OREANDA-NEWS. April 16, 2014. Deputy Head of the Federal Antimonopoly Service (FAS Russia), Anatoly Golomolzin, took part in the Second Final Session of extended Collegium of the Ministry of Energy of the Russian Federation.

Anatoly Golomolzin stated that the share of costs of the services for electric power transmission in the price for the end users constitutes 40 - 60%, which in view of the difference in the rates according to the voltage class, has the most sensitive impact upon small and medium companies. Analysis carried out by FAS shows that the tariff growth rates for electric power transmission substantially outruns price growth in the electric power industry as well as in the economy in general.

One of reasons for such aggressive tariff growth is a delay in developing and approving long-term tariff-setting procedures. Earlier FAS drafted amendments to the Law “On Natural Monopolies” that were not supported. At the same time, the growth of transmission tariffs stems from the practice of applying the so-called “boiler method” of tariff-setting, that leads to unreasonable differences in tariffs of grid companies.

As a result of gaining an additional income through economically unreasonable tariffs, the number of grid companies is many times higher than the number of companies operating in competitive sectors of the electric power industry.

In the opinion of Anatoly Golomolzin, changing approaches to tariff-setting would decrease the number of grid companies to the efficient level and resolve the problems of cross-subsidies and the “last mile”.

Discussing violations of the antimonopoly law, Anatoly Golomolzin emphasized that violations on the markets of electric and heating power account for one third of all antimonopoly violations in Russia, of which the most violations are committed by holders of natural monopolies – integrated power grid, and, first of all, are related to the services of electric power transmission and technological connection to electric power networks. Statistical data show that in 2013 FAS exposed 1.5 times more violations, committed by grid operators, than in 2012.

Anatoly Golomolzin pointed out that FAS is the main initiator of adopting the Rules for non-discriminatory access to transmission services and undertakes active efforts on improving them, particularly, under the framework of the Road Map on “Increasing Accessibility of Energy Infrastructure” together with the interested federal executive bodies and “Strategic Initiative Agency for Promoting New Projects” Autonomous Non-Commercial Organization. A proper institutional framework is formed to simplify technological connection of consumers to electric power networks.

A considerable improvement of Russia’s position in 2013 in the “Doing business” global ranking under the indicator on “Connecting to electric power systems” is determined by certain factors being formed within several years: detailed, pin-pointed Rules for non-discriminatory access adopted upon a FAS proposal; as well as the system of antimonopoly control over compliance with the Rules by participants of the electric power industry using sanctions for violating the established procedures.

Anatoly Golomolzin also pointed out that 60 % of capacity and 77 % of electric power are sold through competitive bidding; tariffs for the remaining volumes are regulated. The lowest level of capacity tariffs is formed through competitive capacity take-off.

Current generating facilities, operating under the so-called “forced regime”, are able to receive regular payments for capacity, considerably exceeding the monetary means they would gain participating in competitive capacity take-off. Payments for capacity of newly introduced generating facilities, for which capacity supply contracts were concluded, are many times higher than the payment for capacity of current generating facilities. At the same time, a paradoxical situation emerged, when the rates of commissioning new capacities under capacity supply contracts are two times behind the growth rate of distributed generation, than consumers of electric power and capacity build at their own expense.

Anatoly Golomolzin believes that for the current generation capacity should be paid at the price formed through competitive capacity take-off, use of generation in the “forced regime” should be considerably reduced, and in prospect completely refuse to apply this mechanism. A refined mechanism of investment guarantees shall be expedient for new capacity engaging not only electric power generators but also networks and consumers in long-term take off projects.

In the opinion of Anatoly Golomolzin, to improve the model of the “day ahead” electric power market it is necessary to move away from the “market of generators” keeping the common procedures. Consumers must play the key role in the model. Choosing electric power suppliers must be based on generators’ prices, actual expenses for the services of electric power transmission and distribution, as well as the adequate reliability level of power supply to consumers. The findings of the analysis carried out by FAS with help of sectoral experts, demonstrate that current informational and technological infrastructure of the energy market does not require considerable changes; rather it needs pin-point refinement and development of certain new elements.

The results of FAS discussions of these issues shall be considered by FAS Expert Council on the electric power industry.

Anatoly Golomolzin also said that to develop efficient government solutions a Working Group had been formed on improving public procurement and state investments with participation of federal agencies and companies in the sector (Russian Energy Agency, “Gazprom” OJSC, “Rosseti” OJSC, “Transneft” OJSC). The Working Group should develop mechanisms aimed at improving control over public expenses, procurement and investments.