On 4 October 2023, the National Energy and Utilities Services Commission (the Regulator) adopted Resolution No. 1812 On approval of procedures for registration of members of the wholesale energy market (the Resolution), with effect from 15 October 2023.

As a result, from 1 February 2024, transactions involving wholesale energy products may only be carried out by persons registered as a wholesale energy market participant (as defined in the Resolution).

The Resolution was adopted on the basis and in order to implement provisions of the Law of Ukraine On introduction of amendments to certain laws of Ukraine as to prevention of abuse in wholesale markets dated 10 June 2023 № 3141-IX, envisaging implementation of the REMIT regulation in Ukraine, which introduced amendments to a number of energy-related laws (effective from 2 July 2023, except for some provisions that will take effect later).

Article 2-1 of the Law of Ukraine On the Regulator (the Law on the Regulator) sets out that wholesale energy products are contracts regardless of the place and time of their conclusion, in particular:

• Contracts for the sale and purchase of electricity or natural gas
• Derivative contracts with electricity or natural gas as the underlying asset
• Contracts for the transmission of electricity or natural gas, access to capacity / capacity allocation
• Derivative contracts for the transmission of electricity or natural gas, access to capacity / capacity allocation
• Contracts for the supply or distribution of electricity and/or natural gas to end consumers with a total nominal consumption capacity of the consumer’s installations, which ensures the technical capacity of electricity or gas consumption in the amount of 600 GWh per year and above

Respectively, a wholesale energy market participant is defined as any person who concludes purchase and sale agreements or submits offers (applications) for the purchase and sale of wholesale energy products on the wholesale energy market (i.e., any market that trades in wholesale energy products).

Please note, under the Law on the Regulator, entering into transactions with wholesale energy products without being registered as a wholesale market participant is considered abuse of the wholesale energy market. In the case of electricity-related transactions, such activity will also be considered as a violation of regulations in the electricity market in accordance with the Law of Ukraine On Electricity Market, and for natural gas–related transactions, such activity will also be considered as a violation in the natural gas market in accordance with the Law of Ukraine On Natural Gas Market. In both cases, a violation by a wholesale market participant is subject to a fine imposed by the Regulator. At present fines vary from UAH 51,000 to UAH 1,700,000 (approx. €1,300–€44,000) for each violation.

The Resolution expressly stipulates that it applies to the follow entities, among others:

• Aggregators
• Electricity producers
• Gas producers
• Electricity suppliers
• Wholesale buyers of natural gas
• Wholesale sellers of natural gas
• Natural gas suppliers
• Traders
• Electricity and/or natural gas consumers with a total maximum consumption capacity of 600 GWh per year and above
• Electricity consumers who have acquired (intend to acquire) the status of an electricity market participant
• Other persons (including non-residents) entering into or applying for derivative contracts with electricity or natural gas as the underlying asset, or derivative contracts for electricity transmission or natural gas transmission, access to transmission capacity

Consequently, all producers of electricity from renewables, gas traders/supplies, including nonresidents that store gas in the customs warehouse regime in Ukraine, all gas produces, including producers of biomethane will be subject to mandatory registration as members of the wholesale energy market.

All persons subject to the registration requirement intending to carry out transactions in wholesale energy products must register before concluding purchase and sale agreements or submitting offers (applications) for purchase and sale.

Registration as a wholesale energy market participant – practical information

The Regulator recommends submitting applications for registration as a wholesale energy market participant according to the following schedule (not including public entities and grid operators):

This schedule is only recommended so apparently, market participants may make submissions sooner or later. However, the later the submission is submitted the greater the risk that the participant would not be registered by 1 February 2024.

The registration procedure is composed of the following key steps:

• Submission of the registration form (with the content, as envisaged by the Resolution, in both Ukrainian and English) by an authorized person
• Review by the Regulator of the completeness and accuracy of the submitted form
• Assignment by the Regulator of an ECRB code (a special identification code) and inclusion in the Register of members of the wholesale energy market (the Register)

Participants only need to register once, regardless of the types of activities related to the wholesale energy products they carry out or intend to carry out.

The registration must be submitted by an authorized representative:

• If a resident of Ukraine: digitally, in “xls” or “xlsx” formats through the Regulator’s official website www.nerc.gov.ua (navigate to OPTIONAL SECTIONS › REMIT › REGISTRATION OF WHOLESALE ENERGY MARKET PARTICIPANTS), or through the Ministry of Economy’s e-Services Portal (https://my.gov.ua/) or through the Diia portal Guide to Public Services (https://guide.diia.gov.ua/) using a qualified electronic signature recognized in Ukraine.
• If a nonresident of Ukraine: in hard copy or by post to the Regulator’s address with simultaneous submission of “xls” or “xlsx” formats through the Regulator’s official website www.nerc.gov.ua (navigate to OPTIONAL SECTIONS › REMIT › REGISTRATION OF WHOLESALE ENERGY MARKET PARTICIPANTS). A qualified electronic signature is not necessary.

Registration must be completed within 10 business days from the date of due receipt by the Regulator of the registration form (for nonresidents, of its duly signed original). The Regulator rejects the submission if finds any of the following issues:

• The signatory lacks proper authority.
• The information submitted does not comply with existing information in state electronic registries.
• There is incomplete or incorrect data.
• The Regulator determines that the applicant is controlled by residents of countries carrying out aggression against Ukraine.

If the applicant has any changes to the information it submitted to the Regulator, a revised registration form must be submitted within 10 business days from the change in such information. (Information about controllers must be submitted within 30 calendar days from such change.)

The Register is maintained and updated by the Regulator in Ukrainian and English. Certain information submitted to the Register must be publicly disclosed within three business days from its introduction to the Register.

This information does not constitute legal advice and is merely the views of the author.