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June 23, 2011 regional branch of the Russian Union of Industrialists and Entrepreneurs in the Volgograd region and VEGAS LEX law firm with support of the Administration of the Volgograd region and «LUKOIL-Volgogradenergo» held a conference at the Volga HPP-1 on «ELECTRICITY AND POWER OF THE REGION: financial and legal efficiency instruments».

The conference was attended by business representatives of major electricity consumers of the region, power producers and resellers, banks, state and federal authorities.

The conference was moderated by Viktor Fokin, the executive director of RSPP regional office in Volgograd and Director for regional development, Partner of VEGAS LEX law firm. Representatives of the Administration of the Volgograd region, the central offices of the Federal Tariff Service (FTS) of Russia and the Federal Antimonopoly Service (FAS) of Russia, members of RSPP Committee on Energy policy and energy efficiency, representatives of energy companies and directors of industrial enterprises of the region were invited as key speakers.

The most heated debate unfolded on the topic of payments for the services of the grid companies, their price transparency, justification of the investment programs and control over their implementation. Viktor Fokin and Sergey Kostrov, Chairman of RSPP Board of the regional office, General director of OJSC «Volga Abrasive Plant» took an active part in the discussion. Following the discussions, it was suggested to involve RSPP into the process of establishing tariffs in the region.

Yuriy Stankevich, Deputy Chairman of RSPP Committee on Energy policy and energy efficiency, promised to integrate the representatives of the regional offices of the organization into the expert group to develop proposals for optimizing the electric power system at the federal level.

According to Evgenyi Moskvichev, General Director of JSC «Volgogradoblelectro», current decision-making process for the electric retail companies to enter the wholesale market is incorrect. He mentioned that the growth of tariffs for the services of the distribution companies is associated with the increased financial burden put on them.

Another important issue, marked at the conference, was cross-subsidization. Dmitry Vasiliev, Head of Monitoring of wholesale and retail electricity markets department at the Electricity control office of the FAS Russia, pointed to the need to abolish such practices.

Another discussion was formed around the issue of indirect connectivity to the MRSK grids. Sergei Ageev, Chief power expert of «LUKOIL-Volgogradneftepererabotka» and Alla Gorshkova, Head of Energy department at JSC «Sibur - Russian Tires», shared their views. VEGAS LEX partner and Evgenyi Rodin, Head of Energy projects group at VEGAS LEX, pointed out that the situation with the payments for transmission services via indirect connection violates the economic interests of many industrial enterprises. Batradz Metsaev, Head of Legal Protection at the Legal department of the FTS of Russia, explained that the legal regulation in this area relates to the need to maintain the grids in working condition in case of disconnection of the generation, which supplies the consumers with energy. However, if a consumer has no way to get energy from MRSK grids through HPP equipment in the event of termination of the generation of energy production, there should be no charges.

Serious debate was about payments for technological connections. It is a well known fact that among the factors, influencing the investment flow into the country and the development of new industries, high costs, lack of transparency in pricing, and complexity of forecasting the costs of connection to energy grids for new companies is on the top of the list. Eugene Rodin agreed that the legal regulation in this area is quite flexible. In turn, Rashida Ablyaeva, Head of Leading industries at the Office of Economic Development of the Volgograd region Administration Economic Committee, informed the participants about the fact that the administration of the region together with Mineconomrazvitia of Russian is conducting a study of the factors that interfere with business development.

Evgenyi Rodin drew attention of the participants to the problem of pricing in electric power sector. Nikita Kondakov, Head of the Regional Tariff Administration of the Volgograd region, spoke about the prospects of transition to RAB-regulation for the region, which allows to set the tariff for a longer period of time. The participants discussed the advantages and disadvantages of this method. Sergei Kostrov and Dmitry Vasiliev also shared their views on the matter.

Andrey Gavrilenko, Branch #8621 Manager of Sberbank of Russia in Volgograd, and Larisa Turetskaya, Branch Manager of «Gazprombank» in Volgograd, told the audience about the banking products that allow funding the projects in the field of electric power efficiency development on favorable terms. Almost all agreed that the mentioned conditions for attracting loans are actually very interesting and can eventually reduce the cost of energy used by businesses.

Transition of the enterprises to their own generation also was discussed at the conference. The only company in the region that implemented that concept was OJSC «Volzhsky orgsintez». Sergei Klimenko, Deputy Chief of the Science, Industry and Resources department at the Administration of the Volgograd region, shared his concerns about the destructive trend, which reduces the security level of energy generation and, moreover, obstructs planning of the economic effect of such measure in the future.

Closing the conference, Mikhail Zimin, First Deputy General Director of LLC «LUKOIL-Volgogradenergo», expressed the view that the conference was very relevant for all organizations in the Volgograd region.

Since 2011 VEGAS LEX Law Firm is a member of RSPP Committee on Energy policy and energy efficiency.