Sergey Puzyrevskiy: Higher School of Tariff Regulation is established in Russia

Speaking on 17 October 2017 at the workshop on “Tariff regulation in 2017 and regulators’ objectives for 2018 – 2025” in Crimea, Deputy Head of FAS Sergey Puzyrevskiy highlighted the main issues of tariff regulation in Russia, including: segmental normative-legal regulation, uncertainty of legal regulation and regulatory gaps,  absence of clear and transparent procedures for tariff-setting and tariff dispute resolution.

As a result, in most regulated fields tariff regulation is “manual”. There is tariff discrimination when tariff of organizations operating under comparable conditions differ by more than tenfold. Under such a situation there might also be some corruption factors in decision-making. Unfortunately, the current tariff regulation system allows bankruptcies of regulated organizations when the tariffs are set below the economically justified level. It ultimately leads to mistrust of consumers to the economic rationale of the tariffs.

In view of Deputy Head of FAS, the solutions require determining at the legislative level the common principles and methods of state regulation of prices (tariffs), the procedure for interaction between the federal and regional tariff regulators, the procedure for considering disputes on regional tariffs at the federal levels.

To this purpose, FAS drafted the Federal Law “On the basics of government regulation of prices (tariffs)” that should undergo broad discussions with all interested authorities, businessmen and NGOs.

Sergey Puzyrevskiy gave statistical data on tariff disputes of FAS. He pointed out two trends observed in 2017. First, reduction of the general number of tariff disputes and discrepancies: in 2016 FAS investigated around 500 disputes, and in 2017 so far – not exceeding 250.

The second trend is exposing violations in tariff decision-making: in approximately one third of FAS inspections it is found that tariff decisions are made in breach of the current law. “This year FAS has already finalized 13 inspections of regulators and two inspections are currently on the way. Base on the findings, FAS issued over 60 injunctions, all of which concern unreasonable inclusion of costs ion the tariffs. Regulators executed 50% of injunctions, and 22 injunctions are being executed, regulators are attempting to challenge 8 injunctions at Courts”, reported Sergey Puzyrevskiy.

Deputy Head of FAS informed that the High School of Tariff Regulation is formed under Plekhanov Russian Economic University that will offer qualification advancement programmes on tariff regulation. “Training will be integrated rather than sectoral, so that the listeners will have a comprehensive understanding of the tariff regulation in Russia”, confirmed Sergey Puzyrevskiy.

Deputy Head of FAS also discussed a FAS drafted Federal Law “On amendments to the Code on Administrative Violations”. FAS proposes to differentiate violations of the pricing procedures in government regulation of tariff by subject: executive bodies and persons involved in regulated activities. In the opinion of Sergey Puzyrevskiy, it is necessary to expand the conditions of holding administratively liable for violations under Clause 19.7.1. of the Code on Administrative Violations. In particular, establish liability for submitting incomplete or distorted data to FAS and submitting document or information that resulted or could have resulted in setting unreasonable “necessary gross revenue”. FAS proposes to tighten liability for repeated failure to meet the deadline executing FAS injunctions – introduce disqualification of the persons that made unlawful decisions.