The Caucasus is holding on to the tariff – Newspaper Kommersant No. 193 (7394) dated 10/18/2022

According to Kommersant, the Ministry of Energy wants to maintain preferential tariffs for electricity in the North Caucasus, Tuva, Buryatia and Karelia. Benefits were supposed to begin to be canceled as early as 2023, but the ministry plans to delay the launch of price liberalization until 2025. Energy market participants are against: energy companies lose 13 billion rubles each due to preferential treatment. per year, and the industry of other regions of the country is forced to pay extra 33 billion rubles. Generating companies offer a compromise: cut benefits at a “softer pace”.

The Ministry of Energy intends to postpone the abolition of preferential tariffs for electricity in the republics of the North Caucasus and Siberia, several sources in the industry told Kommersant. According to the current law, benefits in the republics should be gradually reduced from January 1, 2023.

But the Ministry of Energy intends to start the liberalization of regulation only from January 1, 2025.

In Karelia, where the preferential regime should be fully completed in 2023, it is also proposed to extend the effect of special regulation, Kommersant’s interlocutors clarify.

The government transferred six Caucasian republics (Chechnya, Dagestan, Ingushetia, Kabardino-Balkaria, Karachay-Cherkessia and North Ossetia), as well as Tuva, to preferential tariffs back in 2010. The authorities hoped that the measure would solve the problem of growing non-payments. The transition to market prices was planned from 2015, but was postponed. Moreover, new beneficiaries appeared on the list: in 2017, Buryatia managed to get into the list, and in the spring of 2018, Karelia was added there.

In problem regions, all electricity consumers buy electricity and capacity under regulated contracts (RCs), and not at general market prices. As a result, commercial customers in the rest of the country are burdened. According to the current law, the volume of purchases under the RC in nine regions from 2023 should be reduced by 10% annually.

In 2021, the total electricity consumption in privileged regions was about 41 billion kWh, or about 4% of the total Russian demand, Sergey Rozhenko from Kept calculated.

According to his estimates, privileged regions pay about 55 billion rubles for electricity according to the RD. per year, and the amount of the discount (the amount of underpayment) is about 33 billion rubles.

Reduced electricity prices have not helped to solve the problems with non-payments: all these years the Caucasian republics have been the worst in the country in paying for electricity. As of October 14, the debt of the North Caucasus on the wholesale market alone (to generating companies) is 66.1 billion rubles, or 88.4% of the total debt in the country as a whole.

The Market Council (energy market regulator) told Kommersant that they are consistently in favor of the liberalization of the energy market. “This will reduce the volume of inter-territorial cross-subsidization, which ultimately may have a positive impact on prices for most of the country’s consumers,” they say. The FAS said they did not receive the bill. The Ministry of Energy and the Ministry of Economy did not respond.

“It is expedient to maintain the liberalization trend set earlier by the legislator,” Kommersant was told at the Council of Energy Producers (CPE, which unites the largest generating companies in Russia). In their opinion, the possibility of a softer pace of liberalization, rather than postponing it for two years, should be “considered”. The POC recalled that this mechanism is a subsidization of these regions at the expense of producers and consumers of electricity in other regions.

“The difference between tariffs for special regions and free prices on the wholesale market is from 1.5 to 2.5 times; annually, manufacturers lose about 13 billion rubles,” the association emphasized.

Industrial consumers of electricity are also opposed. “In practice, the positive effects of interregional subsidizing of energy tariffs, if they arise, are non-systemic, and they are disproportionately less than the deterioration of conditions in donor regions. Delaying the liberalization of regulated contracts will only demotivate everyone and exacerbate the situation with cross-subsidization,” Kommersant was told in the Community of Energy Consumers (which unites industrial consumers of electricity).

Polina Smertina