Heat Supply Reform: Implications for Consumers in the Far East

ABSTRACt

As new legislation concerning the heat supply is put into effect, this article considers its possible consequences for the population of the Far East, which is one of the main consumers of heat supply services in Russia. The article shows that as recipients of this service, Far East residents are limited in their ability to manage the volumes of their consumption. By considering individual Far East regions and cities, we estimate the ability of the population to pay for heat supply services. Despite the regulation of heat tariffs, the burden on Far East residents remains higher than in the rest of country due to higher regional rates and consumption volumes. As the new method of the so-called “alternative boiler plant” is put into effect, a new regulated heat tariff will be introduced in the Far East, which will result in an increase in payments by 1.7–3.1 times. This will inevitably raise the debt risk of enterprises and require the government to spend more money on social welfare support.

KEYWORDS:

• alternative boiler plant price
• Far East
• thermal energy tariff
• heat supply system
• population

Disclosure Statement

No potential conflict of interest was reported by the authors.

Notes

^1. Rosteplo, “Kontseptsiia razvitiia teplosnabzheniia v Rossii, vkliuchaia kommunal’nuiu energetiku, na srednesrochnuiu perspektivu,” Moscow, 2001 (available at http://www.rosteplo.ru/Npb_files/npb_shablon.php?id=27; accessed on February 6, 2019).

^2. According to the national report, “Teplosnabzhenie Rossiiskoi Federatsii. Puti vykhoda iz krizisa,” real heat losses at the turn of the millennium in Russia ranged from 20 to 50 percent in the winter and from 30 to 70 percent in the summer (Kniga 1 Doklada—Reforma sistemy teplosnabzheniia i teplopotrebleniia RF, available at http://www.rosteplo.ru/Tech_stat/stat_shablon.php?id=596).

^3. Federal Law No. 190-FZ “O teplosnabzhenii,” July 27, 2010.

^4. Decree of the Government of the Russian Federation No. 2490-r, November 15, 2018.

^5. Available at https://tass.ru/ekonomika/5326489.

^6. Federal Law No. 279-FZ, “O vnesenii izmenenii v Federal’nyi zakon ‘O teplosnabzhenii’ i otdel’nye zakonodatel’nye akty Rossiiskoi Federatsii po voprosam sovershenstvovaniia sistemy otnoshenii v sfere teplosnabzheniia,” July 29, 2017.

^7. The “alternative boiler plant” is the name of a new method for calculating heat prices in the thermal energy market. It is used to evaluate price relations between heat market participants. It does not refer to the building of physical boiler plants. In the literature, the method is also referred to as the “alternative boiler house.”—Trans.

^8. The rules for determining the maximum price level for thermal energy (capacity) in heat supply price zones, including the rules for indexing the maximum price level for thermal energy (capacity), were approved by the Decree of the Government of the Russian Federation No. 1562, December 15, 2017.

^9. Federal Law No. 279-FZ, “O vnesenii izmenenii v Federal’nyi zakon ‘O teplosnabzhenii’ i otdel’nye zakonodatel’nye akty Rossiiskoi Federatsii po voprosam sovershenstvovaniia sistemy otnoshenii v sfere teplosnabzheniia,” July 29, 2017.

^10. “Pliusy i minusy metoda ‘al’ternativnaia kotel’naia’,” KS (Energetika i ZhKKh), 2016, no. 3(38) (available at http://www.ids55.ru/ks/articles/events/3391-l-r.html).

^11. “Tekhniko-ekonomicheskie pokazateli elektrostantsii (6TP),” Unified Archive of Economic and Sociological Data, Higher School of Economics, National Research University (available at http://sophist.hse.ru/rstat; accessed on August 25, 2018).

^12. Draft Decree of the Government of the Russian Federation on the approval of the methodology for calculating the price of the alternative boiler plant method (available at https://minenergo.gov.ru/view-pdf/4227/69119; accessed on September 17, 2018).

Additional information

Notes on contributors

S.N. Naiden

S.N. Naiden, doctor of economic sciences, is affiliated with the Economic Research Institute, Far East Branch of the Russian Academy of Sciences, Khabarovsk. E-mail: [email protected].

O.V. Demina

O.V. Demina, candidate of economic sciences, is affiliated with the Economic Research Institute, Far East Branch of the Russian Academy of Sciences, Khabarovsk. E-mail: [email protected].