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Energy law and energy dispute resolution

Module 7Lection 2

Oleh Bakulin

Oleh Bakulin

lawyer in the gas sector

Oleh Bakulin is a lawyer and attorney specializing in the energy and utilities sectors since 2011.
He has held positions as a legal counsel and deputy head for legal affairs at companies operating in the natural gas and electricity markets, including natural gas suppliers, electricity suppliers, a gas production company, and an electricity producer.

He holds a higher legal education and graduated from the National Academy of Internal Affairs in 1994. In 2004, he obtained a certificate to practice law.

From 2015 to 2019, he participated in the activities of public councils under the National Energy and Utilities Regulatory Commission of Ukraine (NEURC), the Ministry of Energy of Ukraine, the Ministry of Economy of Ukraine, and the Antimonopoly Committee of Ukraine. As part of working groups, he contributed to the drafting of legislative initiatives and regulatory acts of the Cabinet of Ministers of Ukraine, NEURC, and the Ministry of Energy of Ukraine.

Until 2019, he headed the NGO “Union of Gas Market Liberalization Participants.” The organization’s activities included analyzing legislative and regulatory drafts of the Cabinet of Ministers, NEURC, the Ministry of Energy, and the Ministry of Economy of Ukraine, and preparing proposals to improve them.

From 2019 to the present, he has been an analyst of regulatory draft acts for the Ministry of Energy, the National Securities and Stock Market Commission, and NEURC, preparing expert recommendations and proposals.

For over 15 years, he has practiced litigation in the energy and utilities sectors: administrative proceedings — challenging regulatory acts of the Cabinet of Ministers and NEURC; commercial proceedings — representing parties in disputes among natural gas and electricity market participants; and civil proceedings — handling cases involving market entities in natural gas, electricity, and utilities.

Since 2021, he has been a regular contributor to the information and analytical journal Energobusiness.

Lecturer's presentation

Lecture content:

  1. Origins of energy law in Ukraine
  2. A new stage after 2010
  3. Ukraine’s accession to the Energy Community
  4. European energy law and its impact on Ukraine
  5. Association Agreement and Energy Dispute Settlement
  6. Practice of resolving energy disputes
  7. Active links (NPAs, standards, resources)
  8. Glossary
  9. Questions for self-testing

 

1. Origins of energy law in Ukraine

Until 2010, systemic energy legislation in Ukraine practically did not exist.

The only profile act was the Law of Ukraine “On Electric Power Industry”, which regulated the basic principles of the functioning of the electric power sector.

The natural gas market was not regulated by a special law at that time, and relations in this area were regulated mainly by subordinate normative acts.

Fundamentals of civil law regulation:

  • Civil Code of Ukraine (2004), Article 714 defined a contract for the supply of energy and other resources through a connected network.
  • Economic Code of Ukraine (in force until August 2025), Article 275 defined an energy supply contract, which established the obligations of the energy supply enterprise and the consumer.

According to these provisions:

  • The energy supply enterprise was obliged to supply energy (electricity, heat, hot or superheated water).
  • The consumer was obliged to pay for the received energy, comply with the regime of its use and ensure the safe operation of the equipment.

Other aspects of legal regulation were provided by-laws:

  • Resolutions of the Cabinet of Ministers of Ukraine,
  • decisions of the National Commission for the Regulation of Energy and Energy Efficiency of Ukraine,
  • orders of the Ministry of Energy and the Ministry of Coal Industry.

 

2. A new stage after 2010

Since 2010, significant changes have occurred in the field of energy law of Ukraine. The requirements enshrined in the relevant laws have become key guidelines for the development of the gas and electricity markets.

  1. Law of Ukraine “On the Natural Gas Market”
    Article 2 defines the legal principles of the functioning of the natural gas market.
    It is adopted in fulfillment of Ukraine’s obligations under:
  • The Treaty establishing the Energy Community;
  • The Association Agreement between Ukraine and the EU.

The document implements EU acts, in particular:

  • Directive 2009/73/EC (rules of the internal market in natural gas);
  • Regulation (EC) 715/2009 (conditions for access to gas transmission networks);
  • Directive 2004/67/EC (security of gas supply measures);
  • Regulation (EC) No. 1227/2011 (transparency in the wholesale energy market).

The legal basis of the market is the Constitution of Ukraine, this Law, as well as other special laws (“On Pipeline Transport”, “On natural monopolies”, “On oil and gas”, “On energy efficiency”, etc.).

