Power Price Jumps 18% At Auction

Russian electricity producers got at least 18 percent more for their newly built power capacity at the December auction than the previous one in August, a source familiar with the bidding said Wednesday.

The auctions allow generators to package a number of megawatts for a set period and price. Large industrial consumers, such as steel mills, can buy this capacity to ensure steady supplies.

The prices at these auctions have been a source of heated debate in the sector. Power producers have complained that the government imposes price caps that hurt profitability, while industrial consumers have lobbied to keep the prices low.

The government regulator, known as the Market Council, has the right to force the prices down if it deems them unjustified.

In the December auction, the second of its kind, regulators approved prices for new capacity of roughly 400,000 rubles to 800,000 rubles ($12,600 to $25,200) per megawatt, compared with around 340,000 rubles per megawatt in August, the source said.

The prices at these auctions are not made public, in part because the appearance of a spike could stir fears of runaway inflation.

At the first capacity auction in August, the Market Council forced power producer Mosenergo to lower its asking price by 20 percent.