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The amendments are to become effective as of August 1, 2018.
Naftogaz heeds discrimination in the upcoming regulatory amendments to the Ukrainian Gas Transmission Code.
"Naftogaz welcomes the message from the Energy Community Secretariat that a facilitation process has been agreed between JSC Ukrtransgaz and the Ukrainian energy regulator as regards 'implementation of the amendments to the Ukrainian Gas Transmission Code which are supposed to enter into the force by 1 August 2018.' In our opinion, one of the most critical shortcomings of these amendments concern the rules for the so-called automatic registration of consumers with the PSO supplier (those which may not refuse to conclude a gas supply contract with the respective consumer, which may imply Naftogaz, and all other PSO suppliers)," Naftogaz's press service said on July 5.
Specifically, the amended Transmission Code envisages that the supply of natural gas to gas consumers starting from August 1, 2018, shall be supported via the information platform of the transmission system operator (TSO) which shall also provide the suppliers with the so-called 'register of consumers.' The supplier is entitled to supply gas to its consumer only if the latter is included to the register of consumers assigned specifically to this supplier. "In this case, all the gas used by the consumer will be allocated as an offtake of the respective supplier," Naftogaz said.
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The amendments establish a procedure for compiling and managing such registers of consumers starting from July 2018 (the month before the transition to the daily balancing regime). This procedure consists of the following steps: 1) the consumer which has a current supplier in July 2018 is automatically included by the TSO in the register of consumers of his current supplier; 2) in July 2018 the TSO submits this initially formed register of consumers to the supplier; 3) after checking the register of consumers for its completeness and correctness, the regular supplier is entitled to define the period of gas supply for each consumer included to the register or eliminate an ineligible consumer from his register. The supplier may also add missing consumers to his register when identified.
"However, the GTS Code stipulates different rule to a PSO supplier which cannot freely eliminate an ineligible consumer from its consumer register even if having legitimate grounds to do so (e.g., non-compliance with PSO conditions); instead, the PSO supplier is required to initiate disconnection of such a consumer, in line with the Rules on natural gas supply," Naftogaz said.
According to the company, this distinction in treatment of the PSO suppliers is justified with their obligations within the PSO Regulation but we hardly can accept those arguments. For PSO suppliers which are obliged to supply natural gas under certain conditions only (e.g., the level of payments), it is excessive and imposes additional burden on the PSO suppliers whereas the latter have already been obliged to ensure gas supply to the eligible consumers by virtue of the PSO Regulation.
"These rules have the potential of causing significant losses to Naftogaz if applied. In this connection, we take note of the letter from the Energy Community Secretariat addressed on 03 November 2017 where additional explanations have been requested from NEURC [Ukraine's energy regulator] in regards to the clarity of the roles of supplier of last resort and PSO supplier and it was stated that '[suppliers of last resort and suppliers with public service obligation] have different scope of obligations and rights and which cannot be mixed in the transmission code. Furthermore, the balancing rules must not discriminate against system users, which is the fundamental requirement of the Third Package, or in this case, against balancing responsible parties. The balancing rules cannot envisage additional burden for either public service supplier or a reserve supplier and thus, indirectly, place them in a less advantageous positions to other suppliers (i.e. balancing responsible parties), or allow for cross-subsidies between network users,'" it said.