RAO “UES OF RUSSIA” ANNUAL REPORT 2006

RAO “UES OF RUSSIA” 

ANNUAL REPORT 

2006 

The Annual Report 2006 of OAO RAO “UES of Russia” 

was approved by the Board of Directors 

of RAO “UES of Russia” on 25 May 2007 and submitted 

for shareholder approval at the Annual General Meeting 

of OAO RAO “UES of Russia” on 26 June 2007.

2 0 0 6 ANNUAL REPORT OF RAO “UES OF RUSSIA” 

Contents 

CORPORATE 

HIGHLIGHTS 4 

STATEMENT 

BY BOARD CHAIRMAN 

AND MANAGEMENT 

BOARD CHAIRMAN 

OF RAO “UES OF RUSSIA” 6 

CORPORATE 

GOVERNANCE SYSTEM 

REFORMING 

THE COMPANY 

ENSURING RELIABLE 

OPERATION 

OF THE UES OF RUSSIA 

ELECTRICITY 

AND HEAT MARKETS 

INVESTMENT 

ACTIVITIES 

INTERNATIONAL 

ACTIVITIES 

APPENDIX 

ABOUT THE COMPANY 10 

CAPITAL 

OF OAO RAO “UES OF RUSSIA” 12 

18 36 

62 

76 

96 

118 

130 

Shareholders Meeting 21 

Board of Directors 22 

Management Board 25 

Governance System 26 

Results 

of the Structural Reform 38 

Liberalization of the Electricity 

Markets 44 

First Phase of the Company’s 

Reorganization 45 

Reform Plans 46 

REGULATORY 

ENVIRONMENT 

AND MACROECONOMIC 

INDICATORS 

54 

Power Consumption Trends 55 

Factors Affecting Pricing 

in Electricity Industry 57 

Electricity 

and Heat Tariffs 59 

Operation 

of the UES of Russia 63 

Тechnical Policy 66 

INVESTMENT PHASE 

OF THE UES DEVELOPMENT 

68 

Investment Needs 

of the UES of Russia 68 

Sources of Investment 71 

Wholesale 

Electricity Market 77 

Retail Electricity Markets 84 

Heat Market 85 

COMPANY’S 

FINANCE 

PRODUCTION 

100 

RESULTS 

86 

Generation 86 

Electricity Transmission 

and Distribution 92 

Electricity Sales 94 

Financial Management 

and Financial 

Market Operations 101 

Company’s 

Financial Performance 104 

Auditor’s Report 110 

Statutory Financial Statements 

of the Company 114 

Opinion Statement 

of the Auditing Commission 117 

International Cooperation 

of RAO “UES of Russia” 118 

Foreign Assets 

and Projects 121 

Electricity Exports 

and Imports 122 

CORPORATE 

SOCIAL 

RESPONSIBILITY 

126 

Corporate Governance Code 

Compliance Report 132 

Information 

on Members of the Board 

of Directors, Management 

Board, Committees 

and Commissions under 

the Board of Directors 

of RAO “UES of Russia” 138 

Information on Stakes 

and Voting Shares Held 

by RAO “UES of Russia”, 

Membership in Not-for-Profit 

Organizations 145 

RAO “UES of Russia” 

Subsidiaries 

with Shares Traded 

on Stock Markets 161 

Report on Financing 

of OAO RAO “UES of Russia” 

Investment Programme 

Projects 167 

Information 

on Transactions Made 

by OAO RAO “UES of Russia” 168 

Company Bylaws 172 

Major Corporate Events 174 

Glossary 180 

Contact Information 185

2006 Corporate Highlights 

Key Performance Highlights 

of RAO “UES of Russia” 

Holding Company and Parent Company 

59 REGIONAL ENERGOS COMPLETE 

SEPARATION BY LINES OF BUSINESS 

ALL THERMAL WGCs AND MOST TGCs 

CREATE THEIR INTENDED FINAL 

STRUCTURE 

NEW RULES FOR THE OPERATION 

OF THE WHOLESALE AND RETAIL 

ELECTRICITY (CAPACITY) MARKETS 

ARE ADOPTED 

Indicators 

Unit of 

measurement 2004 2005 2006 

Installed capacity of power plants owned by the Holding Company million kW 156.5 157.9 159.2 

Electricity output by RAO UES energy companies billion kWh 651.9 665.4 695.0 

Heat output by RAO UES entities million Gcal 465.8 465.2 477.8 

Average annual number of employees in the 

Holding Company’s entities 

‘000 persons 496.3 461.2 469.3 

OAO "WGC-5" COMPLETES ITS IPO, 

THE FIRST ONE AMONG THE RAO UES 

GENERATION COMPANIES, RAISING 

USD459 MILLION IN FUNDS TO FINANCE 

ITS INVESTMENT PROGRAMME 

THE FIRST SALE OF A REGIONAL 

ENERGY retail COMPANY 

OF RAO "UES OF RUSSIA" TO A PRIVATE 

INVESTOR TAKES PLACE. 

