Companies of the electric distribution grid industry keep on switching to the new system of regulating tariffs for electricity transmission services using the Regulatory Asset Base method (RAB regulation).

From the 1st of January 2010 nine branches of subsidiaries and dependent companies (SDC) of IDGC Holding switched to RAB regulation. In compliance with orders by the Federal Tariff Service (FTS of Russia), proposals by regional regulatory authorities regarding the transition to the new tariff regulation system were approved by the Vladimir and Kaluga Regions, the Republic of Udmurtia (areas covered by IDGC of the Center and Volga Region), Kursk and Yaroslavl Regions (IDGC of the Center), Novgorod Region (IDGC of the Northwest), Omsk and Tomsk Regions, and the Republic of Altai (IDGC of Siberia).

For all branches of IDGC that have switched to the new tariff regulation method from early 2010, the FTS of Russia set the rate of return on existing capital at 6% in 2010, 9% in 2011, 12% in 2012, with the rate of return on new invested capital at 12%, and the payback period for investments of 35 years.

We would remind that from the 1st January 2009 the new tariff regulation system was adopted by 8 branches of SDCs of JSC IDGC Holding: Belgorodenergo, Tverenergo, Lipetskenergo (IDGC of the Center), Permenergo (IDGC of the Urals), Tulenergo, Ryazanenergo (IDGC of the Center and Volga Region), Astrakhanenergo and Rostovenergo (IDGC of the South).

Nikolay Shvets, Director General of JSC IDGC Holding, estimates that “the experience of “pilot” regions has proven the viability and efficiency of the new tariff regulation system as reflected in higher construction and lending volumes of distribution grid companies. In 2010 IDGC Holding will continue the transition of the remaining branches of IDGC to the new system of regulating tariffs for electricity transmission services”.