BY THE END OF THE YEAR FAS SHOULD WORK ON BECHMARK TARIFFS IN GAS SUPPLY

A new tariff method, cross-subsidies in gas distribution and tariffs on the main gas transport were discussed at the workshop in Crimea

Head of FAS Department for Regulating the Fuel-and-Energy Complex and Chemistry, Dmitry Makhonin, emphasized: “A transition to a new, benchmarking principle of costing stimulates saving ad performance of economic entities”.

Fatima Abaeva, Head of the Gas Transportation Unit, FAS Department for Regulating the Fuel-and-Energy Complex and Chemistry, detailed the ne approach.

“Tariff campaigns should be guided by new approached on determining the benchmark costs procedure”, pointed out Fatima Abaeva at the session on the changes to the law on gas supply in the course  of the “National Workshop on Tariff Regulation in 2019 and the goals of regulators for 2020“ on 16 October 2019.

Discussing the procedure to the benchmarking principle, Fatima Abaeva emphasized the need to form economic mechanisms of motivation, particularly, improving the tariff regulation procedure:

“Our goal is to stimulate entities to optimize their costs”.

She added that “use of the new method will enable clear and transparent pricing, convenient for all participants: from regulated entities to consumers”.

Head of the Gas Transportation Unit also explained cross-subsidizing in gas distribution. The work in this area is undertaken to maintain inter-territorial cross-subsidizing, state-by-stage reduction of cross subsidizing between groups of consumers and bringing “transitional” tariffs to the level of the main tariffs in the group.

Fatima Abaeva reminded about a valid method for determining tariffs for the main gas transport. She pointed out a possibility to build up a tariff system in the future that conforms to the main principles of the “entry-exit” system used in most developed competitive gas markets.

“Stabilizing the market in the transitional period after abolishing regulation of gas wholesale prices, a need will emerge to develop a new method”, summed up the speaker.