Moscow, 27 October 2006. The Board of Directors decided it would be advisable for RAO "UES of Russia" and its energy retail subsidiaries (ERCs) to participate in Not-for-profit Partnership of Guarantee Suppliers and ERCs.

The Partnership will be co-founded by RAO "UES of Russia", its energy retail subsidiaries (OAO "Kaluga Retail Company", OAO "Oryol Retail Company", OAO "Energosbyt Rostovenergo", OAO "Mosenergosbyt", OAO "Tambov Energy Retail Company", and OAO "Nizhny Novgorod Retail Company"), and independent energy retailers, OOO "Rusenergosbyt", ZAO "HC RusEnergo", OOO "KES-Trading", ZAO "Dizazh M", and OOO "Transneftservis S".

The Partnership will represent the interests of energy retail companies, including the independent retailers, on the retail electricity markets. It will draw up proposals to be included in draft rules and regulations governing retail activities on the electricity market, and safeguard and represent its members' interests.

The Partnership will promote exchange of management experience and expertise among Russia's regions in developing an efficient competitive retail market for electricity, including other countries' experience. It will also work to cut costs, increase the ERCs' investment attractiveness, develop and submit recommendations, proposals and directions designed to improve the customer services system on the retail electricity market, including dissemination of the best practices, etc.

The Partnership's first actions will be the development of good business conduct practices for its members, identification of the top priority regulations for the electricity market and preparation of proposals relating to such regulations, and creation of an e-discussion forum.

* * *

The Board noted the progress report on the activities to raise investments in the generation capacity projects using the investment guarantee mechanism (IGM).

The investment guarantee mechanism was approved by the Resolution of the Russian Government dated 7 December 2005 and is one of the ways of raising funds needed to build new generating facilities in the areas where capacity shortages are anticipated.

The essence of the IGM is that it is possible to compensate the investor for its investment costs incurred in delivering capacity for the System Operator's benefit during ten years. The investors will make investments in such projects in their own capital and/or debt. The funds needed for investors' compensation are expected to be included in the tariff of the System Operator as a capacity surcharge. An important feature of the arrangement is the investor's contractual obligation to ensure that the new generation capacity is supplied with fuel (natural gas or coal) throughout the contract term.

The total installed capacity of the generation projects to be implemented under the IGM should not exceed 5,000 MW.

RAO "UES of Russia" approved the list of priority IMG projects based on the System Operator's proposals in April 2006.

The Russian Ministry of Industry and Energy is expected to adopt a final decision regarding the amount of generating capacity needed, identifying the specific project sites, and issue an order to that effect. In October, the Ministry hosted a meeting which agreed the following list of sites for generation construction projects, primarily those involving the IGM:

The Board decided to finalize and agree the characteristics of the generation projects planned for implementation in the Tyumen energy system (the Northern energy area, Urengoiskaya TPP), and the time frame for the plant's construction. Also, on the suggestion of the Federal Tariff Service, it will be necessary to examine in greater detail the possibility of construction of generating capacity in the Kuzbass energy system (Southern energy area, Kuznetskaya TPP).

Afterwards, pursuant to the above resolution of the Ministry of Industry and Energy, the Russian Federation Federal Energy Agency, which is in charge of the process to select investors, will take a decision on the timing of the tenders and set up and the tender commission.

As part of the process, the Agency created a joint working group to prepare for the tenders.

The tender commission and joint working group comprise officials from the Ministry of Industry and Energy, Ministry of Economic Development and Trade, Federal Antimonopoly Service, representatives of RAO "UES of Russia", Federal Grid Company, and System Operator.

Within the framework of the IGM implementation, the Ministry of Industry and Energy together with RAO "UES of Russia" and System Operator produced and adopted the Rules for holding tenders for awarding investment projects to create the long-term technological reserve and the Rules for determining the scope of required installed capacity of generation facilities brought on line under the IGM.

