From Oligarchs to Territorial Communities: A Plan to Save the Energy Sector and Return Money to the People

Key Takeaways

If you don’t have time to read the whole text, here are 5 main points you should know:

1. The energy market does not exist: What is sold to us as a “European market” is actually an oligopoly scheme where 5–6 players dictate prices, and the state-owned “Energoatom” and “Ukrenergo” are used as donors for private profits.
2. We pay twice: Through the RAB-tariff scheme, we pay interest on “profits” for old Soviet networks, the value of which was artificially inflated tenfold. This is not investment, this is rent.
3. Intermediaries are evil: The unbundling system of regional energy companies (oblenergos) created not competition, but a chain of “middlemen” (generation → trader → operator → supplier), each of which adds its margin to the price for the consumer.
4. Not changing the owner, but reclaiming what is ours: It’s not about simply replacing a private owner with a state official. The only way out is the return of stolen property to its rightful owner — the Territorial Community. The community becomes the sole owner responsible for the entire chain: from extraction to the socket.
5. Personal responsibility: In the SPLE-EE (Sole Public Law Legal Entity – Economic Entity) model, the authorities are accountable not to a “ministry,” but to every member of the community for the quality of services (through the OSN mechanism) and to every employee for working conditions and social protection.

Introduction: The “Stolen House” Analogy and the Great Energy Trap

Imagine a situation that seems like a plot for a thriller movie, but is actually our reality. You and your family built a large, sturdy house with your own hands, brick by brick. You invested all your savings, worked weekends, denied yourself rest for the sake of future comfort. And when the house was ready, slick dealers appeared. Using corrupt connections, “black notaries,” and loopholes in the laws, they “re-registered” this house to themselves for the price of construction debris.

And here is the finale of this cynical absurdity: they don’t kick you out. No, they do “better.” They allow you to live in your own house, but demand that you pay them monthly rent. They control the light switch, the water valve, and the temperature in the radiators. And when the roof starts leaking due to their negligence, these “new owners” demand extra money from you for repairs, calling it an “investment surcharge.” You pay, they buy a new yacht, and the hole in the roof remains. Why do you pay submissively? Because the alternative is even scarier — becoming homeless. The fear of ending up on the street without heat and light forces you to give any amount the new owner “draws” in the bill, even if it takes the last money for food. This is not rent, this is — paying a ransom for the right to survive.

Sounds like a crime drama? But this is exactly what, according to a deep strategic analysis of the industry, actually happened to Ukrainian energy. We, the Ukrainian people, with our labor and taxes over generations, created this powerful infrastructure — hydroelectric power plants on the Dnieper, atomic giants, heating plants in every city, thousands of kilometers of networks. But as a result of dubious privatization in the 90s and 2000s, control over these assets and, most importantly, the profits from them ended up in the hands of private monopolies. We found ourselves in the role of disenfranchised tenants in our own home, forced to pay new “masters” for using what was rightfully created for us.

This article is not just a critique. It is a detailed deconstruction of a great deception. We will analyze why the 2019 reform, which promised a “European market,” turned into a fiction. We will show where hundreds of billions of hryvnias disappear during the war, and propose a concrete, scientifically grounded way out — transitioning to the SPLE-EE (Sole Public Law Legal Entity – Economic Entity) model, which will return control over energy to territorial communities.

1. The Great Illusion: Why the Market Actually Doesn’t Exist

For years, we were told a beautiful fairy tale about a “European market,” free competition, exchanges, and choice of supplier. We were convinced that the state is — a priori an inefficient owner, and privatization will automatically bring new technologies, investments, and lower prices.

In reality, under the guise of these liberal slogans, there was a virtually criminal seizure of Ukraine’s energy sector. Strategic assets were removed from people’s control not for development, but to create a mechanism through which billions in resources were systematically siphoned out of the national economy for years. Instead of investments, we got a scheme of enrichment for a narrow circle of people at the expense of the impoverishment of the population.

