Long-term power market in Russia not to be launched before end 2009
MOSCOW. Oct 12 (Interfax) - A long-term power market will not be launched in Russia before the end of 2009, the Energy Ministry said.
The latest version of a draft government decree on the market's launch states that the first competitive selection process will take place by September 1, 2010.
The government will probably approve the price parameters, including price caps, in a separate resolution, the ministry said.
"We expect the draft of a second decree [on the market's financial and economic parameters] to be approved by ministries and agencies and submitted to the government before the end of the year," Irina Yesipova, aide to the Russian energy minister, told reporters.
The Energy Ministry expects a decree on the model fore the long-term market to be approved in October-November. This document has been submitted to the Justice Ministry with a table of disagreements.
It states that the necessary regulations and methodologies must be approved by May 1, 2010. Capacity will start to be supplied as per the long-term market regulations from January 1, 2011, and competitive selection for the period 2012-2015 should take place by March 1, 2011.
The price parameters are still the main stumbling block, a representative of the Markets Council, which regulates the capacity market, told reporters.
Parties to the process are still debating whether to adjust price parameters from one year to the next; whether to have two price tiers, one for existing and one for new capacity, and how quickly these can be aligned; and the timeframe for paying for new capacity. But the most fiercely debated aspect is how to determine the cost of capacity in the framework of compulsory investment programs (capacity supply contracts) and existing generating capacity.
The parties are also discussing whether the decree ought to contain a specific price or a procedure for determining the price.
The new rules would allot up to ten years to pay for new capacity, with a possible five-year extension, primarily for capacity to be commissioned under the capacity contracts. It is unclear how decisions to extend the payment deadline will be reached: the previous version of the decree set a 15-year investment recoupment period with a return of 8%.
Experts say the price cap is the most contentious issue. "It has been removed from the draft owing to its complex nature, and will be set down in a separate document, which will take longer to approve," one expert said. The power generating companies are insisting that both documents are approved simultaneously, the expert said.
Differences remain over specific aspects of the involvement of nuclear and hydro plants in the long-term market. Rosatom, the state nuclear power corporation, wants full payment for capacity according to the tariff to be preserved in 2011-2012 (a switch to market prices for industry is envisaged from 2011), and one of the compromises is to preserve the investment component for Energoatom and RusHydro for that period.