Liberalization of the Electricity Market in Russia: Assessment of the Consequences of Expanding the Second Price Zone

The main measures within the framework of the electricity market reform in Russia were completed by 2011, but the process of liberalization and market adjustment continues. Some regions of the country remained excluded from the institutional changes, as conditions for competition were not created there (non-price zones and isolated power systems). Since January 1, 2025, institutional changes in the electricity market have affected seven previously non-price zones of the Russian Federation (the Republic of Komi, Arkhangelsk Oblast’, the Republic of Sakha (Yakutia), Primorsky Krai, Khabarovsk Krai, Amur Oblast’, and Jewish Autonomous Oblast’, five of which are located in the Far East and are part of the Eastern integrated power system (IPS) service area. Accordingly, it is relevant to study the consequences of expanding the second price zone (the Siberia and Eastern zone), which includes the service areas of the Siberian IPS and the Eastern IPS. Of particular interest are theoretical models of electricity market organization, among which four market models are distinguished: regulated monopoly (model I), monopsony (single buyer) (model II), competition in the wholesale market (model III), and competition in the wholesale and retail markets (model IV). From the perspective of economic theory, model IV is optimal, but foreign experience shows that its implementation leads to ambiguous results, which are determined by institutional conditions in the country. In Russia, there is a tendency toward a model of competition in wholesale and retail markets (model IV), but so far there is a hybrid model, with a predominance of a regulated monopoly model (model III) in retail markets. The consequences of expanding the second price zone (the Siberia and Eastern zone) are analyzed from the perspective of changes in competition conditions for producers and prices for consumers. A comparative analysis of the segments of the second price zone (the Siberia and Eastern zone) showed that the electricity market is highly concentrated, and this situation is likely to continue in the medium term; producers from the Eastern IPS are losing out in price competition to producers from the Siberian IPS