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ROSSETI

April 12, 2010

IDGC Holding and Altai Territory Administration assumed mutual obligations for innovative development of electric grid facilities in Siberia

On April 12, 2010, IDGC Holding and the Altai Territory Administration entered into the Agreement for Measures Ensuring Reliable Electricity Supply for Customers and Their Connection to Electric Grids within the Region.

The Agreement was signed by IDGC Holding Director General Nikolay Shvets and Governor of the Altai Territory Aleksandr Karlin. The Agreement signing ceremony was held at the IDGC Holding Moscow Office.

At the ceremony, Nikolay Shvets said that about 90 facilities are supposed to be created in the Altai Territory as part of the implementation of the Siberia Development Strategy. A good share of this work will be completed within the following five years. "It is possible to implement these programs, provided that the efforts to build and develop electric grid facilities would be perfectly coordinated," emphasized Nikolay Shvets.

Another vital objective, according to Mr. Shvets, is to implement the program for consolidation of the territorial grid assets.

"Next year, we may face a serious problem with rapidly growing electricity tariffs. One of the measures to be taken to help to solve this problem is consolidate the territorial grid assets. This will help to reduce maintenance costs for the grids currently operated by different entities. IDGC Holding is willing to negotiate to find mutually acceptable solutions for these issues," said Nikolay Shvets.

"It is also essential to coordinate the efforts for the transition, from January 1, 2011, of the Altai Territory to a long-term tariff regulation system for electricity transmission services," emphasized the IDGC Holding Director General.

"This transition is prescribed by the Government Regulation. IDGC Holding and the Altai Territory Administration have already started developing the model to be implemented within the following five years," said Nikolay Shvets.

Mr. Shvets also emphasized that many projects for the development of small and medium businesses have been implemented in the region. "We know that the Altai Territory Administration places special emphasis on developing this particular sector, and its share will grow. At present, about 1,000 connections to electric grids have been made for customers falling under the preferential category as determined by Russian Government Resolution No. 334 of 2009," said Nikolay Shvets.

For his part, the Governor of the Altai Territory thanked the IDGC Holding management "for the opportunity to work in the same algorithm and along the same vector as determined by the Government of the Russian Federation." "This Agreement," the Governor said, "is no tribute to fashion. We are entering into a format of consistent and systematic cooperation with IDGC Holding to enhance operational efficiency of the electric grid facilities in the Altai Territory. Our objective is to renovate the electric grid facilities in the region, provide them with modern equipment, and improve tariff regulation."

The Governor emphasized that the Altai Territory electric grid facilities were among Russia's largest facilities in terms of extent and expressed profound gratitude to Altaienergo Division of IDGC of Siberia experts, executives, engineers, and technicians for their efforts to supply the region with electricity during the 2009–2010 heat deficit period.

The Agreement signed on April 12 provides for an integrated development of generating and electric grid facilities to ensure energy security in the Altai Territory. Under the Agreement, the Parties will cooperate to construct and rehabilitate electric grid facilities to prevent electric capacity deficiency, enhance electricity supply reliability in the region, and create conditions for connecting new customers to the electricity distribution networks.

The Parties are supposed to cooperate in the following areas: financing of the planned construction and rehabilitation of electric grid facilities within the Territory, compliance with the established requirements and deadlines for the submission to the federal executive authorities of materials concerning consideration and approval of tariffs and their limits, and holding investment biddings. The Parties also plan to closely cooperate to ensure energy security in the event of incidents or emergencies at the electric grid facilities of Altaienergo Division of IDGC of Siberia, long-term development of these facilities, and information support related to socio-economic development of the region.

In the course of implementation of the Agreement—whose term is until December 31, 2014, with the term of the Parties' obligations being until their complete performance—IDGC Holding will use its corporate management mechanisms to ensure reliable and uninterrupted electricity and capacity transmission to the customers connected to the Altaienergo electric distribution grid facilities. It is planned to apply new electricity metering approaches, optimize electricity supply patterns, and use energy-efficient equipment and technologies to reduce electricity transmission losses in the electric distribution system of the Altai division of IDGC of Siberia. To stabilize electricity transmission tariffs, IDGC Holding will implement efficient production cost management programs for Altaienergo. The corporate management mechanisms applied by IDGC Holding will enable the Division of IDGC of Siberia to participate in all kinds of Altai Territory municipal biddings and auctions for the sale of electric facilities connected to the Altaienergo grids, pursue an industrial policy aimed at developing cooperation and production ties with regional entities, and efficiently meet other challenges.

For its part, the Altai Territory Administration will ensure transition from January 1, 2011, of the Altai Territory to an electricity transmission service tariff (price) regulation system providing for setting long-term tariffs based on long-term activity regulation parameters and the return on investment method. Under the Agreement, the Administration is also obliged to ensure, within its competence, consideration, approval, and control over the implementation of the Altaienergo investment programs, as well as consideration and approval, within effective laws, of amounts of fee for connection to the electric grids of Altaienergo Division of IDGC of Siberia.

According to the Parties, the mutual guarantees and obligations assumed today by IDGC Holding and the Altai Territory Administration will enhance energy security of the Siberian electric power system.

 

 

 

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