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IDGC of Volga

December 29, 2015

Saratov, PJSC starts operations in the new year with a multi-million debt

Saratovenergo, PJSC owes over 1.1 billion rubles to IDGC of Volga, PJSC for electricity transmission services. Saratovenergo maintains the notorious leadership position among the defaulter companies who undermine the energy security of the region. This is a truly unrivalled debt amount as compared to other retail electricity companies in the area of operation of IDGC of Volga, PJSC; and any references to a “dire economic environment” sound unconvincing. Without receiving payments from Saratovenergo, IDGC of Volga, PJSC will have to suspend its payments to downstream territorial distribution companies (TDCs). Therefore, through failing to fulfill its payment obligations, Saratovenergo triggers a “chain of non-payments”, undermining the energy stability of the Saratov region. Without timely financing, IDGC of Volga, PJSC and TDCs will have difficulties in operating and maintaining their electric grid facilities. During the autumn and winter period, it's putting the energy security of the region at risk.
It is unclear how Saratovenergo intends to resolve this situation. So far, IDGC of Volga, PJSC has received no proposals for settlement of this indebtedness. As a conciliatory gesture, in 2015 the distribution grid company gave its consent to restructure the debts of retailers. However, even this measure did not help Saratovenergo to duly perform its main function – to collect electricity fees and settle payments for electricity transmission services. In connection with the current situation, it becomes doubtful whether Saratovenergo is able to plan and further carry out its business as Provider of Last Resort (POLR) in the Saratov region and fulfill its commitments to consumers. Starting from 2016, the defaulting companies will be unable to further use finances of their partners at no cost to themselves.
Pursuant to Federal Law No. 307 “On amending certain legislative enactments of the Russian Federation related to strengthening of payment discipline of consumers of the energy resources”, tougher penalties will apply to all categories of power consumers offending the payment discipline.
Thus, the amount of penalty charges for failure to meet the payment discipline will be virtually comparable to bank loan rates. In such a case, undisciplined consumers who damaged their business reputation will have difficulties in attracting credit resources. In such conditions, it will be extremely difficult to carry out the business at all, and, as is the case with Saratovenergo acting as POLR, to ensure failure-free supply of electricity for its customers. In the long run, reluctance of Saratovenergo to pay its bills may result in collapse of the regional energy system.




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