OREANDA-NEWS.  September 10, 2012. According to the press release o the National Energy Regulatory Agency, this is stipulated by the new methodology of calculating, establishing and applying prices for heating supplied to final users, approved by the ANRE Administrative Board.

Main goals of the new methodology are: to make system operators be more effective, minimize cost of service, attract investments in modernization and reconstruction of heating networks. ANRE Director General Victor Parlicov notes that by the new methodology heating providers will be offered to make investments which will allow to enhance efficiency and quality of the service. “ It does not mean that prices will grow”, he noted. In fact, since now, a profit of the heating provider will not be calculated as a percent of the cost, but as a percent of its investments.

If earlier companies were interested in increasing their expenses as much as possible to gain more profit, since now they have to reduce their costs and improve the quality of their service. Victor Parlicov expressed hope that the Parliament would pass the heat energy law, which would enable ANRE to set quality standards for the heating service. By introducing the new methodology, ANRE has changed a procedure of calculation of the regulated profit: the profitability of a company will now be judged about on the basis of the weighted average cost of capital (WACC), the indicator commonly used worldwide.

Advised by the World Bank, the European Commission and the Energy Charter Treaty Secretariat, WACC method takes into account country risks, market risks, value of the owned and loan capital, and other factors.