This is related to a draft governmental decree that has recently been developed and is pending approval by the Government to provide Pricing Principles in the Field of Regulated Prices (Tariffs) in the Electric Power Industry. The Federal Tariff Service (FTS) did not approve switching to RAB-regulation in a number of grid companies including Karelenergo of IDGC of the North-West from 1 January 2012. Karelenergo, a branch of IDGC of the North-West, had compiled all documents required to switch to RAB in full compliance with the approval procedure adopted at the FTS of Russia, but the modifications planned to be made to RAB regulation in 2012 did not allow Karelenergo to switch to the new tariff regulation method from 1 January 2012. This is related to a draft governmental decree that has recently been developed and is pending approval by the Government to provide Pricing Principles in the Field of Regulated Prices (Tariffs) in the Electric Power Industry. These draft basics of pricing reflect the electricity tariff regulation system and approach in 2012–2014 based on the forecast of social and economic development of Russia in 2012 and the planning period of 2013–2014. The FTS of Russia therefore denied Karelenergo the switching to RAB regulation from 1 January 2012 and recommended that the branch of IDGC of the North-West switch to the new system from 1 July 2012 when regulatory changes are made.
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