Electricity price: rise is the verdict
18.06.2015,
11:44
Armenia’s Public Services Regulatory Commission passed a decision on Wednesday June 17 to raise the electricity tariff for the population by 6.93 drams per kilowatt-hour.
YEREVAN, June 18. /ARKA/. Armenia’s Public Services Regulatory Commission passed a decision on Wednesday June 17 to raise the electricity tariff for the population by 6.93 drams per kilowatt-hour.
The decision that is to come into force on August 1, 2015, was made following the application of May 8 by the Electric Networks of Armenia (ENA) to increase the price of electricity supplied to consumers. The company asked the regulator to raise the tariff by 17.08 drams, i.e. from the current 41.85 drams to 58.93 drams per kilowatt-hour for daytime consumption and from 31.85 drams to 48.93 drams per kilowatt-hour at nights.
Of course, the Electric Networks found weighty, in their opinion, reasons and submitted a hefty folder of documents containing thousands of pages. From the beginning, the proposed increase gave rise to huge public discontent in the society that was confident it was another unjustified electricity price increase.
The intentions to raise the price by 40% in one go caused an extreme public outcry. There is no doubt about that the “inefficient” use of funds borrowed as government guaranteed loans, it is about $250 million, should be repaid one way or another, and raising the price for the population is “the best and the simplest” option
Allegations suggested that the bid for raising the price by 17 drams was just a red herring to reduce the public discontent and make a lower price increase achievable. In fact, that is what happened.
Practically all sides, from NGOs to high officials, including the speaker, kept talking about poor management in the company after the bid on the price increase was submitted. Before the regulator’s draft decision was made public, speaker of the Armenian parliament Galust Sahakyan said increase of 17 drams is “unrealistic”.
Lawmakers, including the opposition, have recurrently urged to investigate into the matter, reveal corruption and stealing at the Electric Networks and in no way increase the price for electricity as it would lead to grave consequences both for common people and for the economy as a whole.
The ruling Republican Party of Armenia have also expressed their concerns about possible price increase, yet called to refrain from making premature conclusions and leave the matter to the PSRC.
Even before all the documents from the Electric Networks were considered, the head of PSRC Robert Nazaryan said certain unnecessary expenditures were included in the bid.
“Apparently, there are management problems. But no single penny of costs from poor management or presumably slapdash work will be included in the electricity tariff,” Nazaryan said.
According to the head of PSRC, expensive product and service costs (luxury car and house rentals) were incorporated in the bid. These costs were not considered in calculating the new tariff, he said.
In the beginning Nazaryan gave no indication of the increase levels, but said there will be a hike, first of all, from the dollar revaluation, 88-day standstill at the nuke plant last year and the dry year. Yet, on June 9, the PSRC released a draft decision saying the electricity tariff will go up by 6.93 drams per kilowatt-hour, of which about 2.4 drams will go to energy generating and maintenance companies and 4.24drams will be used by the distributing networks.
A few days later, at a parliament session, Nazaryan said the electricity tariff might reduce by 5 drams in a year’s time. But this will be possible only if there are no currency fluctuations, no dry year and no other commitments and problems, which is low probable.
The debate was even further fueled by the interview of ENA’s general director Yevgeniy Bibin saying that one of the key reasons for the increase was the need for systemic structural changes in the energy system as a whole and that numerous requests by the company to address the issue were left with no response from the government.
Apart from this, Bibin sent a letter to PSRC the day before saying if the draft decision on ENA’s bid was approved, the company would not be able to ensure the quality standards and reliability of energy supplies. Similarly, it would not be able to ensure the investments in further development of services, the letter said.
Yesterday’s decision-making meeting of PSRC was quite tense, and ENA’s general director was not there. According to Nazaryan, this was the first case of the regulator’s considering the bid with no representative from the bidder’s side.
The meeting was attended by political parties and non-governmental organizations that condemned any increase in the electricity tariffs for the population. The speakers blamed the increase on the poor management in the Electric Networks of Armenia.
But the accusations were left with no response from the Electric Networks, and the meeting itself had been interrupted due to heated disputes and competing accusations, by representatives of NGOs and extra-parliamentary parties who were blaming not only the ENA, but also the regulatory commission – for “not taking common people’s interests in account”.
While PSRC was considering the matter, dozens of activists gathered outside the PSRC’s building to protest against the electricity tariff increase. The police had to exercise restraint and detain six protesters who are expected to be released after the respective formalities are completed.
Another rally is planned to be held against the electricity price increase in Yerevan on June 19. There is no idea what the rally activists plan to do, but it would be more logical to stage a rally before, not after the PSRC made its decision.
One can be quite pessimistic about the future, also bearing in mind that Vorotan Hydro Power Cascade producing the cheapest energy in the country has been recently sold. The new owner, American Contour Global Hydro Cascade company, is obliged to keep the current wholesale price (which is about 9 drams per kWthour, as compared to average of 21 drams) during seven months only, and may increase it afterwards, based on cost calculations.
