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DEC (DVEC)
Common stock₽1.631−0.85%−₽0.014on the day
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DEK is Far Eastern Energy Company, which supplies electricity to consumers in the Russian Far East. What sets the region apart is that its power system operates within its own pricing perimeter, distinct from that of the European part of the country. The shares trade on the Moscow Exchange under the ticker DVEC.
The Far Eastern power system has historically been set apart as a separate price zone: there is no competitive wholesale electricity market there, and tariffs are set by regulation. For the company this means predictability and, at the same time, the absence of any market mechanism to compensate for rising costs.
The company supplies energy to the region's consumers: it buys the power, pays for its transmission and issues the bills. Its own income is a mark-up approved by the regulator.
An added difficulty of the region is payment discipline and the high share of consumers whose tariff is subsidised. The gap between the economically justified cost and what the consumer pays is covered by support mechanisms, and any change in them affects the company directly.
Supplying energy to consumers in the Far Eastern regions.
Delivering heat in individual towns and settlements of the region.
Strengths and weaknesses describe the business itself. Opportunities and threats describe what may happen around it.
It sells electricity to consumers in the Far Eastern regions: it buys the power, pays the grid companies for its transmission and issues bills to households and businesses.
It is a part of the power system where the competitive wholesale electricity market does not operate and prices are set by regulation. The Far East has historically belonged to such a zone because of its isolation and the structure of its generation.
Because some consumers pay less than the economically justified cost, and the difference is covered by support mechanisms. A change in their rules or their volume feeds directly through to the company's revenue.