Also, experts of RAO "UES of Russia" and System Operator are engaged in the activities of the joint working group developing a number of IGM documents, including an information memorandum which sets out the details of the planned tender, draft tender documentation, and the draft agreement to be made with the tender winner.

In parallel with the work to organize tenders within the IGM process, RAO "UES of Russia" held tenders to select engineering companies to develop pre-feasibility studies. To date, the Company has received bids from international engineering companies relating to audit of pre-feasibility studies. The audited results of the pre-feasibility studies will be used to determine the maximum cost of investment projects for the tender documentation. Under the tender terms, this cost will be a key criterion for selecting a tender winner and a benchmark for investors' bids.

* * *

Information on this decision of the Board of Directors of RAO "UES of Russia" is not intended for publication or distribution in Australia, Canada, Japan or the United States of America.

The Board took a number of decisions relating to the conduct of the EGM regarding the Company's reorganization, as scheduled to be held on 6 December 2006.

The Board of Directors also approved the form and wording of the ballots for the EGM, and the voting instructions.

The Board approved the list of candidates for the Board of Directors of OAO "WGC-5 Holding" and OAO "TGC-5 Holding" nominated by the Company's shareholders. The following persons have been included in the candidates list of OAO "WGC-5 Holding":

The Board approved the following list of candidates for the Board of Directors of OAO "TGC-5 Holding":

The Board of Directors of RAO "UES of Russia" approved the appointment of Anatoly Bushin, Director General of OAO "WGC-5", as the one-man executive body of OAO "WGC-5 Holding"; and Vladimir Lebedev, Director General of OAO "TGC-5", as the one-man executive body of OAO "TGC-5" Holding".

Please be reminded that the peculiarity of the forthcoming reorganization of RAO "UES of Russia" is that it will involve the spin-off of two companies from the Parent Company, OAO "WGC-5 Holding" and OAO "TGC-5 Holding". RAO "UES of Russia" will transfer its shares in OAO "WGC-5" and OAO "TGC-5" to OAO "WGC-Holding" and OAO "TGC-5 Holding", respectively, under the separation balance sheet. Simultaneously with the spin-off, OAO "WGC-5 Holding" and OAO "TGC-5 Holding" will merge with and into OAO "WGC-5" and OAO "TGC-5", respectively, in accordance with the Federal Law on Joint Stock Companies, as amended.

This announcement was published in the Interfax newswire at 15:49 Moscow time on 27 October 2006 in compliance with the requirements Federal Service for Financial Markets of Russia.

* * *

Information on this decision of the Board of Directors of RAO "UES of Russia" is not intended for publication or distribution in Australia, Canada, Japan or the United States of America.

The Board of Directors of RAO "UES of Russia" supported the motion by the Management Board that the 25% plus one share in OAO "WGC-5" held by RAO "UES of Russia" be subject to a lock-up period of 180 days after the additional share issue of OAO "WGC-5".

The Board broadly approved the time frame for the sale of WGC-5 shares and spin off of WGC-5 from RAO "UES of Russia", as proposed by the Management Board. The Board also gave the Management Board a task to submit to the Board, no later than March 2007, a memorandum prepared with the involvement of an investment advisor, concerning the best course of actions to sell the WGC-5 shares and decide on the reorganization of WGC-5 (spin off from RAO "UES of Russia" during the first phase of the Company's reorganization) with a view to maximizing return from the sale of the WGC-5 shares.

* * *

The Board instructed the RAO UES representatives on the Board of Directors of OAO "Bureyskaya HPP" to vote for the inclusion on the EGM agenda of the proposals to lease the property of OAO "Bureyskaya HPP" to OAO "HydroWGC", provision by OAO "Bureyskaya HPP" of equipment operation and maintenance services, and approval of the loan to be provided by OAO "HydroWGC".

