Director General of IDGC Holding Nikolay Shvets and the new CEO of Moscow United Power Grid Company (MOESK) held a news conference for the Russian media on March 12, 2010. The news conference followed the ceremony introducing MOESK’s new Director General Andrey Konovalov, elected by the MOESK Board of Directors on March 11, 2010.

Nikolay Shvets told the news conference that the different scenarios of developing IDGC Holding’s management system did not exclude the possibility of engaging strategic investors, including the foreign ones, to co-manage IDGC Holding entities. This will be possible, starting from 2011. “And we have already begun work in this area,” Nikolay Shvets said. “We have recently signed an agreement with France-based ERDF.”

Nikolay Shvets emphasized that this involved the possibility of engaging strategic partners as managers of subsidiaries rather than IDGC Holding. Nikolay Shvets elaborated on the issue, saying that “the current Development Strategy of the company for the period until 2015 does not specify any possibility like that.”

“These are our initial contacts, initial arrangements in this area. In the future, IDGC Holding is determined to build up cooperation with all global energy companies that effectively manage electric grid assets,” underlined Nikolay Shvets.

But the final decision on the further development of interregional distribution grid companies, he said, will definitely be made by the Government, the principal shareholder of IDGC Holding.

Asked about how consumers are equipped with up-to-date electricity metering systems that incorporate automated collection of metered data and automated electricity consumption control, Nikolay Shvets answered that this work was underway as part of implementing the governmental program related to energy conservation and energy efficiency enhancement in the Russian economy. Consumers now install, all by themselves, the metering devices that they need. This will be the responsibility of grid companies as of January 2012 when they will use their own resources to install all the remaining meters and consumers will pay for this work, Nikolay Shvets said.

He stressed that it was vital that consumers realize right now: it is necessary for them to have more than merely an electricity meter, they need a device that will enable them to use the opportunities opened up by tariff regulation and communication with grid companies for information exchange. These devices will be used to create so-called smart or actively adaptive networks; implement Smart City, Smart Neighborhood, and Smart House projects; and carry out other promising energy-conserving programs.

Speaking about the transition to a new tariff regulation system based on the return on investment method (Regulatory Asset Base, RAB), Nikolay Shvets voiced a hope that the transition would make it possible to stabilize the physical depreciation of equipment used in the distribution grid sector. In addition, he said that the implementation of the new method would make the tariff policy more predictable as the rate of return on investment and the internal rate of return would be set for a long term. Another important thing is that the new method encourages investment in efficient facilities because they should be profitable and ensure good return on capital.

For his part, Andrey Konovalov told the news conference that MOESK was negotiating with the Government of Moscow and the Government of the Moscow Region about the possible transition to a RAB-based new tariff regulation system with a five-year regulation period, starting from 2011. “It would be ideal for the company to have a five-year RAB period,” he said, adding that a compromise is quite probable, with MOESK having the same initial RAB period of three years as other distribution grid companies that have already completed the transition to the new method. Andrey Konovalov said that this issue kept on being discussed with Moscow and Moscow Region regulators.

Speaking about what he, as the head of MOESK, viewed as his priorities, Andrey Konovalov said, “The focus will be on improving the efficiency of capital construction, implementing the company’s strategy, and enhancing its operating efficiency.” According to him, it will take at least three months to “size up the situation and put forward the first proposals.” The MOESK CEO believes that it will take him the same period to finalize the position on the company’s debt burden.

ERDF is one of France’s leading electricity grid companies. Its area of responsibility covers 95% of medium- and low-voltage distribution networks with a total length of 1,274 thousand kilometers. The company provides services to 33,600 thousand customers. ERDF is a wholly-owned subsidiary of Électricité de France (EDF). EDF-managed assets include foreign assets.