Economy and Finance > Tariff Regulation

In the reporting year the Company's tariff policy was aimed at ensuring break-even operation of the Company.

Tariffs for electric energy transmission services for consumers of branches of JSC IDGC of the North-West for 2011 were approved:

  • by Resolution No.100-e/2 of the Agency for Tariffs and Prices in the Arkhangelsk Region of December 29, 2011 for Arkhenergo branch of JSC IDGC of the North-West;
  • by Resolution No.1317 of the Regional Energy Commission of the Vologda Region of December 28, 2011 with amendments No.191 of May 30, 2012 effective from July 1, 2012, for Vologdaenergo branch of JSC IDGC of the North-West;
  • by Resolution of the State Committee of the Republic of Karelia for Prices and Tariffs of December 23, 2011, with amendments No.74 of May 30, 2012 effective from July 1, 2012, for Karelenergo branch of JSC IDGC of the North-West;
  • by Resolution No.66/1 of the Office for Tariff Regulation of the Murmansk Region of December 30, 2011, with amendments No.25/1 of May 25, 2012 effective from July 1, 2012, for Kolenergo branch of JSC IDGC of the North-West;
  • by Order No.113/41 of the Tariff Service of the Komi Republic of December 16, 2011, with amendments No.44/10 of June 26, 2012 effective from April 1, 2012, No.56/12 of August 1, 2012 effective from August 10, 2012 and No.109/2 of December 19, 2012 effective from December 30, 2012 for Komienergo branch of JSC IDGC of the North-West;
  • by Resolution of the Committee for Pricing and Tariff Policy of the Novgorod Region No.80/5 of December 27, 2011, with amendments No.28/1 of May 25, 2012 effective from July 1, 2012, for Novgorodenergo branch of JSC IDGC of the North-West;
  • by Order No.65-e of the State Tariff Committee of the Pskov Region of December 29, 2012, with amendments No.7-e of March 30, 2012 effective from July 1, 2011, with amendments No.19-e of June 14, 2012 and No.74-e of December 27, 2012 effective from December 27, 2012 for Pskovenergo branch of JSC IDGC of the North-West.

Adjustment of tariff decisions in 2012 was related to coming into force of Resolution No.1178 of the Government of the Russian Federation of December 29, 2011. In accordance with clause 2 of the above Resolution, executive bodies of the subjects of the Russian Federation were instructed to set (to be effective from January 1, 2012) tariffs for services of electric energy transmission through electric grids at the level not exceeding the level set for the same prices (tariffs) for 2011 with regard to the provisions of clause 9 of Resolution No.1172 of the Government of the Russian Federation of December 27, 2010 and from July 1, 2012 to set tariffs with an increase not exceeding 11% of the Russian Federation's subject's average one-phase boiler tariff for services of electric energy transmission through electric grids owned, or possessed on any other legal grounds, by territorial grid organizations, with respect to the level of the Russian Federation's subject's average one-phase boiler tariff effective as of the date of making the decision on review (setting) from July 1, 2012.

Information on the average calculated tariffs for services of electric energy transmission by the Company's branches (without taking into account expenses on payment for services of third-party grid organizations):

Branch/IDGC Average calculated tariff for 2010, in RUR/mWh Average calculated tariff for 2011, in RUR/mWh Average calculated tariff for 2012, in RUR/mWh Growth 2011/2010, % Growth 2012/2011, %
1 2 3 4 5=3/2-1 6=4/2-1
Arkhenergo 1,028.91 1,060.11 1,274.61 3.03 20.23
Vologdaenergo 611.89 705.39 725.75 15.28 2.89
Karelenergo 501.13 547.64 534.36 9.28 -2.42
Kolenergo 357.85 409.49 427.32 14.43 4.35
Komienergo 914.38 1,102.62 1,083.11 20.59 -1.77
Novgorodenergo 763.06 878.19 953.79 15.09 8.61
Pskovenergo 1,443.09 1,646.78 1,646.56 14.11 -0.01
IDGC of the North-West 648.92 728.67 752.53 12.29 % 3.27

