The issue of expediency of new electric power tariffs (Resume)

Maka Gudiashvili, Nana Samsonia

The purpose of restructuring of the electroenergetics sector and inculcation of various ownership forms was formation of a healthy competitive environment, in which a consumer would always be the gainer.

If we judge by the results of the 15 years from the moment of starting of the restructuring process, the natural monopoly seems to be an impedimental factor for a healthy competition, since we witness periodic rising in price of electric power, because of which a consumer suffers losses. If we compare the electricity tariff to similar indicators in America and Europe, an employed adult person’s average annual income of 30 000 USD considerably exceeds an employed adult person’s average annual income of 1 800 GEL (1 000 USD) in Georgia. According to the data of 2004, the remuneration of labor by the hour of the people employed in different branches of Georgia’s economy and in the public sector makes up 0.90 GEL, (250 workdaysX8 hours)X0.90 GEL=1 800 GEL a year. In conditions of the existing tariff, in case of economical consumption of electric power, the 300 GEL paid annually make up 17% of an employed adult person’s average annual income in Georgia. According to the decision of the Georgian Commission for Regulation of Electric Power (!18. 15 May, 2006), increasing of the tariffs is substantiated by the sharp rise in the price of imported fuel, which to a certain extent justifies raising of the sale price of the electric power generated at thermoelectric power stations. The motive of raising of the distributing companies’ tariffs, which only distribute electric power among the consumers by means of the local distribution network, is not clear. As it is known, the average distribution tariff of “Telasi” distributing company was calculated in the amount of 7.207 tetri/ kwh (without VAT, 8.5 – including VAT) according to the correlation between expenses, net profit and taxes. As it is known, no investments were made in the fixed assets of “Telasi” after 2000, annual operational expenditure has had no significant changes, as to the taxes, after the last decision the Tax Code was changed (December 2004), but a serious reduction in kinds of taxes and rates has taken place, which should have caused cutting of the tariffs rather then their increasing. In other words, according to the average tariff (7.89 tetri/kwh, 9.31 – including VAT) fixed for “Telasi”, the share of profit has increased, which contradicts to “the rules and methodology of tariff fixing”, according to which the profit level of energy distribution companies should not exceed 20%. At the same time, Tbilisi consumers will have to pay 20 million GEL extra.