Deloitte has valued the assets of five MRSK subsidiaries that plan to convert to an RAB tariff-setting system in 2008, Interfax reported. The initial regulatory asset bases (iRAB) calculated, with account for equipment depreciation, are shown in the table below. The re-evaluation ratios (iRAB/RAS fixed assets) average 3.2. The estimations made cannot be regarded as final, as they have yet to be approved by the regional energy commissions (REC), which, in turn, have to wait for the release of the official calculation method for RAB tariffs. Rules for the evaluation of assets are an integral part of the method. We believe that the approved valuations will not differ much from those made.
Table. Valuation of the initial asset base for regulation of electricity tariffs under the RAB method.
| MRSK | Subsidiary | Fixed assets calculated to RAS, bn RUB | Initial regulatory asset base (iRAB), Bn RUB | Re-evaluation ratio (iRAB/RAS) |
|---|
| Center | Belgorodenergo | 9.0 | 19.9 | 2.2 |
| Center | Tverenergo | 2.7 | 14.3 | 5.3 |
| South | Astrakhanenergo | 1.9 | 5.7 | 3.1 |
| Volga | Orenburgenergo | 5.7 | 13.2 | 2.3 |
| Ural | Permenergo | 6.4 | 21.0 | 3.3 |
Source: Spark, Interfax.
The Russian government resolution enacting a new tariff regulation system for Russian power distribution grids, based on returns on invested capital, was signed on June 20. The MRSK subsidiaries in Belgorod, Astrakhan, Perm, Tver and Orenburg are to switch to RAB tariffs in 2008. However, no actual growth of electricity tariffs should occur before January 1, 2009.
We believe that this news is upbeat for the power distribution sector, since it gives an idea of the scale of the imminent re-evaluation of power distribution grids' assets prior to converting them to RAB tariffs, and lowers uncertainty in projecting the tariffs.
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