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Energy Ombudsman: A Request to Increase Electricity Tariff in Tbilisi was Expected

An interview with energy ombudsman Salome Vardiashvili

The National Energy Regulatory Commission began consideration of the request of the Tbilisi electricity distribution company Telasi to increase tariffs for electricity in the capital. What is the mood of the Commission members?

A tariff is a  very complex issue as concerns  100% of the population, in addition, it consists of several components, each of them must be considered separately. It is necessary to meet the interests of all parties. The first session dealt with issues relating to normative loss of power  during its distribution.

Prior to the discussion of the issue,  we’ve  held consultations  with experts, financiers and economists. We decided to create a special council for the consideration of such matters. This will be an open process during which alternative proposals, calculations, possible fares, etc will be reviewed.

Our goal is to make the tariff  counting process more transparent to avoid any suspicion that the Commission is working secretly, and no one can keep track of its activities. That is, society has the opportunity to follow the decision-making processes. Management of the Energy Commission agreed with our initiative and said that now the tariff issue would  be discussed in stages – the first set of questions just touched on a normative loss.

To say simply, when transporting electricity each company has losses which are calculated each year. This issue was discussed at the meeting attended by experts, financiers and economists.

Will the wastage rate be reflected in the tariff?

Normative  losses  amount to  5.4%. It turned out that it is constantly decreasing that was positively evaluated by the experts. Ultimately, this will have a positive impact on the tariff. Of course, we cannot say that the tariff will not rise, since apart from normative losses, there are several other components forming the energy rate, and they also will be counted. While it is difficult to say what will be the real tariff  because we are actively working on this issue. The final figures will be known in the autumn.

So we  cannot count a tariff only on the basis of normative losses, and it is impossible today to determine whether the reduction in  losses will maintain  the current tariff.

How justified is  Telasi’s demand  to change the tariff? Does the company have enough arguments in favor of such a decision?

The first argument is a devaluation of the national currency. The company also takes into account the rising cost of energy produced by thermal power plants again due to the depreciation of the lari – thermal power stations run on gas they buy for dollars. Obviously, all of these factors necessarily led to Telasi’s request to  hike tariffs in Tbilisi. It was expected.

How much does Telasi demand  to increase the tariff?

While it is difficult to talk about  any figures, as at present we received a request for the revision of the tariff, but theoretically this means that the rate may rise and fall. First, the Commission should take  the request for review. At this stage, we can’t talk about  any specific  figures.