VITALY KOROLEV: DECISIONS ON EXCEEDING TARIFF GROWTH SHOULD BE COORDINATED WITH FAS
Particularly, if such exceeding is determined by the scope of investment programmes of electric power facilities
Deputy Head of FAS Vitaly Korolev was a speaker at the Plenary session of the “National Workshop on Tariff Regulation in 2019 and the goals of regulators for 2020".
He explained that “if a tariff regulator made a decision without FAS approval, the minimum cap tariffs should apply that are approved by the antimonopoly authority".
The changes came into effect after the President of the Russian Federation signed № 300-FZ Federal Law in August 20191.
"Also, in accord with the instructions from the President of Russia on improving tariff regulation in the electric power industry and the housing-and-utility sector, several essential decisions were made, including introduction of the “benchmarking” tariff-setting principle, setting long-term tariffs for 5-10 years, as well as limiting possibilities of regional regulators to make decisions on the payments of the population for utility services and transferring electric power higher than the cap level without FAS approval", said Vitaly Korolev.
In his view, the package of measures devised by FAS to tighten control over a growth of payments from the population also includes the “Basic principles for indices of payment from the population” that have recently come into force2. They “close the gaps” associated with the decisions of municipal and regional bodies that increase payments from the population.
According to Principles, Heads of regions can singly approach FAS about exceeding the level of payments from the population. The authorities can do it before the start of the year, for which overrated indices are planned. The statements should include a mandatory appendix with an analysis of the social-and-economic consequences of such growth.
"We expect that all these measures will limit regions in their attempts to uncontrollably increase the tariffs for utility services and electric power transfer, and also will make regional decision-making on cap indices more transparent and predictable", emphasized Vitaly Korolev.
He also reminded about the benchmarking principle of costing introduced in the electric power industry in 2018 to calculate sales mark-ups of providers of last resort.
Deputy Head of FAS informed that “the results of its enforcement nearly halved the differences in sales mark-ups by the regions of Russia. Currently, benchmarking for tariff regulation and electric power transmission is under development, and a draft Decree is already submitted to the Government of the Russian Federation".
In his view, benchmarking regulation is also being introduced in the housing-and-utility sector: the Road Map for transition to a comparative method in tariff setting in the housing-and-utility sector with use of benchmark cost values and the concept of informatization of tariff regulation in the utility complex.
"Introducing benchmarks in the housing-and-utility sector will “freeze” tariffs when they are higher than the “benchmark” and the difference will be used for mandatory investments; tariffs below the necessary level will be gradually indexed", explained the speaker.
To resolve the cross-subsidies issue, FAS suggests establishing a clear procedure for calculating it in the regions – determining the “cross-subsidy rate” for each region of Russia. They will be given in kopeks/kWh, and officially published.
Vitaly Korolev highlighted: "We also propose to introduce the principle for “even distribution” of cross-subsidies per each voltage level. I’d like to draw your attention that this distribution will take place gradually in the mid-term period”.
1 № 300-FZ Federal Law “On amendments to the Federal Law “On the electric power industry” of 02.08.2019
2 Under № 756 Decree of the Government of the Russian Federation of 13.06.2019