OREANDA-NEWS. February 10, 2009. A partnership of industrial consumers of electric power is founded. It was reported that large industrial consumers of electric power, such as TNK-BP, SIBUR, and energy trading structures of the Ural Mining and Metallurgical Company and the Rosoboronexport (Russian Defense Export) State Corporation, have established a nonprofit partnership “Association of Customers of the Wholesale and Retail Market of Electric Energy” for working out rules for the energy market, reported the press-centre of TNK-BP.

This is the first organization in Russia that will protect the interests of industrial consumers of electric power. It is an open partnership without any special restrictions for participation and that any large industrial customer of the wholesale electric power market can take part in it, except power suppliers of last resort.

The partnership is registered and has already started its work. Pavel Strunilin, Vice President, Power Supply, TNK-BP, is appointed its director. Members of the partnership will actively participate in development of laws, rules, and regulations for industrial markets. The association will interact with state authorities and organizations from the commercial and engineering infrastructure of the wholesale electric power market, mainly with the Market Council and the System Operator of the Unified Energy System.

In the years of RAO “Unified Energy System of Russia,” electric power prices for wholesale and retail consumers were set by the Federal Tariff Service. With the reforms in the energy industry and transition to free market, a model of free energy market was developed.

The share of energy sold at free prices based on the price bids of buyers and sellers was expected to reach 100% by 2010. Now, only 30% of electricity provided by power generation companies is being sold at free prices, whereas prices for the remaining 70% of electric power are regulated by the Federal Tariff Service.

By July 2009, liberalization of the wholesale energy market will reach 50%. A short-term model of energy market is currently being used, and a long-term model (for three–five years) is now under development. The population is not involved in all this yet, because power supplies at regulated prices are guaranteed to private consumers in the transition period.

Most of the revenues of power generation companies is yielded by sales of electric power and these companies are interested in selling electric power at prices as high as possible. However, nobody want to buy for high prices. All regulations of the wholesale market are worked out and established by the Market Council consisting of representatives of state authorities, producers of energy, consumers, and infrastructure organizations.

There were cases when the Market Council artificially scaled down and smoothed out prices on the free market when they tended to soar too high. The established nonprofit partnership will give recommendations to have influence on the prices of electric power sold on the free market.

Many large consumers of electric power wish to suspend liberalization. Last fall, Russian oilmen wrote a letter to the government. However, the whole initiative stopped short there. “When large industrial consumers realized that liberalization cannot be stopped, they established an organization that in fact is yet another price regulation mechanism. Thus they are trying to reduce their risks and create a counterbalance to liberalization,” holds Elena Yushkova, analyst of AK Bars Finance.

Igor Mineyev, Director of the non-commercial partnership “Council of Energy Producers,” hopes that the Association of Customers will be able to form a consolidated position of energy consumers. Now all energy consumers act only for themselves, which substantially reduces their possibilities for negotiation.