Column by Polina Smertina on the practical benefits of consolidating the power grid complex

After almost four years of heated discussions, the Ministry of Energy managed to submit to the State Duma a bill on the creation of the institution of a backbone power grid company that will absorb small territorial grid organizations (TGOs). This step can be considered the beginning of a large-scale consolidation of the industry, which is scheduled to start on January 1, 2025. But consideration of the document in the State Duma may drag on.

The introduction of the sensational document to parliament was slowed down by the Moscow authorities, who are not eager to place their network asset, the United Energy Company (UEC), under the management of Rosseti. Mayor Sergei Sobyanin has repeatedly addressed the government and industry regulators on this issue: as a result, an amendment appeared in the bill, according to which the operation of two systemically important TGOs is allowed in Moscow (see “Kommersant” dated December 25, 2023).

The position of the mayor’s office is understandable, because the proposal of the Ministry of Energy could directly affect the economic interests of the city. According to the bill, there will be only one systemically important grid company in each region. Such an organization will become a “boiler holder,” that is, it will collect all funds from consumers and then distribute them to other TGOs. The latter in such a scheme will be forced to rely on the good will and honesty of the system-forming organization.

Such changes once again show the special position of the capital, even within the framework of large-scale regulatory changes. However, I can assume that other regions simply did not read the bill carefully enough.

For example, a conflict situation similar to Moscow may arise at least in the Moscow region and the Leningrad region, but nothing is known about protests from these entities. However, they still have a chance to do this during the discussion in the State Duma.

The regions should be on their guard. As Kommersant wrote on November 30, 2023, the Ministry of Energy is already thinking about completely prohibiting local authorities from managing electric grid assets. The Ministry proposed obliging regions to transfer a controlling stake (more than 50%) in joint-stock companies to “professional players,” citing Rosseti as an example. In this case, the interests of not only Moscow, but also such large entities as St. Petersburg, Tatarstan, Kuzbass and the Sverdlovsk region will be affected.

Meanwhile, the main question still remains unclear – the practical benefits of consolidation, including for consumers. Will transferring control to one large company in reality, and not on paper, really reduce accidents? I don’t see a reasonable answer yet.