This is the kind of letter that arrived yesterday. I even had to urgently reschedule my planned visit to the Investigative Committee, where they were once again supposed to explain to me that I am the country’s chief criminal. Oh well—they’ll explain it again this evening, after the Moscow City Duma session. As you can see, the process is underway, and soon the Moscow City Duma will either register our 543-member initiative group or refuse registration, as it has done with all similar initiative groups before. Once again, briefly, I want to explain the essence of the bill. Here are the tariffs under which we pay for housing and utility services:
http://rec.mos.ru/tarifs/tarifs2013/ Do you understand where these numbers came from, and why it says 4.03 rather than 3.88? I don’t understand either, and I very much want to check. Right now, tariffs are approved like this: The Federal Tariff Service (FTS) sets the upper limit for tariff increases. The utility provider (resource-supplying organization—companies like Mosenergosbyt, i.e. utility monopolies) submits an application to the Regional Energy Commission within that range: we want to raise the tariff by 8%, and here is some justification for why we need to raise it by 8%. The Regional Energy Commission (REC), which is subordinate to the Moscow city government, reviews these mysterious justifications at a closed meeting of nine people and says: okay, we agree that the public should pay 8% more. We pay 8% more.
(Blue shows what exists now. Red shows what will exist after the bill is passed.) Here is how tariffs would be approved if our bill becomes law: The FTS sets the limits for tariff increases. The utility provider lays out its wish list and justification for a tariff increase and sends its application to the REC. The REC holds a public tender and selects an independent auditing company, to which it sends the utility provider’s application for audit and review. The auditing company conducts the audit, writes its opinion, and submits it to the REC. The audit opinion and all attachments to it (including the utility provider’s application) are published. The REC holds an open meeting with a live broadcast. Representatives of the FTS, the antimonopoly service, and deputies of the Moscow City Duma take part in the commission, and at least one deputy must come from an opposition faction. They approve the tariff and publish all minutes. Anyone wishing to appeal the tariff approval gets that opportunity, and they will be allowed to attend the open review of the complaint (this may sound obvious, but right now your complaint will never be reviewed collectively, openly, and in your presence). That is the main point of the bill. There are various details, but those are mainly of interest to experts. They are being handled by Lyubov Sobol from RosPil and Dmitry Taralov from RosZhKH. If you understand sector-specific problems, feel free to get in touch. Why is this so important? Because we pay enormous amounts of money and have no way to verify how the tariff is formed. There is a cozy little club of government officials and utility monopolists, and they decide everything among themselves. That is how it turns out that a 300 million ruble donation to United Russia is stuffed into Mosenergosbyt’s tariff. And that is just the tip of the iceberg compared with everything else. At the Anti-Corruption Foundation, we have repeatedly tried to examine the documents used to justify tariffs. Try the experiment yourself and find on the REC website anything at all explaining housing and utility prices. Or on the Mosenergosbyt website. Or on any other website/open source. You won’t succeed. Of course, you might be able to get something through unofficial channels, but you won’t be able to use it in court, with the prosecutor’s office, the Investigative Committee, or the Federal Antimonopoly Service. The extreme corruption in the housing and utilities sector is common knowledge, and tariffs are a constant scandal, but the astonishing thing is this: no one has been able to obtain the documents and justifications, and still cannot. Once this bill is passed, we will get all the materials needed to fight the monopolists. The openness of decision-making will increase about a million-fold. The degree of public and parliamentary oversight will grow many times over. Inflating tariffs will become much harder. Frequently asked questions: *- This is all nonsense. It won’t solve the problems of housing and utilities or high tariffs. What we need is competition (what we need is nationalization). I agree 100%. This law will not solve the problems of housing and utilities. Just as no law has solved the problems of the police, the army, or the moral upbringing of young people. To solve the problems of housing and utilities, we need a) political competition b) an independent judiciary c) free media d) anti-corruption efforts. This law is aimed at making tariff-setting transparent and introducing professional independent auditing of applications for tariff increases. In other words, it is a law called “I Want to Know What I’m Paying For.”** - Your law is bad. You just need to include publication of the utility provider’s application. Why build such a complicated contraption? Or this version: - Your law is bad. If you’re going to build a complicated contraption, then put everything into it, including regulation of homeowners’ associations and rules for cats walking on rooftops. - These are common questions from people who understand housing and utilities but do not understand the legislative process. We were writing a Moscow city law. Look:
