Wholesale electricity market: the growth of debt has slowed amid a decline in consumption

Debt dynamics in the wholesale and retail electricity markets in 2019

According to ACRA, the slowing growth rates of debt in Russia’s wholesale market for electricity and power (WMEP) in 2019 are due not only to improved payment discipline, but also to a reduction in electricity consumption amid rising prices. ACRA also notes the work carried out by industry companies to collect debt, as well as the debt of organizations deprived of the “guaranteeing supplier” status being sold at auctions.

According to data from the Financial Settling Center (FSC), payment levels in the WMEP increased by 0.36% in 2019 compared to 2018, and the increase in debt in monetary terms decreased by a little more than five times (Fig. 1, 2).

Source: FSC

Technologically isolated systems are not connected to Russia’s United Power System and their electricity prices are subject to regulation.

According to data from the System Operator of the United Power System, Joint-stock Company (hereinafter, SO UPS, JSC), electricity consumption in the Russian Federation as a whole (UPS and technologically isolated power systems) decreased by 0.1% in 2019 compared to 2018 and amounted to 1.0752 tln kW-h. At the same time, electricity generation increased by 0.4% in 2019 compared to 2018 and amounted to 1.0964 tln kW-h (Fig. 3). The increase in electricity generation in 2019 is due to its export, as well as increased consumption in the combined energy systems of Eastern Russia and Siberia (taking into account technologically isolated systems).

Figure 3. Electricity generation and consumption in the Russian Federation (2019 compared to 2018), %

*Taking into account technologically isolated systems.
Source: SO UPS, JSC

Total WMEP debt for 2019 increased by RUB 1.61 bln compared to the year before and stood at RUB 76.5 bln (including VAT). The North Caucasian Federal District continued to demonstrate the worst payment discipline, and accounted for 78% of total debt as of the end of 2019 (Fig. 4).

Figure 4. Structure of WMEP debt by federal district, RUB bln

Source: FSC

ACRA believes that the growth of WMEP debt is due to higher electricity and power prices. According to ACRA’s calculations, the monetary equivalent of 0.01% of WMEP non-payments in 2019 grew by 19% compared to the year before (Table 1).

Table 1. Debt for WMEP purchases in 2018–2019


% of payment

Increase in debt, RUB bln

0.01% of debt, RUB bln









Change, y-oy


5.2x decrease


Sources: FSC, ACRA

Utilities companies that buy electricity in the WMEP and sell it to end users in the retail electricity market (REM) make up the bulk of the debt in the wholesale market.

ACRA notes that REM debt is significantly larger than WMEP debt. According to the FSC, growth of buyers’ debt in the REM for 11M 2019 amounted to RUB 63.8 bln, a 7.6% increase compared to the indicator for 2018 (Fig. 5). Total retail market debt hit a multi-year high of RUB 308.4 bln as of November 30, 2019 (Fig. 6).

Source: FSC

End users’ electricity supply debts are compensated by utilities companies. They have to acquire additional financing to cover settlements in the wholesale market in order to avoid losing their WMEP participant status as a result of improper fulfillment of obligations to pay for electricity (power). In ACRA’s opinion, this practice could potentially lead to the bankruptcy of utilities companies or their debt servicing costs being passed on to consumers.

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