Let’s look at dry facts and reality, which analysts call a “hybrid administrative-command system” with signs of cartel collusion. A real market works on a simple principle: there are many sellers, and they compete for you, lowering prices. In Ukrainian energy, a situation of rigid oligopoly has developed — a regime where several powerful players have divided the “pie” and dictate the rules of the game.

But the main manipulation lies not even in prices, but in the very essence of the service. We are being imposed the idea that energy, heat, and water are ordinary commodities, like sneakers or a smartphone. If you don’t like the price of a new iPhone, you can choose not to buy it. But you cannot refuse water or heat in winter.

Life support systems are not a market, they are a matter of national security and physical survival of people. The laws of elasticity of demand do not apply here: a person will give the last to not freeze. When critical infrastructure ends up in private hands, it turns into a weapon of mass destruction, where the “button” is in the hands of an oligarch, and millions of citizens become hostages.

This situation has led to a tectonic shift in the “state-citizen” relationship. The state, which gave control over survival systems to private individuals, effectively lost part of its sovereignty, becoming controlled by oligarchs and powerless before their blackmail. And citizens, deprived of choice and forced to give the lion’s share of income for basic needs, de facto lost economic freedom and turned into “energy serfs” of new feudalism.

Architecture of Monopolism:

• Thermal Generation (TPP) — “Golden Share” of the market: This segment is controlled predominantly by one private monopoly. Why is this critically important? Thermal plants are “maneuverable” — they turn on in the morning and evening to cover peak consumption when we all turn on kettles and boilers. In the market, the price of electricity is often determined precisely by the price of the “last switched-on unit” (marginal price). That is, a private TPP owner, having the most expensive generation, effectively sets the price bar for the entire market, pulling prices up even for cheap atomic energy.
• Distribution (Oblenergo) — “Feudal Estates”: These are so-called “natural monopolies.” They own physical assets — wires, poles, and transformers in your region. You cannot lay another cable to your apartment. As a result of privatization, these strategic arteries ended up in the hands of several oligarchic groups (some of which have historical and business ties with the aggressor state). Owners of these networks simply collect a delivery fee from you, like medieval feudal lords collected tolls for crossing a bridge. They have no incentive to improve service because you have nowhere else to go.
• Atomic and Hydro Energy — “Corporate Trap”: Legally, these giants (“Energoatom”, “Ukrhydroenergo”) have been transformed into joint-stock companies (JSC, PJSC). Although 100% of shares belong to the state, their legal goal has changed — now it is profit generation, not serving society. This creates a classic “principal-agent” conflict. Management assigns itself “market” millions in salaries and bonuses, citing corporate status. However, real profit is washed out through procurement schemes: regular corruption scandals with overpayments of hundreds of millions of hryvnias on equipment or spare parts purchases are direct proof of this. Managers effectively steal from the people (since the state only manages our common indivisible property). At the same time, through the PSO (Public Service Obligation) mechanism, they are forced to sell energy for a pittance to cover the super-profits of private generation. In fact, the state sector is robbed twice: from the inside — by dishonest management, from the outside — by the oligarchic system.

What does this mean for you personally?

The price in your bill is formed not by the balance of supply and demand, but by the “wants” of monopolists, which are approved through lobbying in the high offices of the regulator — NEURC.

NEURC (National Energy and Utilities Regulatory Commission) was supposed to be an independent arbiter. But the Constitutional Court of Ukraine back in 2019 recognized the creation of this body as unconstitutional. In fact, the market is regulated by a body with dubious legitimacy, which operates in a “regulatory capture” mode. Oligarchs, through the quota principle, delegate “their” people there themselves, who legalize predatory tariffs.

2. Scheme “Privatization of Profits, Nationalization of Losses”

This is the most cynical part of the current model. The system is set up so that when business goes well — the money is private and withdrawn to offshores. But when a crisis, war, destruction happens or debts accumulate — the state pays, that is, each of us through taxes and inflation. In economics, this phenomenon has a clear name — “privatization of profits and nationalization of losses.” This is when the oligarch takes the cream, and the roots (debts and problems) go to the people.

