and liability of the parties;8) contract term.

4. The Regulator may set the maximum duration of bilateral contracts which cannot be shorter than six month.

The parties to bilateral contract shall, in accordance with the market rules, notify the settlement administrator about the agreed-upon electricity purchase-sale quantities under their contract. Based on this notice, these quantities will be included to daily electricity schedules for the market participants concerned.

CHAPTER XVELECTRICITY MARKET

Article 68. The day-ahead and intra-day markets1. Ukraine has a single day-ahead market and intra-day market.To operate on the day-ahead market and intra-day market, market

participants shall conclude a day-ahead market and intra-day market participation agreement with the market operator; the standard form of the above agreement represents an integral part of the rules of the day-ahead market and intra-day market.

The market operator can not decline to conclude a day-ahead market and intra-day market participation agreement with a market participant which has duly complied with all provisions of the rules of the day-ahead market and intra-day market concerning the access to the day-ahead market and intra-day market.

2. Purchase-sale of electricity on the day-ahead market and intra-day market is regulated by the day-ahead market and intra-day market rules.

3. To maintain sufficient liquid it yon the day-ahead market, the Regulator has the right to set:

1) for electricity producers (except micro, mini and small hydroelectric stations and power stations producing electricity from renewable sources of energy): minimum quantity of obligatory sale of electricity on the day-ahead market which cannot exceed 15 (fifteen) percent of their monthly electricity production output according to procedure defined in the market rules;

2) for the transmission system operator and distribution system operators: minimum quantity of obligatory purchase of electricity on the day-ahead market to compensate electricity losses for transmission and distribution, respectively;

3) for companies producing electricity at hydroaccumulation stations:minimum quantity of obligatory purchase of electricity on the day-ahead market to facilitate technological processes at hydroaccumulation stations.

4. In order to sell/purchase electricity on the day-ahead market and intra-day market, participants of these markets shall place an order (bid) with the market operator. The form of bids and offers and their submission procedure are prescribed by day-ahead market and intra-day market rules. Only the day-ahead market and intra-day market participants who, in accordance with requirements of the day-ahead and intra-day market rules, provided a guarantee securingful fillment of financial obligations under day-ahead and intra-day market contracts may be eligible to participate in the trading. The forms and procedure of providing guarantees are prescribed by day-ahead market and intra-day market rules.

5. The electricity purchase-sale price for the next day is set by the market operator for every settlement period on the basis of the marginal pricing principle in accordance with the day-ahead and intra-day market rules based on the balance

of the aggregate demand for and supply of electricity.Day-ahead and intra-day market prices are free (market) prices.

6. Based on the results of trading in accordance with the day-ahead and intra-day market rules, electricity purchase-sale prices and volumes for every settlement period and other indicators which may be used as a benchmark for electricity purchase-sale contracts on the electricity market are published.

7. Electricity is purchased and sold on the day-ahead and intra-day market on the basis of relevant agreements between a market participant and the market operator, concluded under the day-ahead and intra-day market rules.

8. All amount of imported electricity from the state which is not the contracting party of the Energy Community should be sold only at the “day-ahead” market and balancing market.

9. The market operator shall notify, according to the procedure and form required by the market rules, the settlement administrator about contractual quantities of electricity purchase-sale by participants of the day-ahead market and intra-day market for every settlement period.

CHAPTER XVIELECTRICITY MARKET

Article 69. Balancing market1. Ukraine has a single balancing market.Transmission system operator’s activities on the balancing market include:1) balancing electricity purchase and sale for balancing demand and supply

during a current day;2) financial settlement of electricity imbalances with the parties responsible

for balance.

2. Electricity producers are required to participate in the balancing to the extent and in the cases provided by this Law and the market rules. Consumers are also entitled to render balancing services according to market rules.

To be eligible to participate in the balancing, balancing service provider must meet requirements of the electricity market rules regarding participation in the balancing.

3. To participate in the balancing on the balancing market, market participants conclude an agreement with the transmission system operator based on the standard agreement on participation in the balancing.The settlement administrator shall register balancing participants according to the procedure regulated by the market rules.

The standard agreement on participation in the balancing shall be approved by the Regulator.

4. A balancing participant shall submit аn offer (bid) to the transmission system operator regarding increase (decrease) of its production/load for the purpose of selling/purchasing electricity on the balancing market in accordance with the market rules.

5. In order to balance electricity production and consumption quantities and/or regulate the system’s constraints, the transmission system operator shall issue instructions to balancing participants to increase (decrease) their production/load while selecting, according to the market-based procedure provided by the market rules, the relevant offer (bid) which the balancing participants have submitted on the balancing market.

Offers (bids) from the balancing participants are selected on the basis of the need to ensure sustainable and reliable operation of the Unified Energy System of Ukraine and minimize the cost of balancing the electricity generation and consumption.

The transmission system operator has the right to issue instructions to decrease load to the companies producing electricity at generating plants that use renewable (alternative) sources of energy (except blast furnace and coke oven gases, and for hydroelectric stations – electricity generated only by micro, mini and small hydroelectric stations) only if all available requests from other balancing participants for decrease of their load were accepted by the transmission system operator, with the exception of cases when the system’s constraints were caused by force majeure circumstances.

The cost of electricity not released by an electricity producer selling electricity at the ‘green’ tariff under this Law due to fulfillment of the transmission system operator’s instruction to reduce load shall be reimbursed to this producer at the ‘green’ tariff set to him, with the exception of cases when the aforementioned instruction was issued due to the system’s constraints caused by force majeure circumstances

6. The transmission system operator’s instruction to a balancing participant to increase (reduce) load represents the acceptance by the transmission system operator of said balancing participant’s offer (bid) submitted on the balancing market and a change of its accepted hourly daily schedule of electricity production and/or consumption, and stipulates mutual obligations of the transmission system operator and a balancing participant regarding purchase-sale of the relevant quantity of electricity on the balancing market at a price determined according to the market rules.

7. At the end of the balancing market’s operations on a relevant day, the settlement administrator shall calculate, on the basis of the transmission system operator’s data and administrator of commercial metering’s data, the transmission

system operator’s and balancing participants’ payments for electricity, electricity imbalance prices and the all volumes of all market participants’ electricity imbalances and the applicable financial charges for them, and issue the relevant invoices according to the procedure provided by the market rules.

Article 70. Ancillary services market1. Ukraine has a single ancillary services market.The transmission system operator enters ancillary services market to buy

ancillary services in a market-based and transparent manner to facilitate sustainable and reliable operation of the Unified Energy System of Ukraine and ensure proper quality of electricity.

2. Ancillary services market participants include:o the transmission system operator purchasing and/or using ancillary services;o ancillary service suppliers offering and/or providing ancillary services.

3. Ancillary services may be purchased/provided on the ancillary services market to facilitate:

1) frequency and active power regulation in the Unified Energy System of Ukraine, in particular: providing reserves for supporting the frequency (primary regulation), reserves of frequency recovery (secondary regulation), reserves of substitution (tertiary regulation);

2) maintenance of electricity supply reliability and quality parameters in the Unified Energy System of Ukraine, in particular:

voltage and reactive power regulation services;services on restoration of functioning of the Unified Energy System of

Ukraine after systemic blackouts.The market rules may provide for other ancillary services for the frequency

and active power regulation, maintain the balance of capacity and energy in the Unified Energy System of Ukraine and maintain electricity supply reliability and quality parameters in the Unified Energy System of Ukraine.

4. Ancillary services market operates in accordance with the market rules stipulating, in particular:

1) types of ancillary services;2) requirements to market participants regarding provision of ancillary

services and the procedure of confirming participants’ compliance with these requirements;

3) ancillary service provider registration procedure;4) procedure of promulgating information related to purchase of ancillary

services;5) procedure of purchasing/ using ancillary services, including pricing

procedures for every ancillary service;

6) liability for the failure to provide/ improper provision of ancillary services;

7) procedure of physical and financial settlement for ancillary services;8) procedure of monitoring the fulfillment by ancillary service providers of

their obligations to provide ancillary services.

