OREANDA-NEWS. June 25, 2012. The Expert Council of the Federal Antimonopoly Service (FAS Russia) on Electric Power discussed pressing issues of antimonopoly regulation and control on wholesale and retail markets of electric power and capacity, reported the press-centre of FAS Russia. 

“According to the established tradition, the antimonopoly body proposed draft guidelines and normative documents for preliminary discussion by the expert community”, said Deputy Head of FAS, Anatoly Golomolzin, opening the meeting of the Expert Council.

The most extended discussion of the Expert Council covered specifics of revealing, suppressing and qualification of such violations and price manipulation on wholesale and retail markets of electric power (capacity). A number of reports / presentations were given by representatives of the Market Council, the Antimonopoly Service and producers of electrical energy.

The key issue for debates became a draft Technique, devised by the Antimonopoly Service, for determining whether price bids for selling electric power comply with economic justification requirements, as well as the criteria for considerable price changes on wholesale and retail markets of electric power (capacity), which FAS plans to use for exposing manipulations on wholesale and retail markets of electric power and capacity.

At the meeting members and participants of the Expert Council discussed a draft Technique for determining whether price bids for selling electric power comply with economic justification requirements prepared by FAS Russia. Participants paid special attention to consideration of average-weighted (rather than marginal) costs in price bids of suppliers.

“Currently, generating companies file price bids based on the cost of expensive fuel, for instance, residual fuel oil, used to generate “constitutive” Mwatt-hours. Generators incur expenses for the main scope of produced electric power under low cost of regulated gas production. This policy resulted in overvaluation of a general price level for electric power and considerable price volatility, that have considerable adverse impact upon consumers, although general market conditions have changed insignificantly”, the Chairman of the Expert Council, Anatoly Golomolzin, commented the market situation.

As a result of the discussion, the Expert Council decided to adopt as a basis the draft technique devised by FAS. The Expert Council also agreed to form a Working Group on use, administration and influence of the Technique upon participants of the wholesale market. It is planned that the Working Group will comprise representatives of FAS, interested ministries and bodies, producers and buyers of electric power (capacity), representatives of commercial and technological organizations as well as the “Market Council” and “INTER RAO UES” OJSC.

Another important subject of discussion for the Expert Council was criteria of significant price changes on wholesale and retail markets of electric power. The Antimonopoly Service plans to use them to classify such violations as price manipulations on wholesale and retail markets of electric power (capacity). FAS proposed absolute, relative and cost parameters in various sectors of wholesale and retail markets, which would demonstrate considerable price changes due to actions of a market participant that is involved in price manipulations.

“The concept of “manipulations on wholesale market of electric power” was introduced as a violation on the Federal Law “On Electric Power Industry” and “On Protection of Competition” by the “third antimonopoly law”. Earlier FAS already conducted a series of cases upon signs of violating the antimonopoly law (price manipulations on the wholesale market of electric power and capacity). Violations were exposed on both wholesale and retail markets in actions of suppliers and were committed by suppliers as well as sellers of electric power. Draft regulations, presented by FAS to the Expert Council, were based, in particular, on investigation practice of such cases. The discussion enabled to share experience and problems in this field and outline the avenues for resolving them in the future”, pointed out Deputy Head of FAS, Anatoly Golomolzin.

The Expert Council also discussed further integration of free transfer zones and expanding their boundaries.

The Ministry of Energy reported formation of new integrated free transfer zones in 2013-2016 in view of investment programs of network organizations and power-generating companies.

“According to an analysis carried out by the Antimonopoly Service, the level of economic concentration in these free transfer zones is decreasing, and accordingly, competition conditions are improving. FAS will take into consideration these circumstances to prepare proposals for expanding a number of free power transfer zones, where the upper price limit for capacity prices shall not be fixed due to intensified competition. Possibly, the number of such zones will be increased from three to six”, stated Anatoly Golomolzin.