The analytical report and materials of NABU investigations allow estimating the scale of this “washing out” of funds:

1. “Green Tariff” Trap: Ukraine guaranteed private solar and wind farms one of the highest payments in Europe, pegged to the euro. This created a financial hole. When there wasn’t enough money in the market, debts were covered by the state company “Ukrenergo,” taking loans under state guarantees. We all now owe banks money that went to the super-profits of energy barons.
2. Preferential loans “5-7-9”: The program for saving small businesses (coffee shops, farmers) became a feeding trough for energy giants. Large holdings take billion-dollar loans to restore their private stations, and the state compensates them for interest. This is a direct subsidy from the taxpayer’s pocket to private capital.
3. Robbery mathematics on RAB-tariffs:
   The brightest example of cynicism. Owners of oblenergos, who bought these enterprises from the state for sums equivalent to 200–500 million UAH, lobbied for a “revaluation” of assets. Old Soviet poles on paper suddenly started costing 5–10 billion UAH. And now we pay them a percentage of this inflated amount in the tariff.

• Consequence: In one year of this scheme’s operation, owners pump out “net profit” more than they once paid for buying the entire enterprise.

1. “Rotterdam+”: The infamous formula that forced us to pay for Ukrainian coal a price as if it were being brought from the Netherlands. Direct losses to consumers are estimated at over 39 billion hryvnias.

Total bill: According to expert estimates, the total volume of funds withdrawn from the economy through these schemes in recent years exceeds 100 billion hryvnias. This is equivalent to the annual budget for purchasing modern weapons for the entire Ukrainian army. We financed not defense, but yachts.

Concrete Corruption: How Protection Was Stolen and the Country Frozen

Another layer of cynicism opens up when it comes to the physical protection of energy facilities from missile strikes. The state allocated billions of hryvnias for the construction of concrete shelters for transformers (so-called “second and third level protection”).

However, as NABU investigations and journalists testify, a significant part of these funds was stolen.

• “Mindichgate” Scheme: Journalists and law enforcement point to the possible involvement of the authorities’ entourage in the theft of funds intended for the protection of the energy system. Instead of reliable concrete bunkers, “Potemkin villages” were built or nothing was built at all.
• Consequence: When the enemy began to target substations, they turned out to be unprotected. Missiles and drones destroyed expensive equipment that should have been hidden behind concrete.
• Result for people: Precisely because of this corruption, Ukrainians sat without light and heat for hours in winter. People froze in their apartments not only because of the enemy’s cruelty but also because of the greed of officials who stole the “concrete dome” over energy.

“Cryptocurrency Hole”: How Mining Steals Light

Besides classic corruption schemes, the energy system is also drained by shadow business, which is often “covered” by energy workers or officials themselves. A vivid example of cynicism is a criminal case against officials of “Ukrenergo” and commercial structures who organized a scheme for free receipt of electricity.

• Scheme for 168 million: Law enforcement officers exposed a deal whereby the state company “Ukrenergo” freely “released” electricity worth more than 168 million hryvnias to a private structure. These funds were effectively stolen from the state during the war.
• Mining instead of heat: Often such “left” energy goes to the operation of illegal mining farms. While outage schedules are in effect in cities and people are freezing, someone uses stolen megawatts to mine cryptocurrency, receiving super-profits.
• Who pays: This stolen electricity is written off as “technological losses in networks.” And you pay for these losses in your tariff. Moreover, illegal connections create insane loads on transformers, leading to accidents and fires, which again leave honest consumers without light.

This is another proof of how private interest parasitizes on a common resource, creating losses for everyone.

