OREANDA-NEWS. September 23, 2014. “System Operator of the Unified Energy System” [“SO UES”] OJSC published information at its official web-site on the interim results of competitive take-offs.

Capacity prices were formed in each of 21 free power transfer zones, in five of which price caps were not fixed.

Specifics of the competitive take-off included not only new procedures providing for approving of participation parameters by the antimonopoly authority for the economic entities that have dominant positions within the relevant free power transfer zones, but also a considerable surplus of generating capacities in the first price zone of the wholesale market – over 13 GW, which, undoubtedly, had a significant impact upon increased competition in free power transfer zones of the first price zone.

As a result, capacity price in “Urals” free power transfer zone was the lowest in the past four years – 106,243 RUB/MW. Also, for the first time prices in free power transfer zones with price caps are below the established maximum level (133,000 RUB/MW). For instance, in “Kaspii” free power transfer zone the price is 132,900 RUB/MW, “Moscow” free power transfer zone– 132,999 RUB/MW, “Kolskaya” free power transfer zone - 132,800 RUB/MW, in the remaining free power transfer zones of the First price zone (“Tyumen”, “North Tyumen”, “Blakovo”, “Caucasus”, “Volgograd”, “Caspii”, “Kuban”, “Makhachkala”) – 128,400 RUB/MW.

“The results demonstrated the work of market mechanisms in the existing model of competitive capacity take-offs. Prevalence of supply over demand in the First price zone of the wholesale market undoubtedly influenced price reduction, and not only in the free power transfer zone without price caps but also in the remaining free power transfer zones with price-caps”, pointed out Deputy Head of FAS, Anatoly Golomolzin.

Unlike 2013, in 2014 there was no considerable capacity surplus in the Second price zone of the wholesale market, as a result of which price pressure was insignificant. In “price-caps” free power transfer zones (“South Kuzbass”, “Omsk”, Chita”, “Buryatia”, Altai”) the price is 144,000 RUB/MW. In “Siberia” free power transfer zone the maximum capacity price is 179,000 RUB/MW.

Anatoly Golomolzin summed up the results of trading on the capacity market in 2015: “a long-term trend in the Second price zone is observed for capacity prices to be contained within the inflation level. In 2012 the price was 146,000 RUB/MW, in 2013 - 156,000 RUB/MW. In reality payment was readjusted for capacity prices, so prices in 2012 and 2013 were around 156,000 and 165,000 RUB/MW accordingly. The price in “Siberia” free power transfer zone is final - 179,000 and it shall not be readjusted in 2015 in accordance with the procedures amended by the Government of the Russian Federation. FAS did not have questions about a downward bias in 2014 from the established long-term tradition”.

Deputy Head of FAS believes that “it is necessary to continue the work for eliminating barriers on the wholesale market of electric power and capacity by combining free power transfer zones since it will increase competition. Earlier, having discussed the configuration options for free power transfer zones on the wholesale market with “System Operator of the Unified Energy System” OJSC, FAS proposed to reduce the number of free power transfer zones form 21 to 4. The proposal is still timely and FAS will promote it for the subsequent periods of capacity take-offs”.