5. The requirements to ancillary service providers (including requirements to their power equipment) which they must meet to provide ancillary services are devised by the transmission system operator in accordance with the electricity networks code, market rules and other regulations. Information concerning requirements to ancillary service providers constitutes public knowledge, and the transmission system operator is required to promulgate it according to the procedure provided by the market rules.

The procedures of inspecting and testing ancillary service provider’s power installations to confirm it’s compliance with the transmission system operator’s requirements are regulated by the transmission system code.

6. The list of ancillary services which must be offered and provided to the transmission system operator by an ancillary service provider is regulated by the market rules.Electricity producers are obliged to participate in the ancillary services market and provide ancillary services in the cases required by the market rules.

7. Depending on the type of an ancillary service and the transmission system operator’s needs, ancillary services may be purchased during the relevant period (a day, week, month, quarter and year/years).

Ancillary services are purchased under ancillary service contracts made on the basis of standard ancillary service contracts.

Standard ancillary service contracts require approval by the Regulator.

8. The transmission system operator determines the required volumes of ancillary services for a particular period in accordance with the transmission system code and other technical documents. Information regarding the required ancillary services and the volumes and purchase/delivery terms of these services constitutes public knowledge, and the transmission system operator is required to promulgate it according to the procedure provided by the market rules.

9. The transmission system operator shall purchase ancillary services on a competitive basis, with the exception of cases provided by this Law.

10. If the volume of proposed ancillary services is smaller than the transmission system operator’s needs in these services or if an ancillary service is provided by ancillary service providers monopolizing (dominating) the ancillary services market or part of the Unified Energy System of Ukraine with existing systemic constraints, the Regulator may oblige the ancillary service provider to sell

this ancillary service at a price calculated according to the Regulator-approved methodology.

Prices on ancillary services market calculated according to the Regulator-approved methodology must ensure:

1) reimbursement of economically-justifiable expenses of ancillary service providers associated with the provision of ancillary services, including coverage of justifiable investments required to facilitate the provision of these services;

2) allowed revenue.

11. The transmission system operator shall provide information to the settlement administrator regarding volumes and prices of ancillary services purchased and ancillary services that were actually provided to calculate the relevant payments. Information regarding volumes and prices of ancillary services constitutes public knowledge, and the transmission system operator is required to promulgate it according to the procedure provided by the market rules.

12. The transmission system operator’s expenses associated with payments for ancillary services are included to the dispatching tariff.

Article 71. Electricity imbalance settlement1. All market participants, except consumers purchasing electricity under

the agreement for supply of electricity to the consumer, are responsible for their own electricity imbalances.

2. To settle imbalances with the transmission system operator, a market participant (except consumers) shall become a party responsible for balance or transfer his responsibility to another party responsible for balance by joining a balancing group. Electricity supplier is the balance responsible party for his/her consumers.

The parties responsible for balance are obliged to financially settle all their electricity imbalances with the transmission system operator.

3. Market participants may unite into balancing groups on a voluntary contractual basis, if they comply with the standard requirements to balancing groups provided by the market rules.

The balancing group establishment, registration and dissolution procedures regulated by the market rules.

4. A purchase-sale of electricity to settle electricity imbalances of a BRP requires an imbalance settlement agreement between the BRP and the transmission system operator.

5. Transmission system operator shall settle all electricity imbalances with

all balance responsible parties in accordance with the procedure provided by this Law and the market rules.

The settlement of electricity imbalances means entry of a BRP into electricity purchase-sale contracts with the transmission system operator in the quantities equal to its electricity imbalance and at the imbalance settlement prices calculated in accordance with the market rules.

The standard imbalance settlement agreement required approval by the Regulator.

Parties responsible for balance shall be obliged to provide guarantees of financial obligations performance under imbalance settlement agreements in accordance with the market rules.

6. The settlement administrator calculates the cost of electricity imbalances of a party responsible for balance for every settlement period of a day based on the quantity of that party’s electricity imbalance and electricity imbalance prices calculated in accordance with the market rules.

The procedure of calculating the quantity, price and cost of electricity imbalances is regulated by the market rules.

The market rules defines how under defining of electricity imbalance amount should be taken into account. The produced and/or consumed amount of electricity by ancillary service provider in case of ex post ancillary service providing

7. Inside a balancing group, a party responsible for the balancing group’s balance shall purchase and sell electricity of the balancing group’s members on a contractual basis in the quantities equal to electricity imbalances caused by these participants.

8. The particularities of functioning of balancing groups of producers operating under the ‘green’ tariff are regulated by Article 71 hereof and the rules of functioning of balancing groups of producers operating under the ‘green’ tariff.

Article 72. Particularities of participation of electricity producers operating under the ‘green’ tariff on the electricity market

1. Electricity produced at generating plants that use renewable sources of energy (hydroelectric stations – electricity generated only by micro, mini and small hydroelectric stations) may be sold by producers under bilateral contracts on the day-ahead market and intra-day market and on the balancing market at the going prices of these markets.

2. Electricity producers operating under the ‘green’ tariffhave the right to sell electricity produced at generating plants that use renewable sources of energy (and for hydroelectric stations – electricity generated only by micro, mini and small hydroelectric stations) to the guaranteed buyer at the ‘green’ tariff, considering the

extra charge thereto, in accordance with this Law.

3. To this end, such producers shall be obliged to:1) become a market participant in the manner prescribed by this Law;2) enter into a contract with the guaranteed buyer on the bilateral contract on

the basis of typical form of the contract of electricity purchase and sale at the "green" tariff, and become part of the balancing group of the "green" tariff producers based on such contract;

3) on a daily basis provide the guaranteed buyer with their daily schedule of electricity delivery for the next day in the manner and in the form specified in the bilateral contract with a guaranteed buyer.

4. The deviation of actual volumes of supply of electricity of ‘green tariff’ producers from their daily schedules of electricity delivery shall be considered as imbalances of the "green" tariff producer. The procedure for compensation to producers which are members of the balancing group of "green" tariff producers, of their share in the cost of electricity imbalance to the guaranteed buyer shall be determined by rules of operation of the balancing group of "green" tariff producers.

Article 73. Record keeping1. Market participants are required to store information regarding all

bilateral and electricity purchase-sale contracts made on organized market segments and for provision/purchase of ancillary services for at least five years.

2. The aforementioned information shall include terms and conditions of these contracts, in particular, contract duration, purchase-sale and payment terms and conditions, delivery timeframes, quantities and prices, details of the parties, including contracts which have not been fulfilled yet.

3. Market participants are required to provide the aforementioned information at the request from the Regulator and the Antimonopoly Committee of Ukraine.

The Regulator has the right to authorize complete or partial disclosure of this information, if this action will not result in the disclosure of information of commercial value to market participants or information regarding specific contracts.

Article 74. Organization of commercial metering on the electricity market

1. Commercial metering on the electricity market shall be organized by the commercial metering manager and carried by providers of commercial metering services in accordance with this Law, Code of Commercial Metering Rules and rules of the market.

2. The purpose of organization of commercial metering of electricity on the electricity market shall be to provide market participants with complete and reliable information on the volume of electricity produced, supplied, delivered, distributed, imported and exported and consumed within a specified period of time with a view to its subsequent use for settlements between market participants.

3. Provision of commercial metering services shall be performed by service providers of commercial metering on competition basis subject to the relevant registration of service provider for commercial metering and registration of automated systems for commercial metering of electricity by Commercial Metering Administrator in the manner prescribed by the Code of Commercial Metering.

4. The service of commercial metering of electricity shall include:1) installation, configuration, replacement, modernization, commissioning

and decommissioning, as well as technical support and maintenance of commercial metering devices, additional equipment and automated systems used for commercial metering of electricity, their hardware and software thereof;

2) collection, management, and administration of data on commercial metering data as it is defined by the Code of Commercial Metering

5. Market participants which installations are connected to the networks (excluding household customers) shall have the right of free choice of the service provider for commercial metering.

