The Energy Regulation and Markets Review - Stikeman Elliott

Russia
reasonable return (with separate accounting of output and expenditures related to
production costs).
From 2010–2012, long-term tariffs are set for electric power transmission services
rendered by the unified national and territorial grid companies, on the basis of long-term
parameters for regulation of their activities, including by applying a method for ensuring
a return on invested capital. 55 These companies are required to attain goods and services
reliability and quality parameters stipulated by the government, otherwise the long-term
parameters are subject to adjustment.
Approved prices (tariffs) in the electric power sector are valid for a minimum of
12 months, unless the government decides otherwise.
In the sphere of gas supply, the government establishes the principles for setting
gas prices and the tariffs for transporting it along gas transportation (main) and gas
distribution networks. State regulation of these prices and tariffs takes into consideration
economically reasonable expenditures and profits, as well as the finances available to gas
supply network owner companies for expanding gas extraction, gas pipeline networks
and underground gas storage facilities. 56
The state has approved the tariffs for the services rendered by owners of gas
distribution networks for transporting gas and the procedure for applying them. Tariffs
may be differentiated in consideration of the economic and social gas supply conditions
on parts of the territories of constituent entities of the Russian Federation.
A transition period from 2011 through 2014 has been set for introducing market
principles for setting prices for gas supplied by Open Joint-Stock Company Gazprom
and its affiliates (in consideration of achieving equal returns on gas supplies to both
the foreign and domestic markets and of the cost of alternative fuels), and preparing
for transition from state regulation of gas wholesale prices to state regulation of gas
transportation tariffs via major gas pipelines.
iv Security and technology restrictions
The legislation focuses particularly on ensuring the safety of fuel and energy complex
facilities in Russia – those in the electric power, oil extraction, oil refining, petrochemical,
gas, coal, shale and peat industries, gas supply, petroleum product supply and heat supply.
55 Order of the Federal Tariff Service dated 30 March 2012 No. 228-e on approval of
Methodological Instructions for regulating tariffs using the investment capital return method.
56 Articles 8, 21 and 23 of the Federal Law on Gas Supply in the Russian Federation; Main
provisions on setting and state regulation of gas prices and tariffs for its transportation on
the territory of the Russian Federation, approved by resolution of the Government of the
Russian Federation dated 29 December 2000 No. 1021; Methodology for calculating tariffs
for gas transportation along main gas pipelines, approved by order of the Federal Tariff Service
dated 23 August 2005 No. 388-e/1; Methodological Instructions for regulating tariffs for gas
transportation along gas distribution networks, approved by order of the Federal Tariff Service
dated 15 December 2009 No. 411-e/7.
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