Complete Tariff Approval Process for Natural Monopoly Entities
The tariff approval procedure for Natural Monopoly Entities (NMEs) is a structured, step-by-step framework designed to ensure transparency, economic justification, and predictability in tariff policy. This methodology covers the entire cycle—from initial application submission to the official order issued by the regulatory body.
📋 Phase-by-Phase Process
[1. Application & Submission]
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[2. Preliminary Review (7 Days)]
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[3. Expert Evaluation (Up to 90 Days / 30 Days Simplified)]
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[4. Public Hearings (≥30 Days Before Implementation)]
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[5. Final Order & Publication (30 Days Advance Notice)]
1. Preparation and Submission
- Documentation: The entity prepares the tariff estimate, investment program, and financial and production reports.
- Submission Portal: All documents must be submitted via the electronic system "Monopolist Database" (Baza Monopolist) at least 90 working days prior to the proposed effective date.
- Authentication: Signing with a qualified Electronic Digital Signature (EDS) is mandatory.
2. Preliminary Completeness Review
- The Committee for Regulation of Natural Monopolies (CREM) conducts a initial completeness check of the application within 7 working days.
- Upon positive review, information regarding the application is published on CREM's official website, initiating the formal evaluation phase.
3. Expert Evaluation
- Standard Procedure: Takes up to 90 working days.
- Simplified Procedure: Takes up to 30 working days.
- Focus Areas: CREM assesses cost justification, the accuracy of methodologies used, performance metrics, and funding sources for investments.
- Deliverable: An official expert evaluation report that serves as the basis for further action.
4. Public Hearings & Stakeholder Engagement
- Public hearings are organized at least 30 calendar days before the new tariff takes effect (10 days under the simplified procedure).
- The entity must notify consumers in advance and provide open access to application materials for public discussion.
5. Approval, Registration, and Effective Date
- CREM issues an official order approving the tariff.
- The order is subject to state registration and official publication.
- Consumers must be notified at least 30 calendar days before the new tariff officially comes into force.
⚙️ Adjustments, Compensations, and Tariff Regimes
- Annual Adjustments: Conducted based on actual reporting data.
- Indexation: Streamlined for small-scale natural monopoly entities.
- Unscheduled Revisions: Initiated by the regulator or triggered by force majeure events.
- Temporary Mechanisms: Application of temporary compensatory or reduced tariffs when required.
📊 Regulatory Approaches Supported
The methodology accommodates multiple tariff-setting frameworks based on industry characteristics, entity size, and investment intensity:
- Cost-Plus (Cost-based method)
- Incentive-Based / RAB (Regulatory Asset Base)
- Indexation Method
- Concession Agreement Framework
Key Takeaway: This structured workflow provides a unified, transparent regulatory framework that balances consumer protection with the operational sustainability and financial viability of natural monopoly entities.
