The Ministry of Industry and Trade criticized Rosseti’s initiatives to reform the power grid complex

As Kommersant found out, the Ministry of Industry and Trade criticized the initiatives of the head of Rosseti (MOEX: FEES) by Andrey Ryumin, aimed at reducing the shortfall in income of the state-owned company. The ministry believes that the ban on industry’s free transfer to its own generation and the introduction of payment for network services on a “take-or-pay” basis will undermine the financial position of business. Metallurgists and fertilizer producers estimate their additional burden due to the grid company’s ideas at 4 billion rubles. in year. However, according to analysts, it is impossible to calculate the economic consequences of Rosseti’s initiatives, since they have not been worked out in detail.

The Ministry of Industry and Trade did not support the initiative of the head of Rosseti, Andrei Ryumin, to reform the country’s electrical grid complex, as follows from a letter from the deputy head of the ministry, Ekaterina Priezzheva, to Deputy Prime Minister Alexander Novak (“Kommersant saw the document dated January 12”). The Ministry opposes two proposals: the introduction of compensation payments for the transition of enterprises to energy consumption from their own generation, as well as the transfer of new consumers (from 670 kW) to pay for electricity transmission services on a “take or pay” basis. The head of Rosseti, as Kommersant wrote on September 12 and October 3, 2023, last year secured the support of Russian President Vladimir Putin. Now ways of implementing initiatives are being discussed at the government level.

As the deputy head of the Ministry of Industry and Trade writes, when switching to payment based on the “take or pay” principle, industry costs will increase, because enterprises “will be forced to pay for the declared, and not the actually used, volume of electricity.” Such a change “will have a negative impact on the operating performance of companies, and in some cases will lead to companies refusing to implement investment projects,” emphasizes Ekaterina Priezzheva, but does not name specific examples. She notes that with a new connection to the electrical grid, “it is impossible to predict the volume of future electricity consumption” of a new workshop or unit “due to the high volatility of capacity utilization caused by market factors.”

Mrs. Priezzheva also reminds that large metallurgical plants have their own power plants that utilize associated gases. The business maintains the stations with its own money, but Rosseti “unreasonably proposes to extend non-market surcharges to the price of capacity to the amount of their generation.” The additional costs are “extremely sensitive” and will “negatively affect the competitiveness and sustainability of companies,” she believes.

Ekaterina Priezzheva, judging by the document, when writing the letter, took into account the positions of several business associations, whose appeals were also sent to Deputy Prime Minister Alexander Novak (“Kommersant saw them”). In particular, according to calculations by the Russian Association of Fertilizer Manufacturers, the transition to the “take or pay” principle “will lead to additional annual costs from 1 billion to 4 billion rubles.” According to Russian Steel estimates, on average for a large metallurgical enterprise such a measure will lead to additional costs of about 2 billion rubles. in year. The Soyuzcement organization reminds that cement producers’ electricity consumption increases sharply in the summer and falls in the winter. The associations also criticize restrictions on the transition to own generation.

Rosseti told Kommersant that the proposed take-or-pay approach ensures both the network company and the consumer predictability and stability of the volume of services provided, and also “protects the interests of consumers who take a responsible approach to planning the declared maximum capacity and reliability categories, limits the possibility of passing on to such consumers the costs of maintaining unclaimed network capacity.”

The Ministry of Industry and Trade’s estimates are based more on expectations than on strict calculations of the real consequences of Rosseti’s initiatives, since the state-owned company’s proposals have so far been formulated only at the level of a conceptual idea, notes Sergei Sasim, director of the Center for Research in the Electric Power Industry at the National Research University Higher School of Economics. At the same time, the impact of the cost of electricity on the economic performance of business activities is often greatly exaggerated, he adds.

Polina Smertina