Apart from this, the Armenian nuke plant will be stopped for half a year in early 2017, for service life extension works, which means that future energy price increases become more and more apparent in Armenia.
David Galstyan, for ARKA Agency. –0—
The decision that is to come into force on August 1, 2015, was made following the application of May 8 by the Electric Networks of Armenia (ENA) to increase the price of electricity supplied to consumers. The company asked the regulator to raise the tariff by 17.08 drams, i.e. from the current 41.85 drams to 58.93 drams per kilowatt-hour for daytime consumption and from 31.85 drams to 48.93 drams per kilowatt-hour at nights.
Of course, the Electric Networks found weighty, in their opinion, reasons and submitted a hefty folder of documents containing thousands of pages. From the beginning, the proposed increase gave rise to huge public discontent in the society that was confident it was another unjustified electricity price increase.
The intentions to raise the price by 40% in one go caused an extreme public outcry. There is no doubt about that the “inefficient” use of funds borrowed as government guaranteed loans, it is about $250 million, should be repaid one way or another, and raising the price for the population is “the best and the simplest” option
Allegations suggested that the bid for raising the price by 17 drams was just a red herring to reduce the public discontent and make a lower price increase achievable. In fact, that is what happened.
Practically all sides, from NGOs to high officials, including the speaker, kept talking about poor management in the company after the bid on the price increase was submitted. Before the regulator’s draft decision was made public, speaker of the Armenian parliament Galust Sahakyan said increase of 17 drams is “unrealistic”.
Lawmakers, including the opposition, have recurrently urged to investigate into the matter, reveal corruption and stealing at the Electric Networks and in no way increase the price for electricity as it would lead to grave consequences both for common people and for the economy as a whole.
The ruling Republican Party of Armenia have also expressed their concerns about possible price increase, yet called to refrain from making premature conclusions and leave the matter to the PSRC.
Even before all the documents from the Electric Networks were considered, the head of PSRC Robert Nazaryan said certain unnecessary expenditures were included in the bid.
“Apparently, there are management problems. But no single penny of costs from poor management or presumably slapdash work will be included in the electricity tariff,” Nazaryan said.
According to the head of PSRC, expensive product and service costs (luxury car and house rentals) were incorporated in the bid. These costs were not considered in calculating the new tariff, he said.
In the beginning Nazaryan gave no indication of the increase levels, but said there will be a hike, first of all, from the dollar revaluation, 88-day standstill at the nuke plant last year and the dry year. Yet, on June 9, the PSRC released a draft decision saying the electricity tariff will go up by 6.93 drams per kilowatt-hour, of which about 2.4 drams will go to energy generating and maintenance companies and 4.24drams will be used by the distributing networks.
A few days later, at a parliament session, Nazaryan said the electricity tariff might reduce by 5 drams in a year’s time. But this will be possible only if there are no currency fluctuations, no dry year and no other commitments and problems, which is low probable.
The debate was even further fueled by the interview of ENA’s general director Yevgeniy Bibin saying that one of the key reasons for the increase was the need for systemic structural changes in the energy system as a whole and that numerous requests by the company to address the issue were left with no response from the government.
Apart from this, Bibin sent a letter to PSRC the day before saying if the draft decision on ENA’s bid was approved, the company would not be able to ensure the quality standards and reliability of energy supplies. Similarly, it would not be able to ensure the investments in further development of services, the letter said.
Yesterday’s decision-making meeting of PSRC was quite tense, and ENA’s general director was not there. According to Nazaryan, this was the first case of the regulator’s considering the bid with no representative from the bidder’s side.
The meeting was attended by political parties and non-governmental organizations that condemned any increase in the electricity tariffs for the population. The speakers blamed the increase on the poor management in the Electric Networks of Armenia.
But the accusations were left with no response from the Electric Networks, and the meeting itself had been interrupted due to heated disputes and competing accusations, by representatives of NGOs and extra-parliamentary parties who were blaming not only the ENA, but also the regulatory commission – for “not taking common people’s interests in account”.
While PSRC was considering the matter, dozens of activists gathered outside the PSRC’s building to protest against the electricity tariff increase. The police had to exercise restraint and detain six protesters who are expected to be released after the respective formalities are completed.
Another rally is planned to be held against the electricity price increase in Yerevan on June 19. There is no idea what the rally activists plan to do, but it would be more logical to stage a rally before, not after the PSRC made its decision.
One can be quite pessimistic about the future, also bearing in mind that Vorotan Hydro Power Cascade producing the cheapest energy in the country has been recently sold. The new owner, American Contour Global Hydro Cascade company, is obliged to keep the current wholesale price (which is about 9 drams per kWthour, as compared to average of 21 drams) during seven months only, and may increase it afterwards, based on cost calculations.
Apart from this, the Armenian nuke plant will be stopped for half a year in early 2017, for service life extension works, which means that future energy price increases become more and more apparent in Armenia.
David Galstyan, for ARKA Agency. –0—
