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LAW ON ENERGY REGULATOR DECLARED UNCONSTITUTIONAL
Avellum, Kyiv, Ukraine
Thu, July 4, 2019
On 13 June 2019, the Constitutional Court of Ukraine (“Court”) declared unconstitutional certain provisions of the Law of Ukraine “On the National Energy and Utilities Regulation Commission” (“Law”) regarding (a) the legal status of the National Energy and Utilities Regulation Commission (“Regulator”), and (b) the powers of the President of Ukraine and the Ukrainian Parliament on appointment of members of the Regulator.
In 2016, the Ukrainian Parliament adopted the Law to establish institutional and financial independence of the Regulator that, among others, included:
(1) the legal status of the Regulator as a permanent independent state collegial body
(2) a procedure for appointment of members of the Regulator providing for selection of candidates by a tender committee and further appointment of the members of the Regulator by the President of Ukraine
In the Court’s opinion, authority, scope of activity and purpose of the Regulator are similar to those, which may be vested only with a state central executive body coordinated by the Cabinet of Ministers of Ukraine. In addition, the Court opined that neither the Ukrainian Parliament (in terms of adopting the Law and participating in the appointment of the members of the Regulator), nor the President of Ukraine (in terms of the appointment and dismissal of the members of the Regulator) had proper authority.
Based on the above, the Court declared the respective provisions of the Law unconstitutional. Considering that unconstitutionality of these provisions may prevent the Regulator from exercising its duties and, as a result, destabilise the industry, the Court ruled that the above provisions cease to be in force starting from 31 December 2019. In the Court’s opinion, this time should allow to bring the regulatory framework into compliance with the Constitution of Ukraine.
The Court’s decision does not state that it has retroactive effect, i.e. that the Regulator’s previous decisions must be deemed unlawful starting from 13 June 2019. Moreover, since the Court gave Ukrainian authorities some time to make the regulatory framework on the Regulator compliant with the Constitution of Ukraine, we assume there was no intention to declare unlawful all previous decisions of the Regulator retrospectively.
After the Court’s decision, the Regulator continues adopting decisions on the issuance, among others, of power generation licences. As a result, we expect that the Regulator will continue working in the ordinary course until 31 December 2019. After this date, the powers of the members of the Regulator appointed by the President of Ukraine and the Ukrainian Parliament will terminate. Therefore, if Ukrainian authorities fail to make the regulatory framework compliant with the Constitution of Ukraine by 31 December 2019, the Regulator’s work may be suspended afterwards.