[Alexander Merkulov][December 18, 2006]Energy reform in Russia will proceed according to the previously set plans and will not be accelerated, as some commentators had suggested, Smart Energy International’s regional editor in Russia, Alexander Merkulov, has reported. The liberalization of the wholesale energy market from 1 January 2007 will be 5% and will be set at 5% twice a year. It had been suggested that the market liberalization could have been as high as 40%, even in the year 2007.

Merkulov has also reported that natural gas prices will increase by 15% from the beginning of 2007 and by another 13% from 1 July 2007. However residential customers will be protected from market price fluctuations. The annual increases in tariffs for the next three years have been set by the government at 10%, 9% and 8% for electricity, and 15%, 14% and 13% for natural gas.

This large increase in the natural gas price is due to a move to close the gap between the local and export prices, the local price currently being about a third of the export price.