Soviet-era economic planners emphasized the development of heavy industry and transformed Russia into a prolific energy consumer. Since the early 1990s, Russia's energy inefficiency has actually increased, because output in almost every sector of the economy has declined faster than energy consumption. As a result, the amount of energy consumed per unit of GDP in Russia in 1996 was 32 percent higher than in 1990. Energy price reforms, which have raised Russia's energy prices to world levels or higher, have made energy-efficient technologies more attractive. Energy is now a major share of Russian production costs, and in some factories costs per unit of output are higher than in the West because of high energy prices.
High costs give energy-intensive industries strong incentives to save.
Production stoppages are now less frequent because of improved power quality, and Moscabelmet is not in debt to power and water utilities. Cities also subsidize heat and hot water services with heat subsidies now dominating many municipal budgets. Some Russian cities spend a third of their budget subsidizing citizens' heat and hot water. The financial burdens imposed by these obligations have led cities to seek ways to reduce their energy consumption. The money saved from the efficiency program will be re-invested in further improvements to the system.