Power Grid Stocks Fall as Russia Delays RAB Tariff Revision

Power stocks slumped on a report that Russia is delaying a revision of long-term tariffs for power distributors by four months to Nov. 1.

OAO MRSK Holding, the management company for interregional distributors, fell 5.1 percent to 2.011 rubles by the close in Moscow. OAO MRSK Yuga lost 3.3 percent to 5.32 kopeks. Federal Grid Co., the monopoly for high-voltage transmission, dropped 0.1 percent to 22.79 kopeks, narrowing losses of as much as 4.8 percent earlier. A kopek is one-hundredth of a ruble.

Acting First Deputy Prime Minister Igor Shuvalov approved the postponement after Federal Grid sought time for MRSK Holding’s regional power distributors to approve investment programs under the so-called regulatory asset base, or RAB, regulation, Kommersant said today, citing the May 15 order. Federal Grid is taking over management of MRSK Holding.

“The news is negative for grid companies, including Federal Grid and MRSKs, since investors were expecting to receive clarity on RAB tariffs by June 1,” Alfa Bank analysts led by Alexander Kornilov wrote in a note, referring to interregional power distributing companies using abbreviation from Russian. “The new postponement does not make the grid companies more attractive as it keeps their earnings visibility the poorest in the whole power sector.”

Power distribution tariffs will be raised as planned by 11 percent from July 1, except under the RAB system, which is a method of setting tariffs based on the return on invested capital, Kommersant reported.

OAO Mosenergo, the Moscow-based power generator controlled by OAO Gazprom, lost 4.8 percent to 1.4654 rubles, the lowest price since July 2009.

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