THE SHARES IN OAO "YAROSLAVL 

ENERGY RETAIL COMPANY" HELD 

BY RAO "UES OF RUSSIA" HAVE BEEN 

SOLD IN A PUBLIC AUCTION 

THE EGM OF RAO "UES OF RUSSIA" 

HELD ON 6 DECEMBER 2006 APPROVES 

THE FIRST PHASE OF THE COMPANY 

REORGANIZATION BY SPIN-OFF 

OF TWO GENERATION COMPANIES FROM 

RAO "UES OF RUSSIA": 

ОАО "WGC-5" AND OAO "TGC-5" 

Length of the Holding Company’s transmission lines ‘000 km 2,482.5 2,479.0 2,476.8 

Total length of the Holding Company’s backbone 

transmission lines (220 kV and above)* 

Total length of the Holding Company’s 

transmission lines (35-110 kV) 

Total length of the Holding Company’s 

transmission lines (0.38-20 kV) 

‘000 km 144.2 144.7 144.9 

‘000 km 478.3 478.7 479.0 

‘000 km 1,860.0 1,855.6 1,852.9 

Company’s net revenues from sale of goods, products, 

works and services 

Company’s profit before taxes 

Company’s net (retained) income 

millions of 

RUB 

millions of 

RUB 

millions of 

RUB 

34,461 32,579 40,297 

27,233 24,964 754,942 

24,069 20, 898 745,088 

Dividends per ordinary share of the Company RUB 0.0559 0.0574 0** 

Dividends per preferred share of the Company RUB 0.2233 0.1939 0** 

* overhead and cable transmission lines 

** submitted for shareholder approval at the AGM of OAO RAO "UES of Russia" on 26 June 2007

2 0 0 6 

ANNUAL REPORT OF RAO “UES OF RUSSIA” 

ALEXANDER VOLOSHIN, 

Chairman of the Board of Directors 

RAO "UES of Russia" 

ANATOLY CHUBAIS, 

Chairman of the Management Board 

RAO "UES of Russia"


Statement by Directors Board Chairman 

and Management Board Chairman 


2 0 0 6 

Dear Shareholders, 

subsidiaries via a share exchange. 9 out of the 

city markets were liberalized with effect from 

The RAO UES Investment Programme is 

OAO “TGC-1”, and the Chelyabinskaya CHPP-3 

as launch a large-scale investment process in 

14 TGCs completed the creation of their in- 

1 September 2006. The new model for the 

designed to achieve those goals. By 2011, over 

of OAO “TGC-10”. By end-2006, the installed 

the energy sector. We are convinced that our 

tended corporate structure. To date, 64 out of 

wholesale electricity market includes a sys- 

RUB3.1 trillion in funds will be allocated to 

capacity of power plants of RAO UES Hold- 

joint efforts will help us meet the challenges 

During the reporting year, the Company’s 

the 72 regional energos have fully completed 

tem of regulated bilateral contracts and the 

finance the Investment Programme, includ- 

ing Company increased by 1,300 MW reach- 

that the national economy presents to the 

management bodies paid special attention to 

the functional unbundling process, including 

competitive spot and balancing markets. The 

ing RUB1.3 trillion to be used for the develop- 

ing 159,200 MW. Electricity output grew by 

electricity industry. Investments in the sector 

implementing the industry reform, shaping 

11 companies in 2006. 

share of electricity sold at unregulated prices 

ment of power grid facilities. The Programme 

4.4 percent, and heat output rose 2.7 percent. 

will enable us to create an entirely new indus- 

the five-year investment programme for RAO 

In the power grid and dispatching business, 

will increase stepwise to reach 100 percent by 

takes into account the needs of each region 

The progress with the electricity reform, the 

try making use of cutting-edge technologies 

UES entities, and the current financial and 

efforts were continued to consolidate the 

January 2011. The retail market will be liber- 

of Russia. Together with the regional admin- 

current results of our financial and production 

and give an impetus to the development of the 

production issues. 

UNEG facilities within OAO “UES FGC” and the 

alized in parallel with the wholesale market. 

istrations, we have started to work out and 

activities during the reporting year were hailed 

related sectors. 

The key resolutions taken by the Board of 

dispatching operations within the framework 

The first results of the markets’ operation 

implement five-year programmes designed 

by the investment community. In February 

Directors included the approval of the first 

of OAO “UES SO-CDA”. 

suggest that they deliver improved efficiency. 

to ensure reliabile power supply and develop 

2007, international rating agency Standard & 

and final reorganization of the Company, the 

In the reporting year, the Company’s mana- 

Today, the wholesale market prices reflect 

energy facilities in the regions. 

