Spot prices usually exceed regulated prices on average. S&P noted that in the Ural region as well as Western Europe the spot market averaged 46% above regulated tariffs. The effect of hydro power in the electricity market in Siberia was included in one of the latest reports from S&P on Russia.

In September 2006, Russia changed the electricity market rules, which the agency commented was a big step forward towards full deregulation of the wholesale power sector in the country. Regulated contracts between generators and wholesale customers now account for 95% of the planned generation volumes, and any excess is sold on the spot market. The government plans to reduce the proportion of generation covered by regulated contracts.

The gas market is also being deregulated in Russia, which means that results in higher gas prices would lead to benefits to other sectors, like hydro, such as higher margins plus improved cost and competitive positions, said S&P.

However, amongst the changes, the agency believes it to be unlikely that non-Russian investors in utilities will be allowed to control strategically important power companies, including those in the hydro sector.