Commercial metering of electricity for household consumers is ensured by operators of the distribution system.

6. The transmission system operator and distribution system operator shall register itself at the Commercial Metering Administrator as the service providers of commercial metering or engage for providing such functions other service providers and shall have no right to refuse to market participants, electric plants of which are attached to their networks, in provision of services of electricity commercial metering

7. Market participants should provide easy access to tools and systems for electricity commercial metering and data of commercial metering of electricity in the manner and within the limits set by the Code of Commercial Metering

Article 75. Settlements on the electricity market1. Payments for electricity and services provided on the electricity market,

shall be held between participants of the market in money according to the signed agreements and subject to requirements of this Law.

2. The electricity buyers that buy electricity from electricity suppliers shall pay for electricity delivered to them only to the electricity supplier’s special current account with the authorized bank.

3. Participants of the "day ahead" and intraday markets which buy electricity on those markets, shall pay for the purchased electricity only to the market operator’s special current account with the authorized bank.Funds from the market operator’s special current account shall be remitted in accordance with the rules of the "day ahead" and intraday markets to:

1) current accounts of participants of "day ahead" and intraday markets, other than electricity suppliers, for the electricity sold on the "day ahead" and intraday markets;

2) special current accounts of electricity suppliers for the electricity sold on the "day ahead" and intraday markets;

3) current account of the market operator.

4. The balancing service providers and parties responsible for balancing which have the liability towards the operator of transmission system as a result of activity at the balancing market shall pay a fee for electricity only to the special current account of the transmission system operator with an authorized bank.Funds from the special current account of the transmission system operator shall be remitted in accordance with the market rules, to:

1) current accounts of balancing service provider and parties responsible for balancing, other than the electricity suppliers;

2) special current accounts of electricity suppliers;3) current account of the transmission system operator subject to provisions

of this Law.For the purpose of payments to balancing service providers in course of

settlement of system restrictions the transmission system operator can credit funds to its special current account from its own current account.

5. Funds from special current accounts of the electricity supplier shall be remitted in accordance with an algorithm, which is set by the Regulator.Such algorithm of funds allocation from the electricity supplier’s special current account shall stipulate remittance of all funds received from customers at the electricity supplier’s special current account to the electricity supplier’s current accounts in full under normal condition.

Amendments to the specified algorithm are made only in case of the electricity supplier’s delay of schedule and in accordance with the procedure set by the rules of market, when it is late with payment for the electricity imbalance. Such changes to the algorithm shall be valid until full repayment of the electricity supplier’s debt to the transmission system operator. Changes shall be made to the algorithm based on the transmission system operator’s submission in case of the electricity supplier’s debt to the transmission system operator. Such changes to the algorithm should stipulate that funds from the special current account of the

electricity supplier shall be transferred to the special current account of the transmission system operator until full recovery of underpayments for the imbalance of electricity purchased by the electricity supplier.

6. The list of special current accounts of electricity suppliers, transmission system operator and market operator shall be approved and published by the Regulator.

7. On the special current accounts of electricity suppliers, the transmission system operator and market operator may not be levied under liabilities of market participants.

Operations on special current accounts of electricity suppliers, the transmission system operator and market operator shall not be subject to suspension.

8. In case of transfer of funds for electricity and other services to accounts other than special current accounts in the cases specified in this Article, beneficiaries shall refund the money within three days upon receipt.

In case of failure to refund within that term the money paid to accounts other than special current accounts, these amounts shall be withdrawn to the State Budget of Ukraine as a sanction for an offense completed. Crediting funds to the State Budget of Ukraine shall not exempt recipient thereof from the obligation to refund to relevant market participants.

SECTION XVIIDISPUTE RESOLUTION PROCEDURE

Article 76. Complaint review and dispute resolution procedure1. The Regulator shall review complaints against actions by market

participants (except complaints for actions of consumers) and resolve disputes between market participants according to the procedure approved by the Regulator.

2. According to the complaint review and dispute resolution procedure, the Regulator shall make, within the required timeframe, decisions binding upon market participants whom these decisions concern.

3. These decisions shall be published on the Regulator’s website, with the exception of those parts which contain confidential information. The Regulator shall determine the scope of confidential information which cannot be disclosed on the basis of request from the parties concerned.

4. Regulator’s decisions mentioned in part two of this Article may be appealed in court.

5. Complaints of household and small non-household consumers on actions or omissions of electricity suppliers and distribution system operators shall be considered, and disputes between them shall be resolved by an energy ombudsman. The legal status, terms and conditions of the energy ombudsman shall be determined by law.

SECTION XVIIILIABILITY OF MARKET PARTICIPANTS

Article 77. Liability for violation of the law regulating operation of the electricity market

1. Market participants which violated regulatory legal acts ensuring operation of the electricity market shall be liable under the law.

2. The offense in the electricity market shall be as follows, in particular:1) licensees’ violation of relevant license conditions for economic activity;2) failure to comply with regulatory legal acts that ensure operation of the

electricity market;3) violation of legal acts, regulatory technical documents, regulations on

technical operation of power plants and networks, power equipment and networks of electric power companies and consumers, manufacturing, construction, installation and testing of power plants and networks, performance of design work at power plants and networks;

4) electricity theft, unauthorized connection to electric power facilities and energy consumption without metering devices;

5) ungrouping and damage to energy facilities, embezzlement of such facilities;

6) damage to meters, use of electricity meters which are not validated or certified in the set manner;

7) failure or delay in reporting as specified by this Law, and the submission of false information in such reports;

8) unjustified refusal of access to the transmission system or distribution system or to connection to the transmission system or distribution system;

9) creating obstacles in implementation of state energy supervision;10) violation of rules of power facilities protection;11) acts that preclude operational personnel and officials of power facilities

from performance of their duties;12) termination of electricity supply to customers that do not allow

violations of their contractual obligations towards the transmission system operator and/or distribution system operator and/or electricity supplier;

13) failure to conclude agreements in accordance with this Law and other legal acts that ensure operation of the electricity market;

14) breach of integrity of seals, verification mark, etc., affecting the measurement results;

15) denial of access to authorized employees of commercial metering service providers to the premises where the electricity meters are if the obligation to grant such access is established by law;

16) Non-performance of legal statutes, regulations, orders, decisions and regulations of government agencies on the electricity market, and creating obstacles to the performance of official duties by such entities;

17) failure to submit or late submission to the transmission system operator, distribution system operator and the subject of authority on the electricity market of the information stipulated by law, or providing false information;

18) unauthorized interference with the work of power facilities.

3. In case of offense on the electricity market sanctions may apply to relevant market participants in the form of:

1) notice of the need to cure violations;2) fine;3) suspension of the license;4) revocation of the license.

4. In case of offense on the electricity market the Regulator, shall take actions within its authority on imposing penalties on market participants (other than customers) in the following amounts:

1) up to 10 percent of annual income (revenue) of vertically-integrated business entity, defined as the total value of income (revenue) from sales of goods (works, services) of all businesses and individuals that are part of such business entity, - on the vertically integrated entity for violation of requirements for the separation and independence of the transmission system operator or distribution system operator under this Law;

2) up to 10 percent of the annual income (revenue) of the transmission system operator – on the operator of the transmission system for violation of requirements for the separation and independence of the transmission system operator under this Law

3) up to 10 percent of annual income (revenue) of the distribution system operator – on the distribution system operator for violation of requirements for the separation and independence of the distribution system operator under this Law

4) from 900 to 3,000 non-taxable minimum incomes of citizens – on the officials of vertically integrated entity or the transmission system operator for violation of requirements for the separation and independence of the transmission system operator under this Law

5) from 900 to 3,000 non-taxable minimum incomes of citizens – on the officials of vertically integrated entity or distribution system operator for violation of requirements for the separation and independence of the distribution system operator under this Law

6) from 5,000 to 100,000 non-taxable minimum incomes of citizens – on the entities that conduct economic activities in the electricity market, subject to licensing:

a. for economic activities in the electricity market subject to licensing without licenses, including for economic activity in the energy market in the absence of final certification decision adopted on the appropriate entity;

b. for violation of license conditions for the respective type of economic activity in the electricity market subject to licensing;

c. for violation of accounting and reporting rules and of market participants under this Law;

d. for failure to submit information to the Regulator, transmission system operator or other market participant, if the mandatory submission of such information is set forth by this Law;

e. for denial of access to the transmission system or the distribution system in cases unforeseen by law;

f. for non-compliance with the set technical rules and safety standards;7) from 20 to 900 non-taxable minimum incomes of citizens – on the

officials of entities that conduct economic activities in the electricity market, subject to licensing for violations under paragraph 5 of this clause.

