At the Federation Council, ROSSETI voiced its position on tariff regulation and improving financial stability of the integrated power grid

At the Federation Council, ROSSETI voiced its position on tariff regulation and improving financial stability of the integrated power grid 06.03.2015

The First Deputy Director General for Technical Policy of JSC Rosseti, Roman Berdnikov, and chief advisor to the director general of JSC Rosseti, Valentin Mezhevich, participated in the work of a round table on "Prospects for the development of power joint market in the current economic situation: issues of statutory regulation."

The event was held at the Federation Council of Russia. It was attended also by senators of the Federation Council, State Duma deputies, representatives of the RF Ministry of Energy and other federal agencies, NPO Market Council, and generating, grid, and energy supply companies, and industry experts.

The round table objectives were to discuss the problems in the functioning of the electrical energy and capacity markets under current conditions, the need to create legal framework to increase the efficiency of their work, and to make appropriate changes in the legislation on electricity.

During his speech, Roman Berdnikov specified the position of JSC Rosseti on a number of key issues of work and development of the power grid sector, including the current financial economic situation of power grid companies, existing tariff regulation, the responsibility of consumers putting in an order for a utility connection, the selection of the requested capacity and the situation in the retail electricity market.

The representative of JSC Rosseti noted, that today in addition to containing the growth of the transmission tariff and the reduction of energy consumption, non-payment has become an acute problem which has an extremely detrimental effect on the financial soundness, stability, and capacity to pay debt of companies in the power grids sector.

By the company's assessment, accounts due from customers from January 1 2015 amounted to 134 billion roubles, which is comparable to 4 annual maintenance programs for networks - transmission and distribution. Additionally, in January and February of the current year, Rosseti noted a tendency of accelerated non-payment growth, especially from provider of last resort and so-called non-disconnectable consumers.

An important condition for increasing the financial soundness of electric distribution companies, in the opinion of Rosseti, is perfecting the system of tariff setting, providing for an increase in transparency to lower the effect of "distributed tariff regulation," when the FTS decision is idiosyncratically interpreted by the Regional Energy Commissions.

Overall, the current regulatory system is heavily complicated and does not account for a variety of identified operational problems in the course of financial activities.

To solve this problem, Rosseti proposes to introduce to the retail electricity market, similar to the wholesale, punitive sanctions for non-payment of services, institute a "financial guarantee" for power grid companies, symmetrical responsibility for providers of last resort before power grid companies and wholesale markets, to create integrated payment centres in the regions, to lift the ban on the execution of functions of providers of last resort by power grid companies, affording them a right to participate in respective competitions and work under general conditions, and require providers of last resort to end their monopoly and open information bases for servicing consumers.

These proposals have been sent to the main regulator of the industry - the Ministry of Energy of Russia.

Roman Berdnikov paid special attention in his report to the issue of technological connections and development of the integrated power grids.

Yearly the number of requests for power connections grows 20-30% and at the present time in the Rosseti group they are submitted for a total power of 157 GW, which is comparable with the maximum power used in Russia. Thus, on the one hand, in the country there is a decrease in electricity consumption, and on the other, the amount of power is increasing which the consumer does not use.

To escape the current situation, Rosseti proposes to institute payment for electric energy transmission services by statement, and not Watt consumption, which increases the responsibility of the consumer and reduces cross-subsidization, and also raises the level of synchronization of network infrastructure with territorial planning and regional participation in evaluating bids for 0.5 MW and higher.

Photo courtesy of the press service of the Federation Council of Russia

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