STATE DUMA ADOPTED FAS DRAFT LAW ON RESTRICTING THE RIGHTS OF REGIONS TO EXCEED ELECTRIC GRID TARIFFS

Amendments to the Law on the electric power industry

On 18 June 2019, the State Duma of the Russian Federation approved unanimously a draft Law, prepared by FAS, in the part of approving tariff regulation.

According to the current rules, regional tariff bodies can exceed the ceiling level of electric power transmission tariffs set at the federal level if it is determined by an investment programme adopted by the monopoly.  FAS approval is not required.

The law enforcement practice shows that a significant number of tariff decisions on the electric power transmission services are made at the level higher than the maximum ceiling tariff levels, which has an adverse impact upon consumers.  The draft law is prepared in accord with instructions from the President and the Chairman of the Government of the Russian Federation.

The objective of the draft law is to exclude an increased growth of electric power tariffs for end consumers.

Deputy Head of FAS Vitaly Korolev, who officially represents the Government in the State Duma with regard to the draft, emphasized:

“FAS continues paying special attention to curb tariff growth. It should be pointed out that after transferring tariff regulation powers to FAS, regions that exceed the thresholds reduced: 20 regions in 2016, 15 - in 2017 and 8 in 2018. With adopting the draft law all tariffs will be set strictly within federal constraints, and exceptions will be specially analyzed by FAS concerning unrestricted economic rationale. It will exclude uncontrollable overrun of federal constrains, at the same time maintaining the required regulatory flexibility when it is truly necessary to ensure operational investments in electric grid facilities, particularly, for the purposes  of power supply safety and reliability”.

Note:

The draft law is prepared upon an order of the President of the Russian Federation based on the outcome of the Presidential Commission on the strategy for developing the fuel-and-energy complex and environmental safety of 27 August 2018 (Sub-Clause “e”, Clause 4, Section 2 of the Commission Protocol;

No.DM-P9-8590r Order of the Chairman of the Government of the Russian Federation, Dmitry Medvedev of 04.12.2018.