Information on the average calculated tariffs for services of electric energy transmission by the Company's branches (taking into account expenses on payment for services of third-party grid organizations):

Branch/IDGC Average calculated tariff for 2010, in RUB/mWh Average calculated tariff for 2011, in RUB/mWh Average calculated tariff for 2012, in RUB/mWh Growth 2011/2010, % Growth 2012/2011, %
1 2 3 4 5=3/2-1 6=4/2-1
Arkhenergo 1,042 1,146.01 1,416.06 10.03 23.5
Vologdaenergo 616 710.11 730.68 15.22 2.9
Karelenergo 530 547.64 534.37 3.40 -2.4
Kolenergo 432 478.35 451.62 10.77 -5.5
Komienergo 942 1,147.81 1,128.89 21.8 -1.6
Novgorodenergo 774 891.87 917.32 15.20 2.8
Pskovenergo 1,467 1,687.39 1,690.58 15.00 0.1
IDGC of the North-West 682 763.99 776.07 12.06 1.58 %

In 2012 tariffs for the services of electric energy transmission varied greatly by regions of operation of JSC IDGC of the North-West. Such great difference was due to different correlation of consumers by voltage levels. Branches, at which low-voltage electric grids prevail, such as Arkhenergo, Komienergo and Pskovenergo, fixed high tariffs, resulting from higher expenses for electric grids' maintenance, as compared to branches, at which high-voltage electric grids prevail, such as Vologdaenergo, Karelenergo, Kolenergo, Novgorodenergo.

Tariffs for the services of electric energy transmission for 2012 at all branches of JSC IDGC of the North-West were approved based on fixed long-term parameters. In JSC Vologdaenergo, JSC Novgorodenergo and JSC Pskovenergo and, from November 1, 2012, JSC Karelenergo branches, long-term parameters of regulation calculated with the application of RAB method were approved.

The growth of the average calculated tariff for the services of electric energy transmission in 2012 in all branches, except for Arkhenergo, did not exceed the limits set forth by Resolution No.1178 of the Government of the Russian Federation of December 29, 2011. In Arkhenergo branch the growth was due to the change of the scheme of mutual settlements with other grid organizations.

RAB-regulation parameters

Branch Year Basic level of operating expenses, RUB million Operating expenses efficiency index,% Size of investment capital, RUB million Net working capital, RUB million Rate of return on investment capital,%
Capital invested before the commencement of long-term regulation period New investment capital
RAB-regulation from January 1, 2010
Novgorodenergo 2012 908.08 1 5,476.36 45.62 5 12
RAB-regulation from January 1, 2011
Vologdaenergo 2012 1,791.31 1 6,162.01 110.01 11 12
Pskovenergo 2012 1,106.69 3 5,844.77 130.15 1 12
RAB-regulation from January 1, 2012
Karelenergo 2012 1,248.05 3 4,270 144.92 3.9 12

*Note: the data in the table are provided in accordance with effective resolutions of executive authorities in the field of tariff regulation on setting of long-term parameters using the RAB method:

Novgorodenergo branch — Resolution No.28 of the Committee for Pricing and Tariff Policy of the Novgorod Region of May 25, 2012

Vologdaenergo branch — Resolution No.191 of the Regional Energy Commission of the Vologda Region of May 30, 2012

Pskovenergo branch — by Order No.19 of the State Tariff Committee of the Pskov Region of June 14, 2012

Karelenergo branch — Resolution No.173 of the State Committee of the Republic of Karelia for Prices and Tariffs of October 31, 2012