  1. Law of Ukraine “On the electricity market”
    Article 2 establishes similar approaches.
    The legal bases include the Constitution of Ukraine, the Law itself, as well as special acts (“On Alternative Energy Sources”, “On Combined Heat and Power Generation”, “On the National Commission for the Regulation of the National Energy and Power Sector”, “On the Protection of Economic Competition”, etc.).

The Law implements the provisions of:

  • Directive 2009/72/EC (rules of the internal electricity market);
  • Regulation (EC) 714/2009 (conditions for access to cross-border networks);
  • Directive 2005/89/EC (security of electricity supply);
  • Regulation (EC) No. 1227/2011 (integrity and transparency in the wholesale energy market).

Common features of both laws

  • Both refer to the Treaty establishing the European Union Energy Community.
  • Establish harmonization of Ukrainian legislation with EU law.
  • Give grounds for adoption of by-laws by the Cabinet of Ministers of Ukraine, the National Commission for the Regulation of Energy and the Ministry of Energy.

Institutions and bodies that form energy policy

  • Cabinet of Ministers of Ukraine – general energy policy.
  • National Commission for the Regulation of Energy and the Ministry of Energy – tariff regulation, balancing, control.
  • Ministry of Energy – strategic directions.
  • Antimonopoly Committee of Ukraine – control of natural monopolies, approval of regulatory acts.

 

3. Ukraine’s accession to the Energy Community

In 2010, Ukraine acceded to the Treaty establishing the Energy Community.
The Protocol on Accession was ratified by Law No. 2787-VI of 15.12.2010.

Role of the Secretariat (Article 67 of the Treaty)

SecretaryThe Energy Community Secretariat:

  • ensures the administrative work of the Council of Ministers, the Council of Regulators and other institutions;
  • monitors the implementation of obligations by the parties and submits annual reports;
  • assists the European Commission in coordinating donor activities;
  • performs other tasks stipulated by the agreement;
  • adopts procedural acts.

It is mentioned quite often in the national laws of Ukraine:

  • in the Law “On the Natural Gas Market” – 50 times,
  • in the Law “On the Electricity Market” – 31 times.

Development of cooperation between Ukraine and the Energy Community

  • 2011–2015: the influence of the Secretariat was limited. It could only address Ukraine with open letters regarding violations.
  • Since 2015: the importance of the Secretariat has increased. Its role has been strengthened by the certification of operators procedure (TSOs, gas storage operators, GTS). The certification approved by the Secretariat is a confirmation of the compliance of the operators’ work with the requirements of EU legislation and allows European companies to cooperate with Ukrainian operators.

Legal status of EU directives and regulations

  • EU regulations are directly applicable in all Member States and are directly applicable.
  • EU directives are binding as to their result, but the form of implementation is determined by national authorities. They are not acts of direct action, but in the event of non-compliance by the state, they may have such an effect.

Ukraine implements directives into its legislation. For example, in the gas market – through the adoption of the Law “On the Principles of the Functioning of the Natural Gas Market”.

Case Law of Ukraine

  • Resolution of the Supreme Court (03.11.2023, case No. 918/686/21):
    The Energy Community Secretariat does not have the authority to interpret the provisions of the Treaty or EU acts in the context of legal disputes, but its annual reports and conclusions may be taken into account.
  • NCRECP, Resolution of 29.11.2019 No. 2586:
    transposed Regulation (EU) 312/2014 on gas balancing in gas transportation systems into Ukrainian law. Its requirements take precedence over the GRM Code, which obliges to revise Ukrainian balancing norms.

 

4. European energy law and its impact on Ukraine

Regulation (EU) 312/2014 has a higher legal force than the Ukrainian GRM Code. Therefore, the provisions of the Gas Transmission System Code on balancing and calculation of imbalances should be revised in accordance with the requirements of this Regulation.

After 2015 and the relevant decisions of Ukrainian courts, the norms that form the basis of energy law in Ukraine have significantly expanded. This created an opportunity for more active implementation of Ukrainian energy legislation into the legal field of the European Union.

Position of the Supreme Court:

  • The ruling of 03.11.2023 (case No. 918/686/21) confirmed that the Energy Community Secretariat performs only administrative and monitoring functions, but does not have the authority to interpret the provisions of the Treaty or EU acts in court disputes.
  • The ruling of the Grand Chamber of 03.08.2022 (case No. 910/9627/20) emphasized that the conclusions of the Secretariat may be taken into account by the courts of Ukraine as a source of assessment of the fulfillment of obligations by the parties to the Treaty, even if they are not issued in the form of annual reports.

