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Former Armenian PM Proposes Plan for Energy Reforms

Opposition Armenian National Congress MP, former Prime Minister of Armenia, economist Hrant Bagratyan welcomed the non-stop sit-in protest on Baghramyan Avenue against the hike in electricity rates in Armenia, and proposed on Wednesday a plan for energy sector reforms in Armenia on his personal Facebook page. 

“Provided below is a brief introduction to the key steps for reforming the energy sector, the implementation of which will only take about 15 days.

1. [RA Public Services Regulatory Commission]'s (PSRC) decision on [increasing electricity tariffs] (June 17, 2015) is reversed.

2. Energy market is created in accordance with the law, with the following members: producers (representatives of power stations – NPP, HPPs, TPPs); transmitters (representatives of high-voltage power lines and retailers (ENA), representatives of the Government (Ministry of Energy), RA Central Bank, and PSRC.

3. Members of the energy market periodically organize bargaining on the wholesale price of the generated electricity, based on an application by the ENA (ENAs). Decisions are made through proportional representation voting. The sessions of the energy market are chaired by all members in turn. 

4. Public Services Regulatory Commission ceases the practice of determining electricity rates.

5. The Commission is only responsible for setting the rates for electric power transmission through high-voltage power lines. After this, the wholesale price of electricity is established – wholesale price of generated electricity + wholesale price of electricity transmission through high-voltage power lines.

6. Based on the wholesale price, the Commission submits the size of the margin for the approval of market representatives (in percentages, with respect to the wholesale price of electricity). It can be varied according to time of consumption (night, day) and volume (100,100-300, 300-1000 kW per month).

7. After establishment of the margin, retail (market) price of electricity is determined. It can change (increase, decrease) by month. 

8. ENA (independent of its owner) is divided into at least two enterprises with their own balance sheets (e.g., separately Yerevan, and the rest of the country). 

9. If execution of aforementioned points requires more time, then ENA can determine and work with a temporary tariff (starting August 1, not longer than until October 1). 

Do all of this and you'll get a tariff of AMD 30-35, and its annual increase will be not exceed 3-5%.”

The RA Public Services Regulatory Commission decided on June 17 to increase the tariff for electricity supplied to consumers by 6.93 drams. Starting August 1, 2015, a kilowatt-hour of energy will cost 48.78 drams during the daytime (previously – 41.85 drams), and 38.78 drams – the nighttime (previously – 31.85).