Poor’s upgraded its corporate credit rating on 

strategy for issuance of additional shares by 

gement bodies approved the reorganization of 

the actual proportion between the demand 

The key mechanism to attract investments 

RAO “UES of Russia” to ‘BB’ from ‘B+’. The 

the generation companies, and the strategy 

RAO “UES of Russia” (the Parent Company) in 

and supply. The market gives adequate price 

in the generation segment is offering new 

national rating was upgraded to ‘ruAA’ from 

for disposal of shares in the energy retail com- 

two phases. The first reorganization phase will 

signals to both electricity producers and con- 

shares in WGCs and TGCs to private investors. 

‘ruA+’. From 28 June 2006, when the previous 

panies. Before consideration by the Board, 

virtually all questions were reviewed by the 

Management Board of RAO “UES of Russia” 

be implemented in 2007 by divesting two companies—WGC-5 

and TGC-5. Shares in these 

companies will be distributed pro rata among 

sumers. 

2006 saw an unprecedented growth in 

terms of electricity consumption during the 

To date, we have completed three offerings, 

which we consider were a great success. As 

a result of the offerings, the three genera- 

AGM of OAO RAO “UES of Russia” was held, 

to 24 April 2007, the Company’s market capitalization 

grew by 96 percent to USD58 billion, 

Alexander Voloshin, 

Board Chairman 

and the advisory bodies under the Board of 

the shareholders of RAO “UES of Russia”. 

entire reform period, with the energy use 

tion companies—WGC-5, WGC-3 and TGC-5— 

outstripping the RTS Index by 57 percent. 

Directors — the Strategy and Reform Commit- 

The second reorganization phase is expected 

nation-wide increasing 4.2 percent during 

raised about RUB107 billion in funds for their 

The revenues of RAO UES Group in 2006 

tee, Audit Committee, Appraisal Committee, 

to be completed by 1 July 2008. By that time, 

the year. This represents a 2.5-fold increase 

investment programmes. 

were in excess of RUB900 billion, an increase 

and Human Resources and Remunerations 

RAO “UES of Russia” will have spun out all 

compared to the average annual growth rate 

In 2007-2008, seventeen generation compa- 

of over RUB135 billion compared to 2005. 

Anatoly Chubais, 

Committee. In 2006, the Board of Direc- 

companies of the intended final sector struc- 

of electricity consumption over the past five 

nies are to hold IPOs. The Board of Directors 

Despite that, the Board of Directors recom- 

Chairman of the Management Board 

tors created an Investment and Fuel Supply 

ture, and the Parent Company will discontinue 

years. In November 2006, the Russian Federa- 

and the Management Board of RAO “UES of 

mends, for the first time, that the shareholder 

Commission. 

operations. As a result of the reorganiza- 

tion Government released a basic forecast of 

Russia” expect that these offerings will gen- 

meeting, which is the supreme management 

The relationships between the Company’s 

tion, all shareholders in RAO “UES of Russia” 

electricity production for domestic consump- 

erate at least RUB420 billion in cash, which 

body of the Company, vote to omit the dividend 

managers and shareholders, the system of 

will receive shares in the spin off companies 

tion at 1,426 billion kWh by 2015. This means 

will be used to implement the WGC and TGC 

in respect of 2006. This recommendation is 

accountability, responsibility and manage- 

in proportion to their holdings of the Parent 

that the average annual growth rate of elec- 

investment programmes. As a result, the total 

due to the review of the market value of the 

ment actions were regulated by the Revised 

Company shares. 

tricity use until 2010 will be approximately 

amount of investments to be made by the RAO 

Company’s holdings in its subsidiaries, which 

Corporate Governance Code of RAO “UES of 

After the reorganization is completed, the 

5 percent, and 3.6 percent in 2011-2015. 

UES energy companies in 2007 will increase 

resulted in the accrual of a net “paper profit” 

Russia” adopted in 2006. 

state will control OAO “UES FGC”, OAO “UES 

Such a dramatic increase in electricity 

almost threefold to RUB520.5 billion com- 

of RUB717 billion. In such a situation, we be- 

After the AGM held in 2006, the Board of Di- 

SO-CDA”, OAO “HydroWGC”, ZAO “INTER RAO 

consumption means that a lot of new genera- 

pared to 2006, and 4.5-fold over 2005. 

lieve that dividend payment from the paper 

rectors and Management Board of RAO “UES 

UES”, “IDC Holding”, and “Far East and Is- 

tion capacity will have to be constructed and 

During the year under review, we brought 

profit would not be advisable. 

of Russia”, together with the management 

landed Regional Energos Holding”, and the 

brought on line very quickly. By 2011, we will 

on line new generation facilities, including 

Next year, the management and sharehold- 

bodies of the RAO UES subsidiaries, conti- 

thermal WGCs and TGCs will become fully 

need to put into operation over 40,000 MW of 

power unit 2 of 450 MW at the Severo-Za- 

ers of the Company will have to complete the 

nued the process to create the intended final 

private companies. 

generation capacity, of which about 34,000 MW 

padnaya CHPP, new 180 MW power units 

corporate restructure and vote on the reso- 

structure of the electricity industry. All ther- 

Pursuant to the Russian Government 

will be built by the companies which today 

at the Khabarovskaya CHPP-3 of OAO “Far 

lution to implement the final reorganization 

mal WGCs completed consolidation of their 

resolution, the wholesale and retail electri- 

form part of RAO UES Holding Company. 

