Introduction. In the conditions of formation a society of sustainable development the important task of the communal heat power engineering of Ukraine is to provide housing and communal, budget, social, and commercial spheres with the services on the supply of thermal energy at the level of European standards. However, the institutional, organizational and economic environment that has developed in municipal heat and power engineering does not allow solving this issue in its entirety. The urgency of the problem is exacerbated in the context of the integration intentions of Ukraine. Ukraine in its legislative initiatives declares the choice of a European model for the functioning of energy markets, as well as its desire to integrate into the European energy space, which requires the development of market relations in areas where the regime of natural monopoly operates. Formation of market relations in the municipal heat energy market means the development of a competitive environment and the emergence of independent heat energy producers using different types of fuels. The cost of producing heat depends on the type of fuel, that is, the market has a multi-fuel mode of its production. For this reason, the problem of tariff policy formation, which would reflect the economic relations that are emerging in the market, arises.
Purpose. The article aims to substantiate and develop practical recommendations for the formation of the tariff policy of thermal energy production in Ukraine in the conditions of multi-fuel mode.
Results. The basic models of the functioning have been determined with the help of systematization and generalization of international experience of functioning of competitive markets of thermal energy in developed countries. In this context, the basic model of functioning of the competitive heat energy market has been determined. This model is defined as an acceptable one for Ukrainian realities.
It is determined that an acceptable model for developing a competitive environment in the heat energy market is the "Single Buyer" model, which is a compromise in modern Ukrainian economic realities. This model gives a moderate reduction in the average weighted tariff for the end user, stimulates the operator to increase the efficiency of its own production, and fosters fair competition between the operator and the independent producer.
ANALYSIS OF CONDITIONS FOR THE CREATION OF THE LOCAL THERMAL ENERGY MARKET IN UKRAINE