DMITRY VASILIEV: REGULATORY AGREEMENTS ARE A REVOLUTION IN THE ELECTRIC POWER INDUSTRY
The concept of regulatory contracts and its application is included in № 300-FZ Federal Law that makes amendments to the Law on the electric power industry1, signed by the President of the Russian Federation in August 2019
Under the Law, regulatory contracts are concluded between territorial networks and regulators and should be agreed upon by FAS. It is expected that in H1 2020 the Government shall pass a Decree outlining the procedure for concluding regulatory contracts and their essential terms and conditions.
"A mandatory condition for agreeing upon a regulatory contract is that a network company has an investment programme”, emphasized Head of FAS Department for Regulating the Electric Power Industry, Dmitry Vasiliev. “FAS shall not consider contracts without an investment programme because these concepts are mutually related”.
Dmitry Vasiliev shared his view speaking at the “National Workshop on Tariff Regulation in 2019 and the goals of regulators for 2020" in Yalta on 17 October.
According to the law, network companies may keep their savings.
"At the same time, we plan to give a more detailed description of the concept of saving and the rules that will define it more specifically", explained the speaker.
Head of Antimonopoly Control Unit, FAS Department for Regulating the Electric Power Industry, Maxim Palyanov, took part in the session on “Enforcement of № 300-FZ Federal Law of 02.08.2019”.
He pointed out that the Law bans exceeding the cap tariff levels approved by FAS without agreeing with the antimonopoly body, particularly, as part of investment programmes. The procedure for obtaining approvals was set by the Federal Tariff Service, and FAS is mainstreaming the Procedure.
"Decisions that exceed the cap tariffs and were passed before 13 August 2019 are not subject to FAS approval”, explained Maxim Palyanov. “If, however, a decision is made after the Law came into effect, it should be agreed upon with FAS”.
The Law also introduces long-term state tariff regulation in the electric power industry.
"The law defines a clear vector of the tariff policy regarding territorial network companies – the long-term approach and the parameters that should be reached by territorial network companies under the frame of long-term regulatory period", highlighted the speaker.
From 1 January 2023, the tariffs for territorial network companies will be set only on the long-term basis - for no less than five years.
In FAS opinion, long-term tariff regulation should limit tariff growth and increase the openness of decision-making for consumers.
FAS has issued explanations on enforcement of the law. They are published on the official web-site of the antimonopoly body.
Speaking at the session on “Connecting to utility networks: procedure, tariff-setting, digitalization”, Irina Kasatkina, Head of Antimonopoly Control Unit, FAS Department for Regulating the Housing-and-Utilities Sector, informed about the projects for electronic network connections in Moscow and the Moscow region and St Petersburg2. It is expected that the Amur, Kamchatka, Khabarovsk and Primorie regions and the Republics of Sakha (Yakutia) and Tatarstan will join the experiment.
Irina Kasatkina stated that “a transition to electronic connection should not increase tariffs for the population. Today resource suppliers in other regions must accept connection applications in the electronic form, issuing an identifier and password to applicants. This binding service is free”.
She outlined the changes to the current Law planned by FAS in the part of connection to heating and water supply. A draft Decree will be submitted to the Government by the end of 2019.
References:
1 № 300-FZ Federal Law “On amendments to the Federal Law “On the eclectic power industry” of 02.08.2019
2 № 955 Decree of the Government of the Russian Federation of 09.08.2017