05.05.2026
On May 11, Energy Club is gathering key players of the energy market for a professional discussion “Public Procurement of Electricity: Legal Certainty, Retrospective Risks, and Energy Security,” which already extends far beyond the legal plane. Today, public electricity procurement is a test of the state’s ability to provide predictable rules of the game: without retrospective punishment of business and without the risk of leaving the budget sector without a stable supply.
Against the backdrop of mass lawsuits, new judicial practice, and collisions in the interpretation of norms, the issue of pricing in contracts has turned into a factor of systemic instability for the entire market.
On the eve of the forum, in an interview with the Energy Club media department, the Director of Euro Trade Energy LLC, Oleksandr Kudym — one of the main speakers of the upcoming forum — spoke about the conflict between the nature of electricity as a volatile exchange-traded commodity and the “static” logic of public procurement.
He explained why applying new approaches to old contracts creates a risk of retrospective liability, how the “10%” limit destroys the economics of contracts, and why mass lawsuits are already changing the behavior of suppliers, reducing competition. This is not just about disputed additional agreements, but about the balance between legal certainty, market economics, and the country’s energy security.
– Mr. Kudym, why has the problem of public electricity procurement today become not just a legal dispute between suppliers and customers, but a systemic risk for the entire market?
– The problem has long gone beyond individual legal disputes regarding specific additional agreements. It is about a systemic conflict between the nature of the electricity market as a volatile exchange commodity and the public procurement model, which until 2024 allowed parties to respond to significant price fluctuations. However, this approach was significantly changed by judicial practice unexpected for the market, which redistributed risks not in favor of the further systemic, competitive, and predictable development of the industry.
When a supplier enters a tender with a competitive price, but the market price subsequently rises significantly, they are faced with a choice: either fulfill the contract at a loss, initiate a price change, or withdraw from the contract and transfer the consumer to the “supplier of last resort” (last hope).
For a long time, a price change proportional to market fluctuations seemed the most logical and balanced mechanism for the market. After all, the market model introduced by the state did not stipulate that all financial risks of volatility should be placed exclusively on the supplier. At the same time, the reputational component of contractual relations restrained suppliers from taking drastic steps aimed at terminating contracts with public consumers, as the transition to the supplier of last resort always creates an additional financial burden on budgets at all levels.
After the formation of strict judicial practice regarding the “10%”, any price change began to be assessed not just as a matter of commercial risk, but as a potential basis for mass lawsuits by the prosecutor’s office, recovery of funds, and even criminal prosecution of officials — both suppliers and public procurement customers.
That is why this is no longer just a dispute about the interpretation of legislation in the field of public procurement. It is a matter of the disturbed balance between budget discipline, continuity of electricity supply to public sector consumers, and the ability of business to work in the public procurement segment at all.
– How did electricity suppliers in 2021–2023 actually work with budget customers in the conditions of a volatile market, martial law, and constant changes in electricity prices?
– In 2021–2023, suppliers worked in conditions where the price of electricity was not a stable value. It depended on the situation in organized market segments, regulatory decisions, military risks, system constraints, and a general lack of predictability.
Public customers, for their part, concluded contracts for the duration of the budget cycle, and the mechanism for their adaptation to systematic market fluctuations was sufficiently detailed by the Ministry of Economy and legitimate for application. It did not appear to the parties as obviously legally vulnerable or as something that could become a basis for a mass review of concluded additional agreements in the future.
Therefore, suppliers actually worked in a model of constant balancing: they had to fulfill contracts, ensure continuous supply, prevent their own default, and at the same time try to reflect the change in the market price in the contract within the regulatory framework.
In many cases, the price change through additional agreements was perceived by the parties not as a way to “earn more,” but as a technical mechanism for maintaining the contract in conditions where the original price ceased to correspond to the market. The problem is that later these same mechanisms began to be evaluated through the prism of controversial judicial practice.
– Is it possible to evaluate the actions of suppliers in contracts of previous years based on judicial practice approaches that were formed much later? Where is the line between legal assessment and retrospective punishment of business?
– In my opinion, this is one of the key issues. The state has the right to assess the legality of the actions of the parties to the contract, but such an assessment must be carried out taking into account the legal, market, and regulatory context that existed at the time of the relevant actions, as this is the foundation laid constitutionally.
If in 2021–2023 the parties acted in conditions of ambiguous legal regulation, different approaches to the interpretation of the Law, the absence of established judicial practice, and objective market volatility, then applying a later, stricter, and actually opposite approach to them raises questions of legal certainty.
The line between legal assessment and retrospective punishment passes where the bona fide conduct of a market participant, which at the time of its occurrence did not have an unequivocally negative legal assessment, begins to be qualified retroactively as a violation with grave property or criminal-legal consequences.
