Regulator initiates review of electricity price caps: what you need to know

The National Commission for State Regulation of Energy and Utilities (NCRECU) has decided to launch a review of electricity price caps. This was the result of the approval of a draft resolution on updating price caps. The relevant information was published by ExPro Electricity analyst Daria Orlova.

According to the head of the NCRECU, Yuriy Vlasenko, this decision was expected. “As predicted, we are launching a review of price caps in order to promptly respond to the situation in the market,” he said. The regulator believes that such steps are necessary to ensure price stability and the functioning of the Ukrainian energy market.

The draft resolution provides for a review of prices in the event of significant fluctuations in the day-ahead market (DAA), the intraday market (IDM) or the balancing market. The basis for this is data provided by the market operator. It is precisely such fluctuations that have been recorded recently that have become the trigger for the appropriate decision.

Official appeals have already been received by the regulator. JSC Market Operator reported significant price fluctuations on the RDM and VDR, and NPC Ukrenergo reported similar problems on the balancing market. These circumstances are of concern due to possible consequences for the market and the energy system as a whole.

An additional factor is the threat to the stability of the energy system due to possible continued shelling of critical infrastructure. Maintaining such risks requires a flexible approach to market regulation and a prompt response to changing circumstances.

Launching the review of limit prices is a step towards minimizing the negative impact of price fluctuations and external threats. NEURC seeks to ensure the efficient functioning of the electricity market in order to meet consumer needs and guarantee the stability of the energy system even in difficult conditions.