Generators are setting up a non-profit partnership for dialogue with the Government While everyone is trying to guess who will inherit part of the functions of RAO UES of Russia upon its final reorganisation, independent generators are already setting up their own association. The non-profit partnership of independent electricity producers which is to be founded on December 20 will allow the new owners of wholesale and territorial generating companies (WGCs and TGCs) to interact with relevant agencies and regulatory authorities as a united front. This will enable the market to organically switch to self-regulation, experts believe. Independent electricity producers will soon establish a non-profit partnership (NP), Andrei Bugrov, Chairman of the WGC-3 Board of Directors and Managing Director of CJSC Interros Holding Company, told RBC Daily. "We would like to have a floor for discussing common issues and problems where we could shape a consolidated position in negotiations with both RAO UES and the regulator, whether the energy agency or another authority," he added. The NP will allow market participants to exchange experience and discuss issues of pricing, connection to the grid, and capacity supply contracts, according to Mr Bugrov. The top manager noted that the organisation may be established in late December. "The founding documents are now ready and provisional consultations have been conducted," he specified. The following new owners of generating assets in Russia may become potential members of the partnership: Gazprom which has purchased Mosenergo, TGC-1 and WGC-2; Norilsk Nickel (WGC-3); IES-Holding (TGC-5); Enel (WGC-5); E.ON (WGC-4); and Kapital Investment and Financial House (TGC-8). Representatives of IES-Holding told RBC Daily that it is their company that initiated the establishment of the new NP. "The founding members of the partnership will meet within the next two weeks," confirmed the company. This subject has already been discussed with RAO UES and received provisional approval there, according to the holding company's representative. "The goal of the NP is to shape a favourable investment climate in the industry, as well as to reduce risks for electricity producers," noted the publication's interlocutor from IES. Gazprom is also considering its participation in the NP. E.ON noted to RBC Daily that the company is currently largely focused on the integration of WGC-4. "It is always useful to co-ordinate the interests of market participants in general," added the company. Kapital and Enel were not available for comment on this subject yesterday. Experts approve of the generators' initiative. Investors should perceive the establishment of such an organisation very positively, thinks Derek Weaving, Head of Power Industry Sector Analysis Group with Renaissance Capital. "This is a natural response of market players to the replacement of governmental control with a market-based model," he says. The new strategic owners of WGCs and TGCs will approve of the establishment of the organisation and will readily finance its operations, in the analyst's view. Vasily Konuzin, Head of Analysis Department at Alemar Financial and Investment Corporation, believes that two structures will exercise control over the industry after RAO UES has disappeared: a governmental one via the Federal Energy Agency (Rosenergo) and a private one via the NP being established. "A balance between them is to ensure normal development of the industry as a whole," thinks he. "It is clear that the new partnership will defend the interests of producers who are interested in the creation of a really free market." Mr Konuzin believes that Rosenergo and the NP will only be efficient in tandem: Rosenergo will be expected to limit the possibilities for lobbying the interests of electricity producers only, and both structures will be able to act as a united front against state monopolies or the Federal Antimonopoly Service or the Federal Tariff Service if their decisions contradict the industry's interests. Russian generators have some benchmarks to guide them in this cause. "There are similar organisations working in other countries," says Mr Weaving. During the first 13 years after the privatisation of the electric power market in the United Kingdom, there existed a united organisation of electricity producers, grid companies, and suppliers in the country. It was divided into lines of business in 2003." According to the analyst, generation in the United Kingdom is a highly competitive business: the Association of Electricity Producers (AEP) unites 83 members, including E.ON, EDF, and GDF. The AEP closely co-operates with the Government and regulatory authorities. The expert is confident that the new NP in Russia will make market participants more influential in their dialogue with the State. |
