Increase to electricity rates cancelled


The Authority for Fair Competition and Consumer Protection Mongolia (AFCCP) and Financial Regulatory Commission have stopped the Energy Regulatory Commission’s (ERC) move to raise residential and commercial electricity fees following the discovery of industry violations and lack of AFCCP approval for the price increase.
The Energy Regulatory Commission approved a resolution to increase residential and commercial electricity fees by 5 MNT per kilowatt on July 21. The commission directed electricity suppliers to put the new tariff into effect and include it in contracts established with consumers starting on August 10.
The AFCCP reviewed the electricity tariff change and considered granting its approval in accordance with the Fair Competition Law, but the Energy Regulatory Commission increased electricity fees without acquiring final approval from the AFCCP, thus violating the Fair Competition Law. Though legal monopoly entities are obligated to send the AFCCP appeals and require approval to make changes to their products’ tariffs, six legal monopoly entities violated this obligation and increased rates.
The AFCCP notified the six companies, Ulaanbaatar Electricity Distribution Network JSC, Erdenet and Bulgan Electricity Distribution Network JSC, Baganuur and East-Southern Region Electricity Distribution Network JSC, Dornod Region Electricity System JSC, state-owned Khuvsgul Electricity, and Darkhan-Selenge Electricity Distribution Network JSC, to correct their violations and report back. Imposed fines total 185.4 million MNT, which is 0.5 percent of the industry’s trade revenue in 2013.
The AFCCP sent the Financial Regulatory Commission an official document to annul the resolution to increase electricity rates and imposed a fine of 960,000 MNT on Chairman of Energy Regulatory Commission S.Otgonbayar and regulators of the commission D.Bassaikhan and R.Myagmar, each for approving the illegal resolution.
Residents will continue to pay former rates. Chief of the Competition Enforcement Division of the AFCCP L.Ganulzii commented, “We sent notification of the fines last Friday. Increasing the payment rate is not wrong, but the process should conform to the relevant law.”

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Posted by on Sep 11 2014. Filed under Business & Economics. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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