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Regional Electric Power Industry and HPUS

The transition to market mechanisms in the electric power and gas supply industry in Russia at the macroeconomic level is to be accomplished by 2012. The completion of this transition will allow tariffs based on supply and demand in the regional electric power industry and the housing and public utilities sector  (HPUS) to begin to be formulated. Combining its global experience and knowledge of transitional economies, as cross-subsidies are being phased out, Deloitte offers comprehensive consulting services in forecasting key performance characteristics of the utilities and electric power system sectors in the medium term (10 years) in the following areas:

  • electric power transmission and distribution via medium and low voltage lines
  • transmission and distribution of heat energy / centralized hot water supply
  • gas supply
  • water supply and drainage.

To create the forecast parameters, we are taking a number of measures, including, but not limited to:

  • implementation of an economic model of medium term regional development and, based on this model, projection of the correlation between the physical consumption of energy resources and tariffs, broken down into major consumer group and type of public utility service
  • development of a comprehensive methodology to regulate tariffs during the gradual shift from the Costs+ principle in tariff derivation towards the Price Growth Ceiling principle
  • analysis of the depreciation of fixed assets of regional electric power networks and public utilities, as well as determination of the minimum required level of investments
  • generation of proposals to develop standard principles for the transfer of individual public utilities or the system as a whole to long-term leases (or concession).

The methodology developed by Deloitte for forecasting tariff limits in the regional electric power and public utilities sectors enables all interested parties to reap the economic benefits of our labor:

  • federal authorities, informed of tariff growth possibilities and the potential growth rates in particular regions, are able, as the regulator, to differentiate tariffs on account of the uneven economic development of regions and well-being of the corresponding population, as well as optimize regional subsidies
  • regional administration, having the mechanism to forecast physical consumption of energy resources and utilities services taking into account the attainable tariff levels at their disposal, gains the ability to improve long-term planning of the regional budget, increase its revenue share, use additional funds to finance projects in progress and/or new target regional programs and provide better social services to the population
  • businesses, equipped with historical data on attainable tariffs, are given the opportunity to evaluate the feasibility and profitability of investments in the regional electric power and utilities sectors, as well as improve long-term business planning.

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