FAS Made Decision on Petition of INTER RAO UES on Bashkirenergo
OREANDA-NEWS. February 21, 2012. Upon investigating a petition of “INTER RAO UES” OJSC on acquiring over 75 % voting actions of “Bashkirenergo” OJSC, the Federal Antimonopoly Service (FAS Russia) granted the petition, but at the same time issued a determination, reported the press-centre of FAS Russia.
FAS has specified that the decision shall only be valid if the group of persons of “INTER RAO UES” OJSC and “Bashkirenergo” OJSC observes prohibition of combining activities of natural monopolies and competitive activities, as provided for by Article 6 of the Federal Law “On Specifics of Performance of Electric Power Industry in the Period of Transition and on Introducing Amendments to Some Legislative Acts of the Russian Federation and Annulment of Some Legislative Acts of the Russian Federation due to Passing No.36-FZ Federal Law “On Electric Power Industry” of 26th March 2003.
Therefore, before the petitioned transaction can be completed, “Bashkirenergo” OJSC will have to transfer activities for transmitting electric power industry as well as the rights of property (other grounds for possession provided for by the federal law) for power supply network facilities to another person (other persons).
If the transaction is completed, the group of persons of “INTER RAO UES” OJSC will have to comply with conduct requirements on the wholesale market of electric power and capacity within the boundaries of the First Price Zone (Europe and the Urals), specified in the FAS determination. In particular, these requirements are set for applications on the “day ahead” market and balancing market, that guarantee the minimum volume of price-taking at 70 % from 7 a.m to 22 p.m. a day, using the strategy of minimizing cost of fuel per generating a unit of electric power, as well as the need to calculate price bids on the basis of the average-weighted cost of fuel.
Earlier, similar conduct conditions were issued to the group of persons of “INTER RAO UES” OJSC in 2011 when FAS approved a transaction for acquiring stock of “OGK-3” OJSC.
“As part of antimonopoly control over the transactions, FAS considered both structural and conduct measures for protecting competitive conditions. Structural measures ensured property separation of activities of natural monopoly (services for transmitting electric power) and competitive activities (generating electric power). Conduct conditions ensured conditions of market pricing on the wholesale market of electric power and capacity”, emphasized Deputy Head of FAS Russia Anatoly Golomolzin.
In view of consolidation processes in the industry, FAS frequently applies both conduct and structural measures to sell part of companies’ assets, and in some cases FAS refuses to approve transactions.
“Eliminating bottlenecks in the network will facilitate development of competition on the wholesale market of electric power. In the FAS opinion, based on the findings of technical-and-economic analysis carried out jointly with the “Market Council” Non-Commercial Partnership, the number of free power transfer zones can be reduced from 27 to 18. Further reduction of the number of free power transfer zone or, in other words, expanding the boundaries of free market is possible on the basis of investment projects that help eliminate bottlenecks and decrease existing regional differences between nodal prices”, added Anatoly Golomolzin.
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