Legal regulation of the emergency situation in the IPS of Ukraine

If the TSO declares an emergency situation in the IPS of Ukraine because more than 50% of consumption in its control area has been lost (a blackout), the electricity market effectively stops operating as usual. The criterion is set out in subparagraph 5 of paragraph 14.2, Chapter 14, Section V of the Transmission System Code. The consequences for the market are set out in paragraph 2 of NEURC Resolution No. 332 of 25.02.2022, as instructions to the settlement administrator (SA) and the market operator (MO).

Key point: trading mechanisms are suspended

From the day the emergency situation is declared until the first day after the criterion ceases to apply (inclusive):

• registered volumes under bilateral contracts and accepted balancing energy bids from BSPs are cancelled;
• DAM and IDM trading results for the day of the emergency situation and the day after it ends are cancelled;
• no DAM auctions are held;
• no IDM trading takes place until 22:00 on the first day after the criterion ceases to apply.

In effect, the market switches to administrative dispatch mode.

Special settlement procedure for imbalances

Regardless of how long the emergency situation lasts:

• imbalances are charged at the arithmetic mean DAM price for the relevant settlement period over the previous 30 days on which the IPS was not in an emergency situation;
• all BRPs are debited and credited at this price;
• days of the emergency situation are excluded from the historical data used to determine the maximum imbalance volume.

For the duration of the crisis, market-based pricing is replaced by a calculated price.

Payments are deferred, not cancelled

The TSO, acting as SA:

• issues imbalance invoices for the entire period no later than the fourth working day after the criterion ceases to apply;
• uses funds received in the TSO’s special accounts first to meet the financial obligations that arose during that period.

For market participants, this means no payments during the crisis itself, but a concentrated financial burden just a few days after the market resumes.

DAM/IDM funds are returned

The MO returns the relevant amounts to participants whose DAM and IDM purchase volumes were accepted and later cancelled, crediting them to the escrow accounts from which the funds were debited.

The full version of this article is available in DEVOSO’s private channel.

There we publish full analyses, practical takeaways and free consultations for energy market participants. To join the channel, email or call us:

office@devoso.info

+380 77 172 27 45