The Balance Of Interests Of The Entities Of The Wholesale Electric Power And Capacity Market: Legal Regulation Issues

This article studies the causes of defaulting on the contractual obligations of payment for electric power and capacity by the guaranteeing suppliers and considers possible options for the improvement of the legal regulation system of the wholesale electric power and capacity market. The institution of the guaranteeing supplier has for its mission the ensuring of a reliable and uninterrupted energy supply for consumers, but, along with that useful function, the institution of the guaranteeing supplier has negative aspects as well. One fourth of the guaranteeing suppliers operate on the edge of bankruptcy and are not able to fulfill their payment obligations to other entities of the wholesale market. The compulsory requirement to enter in regulated contracts leaves the generators no opportunity to choose the most bona fide and solvent counterparty. The mechanisms to encourage payment discipline existing in the wholesale electric power and capacity market have proved to be inefficient. The electric power and capacity sellers incur global losses with, in fact, no hope to have them reimbursed in the future. As the most thoroughgoing alternative to the existing legal model of the wholesale electric power and capacity market, is, in the author’s opinion, reforming of the institution of the guaranteeing supplier with lifting of the prohibition to combine the electric power transmission and selling activities as an option. The author of this article concludes that the focus from the punitive measures for the non-payers should be shifted to application by the state of comprehensive measures to improve the situation in the segment of the insolvent guaranteeing suppliers (the power supply and power sales companies) and change their legal status.

Ключевые слова

energy law; legal regulation of the wholesale electric power and capacity market; guaranteeing supplier’ legal status; rules of the wholesale electric power and capacity market; regulated contracts

Получено

06.08.2018

Дата публикации

30.09.2018

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17109

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ГОСТ	Коропец Н. В. The Balance Of Interests Of The Entities Of The Wholesale Electric Power And Capacity Market: Legal Regulation Issues // Правовой энергетический форум – 2018. – Выпуск № 3 C. 100-104 [Электронный ресурс]. URL: https://mlcjournal.ru/S231243500022038-9-1 (дата обращения: 03.05.2024). DOI: 10.18572/2410-4390-2018-3-100-104
MLA	Nadezhda V., Koropets "The Balance Of Interests Of The Entities Of The Wholesale Electric Power And Capacity Market: Legal Regulation Issues." Energy law forum 3 (2018):100-104. DOI: 10.18572/2410-4390-2018-3-100-104
APA	Nadezhda V. K. (2018). The Balance Of Interests Of The Entities Of The Wholesale Electric Power And Capacity Market: Legal Regulation Issues. Energy law forum (3), pp.100-104 DOI: 10.18572/2410-4390-2018-3-100-104


