Translated material
State control and chaos
The Ministry of Energy received the right to veto decisions of the Electricity Market Council
Vladimir Putin decided to no longer interfere with the work of the Electricity Market Council (a non-profit partnership that brings together energy workers, consumers and officials) and signed a decree on the mechanisms of its work. The document states that the Ministry of Energy, which became the successor to RAO UES of Russia, will have the right to independently make decisions on important issues if the NP supervisory board does not do so within 45 days, and also to veto decisions of the Market Council. All issues and proposals of the Ministry of Energy are subject to mandatory consideration at extraordinary and regular meetings and meetings of the NP Supervisory Board, the document notes. Thus, the state, on the one hand, moves somewhat away from the development of market functioning mechanisms, but on the other hand, it does not give control over the industry to the hands of a self-regulatory structure. Energy workers reacted to this decision of the prime minister with restraint and, on condition of anonymity, say that in the industry now everything will be “according to concepts, and not according to the laws of the market,” that is, almost the same as it has been until now.The Market Council is conceived as an organization that will determine the rules of the game in the energy market. De facto, it was assumed that in this capacity it would replace RAO UES, but at the same time would act in the interests of all market participants. In April of this year, the Market Council was registered, but the founding meeting did not take place in May - as sources in large energy companies said, the new government did not want to create a council without understanding the situation. In addition, it was believed that Deputy Prime Minister Igor Sechin, who oversees the electric power industry, did not want the council to be headed by Yuri Udaltsov, a member of the board of the now reorganized RAO. As a result, the founding meeting took place only last week, and Mr. Udaltsov actually did not become nominated for the post of head of the council. Dmitry Ponomarev was elected to this place, at the same time heading the “Trading System Administrator”, who will perform commercial functions for organizing trade in electrical energy and capacity.
The Ministry of Energy, quite possibly, would not be averse to taking over the functions of the Market Council altogether, leaving trade participants only a platform for expert discussion of certain issues. However, it is not yet able to realize such a desire, if only because of the personnel problem: according to the staffing schedule, the ministry should have about fifty people working in the electrical energy sector, says a source familiar with the situation, but in reality no more than a dozen specialists have been found. At RAO UES, several hundred people worked in these areas, but highly qualified workers clearly do not intend to move to the ministry - private companies also have a shortage of personnel, and salaries are obviously higher.
Thus, it was decided to retain the Market Council and transfer control over its activities to the Ministry of Energy. “This decision was discussed back in May,” the head of one of the large energy generating companies told Vremya Novostey. “The state wants to maintain control over the market, which at the same time must be civilized. That’s why this decision was made.” The energy worker did not want to say whether it was Solomon's, saying only that so far no serious changes have occurred in the industry compared to “life under RAO”.
The head of one of the large energy sales companies indicated that, in principle, the decision to give control over the Market Council to the Ministry of Energy is not “terrible”, but rather formalizes the relationship. In addition, supervision over the activities of exchanges and markets in almost all countries is carried out by the state. “Another thing is that the procedures for making certain economic decisions have not yet been prescribed either by the Market Council (it also intends to cut off high price bids) or by the ministry. In these conditions, the Ministry of Energy will be faced with the temptation, to put it mildly, to make independent economic decisions.” However, it couldn’t have been any other way in the current situation, he believes: the idea of creating a Market Council was crude, procedural aspects were not spelled out, there was no responsibility for decisions made, and therefore, in order to prevent chaos, the government was forced to take control of the situation .
By the way, several years ago, when the “Trading System Administrator” began work, the Federal Antimonopoly Service had the right to veto all his decisions, recalls Sergei Pikin, a former top manager of ATS, head of the Energy Policy Fund. However, there was no real oversight - all statistics and analytics were prepared by the Administrator's employees, and a veto was never imposed.
In any case, this state of affairs is clearly temporary, the head of the energy sales company believes, since with the advent of clearly defined rules for the functioning of the market and a decision-making mechanism, state control in such a dubious form will hinder the development of the electric power industry.
The Ministry of Energy believes that “granting the right of veto to the department is quite logical.” “Eight government agencies are represented in the Market Council, and the Ministry of Energy is only one of these eight responsible for the energy sector. And we make decisions that are most optimal for market participants, because we must maintain a balance between all of them. And important issues are socially significant issues, we must look for solutions that will not infringe on anyone’s interests,” the ministry’s press service told Vremya Novostey.