According to Vladimir Mokhov, first deputy chairman of the Moscow Regional Energy Commission (REC), the decision to increase electricity and heat tariffs in Moscow will be made no earlier than April 10, 2002. In addition, the REC is not going to increase tariffs by more than 25%. However in the application submitted earlier to the REC, AO MOSENERGO provided economic justification for 40% increase in electricity tariffs and 70% increase in heat tariffs.

Delays in tariff increases could cause difficulties for AO MOSENERGO due to rising current costs. In February gas prices increased 20%. Gas accounts for 90% of the fuel balance of the energy system. The same rise was observed in rates charged for using RAO UES grids. One should also remember that heat revenues account for one third of the total AO MOSENERGO’s revenues. However the heating season is close to the end, and the delays with tariff adjustment may result in substantial fall in company revenues.

In its turn, the lack of funds may disrupt the preparation for the heating season. According to the approved schedule, 8,200,000 million rubles are budgeted for equipment repairs in 2002. A considerable portion of the funds is expected to come from tariff increases. Delays with tariff increases negatively impact financial results and the economic situation in the company, thus threatening the reliability of power supply for consumers.