The Russian government has approved an increase in nuclear electricity tariffs in the first price zone, including the European part of the country and the Urals, according to a decree published on the Russian government's website on Dec 29.

In the explanatory note, the government justified the rise with a need to compensate Atomenergosbyt, a subsidiary of state nuclear company Rosatom, for losses suffered in selling electricity to "new regions" — the Russian government's term for the parts of Donetsk, Luhansk, Zaporozhe and Kherson regions of Ukraine controlled by Russian forces.Russian electricity consumers pay one price for electricity based on use and another in a capacity payment designed to provide an incentive for generators to ensure capacity is available in the medium- and long-term. There is competitive pricing in the electricity market, while in the capacity market, prices are set by the state within a so-called capacity supply agreement.

The rise is planned for the capacity payments and is due to come into force after the Russian Federal Antimonopoly Service designed the new tariffs, the government stipulated.

Supplying electricity under low electricity tariffs set by the Russian government for Donetsk, Luhansk, Zaporozhe and Kherson regions for the next 10 years, would incur losses to Atomenergosbyt of Rb36 billion ($399.6 million) in 2024, Kommersant, a Russian business newspaper, reported Dec. 29.

The publication said that to reimburse these costs, Rb3 billion is due to be allocated as a direct subsidy from the Russian budget and the rest from the planned rise in capacity tariffs.

In August 2023, the Russian government appointed four Atomenergosbyt subsidiaries as guaranteeing electricity suppliers to the "new regions." The company was authorized to purchase electricity locally as well as supply it from the Russian common energy grid, and distribute it among the customers in each region.

Atomenergosbyt is a Rosatom electricity-selling subsidiary. Before 2014, the company was focused exclusively on serving the needs of the Russian nuclear industry, but in the following years, it expanded its business to the open market and was appointed as a guarantying electricity supplier in Kursk, Smolensk, Tver, Murmansk regions and the Khakassia Republic.