Almost the entire housing and utilities sector is regulated at the federal level. We were especially careful to strip out of the bill all the very sensible provisions (unfortunately) that fall under federal jurisdiction. That is the most common justification for refusing to register an initiative group: we do not have the authority to regulate this. Our bill is an attempt to find the best possible point within a small red circle. *- You’re a disgusting populist. This law of yours is far too election-driven. Absolutely true. The only difference is that this is not “populism,” it is “fulfilling an election promise.” I ran on a promise to “conduct a public audit of housing and utility tariffs,” and that is what people voted for. I did not become mayor, but I believe—and our team believes—that it is important to do everything possible to pass the laws we promised.* *- Good Lord! You pathetic nonentity, do you really not understand that the monopolists will bribe any auditors. Of course that possibility exists. The monopolists have a lot of money, and they will try to bribe everyone. But in any case, we will get the report data, the original application, explanations of investment programs, and much more. Right now the REC operates with zero transparency. Bribing everyone is very easy. Some people do not even need to be bribed—they are already closely tied to utility monopolists. For example, Pavel Grebtsov, deputy chairman of the REC, before being appointed to the commission in 2011, worked at MOESK, where he dealt with tariff-setting. The bill provides for representatives of opposition parties and independent experts to take part in its work in an advisory capacity. All of this will make bribery and manipulation much more difficult.* *- The REC is staffed by professionals who publicly justify their decisions. Stop lying and tearing the country apart. The REC does not justify its decisions in any way. Its resolutions (http://rec.mos.ru/legislation/projectsotchets/) simply state the new price. We do not know how or why it was set.* *- Audits are very expensive. Tariffs will rise even more. The audit of Russia’s largest company—Gazprom—cost 222 million rubles in 2012. Obviously these are different kinds of audits, but that gives you a sense of the scale of the costs. But if the new electricity tariff were just one kopeck lower (4.49 rubles per kWh instead of 4.50 rubles), Moscow consumers would save roughly 500 million rubles a year.* *- You just want to create more bureaucracy. Things are fine as they are: people sit down and make deals. No bureaucracy at all. We specifically stated that this would be an audit by an independent company; no new bodies are being created—it is simply a contractor. They will still sit down and make decisions, only now it will be done publicly and openly, with independent expert review.* *- Tariff growth cannot be stopped anyway; it is an objective reality. We are not saying tariff growth must be stopped in principle. What must be stopped is unjustified tariff growth. If Mosenergosbyt has invented some hyper-nano power plant and is going to invest in it, fine—we pay. But if, as usual, the investment program and modernization exist only on paper while the money goes straight to a Cyprus offshore account, then we do not want to pay.* *- The Moscow City Duma is all United Russia anyway, so they’ll just reject your law. If it comes to a vote, it will not be that easy. Elections are just around the corner, and now everyone will be running in single-member districts; there are no party lists. After all, Sobyanin ran under the slogan “we will not allow tariff growth.” This will be a difficult political fork in the road for United Russia.* It is important to remember that no one has ever written a perfect law, but the alternative to our law is, as usual, to do nothing. I am against doing nothing. It is important to understand that this law is extremely painful for monopolists and the officials on their payroll. Just imagine yourself in the place of Mosenergosbyt (which, incidentally, belongs to Gazprom): some auditors, some deputies, some opposition deputies (eager to win fame by fighting the monopoly) will be digging through your paperwork. A live broadcast. People. Journalists. Publication of documents. It is a complete nightmare. That is why they will do everything they can to prevent the initiative group from being registered and to bury the bill. That is why there will be commissioned articles, fake experts, and all the usual stuff. We need to be firm, consistent, and believe in what we are doing. Once again, thank you to everyone who worked on the law and became part of “People’s Deputy.” Soon we will find out how United Russia and the mayor’s office have decided to fight back against us.