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Electricity distribution tariffs regulation reform in Russia: provisions for increase competitiveness of the sector

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  • Orlova, Y.

Abstract

The aim of the article is to analyze reform of the tariffs regulation for the Russian electricity distribution companies against the background of the global tendencies in this sphere.The «cost plus» regulation approach which applied to electricity grids till 2009 did not help to bring investments in the sector. Starting from 2009, the new long-term tariff methodology (RAB-regulation that stands for Regulatory asset base) has been introduced. The main goal of the tariff reform is to stimulate investments into electricity networks and to improve their operational efficiency, service quality and reliability. Starting from 2012 the electricity distribution companies that have not completed transfer to RAB-regulation are regulated under long-term indexation.Some features of the transition and design of the new tariff regulation caused dramatic increase of the grid’s component in the final tariffs for the commercial consumers. This fact is extremely negative both for the competitiveness of the Russian producers and for the prospects of the unified energy system. Tariff regulation of the power grid companies influences not only the efficiency and reliability of electricity distribution but may also directly affect competition on the wholesale and retail electricity markets and overall liberalization of the electricity market.

Suggested Citation

  • Orlova, Y., 2014. "Electricity distribution tariffs regulation reform in Russia: provisions for increase competitiveness of the sector," Journal of Modern Competition, Synergy University, issue 4, pages 26-48.
    • Handle: RePEc:snr:mdrcmp:y:2014:i:4:p:26-48
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    File URL: https://www.moderncompetition.ru/jour/article/view/621
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