3.3. Tariff regulation
3.3.1. Structure of electricity and capacity market
Currently, we have a two-level (wholesale and retail) electricity and capacity market in the Russian Federation. According to the law requirements, all the stations with installed capacity of over 25 MW , carry out the sale of electricity on the wholesale market only . Plants with capacity of 5 – 25 MW operate either on wholesale or retail market at their choice.
The sellers and buyers on the wholesale electricity and capacity market (WECM) include: generating companies and supply organisations, major electricity consumers, guaranteeing suppliers which became subjects of the wholesale market, the market council, commercial operators and other organisations providing for the functioning of the commercial infrastructure of the wholesale market and the functioning of the engineering infrastructure of the wholesale market (an organisation managing the unified national (all-Russian) electric grid), the system’s operator).
The wholesale electricity and capacity market functions within the territory of regions united into price zones. The first price zone includes the territories of the European part of Russia and the Urals, while the second price zone includes Siberia. The WECM’s non-price zones include: the Arkhangelsk and Kaliningrad Regions, the Komi Republic and the territories of the Far East), where the capacity wholesale realized on the regulated prices (tariffs).
Almost all of the power plants of PJSC RusHydro are objects of the WECM.
WECM price and non-price zones
1 – First price zone
2 – Second price zone
3, 4, 5 – Non-price zones where due to technical reasons the organization of market relations in the power sector is not yet possible. In these regions, the sales of electricity and power on the wholesale market are carried out at regulated tariffs
3.3.2. The structure of the wholesale electricity and capacity market
Regulated and non-regulated sectors of the wholesale electricity market
|CSC facilities||HPP non-CSC facilities||1st price zone||2nd price zone||Non-price zone|
Non-regulated sector of the wholesale electricity market (NRWEM)
There are numerous sectors functioning on the wholesale electricity market, which differ in terms of the conditions of transactions and supply terms: Regulated contracts (RC), Quadripartite contracts, The Day Ahead Market (DAM), Non-regulated bilateral electricity and capacity supply contracts (NRBECS), Non-regulated bilateral contracts (NRBC), Capacity auction (KOM), Capacity supply contracts (CSC).
22.214.171.124. The electricity and capacity wholesale price dynamics
Equilibrium price index for buying electricity in the first and second price zones, RUB/mW∙h
Source: data from the association NP Market Council
In 2015 the average weighted index of the equilibrium prices for electricity in the European part of Russia and the Urals (1st price zone) increased 5,3 % (2014 it increased 3,4 %), up to 1 123 RUB/ MW·h. In Siberia (2nd price zone) the average weighted index of the equilibrium prices increased by 11,9% – from 788,9 up to 883 RUB/ MW·h.
Equilibrium price index for buying electricity in the first price zone, RUB/MW·h
|1 quarter 2015||2 quarter 2015||3 quarter 2015||4 quarter 2015|
|The preservation of the value of the DAM index in the 1Q2015 at the level of the 4Q2014 (RUB 1,066 / MW·h) is caused by:||The insignificant growth of the index in the 2Q 2015 (by 1.1% to RUB 1,080 /MW·h) is caused by the decrease of NPP and HPP outputs and the planned hourly electricity production rate of CCGT TPP/ SDPP commissioned as per PDC (except modernisation projects) and new CCGT commissioned not in accordance with PDC, by 7.6% and the decrease of the kPrice index by 19.6%.||The Growth of the index in the 3Q2015 by 4.2% to RUB 1,125 / MW·h is caused by the increase of the gas tariff by 7.5% and the decrease of the kPrice index by 6.7%, which resulted in constraining impact on the growth of the index.||The insignificant decrease of the DAM index in the 4Q2015 (-0.2% compared to the 3Q2015) is caused by the increase (+6,2% compared to the 3Q2015) of NPP and HPP outputs and the planned hourly electricity production volumes at the CCGT TPP/ SDPP commissioned as per PDC (except modernisation projects) and at new CCGT launched not as per PDC.|
