Executive Summary:

1. We positively note that more market data has become available and that imports from EU countries and Belarus with lower electricity prices continue to increase.
2. Prices inch closer to bidding caps in all visible market segments. Peak prices in Ukraine appear high compared to prices inneighbouring markets and very high compared to estimated generation cost. In addition, bidding curves appear to be managed in a way to ensure that in all demand situations, supply and demand meet very close, but not exactly at the bidding cap. These observations are consistent with the hypothesis that substantial market power is exercised.
3. Bid volumes in off-peak hours start to decrease and off-peak auctions are mainly oversubscribed. This poses the question atwhich segment and which prices buyers will be able to purchase the needed electricity. Declining volumes at the power exchange(with bidding caps) might indicate, that sellers with market power might have found a way to directly trade in unregulated segments.
4. Currently, the big unknown is the balancing market. If sellers with market power are able to withdraw volumes to thebalancing market (e.g., because they want to enforce higher off-peak prices), it would be very hard for the operator to ensure that supply meets demand. In addition, volumes in the balancing market will be an indication on how many consumers managed to secure over-the-counter contracts with producers.
5. Current price caps do fulfil their intended role to keep the wholesale prices below a certain level. But at the same time, they directly influence the behaviour of market participants and may be considered too high given the current coal prices on international market.