Tariff Policy
The Company’s tariff policy, as a group of tariff calculation principles and methods, is shaped by the Russian tariff regulation laws.
The year 2012 was a period when legislation underlying the regulation of electricity distribution services was substantially revised. To implement the principle of pursuing a socially oriented tariff policy and limit the growth of tariffs at the level of inflation expectations, the following regulations were adopted:
1. 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 defined:
- the fundamentals in regulated prices (tariffs) in the electric power industry
- the rules for the government regulation (revision, application) of prices (tariffs) in the electric power industry
2. 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.
3. 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.
4. Order of the Federal Tariff Service of the Russian Federation No. 121-e 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.
Changes in tariffs according to the evolution of socio-economic development of the regions of MRSK Holding’s operations is a precondition for implementing the Strategy for Development of the Company Until 2015 with Long-Term Plans Until 2020, including one of the key priorities: tariffs are set, depending on the required level of reliability and the pace of regional development.
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.
These efforts resulted in reregulating 44 branches of the Company’s subsidiaries and dependent companies in 2012 in accordance with the return on invested capital method (Regulatory Asset Base, RAB) for the period until 2017 (Figure 1).
As of January 1, 2013, RAB regulation was applied by 68% of the branches as compared with 85% as of January 1, 2012 (Figure 1). In 2012, the cost-plus pricing method ceased to be applied to regulation.
Changes in electricity distribution tariffs (Figure 2), in line with Russia’s socio-economic policy on keeping down the growth of tariffs for natural monopoly services, ensure the implementation of programs to maintain a reliable power supply and develop the distribution grid sector.
DIAGRAM 2. CHANGES IN THE WEIGHTED AVERAGE TARIFF OF ELECTRICITY DISTRIBUTION SERVICES AS AT JULY 1, 2012
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