Utilities to go up as industry on brink of catastrophe

(Moscow News – themoscownews.com – Evgeniya Chaykovskaya – December 19, 2012)

Russia’s Federal Tariff Services asked the government to raise tariffs for heating (by 11.5 percent instead of 9.5 percent proposed by the Economic Development Ministry) and water supply (11-13 percent instead of 5-6 percent).

If their wish is granted, households will face a 15 percent increase in utility payments, even though the Economic Development Ministry predicted a 10-percent rise.

The cumulative inflation rate between 2007 and 2011 is 63 percent, Finekspertiza analysts estimated.

Utility payments over the last five years in Russia rose 1.8 times faster than the inflation rate and 1.9 times faster than income, Finekspertiza’s director general Agvan Mikaelyan told Vedomosti.

Utility industry on brink of collapse

Utility providers say that the hike is necessary because their industry is on the verge of a catastrophe over the poor conditions of pipes and other equipment.

Head of the state cooperation department of Optima managing company Alexei Tolchinsky even used the words “underground Chernobyl” in his RBC Daily column.

Managing companies are the most popular form of managing households in Russia, but is considered one of the most corrupt, when officials often start their own managing companies and create a monopoly.

However, talk of a collapse has been going on for a decade, since not all pipes laid in the times of Stalin have been replaced.

Russians try to save money

According to a poll by the All-Russia Public Opinion Pollster VTsIOM, more than half of Russians consider utilities the country’s main problem (55 percent).

The increase in payments will also hit the pockets of many Russians (72 percent) and 85 percent will try to save money by heat-proofing their apartments and switching to meters and energy-saving light bulbs.

The people who noticed the hikes the most are those over 45 (74-75 percent) and those who live in large cities (78 percent).

Eight percent call the tariff hikes an insurmountable burden that could see them evicted.