Equilibrium price index for buying electricity in the second price zone, RUB/mW·h
|1 quarter 2015||2 quarter 2015||3 quarter 2015||4 quarter 2015|
|The growth of the index in 1Q2015 by 5.4% to RUB 998 / MW·h results from the influence of: the increase of the kPrice index by 3.7% and the decrease of hourly average output of Irkutsk HPP by 7.4%.||The decrease of the index in the 2Q2015 by 21.4% to RUB 781 / MW·h is caused by the growth of the total share of planned hourly HPP generation in the total volume of planned GPC generation by 47.3% and the decrease of the kPrice index by 32.8%.||The growth of the DAM index in the 3Q2015 by 2.5% to RUB 800 / MW·h is caused by the decrease of the total share of planned hourly HPP output in Krasnoyarsk region, Novosibirsk region, and the Republic of Khakassia in the total volume of planned hourly generation in the second price zone by 1.8% and the growth of the coal price index in the second price zone by 3.6%.||The increase of the DAM index in the 4Q2015 by 10.3% to RUB 883 / MW·h is caused by the decrease of the total share of planned hourly HPP generation in the total volume of planned hourly GPC generation by 31.0% compared to the value as of the previous quarter.|
3.3.3. Electricity and capacity sales tariffs in 2015
WEM’s average weighted tariff dynamics
|2014||2015||Growth 2015-2014||Growth rate |
|The average tariff||NGP||The average tariff||NGP||The average tariff||NGP||The average tariff||НВВ|
|RUB/ thousand. kW·h||thousand RUB||RUB/ thousand kW·h||thousand RUB||thousand RUB||thousand RUB||%||%|
|Retail market - isolated areas of the Far East||3,152,163||3,33, 611||180,448||105.72|
126.96.36.199. Results of activity in WEM in 2015
WEM tariff growth amounted to 5.72 % due to:
- ncreased in 2015 tariffs of infrastructure organisations,
- transition to calculation of tariff payment in the non-price zones on available capacity for power generation facilities,
- commissioning Zelenchukskaya HPP,
- the return of indexation in the non-price zones in the second half of 2014 and first half of 2015,
- consolidated performance forecast balance of electricity and power, the growth of PDC prices of 2015 for Zaramagsk HPP and Kashkhatau HPP previously brought into operation.
188.8.131.52. RusHydro’s DAM and KOM price dynamics
Price tariff dynamics DAM and KOM
|2013||2014||2015||Growth 2015/2014||Change, %|
|DAM price, RUB/ МWh||1,018.8||1,139.5||1,206.8||67.3||5.9|
|Price DAM*, RUB/ МWh||957.8||1,072.9||1,096.0||23.2||2.2|
|1st price zone DAM price , RUB/ МWh||1,124.4||1,226.9||1,207.1||-19.7||-1.6|
|2nd price zone DAM price, RUB/ МWh||658.0||776.8||882.5||105.7||13.6|
|Price KOM*, RUB/ МW monthly||110,577.4||116,190.6||127,564.1||11,373.5||9.8|
|1st price zone KOM price, RUB/ МW monthly||134,435.7||140,566.7||125,524.0||-15,042.6||-10.7|
|2nd price price KOM price, RUB/ МW monthly||60,009.3||68,492.8||131,695.6||63,202.8||92.3|
An increase in Siberia DAM and KOM prices in 2015 ( 2nd price zone) is objectively caused by numerous factors: low water inflows, liberalisation of the capacity market for HPPs, eliminated limits for exchanges between the price zones. There was no any DAM and KOM price growth in the 1st price zone in 2015.
The increase of DAM prices in 2nd price zone was caused by:
- sustainable low water inflows in the basin of the Angara-Yenisei cascade,
- demand increase for the thermal power generation,
- eliminated limits for exchanges between the price zones,
- significant restrictions on the network flows In the UES of Siberia.
The capacity auctions price increase for HPP in the second price zone due to the “liberalisation” of the market for HPP from 05.01.2014 (30).
DAM price dynamics
KOM price dynamics
*Average weighted price DAM/KOM