5. When determining sanctions for violations under this Article, the Regulator shall take into account the severeness and duration of the offense, consequences of the offense to the interests of the electricity market and its participants, mitigating and aggravating circumstances.

The behavior of the offender aimed at reducing the negative effects of the offense, the immediate suspension of offense after discovery thereof, facilitating detection of violations by the Regulator during the test shall be treated as mitigating circumstances.

The behavior of the offender aimed at concealing the offense and its negative consequences, at continuation of the offense and reoccurrence of the offense on the electricity market shall be treated as aggravating circumstances.

6. The Regulator's decision on imposition of sanctions for violations under this Article may be taken within five days upon identification of the offense by the Regulator.

Imposition of sanctions under this Article is not allowed if the violation has been detected within three or more years after the commission (in case of continuing violation – suspension thereof) or identification of its effects.

7. For one offense on electricity market only one type of penalty sanctions (fines), or the fine suspension of the license can apply.

8. The decisions to impose sanctions by the Regulator can be challenged in court.

9. The amounts of fines charged shall be credited to the State Budget of Ukraine.

The amounts of fines in case of non-payment shall be charged in court.

SECTION XIXFINAL AND TRANSITIONAL CLAUSES

1. This Law shall come in force upon the day following the day of publication hereof, , except for:

articles 32, 34-36, 64-66 to be enforced twelve months upon publication of this Law;

articles 47, 48, part 2 of article 57 to be enforced eighteen months upon publication of this Law;

The balancing and ancillary services markets, the “day-ahead” market, intraday market and bilateral contracts market (hereafter – “the new electricity market”) shall be implemented no later than twenty four months the date this Law enters into force.

The Cabinet of Ministers of Ukraine shall define the precise date of starting operation of the new electricity market taking into account the above provision.

2. Rights and obligations of electricity market participants as prescribed by articles 30, 33, 46, 52, 56, 57, 66, related to participation at the “day-ahead” market and intraday market, at balancing marke and ancillary services market, at bilateral contract market shall emerge from the date of operation of the new electricity market.

3. In order to limit the impact of support schemes for renewable energy and cogeneration on electricity prices for households and small consumers, the transitional period on the new electricity market (hereafter – “the transitional period”) is implemented in Ukraine according to this Paragraph

The transitional period is implemented from the date of starting operation of the new electricity market till January 1, 2019, during which the Guaranteed Buyer shall purchase electricity directly from commercial entities which produce electricity from nuclear and hydro (apart from small, mini and micro) power plants, under bilateral contracts in quantities and prices approved by the Regulator.

The quantities of energy generated by nuclear and hydro (apart from small, mini and micro) power plants and sold subject to this public service obligation to the Guaranteed Buyer shall be formulated to appropriate energy products determined quarterly by the Regulator based on a methodology to be approved in consultation with the Energy Community Secretariat. At the actual date of implementation of the new electricity market these quantities shall:

o correspond to nuclear capacity not exceeding 75% of the total nuclear capacity installed and operational in the country, and

o not exceed on annual level 40% of the average annual electricity production (in MWh) of the hydro (apart from small, mini and micro) power plants in Ukraine in the previous three years .

During the transitional period, quantities of electricity which shall be sold to the Guaranteed Buyer by commercial entities which produce electricity from nuclear and hydro (apart from small, mini and micro) power plants, shall be gradually diminished and phased.

From 1 January 2019, any compensation for costs associated with support schemes for renewable energy and cogeneration shall be passed on to customers as a surcharge on the transmission tariff according to the Article 63 paragraph 6 of this Law and paragraph 11 of this Section.

The Regulator, in consultation with the Energy Community Secretariat, shall develop and adopt market-based, non-discriminatory and transparent procedures for the sale and purchase electricity by the Guaranteed Buyer at the transitional period.

4. Until beginning of activity of the certified transmission operator, functions, rights, and obligations of the transmission operator hereunder shall be exercised by the state enterprise performing centralized dispatch (operational and technological) control of the unified energy system of Ukraine.

5. Until beginning of activity of the Regulator to be established meeting the self-sufficiency and independence requirements based on the separate law, functions, rights, and obligations of the Regulator hereunder shall be exercised by the national commission effective at entry into force hereof that performs government regulation of energy and public utility services.

The coordination of activity on implementation of the new model of electricity market of Ukraine under this Law, as well as control over fulfilment of organisational and legal actions on implementation of the new model of electricity market are accomplished by the Coordination Centre on implementation of the new model of electricity market (hereafter – the Coordination Centre). the Coordination Centre is the consulting and advisory body at the Cabinet of Ministers of Ukraine, the main tasks of are, in particular:

o coordination of work provided by state bodies and organisations and commercial entities on implementation of the new model of electricity market of Ukraine;

o preparation of proposals and recommendations on actions related to implementation of the new model of electricity market of Ukraine;

o control over fulfilment of actions related to implementation of the new model of electricity market of Ukraine;

The Coordination Centre is performed its activity till January 1, 2018.

The decision of Coordination Centre shall not influence on independence of the Regulator.

6. The license for the business of electricity transmission, which was issued before the entry into force by this Law shall be valid until the day of issuance of

relevant licenses to the transmission system operator in accordance with this Law.Until issuance of an appropriate license to the transmission system operator

functions of the transmission system operator as defined by this Law, shall be performed by state enterprise that provides centralized dispatching (technological and operational) management.

Conduction of the electricity production activity shall be based om valid licenses that were issued prior to the day of enactment of this Law till January 01,2017.

7. During the first year ofoperation of the "day ahead" market marginal lower limit ofthe compulsory sale of electricity byproducers at this market (other than producers engaged in generation of electricityfrom renewable energy sources) can not be less than ten per cent of their monthly volumes of electricity supply for the corresponding period of the previous year.

8. The intraday market shall be launched within twenty four months from the date this Law enters into force

9. Maximum term of bilateral contracts, except agreements with producers under green tariff, concluded from the date of operation of the new electricity market till December 31,  2020 may not exceed one year.

10. The reimbursement rate for producers that produce electricity at electricity facilities using the energy of wind and sun light, for which the green tariff is set and which are within the balancing group of green tariff producers for reimbursement of value of imbalances thereof to the guaranteed buyer is as follows:

until December 31, 2018 – 0%;from January 01, 2019 – 50%from January 01, 2020 – 100%.

Until 2025, the reimbursement of imbalance by producers that produce electricity at electricity facilities using the energy of wind and take part in balancing group under the “green tariff”, is committed to the Guaranteed Buyer in case of deviation of its ex post amount of produced electricity from its daily production schedule more than 10%.

Until 2025, the reimbursement of imbalance by producers that produce electricity at electricity facilities using the solar energy and take part in balancing group under the “green tariff”, is committed to the Guaranteed Buyer in case of deviation of its ex post amount of produced electricity from its daily production schedule more than 5%.

11. In order to ensure continuity of district heating for population, the Cabinet of Ministers of Ukraine may decide to temporarily support some thermal power plants for their reconstruction.

The decision on the introduction of support for each separate cogeneration heating plant is made under the following conditions:

- the cost of power generation by the cogeneration unit without reconstruction is higher than the market price;

- lack of alternative sources of heat for combined heat and power at the district heating area;

- availability of feasibility study on the reasonability of reconstruction compared to the construction of new alternative sources of heating.

