VITALY KOROLYOV: BENCHMARKING WILL INCREASE REGULATION EFFICINECY AND TRANSPARENCY

Representatives of FAS and the expert community discussed implementation of the benchmarking principles of tariff-setting in heating supply and the issues of transition to direct contracts with resource suppliers

On 27 June 2019, FAS held sessions of the Working Groups on heating supply, water supply and drainage at FAS Expert Council on the Housing-and-Utility Sector.

One of the main items of discussions was implementing benchmarks in heating supply.

The position of the “Energy Generators Council” Association was announced on the comparative methods (cost benchmarks comparison) in setting prices (tariffs) in the heating supply sector.  

Experts emphasize the need to apply and calculate benchmarks for operational costs with a stage-by-stage transition with differentiation by types of activities (heat energy sales, transmission, generation).

Discussing benchmarks, Deputy Head of FAS Vitaly Korolyov pointed out: “FAS is firmly convinced that benchmarking is the approach facilitating fair and transparent regulation and increases efficiency and decreases corruption, particularly, eliminates its causes”.

In August 2018, following the Commission on the Strategy for Developing the Fuel-and-Energy Complex and Environmental Safety, the president of Russia instructed to implement the benchmarking principles in tariff-setting in the housing-and-utility sector.

In 2019, the base is already formed to implement benchmarks in the grid complex. In 2020 pilot projects will be launched, and from 2021 implemented in all regional of Russia.

The WG participants also discussed transition to direct contracts between resources suppliers and consumers of utility services.

The experts discussed issues related to transfer of information necessary to conclude direct contracts between resources suppliers and consumers, from managing organizations, and put an emphasis on verifying protocols of general meetings of premise owners in apartment buildings for transition to direct contracts because only State Housing Inspectorates have such powers.

Deputy Head of FAS Department for Regulation over the Housing-and-Utility Sector, Elena Tsyshevskaya stated: “The process should be built up in view of proper interaction between subjects. Consumers should not suffer because of lack of coherence in the actions of managing companies and resource suppliers”.

Several decisions were made at the meeting:

1. Hold a meeting with the expert community and representatives of the Ministry of Construction on optimization of the norms regulating legitimacy verification of protocols of general shareholders meetings.  

2. Get an answer from the expert community on the concept proposed by the “Energy Generators Council” Association on implementing the comparison method (cost benchmarking) to set prices (tariffs) in heating supply.

FAS is in an open dialogue with the expert community, and FAS efforts in the course of considering such important issues are aimed at transparency of the measures undertaken in the field of tariff regulation.