Eastern Generation Company”, CHPP-5 of 

phase of OAO RAO “UES of Russia”, as well

10 


About the Company 

Company Structure 

as at 31 December 2006 

RAO UES Group 

RAO UES Holding Company 

2 0 0 6 

OAO RAO “UES of Russia” was established 

in 1992 pursuant to Decrees of the Russian 

President No. 923, dated 15 August 1992, and 

No. 1334, dated 5 November 1992. The contributions 

to the Company’s authorized capital 

were made in the form of property of thermal 

and hydroelectric power plants, power transmission 

lines with substations, other energy 

facilities, and shares in energy companies, 

power sector research and development and 

construction entities. 

OAO RAO “UES of Russia” was registered 

with the Moscow Registration Chamber on 

31 December 1992 (Registration Certificate 

No. 020.863). Pursuant to the legislative requirements, 

on 19 July 2002 the Company reregistered 

with the Moscow City Directorate of 

the Ministry of Taxes and Levies of Russia and 

was assigned the Principal State Registration 

Number (OGRN) 1027700043293. Pursuant to 

Order of the Russian President No. 1009, dated 

4 August 2004, OAO RAO “UES of Russia” was 

included in the List of Strategic Enterprises 

and Strategic Joint Stock Companies. 

OAO RAO “UES of Russia” (also the “Company” 

or the “Parent Company”) is engaged 

in organizing activities of its subsidiaries and 

dependent companies directly involved in the 

generation, dispatching, transmission and retailing 

of electricity and heat. Taken together, 

OAO RAO “UES of Russia”, its subsidiaries 

and dependent companies make up RAO UES 

Holding Company (the “Holding Company”). 

The Holding Company and other subsidiaries 

of OAO RAO “UES of Russia” — research 

and development institutions, repair and 

maintenance companies, services providers, 

and other entities not involved in the generation, 

dispatching, transmission or retailing 

of electricity and heat — comprise RAO UES 

Group (also the “Group”). 

Company’s Mission 

In the interests of its shareholders, OAO RAO 

“UES of Russia” endeavours to ensure a longterm 

increase in the value of the Company 

and its assets and to increase the efficiency of 

the Holding Company’s entities. 

The mission of OAO RAO “UES of Russia” is to: 

achieve the goals of the electricity reform; 

ensure reliable and uninterrupted power 

supply of electricity and heat to customers; 

maintain a balance of interests of the 

Company’s owners (the state and minority 

shareholders) and other stakeholders. 

The key strategic goals and objectives pursued 

by RAO “UES of Russia” in the course of 

the sector reform are as follows: 

to attract massive investment in the electricity 

industry and create the conditions for 

raising private capital; 

to create a competitive market for electricity 

(capacity); 

to increase the efficiency of power utilities; 

to expand the market share of the Holding 

Company entities on the heat and electricity 

markets; 

to develop and implement a fair and transparent 

system of regulation for power grid 

companies; 

to improve the corporate governance system. 

RAO UES companies generate 

69.8% 

of electricity 

32.7% 

of heat in Russia 

RAO UES companies 

account for 

72.1% 

of generating capacity 

96.0% 

of the entire length of the 

UNEG transmission lines 

The Holding Company has 

469,300 

employees 

companies included 

in rao ues group 

OAO RAO “UES of Russia” 

(Parent Company) 

Companies comprising the final 

industry structure 

regional energos 9 

AO-power plants 22 

*the Company’s second-tier subsidiaries. 

OAO “System Operator-Central Dispatch 

Administration of the 

Unified Energy System” 

100% 

OAO “Federal Grid Company of the 

Unified Energy System” 

ZAO “INTER RAO UES” 

Wholesale Generation Companies 

Territorial Generation Companies 

Interregional Distribution Companies 

Executive administration and branches, 

representative offices 

100% 

60% 

49-100% 

49-100% 

100% 

14-100% 

0.1-100% 

Branches: Integrated Dispatch Administrations (IDAs) 

Branches: Territorial Isolated Units 

Bulk transmission (trunk) grids (TGs) 

OAO "WGC-1", OAO "WGC-2", OAO "WGC-3", 

OAO "WGC-4", OAO "WGC-5", OAO "WGC-6", 

OAO "HydroWGC" 

