Restructuring the Russian Electricity Sector: Re-Creating California?

EAG Discussion Paper

38 Pages Posted: 22 Sep 2005

See all articles by Russell W. Pittman

Russell W. Pittman

U.S. Department of Justice - Economic Analysis Group; Kyiv School of Economics; New Economic School (NES)

Date Written: October 2005


The Russian Federation has begun the restructuring of its electricity sector, following the now standard restructuring model of complete vertical separation of generation from transmission, with the aim of creating competition in regional wholesale generation markets. This paper examines the structure of the six principal regional generation markets that are in their early stages of development and argues that they are likely to be characterized by high levels of market power on the part of individual privatized generation companies, especially during the peak winter demand season. These levels - considerably higher than those that caused competitive problems in California - seem to create a serious risk of price spikes in deregulated wholesale electricity markets, and thus of significant price increases to consumers of electricity.

Keywords: Russia, electricity, restructuring, vertical separation, competition, market power

JEL Classification: L13, L22, L94, L98, P28

Suggested Citation

Pittman, Russell, Restructuring the Russian Electricity Sector: Re-Creating California? (October 2005). EAG Discussion Paper, Available at SSRN: or

Russell Pittman (Contact Author)

U.S. Department of Justice - Economic Analysis Group ( email )

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Antitrust Division
Washington, DC 20530
United States
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Kyiv School of Economics ( email )

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Kyiv, 04119

New Economic School (NES) ( email )

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Moscow, Skolkovo 143026

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