Legislation Does Not Provide for Cross-Subsidization in Field of Heat Supply

10 february 2017 | "Komsomolskaya Pravda"

Zabaykalsky Krai can recall cross-subsidization of the heat tariffs. Late last year the story of cross-rate differences was given publicity, when the local government tried to evade subsidization through the increased utility load on legal entities, and raised the tariffs by 35%. The Komsomolskaya Pravda newspaper states that the rates, however, were cancelled due to disaffection of the big business leaders.

Victoria Gimadi
Victoria Gimadi
Department for Fuel and Energy Sector

Head of Department for Fuel and Energy Sector of the Analytical Center Victoria Gimadi commented the situation for the newspaper reporter as follows: “The legislation does not provide for cross-subsidization in the field of heat supply, therefore we lack official statistics in this regard, and every single case is considered and proved separately.”

The variety of tariffs set for different consumer groups, such as the households, the public sector, and the industrial sector receiving heat power from the same heat supply facility, which is quite rare nowadays, can speak for the cross-subsidization in the region. Ms. Gimadi also noted that the situation where the rates of growth of economically justified tariffs scaled up massively, the household tariffs scaled up less, and the actual budgetary compensation stayed unchanged, can also evidence cross-subsidization presence or increase.”

The expert mentioned that at present such tariff differences can be seen in about 20-25 regions. In this context, according to the Federal State Statistics Service, some 50% of the All-Russian volume of heat supply tariff differences are accounted for by the Far Eastern Federal Okrug, while the Siberian Federal Okrug, the Urals Federal Okrug and the Northwestern Federal Okrug take some 15% each, namely, regions characterized of more cold climate, where the cost of heat power and the generation expenses significantly outweigh the national average, Ms. Gimadi explained.

Source: Komsomolskaya Pravda