OAO "TGC-1", OAO "TGC-2", OAO "Mosenergo" (TGC-3), OAO "TGC-4", OAO "TGC-5", 

OAO "TGC-6", OAO "Volzhskaya TGC"*, OAO "Southern Generation Company 

TGC-8", OAO "TGC-9", OAO "TGC-10", OAO "TGC-11", OAO "Yeniseyskaya TGC (TGC-13)", 

OAO "TGC-14", OAO "Far Eastern Generation Company"* 

OAO "Center and North Caucasus IDC", OAO "North-West 

IDC" OAO "Urals and Volga IDC", OAO "Siberia IDC" 

Regional companies Generation Companies 14 

Energy Retail Companies 62 

Distribution Companies 57 

Transmission (Trunk Grid) Companies 8 

49-100% 

OAO "Power Machines", OAO "Russian Communal Systems" 

Scientific, research, design, and construction companies 

ZAO "Agency for Power Balance Forecasting", Non-core companies

12 


2 0 0 6 

Capital of 

OAO RAO "UES of Russia" 

As at 31 December 2006, the share capital 

of OAO RAO “UES of Russia” amounted 

to RUB21,558,451,684, and was divided into 

43,116,903,368 shares of 50 kopecks par 

value each, including 41,041,753,984 ordinary 

shares and 2,075,149,384 preferred shares. 

139,989,946 shares of the Company were 

issued in 1993, and the second issue of 

42,976,913,422 shares took place in 1995. 

On 17 June 2003, the Federal Commission 

for Securities Market (FCSM) of Russia adopted 

Resolution No. 03-1131/r providing for the 

consolidation of the share issues of OAO RAO 

“UES of Russia”: 

the issues of ordinary shares of OAO RAO 

"UES of Russia" were assigned a new state 

registration number, 1-01-00034-A, and the 

old state registration numbers, 73-1P-1553 

of 18 August 1993, and MF 73-1-00901 of 

16 October 1995, were cancelled; 

the issues of preferred shares of OAO RAO 

"UES of Russia" were assigned a new state 

registration number, 2-01-00034-A, and the 

old state registration numbers, 73-1P-1553 

of 18 August 1993, and MF 73-1-00901 of 

16 October 1995, were cancelled. 

Under the Charter of RAO “UES of 

Russia”, the Company is authorized to is- 

sue, in addition to the shares outstanding, 

The shareholders owning ordinary and preferred 

shares in OAO RAO “UES of Russia” 

have all the rights to take part in running the 

Company and rights to a share of its assets, 

as provided by Russian law and the Company 

Charter. 

Peculiarities 

of the Dividend Rights 

of Preferred Shareholders 

The holders of Type A preferred shares have 

the right to a fixed annual dividend. The 

amount of dividend payable on each Type 

A preferred share makes 10 percent of the 

Company’s full year net profit divided by the 

number of preferred shares, which make up 

25 percent of RAO UES authorized capital. 

If the dividend amount to be paid by the Company 

on each ordinary share in a particular 

year is greater than the dividend payable per 

Type A preferred share, the preferred dividend 

amount is to be increased to the amount of 

the ordinary dividend. The dividends to the 

holders of Type A preferred shares are paid 

annually within the period determined by the 

General Shareholder Meeting, but no later 

than 1 May of the year following the year of the 

General Shareholder Meeting which declares 

the dividend. Additional payments are made 

Ownership Structure 

of OAO RAO "UES of Russia", % 

2.89 

31 December 

2005 

44.43 52.68 

3.20 

31 December 


Major Shareholders of OAO RAO "UES of Russia"* 

Russian Federation through the Federal Agency for 

Federal Property Management 

Stake, % 

52.6832 

ING BANK (EURASIA) ZAO (as nominee) 18.4521 

ZAO “Gazprombank” 

(as nominee) 

Not-for-profit Partnership “The National Depository Center” 

(as nominee) 

10.4902 

6.8298 

ZAO “Depository Clearing Company” (as nominee) 5.6459 

* as at 31 December 2006 

State Ownership Structure of Shares 

in OAO RAO "UES of Russia"* 

Ordinary shares 

Quantity of 

shares Stake, % 

State ownership, total 22,569,848,313 52.3457 

including: 

With the electricity reform 

progressing, favourable conditions 

are beginning to emerge 

for the increase in the energy 

companies’ value. RAO “UES 

of Russia” is one of the likely 

beneficiaries of this process, 

say Aton analysts. According 

to them, RAO UES shares 

do not only provide an opportunity 

to take part in the 

liberalization of the wholesale 

electricity market and privatization 

of the power generation 

assets, they are a very liquid 

instrument. Alfa-Bank’s 

analysts agree that shares 

of RAO “UES of Russia” are 

a reliable and very liquid way 

of taking part in the electricity 

reform. 