According to the 2006-2010 Development Strategy and Draft Investment Programme of OAO "HydroWGC", one of the sources of finance for HPP construction will be an investment component, which will be included in HydroWGC's tariff for deliveries to the wholesale electricity market. In order that Russia's Federal Tariff Service set a tariff for OAO "HydroWGC", the latter should own generation equipment meeting the requirements imposed on the wholesale electricity market participants. For that purpose, OAO "HydroWGC" plans to lease the property of the Bureyskaya HPP from 1 January to 31 December 2007. The lease payment amount will be calculated based on the amounts of equipment depreciation charges, property tax, and profit margins.

After the lease contract is concluded, the Bureyskaya HPP will cease to be a wholesale electricity market participant. On the same date, OAO "HydroWGC" will become a wholesale market participant delivering electricity to groups of delivery points previously registered for the Bureyskaya HPP.

In order to ensure process continuity, it is planned to simultaneously make a contract under which the Bureyskaya HPP will provide equipment operation, maintenance and repair services to OAO "HydroWGC".

The total receipts by the Bureyskaya HPP from both contracts will be the same as the cash flows generated by the Bureyskaya HPP selling electricity on the wholesale market. This will ensure that the power plant meets the profit targets provided by its business plan and pays the planned dividends.

Additionally, in order for OAO "Bureyskaya HPP" to be able to redeem its promissory notes sold to RAO "UES of Russia", it is planned that the company will obtain a RUB1.9 billion loan from OAO "HydroWGC".

* * *

The Board instructed the RAO UES representatives on the Board of Directors of OAO "HydroWGC" to vote for the approval of the company's participation in the Novaya Energia Not-for-profit Foundation for the development of renewable energy sources. The Foundation's primary objective is to contribute to the overall development of the infrastructure which will facilitate the use of renewables in Russia.

Besides OAO "HydroWGC", other founders of the Foundation are the Non-government pension fund of the electricity industry and the Energy Carbon Fund of RAO "UES of Russia". The Foundation will provide experts needed for the construction of small-scale HPPs, and the Energy Carbon Find will deliver innovation mechanisms for implementing renewable projects which will help increase energy efficiency and reduce greenhouse gas emissions.

* * *

The Board of Directors of RAO "UES of Russia" noted the report on the activities of the Management Board in Q3 2006 and approved the work plan for Q4 2006.

* * *

The Board instructed the RAO UES representatives at the shareholder meeting of OAO "Mosenergo" to vote for the approval of the private placement of the company's additional shares to Gazprom Group.

At its previous meeting held 29 September, the Board approved the issuance by OAO "Mosenergo" of RUB11.5 billion in additional shares, par value of RUB1 each, and the increase of Mosenergo's authorized capital by RUB11.5 billion. The Management Board of RAO "UES of Russia" was instructed to submit to the Board of Directors its proposals regarding the persons to which the additional shares will be placed.

The placing price will be determined as an average weighted price of trading on the RTS and MICEX stock exchanges over the period of six months before the shareholder meeting of OAO "Mosenergo", at which the shareholders will approve the additional share issue, but not less than RUB5 per share. The meeting is planned to be held in December 2006, and the shares are expected to be placed in March 2007.

According to the Board resolution, as a result of the share issue the stake held by RAO "UES of Russia" in OAO "Mosenergo" will be at least 25 percent plus one share (blocking stake).

OAO "Mosenergo" expects to raise at least US$2.1 billion through this share issue. The proceeds will be used to finance top priority investment projects under the joint programme of RAO "UES of Russia" and the Moscow City Government for the development of the Moscow city energy system until 2011.

According to the document, the generating capacity of OAO "Mosenergo" will increase by 2,400 MW to 13,000 MW, primarily through the construction of new combined-cycle power units at the power plants, CHPP-21, CHPP-26, and CHPP-27.

The investment projects implementation will be controlled by the simple partnership of RAO "UES of Russia", Gazprom Group, and OAO "Mosenergo". The Board of Directors approved the conclusion of the partners' agreement.

