Russia Expands Share of Power Sold on the Free Market to 50%

Russia expanded the share of electricity sales not capped by the government to 50 percent and stood by a pledge to free all power prices by 2011.

Utilities will be able to sell half their generated power on the day-ahead market, as opposed to the government determining a fixed price, the Energy Ministry said today in an e-mailed statement. Free market sales will grow to 60 percent of the total starting next year.

As Prime Minister Vladimir Putin’s government frees prices, it’s requiring investors that acquired stakes in Russian generators over the last two years to maintain commitments to invest in new power plants and upgrades, even as demand weakens. The Market Council, a power industry watchdog, forecast that power demand will drop 6 percent this year, Interfax said today, citing Market Council chief Dmitry Ponomarev.

“The liberalization process is due to turn all relations in the industry to a market basis,” the Energy Industry said.

To contact the reporter on this story: Yuriy Humber in Moscow at yhumber@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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