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Government suggests new measures to resolve last-mile issues in the most problematic regions

 
31.07.2012

At its regular meeting yesterday, the special government commission discussed last-mile agreements, one of the most difficult issues within the distribution companies universe, Vedomosti reports. According to the paper, the final suggestions for resolving the cross-subsidies system in the most problematic regions are to be submitted by 1 September. As regards yesterday’s meeting, the commission discussed:

Extending the last-mile agreement to the end of 2014;

The social quota of electricity consumption;

Direct regional subsidies to households;

Optimising distribution companies’ costs (e.g. additional pressure on distribution

tariffs). 

We welcome the government’s initiative to impose a social quota as it would help to eliminate some of the existing imbalances in the utilities sector and the crosssubsidies between industrial and household tariffs. The measure would help decrease the electricity bill for industrials which is one of the government’s targets, in our view, although the impact on the profitability of distribution companies is likely to be neutral to negative, as it might be combined with the additional pressure on distribution tariffs. 

Mikhail Rasstrigin, Alexander Seleznev
VTB Capital analyst

Tags:
electricity

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