APEC Agreements and Declarations

Category

Current situation

Planned further actions

Scope of basic policy

Efforts of the MAP of Russia to regulate relations with the participation of subjects of natural monopolies proved the necessity for special regulating respective goods markets, where mechanisms of market price- formation are not optimal and the development of competition is impossible and ineffective.

According to the Federal Law on Rate Management for

Electric and Heat Energy in the Russian Federation two-

level system of state regulation at the federal level and at the level of subject of the Russian Federation has been introduced.

If actions of the subjects of natural monopolies infringe upon counteragents’ interests they are subject to measures of pressure under the Russian Federation Law on Competition.

It’s important to underline that there’s no overlapping of functions of antimonopoly bodies and bodies regulating natural monopolies. Their authorities are separated by subject of regulation and not by certain types of legal relations.

Among the recent acts of the legislation aimed at the improvement of situation in the sphere of natural monopolies it’s necessary to note introduced by the MAP of Russia before the Government of the Russian Federation the draft amendments to the Federal Law on Natural Monopolies which specifies the spheres of natural monopolies and establishes common principles for regulating the subjects of natural

monopolies at the federal, regional and

local level. The Ministry of Energy of Russia

together with the federal executive power bodies concerned, including the MAP of Russia, and with the participation of the fuel and energy complex organizations

developed and introduced before the

Government of the Russian Federation the draft Federal Law on Federal Energy Systems which specifies the notion “federal energy system” and defines terms of reference of the Russian Federation. The produced legal base permits on the one

Category

Current situation

Planned further actions

The efficient measure to prevent monopolistic activity in the sphere of natural monopolies consists in regulating the activity of natural monopolies and at the same time

in introducing competitive principles for equisition of

resources by the subjects of natural monopolies.

One of the conditions to assure transparent activity of regulable enterprises belonging to natural monopolies consists in separation of natural monopoly activity from potentially competitive activity through separate

accounting and control as well as through the process of property transformations.

It’s clear that economic activity of Russian enterprises is not transparent and the state regulation of business activity is not in sufficient order. At the same time, forms and methods of their regulation are often in contradiction with the antimonopoly legislation. The activity of

licensing, certifying, supervising and controlling bodies should be put in order. Numerous abuses and

requisitions by these organizations in some cases hinder the development of business and investment. One of the way to improve market relations consists in creating the framework for developing the competitive market and preventing these bodies from the process.

hand to increase the efficiency of the state price regulation and on the other hand to create conditions for improving market relations and introducing competitive mechanisms. This should result in higher efficiency of production and stronger protection of consumer interests.

The major purpose of regulating the subjects of natural monopolies is to continue the course of economic reforms aimed at price (rates) liberalization and to carry out the state regulation of them.

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Current situation

Planned further actions

It's necessary to clarify the notions used in the Federal Laws on Natural Monopolies, on Communication, on State Regulation of Rates with respect to the definition of objects that are under the common legal regulation

(for example, "communication agency", "communication

operator", "public electric and mail communication

services", "communication services", "electric and heat power transfer services”).

It's also necessary to reconsider competence, subordination, distribution of authority and financing procedure of federal and regional bodies, that regulate

the activity of natural monopolies, first of all in the field of

energy. Lack of a common procedure for state

regulation of natural monopolies in the sphere of electric and heat energy transfer at the federal, regional and

local level compromises efficiency of the state regulation in the sphere, whereas systems of regional energy

commissions financing, adopted in some regions, permit

to use considerable sums (up to 5% of electricity rate) for organizing their work under the poor budget for the federal regulating body and its territorial offices.

It's necessary to summarize the results of efforts to establish standard and legal basis for the wholesale electricity and power market, including the rules of wholesale market functioning and procedure of

- development of the legal base for creating “crises cartels”;

- efficient control over concluded

and to be concluded regional agreements as well as price agreements being concluded with the participation of economic entities and executive power bodies with the object of determining the conformity to the requirements of the Law on Competition articles 6 and 8;

- preventing the unjustified rise of

prices of production and sale of fuel and energy resources

(electricity and heat energy, oil

and oil products, gas, coal);

- strengthening the institutional cooperation between the MAP of

Russia and its territorial offices, Federal Economic Commission of Russia and regional energy commissions of the subjects of

the Russian Federation under the

existing legislation taking into account the necessity for

Category

Current situation

Planned further actions

settlements between wholesale market subjects, to develop vendor contracts for electricity and power contracts for using intersystem power grids of wholesale market and grids of regional energy supply companies,

to establish terms of relations between wholesale

market operator and market participants as well as to

implement them in practice.

Communication services rates are regulated at two levels: federal and regional (FSEMS of Russia) and regional (executive bodies of the Russian Federation subjects) according to the Government of the Russian Federation Regulation No. 793 on List of Communication Services that are Subject to State Regulation of Prices (Rates)".

energy resources prices.

Since 1999 communication services rates are regulated by the MAP of Russia in accordance with Government of the Russian Federation Regulation 1559 on Improvement of State Regulation of Communication Services Prices (Rates).