International Energy Forum – 2013

Yesterday V International Energy Forum «Innovations. Infrastructure. Security» was held in Moscow. The event was organized by the Chamber of Commerce and the Russian Agency of Strategic Programs under the auspices of the Ministry of Energy.
The forum participants, among them representatives of legislative and executive bodies at all levels, scientists, heads of domestic and foreign energy companies and industrial enterprises, heads of trade unions, experts and analysts of the energy market tried to understand what is happening today in the basic sectors of the economy, in what way the situation will develop in the future, and what measures should be taken to strengthen the position of Russia on the international energy scene.
At the plenary meeting representatives of various energy industries discussed what key issues in each sector for fuel and energy complex are long overdue. It appeared that uneasy situation is developing in all sectors, everywhere the legal and regulatory framework requires updating, effective participation of the state in managing the energy industry is needed. If we talk about the power industry, it has to cope with the consequences of incompetent industry reform. The chairman of the State Duma Committee Ivan Grachev noted that reform objectives have not been achieved, safety and power supply reliability decreased, power quality has deteriorated, and labor productivity has fallen. To change the situation for the better, it is necessary to adopt a number of laws and amendments to the existing legislation. There are several sections under the chairman of the State Duma committee where professionals are making hard-won practice offers. However it is very difficult to take such decisions in the Duma. For example, innovations and innovation activity bill has been put on a waitlist. By its quality it is the best in the world, but it is stubbornly rejected for consideration. Nevertheless, power-generation sector persistently promotes its ideas and sometimes achieves the desired results. Now one of the most urgent tasks for Energy Committee is to prevent introduction of social norms for electricity, as it can lead to uncontrolled social consequences. Ekaterina Popova, Chairman of the Committee for promoting modernization and technological development of economy of Russia at the Chamber of Commerce and Industry of the Russian Federation stressed that per capita electricity consumption is an indicator of the level and quality of life. Reform in the power sector has completely changed the relationship between consumers, producers and the government. But what more dis these changes give: the pros or cons? Hopes for private investment are not justified – more than 85% of the investments to the industry are made by the state. Separation of vertically integrated companies has led to appearance of almost four thousand TGCs, most of which do not have the right to life. The problem of electricity prices is exacerbated to the limit because suppliers unreasonably raise prices for their services.

If this goes on, we will lose industry – believes Victor Kudriaviy, scientific director of the Institute of Energy Economics. Tariffs for industrial consumers are the highest in the world. They are twice as high as anticipated at the time of the reform. Why did it happen? Because electricity market model is not valid. It is not suitable for a country like ours, consisting of different areas and using different types of fuel. It should not be corrected (only last year more than a thousand amendments were made), but shall be completely revised.

The conversation continued at the meeting of the power electricity section, the title media sponsor of which was magazine «Electricity. Transmission and distribution». Pavel Dorokhin, Chairman of the State Duma Committee on Industry announced that the state is interested in addressing market failures. In this regard a number of relevant bills were prepared. In addition, the course on restoration of the planned economy was set. Based on our own experience and the experience of leading economic powers, the market cannot fully repeal and replace planning. In this connection Russia Gosplan (State Planning Committee) will be revived. No matter how it will be called but it will be a single coordinating body responsible for harmonization of economic projects and programs.
The issue of regional power sector was highlighted by Ildar Shakhmaev, Deputy Minister of Industry of the Republic of Bashkortostan. He stressed that the separatist activities of private power entities and incompetence of local authorities leads to appearance of unnecessary energy facilities. This problem needs to be solved at legislative level. He also raised the issue of TGO. Under current conditions any entrepreneur who has bought a half-meter cable can declare itself a TGO. It is necessary to enter the rigid criteria for network organizations, and then fly-by-night operators will leave the market.
Issues on technological connection and energy saving raised a lot of controversy. It is not as clear-cut as it was in the reports. It was Vladimir Dzhanghirov, Vice President of the International Energy Association and Vitaly Bushuev, General Director of JSC «Institute for energy strategy» who attracted attention to the specifics of the problem. They noted that our legislation had been arranged in such a way that the balance of interests can be difficult.  This problem is scarcely discussed but it still remains and will not disappear by itself. The section raised a lot of underlying problems. After the discussion the participants agreed to submit their proposals to the Organizing Committee of the Forum. Read the report in the magazine “Electric power. Transmission and distribution.”