FAS ASKS COMPANIES TO SEND CORRECT DATA TO ESTIMATE THE BENCHMARK COSTS IN HEATING

The submissions will form the benchmarking basis

The National Tariff Regulation Workshop in Crimea on 16 October 2019 included a session on the “Benchmarking principles of tariff-setting in heating supply, water supply and water drainage”. The participants gave comments and proposals on establishing benchmark costs of resource suppliers.

Head of FAS Department for Regulating the Housing-and-Utilities Sector, Alexei Matuykhin said that at this stage the FAS goal is to analyze the market: collect source data on the network conditions, geographic and climatic characteristics for work in different regions, etc., based on which benchmarks for operation costs of resource suppliers will be estimated.

He emphasized: “There is no question whether benchmarks will be introduced in the tariffs for heating- and water supply and water drainage – the President and the Government of Russia have given the orders. Today we must take this collaborative work carefully to avoid errors at the initial stage”.

According to Deputy Head of FAS Department for Regulating the Housing-and-Utilities Sector, Anastasia Adonina, the main principles of state regulation of tariffs are outlined in the draft unified tariff law submitted to the Government in August 2019.

These principles include: the priority of state regulation of prices (tariffs) by comparative analysis (benchmarking expenses (costs); setting  prices (tariffs)  based on underlying economic expediency; observing the balance of economic interests of regulated subjects and consumer interests; long-term prices (tariffs) setting; stable and non-discriminatory conditions for business in the field of tariff regulation; openness of regulated subjects and regulators.

Efforts are being undertaken to improve tariff regulation in the electric power industry and the housing-and-utility complex in terms of introducing tariff benchmarking, long-term (5-10 years) tariffs, and limiting regional regulators in tariff decision-making when utility payments from the population exceed the cap levels.

Anastasia Adonina mentioned that in June 2019 a mechanism for obtaining FAS approvals when municipalities exceed the cap level was introduced*.

In August 2019, the Government instructed FAS together with the interested authorities to execute the Road Map for a transition to the comparative method with use of benchmarking in tariff setting in water supply, water drainage and heating supply.

Executing the Governmental Order, a list of technological-and-economic parameters is complied that characterize impact of technological factors upon operational costs of regulated entities. The list is approved by the Ministry of Economic Development of Russia.

FAS has also devised a unified classifier of regulated types of activities. The draft is now under discussion by the expert community.

The National Workshop on Tariff Regulation in 2019 and the goals of regulators for 2020 takes place on 15 - 17 October in the Republic of Crimea. The event participants are discussing tariff regulation of the telecommunications sector, gas supply, heating supply and solid municipal waste treatment.

Background:

* No. 756 Decree of the Government of the Russian Federation of 13.06.2019 came into effect on 28.06.2019