TCO norms shine for business – Newspaper Kommersant No. 241 (7442) dated 12/27/2022

As Kommersant found out, the Ministry of Energy wants to prohibit businesses from directly connecting their enterprises to the backbone power grids of the Federal Grid Company (FGC, part of Rosseti). From January 2024, all new customers will be required to join FGC only through a backbone grid company, whose tariff will be many times higher. The industry is strongly opposed: the initiative, in their opinion, will hit energy-intensive enterprises and investment projects. Special economic zones in the regions will also suffer, analysts warn.

The Ministry of Energy may prohibit businesses from connecting directly to the FGC’s main power grids, follows from the ministry’s bill (Kommersant has the document). From January 1, 2024, all new consumers will be required to join FGC only through a backbone territorial grid organization (TSO). The TSO tariff is usually several times higher than the FGC tariff, so the costs of new customers for payment for transmission services will increase significantly. In 2023, the FGC tariff will amount to 241 thousand rubles. for 1 MW per month. The Ministry of Energy did not answer Kommersant.

The Ministry of Energy wants to create one backbone TSO in each region – this is necessary for the implementation of a new wave of consolidation of small private networks. The largest TSO in the region will receive the status of backbone, therefore, in terms of the constituent entities of the Russian Federation, the status will obviously go to the subsidiaries of Rosseti. All customers will be required to sign a transmission service contract with a major TCO. The Ministry of Energy hoped to launch the mechanism in 2023, but this summer the ministry had to send these amendments again for approval by the departments (see Kommersant of June 6). According to Kommersant’s information, the document has now been submitted for discussion by the working group “on the regulatory guillotine.”

The Ministry of Energy has long been preoccupied with the rates of main electricity networks: the ministry wanted to double the FGC tariff, while promising to reduce the tariff on distribution networks. However, this initiative was abandoned after fierce criticism of big business and other ministries.

Rosseti told Kommersant that the amendment is designed to streamline interaction with FGC’s “indirect” consumers in terms of operating backbone networks and servicing large consumers.

Now FGC is obliged to serve all “indirect” consumers on a par with TCO (regardless of the power of the connected power receiving devices). The introduced requirements will not apply to those “indirect” consumers who have already been served by FGC, the state holding noted.

The industry has criticized the creation of restrictions on direct access to FGC’s networks. “The introduction of the ban is aimed solely at replenishing the revenue of the grid monopoly, and unreasonable,” Kommersant was told in the Community of Energy Consumers. “There are no additional costs for the networks, there is no shortage of funds. The contract with the backbone TSO, when actually connected to the backbone network, is artificial; it rolls back the situation a decade back to “last mile” lease agreements. The initiative will hit investments primarily in energy-intensive projects, and will hold back import substitution and economic recovery as a whole.”

FGC’s low tariff encourages end consumers to look for ways to connect directly or indirectly to backbone networks, says Sergey Sasim from the Institute for Economics and Regulation of Infrastructure Industries at the National Research University Higher School of Economics. In his opinion, the Ministry of Energy wants to stop the indirect connection of end consumers to FGC networks. Probably, the Ministry of Energy proceeds from the logic that FGC is a backbone network that is not intended for connecting consumers, and its function is to form regional energy systems, as well as provide links between regional energy systems.

Mr. Sasim notes that, first of all, the initiative of the Ministry of Energy will affect consumers connected to FGC not directly, but through direct consumer networks. If the draft law is adopted in its current version, such indirect consumers will pay for transmission at higher tariffs of distribution networks. The cessation of servicing indirect consumers by FGC will increase the productive supply of distribution networks, which will help curb the growth of boiler tariffs, the analyst admits, but consumer payments after leaving FGC networks will increase significantly. “Before the adoption of the law, it is necessary to additionally analyze the economic consequences, especially for priority development zones, which regional authorities often organize according to the scheme of indirect connection, thereby providing investment-attractive tariff conditions,” Sergei Sasim believes.

Polina Smertina