For Ukrainian business and the conservative European legal environment, this creates a dangerous signal: even if you acted within the mechanism of the law effective on a certain date, in a few years your actions may be re-evaluated according to new standards.
– Why does the classic logic of the “10% limit” for price changes in public procurement not always work correctly for the electricity market?
– Because electricity is not an ordinary commodity with stable cost and predictable logistics. It is a commodity whose price is formed virtually every hour and depends on the dynamics of organized market segments, regulatory decisions, the state of the power system, the balance of supply and demand, and in war conditions — also on the constant influence of hostile military aggression on energy infrastructure.
The classic logic of “10%” can work for goods where price fluctuations are moderate and do not destroy the economics of the contract. But for electricity, especially in the conditions of 2021-2023, market fluctuations in certain periods could reach levels that significantly exceeded 10%, and sometimes even 100%. In such a situation, the literal application of the limit without taking into account objective market conditions turns the contract into a loss-making one for the supplier.
Moreover, it can already be reasonably stated that in the long run, such a model leads not to savings of budget funds, but to additional pressure on budgets of all levels. Suppliers either include risks in the initial price or reduce participation in public procurement altogether. This is gradually changing the very structure of the public electricity procurement market.
We have repeatedly discussed that a fair model should be based not on an abstract percentage limit, but on the principle: the change in the contract price should be proportional to the confirmed market fluctuation and should not lead to unjustified enrichment of the supplier. That is, the key should be not a mechanical “up to 10%”, but a demonstrable link between the market and the contract price.
– How do mass lawsuits by the prosecutor’s office regarding additional agreements affect the behavior of suppliers?
– They significantly change the behavior of suppliers. A supplier begins to evaluate participation in public procurement not only as a commercial project but as a potential source of future legal, financial, and criminal-legal risks.
As a result, there are fewer bids in tenders, and customers increasingly find themselves in a “1–2 participants or zero at all” situation. And this is no longer an assumption, but a trend visible in electricity procurement statistics.
The analysis of electricity procurements announced by customers for the periods of November-March, i.e., during the season of the largest number of tenders for the next budget period of 2023-2026, eloquently demonstrates an unfortunate trend towards reduced competition as a direct result of market participants’ reaction to the industry’s structural crisis.
Firstly, the number of open electricity procurement tenders that did not take place due to lack of bids is growing annually. In the procurement campaign for 2024, this figure was almost 11%, for 2025 – almost 15%, and for 2026 – already over 23%. That is, it has actually more than doubled compared to the 2024 campaign.
Secondly, for price quotation requests, the situation has also worsened: the share of procurements that did not take place rose from 4% in the 2024 campaign to 13% in the 2026 campaign, i.e., more than tripled.
Thirdly, the average number of participants per successful procurement is decreasing. For open tenders, this indicator decreased by 25% — from 2.12 in the 2024 campaign to 1.6 in the 2026 campaign. For price quotation requests, the drop is even more significant — by 46%, from 7.53 to 4.06 participants.
Particularly indicative is the dynamics of winners. Based on the analysis of all announced electricity procurement procedures for 2024–2026, it was found that the number of winners is consistently decreasing: 178 → 168 → 148. That is, in just two years after the decision of the Grand Chamber of the Supreme Court, the market lost 30 winners, or about 17% of the 2024 level.
At the same time, the arrival of new companies did not cover the broader wave of contraction. 35 legal entities that were winners in 2024 did not appear as winners in either 2025 or 2026. Another 32 winners of 2024–2025 did not even participate in the tenders for 2026.
Parallelly, market concentration is occurring. The share of the top 20 winners by the value of concluded contracts rose from 65.6% in 2024 to 75.4% in 2026.
This forms a paradox: the application of a norm, which in judicial doctrine is presented as a safeguard against abuse, in the long term creates conditions where the budget pays more and gets less competition and resilience.
– What risks for hospitals, water utilities, heat and power utilities, schools, and other critical consumers may arise if suppliers begin to mass-avoid public procurement?
– The main risk is the loss of supply stability for critical consumers and an increase in the cost of supplier services. Hospitals, water utilities, heat utilities, schools, and social infrastructure facilities cannot function without electricity. For them, electricity is not just a commodity, but a condition for continuous operation.
If suppliers start avoiding such procurements, customers are already facing fewer offers, tender failures, the need to conclude short-term or emergency contracts, price increases due to risk premiums, and a general decrease in predictability.
That is, formally the state may try to protect budget funds through lawsuits, but in fact, it creates a situation where budget institutions will buy electricity more expensively, more complicatedly, and with greater risks to continuity of supply.
– Was there a real possibility for suppliers in 2021–2023 to fulfill long-term contracts without price changes if the market price rose significantly?
– In many cases — no, or such a possibility was economically unjustified. If the market price of electricity rises significantly and the contract price remains unchanged, the supplier effectively begins to supply electricity at a loss.
