Report - UNDP Russia

affordability of rising prices for housingutilities will continue to be ensured throughthe system of social support.Attraction of investments remains thekey problem of the housing utility sector.Federal Law No.210, ‘On basic principles fortariff regulation in housing and communalservices’, passed in 2004, took transparencyand predictability as its guiding principles. Butamendments to the Law in 2005 allowedfederal regulation of housing utility tariffgrowth through limiting indexes in order tocurb inflation, making housing utilities moredependent on the budget and swelling debtsof housing utility providers. Positive changesin the sector slowed down in 2006 and the rateof breakdowns in the sector rose 12 (based ongovernment statistics and calculations byS.Sivayev, the Institute for Urban Economics).Maintenance of the limiting indexes is thebiggest obstacle to long-term direct andtransparent tariff regulation and the start offull-scale investment programmes.To conclude this review of householdspending on housing utilities, the fact thatRussians spend a relatively small share of theirincomes on these services should entail scopefor price growth. However, the real situation isthat the existing system of housing utilitypayments already stretches personal incomecapacities.3.4. Household consumptionof electricityWhat are the trends and what impact isthe crisis likely to have on use of electricity in thehousehold sector? Economic growth sawincrease of overall power consumption in Russiaby 16% from 2000 to 2007, while household userose by only 9% in the same period (Figure 3.8).The share of power consumed by the householdsector fell as a result from 12.3% in 2000–2001 to11.5-11.6% in 2004–2007, so that growth of itspower use in absolute terms looks insignificant.Growth of personal incomes andchanges in the structure of consumerexpenditures have boosted the construction,retail, public catering and other servicesegments in Russia. Places where economicgrowth is concentrated now have a newlifestyle model, involving power-intensiverecreation outside the home, so that differencesFigure 3.8Annual power consumption by households, million KWh1200000100000080000060000040000020000002000 2001 2002 2003 2004 2005 2006 2007Consolidated power consumptionHousehold power consumptionSource: Calculated using National Energy Statistics12Economy of the Transition period. Essays on economic policy of post-communist Russia. Economic growth 2000-2007 – M, Delopublishing house. Academy of National Economy, 2008.66 National Human Development Report in the Russian Federation 2009