STATE DUMA ADOPTED IN THE SECOND READING FAS DRAFT LAW ON LIMITING RIGHTS OF REGIONS TO EXCEED ELECTRIC GRID TARIFFS

Amendments are made to the Law “On the electric power industry”

On 25 July 2019, the State Duma of the Russian Federation approved the draft law of the Antimonopoly Service in the part of improving tariff regulation.

Under the current rules, regional tariff regulators can exceed the federal ceiling level for electric power transmission tariffs if it is due to an investment programme adopted by a monopoly. FAS approval is not required.

The enforcement practice shows that a lot of tariff decisions on electric power transmission services exceed the maximum tariff levels, which has an adverse effect upon consumers. The draft law is devised in accord with the orders from the president and the Government of the Russian Federation.

Deputy Head of FAS Vitaly Korolev mentioned earlier, “that this are not fringe concerns, since in 2016 20 regions exceeded the maximum federal levels, and in 2017 - 15, and in 2018 – 8 regions exceeded the federal limits”.

"With adopting the draft law, all tariff will fall strictly within federal limits, and FAS will specially analyze exceptions to see whether they are absolutely economically justified. It will exclude excessive growth of tariffs for the electric power transmission services for end consumers”, explainedVitaly Korolev.

Amendments were made for the second reading clarifying the procedure of state regulation of tariffs in the electric power industry, without changing the concept of the draft law. Tariffs for no less than five years can be set on the basis of long-term parameters of regulating entities’ operations or on the basis of agreements on the conditions of regulated activities.

In 2023 a transition for only long-term tariff setting electric power transmission services for at least 5-year validity period will began.  

Notes:

The draft law is devised upon the order of the President of the Russian Federation following the Commission at the President of the Russian Federation 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.