Consumer in the electricity market. Obligations of the consumer of electricity

Lecture content:

1. Legislation for consumers: the main things you need to know
2. Basic provisions for business: consumer-supplier relations
3. What do you need to know about relations with system operators?
4. Clear definition of the rights and obligations of market participants
5. Electricity quality standards and responsibility
6. Classification of electricity consumers
7. The market in numbers: the impact of war
8. Price dynamics: opportunities and challenges
9. What is the consumer entitled to? Rights and guarantees
10. What should the consumer know and do? Main responsibilities
11. Practical cases: typical mistakes and how to avoid them
12. Summaries and useful recommendations
13. Active links (NPAs, standards, resources)
14. Glossary
15. Questions for self-testing

 

1. Legislation for consumers: the main things you need to know

Main regulatory documents:

• Law of Ukraine “On the Electricity Market” No. 2019-VIII of 13.04.2017
• Rules of the retail electricity market (Resolution of the National Commission for the Regulation of the Energy Sector of Ukraine No. 312 of 14.03.2018)
• Codes of the National Commission for the Regulation of the Energy Sector of Ukraine (14.03.2018):
  • Transmission System Code (No. 309)
  • Distribution System Code (No. 310)
  • Commercial Accounting Code (No. 311)

• Temporary procedure for determining the volume of electricity purchases (No. 2118 dated 12/28/2018)
• Procedure for ensuring standards of electricity supply quality and compensation (No. 375 dated 06/12/2018)
• “On ensuring the stable functioning of the electricity market, including the financial condition of electricity market participants for the period of martial law in Ukraine” (Resolution of the National Commission for the Regulation
  

  2. Basic provisions for business: consumer-supplier relations

  • Basic principle: cooperation is carried out on the basis of electricity purchase and sale agreements.
  • Contracts are:
    • public (standard conditions for all consumers),
    • individual (for an individual consumer, with additional conditions).
  • Supplier’s obligations:
    • post on your website:
      • public agreement,
      • public declaration of accession,
      • appendices to contract.

• Requirements for the application for accession:
  • determined by the market rules,
  • form one for all.

• The consumer’s right to choose:
  • to join a public contract,
  • or to agree on individual conditions with the supplier (if they do not contradict the standard contract).

 

3. What do you need to know about relations with system operators?

• Distribution System Operator (DSO) – former Oblenergo.
• Transmission System Operator (TSO) – Ukrenergo.

Legal basis:

• Relations are built on the basis of contracts approved by resolutions of the National Commission for the Regulation of Energy and Utilities.
• Connection to the network is carried out through a application for connection (public, single for all).

 

4. Clear definition of the rights and obligations of market participants

The rights and obligations of market participants are defined in normative and legal acts (law, codes, rules). This ensures transparency and equal conditions for all parties.

 

5. Electricity quality standards and liability

Electricity supply quality standards have been established. Information about them can be found on the NKREKP website. Market participants are obliged to comply with them, and in case of violations, liability and compensation to consumers are provided.

Who is responsible for electricity quality?

A common myth: the supplier is responsible for quality. In fact, the transmission system operator (Ukrenergo) or system operator is responsibledistribution. Complaints should be submitted directly to the system operator.

Clear deadlines have been established for:

• consideration of applications and complaints,
• removal of deficiencies,
• restoration of the quality of electricity supply.

The rights and obligations of all participants in the electricity market are defined in rules and regulatory legal acts (law, codes, resolutions of the National Commission for the Regulation of Energy and Power Generation). They are mandatory for both suppliers and consumers.

 

6. Classification of electricity consumers

By intended use

• Household consumers – individual or collective users who consume electricity for household needs.
• Small non-household consumers – with a contractual capacity of up to 50 kW, are entitled to universal service.
• Non-household consumers – legal entities and sole proprietors who use electricity for commercial, industrial or other purposes.

By connection voltage level

• Class 1 – consumers connected to networks 27.5 kV and above.
• Class 2 – consumers connected to networks with a voltage below 27.5 kV.

By electricity metering groups

• Group A – capacity over 150 kW or average monthly consumption over 50 thousand kWh.
• Group B – those who do not meet the requirements of group A.
• Transitional group (until 01.07.2025) – formally belong to group A, but have problems with operational hourly data. Consumption is determined according to a standardized schedule.

By the degree of participation in the market

• Passive – buy electricity only through the supplier.
• Active – buy through the supplier, but also:

• • participate in demand management,
  • produce and sell their own energy,
  • influence costs.

• Independent – have direct access to the market and purchase energy themselves.

Important:

If a consumer wants to buy and resell electricity to a supplier or trader – they need trader’s license.

If a consumer sells energy to another consumer, a license to supply electricity to the consumer is required (a trader’s license is no longer required).

 

7. Market in numbers: impact of war

Consumption structure in 2021

• Industry – 42%.

