Efficiency of Instruments of State Participation in the Electic Power Industry: Domestic and International Experience

This graduation thesis presents the results of a study analysis about the measurement of economic value added in the Russian electricity distribution network companies from 2012 to 2019. This period came after the reform of the electric power industry and the introduction of incentive based regulation. The aim of this study is to research the impact of state participation instruments and the established tariff regulation procedure on the process of creating economic profit for electric grid companies. The study uses a case method based on financial data of companies with the involvement of non-quantitative, non-financial data. The results indicate that state participation instruments affects the operating activities of electric grid companies: reduced operating and investment expenses, increasing revenue from main activities, creating revenue from temporary activities, tax incentives. The process of creating economic value added for backbone network and distribution network companies in Russia is different. For the backbone network company, it was impossible to create a positive economic value added, despite the introduction of new instruments of state support. For distribution network companies, despite the abolition of state support instruments, it was possible due to the incentive based regulation. Keywords: value of firm, electricity distribution grids, incentive regulation, legal monopolies, monopoly regulation, investment policy. JEL: G32, G38, L43