Vitaly Korolev: an alternative boiler mechanism should not be the single but one of a variety of methods regulating heat supply

Speaking at a session of the Collegium of the Energy Ministry of the Russian Federation, Deputy Head of the Antimonopoly Service highlighted the main areas of constructive cooperation between the two bodies

Deputy Head of FAS Vitaly Korolev started with the statement: “First, it concerns FAS projects that we are discussing in the format of regional regulation. I mean including Crimea in the first price zone and ensuring full conformity of all regulatory processes to the legal norms of the Russian Federation that are set without specifics for the first price zone of the wholesale electric power market. Second, these issues are related to the need of stabilizing payment situation in North Caucasus. FAS has elaborated some solution in this field and we are progressing successfully”.

“A large block of questions is associated with developing the pricing picture in non-price zones of the wholesale electric power market, primarily, on the Russian Far East. FAS is jointly working on the issues under the frame of fulfilling the order of the President of Russia to level electric power prices to the average Russian prices for industrial consumers, except the population. Considerable efforts in this sphere are undertaken in terms of interacting with the State Duma. The relevant Federal Law was passed at the end of 2016”, pointed out Vitaly Korolev.

Then Deputy Head of FAS discussed transformation on the markets of the electric and heat energy markets.

“For instance, the Law on heat supply is being adjusted by introducing a new regulatory methods – alternative boiler-house. We are glad that our position was accepted - this method should not be the single one. It can be one of multiple regulatory methods to be employed if a subject of the Russian Federation finds it possible to have such price consequences”, stated Vitaly Korolev. “Second, FAS proposes an amendment to the second reading of the Federal Law on heat supply - including the new Article “Antimonopoly regulation and control in heat supply”. Similarly to Article 25 of the Law on the electric power industry, FAS would like to implement an ongoing system of monitoring, control and sanctions if repeated violations committed by the Integrated Heat Supplier are exposed. For this regulatory method the Integrated Heat Supplier has such functions as: sales allocation, actual dispatching in a particular area and normalizing relations between all consumers and suppliers of relevant resources. For instance, combining such functions in the electric power industry is prohibited, so undoubtedly special control is necessary”.

Deputy Head of FAS also pointed out that significant work in this area is being conducted to improve the law on regulating the grid companies.

“One cannot but remember No.1157 Government Decree adopted at the end of last year that removed a number of issues on profit and losses accounting in the long-term period and for several years upon completing it. 2017 is also the year of completing the first long-term period in regulating with RAB method, accordingly, a number of companies will be moving to the next long-term period, the relevant decisions will be made, which is very important”, emphasized Deputy Head of FAS.

Vitaly Korolev mentioned another project carried out jointly with the Ministry of Energy – improving the system for regulating sales mark-ups for providers of last resort, transferring them to the yardstick costs method. On the one hand, it will motivate providers of last resort to buy more expensively, on the other – it will help achieve transparency of the relevant estimates.

“FAS understands that here there are issues because it is necessary to fully estimate and fully understand the consequences in advance. We have done such work, presented out position to the Government; hopefully, we will get support and already this year FAS will be able to launch a new system of regulating sales mark-ups for providers of last resort”, concluded Vitaly Korolev.