20 Aug 2010 14:22

Krasnoyarsk could take Rusal to court over power snub

KRASNOYARSK. Aug 20 (Interfax) - The City of Krasnoyarsk could take Oleg Deripaska's aluminum giant UC Rusal to court over billions of rubles in lost revenue resulting from a direct electricity supply contract between the Krasnoyarsk aluminum smelter and the Federal Grid Company , bypassing the Siberia Inter-District Grid Company Holding (IDGC Siberia) .

Oleg Lukin, director of IDGC Siberia's Krasnoyarskenergo power utility, said at a meeting on preparations for the heating season that the smelter's contract with FGC had cost the company 3.5 billion rubles in lost revenue. More than 1 billion rubles of this would have been allocated to the city of Krasnoyarsk, and Krasnoyarskenergo has had to curtail its summer maintenance program as a result, Lukin said.

The city's mayor, Pyotry Pimashkov, urged the city's lawyers to prepare lawsuits and gave them three days to gather the paperwork. "Let's raise this issue. I realize it's hard to do battle with them, but even if we lose we'll at last have tried to do something," Pimashkov said.

Rusal has already won a case at the Moscow Arbitration Court to uphold its decision to get the FGC to supply the Krasnoyarsk smelter direct, bypassing the local grid company, since the start of 2010.

Rusal has been defending its policy to dispense with the services of inter-regional grid companies for its power-intensive smelters because the inter-regional operators rent the trunk grid sections that actually feed the smelters under last-mile contracts. Last-mile contracts are a means of cross-subsidy in the power sector, when major consumers linked to the trunk networks bear some of the cost of transmitting electricity via local grids, for example to households.

Existing law states that last-mile contracts must be phased out with effect from January 1, 2014.

The Krasnoyarsk smelter, built in 1964, is one of the world' biggest. It produces 23% of Rusal's and 3% of the world's aluminum.