• Household consumers – 31%.
• Commercial sector – 14%.
• Transportation – 6%.
• Agriculture – 4%.
• Others – 3%.

Impact of war on 2024

• Total consumption: –30% compared to 2021.
• Industry: –45%, share fell to ~33%.
• Household consumers: –16%, but the share increased to 38%.

Ukraine lost over 9 GW of generating capacity – equivalent to the peak summer consumption of the Netherlands or Finland.

Outages

• In 2024, planned stabilization outages were in effect.
• Total duration – 1,951 hours (this is 22% of the year).

Electricity imports

• In 2024, 4,436.6 thousand MWh were imported.
• This is the highest figure in the last 11 years.

Distributed generation (2024)

• Installed capacity: 944.767 MW.
• Connected to networks: 106.374 MW.
• Built:

• 112.2 MW – with the support of international programs.
• 733.14 MW – by business.
• 100.42 MW – by local governments.

Structure:

• WIND POWER PLANTS – 44.60 MW.
• SPPs of private households – 28.58 MW.
• SPPs connected to the grid – 10.02 MW.
• SPPs for own consumption – 587.22 MW.
• KGUs connected to the grid – 32.787 MW.
• CHP for own consumption – 179.633 MW.
• Mini-CHP – 28.987 MW.

 

8. Price dynamics: opportunities and challenges

For the population

• Mid-2023 – tariff increased from 1.68 UAH/kWh to2.64 UAH/kWh.
• June 2024 – the tariff increased to 4.32 UAH/kWh.

For business

• Prices are market, depending on the terms of the contracts.
• The benchmark is the day-ahead market.
• Reasons for growth:

• • • deficit in the energy system,
    • increase in maximum prices (price caps).

Tariffs of network operators

• Transmission: from 0.293 UAH/kWh (2021) → to 0.686 UAH/kWh (+234%).
• Similar growth in distribution tariffs.

Price manipulation on the DAM

• High market concentration = risk of instability and manipulation.
• Business recommendation: conclude contracts with fixed prices → cost stability, protection against fluctuations.

Dynamics of the DAM

• 2021: 1.80 UAH/kWh.
• 2024: 4.52 UAH/kWh (+251%).
• The maximum price is limited by the price caps of the National Commission for the Energy and Utilities of Ukraine.
• EU integration plans: in 2027 price caps will be abolished → price volatility is expected to increase.

 

9. What is the consumer entitled to? Rights and guarantees

Consumer rights are defined in clause 5.5.1 of the Retail Electricity Market Rules. They can be conditionally divided into four main groups:

1. Choice of supplier and terms of supply

• The right to freely choose a supplier and commercial offers.
• The possibility of concluding several contracts with different suppliers at the same time.
• The right to contact the supplier to change the terms of the contract.

2. Participation in the market

• Independent purchase of electricity on the market.
• Sale of produced or stored electricity.
• Use of storage systems and distributed generation.
• Participation in the balancing market and the market for auxiliary services.

3. Information and quality

• Receiving full information about:

• • quality of electricity,
  • prices,
  • terms of contracts,
  • payment procedure.

• The supplier is obliged to inform about changes in the contract no later than 20 days.
• The right to quality services in distribution, supply and commercial accounting.
• The right to access to meters and data even when they are located outside the object.

4. Protection of interests

• Compensation and indemnification of damages in case of poor-quality services or violation of standards.
• Compensation for unaccounted consumption by subconsumers.
• The right to terminate the contract with the supplier without penalties in case of disagreement with the new terms.

 

10. What should the consumer know and do? Main obligations

The obligations are defined in clause 5.5.5 of the Retail Electricity Market Rules. They are grouped into four main blocks:

1. Payment and contractual relations

• Use electricity only on the basis of concluded contracts.
• Pay for electricity and related services on time.
• In case of incomplete payment – stop consumption in accordance with the terms of the contract.

2. Technical and operational requirements

• Ensure proper technical condition and safe operation of your own electrical installations.
• Follow the rules of technical operation and safety.
• Agree with the system operator on new connections or capacity increases.
• Prevent unaccounted consumption of electricity.

3. Access and control

• Provide the system operator with free access to metering facilities.
• Do not impede replacement or verification of meters.
• Timely report violations of metering schemes, accidents or dangerous situations.

4. Information obligations

• Calculate and prepare balanceselectricity of own networks.
• Inform the system operator and the supplier about changes in contractual terms (e.g. change of supplier).
• Notify about connection of sub-consumers.

 

10. Active participation of consumers: opportunities and challenges

The modern electricity market involves not only passive consumption, but also active participation of customers, who can influence their own costs, efficiency and even the system balance.

1. Independent electricity procurement

• Direct market entry and conclusion of bilateral agreements with suppliers.
• Participation in the day-ahead market (DAM) and the intraday market (IDM) allows you to optimize purchases depending on the price in a specific period.