Testimony from Within: What the “Black Box” of Tariffs Hides (Parliamentary Audit Data)

The scale of cynicism of the situation is confirmed not only by expert estimates but also by direct testimony from parliament. The head of the Temporary Investigatory Commission (TIC) of the Verkhovna Rada on tariff issues, Oleksii Kucherenko, directly states the systemic deception of consumers. However, it is important to note here: Kucherenko himself, being the Minister of Housing and Communal Services in 2007–2010, had all the levers of influence to prevent the creation of this system, but, like many of his colleagues, did nothing for real demonopolization. Today’s exposures from the mouths of government representatives sound like a verdict on themselves: they admit that they created a monster that they now cannot (or do not want to) control.

1. Tariffs already covered everything: According to the TIC’s conclusions, at the time of price increases, there were no economic grounds for this. Current electricity and gas tariffs fully covered the cost. The increase was lobbied by monopolists (“Naftogaz”, “Energoatom”) to cover holes from their own inefficient management and multi-billion debts accumulated due to corruption.
2. Secret aid to “Ukrenergo”: The deputy points to a glaring fact: the state company “Ukrenergo” during the war actually classified data on international aid.

• How it works: The company receives hundreds of millions of dollars in grants and free equipment (transformers, cables) from Western partners.
• What is the scam: It is impossible to check whether restoration works were performed at the expense of these free resources, or they were written off again at the expense of tariff funds (our money). Kucherenko calls this “insane abuses” and points to the case of embezzlement of 1 billion hryvnias on electricity, where there are still no loud verdicts.

1. Credit noose: Instead of attracting “soft” long-term loans at 2-3% per annum or grants for reconstruction (as Europe does), Ukrainian energy giants take commercial loans at 9-10%. These interests then lie in the tariff or are covered from the budget. This is a deliberate policy of driving the industry into a debt hole.
2. Myth of “Import Parity”: Authorities and lobbyists are trying to impose prices on us at the level of European ones (“import parity”), telling tales about European integration. But this is manipulation. Ukrainians have the right to consume their own, cheap atomic and hydro energy according to the formula “Cost + Adequate Profitability”, and not pay the price of the German exchange for it.

These facts prove: the problem is not that “energy is expensive,” but that the system is opaque, corrupt, and works in the interests of a narrow circle of people, hiding behind the war.

Anti-Corruption Trap: When “Reforms” Become a Tool for Robbery and Terror

What is sold to us as “reforms” and “fighting corruption” has actually turned into a carefully planned anti-corruption trap for ordinary citizens. Instead of eliminating schemes, the Verkhovna Rada and the government create new laws that not only legalize the withdrawal of funds but also create an apparatus of coercion to collect debts that they themselves artificially created.

• Legalized racket: Under the guise of “harmonization with the EU” and “market reforms,” laws are passed that untie the hands of private monopolists (oblenergos, gas suppliers, water utilities). They are allowed to:

• Collect debts without court (through executive inscriptions of notaries).
• Block citizens’ bank accounts in minutes.
• Disconnect vital services (light, gas, water) even during the war, blackmailing people with cold and darkness.

• The state as a collector for oligarchs: Instead of protecting citizens’ rights, state institutions (executive service, courts) have turned into a private security firm for oligarchic clans. They do not figure out the nature of the debt (whether it is real or “drawn” due to an inflated tariff), they simply “beat out” money. This creates an atmosphere of total terror against its own population. A person, cornered by the fear of losing housing or being left without means of subsistence due to blocked cards, is forced to pay any amounts.
• Systemic inaction as a crime: Politicians who have been in power for years (like the same Oleksii Kucherenko, who was a specialized minister), perfectly know the mechanics of these schemes. Their inaction during their tenure and the current “struggle” in opposition look like part of one game. The government (legislative and executive) has effectively betrayed its function as an arbiter and become an accomplice in a scheme where the people are viewed exclusively as a “fodder base” that can be exploited with impunity.

Trading Air: How You Are Sold Non-Existent Services

The robbery scheme is not limited to just inflated tariffs. Monopolists have gone further — they have learned to sell non-existent services or artificially inflate volumes, creating “air debts,” which are then really collected from Ukrainians.

