Generation, Transmission, Distribution, Retail: How Electricity Reaches Homes in Ukraine

Before a light switches on in a Ukrainian home, four kinds of companies with different roles are involved, from the power plant to the household: “generation,” which produces electricity; “transmission,” which carries it at high voltage across the country; “distribution,” which delivers it locally to homes and shops; and “retail,” which contracts with users and sells them the electricity. This division is established by the Law on the Electricity Market (Закон «Про ринок електричної енергії», No. 2019-VIII), adopted on April 13, 2017.

This article is based on a reading, in September 2026, of this law, related rules, and the regulator’s annual report. Damage to power plants and substations from attacks is covered in our article on generating electricity in smaller, distributed units in a country whose plants keep being targeted.

The four roles the law divides

The Law on the Electricity Market defines transmission as “carrying electricity, through the transmission system operator’s network, from power plants to the connection points of the distribution network or the facilities of large consumers,” and distribution as “carrying electricity through the distribution system operator’s network,” stating that neither includes the sale (retail) of electricity. A distinctive feature is that carrying electricity and selling it are legally separated.

Transmission: one company for the whole country’s trunk lines

Article 32 of the Law on the Electricity Market defines the transmission system operator as “a legal entity that is not part of a vertically integrated undertaking,” and provides that it may not engage in generation, distribution, or the sale of electricity. The same article restricts eligibility to become a transmission system operator to the owner of the transmission network or to a company in which the state holds 100% of the shares.

The transmission system operator’s duties, as listed in Article 33, go beyond maintaining and expanding the transmission network. They also include operating Ukraine’s power system as a whole (dispatch), “balancing” generation and consumption hour by hour, receiving the daily generation and consumption plans submitted by market participants, and allocating cross-border transmission capacity.

Ukrenergo has been a full member of ENTSO-E, the association of European transmission system operators, since January 1, 2024 (according to ENTSO-E’s list of members). Ukraine’s power grid synchronized with Europe’s in March 2022, and subsequent electricity exports and imports are covered in the article cited above.

According to the regulator’s 2025 annual report, of the electricity sent out from power plants in 2025, 63% went into the transmission network, 30% went directly into the distribution network, and 7% was used within the plants themselves. The regulator characterizes the large share going into the transmission network as a sign that “the centralized generation system continues,” and the 30% going into the distribution network as a sign of growing distributed generation, such as rooftop solar on homes.

Distribution: regional power companies

Distribution system operators are responsible for the network downstream of substations, delivering electricity to homes and shops, connecting new buildings to the network, and managing meters and metering data (commercial metering) (Article 46 of the Law on the Electricity Market). Most are regional companies, known in Ukraine as “oblenergo” (обленерго, short for oblast energy company). The Ministry of Energy’s daily announcements also refer to the companies handling outage restoration by this name.

Article 47 of the Law on the Electricity Market bans distribution system operators from selling electricity at retail. This provision was set to take effect 18 months after the law’s publication (June 10, 2017), requiring the company handling the network and the company selling the electricity to be separate. The same article also bans distribution system operators from holding shares in companies engaged in generation or retail (this part took effect 36 months after publication).

Distribution system operators are also the ones who issue outage schedules and information about accidental outages. The Rules of the Retail Electricity Market require them to post a planned outage on their own website at least 5 days in advance, and, for an accidental outage affecting more than 100 users for more than an hour, to post the area and expected time of restoration within 6 hours of the outage. The Ministry of Energy’s announcement of September 23, 2026 likewise calls on people to check “the official sources of their local distribution company” for changes in electricity supply.

Retail: who households contract with

According to the regulator’s annual report, 1,410 companies held a retail electricity supply license in 2025, of which 356 were actually selling on the market. Users may switch their retail supplier, and the regulator states that 92% of switching procedures were completed within a day.

For households and small businesses (up to 50 kW of contracted power), there is a special kind of retail supplier called the “universal service provider” (постачальник універсальних послуг). Article 63 of the Law on the Electricity Market provides that this supplier cannot refuse to contract with a household in the area it serves. The Cabinet of Ministers selects these suppliers through a tender. The household electricity price is a “fixed price” set by Cabinet decision, and stood at 4.32 hryvnias per kilowatt-hour (including VAT) as of September 2026.

There is also a “supplier of last resort” (постачальник «останньої надії»). This is a supplier that temporarily sells electricity to users if their contracted retail supplier goes bankrupt or loses its license, for a period limited by law (Article 64). According to a Cabinet decision, this role is filled by the state-owned company Ukrinterenergo.

The wholesale market: from July 1, 2019

Buying and selling between generators and retail suppliers takes place on the wholesale market. The Law on the Electricity Market set the provisions governing this central trading to take effect from July 1, 2019. Cabinet of Ministers Decision No. 483 of June 5, 2019, which established the fixed-price mechanism for households, also took effect the same day. The wholesale market is divided into the following four segments (Article 4, the definitions).

• Bilateral contracts: sale and purchase agreements that generators, retail suppliers, and others conclude directly, outside the market
• Day-ahead market (ринок «на добу наперед»): electricity for each hour of the next day is bought and sold the day before
• Intraday market (внутрішньодобовий ринок): trading continues after the day-ahead market, up to the day of delivery itself
• Balancing market (балансуючий ринок): the transmission system operator buys and sells electricity to close the gap between generation and consumption

The day-ahead and intraday markets are operated by the state “Market Operator” (Оператор ринку). The regulator sets a price cap on the market, and in July 2025 raised the cap for peak-demand hours to 15,000 hryvnias per megawatt-hour. The regulator explains this as matching the price level of imported electricity, in order to maximize commercial imports.

The “Guaranteed Buyer” (Гарантований покупець), which buys renewable energy at a fixed price, is also a market participant defined by law. The Law on the Electricity Market defines it as the entity obligated to buy electricity from producers to whom the fixed price (the “green tariff”) applies.

The regulator that sets tariffs

Transmission and distribution are “natural monopoly” businesses, since only one network exists in a given area. It is the National Energy and Utilities Regulatory Commission (NEURC) that sets their tariffs (the transmission and distribution charges) and licenses power companies. A law of September 22, 2016 (No. 1540-VIII) establishes the Commission as a permanent central executive body with special status, created by the Cabinet of Ministers, that operates as a collegial body.

The components of a household’s electricity bill are shown separately on the invoice. The Rules of the Retail Electricity Market require the invoice and the customer’s online personal page to itemize the price of the electricity itself, the transmission tariff, the distribution tariff, the retailer’s service fee, taxes, and so on. According to the regulator, from January 1, 2026, the transmission system operator has also had to show separately, on the invoice, the cost of supporting the purchase of renewable energy.

Buying and selling electricity across the border

With the grid now connected to Europe’s, the allocation of cross-border transmission capacity is also changing. According to the regulator’s annual report, the first monthly auction through JAO, the joint mechanism for allocating European transmission capacity, was held on December 15, 2025 for the borders with Slovakia, Hungary, and Romania. The regulator also states it has been preparing to start intraday auctions on the EU border in 2026.

The same report states that exports were high from June to September 2025, reaching a peak of 644,000 MWh in September, the most since synchronization with ENTSO-E, but that exports stopped on November 11 after a large-scale attack that month, and the year ended with imports of 640,000 MWh in December. Even under continuing attacks, the framework that separates generation, transmission, distribution, and retail remains the structure for tracking the flow of electricity and of payments.