Vedomosti newspaper, 

23 November 2006 

6,467,535,504 additional ordinary sha- 

res, 50 kopecks each, worth a total of 

on the ordinary dividend payment dates where 

the amount of the Type A preferred dividend is 

44.12 

52.68 

held by the Federal Agency for Federal 

Property Management 

22,569,834,761 52.3457 

RUB3,233,767,752. The Company may issue 

additional shares only within the number 

of the shares authorized for issuance. 

to be increased to equal the ordinary dividend 

amount. 

STATE 

held by the regional property management authorities 13,552 0.00003 

Preferred shares 

The state owns 22,715,371,537 shares, or 

52.68% of all shares outstanding. 

LEGAL PERSONS AND NOMINEES 

PRIVATE INDIVIDUALS 

State ownership, total 145,523,224 0.3375 

including: 

held by the Federal Agency for Federal 

Property Management 

145,523,224 0.3375 

* as at 31 December 2006

14 

CAPITAL OF OAO RAO “UES OF RUSSIA" 

CAPITAL OF OAO RAO “UES OF RUSSIA" 

15 


2 0 0 6 

Russian Federation Resident vs. Non-Resident Ownership 

of Shares in OAO RAO "UES of Russia"*, % 

Market for Shares 

of OAO RAO "UES of Russia" 

Ordinary shares of OAO RAO “UES of Rus- 

Trading Volumes in RAO UES Shares on Russia’s 

Major Stock Exchanges, 2006, millions of USD 

sia” are included in the Quotation Lists A, 

24.79 

3.98 

0.01 

12 may 2005 

23.18 

4.38 

0.01 

5 october 2006 

RUSSIAN FEDERATION RESIDENT 

LEGAL PERSONS 

NON-RUSSIAN FEDERATION RESIDENT 

LEGAL PERSONS 

RUSSIAN FEDERATION RESIDENT 


NON-RUSSIAN FEDERATION RESIDENT 


Level 1, on the trading floors of ZAO “MICEX 

Stock Exchange” (ZAO “MICEX SE”), Non- 

Profit Partnership “Russian Trading System 

Stock Exchange” (NP “RTS SE”), and OAO 

“Russian Trading System Stock Exchange” 

(OAO “RTS SE”). 

The Company’s preferred shares are included 

in the Quotation List A, Level 1, on the 

Period NP “RTS SE” ZAO “MICEX SE” 

Quarter 1 758.64 22,564.45 

Quarter 2 570.21 28,889.71 

Quarter 3 492.57 28,493.74 

Quarter 4 887.12 22,447.53 

trading floor of ZAO “MICEX SE” and the Quo- 

71.22 

72.43 * as of the record dates for the General Shareholder 

Meetings of RAO "UES of Russia" in 2006 (AGM held 

28 June 2006, and EGM held 6 December 2006). 

tation Lists A, Level 2, on NP “RTS SE” and 

OAO “RTS SE”. 

In 2006, shares of RAO “UES of Russia” 

accounted for 18.7% of the overall MICEX 

trading volume and 20% of RTS trading. 

markets for electricity (capacity); the public 

offering of WGC-5. The Russian Federation 

Government meeting which established the 

schedule for the liberalization of the electricity 

Capitalization Growth of 

RAO UES Generation Companies 

(From Start-2006/Market Floatation 

to End-2006) 

Over 2006, the capitalization of RAO “UES of 

market and gas price increases; the Extraor- 

Cross-Ownership of RAO UES Shares* 

Companies owning shares 

in OAO RAO “UES of Russia” 


Quantity of shares 


Stake, % 

OAO “WGC-5” 2,860,038 – 0.006633 

OAO “Penzaenergo” 9,400 – 0.000022 

OAO “Samaraenergo” 88,550 – 0.000205 

OAO “Karachayevo-Cherkesskenergo” 118,272 – 0.000274 

OAO “Kirovenergo” 2,080,389 – 0.004825 

OAO “Tyumenenergo” 25,653,944 6,693,960 0.075024 

OAO “Altayenergo” 426,735 – 0.000990 

OAO “Buryatenergo” 100,000 – 0.000232 

OAO “Yakutskenergo” 16,200 – 0.000038 

Russia” grew by 130 percent, or USD24 billion, 

to USD42.04 billion from USD18.04 billion, 

twice the increase of the RTS index, which 

rose 64 percent. The investors reassessed the 

prospects for the energy companies in all lines 

of business: thermal generation (the value of 

the WGCs grew on average by 110 percent 

in 2006), electricity distribution (the value of 

the regional distribution companies grew by 

150 percent), hydropower, transmission and 

retail companies. As a result, shares of RAO 

“UES of Russia”, which has ownership interests 

in energy companies operating in different 

segments, grew on the back of the optimistic 

market sentiment regarding the prospects of 

the Russian electricity industry. 

The capitalization of RAO “UES of Russia” 

in 2006 was significantly influenced by the key 

corporate events and the resolutions adopted 

by the Russian Federation Government. Such 

events included the introduction of new Rules 

dinary General Meeting of shareholders which 

approved the first phase of the Company’s 

reorganization, etc. 

