MOSCOW, Dec 9 (PRIME) -- Russian power holding Inter RAO may significantly lower or fully stop power exports to China in winter due to their unprofitability due to the high price of capacity at the Far Eastern power plants, Kommersant business daily reported Wednesday citing the company’s letter to market regulator Sovet Rynka.
Alexandra Panina, acting head of the company’s trading block, told Kommersant that deliveries to China have “a fairly high profitability”, but the regulator limits profit at 5% per year, the remaining revenue is distributed to participants of the Far East market through the capacity reserve ratio in the price calculation formula. For Inter RAO it is higher than for other consumers: for example, in October – 2.66 against 1.8. Because of this, the exporter pays for capacity more than it actually consumed.
To solve the problem, the company is asking the regulator to change the calculation of the capacity price for Inter RAO. The proposed amendments will allow to fix the profitability of supplies to China at the level of 5% for each month of the year, including in winter, from 2021.
“This will not entail any changes in profitability either for the exporter or for the payment of other consumers,” Panina said. The supervisory board of Sovet Rynka is to consider the issue on Friday.
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