Watershed: will the increase in water use fees for hydroelectric power plants affect consumers

The Ministry of Natural Resources of Russia has proposed raising the business rates for the use of water for hydroelectric power plants by 2.5 times.

According to the correspondent MorningNewsthe Ministry of Natural Resources initiated an increase in the business rate for water use for hydroelectric power plants, but was unable to prepare a draft of the relevant government decree by the appointed date (it was February 1), as the Ministry of Energy and the Federal Antimonopoly Service strongly objected to such plans.

The Ministry of Natural Resources, as an argument in its favor, reported that such a measure would force the power industry to pay more than 40 billion rubles to the budget. for three years, the Ministry of Natural Resources considers it possible to use these funds for the improvement of rivers in the future. However, opponents immediately stated that this initiative would lead to an increase in electricity tariffs for the population by 2-3% above the forecast. And the largest owners of HPPs have already warned that they will have to cut their investment programs.

As reported “Kommersant”by February 1, the Ministry of Natural Resources was able to agree on a draft government decree on increasing business rates for water use for hydropower plants only with the Federal Water Resources and the Ministry of Finance, while the Ministry of Industry and Trade, the Ministry of Economy and the Ministry of Agriculture did not provide their positions.

Let us clarify that the water tax and water use rates apply to hydroelectric power plants, as well as companies that take water from water bodies or use their water areas. In addition to the power industry, the growth in business rates for water use will seriously affect water utilities, nickel and copper producers, as well as agricultural enterprises.

According to Kommersant, the most critical increase in rates for owners of HPPs in Siberia and the Far East. According to the draft resolution, the increasing coefficient to the rate of payment for the use of water bodies for them in 2022, if the resolution under discussion is adopted, will be 7.65 instead of the current 3.06, in 2023 – 8.8 instead of 3.52, in 2024 – 10 .3 instead of 4.05, in 2025 – 11.63 instead of 4.65.

The Ministry of Energy reported that they do not support the draft resolution, since the additional costs of HPPs in 2022-2025 will amount to about 46.3 billion rubles. The one-part tariff for electricity for the population in the price zones of the wholesale energy market, according to the forecasts of the department’s specialists, will increase by an average of 2% above the forecast, for non-price zones (Kaliningrad, Komi, Arkhangelsk region, Far East) – by 3% above the forecast for 2024.

Similar counterarguments were brought to the FAS. According to representatives of this department, the growth of the electricity tariff in 2023 in non-price zones will be 250%, the additional financial burden will be 782.3 million rubles, and the single-rate tariff will increase on average by 1.6% above the forecast for socio-economic development. The FAS recalls that since the growth of tariffs for the population is limited, the adoption of this project will increase the amount of cross-subsidization in power networks.

According to the estimates of the Community of Energy Consumers, the additional amount of cross-subsidizing in 2022-2025 may amount to 7-9 billion rubles, of which 4-5 billion rubles. will fall on the shoulders of consumers in Siberia.

RusHydro also proposed to maintain the current procedure for determining fees for HPPs, especially since it already provides for an increase in rates by 2024 by more than five times compared to 2015.

“The withdrawal of funds will lead to the need to reduce investments in the renewal of hydroelectric power plants and the deterioration of the technical condition of the main equipment, and will also call into question the further development of small hydropower generation,” Kommersant quoted RusHydro representatives as saying.

Meanwhile, according to the En+ Group, the water use rates for the rivers of Siberia are already 1.3-1.5 times higher than the rates for the rivers of the European part of the Russian Federation. Therefore, despite the fact that the generation of RusHydro HPPs is greater than that of En +, the water use fees for both companies are comparable: 3 billion rubles. from En+ and 2.8 billion rubles. from RusHydro at the end of 2021. “The increase in water use rates will have a negative impact not only on energy companies, but also on the country’s economy as a whole. Due to a significant drop in income, our company will be forced to urgently reduce investment programs. Cross-subsidization in Siberia will grow, which will have a sharp negative impact on the Russian industry, ”says En +.

According to Vladimir Sklyar from VTB Capital, in total for 2022-2025, RusHydro will have to pay an additional 22.5 billion rubles, En + – 14.8 billion rubles, TGC-1 – 3.2 billion rubles. This is equivalent to 0.5% of the consumer’s generation fee.

The analyst estimates that the proposed increase in the water tax would, on average, lower the EBITDA of the three companies by 3.7% from the current forecast.