This text is translated into Russian by google automatic human level neural machine.
EastRussia is not responsible for any mistakes in the translated text. Sorry for the inconvinience.
Please refer to the text in Russian as a source.

Tariff Leveling: Pros and Cons

How will the decrease in the energy tariff for the DFO affect the work of enterprises in the Far East, the rest of Russia and the country's energy system

This year, the Russian government set a new base level for the electricity tariff for the Far Eastern Federal District. According to the order No.1615-r, the price per kWh for the five regions of the DFO was reduced to four rubles, excluding VAT. The main objective of this measure, according to the leadership of the Minvostokrazvitie, is to eliminate energy inequality and ensure long-term, global competitiveness of doing business in the Far East. At the same time, experts point out that the "electric manna", donated by the DFO, can have a negative impact on enterprises located outside of it, as well as on the work of the entire energy system of the country. How noticeable will be the effect of reducing energy tariffs for industrial enterprises of the Far Eastern Federal District, and who can suffer at the same time - found out EastRussia.

Tariff Leveling: Pros and Cons
Photo: shutterstock
The first subjects of the Far Eastern Federal District, in which the process of reducing energy tariffs to the level of the basic ones, began was the Chukotka Autonomous District (at 68,6% or 8,76 RUR / kWh), the Republic of Sakha (Yakutia) (at 47,4% or 3,61rub / kWh) , The Magadan Region (by 33%), the Kamchatka Territory (by 33%) and the Sakhalin Region (by 30,5%). Despite the fact that the order of the government of the Russian Federation came out 28 July 2017 year, the recalculation of payment for electricity will be conducted from 1 January this year. The program to reduce tariffs for electricity in the Far East is planned to be implemented within three years.

According to the Ministry of Eastern Development, after the reduction of electricity tariffs by an average of 1 – 1,5%, the costs for the whole economy of the Far East in industrial production decreased, while for energy-intensive industries, the savings in their energy costs reached 25-30%.

Government tariff cuts were approved by the industrialists of the Far East.

- This measure is absolutely necessary for the preservation and further development of the power supply system of the Western energy district of the Republic of Sakha (Yakutia), where the main industrial facilities of ALROSA (Mirninsky GOK, Aikhalsky GOK, Udachninsky GOK) are located, - says Konstantin Mashinsky, presidential adviser to ALROSA ) - one of the world leaders in the diamond mining industry.

According to him, in the second half of the year 2016, ALROSA companies bought electricity at a set tariff for high voltage (VN) at 6,8683 rub / kWh - the highest price for HV on the territory of the Russian Federation.

- At the same time, in the Western power district, electricity is produced only at the HPP - the Cascade of the Vilyuisky HPPs-1,2 and the Svetlino HPP with a relatively low cost of generating electricity. The high cost of purchased electricity is explained by the presence of "cross-subsidizing" the population and diesel generation, "Konstantin Mashinsky explains in a conversation with EastRussia. Such a high price for electricity, in his opinion, leads to the fact that it becomes more profitable for consumers to build gas stations or stations operating on oil than to buy electricity from "cheap" HPPs.

- This in turn leads to the degradation of the existing power system of the Western power district of Yakutia, and instead of using hydro resources, non-renewable organic fuel is burned. Therefore, we support this measure and hope that it will continue to operate after 2019 year, "concludes the advisor to President ALROSA.
"Reducing the tariff for electricity will be beneficial for the activities of large and medium-sized enterprises in the Far East," said Murat Galoyev, General Director of PJSC Magadan Mechanical Plant, one of the main suppliers of washing and dressing equipment for the development of placer deposits of gold and platinum. According to him, the money saved in this way can be directed to other production needs of the enterprise.

This opinion is shared by OAO DSK, one of the largest enterprises producing construction materials in the Republic of Sakha (Yakutia).

"As a result of tariff reduction, we have already saved about 15 million rubles since the beginning of the year," the company's management told EastRussia. For comparison: the net profit of JSC "DSK" in 2015 amounted to more than 130 million rubles.

However, the reduction of the tariff had no effect on the activities of a number of enterprises in the region.

"Of course, it's nice, but by and large the decrease in the energy tariff has not greatly affected us, because our products are produced by ships in the sea and there are no production facilities on the shore," Andrei Savinov, representative of AKROS JSC, one of the largest fishing enterprises, told EastRussia Kamchatka Territory.

