Deputy Head of FAS advised monopolies not to dare solve their problems at the expense of consumers

Today many non-government events discussed the issue of improving the electric power industry as the current driver of national economic development. St Petersburg International Legal Forum was not an exception and included a session on legal regulation and the prospects of advancing the electric power industry.

Deputy Head of FAS Vitaly Korolev made a report where he highlighted that in July 2015 the antimonopoly authority had been transferred the powers on tariff regulation, and the focus of FAS efforts had shifted to this sphere.

“Pricing is constantly on FAS agenda. It is confirmed by a draft Federal Law on state regulation of prices (tariffs) devised by the antimonopoly body. It already outlines the basic regulatory aspects formulated by us during two years”, added Vitaly Korolev. “It allows unifying approaches to different industries, not excluding pecularities of sector-specific regulation”.

Deputy Head of FAS reminded the event participants that in its work the antimonopoly body applies the “tariff below inflation” principle.

“We have already passed through several tariff campaigns, and in the near future we will maintain the trend towards restraining the tariff growth below the inflation. Thus, tariff indexation will be moderate”, said Vitaly Korolev.

Then he moved to the problems exposed in the existing system. He stated that according to social-and-economic forecasting, the growth of electric power transmission tariffs should be 3%. In tariff-setting, regional tariff bodies, however, consider investment programmes of network companies and, as a result, exceed the level set by the federal regulator, which leads to a considerable tariff growth.

“The Government of the Russian Federation instructed to devise and make changes to the law that prohibits exceeding the maximum federal tariffs without obtaining FAS approval and evaluating economic consequences of such decisions”, explained Vitaly Korolev.

Deputy Head of FAS also covered the issue of antimonopoly control in heat supply.

“Understanding the importance and concerns of consumers, the business community and experts, FAS has drafted a special Article on antimonopoly regulation in heat supply similar to Article 25 of the Law on the electric power industry”, reported Vitaly Korolev. “It will apply to regulating integrated heating suppliers (IHS) that have such functions, which in other sectors, for instance, the electric power industry, are prohibited to combine by the same person or a group of persons. Such an organization to a considerable extent has some features of a regulator that is aimed at harmonizing relations in heating supply within the jurisdiction”.

“Should actions of IHS contain violations, they will be subjected to administrative liability, and in the case of repeated violations they will be deprived of the status of integrated heating suppliers”, emphasized Deputy Head of FAS.

He also explained a draft Decree of the Government of the Russian Federation that specifies the pricing procedure for the markups for providers of last resort based on the benchmark principle. “Where the markups were over- or underrated in comparison with the benchmark level, it will enable to adjust them to that level in several levels. It is estimated that savings for consumers will be over 12.5 billion RUB per year. In the future the system can be also used in the grid complex”.

Vitaly Korolev reminded about the adopted normative legal documents are designed to implement the “tariff in exchange to efficiency” principle.

“We have maintained the course towards removing unitary enterprises from the markets, where can be private investments. At the beginning of May a document was adopted, according to which it is not necessary to take into account the estimated business profit in the tariffs of municipal and unitary enterprises which help reduce tariffs for consumers”, stated Vitaly Korolev.

He underlined the importance of consider consumer interests in operation of monopolies.

“Our “national champions” must think how to provide resources to consumers and how to do it” it means that it is sustainable developing consumers that will move the economy forward under the current conditions”, summed Vitaly Korolev.