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Domestic interregional distribution grid companies can switch to the RAB-based new tariff regulation system within two years

Source: www.expert.ru
“We believe that if work is organized in the proper way, in principle all branches of interregional distribution grid companies can switch to RAB as early as during 2010 or perhaps within two years,” Sergey Novikov, Head of the Federal Tariff Service of the Russian Federation, said to journalists.


Experts think that the transition of grid companies to RAB regulation will give an appreciable impetus to a considerable inflow of investment in the sector

Source: www.bolshoybusiness.ru
Experts think that the transition of grid companies to RAB regulation will give an appreciable impetus to a considerable inflow of investment in the sector. Alfa-Bank’s Senior Utilities Analyst Alexander Kornilov said, “It will be much easier and cheaper for grid companies to borrow for financing purposes if they have a de facto guaranteed return on new investment. This is of benefit to lenders too, as these loans involve very low risks if the borrower and the company itself both have adequate leverage, because the rate of return should theoretically cover the weighted average cost of capital. What encourages the investor most is a grid company’s secure rate of return on invested capital.”


One of the most enjoyable properties of RAB regulation is the possibility of substantially lengthening a payback period

Source: energyland.info
One of the most enjoyable properties of RAB regulation is the possibility of substantially lengthening a payback period. This allows very much money to be invested in the development of grids as early as today while keeping the growth of tariffs at an acceptable level. This feature has often been compared to mortgage lending. They say it is like buying a very expensive apartment at one stroke with money to be repaid little by little.