2. Self-production of electricity (generation)

• Installation of your own generating units (solar panels, mini-wind farms, cogeneration units).
• The ability to sell surplus electricity at a “green” tariff or on the market.

3. Use of storage systems energy

• The use of storage batteries allows to reduce consumption during peak tariff hours.
• Such systems do not require a license for their own use.
• An important tool for flexible demand management.

4. Participation in the balancing market and the ancillary services market

• The consumer can balance his own consumption and provide services to the system operator.
• Small consumers can join aggregated groups, which allows them to jointly participate in the balancing market.

5. Main difficulties for business

• High initial investment in equipment (solar panels, batteries, inverters).
• Complicated procedures for registration and connection to the grid.
• Regulatory risks – constant changes in market rules and tariff policy.
• Price instability on the DAM can create additional financial challenges.

Thus, an active consumer not only receives new opportunities for savings and control, but also assumes additional risks and responsibilities.

 

11. Practical cases: typical mistakes and how to avoid them

1. Choosing an unscrupulous supplier

• Mistake: working with suppliers who bill at inflated prices or hide additional payments.
• Recommendation: check the supplier’s reputation, contract terms, and reviews from other consumers. Choose transparent commercial offers and companies with a reliable history.

2. Late payment of bills

• Error: late payments lead to penalties or even electricity supply interruption.
• Recommendation: create a payment schedule, automate payments (through banking services) and avoid delays.

3. Failure to comply with the terms of the contract

• Error: ignoring obligations under the contract (for example, exceeding the contractual capacity).
• Recommendation: carefully read all clauses of the contract, record possible changes and monitor compliance with the established limits.

4. Non-compliance with commercial accounting requirements

• Error: using meters that do not meet standards or untimely reporting their malfunctions.
• Recommendation: regularly maintain metering devices, promptly notify the operator or supplier of problems to avoid fines and financial losses.

5. Incorrect consumption planning

• Error: lack of monitoring of the consumption schedule, which leads to increased costs.
• Recommendation: plan consumption taking into account price fluctuations on the DAM. Use energy management systems to optimize schedules and save during peak periods.

Conclusion:
Most consumer problems in the electricity market arise due to inattention to contract terms, failure to meet deadlines, and lack of control over one’s own consumption. Conscious energy management and competent supplier selectionhelp reduce costs and avoid risks.

 

12. Conclusions and useful recommendations

1. Good knowledge of rights and obligations is the basis for effective and safe work in the electricity market. This allows you to avoid risks and defend your interests.
2. Careful selection of the supplier and terms of the contract is an important step to avoid overpayments and conflict situations. Read contracts carefully, compare commercial offers, give preference to transparent conditions.
3. Assess the economic feasibility of active participation in the market – consider the possibilities of your own generation, use of storage devices or joining aggregated groups only after a financial analysis and assessment of payback.
4. Control your own consumption and technical condition of equipment – this will allow you to avoid fines, accidents and unnecessary expenses. Use monitoring and energy management systems.
5. Actively protect your rights – do not ignore violations. If necessary, contact suppliers, system operators or directly to the National Commission for Energy and Utilities for compensation and dispute resolution.
6. A smart consumer is one who knows the true price of electricity.

 

Active links (normative and legal acts and resources)

• Law of Ukraine “On the Electricity Market” (Vedomosti Verkhovna Rada (VVR), 2017, No. 27-28, p. 312): https://zakon.rada.gov.ua/laws/show/2019-19#Text
• Rules of the Retail Electricity Market (Resolution of the National Commission for the Regulation
• NCRECP Codes (14.03.2018):

• • Electricity Transmission System Code (№309): https://zakon.rada.gov.ua/laws/show/v0309874-18#Text
  • Distribution System Code (№310): https://zakon.rada.gov.ua/laws/show/v0310874-18#Text
  • Commercial Accounting Code (№311): https://zakon.rada.gov.ua/laws/show/v0311874-18#Text

• Procedure for ensuring electricity supply quality standards and providing compensation to consumers for their non-compliance (Resolution of the National Commission for the Regulation financial condition of electricity market participants for the period of martial law in Ukraine”: https://zakon.rada.gov.ua/rada/show/v0332874-22#Text
• Resolution of the National Commission for the Regulation of the Energy and Utilities Sector No. 352 of 26.03.2022 “On the features of temporary connection of electrical installations to the distribution system during the period of martial law in Ukraine”: https://zakon.rada.gov.ua/rada/show/v0352874-22#Text
• Licensing conditions for conducting economic activities for the supply of electricity to consumers (Resolution of the National Commission for the Regulation of the Energy and Utilities Sector No. 1469 of 12/27/2017): https://zakon.rada.gov.ua/laws/show/v1469874-17#Text
• Official website of the National Commission for the Regulation of Energy and Utilities of Ukraine (current regulations, tariffs, quality standards): https://www.nerc.gov.ua/