Heat Supply Reform: Implications for Consumers in the Far East

Abstract

ABSTRACt As new legislation concerning the heat supply is put into effect, this article considers its possible consequences for the population of the Far East, which is one of the main consumers of heat supply services in Russia. The article shows that as recipients of this service, Far East residents are limited in their ability to manage the volumes of their consumption. By considering individual Far East regions and cities, we estimate the ability of the population to pay for heat supply services. Despite the regulation of heat tariffs, the burden on Far East residents remains higher than in the rest of country due to higher regional rates and consumption volumes. As the new method of the so-called “alternative boiler plant” is put into effect, a new regulated heat tariff will be introduced in the Far East, which will result in an increase in payments by 1.7–3.1 times. This will inevitably raise the debt risk of enterprises and require the government to spend more money on social welfare support.