The decision to support the introduction of cogeneration heat power plant is made on the basis of conclusion of the Commission, appointed by the Cabinet of Ministers of Ukraine and which must include representatives of local self-governments combined of areas of heat and power district heating.

Requirements for the feasibility study shall be set by the Cabinet of Ministers of Ukraine and should relate, in particular, to:

- type of primary fuel before and after reconstruction;- changes of electric and thermal capacity due to reconstruction;- the ratio of heat and electric capacities at reconstruction;- the level of specific fuel consumption for electricity and heat;- emissions of harmful substances.The decision on support for cogeneration is re-considered by the Cabinet of

Ministers of Ukraine each 3 years.Reconstruction should be carried out at the expense of the owner of

cogeneration power plant.Support for cogeneration power plant is valid only if it complies with the

commitment to the reconstruction and the timing of the stages of the project.Monitoring of fulfillment of the commitments made for the reconstruction of cogeneration power plants is made by the executive body that implements the state policy on energy supervision in the electricity sector.

Support is provided by introducing price controls on electricity produced by the cogeneration power plants during the period of reconstruction.

Adjustable purchase price of electricity generated by cogeneration power plant is set by the Regulator for each cogeneration power plant on the volume of supply of electricity, determined on the basis of the schedule of thermal energy generation. Methods of calculating the regulated prices for electricity generated by cogeneration power plants are approved by the Regulator and should consider cost recovery through the electricity and heating tariff.

Cabinet of Ministers of Ukraine imposes a special duty on the guaranteed buyer for purchase of electricity generated by the cogeneration power plants in amounts not exceeding the amounts calculated in determining the regulated price of purchase, at the regulated price.

To ensure coverage of economic and reasonable expenses guaranteed buyer to perform special duties for the purchase of electricity generated by cogeneration

power plants at the regulated price, the Cabinet of Ministers of Ukraine imposes a special obligation on the transmission system operator to pay the compensation payment to the guaranteed buyer.

Compensation payments should provide coverage to the guaranteed buyer for the difference between the cost of electricity purchased by him at the regulated purchase price and the cost of electricity sold at prices of the "day ahead" market.Compensation payments are calculated by the guaranteed buyer under the procedure of purchase of electricity of cogeneration power plants at regulated prices. The amount of the compensation payment is approved by Regulator.The procedure of support to cogeneration power plants, including the procedure for purchase of electricity of cogeneration power plants at regulated prices is approved by the Cabinet of Ministers of Ukraine.

12. In the implementation of measures unbundling the distribution system operator, the number of customers connected to the distribution system of which is in excess of 100,000 (one hundred thousand), a vertically integrated entity shall not later than ten months from the publication of this Law establish a separate entity for supply of electricity to consumers. The entity shall, not later than twelve months from the date of promulgation of this Law get a new appropriate license. Since obtaining the license for two years such entity shall serve as the universal service provider in the assigned territory, defined as the oblast, city of Kyiv, city of Sevastopol, Autonomous Republic of Crimea, in which the vertically integrated entity operated on electricity distribution and supply of electricity at regulated tariffs.

Operations of distribution eighteen months after the publication of this Law shall be implemented on the basis of new licenses for the activity of distribution.

License for the economic activity of transmission of electricity to (local) electric networks, supply of electricity at regulated tariffs and supply of electricity at unregulated rates shall be canceled no later than eighteen months from the date of publication hereof. Until revocation of the above licenses activities on distribution and supply on the basis of valid licenses that were issued prior to the date of enactment of this Law.

Transfer of personal data of consumers in the implementation of measures for the separation of the distribution system operator shall not require the consent and notification of consumers about the transfer and shall be deemed made in the public interest to ensure the supply of electricity to consumers.

During unbundling the distribution system operator is acknowledged as the assignee of the rights and duties:

1) to recover debts from consumers for delivered electricity, which occurred at the time of unbundlement of activities, under contracts for the supply of electricity and use of electricity.

2) under the concluded agreements of accession to power networks;3) under concluded contracts on sharing technological electricity networks;4) to repay debts to the company that operates on the wholesale supply of

electricity;

5) for commitments confirmed by court rulings.

13. To oblige the Regulator, transmission system operator and market operator to ensure test transactions on electricity sale and purchase and provision of services, as well as performance of settlements for electricity and services under the terms of this Law, shall be completed within twenty four months from the date this Law enters into force

14. To oblige the Cabinet of Ministers of Ukraine:o by December 31, 2016 to reorganize the company, which would operate

in wholesale supply of electricity by means of its separation from the number of structural units (branches) of the market operator and guaranteed buyer, and to create companies on their basis which will perform the relevant functions. Furthermore, from the day of operation of the new electricity market the guaranteed buyer is the legal assignee of the electricity wholesaler under contracts for purchase of electrictity at ‘green tariff’ that were concluded by the electricity wholesaler with producers with ‘green tariff’ set according to the law ;

o by April 01, 2016 to conduct corporatization of the enterprise implementing dispatching and supervisory control of the unified energy system of Ukraine and transmission of electricity through main and interstate electric networks.

o by December 31, 2016 to designate the authorized the bank for the electricity market; - NBU

o by January 01, 2019 to have bids for designating universal service providers in accordance with this Law;

o by December 31, 2016 to designate the guaranteed buyer under this Law;o by 31 December 2016 to ensure that the company of wholesale supply of

electricity, and public enterprise that provides centralized dispatching (technological and operational) management of the unified energy system of Ukraine, conduct procurement and introduction of software and technical support, goods and services needed for ensuring the operation of the "day ahead" and intraday markets and balancing market, the functions of the transmission system operator, settlement administrator and commercial metering administrator, the guaranteed buyer;

o to ensure that the State Property Fund of Ukraine complies with following provisions within the time limits defined by the Law:

o to take measures for the electricity supply companies where the government share in the authorized capital of which exceeds 50 percent, and for the electricity supply companies that are under authority of the State Property Fund of Ukraine to comply with the requirementson unbundling established by this Law;

o to facilitate the adoption by the investor (buyer) of privatization objects (stocks, shares) of electricity supplying companies of resolutions on separation of

activities to meet the requirements of this Law under the conditions of agreements (contracts) for sale of objects of privatization (stocks, shares) of electricity supplying companies including the conditions of sale of privatization objects (stocks, shares).

In a process of privatization objects (stocks, shares) of electricity supplying companies to involve under recommendation of commission the obligations of unbundling to sale conditions and conditions of agreements (contracts) for sale of objects.

to adopt all necessary regulations required by this Law.By July 01, 2017 to approve necessary regulations under this Law.By October 01, 2016 to ensure development and suggestion for

consideration of the Verkhovna Rada of Ukraine of the draft law on peculiarities of repayment of debts for electricity that occurred at the electricity wholesale market;

15. To oblige the Regulator: 1) to approve the following documents:

o within nine months from the date of publication of this Law – market rules, “day-ahead” market rules and intraday rules, rules governing limits and procedure for distribution of bandwidth of interstate electrical networks, the code of commercial metering, the code of the transmission system, the rules of supply of electricity to customers;

o within six months from the date of publication of this Law – regulations necessary to ensure the separation of distribution and supply of electricity;

o by January 01, 2017 – Code of the distribution system;o within two month after entering into force by this Law – the order

of implementation for procedures of certification of transmission system operator;

o within six months from the date this Law enters into force – conditions and rules for licensing of functions of the market operator, power generation, trader activity.

o by July 1, 2017 to ensure acceptance and adoption of other regulations under this Law.

2) to hold bids for the selection of suppliers of "last resort" and designate suppliers fo "last resort" by July 1, 2017;

16. To oblige the state enterprise conducting the activities of electricity wholesale supply to develop and submit draft rules of the “day-ahead market” and intraday market ruleswithin the six-month term from the date of publication of this Law.

