Energy was taken to the ceiling – Newspaper Kommersant No. 39 (7484) dated 03/09/2023

The FAS has published a methodology for calculating the marginal reasonable prices for electricity for gas and coal-fired TPPs, which can eliminate the recurring disputes between the regulator and generating companies about overpricing on the day-ahead market. The reasonable cost ceiling will depend on fuel consumption and its actual price. Companies will have to explain the reasons in cases where the ceiling is exceeded. Market participants hope that this will prevent possible manipulations. But the discussion continues: regulators still need to establish fuel consumption standards for all types of thermal power plants.

The FAS has completed the development of a methodology for analyzing price bids by generating companies for the sale of electricity on the day ahead market (DAM). The draft document, published on regulation.gov.ru, will prevent possible manipulation of electricity prices, follows from the explanatory note to the project.

According to the methodology, it will be possible to calculate the level of “marginal economic costs” for electricity generation. A reasonable ceiling will be determined on the basis of the specific fuel consumption (g/kWh) and the average actual fuel price in a particular hour. Other costs of the station will also be taken into account (for example, transport and procurement works) in the amount of 15% of the total costs for coal-fired TPPs and 10% for gas ones. Initially, the Market Council (energy market regulator) proposed setting a coefficient for gas blocks at a rate of 5%, while generating companies, according to Kommersant’s data, proposed increasing the figure to 20-25%. If the price in the application is higher than the reasonable ceiling, then the generating company can provide justifications.

When calculating the cost of purchasing fuel, the FAS will use, among other things, data on market prices for fuel from “independent information and analytical organizations”, data from procurement websites, and the results of exchange trading. “In general, the methodology meets its objectives, but the use of exchange indicators to determine the price of coal is not objective and justified enough, so the document needs to be finalized in this part,” Kommersant was told in the Community of Energy Consumers.

The Council of Energy Producers (CPE, which unites large generating companies) believes that the draft methodology is balanced and takes into account a number of proposals from generating companies. But it is yet to determine the values ​​of the maximum level of specific fuel consumption when submitting price bids for various types of equipment, the PPA emphasizes. Limit levels of fuel consumption will be set by the Supervisory Board of the “Market Council” in agreement with the Federal Antimonopoly Service, explained “Kommersant” in the service.

Last year, the Market Council proposed setting maximum fuel consumption standards for coal-fired stations – 333–440 gu/kWh, for gas stations – 323–418 gu/kWh (see Kommersant dated June 9, 2022). The Market Council explained to Kommersant that the executive office of the regulator, when preparing proposals to the Supervisory Board, will focus on the previously proposed parameters, but taking into account the new logic of their application, reflected in the current version of the document.

The Market Council expects that after the adoption of the document, transparency and competition in the market will increase: “The absence of clear and understandable criteria often leads to misunderstanding and conflict situations, accompanied by the initiation of antimonopoly proceedings.” For example, in 2021, the FAS accused T Plus of overstating the price bids for the RSV, but lost all the court cases. In the spring of 2022, the FAS accused the Siberian Generating Company of manipulating prices for RSV.

The FAS was supposed to adopt this methodology before May 1, 2011, so the need for its approval is more than ripe, says Sergey Sasim from the Higher School of Economics. He believes that the effectiveness of the document depends heavily on setting up an overall price monitoring system, including a clear definition of data sources, the responsibility of the departments concerned, the regularity and logic of information exchange in order to avoid the risk of selective application of sanctions. However, if the energy market develops and works normally, then competition, and not a bureaucratic system, should create incentives to control operating costs, the expert is sure: “This distorts the role of market prices and slows down technological development.”

Polina Smertina