Scheme “DTEK — Kyivteploenergo — Naftogaz”

A classic example is a triangle in which billions of Kyivans’ hryvnias were lost.

• Naftogaz (state monopolist) sells gas to Kyivteploenergo (municipal enterprise) for heating houses.
• But “Naftogaz” often issues bills not for actually consumed gas, but for “ordered capacity” or using coefficients that do not correspond to reality.
• In turn, Kyivteploenergo, to cover these costs, “draws” bills to Kyivans, including losses in networks, which sometimes reach 40%. You pay not for heat in the radiator, but for heating the earth through leaky pipes. This is a classic example of artificially created debt, which arises due to the difference in calculation methods and tariffs approved by the same NEURC.
• In parallel, DTEK (Akhmetov’s private structure), which controls Kyiv’s power grids, issues bills to the same water utility or heat energy for “reactive electricity” or “distribution services,” the cost of which is often inflated.

Result: All these structures (state, municipal, private) exchange “air” certificates of completion for billions of hryvnias. These debts accumulate, and then they are either written off at the expense of the state budget (that is, our taxes), or included in your tariff. This is mutual responsibility, where each participant in the scheme receives their percentage, and the consumer remains extreme.

Live Examples of “Effective” Management

Case 1: How the Energy Noose Cuts Off Water (“Dnipro-Kirovohrad”)

The situation with the “Dnipro-Kirovohrad” water utility is a vivid illustration of how the current model kills the life support system.

A municipal enterprise providing water to 400 thousand people found itself on the verge of disconnection due to electricity debts to the monopolist (“Kirovohradoblenergo”). Private energy raised prices twice, and the municipal water utility, bound by a social tariff, cannot cover them. The result is blackmail by disconnecting pumping stations and pumping 47 million hryvnias from local budgets to satisfy the appetites of energy workers.

Case 2: Battle for Heat (“Kyivteploenergo” vs “Naftogaz”)

If you think the problem is only in private oligarchs, look at the capital. Here, a war is unfolding between two giants: municipal “Kyivteploenergo” (owned by the Kyiv community) and state NJSC “Naftogaz of Ukraine” (which, we remind, is also the property of the Ukrainian people, and the state only manages it).

• Essence of the conflict: “Naftogaz”, using its monopoly position as a gas supplier, for years accrued fines and penalties to “Kyivteploenergo” (and in fact — to Kyivans) for debts that were often artificial or arose due to delays in state subsidies.
• Absurd figures: At various periods, billions were involved. For example, claims for hundreds of millions of hryvnias in penalties alone appeared in courts.
• Corruption component: Numerous audits and investigations (in particular by the State Audit Service) revealed financial violations in “Naftogaz” itself for hundreds of billions of hryvnias (writing off debts to intermediaries, dubious purchases, management bonuses).
• Paradox: One state (people’s) enterprise tries to “rip off” money from another municipal (people’s) enterprise, charging commercial interest. As a result, money from Kyivans’ pockets flows not to the modernization of heating networks, but to cover the “effective management” of the gas monopolist. This is a war of the right pocket with the left, where the owner of the pants loses — the people of Ukraine.

Case 3: “Fake Debt” (Kyivteploenergo) — “Kyivteploenergo” issued a debt of 50,000 hryvnias to a Kyivan for hot water. The absurdity of the situation is that there has been no such service in the house for 20 years after DTEK’s intervention in the boiler room. Complaints have been ignored for years. This case is not a mistake, but a systemic feature of automated billing systems that generate profit “out of thin air” and have no feedback from the consumer. Under the new law, this fictitious debt, backed by a court order, will turn into an automatic seizure of property and accounts. This illustrates how digitalization without justice becomes an instrument of terror.

