OREANDA-NEWS. December 13, 2012. When interviewed by the Nash Krasnoyarsky Krai Newspaper, General Director of “Siberian Generating Company” Sergey Mironosetsky commented on the situation currently in place in heat supply thermal regulation.

He reminds that in the course of the few recent decades the tariffs for heat and housing-and-utility services have been established on the “costs plus” principle, the main decision-taking target invariably being restriction of the final consumer prices. As a result, the branch constant funding shortfall has lead to considerable wear of the fixed assets affecting, in its turn, heat supply quality.

“Thus, it becomes evident that the situation in place needs to be changed. This means not only that the tariffs are to be economically justified so that to cover all the costs incurred by the companies inclusive of those in connection with equipment repair and modernization. The heat tariff regulation proper should be built so that a more efficient producer could earn greater profit as compared to a producer displaying inferior efficiency. The system itself ought to incentivise all the branch enterprises for reduction of expenditures, a closer focus on the client and a higher quality of services. Meanwhile, however, higher efficiency is, on the contrary, punishable,” noted SGC CEO.

He quotes the effective norms in accordance whereof a mechanism is to be applied during establishment of long-term tariffs with previously approved rates as per the “costs plus” method assumed as the initial tariff for its indexation in future. Conventionally, this means that, if within one and the same city one company charges 3 RUR for its services while the other – 1 RUR, the corresponding amounts will be recorded as the baseline values. Thus, the least efficient companies will profit more during establishment of long-term tariffs.

“We propose to assume an economically justified standard values within a single local market and proceed from its when taking tariff decisions some years in advance. Additionally, inconsistency on the part of the regulator needs to be excluded: currently, the regulator enjoys the right to revise tariff regulation parameters at any time. This increases risks for bona fide investors which is fraught with further funding shortfall for the branch and aggravation of the problems having accumulated,” notes Sergey Mironosetsky.

“Siberian Generating Company” (SGC) Group including JSC “Kuzbassenergo” (TGC-12) and JSC “Yenisei TGC (TGC-13)” is engaged in production and sales of electric and thermal energy, additionally providing for heat supply. The Group of Companies carries out its activities within the Kemerovo Region, the Altai and Krasnoyarsk Territories and the Republic of Khakassia. In the total generation volume of the Integrated Power System of Siberia SGC accounts for a portion amounting to approximately 20%. The main fuel is coal. The main end market is the Wholesale Electric Power Market. Currently, the Company is implementing a large-scale investment programme for construction of new facilities within the framework of power supply contracts, the programme cost exceeding 86.7 bln RUR.