Izvestia: "Ministry knows who to blame for growing utility rates"
Russians have overpaid suppliers by more than 100 billion roubles.
The report by the Minister for Economic Development, Elvira Nabiullina, on the reasons behind high electricity rates at a government meeting has given rise to heated debates. The ministry has pinpointed government-chosen suppliers as the cause for inflated utility rates.
The official suppliers are obliged to sign a contract to supply electricity to any potential customer. The government awarded them this status to make sure that "nonprofit" clients (individuals, small and medium companies, as well as agricultural and public sector businesses) are not left without electricity until serious competition develops in this market. Suppliers were expected to vie for every customer eventually.
However, the official suppliers were quick to use the advantages of their status. "In reality there are just one or two companies with official supplier status in every region," Nabiullina said. "Using their position as monopolies and their official supplier status, they can impose their own terms on consumers, and inflate electricity prices if they want," she explained.
At the beginning of the year the price of one kilowatt reached five or six roubles. There are no major improvements in this. Small and mid-sized businesses still have to pay up to four roubles for one kilowatt, while the national average is just 2.4 roubles.
Thus, "nonprofit" consumers have become a gold mine for suppliers. In the ministry's estimate, in 2010 alone these customers overpaid by more than 100 billion roubles. Moreover, large consumers have set up distribution businesses of their own that buy electricity at wholesale prices.
"Companies such as Mosenergosbyt saw net profits double in 2010 while Samaraenergo increased its net profits tenfold. Few domestic power producers can boast such figures. An 'official supplier' is no more than an intermediary that does not make any big investment. Yet its profitability is 44%, as compared with 4% in thermal power generation." Prime Minister Vladimir Putin noted: "44% is a high figure, isn't it?" First Deputy Prime Minister Viktor Zubkov added that in agriculture the figure is a mere 7%.
Nabiullina explained the overpricing. First, consumers are divided into groups depending on the amount of kilowatt hours used and the time when they were used. If a consumer uses energy during peak loads, the utility charges the highest rate. The majority of consumers fall in this category. Meanwhile, a marketing company is buying up the entire amount of energy at a relatively low price in the wholesale market, and this price does not depend on the amount of kilowatt hours used.
Second, the utility companies introduce the principle of take or pay. Under this principle consumers have to sign a contract on their purchase commitments with official suppliers. Any deviation from the said amounts involves penalties and fines that become net income for the distributors.
"At the same time, they do not bear any financial risk because they buy electric power in the wholesale market a day in advance," Nabiullina complained.
"Many of these companies corral people into paying guaranteed fines," Putin commented.
The ministry has already drafted a resolution that will prevent these suppliers from gaining unwarranted profits. It will prohibit sellers from requiring payments for the missed gain per year if a customer turns to an independent supplier, as often happens, Nabiullina promised.
However, Energy Minister Sergei Shmatko and Head of the Federal Tariff Service Sergei Novikov strongly objected to the draft resolution.
"We have a problem of arrears in this country. Today, there are 150 billion roubles in arrears on the retail electricity market and this is why the high rates are justified," Shmatko said. "These measures must be targeted – they must be taken against specific marketing companies," he summed up.
"Isn't this debt created artificially? If the prices are three or four times higher, where will they get the money to pay? They are not even in a position to do this," Putin said.
"If we allow consumers an easy transfer from an official supplier to an independent sales company, we will simply destroy the retail market tomorrow," Novikov said, supporting Shmatko. He explained that this proposal would only lead to further rate growth and uncontrolled social consequences.
"I must have an agreed-upon draft on my desk by 9 a.m. tomorrow," Putin said abruptly.
Alexandra Bayazitova