Besides this, the total debt for housing and communal services in Ukraine has reached an astronomical figure — 106 billion hryvnias. However, these are not just debts of unscrupulous payers. A significant part of this amount is precisely such “fake” accruals, inflated tariffs, and fines that monopolists issue to citizens. And now they plan to get this money in two ways:

1. Direct terror: Seizure of accounts, blocking of cards, confiscation of property from citizens.
2. Budgetary looting: Demand to the state or local budgets to “compensate for the difference in tariffs” or pay off the population’s debts. That is, to get into the taxpayer’s pocket again.

These cases prove: as long as the life support system is torn into pieces that fight each other for profit, there will be no order. Water, heat, and energy must be in one hand — the hands of the territorial community.

Briefly and to the point — how “aid” to energy workers during the war is legally arranged

Often one can hear manipulation: “We take loans for restoration, and then energy companies pay them back.” This is not true. Here is how the aid mechanism actually works, and why it is beneficial to private monopolists but burdens the state.

1. TO WHOM is aid formally provided: the state or DTEK?

Depends on the channel, but in most cases, the recipient is precisely the State of Ukraine.

• Model A (Main): Donors (EU, USA, World Bank) provide assistance to the state (Ministry of Energy). The state distributes this equipment (transformers, generators) among operators, including private DTEK and oblenergos. Here, the private company is only a user, not a party to the agreement.
• Model B (Targeted): The donor can directly specify the recipient (for example, a specific oblenergo for network restoration in a region), but this still happens in coordination with the state as part of critical infrastructure protection.

2. Grant or loan?

• 90% of aid is FREE GRANTS. A transformer that arrived from Europe costs millions of euros, but a private oblenergo gets it for free. The owner does not pay a penny for it and has no debts.
• If it is LOANS: Then the borrower is again the State of Ukraine. This means that interest and the body of the loan will be repaid from the State Budget, that is, from your taxes.

3. Final bill

A paradoxical situation emerges:

• Private monopolist receives new, modern equipment instead of old Soviet (destroyed) one. His business recovers, the company’s capitalization grows, and he saves his own money. At the same time, the owner of these assets (for example, the DTEK/Metinvest group of Rinat Akhmetov) invests huge funds not in Ukraine, but abroad. While the Ukrainian energy system is being patched up at the expense of donors, the holding buys new metallurgical plants in Italy (in particular, in Piombino for €2.5 billion) and other EU countries (Romania, Bulgaria). It turns out that the Ukrainian consumer and the Western taxpayer finance the stability of the oligarch’s business here so that he can develop his empire there.
• The State (and you and me) take on debts for international loans.
• Consumer continues to pay a high tariff, into which, ironically, an “investment component” for restoration is often put, which has already been paid for by donors or the budget.

We effectively rebuild the private business of oligarchs at the common state and international expense, allowing them to continue earning from us without investing their own resources. This is not partnership, this is parasitism on war.

3. Historical Rakes: Why the Modern “Market” Works Worse than Soviet Gosplan

History tends to repeat itself, sometimes as farce. I conducted a comparative study between the current “European” market model and the failed Soviet economic reform of 1965 (known as the Kosygin-Liberman reform).

Effect of “Cost Mechanism” (Cost-Plus)

In 1965, the Soviet authorities tried to give enterprises more autonomy, but made a fatal mistake: they tied success and directors’ bonuses to the “gross income” (val) indicator.

• How it worked in the USSR: It became profitable for factories to use the most expensive materials because the higher the production cost — the larger the “val” in reports and the larger the bonus. Saving became unprofitable. This killed efficiency and led to shortages and stagnation.

It would seem, what does modern capitalist Ukraine have to do with this? It turns out we stepped on the same rake, but on an even larger scale. This historical parallel is not accidental: both the Soviet nomenclature and modern oligarchs use the “cost approach” for one purpose — maximizing personal gain at the expense of society, ignoring real efficiency. The aforementioned RAB-tariffs and the “Cost-Plus” model (Costs plus profit) are the reincarnation of the Soviet “val”. It is beneficial for the monopolist (oblenergo) to inflate the value of its assets and operating expenses. The more expensive the maintenance of networks on paper — the higher the tariff NEURC will approve, and the larger the guaranteed profit the owner will receive. Instead of looking for ways to reduce costs, the system stimulates inflating them. This is “economy inside out,” which works against the consumer.

