Methodology

The Energy Transparency Index methodology is based on the universal statistical method of multidimensional weighted average, used to assess complex objects, processes and phenomena. The Index dimensions include specific transparency indicators, their sets (categories, subcategories and energy markets) and transparency aspects (criteria).

Indicators and categories

An indicator is a specific way of measuring the transparency of a certain object (e.g., energy company, public authority), process (e.g., pricing, regulation, trade, etc.), phenomenon (e.g., market, competition, etc.). The Energy Transparency Index studies analyze more than 200 indicators, indispensable and sufficient transparency features of which (contents of information, its format, frequency of updating, etc.) are defined in Ukrainian and/or international regulations and/or in best global practices of information disclosure.

The Energy Transparency Index studies cover five markets: natural gas; electricity; oil and liquid fuels; steam coal; and heat.

A category — is a set of indicators that reflects a certain aspect of the functioning of the energy sector. Grouping indicators into categories allows different stakeholders to obtain information on transparency in various parts of the value chain. By analyzing the requirements and practices of information disclosure, the indicators were grouped into eight categories:

Balances: defines the transparency of annual and monthly energy statistics.
Natural monopolies: defines the transparency of transmission and distribution system operators.
Supply: defines the transparency of the rules, competition, prices and pricing in the energy markets.
Reliability and security: defines the transparency of stocks and reserves; rules and reports on security of supply.
Consumption: defines the transparency of energy consumption metering, customer service standards, information for consumers on prices and tariffs, subsidies, preferences and other aid, and energy efficiency programs; commercial offers of suppliers and tools for comparing them.
Reporting: defines transparency of corporate financial statements and auditor reports, management reports, disclosure of non-financial information; payments to the government; information on final beneficiaries, corporate governance.
Policy: defines the transparency of implementing policy documents on energy and sustainable development; energy efficiency, environmental protection, climate change, and renewables.
Public authorities: defines the transparency of budget spending; adoption, and implementation of policy and regulatory decisions, as well as monitoring of their effectiveness; selection procedures in public bodies.

For the convenience of assessment and analysis, indicators in each category were grouped into subcategories and groups.

Transparency criteria

The transparency criterion is an aspect of assessing transparency of an object, process or phenomenon. Each of the indicators was evaluated against six transparency criteria:

Availability: the existence of information in open sources.
Accessibility: a measure of free access to information.
Relevance: availability of information for the most recent reporting period.
Frequency: compliance with the established requirements for the regularity of updating and storing information.
Usability: convenience and simplicity of using disclosed data and information.
Completeness: availability of exhaustive information required to be disclosed in accordance with the requirements of Ukrainian and/or international regulations and/or best global practices.

Transparency criterion	Score
Availability (C_av)	0 – information unavailable 1 – information available
Accessibility (С_ac)	0 – access to available information requires payment of a fee or prior request 0.5 – access to available information can be obtained only by: i) providing personal data to the party making the request; ii) searching for information on third-party resources (which differ from those provided by relevant regulations) where it is freely accessible; iii) conducting an additional search using internal search engines of government or company websites or external search engines 1 – information in free access
Relevance (С_rl)	0 – information for the most recent reporting period unavailable 1 – information for the most recent reporting period available
Frequency (С_fr)	0 – information not updated and not available for past periods 0.5 – information updated but not available for certain past periods 1 – information updated according to established requirements and available for past periods
Usability (С_us)	0 – information available in a non-machine-readable format (jpg, jpeg, png, pcx, tiff, scanned pdf, etc.) 0.5 – available information can be copied or processed (for numerical data: docx, pdf, html, xlsx (unstructured data)) 1 – information available in a machine-readable format (for numerical data: xlsx (structured data), csv, xml, json; text: docx, non-scanned pdf)
Completeness (С_in)	0 – information to be disclosed unavailable within the required period 0.5 – information to be disclosed partially available within the required period 1 – all information to be disclosed is available within the required period

Usability and completeness criteria are assessed based on the latest available information. Also, for information of mixed type (combination of textual and numerical information), the criterion of usability is assessed as for textual information. The aggregate score of each transparency indicator was calculated by the following formula:

Т_i = C_av × (С_ac + С_rl + С_fr + С_us) × С_in

where С_аv, С_ac, С_rl, С_fr, С_us, С_in – are scores based on the criteria of availability, accessibility, relevance, frequency, usability, and completeness, respectively.

