The Public Services Regulatory Commission (PSRC) warned that the Armenian energy sector will operate at an annual combined loss of 23.8 billion drams ($49 million) if the existing prices are not revised upwards.
In a statement, the PSRC cited the need to repay $270 million in loans used for the recently completed modernization of the Metsamor nuclear plant. It also pointed to Armenia’s contractual obligation to enable Russia’s Gazprom energy giant to recoup investments made in a large thermal-power plant located in the central town of Hrazdan.
The statement revealed that the Armenian and Russian governments have reached an agreement that commits Yerevan to providing the Hrazdan plant with $31.8 million annually for the next ten years. It said in that in exchange for this subsidy Gazprom could keep the wholesale price of its natural gas for Armenia unchanged at $165 per thousand cubic meters, which is well below the current international levels.
The PSRC said the electricity tariffs should therefore rise by 4.7 drams (about 1 U.S. cent) per kilowatt/hour on average. The daytime price paid by most Armenian households currently stands at almost 45 drams (9 cents) per kilowatt/hour.
The regulatory body said the tariff would remain unchanged for low-income families making up 11 percent of the population. They already pay significantly less for electricity than other individual consumers.
The latter could see their electricity bills rise by between 3 and 7 percent depending on the monthly amount of energy use, the PSRC statement said, adding that the steepest price rise should be set for businesses.
The PSRC also indicated that the higher tariffs will likely come into force on February 1. It said it will publicly discuss them with representatives of Armenia’s key power plants and electricity distribution network as well as consumer rights groups on Thursday.
The new energy tariffs and their knock-on effects could further push up the cost of living in the country. According to government data, consumer price inflation there rose to 9.6 percent in November, the highest rate in many years.