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. Last Updated: 07/27/2016

Luzhkov Hikes Domestic Power Prices

Saying rising fuel and transport costs were keeping Moscow utilities from maintaining their equipment in working order, Mayor Yury Luzhkov has ordered a hike on consumer prices for heat, electricity and gas, effective last week.

A decree, signed by Luzhkov on Friday, raises residential consumer prices on electricity and heat by 20 percent to 30 percent, said a source in the Regional Fuel Commission, who asked not to be identified. The fuel commission, which regulates tariffs for industry, has decreed similar increases for enterprises.

The new tariffs are retroactive from Feb. 1, the mayor's decree said.

The rise will just about cover the cost of repairing and replacing worn-out capital stock, the source said, adding that the city would have to seek additional funds to cover 70 percent of the gap between utilities' costs and consumer tariffs this year. He said more price hikes were possible after the spring.

"This is a half measure. It's someplace to start," the source said. "It's enough for repairs and replacement, though not entirely. We'll have to get by on the minimum, at least until spring."

The city blamed a 3.1 percent rise in the price of fuel oil, a 1.2 percent rise in the price of natural gas, 2.9 percent on equipment, 2.9 percent for metal goods, 3.5 on chemical reagents, and 1.26 percent on rail cargo transport, among other rising costs for city utilities.

Mosenergo was not available for comment.

Residents with electric stoves will pay 28 kopeks per kilowatt hour (0.97 cents), up from 21; those with gas stoves will pay 40 kopeks, up from 33. Heat will cost 1.60 rubles (6 cents) per square meter, up from 1.10 rubles, the source said. Gas prices were set at 3.20 rubles per person for households with gas stoves and central water heaters, and 7.90 rubles per person for households with gas stoves and individual water heaters.

Industrial enterprises will pay 130 rubles a gigacalorie for heat, up from 90; 53 kopeks per kilowatt hour for electricity, up from 49, and 349 rubles per 1000 cubic meters of gas, up from 304 rubles, he said.

Kommersant newspaper criticized the price hikes Monday, quoting Valery Zharov, the deputy head of the city economic policy and development committee, as saying that if it were not for a 14 billion ruble ($487 million) debt held by Mosenergo, the city's main utility, "we could have lived another year without raising tariffs."