17. To oblige the state enterprise conducting the centralized dispatching (technological and operational) management of the unified energy system of

Ukraine to develop and submit the following to the Regulator:o within the six-month term from the date of publication of this Law – draft

rules of the market, draft Code of Transmission System, draft Code of Commercial Metering;

o within six-month term from the date of publication of this Law – to develop draft regulatory legal acts necessary for implementation of ancillary services .

18. To oblige the Cabinet of Ministers of Ukraine, central executive authorities, the Regulator to bring their regulatory legislative acts in conformity with terms of this Law within the nine-month term from the date of publication of this Law.

Until approval of regulatory acts for performance of this Law regulatory acts valid as of entry into force by this Law shall be in effect.

19. To hold the Law of Ukraine “On Fundamentals of Operation of Electricity Market of Ukraine” invalid .

20. To hold the Law of Ukraine “On the Electrical Energy” invalid , except for:

the definition of terms "energy generating companies", "energy suppliers", "wholesale electricity market of Ukraine", "participants of the wholesale electricity market of Ukraine", "marginal figures", "special current accounts of wholesale electricity market (hereinafter – the current accounts)", "algorithm of wholesale electricity market", "wholesale supply of electricity", "authorized bank" as prescribed by first Article;

the first and second paragraphs of second part of Article 12;Articles 15, 151, 17, which shall become invalid since July 01, 2017.

21. Article 15 of the Law of Ukraine "On Electricity" (Journal of Verkhovna Rada of Ukraine (VVR), 1998, N 1, Article 1):

to present the first and second parts as follows:"The purchase of all electricity produced in power plants, the capacity or

volume of supply of which is exceeding marginal indicators, and its wholesale shall be made on the wholesale electricity market of Ukraine (except as provided by this Law) Functioning of other wholesale electricity markets in Ukraine is prohibited.

to present the eleventh part as follows:"Rules of the wholesale electricity market of Ukraine shall define the

mechanism of functioning of the wholesale electricity market of Ukraine, order of distribution of loadings between generating sources, rules of formation of market prices for electricity and shall be approved by the National Commission, which performs state regulation in the energy and utilities as agreed with the Antimonopoly Committee Ukraine.";

from July 1, 2016 to amend the twelfth part, adding a new paragraph as

follows:"Market participants are financially responsible for the deviation of their

actual hourly volumes of production and consumption from the plan, according to the Rules of the wholesale electricity market."

22. Since July 01, 2017 to amend the Law of Ukraine “On Combined Generation of Heat and Electrical Energy (Cogeneration) and Use of Waste Potential” (Journal of the Verkhovna Rada of Ukraine, 2005, № 20, art. 278; 2011, № 29, art. 272) as follows:

1) to add words “distribution” to first paragraph of the preamble after words “generation, transmission”;

2) to present first part of article 2 in the following version:"This Law shall govern relations arising in the energy saving domain

between owners of cogeneration plants and electricity distributing enterprises, irrespective of the ownership form";

3) to remove words “electrical and” in fourth paragraph of second part and third part of article 8;

4) to remove second and third parts of article 9.

23. To amend the Law of Ukraine “On Licensing of Kinds of Economic Activities” (Official Journal of Ukraine, 2015, N 25, article 722) as follows:

1) to supplement paragraph 4 of Article 1, after the words "the Cabinet of Ministers of Ukraine" with the following words:

"or state collegial body in cases established by law";2) to supplement second part of the fifth paragraph of article 2 after the

words "the Cabinet of Ministers of Ukraine" with the following words"or state collegial body in cases established by law";3) to supplement paragraph 2 of Article 6, with the following words "except

cases specified by law;";4) to present paragraph 5 of Article 7 as follows:"5) Activity in the electricity sector, which is licensed subject to peculiarities

defined by the Law of Ukraine "On Electricity Market", and in the sector of nuclear energy, which is licensed subject to peculiarities defined by the Law of Ukraine "On Permit Activity in the Field of Nuclear Energy";

5) in Article 9:to supplement the first paragraph of the second part with the following

words:"except cases established by law.";To supplement paragraph 5 of the ninth part with the new third paragraph as

follows:"fulfillment of the requirements of the law on the separation and

independence;";

In this regard, to consider third-fifth paragraphs as fourth-sixth paragraphs, respectively.

6) to supplement Article 21 with the new seventh part as follows:"7. The provisions of the first and third parts of Article 8 of this Law shall

apply subject to the Law of Ukraine "On Electricity Market"In this regard, to consider seventh and eighths parts as eighth and ninth

parts, respectively

24. To supplement part two of Article 2 of the Law of Ukraine "On Administrative Services" (Journal of Verkhovna Rada of Ukraine, 2013., N 57, p. 2056 with subsequent amendments) with paragraph 14 as follows:

"14) certification of the transmission system operator pursuant to the Law of Ukraine "On Electricity Market"."

To supplement part two of Article 2 of the Law of Ukraine "On the Permitting System in Economic Activity" (Journal of Verkhovna Rada of Ukraine, 2005, N 48, art. 483 with subsequent amendments) after the words "protection of economic competition" with the words:

", on relations on certification of transmission system operator in accordance with the Law of Ukraine "On Electricity Market"."

25. To amend the Law of Ukraine "On Alternative Energy Sources" (Journal of Verkhovna Rada of Ukraine, 2003, № 24, p. 155):

In Article 1:to present the second paragraph as follows:"Alternative energy sources are renewable energy sources and secondary

energy resources, which include blast furnace and coke gases, methane gas from drainage of coal deposits, conversion of waste energy potential of technological processes";

to add new paragraphs of the following content:"Renewable energy sources are renewable non-fossil energy sources, namely

solar, wind, geothermal, tidal and wave energy, hydropower, biomass, landfill gas, sewage gas from treatment plants, biogas;

wind power plant is the group of wind power plants or separate wind electrical installation, equipment and facilities located in the same area and functionally linked which form a single complex designed to generate electricity by converting kinetic wind energy into electrical energy;

wind power installation is the electrical installation that converts kinetic wind energy into electric energy;

production of items of equipment of the power facility is the activity linked to the production of goods that includes performance of sufficient manufacturing and technological operations, which result in changing the classification code of goods according to Ukrainian Classifier of Goods within Foreign Operations at any of the first four digits, while the transactions in the production process should not be simple assembly operations under the provisions of customs legislation. Bearing

structures of finished products must be produced in Ukraine with the acquisition the status of Ukrainian origin.

guarantee of origin of electricity is a document issued by the body authorized by the Cabinet of Ministers of Ukraine, at the request of electricity producer, which confirms that the share or defined amount of electricity is produced from alternative energy sources (and for hydropower – only by micro-, mini- and small hydropower plants);

"green" tariff is a special tariff at which electricity is purchased which was generated at the power plants, including the commissioned stages of construction of power stations (starting complexes), from renewable energy sources (and for hydropower – only by micro -, mini- and small hydropower plants);

micro-hydropower plant is the power plant that produces electricity through the use of hydropower with the installed capacity not exceeding 200 kW;

mini-hydropower plant is the power plant that produces electricity through the use of hydropower with installed capacity more than 200 kW, but less than 1 MW;

small hydropower plant is the power plant that produces electricity through the use of hydropower with installed capacity more than 1 MW, but less than 10 MW;

phase of the power plant construction is a group of electrical installations or separate installation, equipment and facilities located in the same area that are functionally linked and form a single complex designed to generate electricity, which according to the project documentation for construction is defined as part of electricity object. Phase of the power station construction may consist of starting complexes;”

After Article 9 to add new Articles 91 and 92 as follows:"Article 9 1. Encouragement of production of electricity from renewable

energy sourcesThe "green" tariff is set by the National Commission, which performs state

regulation in the energy and utilities, for the electricity generated at the electricity objects, including the commissioning phases of construction of power plants (starting complexes) for renewable energy (and for hydropower – only by micro-, mini- and small hydropower plants).

