RUSSIA: CHEAPER ELECTRICITY IN FOUR REGIONS
Unified Energy Systems (EES) CEO Anatolii Chubais signed an agreement with Nizhegorodskaya Oblast Governor Gennadii
Khodyrev on 29 October to lower electricity rates for residential customers by 20 percent starting on 1 November,
"Vedomosti" reported on 30 October. The lower rates will stay in effect through 1 May 2004. The region is one
of four -- the other three are St. Petersburg, Sverdlovsk, and Perm -- slated for rate reductions. According to Chubais,
the regions were selected because they are neither wealthy, like Moscow, nor impoverished, "Kommersant-Daily"
reported on 28 October. As a result, they will be ideal candidates to benefit from a wholesale electricity market that
is supposed to begin operating on 1 November. That market, which must still clear several administrative hurdles if it
is to start up on time, will allow up to 15 percent of the country's electrical energy to be bought and sold
freely. Observers have criticized the rate-reduction initiative as a pre-election stunt by Chubais, who doubles as
co-chairman of the Union of Rightist Forces. UBS Brunswick analyst Fedor Tregubenko told "Izvestiya" on 30
October: "This initiative goes entirely against economic logic.... Electrical energy reform is aimed at increasing
rates for the population and reducing the burden on industry." Analysts queried by "Izvestiya" estimated
that the reduced rates could cost EES subsidiaries as much as 400 million rubles ($13.3 million) in lost revenues. DK
Copyright (c) 2003. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty
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