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Unified Energy System

February 13, 2003

A.Trapeznikov: There is a real opportunity to restrain growth of heat and electricity tariffs

Moscow, 13 February. Today, there is a real opportunity to restrain the growth of heat and electricity tariffs, said member of RAO UES Management Board Andrei Trapeznikov. In the heated discussion of tariffs hike in the regions virtually no attention has been given to the fact that the major power enterprises have to supply heat and electricity to consumers not directly, but through intermediaries, i.e. municipal wholesale resellers. The mark-up charged by such intermediaries usually varies between 20% and 100%. As a result, consumers in many regions of Russia have to pay twice the price for electricity compared to its actual cost. For instance, the mark-up added by the intermediaries to the cost of electricity they purchase from the energy companies of "Vostokenergo" is over 40%, "Centrenergo" up to 46%, "Yuzhenergo" 56%, "Sevzapenergo" 67%, and "Sibirenergo" up to 100%.

At the same time, unlike companies of RAO "UES of Russia", the resellers do not have to procure fuel, nor do they have to repair the generating equipment or power transmission lines. Moreover, because of incompetence of the resellers' staff, there still are rolling blackouts in many areas of the country, and the power grid facilities run by these entities are often in a lamentable state. The so-called "commercial losses" in the intermediaries' power networks, or to put it straight, electricity theft, reach 30%. Meanwhile, the debts owed by the resellers to the companies of RAO "UES of Russia" made nearly RUB 24 billion as at the beginning of the year.

We do understand and share the concerns of the Duma's deputies about the tariff hikes in some regions of Russia. We at RAO "UES of Russia" agree that it is necessary to improve the mechanism for regulation of tariffs in the country's regions and in Russia as a whole. However, it is also important to effect profound restructuring in the power industry. In particular, we believe that the institution of monopoly intermediaries outlived its usefulness long ago.

We have raised this issue both at the State Duma and the Federation Council. And yet, the problem is not being solved, which adversely affects the consumers, emphasized A. Trapeznikov.



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