Phenomenon of “Double Marginalization”

Under the slogan of fighting monopolies and European integration, we had “unbundling” — the separation of oblenergo into a network operator and a supplier.

• Theory: Many suppliers were supposed to appear, competing on price.
• Practice: Instead of one company, we got a long chain of intermediaries: Generation $\rightarrow$ Trader $\rightarrow$ Transmission System Operator (Ukrenergo) $\rightarrow$ Distribution System Operator (Oblenergo) $\rightarrow$ Supplier.

Each in this chain is a separate “profit center”. Each adds its margin to the predecessor’s price. In science, this is called “double marginalization”. As a result, the final price for industry and the consumer becomes higher than if the service were provided by one vertically integrated structure.

The biggest cynicism is that this “chain” often leads to one pocket. For example, in the DTEK group, coal is mined by “DTEK Pavlohradvuhillia”, burned by “DTEK Energy”, distributed through networks by “DTEK Kyiv Grids”, and sold to you under the “YASNO” brand (also a DTEK structure). Effectively, one owner created a vertical monopoly, but legally these are different companies. This allows him to “legally” receive monopoly profit at each stage of this chain, artificially inflating the final price for you. Instead of a market, we got a multi-faced monopolist who buys from himself and sells to himself, and we pay for it.

Collective Irresponsibility

As in the late USSR, where ministries nodded at Gosplan, and directors at ministries, an ideal circle of irresponsibility has been created in Ukraine.

• NEURC says: “We simply execute the approved methodology, we are a technical body”.
• Government says: “The regulator is independent, we have no right to interfere in its work”.
• Monopolists say: “Tariffs are still too low, there is no money for repairs, the war is to blame for everything”.

It is impossible to find the guilty, and you pay for everything — with your money and your safety.

4. Scientific Solution: SPLE-EE Model

Criticizing is easy, but what to do? Is it enough just to change the names of officials in NEURC? No. The system will “digest” any new faces if the rules of the game are not changed.

The answer lies in changing the legal nature of the owner. A scientist (in particular V.V. Morgun in the fundamental work “Three Dimensions of Law”) proves that the root of evil is in the attempt to apply private business rules to the sphere of public services. He substantiates the model of Sole Public Law Legal Entity – Economic Entity (SPLE-EE).

Let’s translate this from complex legal terminology into common sense language. Now our cities and territorial communities are fragmented. City Council — separately, water utility — separately, heating network — separately. These are different legal entities that sue each other, pay VAT to each other, and feed an army of accountants and lawyers.

Essence of the SPLE-EE Model:

1. Sole Owner: The territorial community (city, village) is recognized not just as a collection of people, but as a single, holistic economic organism.
2. Structural Subdivisions Instead of Firms: Utility enterprises (heating networks, water utilities, power generating companies) lose the status of separate commercial legal entities. They become internal departments of the community.
3. “In-House” Principle: This is a European standard. If you cook borsch in your own kitchen for your family, you don’t hold a tender to purchase cook services from your wife and don’t pay her salary with VAT. You are one whole.
   Similarly, a territorial community that produces energy for its residents through its subdivisions should not hold artificial tenders and feed intermediaries. This saves colossal funds on transaction costs.

Three Pillars of the New System:

• Services of General Economic Interest (SIEG): In EU law, energy supply is not a business, but a vital necessity. According to the EU Court decision (Altmark case), the community has the right to provide such services at cost or with a minimal markup, and this is not considered a violation of competition. The goal is accessibility of service, not profit.
• Economic Risks Fund (FGR): Critics will say: “If everything is combined, will energy debts fall on schools?”. A safeguard is created for this. A special FGR (insurance cushion) is formed in the community budget. It is legally established that liability for economic mistakes is covered exclusively from this fund, and not from protected budget items (teachers’ salaries, medicines).
• OSN as Authority, Not “Clubs”: Bodies of population self-organization (street, house committees) become primary structural subdivisions of power. They get the right to sign acts of completed works. No contractor will receive budget money for repairing a pipe on your street until an authorized representative of your house committee checks the quality and signs off.

