Summary:
Ukrainian power markets are not ready to start in July 2019
- Crucial elements of market opening remain unprepared.
- If markets opened under current conditions, those players with significantmarket power will be able to exercise it.
- Opening the markets in July 2019 at current level of readiness adds no value and may lead to further inefficiencies and uncontrolled price increases.
- Direct regulations via price limitations or caps will distort market mechanisms and do not address the problem of market power.
- Mitigating risks ex ante is more effective than dealing with shocks ex post.
- Market opening during turbulent political period implies significant risks – it is important that a functioning government is in place that can tackle any arising issue quickly.
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What is a Policy Briefing?
Similar to Policy Papers, current or possible future policy topics are discussed. The economic analysis and policy recommendations are presented in a concise manner, focussing on the core arguments and results.