Regional aspects of electricity sector regulations in Russia
This paper estimates regional features of the electricity sector regulation in Russia. We use panel data for 77 Russian regions during 1998–2003. Our analysis is based on the interest-group theory of regulation. The objective of the project is to estimate the influence of regional energy company, consumers, and governor on regulation policy in the region. Empirical analysis shows that governors' elections are accompanied by tariffs' decrease. We found that during 1999–2001 there was a gap between federal and regional regulation, and that energy-intensive enterprises choose the strategy to buy electricity from federal wholesale market, but not to bargain with regional regulator about low tariffs. Based on our analysis we conclude that it is necessary to separate social and economic parameters of regulation. Economic requirements call for the change of pricing method to "rate of return" approach that will stimulate monopolist to increase efficiency. Social requirements should incorporate in regulation mechanisms of taking into account the poverty level in a given region.
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