New electricity tariff runs counter to expert opinions but it is based on PSRC calculations    

ArmInfo. "If funds are invested in development of the Armenian energy system, the Armenian consumers should pay for it," Garegin Baghramyan, Head of the Tariff Policy Department of the Public Services Regulatory Commission (PSRC), said on June 24. 

As early as in April 2015, when the prime ministers of Armenia and Russia agreed to reduce the gas price for Armenia on the border, the unanimous opinion was that the process would result not only in revision of the tariffs for the gas consumers but also in reduction of electricity tariffs for subscribers. On May 31, the PSRC set the new gas tariffs and then initiated the process of revision of the electricity tariffs. The optimistic social activists claimed that there was a real opportunity to reduce the tariff by 20-25 AMD and the pragmatic experts mentioned 10 AMD. As a result, pragmatism prevails over optimism. 

The PSRC has approved the electricity price for final consumers by 2.58 drams or 5.9%.

Earlier the PSRC disseminated a statement wherein it said that it has recalculated the tariffs of the big power generating plants, the service providers in the energy market and the Electric Networks of Armenia CJSC considering the power generation balance for Aug 1 2016 -Aug 1 2017, import and export of electric power, the change of the gas price, heat power, and other factors.

The new tariffs do not include compensation for the damage of Electric Networks of Armenia (ENA). As a result, they are lower than last year's tariffs. In addition, this year ENA's profit is by 2.8 bln AMD more than expected. This has also played a certain role in reducing the tariffs. A positive factor is the change of natural gas tariffs, which, in turn, influences the tariffs for TPPs.

Another significant but negative factor influencing the determination of the final electricity tariff is the scheduled suspension of the Armenian NPP's activities for maintenance and refueling for 120 days instead of 45 days. "To understand the given factor, I should say that the need arises to replace 350 mln kWh electricity generated at the ANPP with more expensive electricity," he told ArmInfo. It is due to this factor that the electricity tariffs before 1 Aug 2015 cannot be restored, he said.

An additional factor is that two large projects are being launched: the construction of the third Iran- Armenian power transmission line and construction of substations towards Georgia, Baghramyan said. The tariff also includes the calculations of scheduled service and repayment of the loan ($30 mln loan provided by the World Bank), which was borrowed for modernization of the energy system in general. Were it not for these cheap and preferential loans, the modernization would be more expensive for the consumers, he added.

"In addition, the Yerevan TPP should take into account the expenses for overhaul, which is held once every four years," he said. Baghramyan added that the electricity prime cost has increased by 2.7 AMD as compared to 2015. "In case the previous terms were retained, the need would arise to raise thee electricity tariff by 2.7 AMD," the expert said.  

According to the watchdog's decision adopted today on June 24, both the day and night prices will be reduced by 2.58 drams to 46.20drams (from 48.78drams) and 36.20drams (from 38.78drams) respectively. The decision will come into force on August 1.  For the consumers using 35KV electric power, the price will be reduced from 39,78 drams to 37.20 drams for daytime and from 35.78 drams to 33.20 drams for nighttime. The consumers using 110KV electric power (mostly industrial enterprises), the daytime price will be reduced from 37.27 dram to 34.70 drams and the nighttime one - from 33.28 drams to 30.70 drams. 

Earlier, in August 2015, the electricity price for the population of Armenia was increased by 16%, which sparked large-scale protests in Yerevan and throughout the country.

To recall, on February 18, the Government of Armenia adopted a decision to raise a US$30 million loan from the WB, of which 4 million 183 million drams for the NPP, 10 billion 717 million drams for YTPC so that they could redeem their depts. As for the Electric Networks of Armenia, the government recalled that last year's rise in the electricity price included the 22.4 billion drams debt of the state organizations in the energy field.