FAS POSITION ON HOW TO PREVENT VIOLATIONS OF THE LAW ON TARIFF REGULATION

13-03-2019 | 11:40

In August 2018, following the Commission on the Strategy for Developing the Fuel-and-Energy Complex and the Environmental Safety, the President of Russia ordered to implement the benchmarking principle for tariff-setting in the housing-and-utility complex based on a FAS proposal.  

 

An analysis of regional tariff decisions revealed incidents when a company can operate in two regions simultaneously in comparable conditions but tariffs for its services differ by orders.

 

Following meetings with representatives of federal executive bodies, FAS concluded that the tariff structure should delineate an operational element, associated with current operations and providing a resource, for instance, water or heating, and the investment element determined in accord with an approved investment programme.

 

In FAS opinion, introduction of “benchmarking” costs will eliminate the existing tariff discrimination. It cardinally changes the principles and approaches in tariff regulation. Depending on technological and geographic parameters, it is planned to set a common benchmark costs at the federal level of powers. It will be the first part of the tariff. The second part will be planned at the regional level in view of the importance to invest for the purposes of balancing the final tariff.

 

It should also be pointed out, that in the opinion of the Antimonopoly Service, it is better to prevent violations rather than counter them post factum. To this purpose, FAS drafted a “federal tariff traffic lights” project. It is designed in such a way that regional authorities will not be able to make a decision if it is contrary to the law and market “red” by the “traffic light” meaning that the decision is abolished automatically.

 

“Yellow light” will mean that a decision contains deviations, which should be eliminated, and “green” means that a tariff decision conforms to all norms of the law.

 

It will enable, in particular, to prevent violations in tariff regulation.



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