14 Sep 2010 16:13

FGC tariffs may rise 25% in 2013, 17% in 2014

MOSCOW. Sept 14 (Interfax) - The pace of increase in electricity tariffs under regulatory asset base (RAB) rules at Federal Grid Company could amount to 25% in 2013 and 17% in 2014, Gazprombank, an organizer for an FGC bond issue, said in an analytical report.

Gazprombank believes the electricity tariff will be 179,600 rubles per megawatt-month in 2013 and 210,200 rubles per MW-month in 2014.

The Federal Tariffs Service (FTS) has still not made a decision on FGC's five-year RAB tariffs. The company is currently operating with tariffs for a three-year period: 2010-2012. The tariff increases are set at 51.1% in 2010, 31.2% in 2011 and 24.72% in 2012.

The FTS board plans to examine the parameters of the five-year RAB tariff at an upcoming meeting, the service told Interfax. The rate of return on invested (new) capital is provisionally set at 10% in 2013-2014 (compared with 11% in 2010-2012), while the return on initial (old) capital is 7.8% in 2013 and 9.1% in 2014 (3.9%, 5.2% and 6.5% in 2010-2012 respectively).

The Gazprombank's forecast for FGC revenue and EBITDA in 2013-2014 (excluding losses on transmission networks) given the switch to five-year RAB tariffs, is presented in the following table (billion rubles):

2010 2011 2012 2013 2014
Revenue 93.8 124.6 155.4 194.1 227
EBITDA 62 88.8 116.2 151.8 182.3
EBITDA margin, % 66.1 71.3 74.8 78.2 80.2

FGC switched to RAB with a three-year regulatory period (2010-2012) on January 1, 2010. This summer the FTS confirmed the possible extension of the regulatory period on a three-plus-two basis, for FGC and for the regional grid companies.

FGC prepared an investment program for 2010-2014 totaling 954 billion rubles that was used to calculate the RAB tariff. The program has not received final approval yet.

Gazprombank said that sale of non-core assets inherited from RAO UES Russia could serve as once source of financing for the program. These include stakes in OGK-1, TGK-6, TGK-7 and Bashkirenergo.

State-owned FGC operates the unified national electricity grid.

RAB is a system of long-term tariff regulation that encourages long-term investment by insuring that invested capital will be recovered.