Russian President Dmitry Medvedev ordered the government to prepare a set of measures to curb further increases in the price of power supplies within two months.

“The issue of power supply prices has become the most important one; the number one issue,” Medvedev said at a meeting of the State Council, the presidential advisory body, devoted to problems in the Russian electric power sector. “It is obvious that everything is very difficult here – each region has its own difficulties – but we should try to overcome this situation,” he said.

In mid-February, Prime Minister Vladimir Putin said he was concerned with the fact that rates for electric power grew over 15 percent – the limit set by the Russian government for rate hikes in 2011 – in some regions.

The growth of power supply prices has become a real threat for Russia’s economic growth, Medvedev said. Although prices in Russia are currently lower than in many countries, they have more than tripled since 2000, he said. If this tendency persists, prices in Russia are likely to become higher than in the U.S., Finland, and other countries by 2014, he said. In this environment, the construction of new generating stations will become more profitable than buying power, he said.

The president also said that the situation with power supply prices in Russia was discouraging foreign investors from entering the Russian market.

Speaking about the retail power market, Medvedev pointed to inefficient competition and restricted access of new players in the market and also said consumers almost were not taking part in forming prices for power. The President suggested increasing the number of representatives of consumers in the supervisory board of the non-commercial partnership Sovet Rynka (Market Council), which regulates Russia’s wholesale and retail power markets.

Medvedev also demanded that all regional power distribution grid companies currently controlled by IDGC Holding be either privatized or transferred for management to private investors. The Russian government currently holds a 52.7-percent stake in IDGC Holding, which was established in July 2008 as part of electric power holding UES’ reorganization and received UES’ stakes in 11 power grid companies. Under the initial plans, the government was to keep control over distribution grid companies until 2011. However, IDGC Holding’s Nikolai Shvets said in September 2010 that the government should keep a controlling stake in IDGC Holding until 2015 rather than until 2011.

Economic Development Minister Elvira Nabiullina said that she believed power grid companies should be transferred to private investors for management.

Nabiullina also said it was necessary to reconsider the parameters of the reform in the power sector. The desire to change the course of reforms is shared by both private investors, who complain about the government’s changing rules of operations on the market too often, and the consumers. Nabiullina said the expected economic effect of the reforms was not reached.

Meanwhile, Medvedev said the government should not spend much time reconsidering the reform, but start taking direct actions.

Outdated infrastructure remains one of the most important problems in the power sector, the President further said. Equipment over 30 years old accounts for about 40 percent in the generating business and for over 50 percent in the grid complex, Medvedev said, adding that the worn-out equipment often caused accidents at power facilities. Investments in the sector are made and new capacities are launched, but the control over the effectiveness of extra expenditures is not sufficient, as the efficiency of the sector failed to increase over the last 20 years, Medvedev said.

Medvedev ordered the government to prepare a complex plan for the modernization of the country’s electric power sector by August 15. Special attention will be paid to the development of energy-saving technology and renewable energy sources, he said.