Structure of tariff proceeds of JSC IDGC of the North-West

2010 2011 2012 Growth rate,%
2011/2010 2012/2011
Tariff revenues, RUB million, including 26,620.50 30,982.32 31,735.96 116.39 102.43
Own tariff revenues, RUB million 14,100.79 15,740.73 16,275.04 111.63 103.39
Share of own tariff revenues, % 52.97 50.81 51.28 95.91 100.93
Tariff revenues from TGOs, RUB million 283.06 1,434.51 1,076.08 111.80 75.01
Share of tariff revenues from TGOs, % 4.82 4.63 3.4 96.06 73.23
Payment for FGC services, RUB million 7,246.35 9,016.39 9,537.14 124.43 105.78
Share of FGC expenses, % 27.22 29.10 30.05 106.91 103.27
Expenses to cover losses, RUB million 3,990.29 4,790.70 4,847.69 120.06 101.19
Share of expenses on losses, % 14.99 15.46 15.27 103.16 98.77
Total:
Regional factors, RUB million 15,383.86 17,175.23 17,351.12 111.64 101.02
Share of regional factors, % 57.79 55.44 54.67 95.93 98.61
Federal factors, RUB million 11,236.64 13,807.09 14,384.83 122.88 104.18
Share of federal factors, % 42.21 44.56 45.33 105.58 101.73

The approved tariffs provided for the aggregate growth of tariff revenues by 2% up to RUB 32 billion. Federal factors accounted for 45.3% or RUB 14.4 billion of necessary gross revenues (hereinafter referred to as NGR), regional factors — for 54.7% or RUB 17.4 billion of NGR, where 6.2%, or RUB 1.1 billion, are expenses for payment for services of territorial grid companies. At the same time, the growth of federal factors was higher than that of regional factors.

As for the tariff regulation in 2012, it should be mentioned that there was a growing influence of the investment component of the tariff for the electric energy transmission services. When calculating long-term parameters used to determine tariffs for the electric energy transmission services on the part of regulatory authorities, about RUB 6 billion of investment sources (including loans) were disbursed for JSC of the North-West, which is 41% higher than in 2011.

Branch/IDGC 2010 2011 2012
Total investments Including return on capital investments Total investments Including return on capital investments Total investments Including return on capital investments
Arkhenergo 278 0 387 83 378 56
Vologdaenergo 589 11 1,001 290 2,029 299
Karelenergo 309 118 264 27 273 9
Kolenergo 223 0 273 38 258 0
Komienergo 522 150 686 118 0 266
Novgorodenergo 554 95 820 0 1,198 82
Pskovenergo 390 224 829 99 1,028 70
IDGC of the North-West 2,865 599 4,260 655 5,998 783

The growth of investment sources in Vologdaenergo, Novgorodenergo and Pskovenergo branches is due to the switching of such branches to RAB regulation.

Upon switching to the long-term regulation, the works on setting indicators of reliability and quality of services provided were performed due to the fact that on the basis of Federal Law No.35-FZ on Electric Energy of March 26, 2003 the level of reliability and quality of the said goods (services) is referred to long-term parameters of state regulation of prices (tariffs) in electric energy. Indicators were fixed by regulatory authorities of all branches of JSC IDGC of the North-West. No adjustment to prices (tariffs) for the services of electric energy transmission set for 2011 with respect to the deviation of actual values of indicators of reliability and quality of goods supplied and services provided from target values was made in accordance with clause 6 of Resolution No.1220 of the Government of the Russian Federation of December 31, 2009 on Determination of Indicators of Reliability and Quality of Goods Supplied and Services Provided Applied in Setting of Long-term Tariffs.

Information on technological connection tariffs for 2012 and approval of tariffs for 2013

In 2012 Karelenergo, Komienergo and Pskovenergo branches of JSC IDGC of the North-West applied standard tariff rates for technological connection to electric grids.

In calculating a technological connection fee by application of standard tariff rates the conditions of technological connection in accordance with technical conditions must be taken into account. The amount of a fee depends on physical parameters: line length, necessity to install transformers, etc. In accordance with the Methodical Guidelines on Determination of the Amount of a Fee for Technological Connection to Electric Grids approved by Decree No.365-e/5 of the Federal Tariff Service of December 30, 2010, the rates are categorized as follows:

  • С1 — the rate covering technological connection expenses relating to activities which do not include construction and reconstruction of electric grid facilities;
  • С2 — the rate covering technological connection expenses relating to construction and reconstruction of overhead electricity transmission lines;
  • С3 — the rate covering technological connection expenses relating to construction and reconstruction of cable electricity transmission lines;
  • С4 — the rate for construction of package transformer substations (PTS), distribution transformer substations (DTS) with voltage of up to 35 kV, construction and reconstruction of sectioning points, distribution points, distribution devices, switching devices (cells, chambers, panels, switches), organization of automatic electricity metering, telemechanics (telecontrol, telemetering), relay protection devices and emergency control automatics, connection organization, capacitance current compensation.

