Банкеръ Weekly

Briefs

ELECTRICITY AND CENTRAL HEATING PRICES TO GO UP TWICE A YEAR

The State Commission for Energy Regulation (SCER) will be the one to determine all further hikes of electricity and central heating prices. The Cabinet has approved regulations for price-formation and application of consumer tariffs. As the BANKER weekly has already informed, the SCER will not act on its own or by someone's order. It will only boost future bills after the energy companies file reasonable requests. The companies in turn will have to apply the set prices for at least one year before asking to change them. The proposed rates should only involve typical costs: amounts paid for energy resources, repair works, investments, return on equity, ecological expenses, current and potential credits, production costs (including salaries and social benefits). The SCER will fix the prices for distribution of electricity as well and the fee which companies will pay for using the distribution network. A key factor are the technological expenses of companies transporting electricity and heat. They will be also set by the SCER. The percentage of allowed network losses will be formed in terms of the technical features of the transport environment, SCER's Chairman Prof. Shushulov said. The percentage will not take into account the theft of electricity and heat, losses caused by outdated transportation equipment or uncollected debts of the respective companies. Thefts and uncollected receivables remain at the expense of the company - it will either initiate legal proceedings or report a loss. Distributors are allowed 15% technological losses, and transporters - 12% ones, Prof. Shushulov explained. The above-described mechanism will become effective after the average price for producing an electricity or heat unit becomes equal to the total cost of its delivery to the final consumer. This will happen in a year or two, energy experts forecast.While electricity and heat are being paid below their cost price, a so called transitional pricing method will be used. It stipulates that prices will change twice a year - after April 1 and October 1. Prices of electricity charged from consumers who join the distribution network will be the same on the territory of the whole country. However, industrial and household prices should be made equal before the cost price is attained.Each company that produces or distributes heat will set its own price which will vary in every region of the country. Again, allowed losses in heat transportation will be fixed and will be paid by the respective company.

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