1. Regulation on long-term capacity market
10th ERRA ENERGY INVESTMENT AND REGULATION CONFERENCE
Regulation on long-term capacity market
Denis Milyutin
Deputy Director of the Department for regulation in electricity sector, FTS of Russia
St-Petersburg
May 17, 2011

2. New model of capacity market
Law “On electric power”: Capacity is a special commodity
Rules of the wholesale power and capacity market are set by a Decree of the Government of the Russian Federation
Transitional period
2011
Long-term model
2016
For 1 year period
For 4 years ahead
Price for capacity for generators
according to the results of competitive capacity
take-off (CCT)
According to free agreements
Regulated tariff =
>
Capacity price for generators according to
the results of CCT
the non-regulated contracts (NRC)
capacity delivery contracts (CDC) prices
regulated prices
Scope of capacity supply at free prices - the share determined by the Government
Scope of capacity supply at free prices (CCT + NRC) - all except households (at regulated prices)
Payment for the entire capacity
Only taken-off capacity payment 2

3. Zones without price-cap:
Market map
Non-price areas, geographically isolated systems
Europe price zone– 22 free capacity transfer zones
Zones without price-cap:
Centre, the Urals
Siberia price zone– 7 free capacity transfer zones 3

4. Types of Regulated Prices Government commission
For supply to - household sector
- consumers in the areas with specific
pricing (until 2015) ≤
35% of power and capacity generation scope
Forced/most expensive
15 (10) %
Most expensive
Only for day-ahead market
Not taken-off
capacity
Decommissioning
CCT price
When it is impossible:
Not satisfied with
technical requirements
Government commission
CDC, NPP and HPP
Forced generator
Demand
Ministry of Energy
NPP/HPP: security charge;
investments charge;
new plants 4

5. Liberalization and price regulation
The structure of the physical scope of the capacity supplied by the generators
2011
Transitional period
Long-term model 5%
10%
15%
25%
30%
50%
60%
80%
From 1
Jan. 2007
From 1 Jul.
2007
From
1 Jan.
2008
From 1 Jan.
2009
From 1 Jul. 2009
2010
at free prices
at regulated prices
Others in zones with price-cap
CDC
Forced/ most expensive
New NPP/HPP
NPP/HPP charges
Households sector supply
power
capacity 5

6. Regulating authorities
Technological regulation
Organization of CCT
Designation of the zones
Capacity certification
Price regulation
Submit the proposals on price-cap levels to the Government
Setting price on capacity
Scope of power and capacity supply at regulated prices
Antimonopoly regulation
Designation of the zones where the price-cap is being introduced (no competition)
Determination of the conditions (constrains) for participation in CCT for those who hold dominating or exclusive position
Determination of capacity price-gouging incidents - proposals on CCT results annulment in a zone
Organization-focused regulation
Market rules and procedures
Standard contracts forms development
Capacity pricing according to CDC
Decision on cancellation of CCT results in a zone
System
Operator
Ministry of
Energy
Development of wholesale market rules
Normative support
Determination of reserve ratio ≈ demand for capacity
Decision on the correcting CCT
FAS of Russia 6

7. Thank You for Your attention!
FTS of Russia
7, Kitaigorodsky proezd Moscow Russia
Tel. +7(495)
Fax +7(495)