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International Probe Concludes Hike in Armenian Electricity Tariffs Founded

Deloitte & Touche, the international consulting firm hired by the Armenian government in August to conduct an audit of the national electricity distribution company Electric Networks of Armenia (ENA) and give an assessment as to whether the recent hike in electricity prices in the country was grounded, has determined that the decision by Armenia's Public Services Regulatory Commission (PSRC) to raise the tariffs, “aimed at stabilizing the situation in the sector and maintaining secure power supply to consumers,” was justified. 

As noted in the company's report, the price increase, among other reasons, was based on the rise in prices of energy purchased by ENA, the country's sole power supplier.

“About 80% of the increase in the generators' expenses were due to the 25% devaluation in AMD, as well as the rise in gas prices (+14% in 2013). The remaining 20% were related to the implementation of necessary maintenance and modernization of facilities, the cost of which has increased by a third in the last three years,” the report said.

Other reasons, according to Deloitte & Touche, include: ENA's estimating errors regarding the forecast of the amount of electricity produced, as well as the prolonged (by 88 days) rehabilitation of the nuclear power plant's second unit, and the unplanned downtime of the station which forced the company to fill the volume shortfall with the expensive energy produced by Hrazdan TPP.

Recall, Armenian president Serzh Sargsyan announced on June 27 that the government of the Republic of Armenia would subsidize the cost of electricity rate hike pending in international audit of the national electricity distribution company. Authorities. Sargsyan had said, thought the hike reasonable; however, “if the conclusion determines that the tariff increase is groundless, the government will take measures to return the money from [ENA] and to hold negligent officials accountable.”