The District heating regulation in Russia: local markets’ reaction

Olga Dyomina

Spatial Economics=Prostranstvennaya Ekonomika, 2017, issue 3, 62-82

Abstract: The article explores ways of state regulation of natural monopolies, shows their generalized classification. Two main ways of direct regulation are described: costs-based and stimulating. It is shown that there is an overwhelming trend of changing ways of regulation to less state-controlled. On the example of the district heating market of Russia the article shows the failing of the acting costs-based type of regulation. It is concluded that the main task of changing regulation is destroying the connection between tariffs and heat producer’s costs. The alternative way for district heating reform is a stimulating type of regulation based on price limits (the price of ‘heat-only boilers’). The author made estimates of gains received as a result of the reform for participants of three largest district heating markets of the Far East. It is shown that annual increase rates of tariffs for consumers will be: Vladivostok – 5.0%, Khabarovsk – 8.8%, Blagoveshchensk – 11.1%. The estimates do not support the estimates of Russian Ministry of Energy specialists according to which the annual increase rate is expected to be about 0.6%

Keywords: natural monopoly; district heating; local market; state regulation; tariff; reform; the price of ‘heat-only boilers’; Khabarovsk; Vladivostok; Blagoveshchensk; the south of Far East (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:far:spaeco:y:2017:i:3:p:62-82

DOI: 10.14530/se.2017.3.062-082

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