Regulation by the Return on Investment method is extended till July 1, 2017.
The Federal Tariffing Service of Russia has agreed on long-term parameters for all the branches of IDGC of the North-West, JSC regulated by the Return on Investment (RAB) method. The tariff regulation parameters for Novgorodenergo and Pskovenergo branches were approved of by the Management Board of the Federal Tariffing Service of Russia on May 21, decision on Vologdaenergo taken on May 29 of the current year.
At switchover to RAB new long-term parameters of tariff regulation were agreed for IDGC of the North-West branches. Among such parameters are the operational expenses baseline level and efficiency, the invested capital amount, the rate of its return and payback period as well as the net current capital amount, the regional profit margin, the level of reliability and services quality. According to Resolution No. 1178 of the Government, the parameters were subject to revision with the aim of tariff growth repression. All the companies having switched over to RAB were to undergo the procedure.
“Successive passage of the procedure of long-term parameters agreement has allowed IDGC of the North-West branches to retain regulation by the Return on Investment method, enabling implementation of the approved investment programs aimed at development of the regions’ electric power grids, till July 1, 2017. Had we not undergone the “reset”, we would have had to switch over to regulation by long-term indexation method since July 1, 2012. This would mean shift of emphasis from investments to current maintenance of the grids, essentially – to “band-aid” which RAB regulation has allowed us to evade,” explains Head of the Tariffing Department of IDGC of the North-West Valentin Chesnokov.