OREANDA-NEWS. November 15, 2013. Deputy Head of FAS Anatoly Golomolzin made a report at the parliamentary hearings at the State Dum of the Russian Federation on the “Analysis of the Outcome of Reforming “UES of Russia” RAO and Efficiency of the Entities Formed on its Basis”.

Reforms of the electric power industry in the Russian Federation were preceded by large-scale public discussions, which enabled to encorporate the fundamental principles of industry performance and restructuring in the Federal Law “In the Electric Power Industry”. The essence of the reform was to build up competitive segments, and to achieve efficient regulation and control over the naturally-monopolistic segments. Reforms also established a commercial and technological infrastructure of the electric power markets.

FAS devised and then improved the Rules for non-discriminatory access and formed a system of continuous monitoring and control aimed at exposing and suppressing price manipulation on the wholesale and retail markets of electric power industry, and violations of the Rules for non-discriminatory access, and adopted several regulations in this field. Thanks to this work, for the first time from 2008 Russia is included in the “best hundred” of the Doing Business ranking, rising in 2013 by 19 positions due a breakthrough under “Connecting to Eclectic Power Networks” criterion by 70 points.

Anatoly Golomolzin pointed out that the reform aims had not been achieved in full since inefficient state regulation was a deterring factor: fixing economically unjustified rates for the services of natural monopolies. For instance, in 2008-2012 the number of regional network organizations increased by more than five times, while the number of participants entering competitive wholesale market of electric power in the same period increased by up to two times. Regulated business appears to be much more attractive than the competitive one. Income of the former depends on individual decisions of the regulators; while the latter must earn them under competitive conditions.

Fixing economically unreasonable tariffs results in increased prices for electric power for end consumers, which means excessive financial burden upon them. Analysis of prices on the competitive segment of the market and regulated tariffs shows that regulated prices are increasing at much higher rates.

“The work to improve relations in the electric power industry is not completed, it is necessary to direct efforts to increase efficiency of the state price regulation. As practice shows, the competitive market segment displays a considerably better efficiency and transparency, and achieves the balance of interests of producers and consumers in comparison with the regulated sector”, said Anatoly Golomolzin.