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MOSENERGO (TGC-3)

January 25, 2005

AO MOSENERGO introduced a new admission system to electric grids for consumers

AO MOSENERGO has begun implementation of a new admission system for electricity consumers. From now on, new AO MOSENERGO customers will have to sign an agreement with the Moscow power company and pay for access to electric grids.

Based on current legislation, AO MOSENERGO has developed its own procedure admission that takes into account interests of both customers and the Power Company. In order to gain access to grids, new customers and AO MOSENERGO will sign a special agreement. Under this agreement, AO MOSENERGO assumes all obligations relating to the provision of electric power (development of design papers, construction of transformer substations and electric lines), while the customer pays for these services. The payment for the connection to electricity grids will differ depending on the requested capacity and degree of reliability. In addition, the fee will depend on the cost of land plots in the area of grid construction and conditions for laying cable lines. The money from connecting new customers will be used to finance grid development.

The financing of grid projects directly influences the future of the power industry in Moscow and Moscow region. For the last several years Moscow has been demonstrating rapid and steady growth of power consumption due to the development of the regional economy and robust housing construction. The average annual power consumption growth in Moscow is around 5% against the Russian average of 2-3%. Until recent times, the maximal consumption level was recorded in 1990 (74.1 bn kWt-h). However, since then it has been exceeded twice: in 2002 (75.4 bn kWt-h) and 2003 (79.2 bn kWt-h).

The development of electric grids in the region now lags behind escalating need, as the company has no financing sources. In 2003, the electricity generation within AO MOSENERGO’s license area grew 5.4% while the heat generation increased 1.1%. This difficult situation exists in electric grids particularly in Moscow. Currently, new customers cannot be connected in 75% of Moscow areas. Even in areas with sufficient distribution capacities the electric lines are already overloaded.

The shortage of capacities can be resolved only by investing additional money into the development of these facilities. However, the current tariffs cover only maintenance needs. A number of Russian laws provide for collecting money from consumers for the purpose of power facilities construction. In particular, Federal Law No. 35-FZ, On Electric Power Industry, introduced payments for «technical connection» to electric grids.

On one hand, the implementation of the new scheme would enable consumers to minimize connection costs. On the other hand, the power company would receive money that it needs to increase the power capacities. The main purpose of the new accession procedure is to eliminate the threat of a power crisis in the Moscow region.

According to Anatoly Libet, Head of the Department for Grid Connections and Consumer Relations of AO MOSENERGO, the situation is set to be difficult, and the company will look for all possible ways to develop grids and generation capacities. «Otherwise,» he said, «we could not ensure reliable power supply for connected customers—which is unacceptable.»

 

 

 

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