Mosgorteplo is the biggest reseller of heat in Moscow. Recently, it issued a press release claiming that some Muscovites may face heat shortages this winter due to AO MOSENERGO policies. The reason – the new settlement procedures offered by AO MOSENERGO to Mosgorteplo.

The new settlement procedures require that Mosgorteplo pay in advance for heat on the fifteenth day of each month. The press release says that Mosgorteplo cannot accept this scheme as it will have to borrow up to 2 bn rubles that it does not presently have. As a result, Mosgorteplo will have to increase tariffs and reduce maintenance work.

AO MOSENERGO views Mosgorteplo's statements as populism that misleads Muscovites and put obstacles in the way of AO MOSENERGO's winter preparations.

The current settlements procedures used by Mosgorteplo to pay for heat give Mosgorteplo the opportunity to use AO MOSENERGO's money at a two-month interest-free credit facility. As a matter of fact, Mosgorteplo pays for heat only by the end of the next month after the heat has been consumed. As a result, AO MOSENERGO continuously experiences the deficit of payments and has to borrow money to operate normally as well as pay interest.

On September 23, the current settlement system was discussed at a meeting with the first deputy chief mayor of Moscow Peter Aksenov. The parties agreed to change the settlement procedures. AO MOSENERGO has developed a supplement to the power supply agreement. In accordance with the new procedures Mosgorteplo has to pay for 50% (not 100%) of the consumed heat on the fifteenth day of the settlement month and pay the rest before the 25^th day of the next month. This payment system reduces the credit period for Mosgorteplo to two weeks.

On September 29, 2003, Mosgorteplo refused to sign the supplementary agreement at a meeting chaired by Mikhail Lapir, head of the fuel and power department of the Moscow Government.

AO MOSENERGO is astonished at Mosgorteplo's position as it refuses to fulfill the Moscow Government's decisions. Instead of compliance with adopted settlement policy, Mosgorteplo disseminates populist statements and speculates on Muscovites' feelings. AO MOSENERGO hopes that Mosgorteplo will take a more reasonable and constructive approach to this power supply issue before the winter season starts.