The Constitutional Court of Ukraine has ruled that the National Energy Regulatory Commission, or NERC, is unconstitutional as a state body, according to the court’s statement published on June 14.
NERC was created in 2014 under the presidency of Petro Poroshenko to replace two other commissions. The body regulates the energy market, including electricity tariffs in Ukraine.
According to the court’s decision, Poroshenko had no right to create such a body and “went beyond his constitutional authority.”
The ruling cancels NERC as a body, but the commission will continue to operate normally until Ukraine writes and passes necessary laws to replace this body and ensure that somebody regulates the energy and utility market.
During Poroshenko’s presidency, NERC’s activities led to several scandals. The commission came up with the so-called Rotterdam+ formula, a notorious scheme that indexes Ukrainian coal to its price in the Netherlands, plus the cost of transportation to and from Rotterdam. The richest Ukrainian, oligarch Rinat Akhmetov, owns heating and electricity supply companies and is the one who benefits from Rotterdam+ the most.
The formula elicited anger from Ukrainian civil society, and the National Anti-Corruption Bureau launched an investigation into the case under charges of abuse of power.
A similar lawsuit was filed back in 2017 asking the Constitutional Court to rule NERC as an unconstitutional body, but the court did not review the case while Poroshenko was president.
The Constitutional Court managed to consider the case only on May 13, after Poroshenko lost the presidential election, and after the judges of Ukraine’s Constitutional Court ejected its chairperson, Stanyslav Shevchuk, for an alleged disciplinary infraction and negligence.
Current President Volodymyr Zelensky is an outspoken critic of Rotterdam+. His representative to the Cabinet of Ministers, Andriy Gerus, was the one to file a civil lawsuit against Rotterdam+ back in 2016.
Gerus was a commissioner of NERC from 2014-2015 and then the head of the Association of Energy and Utilities Consumers until he joined Zelenskiy’s team.
Poroshenko created NERC in August 2014. Two years later, in September 2016, the Ukrainian parliament passed a law to establish NERC as an independent state body. However, Poroshenko retained the power to appoint and fire its members.