2006 was rich in corporate and stock market 

events at the subsidiaries and dependent 

companies of RAO “UES of Russia”. During the 

year, 5 WGCs and 6 out of 14 TGCs floated on 

the stock market (OAO “TGC-2”, OAO “TGC-4”, 

OAO “TGC-5”, OAO “TGC-6”, OAO “TGC-8”, 

and OAO “TGC-9”). Due to the trading volume 

and liquidity growth, shares of OAO “WGC-5”, 

OAO “WGC-6”, OAO “TGC-5” were moved from 

the non-listed securities schedule to the Quotation 

List “B”. 

Trading 

Start Date 

Capitalization 

growth, % 

WGC-2 20.07.2006 100 





TGC-2 18.10.2006 34 







for the operation of the wholesale and retail

Price Dynamics of RAO UES Shares on MICEX, % 

150 

140 

130 

120 

110 

100 

90 

80 

70 

60 

50 

50 

46 

42 

38 

10.01.06 

17.01.06 

24.01.06 

31.01.06 

07.02.06 

14.02.06 

21.02.06 

01.03.06 

09.03.06 

16.03.06 

23.03.06 

30.03.06 

06.04.06 

13.04.06 

20.04.06 

27.04.06 

05.05.06 

15.05.06 

22.05.06 

29.05.06 

05.06.06 

13.06.06 

20.06.06 

27.06.06 

04.07.06 

11.07.06 

18.07.06 

25.07.06 

01.08.06 

08.08.06 

15.08.06 

22.08.06 

29.08.06 

05.09.06 

12.09.06 

19.09.06 

26.09.06 

03.10.06 

ORDINARY SHARES 

PREFERRED SHARES 

MICEX INDEX 

Capitalization of OAO RAO "UES of Russia" (according to MICEX), billions of USD 

10.10.06 

17.10.06 

24.10.06 

31.10.06 

08.11.06 

15.11.06 

22.11.06 

29.11.06 

06.12.06 

13.12.06 

20.12.06 

27.12.06 

Depositary Receipts Programmes of OAO RAO "UES of Russia" 

DR program 

Sponsored 

ADR 

(ordinary) 

ADR 

(preferred) 

Unsponsored 

Depositary Bank 

Deutsche Bank Trust 

Company Americas 

Deutsche Bank Trust 

Company Americas 

Number of 

shares 

held with 

Depositary 

Bank 

Volume of programme 

as % of 

authorized 

capital 

as % 

of total 

votes 

457,141,000 1.06 1.1 

367,550,300 0.85 — 

RAO UES stock prices have 

come close to one dollar. 

Recently, shares of RAO 

“UES of Russia” have been 

going against the stream. 

Since early November, the 

Company’s shares have risen 

30%, compared to the 10% 

growth of the RTS Stock 

Index during the period. The 

Company’s market capitalization 

has reached USD40.3 bn. 

Analysts say that this is not 

the limit. 

34 

30 

GDR Reg S 

(ordinary) 

Bank of New York 7,470,656,900 17.33 18.2 

RBC Daily Newspaper, 

26 

5 December 2006 

22 

18 

10.01.06 

17.01.06 

24.01.06 

31.01.06 

07.02.06 

14.02.06 

21.02.06 

01.03.06 

09.03.06 

16.03.06 

23.03.06 

30.03.06 

06.04.06 

13.04.06 

20.04.06 

27.04.06 

05.05.06 

15.05.06 

22.05.06 

29.05.06 

05.06.06 

13.06.06 

20.06.06 

27.06.06 

04.07.06 

11.07.06 

18.07.06 

25.07.06 

01.08.06 

08.08.06 

15.08.06 

22.08.06 

29.08.06 

05.09.06 

12.09.06 

19.09.06 

26.09.06 

03.10.06 

10.10.06 

17.10.06 

24.10.06 

31.10.06 

08.11.06 

15.11.06 

22.11.06 

29.11.06 

06.12.06 

13.12.06 

20.12.06 

27.12.06 

RAO UES Depositary 

Receipt Programs 

OAO RAO “UES of Russia” established a Global 

Depositary Receipt Program (Reg S) and a 

Level 1 American Depository Receipts (ADR) 

tion through spin-off of OAO “WGC-5 Holding” 

