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    This current was not enough // FAS does not let Russian Railways into the wholesale energy market

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    Russian Railways faced difficulties with entering the wholesale energy market to buy electricity without intermediaries. As Kommersant found out, the FAS opposed it, since the railway monopoly owns the networks, which is incompatible with energy sales activities. According to analysts, Russian Railways, which spend 190 billion rubles on the purchase of energy. per year, entering the wholesale market would save 5 billion rubles. annually.

    JSC Russian Railways asks to be included in the “Market Council” (energy market regulator) and in the register of subjects of the wholesale energy market. The issue will be considered at a meeting of the supervisory board of the “Market Council” on August 23 (“Kommersant” saw the draft protocol). According to the document, the company asks to register for it a group of supply points (GTP) of consumption within the boundaries of the Krasnodar Territory. Now JSC Russian Railways is buying electricity in this territory from an intermediary – a guaranteeing supplier TNS energo Kuban. ” dated May 13, 2019). Monopoly is one of the largest consumers of electricity in the Russian Federation. In 2021, it increased consumption by almost 5%, to 51.46 billion kWh (about 4.6% of electricity consumption in the Russian Federation). Russian Railways’ electricity purchase costs increased by 8.8% year-on-year, reaching RUB 188.9 billion in 2021.

    Now the monopoly buys electricity from distribution companies, paying them an additional surcharge. The main intermediary is Rusenergosbyt (a structure of the ESN Grigory Berezkin and the Italian Enel). Almost all major consumers of electricity, in particular Rusal, NLMK and Severstal, are already buying it without intermediaries. According to Maxim Dyakin from Vygon Consulting, entering the wholesale market will allow Russian Railways to save about 5 billion rubles. in year. Part of the savings of Russian Railways will have to be directed to the creation and operation of its own wholesale trading divisions.

    The Federal Antimonopoly Service opposes Russian Railways’ access to the wholesale market. The service explained to Kommersant that this would lead to a violation of the law on the electric power industry, which contains a ban on combining the activities of transmission and sale of electricity. “The company is a territorial grid organization that provides electricity transmission services in more than 40 regions,” the FAS noted. According to the report of Russian Railways, the monopoly’s income from energy transmission in 2021 amounted to 13.8 billion rubles. JSC Russian Railways declined to comment.

    The Market Council said that the issues on the agenda of the next meeting of the Supervisory Board are undergoing preliminary discussion. JSC Russian Railways plans to purchase electricity on the wholesale power market for its own needs using the declared GTP, which presents the power receiving equipment of JSC Russian Railways. “In order to comply with the requirements of the legislation of the Russian Federation in relation to the equipment of Russian Railways, it does not matter in this GTP whether Russian Railways would buy electricity on the retail market from the energy sales company in relation to this equipment or on the wholesale market,” the Market Council believes.

    The legislation provides for exceptions to the rule on the prohibition of combining activities. Thus, entities engaged in the transmission of electric energy and operational dispatch control in the electric power industry solely to meet their own production needs do not fall under the restriction, says Kulik & Partners Law.Economics lawyer Pavel Dmitriev. “Perhaps Russian Railways will refer to exceptions in the legislation,” the lawyer believes.

    Vegas Lex partner Evgeny Rodin adds that in Russia it is forbidden to simultaneously provide transmission services and sell electricity, and not buy it for own consumption. Perhaps, he admits, the point is that Russian Railways will create a new company that will buy electricity and sell it to other subsidiaries of the monopoly. Then there is a formal violation of the ban on combining activities, but this is quite surmountable: the ban was introduced to prevent restriction of competition, but in this situation it cannot be, since electricity will be sold to enterprises belonging to the same group.

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