Russia: the last reform


By Alexander Merkulov

RAO UES is a shareholder (up to 100%) of almost all energy companies in the Russian federation – 64 net companies, 25 generation companies, and 54 retail companies. The estimated power of its plants was 161,500 MW in the year 2007, producing 706 million MW*h of electric energy. The total retail volume was about 900 million MWh.

The reorganisation of RAO UES of Russia will be the logical completion of the electricity sector restructuring and the formation of the industry’s new competitive structure. It will result in the establishment of various target companies – Federal Grid Company (FGC UES), Wholesale Generation Companies (WGC), Territorial Generation Companies (TGC) etc. – and RAO UES will cease to exist after its merger with and into FGC UES. The shares in non-target companies, particularly retail companies, must be traded until the merger has been completed.

Since 1 November 2007 all the players in the wholesale market have had to use metering systems that allow hourly collection and storage of data. Before that date the guaranteed suppliers and participants had the right to use metering systems that measured power consumption on a monthly basis (integral metering).

The next step takes place from 1 September 2008. From that date the players in the wholesale market have to use metering systems that ensure not only the hourly measurement, but the synchronous transmission of the data. And from 1 September 2010 these players have to use automatic measuring systems, which have to be certified by the authorities and have to satisfy the terms and conditions of the trading contract at the wholesale market.

However, it will still be possible to use integral metering with the addition of typical daily graphs at the points where the supply is distributed, providing the power is 10 kV or less, and with connected power less than the total connected power at that point.

Many companies (both wholesale and generation) find these metering requirements too onerous. Many of them reported implementation delays of between 3 and 4 months before being able to meet the requirements of the first step, and the fulfilment of the next steps will bring even more problems. But these steps represent the only way to regulate the new growing wholesale energy and power market in Russia.