Mosenergo, the power utility that serves Moscow and the surrounding region, has increased its rates between 15 and 30 percent, effective May 1. While the approved tariff hike fell short of the 40 percent increase Mosenergo had sought from the regional energy commission, it is likely to hit lower-income ratepayers hard.
"Are you kidding? That's half my pension!" said Maria Petrakova, a pensioner from the small Moscow region town of Vidnoye who learned of the increase during her monthly trip into the city to pay her utility bills.
Her typical bill of 237 rubles ($8) for electricity and heat already account for a sizable portion of her monthly pension of 1,300 rubles ($42). But starting this month, her utility burden will grow by as much as 29 percent, which Petrakova says will make her life even more difficult.
"They have just increased the price for the journey," she said, nodding toward the Paveletsky train station where she arrived from Vidnoye.
The hike will affect residents of the Moscow region the most. Mosenergo, a subsidiary of national power monopoly Unified Energy Systems, had already raised its electricity and heating rates 29 percent in mid-April. City residents' energy expenses, meanwhile, grew by 20 percent starting May 1.
In addition to the hike for its residential customers, Mosenergo is implementing a similar 20 percent increase for its commercial users.
The average electricity tariff was $0.017 per kilowatt-hour before the hike.
According to a news release Mosenergo posted on its Web site (www.mosenergo.ru), the company had to raise rates out of "necessity to compensate for production, transfer and energy-distribution expenses."
The company blamed several factors, including higher subscription fees to parent company UES, a raise in salaries in line with inflation, increases in capital spending and maintenance of its networks and equipment. Higher gas tariffs also contributed to the hike, since natural gas provides for more than 99 percent of the company's energy resources.
Mosenergo also reported plans to spend 9 billion rubles ($300 million) this year on equipment maintenance, much of which will be financed by rate increases. A spokesman at the utility said no further increases were planned.
An analyst from the Moscow regional energy commission, who asked not to be identified, said miscalculations by the counterpart commission in the city were to blame for the discrepancy between the increase in rate hikes for city dwellers and those in the region. The rates should be equal, he said.
He also said that Mosenergo filed a lawsuit claiming that the 15-20 percent tariff hike for city residents was not sufficient. But the analyst said the court was not likely to rule in Mosenergo's favor.
The tariff increase comes on the heels of the State Duma's move to consider several bills for revitalizing the energy sector. If proposed parliamentary legislation is enacted, the industry will get a boost toward restructuring, which in turn is likely to lead to increases in power rates yet again, analysts said.
UES chief executive Anatoly Chubais quoted by Interfax as saying that utility rates would have to be increased by as much as 100 percent within three years.
If that's the case, Petrakova and pensioners like her will feel the effects most strongly. Petrakova, who lives alone, said she has no family to help her pay bills.
"I live very simply - one can see that by how I look," she added with a bitter smile.
No matter how expensive her monthly bills, however, she will continue making her trips to Moscow to pay them. She has no choice.