Honey spoon in the barrel of snow
"The effect that Far Eastern enterprises will receive from reducing the energy tariff to the base level is extremely small and incommensurable with the negative consequences for enterprises in Central Russia, the Urals and Siberia," said Valery Dzyubenko, deputy director of the Association of Energy Consumers.

According to him, the decision to reduce energy tariffs for the five regions of the Far East is not economically justified and is not supported by economic calculations.

"The inflow of investments into the Far Eastern regions is hampered not by energy tariffs - they can hardly be called among the first ten factors - and first of all administrative barriers, undeveloped transport infrastructure, which should be dealt with first of all," the expert believes, and recalls that the decision on subsidies to Far East at the expense of the enterprises of the rest of Russia was accepted, despite the categorically negative position of the Ministry of Energy, FAS, MED and the business community.

"Let's say that for some reason you begin to pay not only for electricity that you consume in your apartment but also for a neighbor - your family's income will inevitably generate a loss," explains Valery Dzyubenko. - The same thing happens on a country scale - one enterprise starts paying for another with very predictable consequences. The paradox is that the large energy-intensive enterprises of Central Russia, the Urals and Siberia with profitability 10-15% are obliged to subsidize the Far East's extracting enterprises, whose profitability reaches 90%!

Dziubenko is sure that the Far East enterprises will not receive any tangible economic effect from the decrease in energy tariff, since for non-power-consuming enterprises the share of energy in the cost price is negligible and this economy will be calculated in kopecks. At large energy-intensive enterprises, which in the Far East are not so many, as a rule, have their own generation, and a reduction in the tariff for their activities will not affect it in any way.

Virtually all large DFO companies have their own generation, one of which is the Sakhalin Energy oil and gas company, which is developing Piltun-Astokhskoye and Lunskoye fields on the northeast shelf of Sakhalin Island.

"All production facilities of the company are independent of municipal energy supply, that is, energy supply is due to the development of own electricity," Larissa Yamomoto, head of the information and organizational support department of Sakhalin Energy, told EastRussia.

While the company does not consider the possibility of transferring its energy supply from its generation to grid electricity at a reduced tariff. But, according to Valery Dzyubenko, the large companies of the region, if there is a technical capability and provided that this decision takes effect long-term, may begin to switch to grid electricity.

At the same time, enterprises in Central Russia, the Urals and Siberia are already actively moving to their own energy sources. According to the Association of the Energy Consumers Association, in recent years, the growth in the output of industrial enterprises by own power plants is 3,2% per year, while productive leave in a unified power system is stagnating. Also, in addition to the Far Eastern surcharges, in recent years, payments to consumers have included subsidies for a number of other regions, payments for new power plants have increased for capacity contracts, for new HPPs and NPPs, for renewable sources, and payments for network services have not declined. Finally, in 2018, the amount of the allowance for subsidizing energy tariffs in the Far East is planned to increase by 1,5 times.

"The economic consequences of this exorbitant burden will be very serious," Valery Dzyubenko said. - With a further large-scale reduction in the consumption of industrial enterprises from general networks, the load in generation will decrease, the productive leave in networks will decrease, the revenue of energy enterprises may fall to a critical level that is incapable of ensuring even the functioning of the enterprise. As a result, the entire power system will begin to suffer from chronic underfunding and low utilization, and sooner or later we will see it in a very deplorable state.

Despite contradictory assessments of the government program, market participants agree that achieving a sustainable economic effect from reducing tariffs in the Far East is possible only if the new rates are in effect for a long time, for example, for ten years. But in the stability of tariff rates there is still no certainty even for a year ahead: it is possible that in 2018 the base tariff for DFO will grow from 4 to 4,14 or 4,46 RUR / kWh. The corresponding two scenarios, which also imply a proportional reduction in compensation paid by consumers in the European part of the Russian Federation, Siberia and the Urals (from 37,6 to 35,2 or 32,64 billion rubles), FAS Russia, submitted to the government commission for electricity in late October. In the future, the parameters of the preferential tariff and allowances are planned to be revised every year.
September 17: current information on coronavirus in the Far East
Digest of regional events and latest statistics