Bloomberg News

RusHydro Rises to Strongest in Two Weeks on Tariffs Increase

July 02, 2012

OAO RusHydro, Russia’s largest hydropower company, advanced to the strongest level in almost two weeks as the government raised power tariffs after an 18- month freeze.

RusHydro climbed 3.4 percent to 81.56 kopeks by the close in Moscow, the highest since June 19. The shares have slumped 16 percent this year.

Russia raised gas prices 15 percent yesterday and regulated electricity prices for residential households by 6 percent, according to an e-mailed note by UralSib Capital. Electricity distribution tariffs rose 8 percent and transmission tariffs climbed 11 percent, according to UralSib.

“We see the tariff growth in the utilities sector as a positive sign following an 18-month freeze on tariffs,” UralSib analysts led by Matvey Taits, said in an e-mailed research note. “We also see RusHydro, with a zero fuel expense, benefiting on the electricity market, as the wholesale electricity price will be driven by the growth of the domestic gas price.”

Russia’s President Vladimir Putin delayed tariff increases to slow inflation before his March 4 election bid. MSCI Inc.’s Russia utilities Index has slumped 23 percent this year.

-- Editors: Alex Nicholson, Linda Shen

To contact the reporter on this story: Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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