Alexei Matyukhin: huge efforts were undertaken to change the law and approaches to tariff regulation in the housing & utility sector

Head of FAS Department for Regulating the Housing & Utility Sector, Alexei Matyukhin summed up the results of improving the regulatory framework.

In his presentation FAS representatives covered several issues, including: heat supply; water supply and drainage; sold household waste treatment; limiting the growth of charges for utility services for physical persons. 

Discussing the latest changes in the heat supply tariff regulation, Alexei Matyukhin outlined the provisions of a Decree of the Government of the Russian Federation that made changed to the Information Disclosure Standards for the resource suppliers.

“FAS submitted the draft Decree to Government of the Russian Federation providing for the “tariff in exchange for investment” principle. The emphasis is put on savings due to transition to different fuel types, for instance, replacing fuel oil with gas. Companies spend money to modernize their equipment while the existing regulatory scheme does not always allow for companies to keep what they saved, and accordingly the regulator reduces the tariff”, continued the FAS representative. “The antimonopoly body suggests that companies should be given a possibility to repay the investments by keeping the funds saved through modernization and reduce the tariffs after the investments pay back”.

The next part of his presentation focused on sold household waste treatment. According to Alexei Matyukhin, the Government of the Russian Federation approved the fundamental pricing principles and the tariff regulation rules in the field of sold household waste treatment. FAS was responsible for drafting the relevant Decree which determines the principles, methods and the procedure for setting the maximum tariffs for the organizations involved in this field. “The new regulatory concept is aimed at market and competitive pricing”, added Alexei Matyukhin.

For instance, as Alexei Matyukhin pointed out, there will be only long-term tariff regulation (no less than 3-5 years). The Decree also introduces benchmarking that will enable comparisons with other organizations operating under similar conditions.

In view of the social importance of the housing-and-utility sector, Alexei Matyukhin talked about limiting the growth of charges for utility services for physical persons. He announced: “The Antimonopoly Service has devised and submitted a draft Decree that introduces a “prompt response” mechanism”.

In particular, FAS monitors compliance with the established indices for changing the charges to physical persons for utility services across a region. Should excessive tariffs be revealed in the current tariff period, the antimonopoly body shall issue determinations to the Head of a constituent territory of the Russian Federation and inform the Government of the Russian Federation. FAS also registers the facts of exceeding the tariffs and decreases indexation pro rata in tariff proposals.

Finally, Alexei Matyukhin outlined the objectives for 2017: synchronizing approaches to tariff regulation in heat supply, water supply and drainage and in sold household waste treatment, implementing the incentives for enhancing efficiency of regulated organizations and improving the tariff-setting procedure in general.