In Kolenergo branch the fee was set for each activity without an investment component per technological connection agreement.

In Arkhenergo, Vologdaenergo and Novgorodenergo branches in 2012 a fee for technological connection per unit of maximum supplied capacity with an investment component was applied.

The calculation of a technological connection fee using payment rates approved for a capacity unit is carried out by multiplying the newly supplied maximum capacity by the approved rate for technological connection. The amount of payment depends on the maximum supplied capacity value.

In all branches of JSC IDGC of the North-West, in cases where technological connection conditions did not correspond to the approved tariff decisions, the amount of a fee was approved by individual projects. For more information on fee amounts see section "Information Disclosure Standard for Entities of the Wholesale and Retail Electricity Markets" at the official website of JSC IDGC of the North-West.

By Decree No.209-e/1 of the Federal Tariff Service of September 11, 2012 a new revision of the Methodical Guidelines on Determination of the Amount of a Fee for Technological Connection to Electric Grids was approved (registered in the Ministry of Justice of Russia on November 28, 2012, registration number No.25948) (hereinafter referred to as the Methodical Guidelines) instead of the Methodical Guidelines approved by Decree No.365-e/5 of the Federal Tariff Service of December 30, 2010.

The Methodical Guidelines were published in the Russian Gazette on December 30, 2012 and came into force on December 11, 2012. The amendments and supplements made allow for substantial reduction of a fee for technological connection to electric grids for almost all groups of consumers, including small and medium-sized business entities. The calculation of a fee for a specific applicant takes into account only those "last mile" activities which are envisaged by technical conditions issued by the relevant grid organization.

The following activities were excluded from calculation of the amount of a fee for technological connection:

  • organization of automated electricity metering, telemechanics organization (telecontrol, telemetering), organization of relay protection devices and emergency control automatics, connection organization, capacitance current compensation;
  • income tax.

In accordance with the effective Rules of Technological Connection to Power Receiving Devices of Electricity Consumers, Energy Generating Facilities and Electric Grid Facilities Owned by Grid Organizations and Other Entities to Electric Grids approved by Resolution No.861 of the Government of the Russian Federation of December 27, 2004, a fee for technological connection of power receiving devices with maximum voltage of up to 15 kW inclusive (taking into account the capacity which was earlier connected in this connection point) is set based on the cost of technological connection activities in the amount not exceeding 550 rubles in case of connection of an applicant who owns facilities referred to the third category of reliability (per power supply unit) on the condition that the distance from the applicant's plot border to the electric grid facility of a voltage class required by this applicant owned by the grid organization to which the application was filed does not exceed 300 meters in cities and urban-type villages and 500 meters in rural areas.

In accordance with clause 87 (extract 6) of the Fundamentals of Pricing in the Field of Regulated Prices (Tariffs) in the Electric Energy Sector approved by Resolution No.1178 of the Government of the Russian Federation of December 29, 2011 (made in accordance with amendments approved by Resolution No.1015 of the Government of the Russian Federation of October 5, 2012) all territorial grid organizations are obliged to provide to tariff regulating governmental authorities, on an annual basis not later than on November 1, an application for approval of rates of a technological connection fee per maximum capacity unit and standardized tariff rates of a fee for technological connection to electric grid. The governmental authorities, in turn, are obliged to approve the rates of a technological connection fee per maximum capacity unit and standardized tariff rates of a fee for technological connection to electric grid for a relevant period.

All branches of JSC IDGC of the North-West have filed applications for resetting the technological connection fee effective from 2013 in accordance with the above amendments.