St. Petersburg Heating Network fails to win approval for switch to RAB
ST. PETERSBURG. Aug 1 (Interfax) - OJSC St. Petersburg Heating Network, which is 75% owned by power company TGK-1, has failed to win approval from the St. Petersburg administration to switch to RAB (regulated asset base) regulation, company chief executive Yevgeny Khachaturov told reporters on Tuesday.
He said the company had worked out a plan for switching to RAB for a period of three years with the possibility of extension. It projected that investment in the development of St. Petersburg's heating network infrastructure would amount to 6 billion-7 billion rubles annually and reach about 70 billion rubles in ten years. The company planned to replace about 140 km of trunk and local networks annually.
Khachaturov did not specify the other RAB proposals, including growth of rates for consumers.
He said the local regulator rejected the RAB proposal in July. The city administration's tariff committee argued that Russia does not have a regulatory foundation for heating distribution companies to switch to this method of regulation.
Company management intends to propose that shareholders pursue the proposal to switch to RAB regulation at the level of Gazprom and the government of St. Petersburg, and appeal directly to the Federal Tariff Service (FTS), Khachaturov said.
RAB is a system of long-term rate regulation based on recoupment of investment capital that makes it possible to raise investment on a long-term basis.
TGK-1 and the St. Petersburg authorities agreed to create St. Petersburg Heating Network to operate all of the heating network infrastructure within the area covered by TGK-1. The company now operates 2,500 km of networks, including 800 km of trunk networks and 1,700 km of local networks. TGK-1 owns 75% minus one share of the company, and the St. Petersburg administration owns 25% plus one share.
It was reported earlier that LLC Gazprom Energoholding and the St. Petersburg authorities had said they wanted to switch the city heating network they control to long-term RAB regulation in 2012.