Cost Principle as a Tool Against Theft

In the SPLE-EE model, the key is the principle of “transparent cost”. Any theft (whether “left” energy for mining, or inflated price for spare parts) inevitably leads to an increase in the cost of the service.

• How it works: Since the tariff is formed based on real cost, any unjustified increase is an alarm signal for the community.
• Control “in hot pursuit”: Instead of waiting for a scheduled check in three years (when money is already withdrawn, and the guilty are abroad), the community’s audit commission and OSN representatives have the right to check the reason for the cost increase here and now. This allows detecting schemes in real time and blocking them before they cause irreparable harm to the budget.

5. Why Is This Beneficial for You?

Transitioning to the SPLE-EE model is not an abstract reform. These are changes you will feel on your wallet and safety:

1. Fair Tariffs: Corruption rent, RAB-markups, and the margin of five intermediaries disappear from the price per kilowatt. The tariff becomes a transparent equation: “Cost + Investment in repair”.
2. Real Control: You, through your house committee (OSN), become a real customer of services. You control where your money goes.
3. Energy Security: Small municipal stations are harder to destroy than giant private TPPs. You will have light and heat even during blackouts.
4. Investment Attractiveness (“Plug-and-Play”): Investors are afraid of corruption but are ready to work with transparent communities. The model offers the investor ready sites with connection, not bribes for “entry”.

The Only Way Out — Return of Stolen Property and Responsibility

Let’s call a spade a spade. It cannot be about “changing the owner,” because that would mean that the current oligarchs obtained assets legally. It is about the return of stolen property to its only legal owner — the Territorial Community (the People).

In this new system, the Territorial Community (TC) becomes the sole owner and manager:

• It is responsible for the entire cycle: from resource extraction (water, heat) to delivery to the home.
• It bears responsibility to every member of the community for the quality of services (through the OSN control mechanism).
• It bears responsibility to every employee of former utility enterprises (which become municipal departments) for decent working conditions and social guarantees, because they are not hirelings of an oligarch, but municipal service personnel working for their community.

This is a return to common sense, where the economy serves people, not the other way around.

Conclusion

Ukraine’s current energy system resembles an old, rusty, leaky bucket. We (the state and citizens) constantly pour water (our money) into it, but the water instantly flows out through holes of corruption, monopoly, and inefficiency.

As long as life support systems (energy, water, gas, heat) remain in the hands of private monopolies or operate on the logic of “commercial profit,” the situation will only worsen. Money will be withdrawn offshore or for building plants in the EU, while Ukrainians will remain with exorbitant tariffs and worn-out networks.

The solution is not to pour even more water (raise tariffs). The solution is to change the design of the bucket. The only way to salvation is the return of stolen infrastructure to its legal owner — Territorial Communities. Transitioning to the SPLE-EE model will allow removing intermediaries, eliminating corruption rent, and implementing two fundamental constitutional principles: direct responsibility of power to the people and direct management of common property through primary bodies of population self-organization (OSN). It’s time to stop being disenfranchised tenants in our own home. It’s time to return what’s ours and become masters on our own land.

Sources

1. Scientific substantiation of the SPLE-EE model:
   Morgun V.V. “Three dimensions of law: Substantiation of the three-sector model of legal entities”. Bulletin of Mariupol State University. Series: Law. Issue 30. 2025.
   DOI: https://doi.org/10.34079/2518-1319-2025-15-30-137-148
2. Additional materials and analytics:

• Anti-corruption trap: How reforms became a tool for robbery — Detailed analysis of how legislative changes legalized corruption.
• Apparatus of debt collection enforcement — How the state turned into a collector for oligarchs.