The "green" tariff is set for each entity that produces electricity from renewable energy sources, for each type of renewable energy and for each electricity object (or for each phase of construction of power plants (starting complexes).

The "green" tariff for electricity generated by generation plants of private households, is set the same for each type of renewable energy source.

The "green" tariff for business entities generating electricity from wind energy is set at the level of retail tariff for consumers of second-class voltage for January 2009 multiplied by a factor of "green" tariff for electricity generated from wind power.

The "green" tariff for business entities producing electricity from biomass is set at the level of the retail tariff for consumers of second-class voltage for January

2009 multiplied by a factor of "green" tariff for electricity produced from biomass. For the purposes of this Law the biomass means the non-fossil biologically renewable organic matter, capable of biological decomposition, in the form of products, waste and residues of forestry and agriculture (crop and livestock), fisheries and technologically related industries, as well as a component of industrial or household waste, capable of biological decomposition.

"Green" tariff for business entities producing electricity from biogas is set at the level of at retail tariff for consumers of second-class voltage for January 2009 multiplied by a factor of "green" tariff for electricity produced from biogas. In this law the biogas means gas from the biomass.

"Green" tariff for business entities, that generate electricity from solar energy is set at the level of retail tariff for consumers of second-class voltage for January 2009 multiplied by a factor of "green" tariff for electricity generated from solar energy.

"Green" tariff for private households that generate electricity from solar energy is set at the level of retail tariff for consumers of second-class voltage for January 2009 multiplied by a factor of "green" tariff for electricity generated from solar energy for private households.

"Green" tariff for private households that generate electricity from wind energy is set at the level of retail tariff for consumers of second-class voltage for January 2009 multiplied by a factor of "green" tariff for electricity generated from wind energy for private households.

"Green" tariff for business entities that operate micro, mini or small hydro power plants is set at the level of retail tariff for consumers of second-class voltage for January 2009 multiplied by a factor of "green" tariff for electricity produced by micro- , mini or small hydro power plants, respectively.

"Green" tariff for business entities producing electricity from geothermal energy is set at the level of retail tariff for consumers of second-class voltage for January 2009 multiplied by a factor of "green" tariff for electricity generated from geothermal energy.

The factor of "green" tariff for electricity generated from alternative energy sources is set at the level of:

Proof of the fact and date of the commissioning of the electricity object, including power plant construction stage (starting complex), which produces electricity from renewable energy sources (and for hydropower – only by micro -, mini- and small hydropower plants) is the certificate issued by a competent authority which certifies compliance of the completed construction with the design documentation and confirms its readiness for operation; or the declaration of the facility readiness to the operation registered according to the law.

If the electricity object, including the commissioned phases of construction of power plants (starting complexes) that uses renewable energy sources (and for hydropower – only by micro-, mini- and small hydropower plants), according to this article applies different factors of "green" tariff, for such an object the separate commercial metering should be set for each phase (starting complex) and/or the facility, for which another factor of "green" tariff applies.

For businesses and private households that generate electricity from renewable energy sources, the "green" tariff set until January 1, 2030. The fixed minimum amount of "green" tariff for businesses and private households is set by means of converting the "green" tariff in Euros, where such tariff has been calculated according to the rules of this Law, as of January 1, 2009, subject to the official exchange rate of the National Bank of Ukraine on that date.

"Green" tariff for electricity objects commissioned before December 31, 2024, and private households, the contract for the electricity sale and purchase with which has been concluded before December 31, 2024 may not be less than a fixed minimum amount of "green" tariff which is converted into the national currency on the date of the last meeting of the National Commission, which performs state regulation in the energy and utilities sector, in each quarter at the average official exchange rate of the National Bank of Ukraine for the last 30 days preceding the date of the meeting.

The National Commission, which performs state regulation in the energy and utility sector sets the increase for the "green" tariff for electricity produced from renewable energy sources (and for hydropower – only by micro-, mini- and small hydropower plants) at the electricity objects, including at phases of construction of power plants (starting complexes) commissioned from July 1, 2015 to December 31, 2024, such increase being for compliance with the level of use of Ukrainian-made equipment at relevant facilities as specified in Article 9 2 of this Law. The increase to the "green" tariff for compliance with the level of use of Ukrainian-made equipment is set and applicable for the whole period of its validity. Increase for compliance with the level of use of Ukrainian-made equipment is not set for the "green" tariff for electricity generated by electricity objects (generating facilities) of private households.

The State guarantees that for businesses that generate electricity from renewable energy sources at commissioned electricity objects the procedure shall apply for encouragemnet of production of electricity from renewable energy sources, as established in accordance with this Article at the date of commissioning of electricity objects, including commissioned phases of construction of electricity objects (starting complexes) that produce electricity from renewable energy sources. In case of changes to the law governing the procedure for encouragement of the production of electricity from renewable energy sources, business may choose new procedure of encouragement.

The State guarantees the consolidation at the legislative level for the whole period of "green" tariff application of requirements for purchase in each billing period of the electricity produced at the electricity objects, including the commissioned phases of construction of power plants (starting complexes) that use renewable sources energy (and for hydropower – only by micro-, mini- and small hydropower plants), which was not sold directly to consumers or power supply companies under contracts, at the set "green" tariff subject to increase thereon, as established under Article 9 2 hereof , to the extent and in the manner specified in Article 15 of this Law of Ukraine "On Energy", as well as with respect to payments for such electricity in full, on time and by monetary funds.

Article 9 2. Increase to the "green" tariff for compliance with the level of use of Ukrainian-made equipment

For electricity objects put into operation from July 1, 2015 to December 31, 2024, including phases of construction of power plants (starting complexes) commissioned from July 1, 2015 to December 31, 2024, that produce energy from renewable sources energy (and for hydropower – only by micro-, mini- and small hydropower plants), the increase is set for the "green" tariff for compliance with the level use of Ukrainian-made equipment.

Increase for compliance with the level of use of Ukrainian-made equipment is fixed, at a certain percentage specified by this Law; it is a surcharge for the "green" tariff proportional to the level of the entity’s use of Ukrainian-made equipment at the relevant electricity object.

Increase for compliance with the level of use of Ukrainian-made equipment is set by the National Commission, which performs state regulation in the areas of energy and utility services, provided that the following levels of use of Ukrainian-made equipment are maintained:

Amount of increase for the "green" tariff, %

Level of use of Ukrainian –made equipment, %

5 3010 50.

Increase for compliance with the level of use of Ukrainian-made equipment for the relevant electricity object in monetary terms is set by the National Commission, which performs state regulation in sectors of energy and utilities, at each date of conversion of fixed minimum amount of the "green" tariff.

The procedure for determining the level of Ukrainian-made equipment at the electricity objects, including the commissioned phases of construction of power plants (starting complexes), which generate electricity from renewable energy sources (and for hydropower – only by micro-, mini- and small hydropower plants), and establishing the appropriate increase to the "green" tariff is approved by the National Commission that performs state regulation in energy and utilities sector.

Compliance of the level of use of Ukrainian-made equipment with requirements established by this Law, is determined by the National Commission which performs state regulation in energy and utilities sector, based on the calculation submitted by the entity and supporting documents.