According to the agreement, RAO "UES of Russia" and Gazprom each will contribute RUB1,000, while Mosenergo's contribution will range between RUB37 billion and RUB 60billion. After the construction is completed, all the newly built facilities will be transferred to OAO "Mosenergo", and the other partners will be repaid their contributions.

The generation company, OAO "Mosenergo" (OAO "TGC-3") was set up on 1 April 2005 as a result of Mosenergo restructuring. The company comprises 17 power plants located in the city of Moscow and the surrounding Moscow Region, except for TPP-4, TPP-5, TPP-24, and the pumped storage power plant, Zagorskaya PSPP. RAO "UES of Russia" currently holds a 50.9 percent stake in OAO "Mosenergo". Mosenergo shares are traded on the major Russian stock exchanges, ZAO "MICEX Stock Exchange" and NP "RTS Stock Exchange".

* * *

The Board of Directors of RAO "UES of Russia" received and noted the information regarding the financial model for OAO "Far East Energy Company" ("FEEC"), OAO "Far East Generation Company" ("FEGC"), and OAO "Far East Distribution Company" ("FEDC").

These companies will be established as a result of restructuring of the non-islanded energy systems in the Russian Far East (i.e. OAO "Amurenergo", OAO "Khabarovskenergo", OAO "Dalenergo", and OAO "Yuzhnoe Yakutskenergo" (on the basis of its Southern energy area), which was approved by the Board of Director of RAO "UES of Russia" on 2 September 2005. The restructuring plan for the Russian Far East energy systems provides for a number of concurrent corporate actions.

To date, OAO "Yuzhnoe Yakutskenergo", FEGC, and FEDC have been set up and registered with the authorities. In January 2007, it is planned to consolidate of OAO "Khabarovskenergo", ZAO "LuTEK", OAO "Amurenergo", OAO "Yuzhnoe Yakutskenergo", and OAO "Dalenergo" into a single entity, OAO "FEEC".

These companies' shareholders have already approved the consolidation and the Charter of OAO "FEEC" to be created through such consolidation. The Consolidation Agreement, inter alia, sets out the ratios to be used to convert the regional energos' shares into shares of OAO "FEEC".

In the process, the regional energos being reorganized will contribute their core assets – generating and grid assets, respectively – as consideration for additional shares in FEGC and FEDC.

The assets of FEEC are to be formed through balance sheet consolidation of the regional energos under reorganization. As a result, their respective liabilities and the undistributed property will be transferred to the newly established company, FEEC. The regional energos will retain the construction in progress and inventories; their accounts payable will be in excess of the accounts receivable.

In order to create energy companies that would have equal financial strength, a procedure was adopted to regulate the distribution of construction in progress, inventories, accounts payable and accounts receivable at the energy companies of FEEC Group. It is based on the principle that the property assets and liabilities should be distributed to the newly established companies according to their line of business prior to the commencement of FEEC operation.

The pro-forma business plans and balance sheets prepared for FEEC, FEGC, and FEDC suggest that such approach is likely to be effective. According to these documents, the companies will be financially strong in the medium term. Thus, the distribution of liabilities among the newly-established energy companies by line of business will help achieve the most balanced result possible and reduce the financial burden on the FEEC at the start of its operations.

In this connection, the Board of Directors of RAO "UES of Russia" instructed the Company's representatives on the management bodies of OAO "Amurenergo", OAO "Khabarovskenergo", OAO "Dalenergo", OAO "LuTEK", and the representatives of OAO "Yakutskenergo" at OAO "Yuzhnoe Yakutskenergo" to vote for the transactions relating to the transfer of these companies' respective debts, disposal of their core assets and inventories, and assignment of the accounts receivable to FEGC and FEDC, respectively.

* * *

The Board of Directors took a number of decisions to increase the authorized capital of OAO "UES FGC".

