GOVERNMENT APPROVED MECHANISM FOR IMPLEMENTING REGULATORY AGREEMENTS IN THE ELECTRIC POWER INDUSTRY

Relevant resolution prepared by FAS Russia was adopted by the Government of the Russian Federation

It provides that regulatory agreements* are concluded between territorial grid organizations and regional tariff authorities and are coordinated with FAS Russia.

When concluding such agreements, the organization undertakes to provide services for the transmission of electric energy, achieve the necessary targets and implement an investment program, while the regulatory authority must set long-term tariffs.

The adopted resolution approves the procedure for concluding, amending and terminating such agreements, as well as their approximate form. In addition, the document establishes essential conditions, including the procedure for indexing tariffs, various obligations of territorial grid organizations and organizations for managing the all-Russian electric grid. The validity period of the agreements is not less than five years five years.

Coordination of regulatory agreements with FAS Russia will prevent an unjustified increase in electricity prices. The authority reviews draft agreements by October 1 of the year preceding the first year of the long-term regulatory period specified in the document. After that, the decision is sent to the parties to the agreement within 5 working days.

Conclusion of regulatory agreements will increase the transparency and efficiency of tariff regulation, and will also encourage grid companies to reduce the costs that the consumer pays. The new approach to regulation will ensure the predictability of the level of tariffs for electric power transmission services in the long term.

Besides, the establishment of long-term tariffs will increase the investment attractiveness of the electric power industry and the quality of electricity supply. When concluding a regulatory agreement, the principle of "tariff in exchange for investment" will also be used, whereby the tariff is not increased, but an internal redistribution takes place in the structure of its costs.

* The concept of agreements on the conditions for the implementation of regulated activities (regulatory agreements) and the possibility of their conclusion are established by the Federal Law of 02.08.2019 No. 300-FZ.