The Ministry of Natural Resources of Russia has suggested increasing the business rates for the use of water for hydropower plants by 2.5 times.
According to the correspondent MorningNewsthe Ministry of Natural Resources proposed raising the business rate for water use for hydropower plants, but failed to prepare a draft of the relevant government decree by the set date (February 1), as the Ministry of Energy and the Federal Antimonopoly Service strongly opposed such plans.
The Ministry of Natural Resources, in support of this measure, stated that it would compel the power industry to contribute over 40 billion rubles to the budget over three years, with the potential to use these funds for future river improvement. However, opponents immediately warned that this initiative would result in a 2-3% increase in electricity tariffs for the population, exceeding the forecast. The largest hydropower plant owners have also indicated that they will need to reduce their investment programs.
As reported Kommersantby February 1, the Ministry of Natural Resources managed to reach an agreement on a draft government decree to increase 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.
It's important to note that the water tax and water use rates apply to hydropower plants, as well as companies that draw water from water bodies or use their water areas. In addition to the power industry, the growth in business rates for water use will significantly impact water utilities, nickel and copper producers, and agricultural enterprises.
According to Kommersant, the most significant rate increase will affect owners of hydropower plants in Siberia and the Far East. According to the draft resolution, the increasing coefficient to the payment rate for the use of water bodies for them in 2022, if the resolution 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 stated that they do not support the draft resolution, as the additional costs of hydropower plants in 2022-2025 will be around 46.3 billion rubles. The single tariff for electricity for the population in the wholesale energy market's price zones, according to the department’s forecasts, will increase by an average of 2% above the forecast, and in non-price zones (Kaliningrad, Komi, Arkhangelsk region, Far East) – by 3% above the forecast for 2024.
Similar counterarguments were presented to the FAS. According to representatives of this department, the electricity tariff growth 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 points out 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.
