THE RUSSIAN FEDERATION WANTS U.S. UTILITIES AND businesses to know investments are welcome and that processes soon will ensure the safety of American ventures there.
Nevertheless, it appears to favor traditional, American-style utility regulation, setting rates of return and limiting profits.
The Federal Energy Commission of the Russian Federation wants to create competition wherever possible, according to Andrey F. Zadernyuk, the first chairman of the year-old commission. The energy sector, formerly a state monopoly, is slowly privatizing, said Zadernyuk, whose organization is akin to the Federal Energy Regulatory Commission. This process has created joint stock companies and set up regional energy commissions, similar to state public service commissions in the U.S.
Zadernyuk, in an interview at the U.S. Energy Association in Washington, D.C., explained that the Russian Federation is looking for a model to follow as it introduces competition. Zadernyuk visited California in early 1998 but was disappointed that he was too early to see competitive markets in action due to the delay of restructuring there.
Zadernyuk pointed to the USEA/USAID partnership program that joins Russians (and members from other countries) with U.S. utilities to gain experience in their methods of utility regulation and business operations. In fact, it was because of Zadernyuk's experiences with the Illinois Commerce Commission and subsequent knowledge of regulation that he was appointed chairman of the Russian FEC. Through these relationships, he was able to organize seminars with commission staff and introduce concepts such as rate design and conflict resolution.
Old-Fashioned Rate Regulation