Rosseti not expected to have enough revenue to fund projects to 2030 with current rate regulation - System Operator
MOSCOW. Sept 2 (Interfax) - Existing rate regulation mechanism will not enable Russian power grid company Rosseti to generate enough revenue to finance the construction projects the energy system needs, materials from a draft plan to develop power grids to 2030 disclosed by the System Operator said.
The System Operator estimated the need for investment in the development of 220 kV or higher power grids in Russia's unified energy system (UES) at 1.335 trillion rubles with value-added tax in 2024-2030.
In the forecast period, Rosseti will not earn sufficient revenue "with existing mechanisms of rate regulation to implement the planned set of technical solutions proposes for inclusion in the scheme and program to develop Russia's electric power systems," the System Operator said.
The supporting materials show that the operator considered several scenarios, but they all come up short in revenue, with financing deficits ranging from 653 billion rubles to 1.1 trillion rubles, depending on the scenario. The first and second scenarios assume that the rate for electricity transmission services in the national UES will go up by an additional 4 percentage points and 2 pp, respectively, while the third assumes the rate will be fixed at this year's level.
"The investment financing deficit can be reduced by accelerating the growth of the average rate for services to transmit electricity through the national UES by 4 percentage points, as well as attracting budget funds," the operator said.
The document also cites projections for capital expenditures on grid projects proposed for inclusion in the grid development plan. However, the operator did not factor in what is already included in Rosseti's investment program. Proposals laid out in the development plan are expected to require capex of 401 billion rubles (here and below, before VAT) in 2025, 325 billion rubles in 2026, 270 billion rubles in 2027, 308 billion rubles in 2028, 269 billion rubles in 2029 and 253 billion rubles in 2030.
Rosseti divisions manage backbone and distribution grids. The power grid group completed a reorganization in 2023 that saw the former Federal Grid Company UES (FGC), manager of Russia's backbone grids, swallow former parent company PJSC Rosseti, as well as Far East Energy Management Company - ENES (DVEUK-ENES), Tomsk Main Power Grids and Kuban Main Power Grids.
After the merger, Russia's stake in Rosseti is 75% plus one share, treasury stock amounts to 6%, quasi-treasury stock held by FGC Asset Management LLC totals 1% and minority shareholders own 18% of shares.
