summary of the case
| status: | closed by Ministerial Council Decision / complied after Art.91 MC Decision |
|---|---|
| registered: | upon complaint 04.01.2012 |
According to the Protocol on accession of Ukraine to the Treaty establishing the Energy Community, Ukraine was under an obligation to implement Regulation (EC) 1228/2003 on conditions for access to the network for cross-border exchanges in electricity and the so-called Congestion Management Guidelines by 1 January 2012. This commitment entails the obligation to transpose this legislation and to apply them to the allocation of cross-border capacity for electricity.
The Secretariat had received two complaints concerning the cross-border capacity allocation organized by the Ukrainian transmission system operator (TSO). Upon receiving the complaints, the Secretariat assessed the compliance of the Auction Rules adopted by the regulatory authority.
In the view of the Secretariat, different treatment of electricity imports and exports by distinguishing between different directions of electricity flow and maintaining different procedures for the allocation of capacity in both directions is incompliant with the Energy Community law. In addition, the Secretariat found that the access to interconnectors for electricity exports is limited by maintaining requirements for participation to the auctions that are falling short of respecting the acquis. The Secretariat also took the preliminary view that the procedure for capacity allocation in case of non-congested interconnectors as well as the prohibition of secondary trading encroach upon several provisions and principles of the Energy Community law.
With the adoption of Decision 2018/02/MC-EnC, the procedure under Article 91 of the Treaty in Case ECS 01/12 is closed.
procedural history
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26 February 2013: Opening letter
Case
On 26 February 2013, the Energy Community Secretariat sent an Opening Letter to Ukraine in accordance with the Rules of Procedure for Dispute Settlement. The Secretariat, takes the preliminary view that the Auction Rules adopted for the allocation of capacity on the country’s electricity interconnectors with its Western neighbours and Moldova, as well as their appliance in practice by the system operator, fails to respect relevant Energy Community rules. Ukraine has been given the possibility until 26 April 2013 to comply of its own accord with the requirements of the Treaty, or to justify its position.
Procedure
Given the importance of cross-border capacity allocation for the establishment of an internal electricity market as pursued by the Energy Community Treaty, the Secretariat decided to initiate the present proceedings under Article 90 of the Treaty. The purpose of this initial step in the procedure is to give Ukraine the possibility to react to the allegation of non-compliance with Energy Community law, and enabling the Secretariat to establish the full factual and legal background of the case.
According to the Rules of Procedure for Dispute Settlement, interested parties may be granted access to the case file and may submit written observations on the present case to the Secretariat within one month from 26 February 2013.
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4 March 2017: Reasoned Opinion
Steps taken
On 14 March 2017, the Energy Community Secretariat submitted a Reasoned Opinion in Case ECS-1/12 against Ukraine, for its failure to comply with the rules for allocation of cross-border capacity. Having taken into account the Government’s reply to the Opening Letter, as well as the follow-up activities undertaken for rectifying the breaches identified in the Opening Letter, the Secretariat considers that the argumentation provided therein as well as the developments in electricity sector reform until today do not change its finding of an infringement of Energy Community law.
Procedure
A Reasoned Opinion is the second step in a dispute settlement procedure initiated by the Secretariat under Article 90 of the Energy Community Treaty. Depending on the Government's reply, the Secretariat may submit the case to the Ministerial Council for a decision on Ukraine’s compliance with Energy Community law.
Ukraine is now requested to rectify the identified issues of non-compliance within a time limit of two months.
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19 May 2017: Reasoned Request
After carrying out a preliminary procedure, the Secretariat submitted a Reasoned Request on Ukraine’s failure to comply with the Energy Community’s rules on allocation of cross-border capacity by the Ukrainian transmission system operator Ukrenergo, under the Auction Rules approved by the National Electricity Regulatory Commission (“NERC”), that are closely linked and depend on the electricity market model based on a single buyer operated in place in Ukraine.
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2 February 2018: Ministerial Council Decision on failure
Steps taken
After having considered the opinion of the Advisory Committee, which upheld the Reasoned Request, the 15th Ministerial Council took a decision regarding the failure of Ukraine to comply with the Energy Community’s rules on allocation of cross-border capacity by the Ukrainian transmission system operator Ukrenergo. The Ministerial Council declared the existence of a breach by Ukraine of Article 41 of the Energy Community Treaty, provisions of the Directive 2009/72/EC and Regulation 714/2009 as well as of the Congestion Management Guidelines.
In Article 1 of the Decision, the failure is described in detail. Article 2 of the Decision specifies Ukraine’s obligation to rectify the breaches and ensure compliance.
Procedure
Ukraine is asked to report to the Secretariat and the Permanent High Level Group about the measures taken. The ministers invited the Secretariat to initiate the procedure under Article 92 of the Treaty if the breach is not rectified.
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1 July 2019: closure of the case
With the energy into force of the new electricity market model, allocating capacity at interconnectors for import was allowed, and by implementing non-discriminatory auctions Ukraine ensured compliance with the Ministerial Council decision.