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Power supply business of Russia: Financial and economic aspects and challenges

Vol. 24, Iss. 11, NOVEMBER 2018

Received: 20 September 2018

Received in revised form: 4 October 2018

Accepted: 18 October 2018

Available online: 29 November 2018


JEL Classification: G30

Pages: 2503–2522

Fedorov Ya.P. Financial University under Government of Russian Federation, Moscow, Russian Federation

Subject This article discusses the financial and economic aspects of the development of energy supply business in Russia.
Objectives The article aims to reveal financial and economic problems of development of energy service companies (ESCO) in Russia.
Methods For the study, I used empirical and logical constructions, analysis and synthesis, generalization, a systems approach, and the methods of comparative analysis.
Results The article formulates the basic financial-and-economic and procedural-and-institutional aspects of functioning of the energy supply industry. It shows the specifics of pricing and government regulation on the retail electricity market. The article also describes the types of cross-subsidization in the industry and some types of economic effects not stipulated by the State regulation.
Conclusions and Relevance The article notes the tendency of the industry to consolidation and integration, small companies are abandoning the market. ESCO companies lose their independence. The main vector of the industry development is the transition to remote service. The only way to solve the problem is to create a real competitive electricity market in the country, depriving the guaranteeing suppliers of exclusive rights on the energy supply to the population, small and medium-sized enterprises and organizations. The results of the study can be used to improve the State regulation of the industry and assess the development prospects of the industry by specialists of analysis services of specialized bodies of State power and energy providers.

Keywords: power supply business, default supplier, electricity prices, reference sales, cross-subsidization, ESCO company


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