Now the electric grid complex, like other natural monopolies, has been given the task of learning to live under conditions of frozen tariffs. Deputy Minister of Energy VYACHESLAV KRAVCHENKO told BG what expenses in investment programs will remain a priority, where they will have to squeeze and what are the savings reserves.

Deputy Head of the Ministry of Energy Vyacheslav Kravchenko promises that the ministry will try to help power grids by freezing their tariffs
Photo: Dmitry Lekai, Kommersant / buy photo

BUSINESS GUIDE: The government plans for 2014 to have zero growth in tariffs for natural monopolies. For electric grid companies, this is a fairly serious problem: they will have to work in conditions of lower cash flow, and perhaps revise their investment program. What will networks, including the state-owned Russian Networks, have to do in this situation?

VYACHESLAV KRAVCHENKO: What to do - bow down and endure, I don’t see any other options. The networks will have to shrink, and shrink wherever possible - it is clear that the Ministry of Energy will try to help them. I believe that by the end of the year, directives to the boards of directors of Russian Grids and the Federal Grid Company (FGC) should be issued on a set of measures aimed at working with zero tariff growth. There will be solutions at several levels. First: appropriate commitments must be made, according to which network companies must sharply reduce all costs, including operating expenses. Second: since it is the state that sets the objectives for the networks’ investment program, some decisions must be made to set investment priorities.

I have my own understanding of such gradation. First of all, this is the provision of power distribution schemes for generation facilities. They must be unconditionally fulfilled, because otherwise, when commissioning these facilities, consumers will pay for them, and generating companies and networks will be held responsible for untimely delivery of power. Second: what is associated with ensuring the reliability and flow of electricity (between parts of a unified energy system - Kommersant ) to create a more reasonable price on the energy market. We, of course, can build whatever we want, but it will be absolutely useless if it does not entail a change in the price of electricity (its reduction or reduction in growth rates). In itself, an increase in reliability, say, five times, we will not materially feel (except for an increase in price). Third: urgent government programs, for example, energy supply to the Baikal-Amur Mainline and Trans-Siberian Railway. Here you need to clearly set priorities.

BG: So it turns out that you will have to cut, for example, costs for modernizing existing facilities?

V.K.: In the very near future we will begin to look at the investment programs of network companies. But so far I have not spoken about the cost of new objects, but about “titles”, about specific objects. Of course, we will also talk about reducing the cost, I admit that there will also be severe pressure: “Will you build this substation for a billion?” - “I’ll build it.” - “Can you build it for 500 million?” But in this case, this is already the second operation. First, identifying objects, then, accordingly, compressing them by cost. And then it’s the work of the networks themselves with contractors and so on.

BG: What major projects, from your point of view, are priorities for investment?

V.K.: There are quite a large number of local projects in Eastern Siberia: the construction of power lines for the development of fields. These are projects for the development of new regions, they may not be as large-scale as the energy supply of the BAM, but quite large in terms of investment - 5-15 billion rubles. every.

BG: And nothing grandiose like the Siberia-Central Russia energy bridge?

V.K.: No. From my point of view, it would be a good idea to postpone such large-scale projects.

BG: From the point of view of the Ministry of Energy, what is the current savings reserve in Rosseti, in territorial grid organizations, whether included or not included in Rosseti? Now, for example, state monopolies are required to reduce purchase prices by 10% per year. Is this real or, on the contrary, is it not enough?

V.K.: It seems to me that the networks have reserves for operating expenses, but I would not say that this is 10%; in my opinion, the savings reserve here is smaller. Because the main operating expenses are still wages. You can follow, for example, the path of Russian Railways, where they plan to send office staff on unpaid leave for three days a month. But it is clear that you cannot save on the line personnel of network companies. Firstly, there are industry tariff agreements on wages, and secondly, this directly affects reliability: the fewer line personnel, the longer the interruptions in restoring power supply.

BG: What about capital investments?

V.K.: We can talk endlessly about capital investments, building hypotheses about how inflated construction and installation work is, the cost of the zero cycle, and so on. I think that probably the main reserve here lies in technical solutions. You can build a substation for a billion, it will function normally. But you can build it for three billion, but it will be a “super candy”; you don’t even need to go there (for maintenance . - Kommersant ), and if you go in, then only in replaceable shoes. The result is the same, only the price is different. Therefore, it seems to me that in this part we need to move towards simpler solutions. Now the vector is such that energy workers will most likely really need to survive.

BG: Exactly to survive?

V.K.: To a certain extent, yes, because a lot of money was pumped into the network in previous periods, and their utilization, in my opinion, was not entirely effective. Therefore, now network companies will be required to do the same thing, but for much less money. This is a response.

BG: Can the current technical state of Russian electrical networks be considered satisfactory? How much does it vary by region?

V.K.: I regard the state of networks at the top level - at the FSK level - as absolutely normal. The situation with distribution networks in different regions, of course, varies. For example, in Moscow and the Krasnodar Territory, the facilities are new. There are also regions where the situation is completely bad.

BG: St. Petersburg is often mentioned here. Where else?

V.K.: Yes, St. Petersburg is a classic example: the situation there, it seems to me, has not improved radically. In the regions of Siberia, modernization is proceeding slowly; the Far East raises certain concerns.

BG: You said that there is a question about how effectively the networks invested in previous periods. Now you are saying that the system will have to shrink. Does it follow from this that the reliability of energy supply has not improved much in previous years, and now funds for investment are limited?

V.K.: No, it’s clear that a lot of things have been done. But I think more could have been done. In my opinion, we did not proceed from the entirely correct premises. In 2007-2008, we did not estimate the growth rates of energy consumption too accurately: they turned out to be overestimated. I can honestly say, since I myself took part in the development of these documents, that no one thought that there would be such crises. We assumed that economic growth rates would be stable, energy consumption would increase, investors would come to the industry and everything would be fine. Everything turned out somewhat differently: energy consumption grew at a rate less than predicted. Electricity prices rose faster than planned. We received a reaction when the consumer approached the threshold, not so much of ability to pay, but the threshold of reasonable price perception. The current price increase already seems excessive to consumers; they are simply not willing to pay more. And they take absolutely conscious actions to build their own generation, because it turns out cheaper.

I repeat once again: power engineers will now have a hard time. You will just need to pull yourself together and prove your worth, your ability not only to work in such systemic conditions, but also to develop. This is a very difficult task.

BG: Investment long-term RAB tariffs were introduced in the second half of the 2000s, but they were often revised and smoothed out. Are RAB tariffs generally necessary for electric grids or can other tariff mechanisms be used?

V.K.: RAB tariffs are certainly needed, otherwise no investors will come to the industry.

BG: But practically no new investors have appeared in the power grid complex in recent years. Perhaps in the regions, at the level of territorial network organizations (TGOs)...

V.K.: I would not say that at the TSO level there are such serious investors who are systematically involved in power grids. But with all our recent actions over the past few years, we have greatly frightened investors who should come to the energy sector, and especially to the power grid. Starting from questioning RAB regulation as such and ending with ideas to unite everything into a hyperstructure under state control. In my opinion, this is not entirely reasonable. When a car is very large, it probably looks very impressive, but it is bulky and heavy, and very difficult to drive.

Interview conducted by Vladimir Dzaguto

“Energy companies will have a hard time now”