THE GOVERNMENT OF THE RUSSIAN FEDERATION HAS APPROVED A MECHANISM FOR LONG-TERM TARIFF REGULATION

A flexible mechanism for investing in housing and communal services will guarantee a predictable tariff for a long period

The FAS Russia is the author of the adopted decree of the Government of the Russian Federation. It became one of the first documents to implement the Concept of Long-term Tariff Regulation*.

Now the regions, after coordination with the FAS Russia, have the opportunity to determine marginal indices for several years ahead, instead of setting them for each next year, which will guarantee the effectiveness of investment planning. It is necessary in order for investors to fund the modernization and reconstruction of the communal complex, receiving a long-term tariff, which will be determined based on the objective conditions of the activity.

The use of such a mechanism together with a set of measures within the framework of the Concept* will make it possible to increase investments in housing and communal services up to 1 trillion rubles in the future until 2030. This effect will be reflected in improving the quality of services, uninterrupted operation and reliability of the municipal infrastructure.

“It is worth noting that the adopted document will become an important element of a stable tariff policy for potential investors. This measure will help attract investments in housing and communal services by guaranteeing their return and will help to implement major projects aimed, among other things, at the development of agglomerations,” Vitaly Korolev, Deputy Head of the FAS Russia said. “At the same time, the document retains the tools of a built-up multi-level system of protecting citizens from significant changes in public utility charges.”

According to this resolution, the heads of the regions may launch the work of such a mechanism for attracting investments already this year. To do this, they need to submit a list of documents to the FAS Russia by November 10, 2021. The determination of the values of the limit indices for several years ahead is allowed only if there is a clear justification for the need to implement investment measures in accordance with the approved schemes of heat, water supply, sanitation, treatment of MSW, which are publicly available. At the same time, the region's obligation to regularly provide a report on the implementation of investment measures is fixed, and in case of non-fulfillment, long-term indices are subject to cancellation.

Reference: *

The concept of introducing tariff-setting mechanisms for organizations engaged in regulated activities for a long-term period.