Russia's Energy Ministry proposes to start liberalizing energy market in non-price zones in Nov 2023

MOSCOW. Dec 14 (Interfax) - The process of transitioning non-price zones of the electricity and capacity market in Arkhangelsk Region, Komi and the Far East to a market model of pricing could begin in November 2023, the director of the Energy Ministry's electricity development department, Andrei Maximov said.

"We propose to already start the transition process next year, in November already. Set 15% [of electricity and capacity sales according to market principles], and as of July 1, 2024 already trade up to 50% according to market pricing. This is our proposal at this point," Maximov said at a meeting of the Russian Union of Industrialists and Entrepreneurs (RSPP) commission for electricity.

He said the ministry proposes to link the degree of market liberalization in non-price zones to the possibility of transmitting electricity through grids and to the economic consequences for consumers and producers in these regions.

The Market Council said in a presentation that followed Maximov's that Arkhangelsk Region and Komi should be included in the first price zone of the energy market (European Russia and the Urals) and the Far East should be included in the second price zone (Siberia).

The Market Council confirmed the timeframe for liberalization laid out by Maximov and said that the complete transition to 100% liberalization should happen by July 2025 at the latest. Capacity will be sold according to the prices of competitive capacity selection and price zones until 2026, and competitive capacity selection for 2027 should be done by November 15, 2023, the council's presentation said.

The proposal to expand the second price zone by adding the Far East to it was made by Energy Minister Nikolai Shulginov at the Eastern Economic Forum earlier this year. This would make it possible to attract investment by increasing competition on the market, as well as set the stage for increasing energy efficiency. At present, the electricity sector in the Far East does not have the conditions for reducing costs due to government regulation of rates, Shulginov said.

Russia's energy market is currently divided into two price zones - the first (European Russia and the Urals) and the second (Siberia), as well as several non-price regulated zones.