Criteria for Heat Network Companies: Legal Capacity Issues

Amendments to the heat supply laws came into force over a year ago, providing criteria for acquiring the status of a heat network company. The purpose of these innovations was to bring order to the heat market and maintain competent professional players. It aimed at consolidating network assets in the last resort heat supplier, the unified heat distribution company, and depriving enterprises that lack the necessary material, labor, and technical resources for proper maintenance and repair of heat networks of the status of a heat network company. The intermediate results of the reform suggest now that the legislator’s expectations were not fully met. While disclosing the historical peculiarities of heat industry development in the pre-reform period, this article examines the factors that first led to the emergence of multiple heat network companies in the heat supply market and then prompted the legislator to take measures to optimize the number of regulated organizations. To simulate the potential effects of legal regulation, the author examines the electric power industry, which is related to heat supply. The legislator had already established criteria for local grid organizations in this industry several years before the reform of heat network companies. However, the legal position of the Constitutional Court of the Russian Federation prevented the legislator’s efforts from being fully implemented. To address the problem at hand, the author suggests transitioning from quantitative to qualitative criteria for evaluating an entity’s compliance with the status of a heat network company. This approach will prioritize the reliability of heat supply over using compliance as a formal basis for depriving bona fide enterprises of the status of a professional player in the heat market.