OREANDA-NEWS. June 02, 2010. Deputy Economic Development Minister Andrey Klepach announced yesterday that electricity prices for households will increase 13-15% in 2011, which is below the state’s prior forecast of 20%. Household heat prices will rise by 12-14% (our estimate is 6%), reported the press-centre of OTKRITIE Financial Corporation.

View: Households comprise only about 10% of electricity consumption in Russia, and are in fact subsidized by industrial consumers that have to pay higher retail electricity prices. Hence, we believe that the 13-15% tariff growth cap for households will not significantly impact electricity pricing in Russia, or substantially affect electricity producers. Heating prices are a different story. Households consume about 50% of Russia’s heating, hence household tariffs have a larger impact on thermal generation companies. The final tariffs will be approved in November-December and the deputy minister’s comment opens the discussion of 2011 tariffs among different state bodies.