Investment Revolution in Heating: The Rubtsovsk Model

ABSTRACT

The text is based on the presentation of E.A. Kosogova during the round table “Reforming the Russian Heat and Power Industry: Results, Current Problems and Challenges,” which was held on May 30, 2019 at the Institute of Economics and Organization of Industrial Production of the Siberian Branch of the Russian Academy of Sciences. In 2016–2017, the Siberian Generating Company LLC comprehensively reconstructed the heat supply system of the city of Rubtsovsk (Altai Krai), including the modernization of the main heat networks and the generating equipment of the South Thermal Power Plant. E.A. Kosogova spoke about the specific organization and financing of the project, as well as its problems and solutions.

KEYWORDS:

• Altai Krai
• combined heat and power plant
• district heating
• heat networks
• heat tariffs
• Rubtsovsk
• Siberian Generating Company

Disclosure Statement

No potential conflict of interest was reported by the authors.

Notes

^1. Note that the latest amendments to Federal Law “O teplosnabzhenii” (No. 279-FZ) are intended to implement the switch to the pricing model of the “alternative boiler plant,” according to which the tariff is set at the limit price of a virtual “alternative boiler plant” (which could be built in the given population center according to given capacity parameters, quality of operations, payback period, etc.).

^2. According to EKO, both the heat supply organizations of Rubtsovsk had repeatedly complained about low tariffs and even tried to sue the mayor’s office over this issue. For example, the municipal unitary enterprise of Rubtsovsk Heating Networks estimated its losses as the result of low tariffs at 610 million rubles in 2009–2015 (available at https://altapress.ru/ekonomika/story/kommunalshchiki-bankroti-trebuyut-ot-merii-rubtsovska-bolshe-polovini-gorodskogo-byudzheta-209297).

^3. The regulatory asset base (RBA)—the regulated base of invested capital—is a long-term tariff-setting system used to attract investment for the expansion and modernization of infrastructure facilities. In Russia, it is mainly used in the electricity industry. The calculation procedure is prescribed in the “Osnovakh tsenoobrazovaniia v sfere teplosnabzheniia,” approved by Decree of the Government of the Russian Federation No. 1075 of October 22, 2012, and the “Metodicheskikh ukazaniiakh po raschetu reguliruemykh tsen (tarifov) v sfere teplosnabzheniia,” approved by Order of the Federal Tariff Service of Russia No. 760-e of June 13, 2013.

Additional information

Notes on contributors

E.A. Kosogova

E.A. Kosogova is affiliated with the Siberian Generating Company, LLC, Director for Tariff-Making, Moscow.