Tariff Campaign Results
The Company tariff policy, as a group of tariff calculation principles and methods, is shaped by the Russian tariff regulation laws. The legislative acts underlying the regulation of electricity distribution services were revised in 2012:
- Resolution of the Government of the Russian Federation No. 1178 of December 29, 2011, “On Pricing in the Area of Regulated Prices (Tariffs) in the Electric Power Industry” approved:
- the fundamentals of in the area of regulated prices (tariffs) in the electric power industry;
- the rules for the government regulation (revision, application) of prices (tariffs) in the electric power industry;
- Order of the Federal Tariff Service of the Russian Federation No. 98-e of February 17, 2012, approved the Guidelines for Calculating Electricity Transmission and Distribution Tariffs Set by the Long-Term Minimum Regulated Revenue Indexation Method;
- Order of the Federal Tariff Service of the Russian Federation No. 228-e of March 30, 2012, approved the Guidelines on Tariff Regulation Applying the Return on Invested Capital Method.
In addition, Order of the Federal Tariff Service of the Russian Federation No. 121-э of February 28, 2012, amended and supplemented the procedure applicable to the Federal Tariff Service’s giving its consent to proposals made by Russian regional executive authorities for tariff regulation with respect to the transition to the return on invested capital method and applicable to decisions to extend the long-term regulation period.
As defined by Resolution of the Government of the Russian Federation No. 1178 of December 29, 2011, “On Pricing in the Area of Regulated Prices (Tariffs) in the Electric Power Industry,” the goal of the 2012 tariff campaign was to change the long-term parameters of RAB regulation and approve the long-term tariff decisions, effective from July 1, 2012, for 2012–2017.
CHANGES IN THE WEIGHTED AVERAGE TARIFF OF ELECTRICITY DISTRIBUTION SERVICES AS AT JULY 1, 2012
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These efforts resulted in mapping out the plan of the transition to tariff regulation using the return on invested capital method (Regulatory Asset Base, RAB) for 44 branches of the Company subsidiaries for the period until 2017. As of January 1, 2013, RAB regulation was applied by 68% of the branches as compared with 85% as of January 1, 2012 (see Fig. 1). In 2012, the cost-plus pricing method ceased to be applied to regulation.
Changes in electricity distribution tariffs in line with Russia’s socioeconomic policy ensure the implementation of programs to maintain a reliable power supply and develop the distribution grid sector.
The tariff of electricity distribution is an aggregate of expenses related to payments for services provided by FGC UES, expenses related to electricity purchased to compensate for electricity network losses, expenses related to payments for services provided by other local grid organizations, and revenues received by the Company-managed companies. The breakdown of the electricity distribution tariff existing as at July 1, 2012, was as follows:
- Revenues received by the Company subsidiaries, 43.5%;
- Electricity purchased to compensate for electricity losses, 14.5%;
- Payments for services provided by FGC UES, 22.5%;
- Payments for services provided by territorial grid organizations, 19.5%.
