Problems facing the electric power industry of the Russian Federation

Significant changes are taking place in the modern energy industry, which is actively developing in Russia. One of the key aspects will be the creation of systemic territorial grid organizations (STGOs), which will play an important role in ensuring reliability and infrastructure development [Bill No. 594962-8, – Ed.]. Such conclusions were reached by the participants of the session ‘Problems Facing the Electric Power Industry of the Russian Federation Today’, which took place at the St. Petersburg International Legal Forum.

KEY CONCLUSIONS

Growth of electricity consumption is trending

“We note the trend of growing electricity consumption, changes in regional consumption volume. <...> We are looking for solutions to ensure increased reliability, energy security, infrastructure protection, adaptation of business processes to the changing reality,” Daniil Krainsky, Deputy General Director for Legal Support, Rosseti.

Flexible transition to a new era of power generation

“The introduction of the STGO with its functionality and status into legislation will solve many of the problems. Essentially it means a flexible transition to a new era of the electricity sector. It is not only about solving a major overdue problem, but also about improving the entire system,” Sergey Sinitsyn, Director Advisor, Institute of Legislation and Comparative Law under the Government of the Russian Federation.

PROBLEMS

The problem of imperfect tariff regulation

“In 2023, decisions of regional regulators totalling almost RUB 9 billion were declared illegal in court. This is only one year. The situation is roughly the same for previous periods, and this year too. We cannot yet say that the problem has been solved in principle, but nevertheless the movement aimed at solving this problem is underway,” Daniil Krainsky, Deputy General Director for Legal Support, Rosseti.

Economic sanctions after foreign investment in a strategic industry

“Large-scale foreign investments came into the Russian economy. We thought that this would always be the case, but then 2008 came, 2014 came, and we were faced with the use of blatantly unlawful, illegal economic sanctions against ourselves,” Alexander Sinenko, Plenipotentiary Representative of the Government of the Russian Federation in the State Duma of the Federal Assembly of the Russian Federation.

Increased burden on consumers due to multiple territorial grid organizations and ownerless grids

“The number of electricity producers has not changed, but the number of territorial grid organizations has doubled. That is, where there is a natural monopoly and there should be fewer organizations, we got some kind of improper competition. This has led to an increased burden on the consumer in tariffs, because each organization has a director and an accountant. Of course, this is wrong,” Sergey Puzyrevsky, Secretary of State – Deputy Head, Federal Antimonopoly Service of the Russian Federation (FAS Russia).

“People are faced with the fact that the only electric line that approaches garden associations or even quite large settlements is actually abandoned. Even a slight accident makes people return to the Stone Age,” Alexander Sinenko, Plenipotentiary Representative of the Government of the Russian Federation in the State Duma of the Federal Assembly of the Russian Federation.

“The difficult situation is related to the privatization of grids and ownerless maintenance of energy facilities, as well as the inability of territorial grid organizations to carry out emergency work in full in a timely manner,” Sergey Sinitsyn, Director Advisor, Institute of Legislation and Comparative Law under the Government of the Russian Federation.

Imperfect tax legislation

“We are talking about property tax. There are problems with criteria. This applies to both movable property and real property. Everything lies within courts, literally everything. We have already completed one round there, and the practice has been quite successful for us. But our colleagues in the industry, unfortunately, are still unable to resolve this issue in their favour,” Daniil Krainsky, Deputy General Director for Legal Support, Rosseti.

“There is a feeling that both representatives of the Federal Tax Service and the Ministry of Finance of the Russian Federation are forming an understanding that this issue needs to be resolved,” Kirill Makarov, Director of the Law Department, Ministry of Energy of the Russian Federation.

SOLUTIONS

Fewer regulated organizations

“The transition to reducing the number of regulated organizations among natural monopolies is certainly correct. We would never say that for the competitive market. On the contrary, we say that there should be more organizations. More supply, accordingly, lowers the price. But the rules are different there, and such rules do not work here,” Sergey Puzyrevsky, Secretary of State – Deputy Head, Federal Antimonopoly Service of the Russian Federation (FAS Russia).

Centralization of Russia’s energy system

“If for some reason the territorial grid organization is unable to restore any networks in the event of an accident, the regional headquarters decides that the network restoration will be the responsibility of the STGO,” Kirill Makarov, Director of the Law Department, Ministry of Energy of the Russian Federation.

“I think that the introduction of STGO leads to centralization of the energy system at the level of the whole country. This is a big and important task, which will make it possible to designate not only single centres of responsibility, but also single centres for managing the energy system,” Sergey Sinitsyn, Director Advisor, Institute of Legislation and Comparative Law under the Government of the Russian Federation.

* This is a translation of material that was originally generated in Russian using artificial intelligence.

For more information, visit the Roscongress Information and Analytical System roscongress.org.

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