Translated material
Strategic Savings
FAS suspects RUSAL of manipulating prices on the energy market
Yesterday, a message appeared on the website of the Federal Antimonopoly Service (FAS) about the investigation that the agency is conducting against a number of RUSAL subsidiaries. Antimonopoly officers saw in the company’s actions “signs of price manipulation on the wholesale electricity market.” The company itself notes that, in accordance with the regulations, they had every right not to buy new volumes. In turn, knowledgeable sources in the energy market told Vremya Novostei that RUSAL simply made an attempt to test a new savings strategy.Although the FAS will consider the case only on June 15, questions to RUSAL enterprises arose in the middle of last year. Thus, according to antimonopoly officials, on certain days in August 2009, RUSAL Krasnoyarsk did not submit a price application on the day-ahead market (DAM). RUSAL Sayanogorsk did the same thing, but already in September of the same year. According to Vremya Novostei sources, immediately after the incident, no sanctions were applied against Oleg Deripaska’s company, since the situation was non-standard, and RUSAL promised to punish those responsible for not submitting the application in a timely manner.
It is worth noting that large industrial enterprises, which, of course, include the above, are the main consumers of electricity in the second price zone (Siberia). Therefore, the refusal to purchase kilowatts by such industrial giants as the Sayanogorsk and Krasnoyarsk plants inevitably leads to a drop in prices throughout the region.
The sharp decline in the cost of products sold could not but cause dissatisfaction with suppliers, who hastened to contact the antimonopoly agency. One of the generating companies explained that in this situation it is not the actual losses that are important (the energy sector chose not to disclose their total amount while the proceedings are ongoing at the FAS) incurred as a result of violations, but the fact of the appearance of the scheme, which in the future can be used for price manipulation. As a result of such actions by RUSAL Krasnoyarsk and RUSAL Sayanogorsk (an investigation is also ongoing against RUSAL Bratsk, RUSAL Novokuznetsk and SUAL), according to the FAS, some generating companies sold electricity in the DAM and the balancing market (BR) at prices lower than those specified in applications and lower than economically justified tariffs established by the Federal Tariff Service. The antimonopoly department also notes that from October to December last year in Siberia, RUSAL plants actively used a joint strategy for submitting price bids.
As a source familiar with the situation told Vremya Novostei, last year RUSAL only launched a “trial balloon”. “We decided to test the strategy and see what the savings would be. One company does not apply for the DAM, prices fall, and other enterprises purchase kilowatts at a discount. Then the enterprise that did not submit an application purchases the required volumes at a higher price on the balancing market. But the rise in prices no longer affects the rest of the group’s consumers,” explains the source. In turn, the generating company, whose facilities are located in the second price zone, noted that by implementing this strategy, significant savings can be achieved not only within the group, but also for each enterprise separately. “The volumes purchased by the largest consumers are so large that even a price difference of one kopeck allows them to save huge amounts,” adds the source.
RUSAL itself told Vremya Novostei that the company “operates within the framework of the regulations of the wholesale market, acting within the framework of the law and without violating the rules existing in the electricity market.” However, RUSAL was unable to comment on whether sanctions were taken against those responsible for failure to submit the price bid on time.