If the information can be obtained only for a fee or upon request (С_ac = 0), it was considered unavailable (С_аv = 0). For all qualitative indicators, if the information was available (С_аv = 1) and accessible (С_ac = 1), it was assumed that С_in = С_rl = С_fr = 1.

Given the large number of transparency indicators, they were considered to be of equal weight. Therefore, the average values were used to develop sub-indexes for the categories, subcategories, and markets.

In the ‘wartime’ editions of the Index (from 2022 onwards), additional attributes are applied to the indicators to determine the reasons and nature of changes in transparency (in particular, a regulatory ban on data disclosure, an decision by data administrators to restrict or stop their publication based on discretionary powers, etc.)

Aggregation of scores

To calculate the total transparency score, following weightings of the Index’s categories were applied:

Interpretation of scores

All calculated transparency scores (by categories, subcategories, markets, authorities) are translated into a universal 100-point scale for convenience. They are rounded to integer digits and have the following interpretation:

Limitations

The Index cannot be applied to assess the transparency of:

the energy sector in real-time, since its calculation requires processing large amounts of information for the reporting period (as a rule, the one preceding the period, during which the assessment is delivered);
all participants of energy markets and/or public authorities; therefore, assessment of certain indicators in the Natural Monopolies, Supply, Consumption, Reporting, Policy, Public authorities categories is based on representative samples;
the still developing energy markets - steam coal and heating; the calculated scores for these markets should be considered only for reference.

Description of samples

Natural monopolies category:

Transmission and transportation system operators (TSOs) are legal entities responsible for the operation, dispatching, maintenance, and development of these systems, as well as for ensuring their long-term ability to meet reasonable demand: for electricity transmission, transportation and storage of natural gas, oil, and diesel fuel;
Distribution system operators (DSOs) are legal entities operating in the five largest cities of Ukraine and responsible for the safe, reliable and efficient operation, maintenance and development of distribution systems and ensuring the long-term capacity of distribution systems to meet reasonable demand for natural gas, electricity, and heating.

Supply category:

for exchange price indicators - commodity exchanges with the highest liquidity in the relevant wholesale energy markets.

Consumption category:

For natural gas - the sample consists of only one supplier, which is Naftogaz of Ukraine Gas Supply Company due to the transfer to it as the last resort supplier of the lion’s share of household consumers in May 2022;
For electricity - universal service providers in the five largest cities of Ukraine;
For petroleum products - operators of retail trade in petroleum products, namely legal entities that manage five largest networks of petroleum stations in terms of sales.

Reporting category:

‘Financial and management reporting’ subcategory, ‘Information on payment of taxes (by types of taxes and entities)’ group – 20 energy companies, which were among the TOP 100 taxpayers and, according to paragraph 21 of Article 1 of the Law “On Accounting and Financial Reporting in Ukraine”, are enterprises of public interest;
‘Special reporting of enterprises in extractive industries’ group - 12 private and state-owned companies with the largest production of natural gas, oil with gas condensate, and steam coal;
‘Beneficiaries and Corporate Governance subcategory’ - 14 largest energy companies selected from the main sample, which are joint stock companies and whose securities may be listed on the stock exchange.

Policy category:

for indicators related to Sustainable Energy and Climate Action Plans (SECAPs) - 5 largest cities of Ukraine: Kyiv, Kharkiv, Lviv, Dnipro, Odesa.

Public Authorities category:

‘Budget spending’, ‘Decision-making and implementation processes’, ‘Transparency of establishing governing bodies’ groups – the Ministry of Energy, the National Commission for State Regulation of Energy and Public Utilities, and the Antimonopoly Committee;
‘State Aid’ group - the indicators were assessed based on the information on state aid provided by the Antimonopoly Committee of Ukraine;
‘Quasi-fiscal transactions’ group - based on information of the Ministry of Finance on quasi-fiscal risks related to energy companies.