Vedomosti said on Monday that the board of directors of electricity monopoly Unified Energy System of Russia (UES) approved in late 2007 the principles of signing long-term contracts on electricity supplies and approved the terms of a long-term contract between Federal Hydrogenerating company HydroOGK and United Company RusAl.
HydroOGK and UC RusAl are expected to sign a contract in 2008, the paper said.
Today only 15% of Russian electricity is sold on the market but the situation will change by 2011 when all power output will be sold at market prices. According to Economic and Trade Ministry estimates, electricity prices will rise 50% by that time, Vedomosti said.
UES shareholders voted in late October in favor of reorganizing the electricity holding to end its monopoly status. The reform is to be completed by July 1, 2008, when UES is to be liquidated.
Russia's electric power sector has undergone radical changes in recent years. The changes have been aimed at increasing the efficiency of power plants and developing the industry by attracting investment.
During the restructuring process, specialized structures have been created in place of the old vertically integrated companies.
By the end of the reforms, potentially competitive units of the industry - generation, sales and repair companies - will become mainly private and will compete with each other. However, natural monopoly functions - power transmission and dispatching - will remain state-controlled.
