Regulation of the electricity sector in Russia: regional aspects (in Russian)

We evaluate the influence of interests of regional energy companies, consumers and governors on electricity regulation policy in Russian regions. We use panel data on electricity tariffs and electricity consumption in 77 regions during 1998-2003. We find evidence that governors tended to "freeze" the tariffs during governor elections, and that energy-intensive enterprises prefer buying electricity at the federal wholesale market to bargaining over lower tariffs with regional regulators. We conclude that regulation in 1998-2003 was socially oriented rather than was protecting interests of industrial consumers. However, an observed tendency of elimination of cross-subsidization is an evidence of reduction in social functions of electricity. Taking into consideration a high poverty level of population it is necessary to reconsider the norms of setting marginal tariffs so as to separate social and economic parameters of regulation.