The Liberalization of Electricity Market in Russia

Abstract

Until the early 90's of the last century a vertically integrated monopoly structure was the main model of the organization of the power industry in most countries of the world. The quality of services and prices for electricity were regulated in different countries exclusively by the state authorities. However, it gradually became apparent that many of the positive features of the vertical integration, including in the first place "the impact of economies of scale," ceased to play a significant role. By this time, most of the advanced and developing countries, including Russia, have realized the objective need for a review of the existing principles of power industry organization through the introduction of market mechanisms of its functioning. The study gives the overview of the aims and objectives of the reforms in the Russian electric power industry. Of special interest is the analysis of the experience in the energy markets restructuring in advanced and developing countries. The stages and main features of the restructuring of Russian energy market are shown. The model of liberalization for electric power market in Russia is represented. Particular attention is paid to the development of competition in the different segments of wholesale and retail power markets.

Mechanism for Adjustment of the Companies Innovative Activity Control Indicators to Their Strategic Development Goals

“…Extensive funding is, as a rule, an important growth driver of strategic outcomes of the system performance. Relevance of this statement has frequently been proved in research conducted earlier from the perspective of functionality of economic entities in different branches and areas of activities (Melnik and Dyrdonova 2014;Melnik and Mustafina 2014;Sadriev et al 2015). However, in the basis of conducting the present research, there initially lies the requirements baseline in compliance with which achievement of the company strategic development benchmarks should be provided at the account of increasing payoff from implementation of innovative activity.…”

A Framework for the Analysis of the Sustainability of the Energy Retail Market

“…Diversification impact on efficiency [41] Financial issues for investor-owned utilities [47] High negative impact on R&D expenditure [48] Low Competition [50] Ownership impact on efficiency [45] Possible abuse of market power by retailers [42] The RPS program was more influential than the electric prices [51] Companies' size impact on market strategies [66] externalities for small firms [66] utilities could not recover their energy procurement [47] Withdrawal of the cheapest offers from the market in case of a price cap [68] Not analyzed [46,51,58,61,67,73] Liberalized market competitive advantage for horizontally integrated retailers [44,52,63] Difficulties for incumbents [38,60] Failure to prevent market concentration [55] Competitive advantage for vertically integrated retailers [13] Increased risk for small and non-integrated companies [13] Increased service costs for independent retailers [38] Negative correlation between price and market concentration of the largest retailer [32] Negative impact on retailers only (externalities) [64] Possible double margin for an incumbent [70] Service quality impacts information transparency [57] Supplier stimulated to be more efficient [60] unstable dynamics of energy prices [69] Not analyzed [14,39,53,74] Market in transition Higher power charges [59] Increase in operating costs…”

“…Liberalized market New choice opportunities [53] New opportunities for active customers. [60] No gain for passive customers [60] welfare risks to vulnerable and low-income consumers [55] Positive impacts on consumer engagement [39] Possible higher price [32] Possible increase in bundle gas + energy + district heating offers [52] Possible optimization of consumption and costs with smart meters [55] Scarce switching rate [13] Crucial role of sales information in the market [74] Not analyzed [38,64,69,70] Market in transition Higher price under competition scenario [35] Increase in eligible consumers with regulated price [30] Low market opening ratio [30] Lower prices [59] Possible improve welfare [15] The regulation of the price disincentivizes the switching rate [30] information asymmetry [71] Price restriction is a barrier to business innovation. [71] Not analyzed [36,40,43] Mixed market competition has benefited consumers [33] Doubt about consumer benefits [44] Lower price Residential customer transitory period [49] lower prices [33] Multimarket set to a collective market power at the expense of consumers [44] Natural gas demand substitute for residential and commercial energy but complementary to industrial [33] no benefit to commercial or industrial customers [49] There are no significant differences in price elasticity between deregulated and not regulated countries [37] Not Analyzed [62] Restructuring Market…”

Generation Structure, Prices, and Tariffs in the Russian Electric Power Industry in 2009-2018

“…The reform led to significant investments in generation (primarily due to the mechanism of capacity supply agreement) and in electric networks [4]. Some researchers confirm that the electricity price growth sustainably exceeded the inflation rate [5]- [6]. This opinion, however, is not shared by all.…”