Theoretically, one could say that business should bear commercial risk. But here it is important to distinguish between normal entrepreneurial risk and a situation where the market changes so significantly that fulfilling the contract without price adjustment loses economic sense.
В our previous discussions at Energy Club, we have repeatedly proceeded from the fact that for electricity, a fair model must provide a legal mechanism for adapting the price to the market. Otherwise, the supplier will either not enter the procurement, or will include the risk in the starting price, or will subsequently be forced to terminate the contract.
– What should be at the basis of a fair model for price changes in electricity supply contracts for the budget sector?
– In my opinion, the basis should be not manual approval of each price change and not a formal restriction detached from the market, but a transparent, pre-determined mechanism.
An optimal model could include several elements: formulaic pricing, linkage to organized market segments, a clear procedure for documentary evidence of price fluctuations (if the formula is not applied), restrictions on increasing the total contract amount, as well as a stricter system of consumer responsibility for violation of payment terms under the contract.
The key is that the rules must be clear before participating in the tender. The supplier must understand what tools are used to change the price. The customer must understand that they are not overpaying. Control bodies must see a transparent link between the market indicator and the contract price.
Such a model is capable of simultaneously protecting the budget and not destroying competition among suppliers.
– What legislative or regulatory solutions are needed right now?
– Solutions are needed that will eliminate legal uncertainty and restore the balance between the interests of the state, customers, and bona fide suppliers.
Firstly, within the framework of draft law No. 11520, Energy Club representatives have agreed with members of the working group and the Committee of the Verkhovna Rada of Ukraine on Economic Development on a model of proportional price increase per unit of goods with a 10% limit applied to each individual case of such an increase, but without a limit on the number of changes.
This is a fundamentally important construction. It does not open the space for uncontrolled price increases but at the same time allows the contract to respond to real market fluctuations. A large part of the professional procurement and energy market expects that this model will be preserved following the results of the draft law’s consideration in the repeated second reading.
Secondly, mechanisms for legislative, interdepartmental, or constitutional-legal resolution of the issue regarding the application of relevant norms to already concluded contracts of past periods are currently being developed. It is especially important to prevent a recurrence of the situation where bona fide conduct that corresponded to the current understanding of the law and market reality is retroactively recognized as a violation.
Thirdly, it is necessary to prevent the formation in judicial and law enforcement practice of an approach where the very fact of signing an additional agreement to increase the price is automatically perceived as a basis for criminal prosecution. This applies to both supplier officials and public procurement customer officials.
If judicial practice later changed its approach to the interpretation of a norm, this in itself should not mean that all persons who acted according to the previous understanding of the law should automatically bear criminal-legal consequences.
– What practical result do you expect from the Energy Club forum on May 11?
– I expect that the Energy Club forum will become not just another professional event, but a point of market consolidation. Today, electricity suppliers find themselves in a situation where acting alone is no longer enough. An individual company can defend its position in a specific dispute, but a systemic problem can only be solved through collective, professional, and consistent action.
We must show that professional market players are not powerless if they honestly call out reality and act together. This fully applies to our market. We need to honestly call things by their names: a model in which they try to squeeze electricity into the logic of a stable commodity with a mechanical “10%” limit has never worked and never will. It corresponds neither to the nature of the electricity market, nor to the conditions of martial law, nor to the needs of budget consumers, nor to the principle of fair risk distribution.
Suppliers should not compete with each other in compliance before risks but should unite efforts around those issues that are common to the entire market: legal certainty, predictability of contracts, protection of bona fide participants, stability of supply to critical consumers, and preservation of competition.
If suppliers are not present at the table where rules are formed, these rules will be formed without them — in courts, control bodies, law enforcement practice, or legislative compromises that do not always take into account the real economy of the market.
Moreover, Energy Club is already that platform where suppliers will not just express concern but will form a common strategy: regarding draft law No. 11520, regarding contracts of past periods, regarding the prevention of automatic criminal prosecution of signers of additional agreements, and regarding a new fair model of electricity procurement.
The old order in electricity procurement will not return in the form in which it existed before. But this does not mean that the market should only defend itself. On the contrary, right now there is an opportunity to build a better, stronger, and fairer model: one in which the budget is protected, the supplier is not a hostage to market volatility, the customer is not afraid to sign economically justified additional agreements, and critical consumers receive stable supply.
In conclusion, this discussion is not about how to interpret a norm, but about whether the public electricity procurement market will remain viable. If the rules continue to change retroactively, business will exit this segment, and then the state will be left alone with more expensive electricity, failed tenders, and growing risks to critical infrastructure.
That is why on May 11, at the Energy Club platform, it will not be just about seeking a compromise, but about choosing a model for the future: either predictable rules and the state’s responsibility for its own decisions or further immersion into legal uncertainty, where everyone loses — business, the budget, and the consumer.