1	The wholesale electric power and capacity market is a complex technological and economic system functioning to achieve a useful effect manifested, on the one part, in an efficient and uninterrupted power supply and, on the other part, in deriving of profit by the participating commercial organizations. The model of the electric power and capacity market (wholesale and retail) functioning today prohibits combining of the activity of the electric power and capacity production, transmission, and sale (Federal Law dd. March 26, 2003, No. 36-ФЗ On the Particularities of the Electric Power Industry Functioning, on Amending of Certain Legislative Acts of the Russian Federation, and on the Invalidation of Certain Legislative Acts of the Russian Federation Due to the Adoption of the Federal Law “On the Electric Power Industry).
2	Presently, the legal studies of legal regulation of the wholesale and retail electric power and capacity markets are not numerous yet. [1] Those works study the issues of law enforcement in the wholesale and retail electric power and capacity markets and the goals of its legal regulation’s further development. The legal studies deal also with the issues of legal regulation of the balance of interests of the energy resources providers and consumers and proper fulfillment of the obligations to pay for the energy resources supplied. [2] Today, the issues considered still remain topical.
3	This article studies the causes of defaulting on the contractual obligations of payment for electric power and capacity by the guaranteeing suppliers and considers possible options for the improvement of the legal regulation system of the wholesale electric power and capacity market.
4	A “payment discipline index” (PDI) has been introduced to assess the guaranteeing suppliers’ payment discipline. The given indicator characterizes the average weighted duration of the arrears under the guaranteeing supplier’s obligations having arisen in the wholesale electricity and power market. The statistics published on the official website of JSC FSC [3] testifies to an extremely low payment discipline of the guaranteeing suppliers: in June 2018, the guaranteeing suppliers’ PDI has decreased by 0.9 % by the previous month, and the trend of preserving the unsatisfactory level of the guaranteeing suppliers’ payment discipline persists. During Q1 2018, the number of solvent and sound guaranteeing suppliers (as compared with the results of Q1 2017, and in reference values) has decreased by 2 %, while the number of financially sustainable companies has grown by 1 %. In its turn, the guaranteeing suppliers’ bankruptcy probability that can be rated as “high” has increased by 7 %. One fourth of the total number of guaranteeing suppliers (27 companies) have extremely low solvency, the financial sustainability of more than 24 % of the companies is rated as “crisis”, and, according to a study of JSC FSC, 21 % of the guaranteeing suppliers are under the threat of bankruptcy.
5	As it has been mentioned, the electric power and capacity market is a controlled system with the state playing an essential role in its regulation. Even though a decade has passed since the reformation of RAO UES, such mechanisms as regulated contracts and cross-subsidizing exist in the Russian “competitive” electric power and capacity market.
6	The system of regulated contracts in the wholesale electric power and capacity market represents an explicit anticompetitive mechanism actively used in the modern Russian electric power and capacity market. According to the report on default interest obligations fulfillment dated July 25, 2018 [4], as calculations show, the biggest debt under payment obligations has been recorded in the regulated contracts sector, regarding the obligations’ type “Default interest under regulated contracts, power energy and capacity”, with the debt amounting to RUB 224,974,551.10 as of July 26, 2018, with the total debt across the market making RUB 292.1 million.
7	The system of regulated contracts in the wholesale market is aimed at the supply of electric power and capacity; entering into such contracts is required from the electric power and capacity producers and the guaranteeing suppliers, the power sales and power supply organizations providing the population with electric power and capacity, as well as from the purchasers functioning in locations covered by particular price zones of the wholesale market (Regulation of the Government of the Russian Federation dd. December 27, 2010, No. 1172 On Approving the Rules of the Wholesale Electric Power and Capacity Market and on Amending Certain Acts of the Government of the Russian Federation on the Procedure of Operation of the Wholesale Electric Power and Capacity Market). A particular feature of such contracts is the lack of expression of the parties’ will regarding the choice of the counterparty, the supply amount, and the commodity sale price. The choice of counterparties and supply amounts under the regulated contracts has been referred to the competence of the Commercial Operator (JSC TSA) and is performed by way of formation and approval, under the established procedure, of the scheme of accession regarding the regulated contracts in accordance with the requirements established by the Registration Rules for the Electric Power and Capacity Purchase and Sale Contracts (Appendix No. 6.2. to the Contract of Accession to the Wholesale Market Trade System) [5].

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1. Energy Markets: Issues and Tasks of Legal Regulation. Energy Law. Monograph edited by V.V. Romanova, Doctor of Law. Moscow : Yurist Publishing House. 2018. s. 21–23, 71–120; Bondarenko A.B. Problematic Aspects of Law Enforcement in Retail Electric Power Markets and the Concept of the Existing Model Liberalization. // Energy Law Forum. 2017. № 1. S. 25–32. Kashlikova I.A. The System of Contracts in the Wholesale Electric Power and Capacity Market // Energy Law Forum. 2016. № 2. S. 36–40.

2. Romanova V.V. Energy Law Order: Current State and Tasks. Moscow : Yurist Publishing House. 2018. s. 65–80; Akimov L.Yu. Improvement of the Legal Mechanisms of Ensuring Timely Payments by the Energy Resources Consumers for the Energy Supplied. // Energy Law Forum. 2016. № 1. S. 13–17.

3. URL: https://cfrenergo.ru/upload/iblock/8c5/Indeks-platyezhnoy-distsipliny-06.2018.pdf

4. URL: https://cfrenergo.ru/upload/iblock/6c5/Otchet-ob-ispolnenii-obyazatelstv-v-datu-platezha-25.07.2018-g..pdf

5. URL: https://www.np-sr.ru/ru/regulation/joining/reglaments/index.htm

6. URL:https://www.kommersant.ru/doc/3696755?query=%D1%81%D0%B5%D0%B2%D0%B5%D1%80%D0%BD%D1%8B%D0%B9%20%D0%BA%D0%B0%D0%B2%D0%BA%D0%B0%D0%B7.