OREANDA-NEWS. May 4, 2012.  The conference participants discussed new rules of the retail electricity market, which, in the opinion of the prime minister, “will protect the interests of legitimate consumers and suppliers of electricity, and will make it possible to guarantee a high level of competition while maintaining reliable electricity supplies.”

Vladimir Putin’s opening remarks:

Good afternoon. As you know, yesterday we discussed improvement of the business climate with our colleagues from the government and from the business community at the venue of the Strategic Initiative Agency. One well-known issue has to do with the electricity industry, or rather connection to power grids and its many related problems – use, price formation and tariffs. There are many costs and a great deal of burdensome routine that serve only to harm the economy. In effect, the balance of interests now favours the suppliers. This has largely distorted the market – one or two power supply companies have monopolised about 80% of the market in almost every region. In the estimate of the Ministry of Economic Development, this leads to overpricing for consumers by about 5%-7%.

We need to take effective steps to upgrade competition at the retail electricity market. Energy companies require stable, predictable conditions, steady and predictable demand and (this is obvious) guarantees for the return of investments, which are quite considerable. According to expert estimates, about three trillion roubles will be channeled into the development of generation and grids in the next three years. In the last few years we have somewhat improved the situation on the energy market.

I’d like to recall what we have done. We have strictly regulated price formation procedures for energy suppliers and established higher demands for the transparency of their operation. We have also ceased differentiating between consumers based on their peak hour/off peak hour usage. We have introduced a common hour to determine the volume of power at the wholesale and retail markets and eliminated the take-or-pay principle of electricity payments for minor and medium-sized consumers. All these measures are aimed at shutting out the unjustified increase in consumer prices. At the same time, at the conference that was organised last December at the Sayano-Shushenskaya hydro-electric power plant, we spoke about the need to take further steps in order to improve the situation at the electricity market.

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