Electricity Rates May Increase by 1.5 to 5.5 AMD, PSRC Provides Details

The Armenian Electric Grid Company (AEGC) has proposed an increase in the electricity rate for consumers in Armenia by 4.7 AMD per kWh. This information was announced by the Public Services Regulatory Commission (PSRC) of the Republic of Armenia.

"We inform you that on December 23, 2021, at 16:00, there will be a working discussion at the PSRC concerning the revision of electricity tariffs sold to consumers by the AEGC. This meeting will involve representatives from consumer protection NGOs and companies in the electric power system, including supplier representatives," the commission stated.

In addition to the announcement published on the commission's website on December 17, 2021, the PSRC noted that, based on the analysis of all positive and negative factors in the context of the tariff revision process for large electricity producers and service providers in the electric power system, a financial gap of 23.8 billion AMD (excluding VAT) is anticipated for the tariff year starting February 1, 2022.

The main factors contributing to this total include:

1. The fulfillment of obligations by Gazprom Armenia regarding the Hrazdan-5 power plant in accordance with the agreement signed between the governments of Armenia and Russia. Specifically, in the agreement regarding the sale and subsequent operational conditions of shares of the ArmRusGasprom Company signed on December 2, 2013, the Armenian side was obliged to ensure the return of Russian investments made in the Hrazdan-5 plant. However, not only have those investments not been repaid, but the debt liabilities involved in the reconstruction of the plant have increased.
2. Negotiations between the Armenian and Russian governments have resulted in an agreement to ensure the normal operation of the Hrazdan-5 plant for ten years starting from February 1, 2022, by providing the company with financial resources equivalent to 31.79 million USD annually in the form of a capacity payment. Meanwhile, this agreement allows for a stable price for natural gas imports from Russia over the next decade, set at 165 USD per thousand cubic meters at a calorific value of 7900 kcal/m³ (the price will be adjusted based on the actual calorific value measurement mechanism).
3. Significant increases in the costs of repaying and servicing privileged loans obtained with government guarantees, particularly at the Armenian Nuclear Power Plant, have led to an increased need to raise the average weighted tariff for electricity sold to consumers by 4.7 AMD per kWh (including VAT).

The proposed changes include:

• Keeping rates unchanged for socially vulnerable groups (which account for 11% of residential consumers),
• Increasing rates by 1.5 AMD per kWh (including VAT) for residential consumers with a monthly consumption of up to 200 kWh (accounting for 55% of residential consumers),
• Increasing rates by 3.5 AMD per kWh (including VAT) for those consuming 201-400 kWh monthly (which make up 25% of residential consumers),
• Increasing rates by 5.5 AMD per kWh (including VAT) for all remaining consumers.

Individuals wishing to participate in the working discussion are requested to inform in advance via email at [email protected] or call the commission's hotline for further information regarding the tariffs and the factors affecting them.