Thus, these decisions:

  • increase the significance of the conclusions of the Secretariat in the practice of national courts;
  • strengthen the basis for harmonizing Ukrainian law with European;
  • confirm Ukraine’s gradual transition to the application of European approaches in the energy sector.

 

5. Association Agreement

The Association Agreement between Ukraine and the EU contains separate annexes relating to energy:

  • Annex XXVII – cooperation in the energy sector, including nuclear;
  • Annex XXVII-A – monitoring of the approximation of legislation in the energy sector;
  • Annex XXVII-B – Ukraine’s obligations to harmonize the energy sector with EU law.

 

6. Energy dispute resolution practice

Until 2010:

  • most disputes arose between the consumer and the supplier (gas transmission and distribution companies, electricity suppliers);
  • suppliers could disconnect debtors from the network and collect debts through the courts;
  • courts mostly ruled in favor of suppliers, based on supply contracts.

2010–2015:

  • the first disputes with state authorities, in particular with the National Commission for the Regulation of Energy and Utilities of Ukraine, appeared;
  • a well-known precedent is lawsuits regarding prices for gas producing companies and appeals against regulatory acts.

Since 2015:
The number of disputes has increased significantly, their main categories:

  • supplier – consumer (energy debts, disconnections, resource accounting);
  • wholesalers – wholesale buyers (settlements under purchase and sale agreements);
  • transmission and transportation system operators – service customers (imbalance settlement, balancing services; e.g., case No. 918/686/21 dated 03.11.2023);
  • market entities – NEURC (mass lawsuits to appeal resolutions; decisions are often made in favor of both the market and the regulator);
  • producers of “green” energy – SE “Guaranteed buyer” (mostly decided in favor of RES producers).


Ukrainian energy law has gone from by-laws to systemic legislation that meets EU requirements. At the same time, the number of disputes is growing, and their resolution requires both transparent judicial practice and further harmonization of Ukrainian legislation with European legislation.

 

Active links (NPA, standards, resources)

Glossary of key terms

Energy law is a set of legal norms that regulate relations in the field of production, distribution, transportation, supply and consumption of energy resources.

Energy supply contract is an agreement under which the energy supply company undertakes to supply energy to the consumer, and the consumer undertakes to pay for it and comply with the rules of use.

The Law “On the Natural Gas Market” is the basic law that defines the legal principles of the functioning of the gas market in Ukraine and implements EU directives.

The Law “On the Electricity Market” is the law that regulates the electricity market in Ukraine, taking into account the provisions of European law.

The National Commission for the Regulation of Energy and Utilities is the national commission that carries out state regulation in the fields of energy and utilities; a state body that sets tariffs, market rules and exercises control.

Antimonopoly Committee of Ukraine is a body that monitors compliance with competition and regulates the activities of natural monopolies.

Energy Community Treaty is an international agreement that integrates the energy markets of the member states into the European energy space.

Energy Community Secretariat is an administrative body that monitors the implementation of obligations by the member states and prepares reports for the Council of Ministers.

EU Directive is a legal act that obliges a member state to achieve a certain result, but leaves freedom in choosing the form of implementation.

EU Regulation is a legal act of direct effect, binding in all EU member states without additional implementation.

Energy dispute is a legal conflict that arises between energy market participants (consumers, suppliers, operators, regulators).

Imbalance is the difference between the ordered and actually consumed/delivered volumes of energy, which is subject to financial settlement.

SE “Guaranteed Buyer” is a state-owned enterprise that purchases electricity from renewable sources at a “green” tariff and makes settlements with producers.

Self-test questions

What regulatory and legal acts regulated energy relations in Ukraine until 2010?
What European directives and regulations are implemented in the laws “On the Natural Gas Market” and “On the Electricity Market”?
Which state authorities in Ukraine have key powers in the energy sector?
What is the role of the Energy Community Secretariat? Does it have the authority to apply sanctions?
How does the operation of an EU directive differ from an EU regulation?
What are the main categories of energy disputes that arise in the gas and electricity markets?
How has the number and nature of energy disputes changed after 2015?
What are the typical disputes that arise between producers of “green” energy and the State Enterprise “Guaranteed Buyer”?
Why is the implementation of European energy legislation a key condition for Ukraine’s integration into the EU?
What is the significance of the Supreme Court's decisions in the cases of 2022 and 2023 for the development of Ukrainian energy law?

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