Today MOSENERGO officially announced that heating and power rates will be raised in Moscow. The announcement came from V.Nazin, MOSENERGO's deputy General Director on economics at a briefing held today at the power company's headquarters.

For most customers rates will go up on average by about 20 percent.

Moscow industrial enterprises will be paying for heating and power according to the new rates starting February 5. Individual customers will be charged new rates as of February 15. Nevertheless, even the increased rates, adopted by the Regional Energy Commission (REC), will not cover the cost of supporting production for MOSENERGO. For instance, heating rates have a negative profitability of five percent. In other words the rates are lower than MOSENERGO's projected value cost. The rates, adopted by the REC, cover only about half of MOSENERGO's costs for production and are insufficient to either implement the capital construction program at the required scale or perform reconstruction and maintenance of the company's power facilities. Neither are the new rates enough to cover the cost of maintaining a positive fuel balance.

Therefore, further heating and power rate increases may come as early as summer.