On 21 November 2005, the Board of Directors of RAO "UES of Russia" acting in the capacity of shareholder meeting of OAO "HydroWGC" approved the capital increase of OAO "UES FGC" through issuance of additional ordinary shares worth a total of RUB80 billion.

The additional issue of shares of OAO "UES FGC" was registered with the FSFM of Russia on 21 March 2006. Part of the shares worth RUB33.5 billion were purchased by RAO "UES of Russia" after the purchase had been approved by the Company's shareholders at the AGM in June 2006. In return for the additional shares, RAO "UES of Russia" contributed its shares in trunk grid companies spun off from regional energos, and the property relating to the Unified National Energy Grid (UNEG).

At the second stage, RAO "UES of Russia" will pay RUB10 billion for the additional shares of OAO "UES FGC". Approval of the above transaction will be submitted for shareholder approval at the EGM of RAO "UES of Russia" scheduled for 6 December 2006.

Under the Draft Federal Budget 2007, the Russian Government will contribute funds to the authorized capital of OAO "UES FGC". These funds will be used to finance FGC's investment programme.

Today, in order to ensure the state's participation in the current share issue of OAO "UES FGC", the Board of Directors of RAO "UES of Russia" approved amendments to its resolution of 21 November 2005 to increase the authorized capital of OAO "UES FGC". The list of persons to which FGC additional shares are to be placed now includes the Russian Federation represented by the Federal Agency for Federal Property Management. The Board decided that that the share of RAO "UES of Russia" in the authorised capital of OAO "UES FGC" may decline: after the state acquires the additional shares in FGC, RAO "UES of Russia" will hold at least 76.94% of FGC shares.

* * *

The Board approved the merger of OAO "Nizhny Novgorod Generation Company", OAO "Penza Generation Company", OAO "Mordovia Generation Company", OAO "Mordovia Heat Network Company", OAO "Ivanovo Generation Company", and OAO "Vladimir Generation Company with and into OAO "TGC-6". This step will bring the process to establish the TGC-6 target structure to completion.

The Board of Directors of RAO "UES of Russia" has approved the share conversion ratios for purpose of the companies' merger with and into OAO "TGC-6". One additional ordinary share of OAO "TGC-6" of RUB0.01 par value will be exchanged for:

• 1/95757.9239682084 of an ordinary share in OAO "Nizhny Novgorod Generation Company" of RUB554.48 par value;
• 1/87696.2202929054 of a Type A preferred share in OAO "Nizhny Novgorod Generation Company" of RUB554.48 par value;
• 1/1171.61047232305 of an ordinary share in OAO "Penza Generation Company" of RUB4.5 par value;
• 1/1072.9602221456844 of a Type A preferred share in OAO "Penza Generation Company" of RUB4.5 par value;
• 1/7221.46798001098 of an ordinary share in OAO "Vladimir Generation Company" of RUB132.53 par value;
• 1/197.808558108143 of a Type A preferred share in OAO "Ivanovo Generation Company" of RUB1.3 par value;
• 1/181.153086495345 of a Type A preferred share in OAO "Ivanovo Generation Company" of RUB1.3 par value;
• 1/87.8873326581243 of an ordinary share in OAO "Mordovia Generation Company" of RUB0.83 par value;
• 1/33.4267812429762 of an ordinary share in OAO "Mordovia Heat Network Company" of RUB0.35 par value.

For the share conversion, OAO "TGC-6" will issue 270 billion additional ordinary shares worth a total of RUB2.7 billion.

The Board of Directors instructed the RAO UES representatives at the board meetings and shareholder meetings of OAO "TGC-6" and those of the merging companies to vote FOR the approval of all resolutions required to bring target structure of OAO "TGC-6" to completion.

Upon the completion of all the appropriate corporate procedures, OAO "TGC-6" will become a unified operational company. The company's production and financial assets will be consolidated, which will boost the investment attractiveness of OAO "TGC-6".