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Opening remarks at meeting of the Commission for Modernisation and Technological Development of Russia’s Economy

October 26, 2010, Naberezhnye Chelny

President of Russia Dmitry Medvedev: Colleagues, today’s meeting of the Commission for Technological Development is taking place in Tatarstan, and we will discuss regional programmes for energy saving and energy efficiency.

There is good reason for choosing this place – I just talked about it with Mr Minnikhanov [President of Tatarstan Rustam Minnikhanov]. Of course, recently a great deal has been done in Naberezhnye Chelny in this respect. We can see the results, though we can see them in other places as well. The main result, of course, is that the real energy efficiency is improving and hence savings grow for both ordinary people and organisations living in or occupying the relevant premises. This is probably the most important thing.

I have repeatedly said that this field is crucial for modernising our economy and social sphere. In solving these problems we are shaping a new economy and improving the competitiveness of our goods and services. We are creating essentially new companies, new industries, and undoubtedly improving our environmental situation and quality of life.

This project is a difficult one and we must admit that we have yet to make a lot of progress, but we've at least started working properly. We just spoke with the President of Tatarstan about this. Of course, we really should have started addressing this problem long ago. Authorities here have been working on this for ten years, in other places they've been working on it even less while perhaps we should have been working on this for the past 15 years, even when our country was going through hard times, and then the current results would be different.

A year ago, we passed a law on energy saving and energy efficiency improving. All the Commission members present here contributed to the adoption of the law. I am sure you remember our discussions of the law at a Commission meeting when we argued about specific wording. It's good that it is finally done. The law defined our priorities and in fact the priority measures in this area. Now we can take stock of the situation and address the obvious problems our people, private enterprises, and public sector face.

First, the law sets the timeframe for mandatory installation of energy accounting meters. But we still have no clear requirements concerning their function and quality. We need to urgently formulate and adopt these requirements. Also, in March I gave the instructions to launch pilot projects involving smart meters. I would like to hear how this work is progressing.

We have just seen how meters look; we visited an ordinary dwelling house here in town. The good thing is that much of the equipment already installed here is manufactured locally in Tatarstan. These are not some super sophisticated devices – these are regular meters. Of course, they look more modern than what we are used to seeing. But most importantly, these are locally-made instruments and they are fully operational, even though the next generation of more advanced meters must be given thought too.

Second, the law stipulates that the savings generated in government funded organisations by more rational energy consumption will remain at the disposal of such organisations and may be allocated where needed, for example for wage increases. I would like to hear a report detailing the mechanisms already launched for the purposes of implementing the said provisions.

There is evidence that managers of public institutions,

school principals, directors of clinics and daycare centres simply do not even know about these possibilities or, if they are aware of them, do not believe the law may be enforced.

Third, public sector energy consumption analysis is progressing very slowly. There are various reasons for this, including objective ones, as autonomous associations of energy auditors are still in the process of establishment and founding. Energy auditors must commence their operations as soon as practicable as we need reliable information on the energy saving potential. Such energy audit must be performed by professionals and cover entire public sector. We were just shown some monitoring capabilities and it is certainly great that in Naberezhnye Chelny there is a system supplying data on energy consumption by every household including, for example, the temperature of hot water pumped to apartments. Such a system is a clear sign of the progress.

Finally, government funded organisations should be allowed to attract private investments therefore we must remove barriers for servicing contracts in energy.

Lastly, and perhaps most importantly for organising our overall efforts, regional programmes of improving energy efficiency should be launched. As of now 54 regional programmes have been fully developed, 25 are undergoing approval proceedings while 4 more are being drafted. Our colleagues, the governors, must accelerate the implementation process or, in case of failure, give their explanations. At present even the documents in question are of poor quality as many of them lack exact targets, specific activities, programmes performance indicators, financing and management mechanisms. Many regional budgets do not even envisage allocations for such programmes.

Of course I am aware of budgeting difficulties, especially at the present time; on the other hand we all understand what kind of investment this is. It is an investment not only in our future, but also in a better life. Ultimately, such investments will amount to budgetary savings, therefore approach to this kind of spending should be rational.

Just recently, on October 21, the Government approved a new ten year national programme on energy saving and energy efficiency improving, aimed at essentially reducing the energy intensity of Russia's GDP, by at least 13.5 percent by 2020.

One of the main mechanisms for implementing this government programme is co-financing regional projects. Over the next three years we plan to allocate about 17 billion rubles

[0.6 billion dollars] to this. Once again, I would note that the governors must pay special attention to these efforts.

In the long term energy saving should help Russian households cut down substantially on their expenses for housing and public utility services. Today these are major expenditures for certain categories of citizens such as the poor and pensioners. I have spoken to lots of various people and the main concern they voice, especially in small towns, is the cost of utilities – not pensions, not salaries, not the crisis, but the cost of utilities. Why? First, it is always frustrating when new bills show higher costs, but the opacity of these costs is especially annoying. People just fail to understand the reasons behind higher charges. While in certain modern large cities such as Naberezhnye Chelny (where new monitoring equipment has been installed for these purposes) it may be seen and explained why the bills are what they are, in smaller towns the situation often looks very, very different as prices rise but improvements never happen.

We will discuss this topic in the near future. I've already pointed out that the quality of services to households should be constantly monitored by regional authorities and in the coming month we will address the quality of housing maintenance and public utility services; I am expecting detailed reports from governors on what has been done. This is one of the primary responsibilities of regional leaders and, of course, of heads of municipalities too.

Much of the responsibility for energy efficiency in utility systems lies with companies which are under government control. I'm referring to our major corporations, the Federal Grid Company, and interregional distribution companies. CEOs of these companies are here today and I would like to hear each of them report briefly on their plans in this regard. They must coordinate their efforts with each other and with regional governments. There are many complaints about the performance of such companies and I do not know whether they are grounded or not, but ultimately, as we say, there is never smoke without a fire. Moreover, every complaint should be investigated as these are companies under government supervision, pursuing government policies, and the government may appoint or dismiss the CEOs of such companies.

One more thing. We have a number of pending issues that

have accumulated and should be addressed. Some of them relate to certain financial aspects and will be reviewed today, so let's start our discussion.

October 26, 2010, Naberezhnye Chelny