The level of use of Ukrainian-made equipment at the electricity objects, including the commissioned phases of construction of power plants (starting complexes), which generate electricity from renewable energy sources (and for hydropower – only by micro-, mini- and small hydropower plants) is defined as the sum of respective specific percentages of items of the equipment. If there are multiple identical items of equipment at the specific electricity object, the corresponding specific percentage of that item of equipment is taken to calculate the level of Ukrainian-made equipment only if each of these identical elements is if Ukrainian origin. Specific percentages of equipment elements are as follows:

a) at electricity objects, including commissioned phases of construction of power plants (starting complexes) that produce electricity from the wind power:Equipment elements Specific percentage, %Blades 30Tower 30Gondola 20Main frame 20Total for the object 100;

b) at electricity objects, including commissioned phases of construction of power plants (starting complexes) that produce electricity from the sun power:

Equipment elements Specific percentage, %Photovoltaic modules 40System of mounts of photovoltaic modules

15

Inventor equipment 15Systems of energy accumulation 15Tracking systems 15Total for the object 100;

c) at electricity objects, including commissioned phases of construction of power plants (starting complexes) that produce electricity from the biomass:

Equipment elements Specific percentage, %Boiler 25Turbine (steam engine) 25Generator 15Network pumps / water heaters 10Smoke exhausts and ventilators 5Fuel supply system 5Gas cleaning system 5Water treatment system 5Steam cooling/condensator 5Total for the object 100;

d) at electricity objects, including commissioned phases of construction of power plants (starting complexes) that produce electricity from the biogas:

Equipment elements Specific percentage, %Reactors of anaerobic digestion 35

Mixers of reactors anaerobic digestion 10Gas blowers 5Systems of biogas treatment 15Cogeneration facilities 35Total for the object 100;

e) at electricity objects, including commissioned phases of construction of power plants (starting complexes) that produce electricity from the biogas recovered from designated places or objects at which wastes are deposited and stored:

Equipment elements Specific percentage, %System of gas recovery, collection, delivery

35

Compressors 5System of gas dehydration 10System of gas cleaning 15Cogeneration facilities / generators / turbine generators

35

Total for the object 100;f) at electricity objects, including commissioned phases of construction of

power plants (starting complexes) that produce electricity using the hydropower at micro-, mini- and small hydropower plants:

Equipment elements Specific percentage, %Turbine 30Generator/ generator set with gear (gear mechanism)

30

Main panel for generator control (control and regulation system)

15

System of generator excitation 10Speed controller/ drive of speed controller

10

System of automated regulation 5Total for the object 100;

g) at electricity objects, including commissioned phases of construction of power plants (starting complexes) that produce electricity through the geothermal energy:

Equipment elements Specific percentage, %Well and wellhead equipment 30Turbine 5

Generator 5Main panel of generator control 15Pumps supplying the thermal acceptor to the zone of heat formation

10

Heat exchange unit of thermal acceptor cooling

30

System of automated magnetic regulation

5

Total for the object 100.The fact of production of equipment elements existing at the electricity

object in Ukraine is confirmed by certificate(s) of origin issued in due course by the Chamber of Commerce and Industry of Ukraine (its regional offices) for these elements.".From the date of starting operation of the new electricity market to present nineteenth part of article 92 as follows:

"The State guarantees the consolidation at the legislative level for the whole period of "green" tariff of requirements for purchase in each billing period of the electricity produced at the electricity objects, including the commissioned phases of construction of power plants (starting complexes) that use renewable energy (and for hydropower – only by micro-, mini- and small hydropower plants), at the set "green" tariff subject to the increase thereon, as established under Article 92 of this Law, to the extent and in the manner laid down in Articles 68 and 74 of the Law of Ukraine "On Electricity Market", as well as with regards to payments for such electricity in full, on time and in monetary funds."

26. To amend the Law of Ukraine "On the List of Enterprises not Subject to Privatization":

In Annex 1 to the Law of Ukraine "On the List of Objects of State Property not Subject to Privatization" dated July 7, 1999, No. 847-XIV – to delete the position "00100227 State Enterprise “National Power Company "Ukrenergo"” 252032, Kyiv, 25 Kominterna St.” from the list of state property not subject to privatization.

To add new position in Annex 2 to the Law of Ukraine to the Law of Ukraine "On the List of Objects of State Property not Subject to Privatization" dated July 7, 1999, No. 847-XIV – the List of objects of state property not subject to privatization, but those that can be corporatized which are managed by the Ministry, as follows:

“Kyiv 00100227 State Enterprise “National Power Company "Ukrenergo"” 252032, Kyiv, 25 Simon Petlyura St.”

27. To supplement part four of Article 14 of the Law of Ukraine "On Accounting and Financial Reporting in Ukraine" (Journal of the Verkhovna Rada

of Ukraine, 1999, № 40, art. 365; 2011, № 45, art. 484) with the second paragraph of the following content:

“Companies – electricity subjects that are not required to publish financial statements in accordance with this Article shall ensure availability of appropriate financial reporting for public familiarization at location of executive body of such enterprise”.

28. To amend Law of Ukraine "On Peculiarities of Procurement in Certain Sectors of Economic Activity"(Journal of the Verkhovna Rada of Ukraine, 2013, № 17, art. 148, as amended by the Law of Ukraine dated October 2, 2012 № 5406-VI) as follows :

1) in part one of article 2:to present third paragraph in the following version:"ensuring generation, transmission, distribution, sale, supply of electricity

and centralized dispatch (operational and technological) management of the united energy system of Ukraine";

to supplement with the paragraph the of the following content:"ensuring operation of the electricity market, "day-ahead market" and

intraday market, balancing market, ancillary services market, as well as providing services of the transmission system operator, settlement administrator, commercial accounting administrator, market operator, according to the Law of Ukraine "On the Electricity Market";

provision of ancillary services in the ancillary services market according to the Law of Ukraine "On the Electricity Market";

2) to supplement part one of article 4 with paragraphs 10-13 of the following content:

"10) of goods and services in the day-ahead market and intraday market, balancing market, and ancillary services market according to the Law of Ukraine "On Electricity Market of Ukraine ";

11) of electricity that is bought and sold on the electricity market by the guaranteed buyer, market operator, transmission system operator, the party responsible for balancing of the balance group, the party responsible for balancing of the balance group of producers at "green" tariff;

12) of services of the transmission system operator, settlement administrator, commercial accounting administrator , market operator, guaranteed buyer according to the Law of Ukraine "On Principles of Operattion of the Electricity Market of Ukraine";

29. To amend the Commercial Code of Ukraine (Journal of the Verkhovna Rada of Ukraine, 2003., №№ 18-22, art. 144) as follows:

1) to supplement part one of Article 275 with the second paragraph of the following content:

"Another type of power supply contract is a contract on electricity supply to consumers. Features of the supply of electricity to consumers and the requirements

for electricity supply contract shall be established by the Law of Ukraine "On Electricity Market";

2) to remove part fourto supplement Article 276 with a new part of the following content:

“9. Features of specification of the amount (volume), quality, timing, price and order of payments under the contract on supply of electricity to consumers shall be established by the Law of Ukraine "On Electricity Market".

3) to remove Article 277;4) to supplement Article 278 with part three of the following content:“3. Legal conditions of organization and trading of electricity shall be set by

the Law of Ukraine "On Electricity Market”.

30. To present first part of Article 3 of the Law of Ukraine “On Natural Monopolies” (Journal of the Verkhovna Rada of Ukraine, 2000, № 30, art. 238, 2004., № 13, art. 181, 2005. № 26, art. 349; 2012, № 7, art. 53) in a new wording as follows:

“1. Ukraine's legislation on natural monopolies consists of this Law, the Air Code of Ukraine, the Merchant Shipping Code of Ukraine, Laws of Ukraine "On Protection of Economic Competition", "On transport", "On Pipeline Transport", "On Railway Transport", "On Electricity Market"," On State Regulation of Utilities", other laws of Ukraine, establishing peculiarities of business in the areas of natural monopolies."

31. To supplement Section XVII “Final and Transitional Provisions” of the Law of Ukraine "On Joint Stock Companies" with new paragraph 8 as follows:“8. The provisions of Article 68 of this Law until July 1, 2016 shall not apply to shareholders' rights and liabilities of the joint-stock company on the mandatory redemption of shares at the request of shareholders who voted against the general meeting decisions related to the joint-stock company’s implementation of prescriptions of the Law of Ukraine “On the Electricity Market”.

32. To present part one of Article 8 of the Law of Ukraine "On Regulation of Issues Related to Nuclear Safety" as follows:The amount of deductions of the operating organization (operator) to a special account is set and approved by the central executive body that ensures the formation of state policy in the nuclear industrial complex in coordination with the central executive body that ensures the formation of public financial policy, since the commissioning of the nuclear facility".