and OAO “TGC-5 Holding” and the simultaneous 

merger of these spin-offs with and into 

OAO “WGC-5” and OAO “TGC-5”, respectively, 

the RAO UES ADR and GDR holders will be 

115 

105 

95 

85 

75 

65 

55 

45 

35 

25 

15 

Price Dynamics of RAO UES DR on the London Stock Exchange (LSE), USD 

10.01.06 

17.01.06 

24.01.06 

31.01.06 

07.02.06 

14.02.06 

21.02.06 

01.03.06 

09.03.06 

16.03.06 

23.03.06 

30.03.06 

06.04.06 

13.04.06 

20.04.06 

27.04.06 

05.05.06 

15.05.06 

22.05.06 

29.05.06 

05.06.06 

13.06.06 

20.06.06 

27.06.06 

04.07.06 

11.07.06 

18.07.06 

25.07.06 

01.08.06 

08.08.06 

15.08.06 

22.08.06 

29.08.06 

05.09.06 

12.09.06 

19.09.06 

26.09.06 

03.10.06 

10.10.06 

17.10.06 

24.10.06 

31.10.06 

08.11.06 

15.11.06 

22.11.06 

29.11.06 

06.12.06 

13.12.06 

20.12.06 

27.12.06 

for its ordinary shares in 1997. The Company’s 

DRs are traded OTC in the USA, Great Britain, 

Germany, and Austria. The ADR program for 

preferred shares of RAO “UES of Russia” was 

established in May 2000. 

In December 2001, both of the Company’s 

ADR programs were transferred from The 

Bank of New York depositary to Deutsche 

Bank Trust Company Americas as successor 

depositary bank. The functions of the depositary 

bank for the GDR Reg S programme are 

performed, as before, by The Bank of New 

York. 

As of 31 December 2006, about 20% of 

RAO UES shares were traded as Depositary 

Receipts outside Russia. 

able to exercise the following rights to shares 

in OAO “WGC-5” and OAO “TGC-5”: receive 

Depositary Receipts representing shares in 

OAO "WGC-5" and OAO "TGC-5"; receive 

shares in OAO "WGC-5" and OAO "TGC-5"; 

receive proceeds from the sale of the shares 

(cash-out). 

In the course of the Company’s reorganization, 

RAO UES DR holders will receive 

GDR Reg S Receipts representing shares in 

OAO “WGC-5” and OAO “TGC-5”. 

However, due to the restrictions imposed 

by US laws, DR holders of RAO “UES of Russia” 

that are U.S. residents will only be able 

to receive cash proceeds from the sale of the 

WGC-5 and TGC-5 shares they are entitled to. 

DR (ORDINARY SHARES) 

DR (PREFERRED SHARES) 

As the shareholders of OAO RAO “UES of 

Russia” approved the Company’s reorganiza-


Corporate 

Governance 

System 

The framework for the governance system of 

OAO RAO “UES of Russia” and the Holding 

Company entities comprised of Russian laws, 

the Company’s Charter and Corporate Governance 

Code. 

The supreme management body of 

RAO “UES of Russia” is the General Shareholders 

Meeting. Shareholders delegate the 

powers to manage the Company between 

shareholder meetings to the Board of Directors. 

The Company is operated by the Management 

Board, the collective executive body of the 

Company appointed by the Board of Directors. 

Relationships within the Company are 

based on hierarchical subordination; the 

activities of the Company officers and divisions 

are regulated in detail by its internal Standards 

and Regulations approved by the Management 

Board of OAO RAO “UES of Russia” 

and its Chairman. Standards have been developed 

to regulate the key managerial functions, 

including property management, 

corporate governance at the subsidiaries and 

dependent companies, budgeting and business 

planning, investment activities, determination 

of the key performance indicators, 

HR management, and internal audit. 

5

20 Corporate Governance System 


In order to enhance its corporate governance 

and information transparency, the 

Company reviewed and approved the restated 

Corporate Governance Code and Regulation 

on the Information Policy of RAO “UES 

of Russia”. 

The amendments made to the Regulation 

on the Information Policy are designed to further 

improve the Company’s information disclosure 

practices, including the methods, timing 

and scope of information disclosure on the 

corporate website, in the issuer’s quarterly 

filings, and the annual report of the Company, 

and to bring the disclosure practices into line 

with the recommendations provided by Standard 

and Poor’s. 

In 2006, the Board of Directors of RAO “UES 

of Russia” approved the Regulation on Internal 

Control Procedures. Internal controls are 

the set of measures taken by the Company’s 

Auditing Commission, Board of Directors, 

Audit Committee under the Board of Directors, 

and the executive bodies and divisions of 

the Company authorized to implement internal 

control. 

Internal controls in RAO “UES of Russia” are 

aimed at identifying non-compliance with the 

Auditing Commission members elected 28 June 2006* 

Bystrov, Maxim Sergeyevich 

Brzhezyansky, Stanislav Edmondovich 

Myasnikov, Victor Mikhaylovich 

Sannikov, Alexey Valeryevich 

Stefanenko, Svetlana Mikhaylovna 

*positions held at the time of election. 

The Auditing Commission’s activities are 

governed by the Regulation on the Activities of 

the Auditing Commission of OAO RAO “UES of 

Russia”. In 2006, the Commission conducted a 

review of the Company’s operations. 

Pursuant to the Regulation on Remunera- 

Commission Chairman, Deputy Director 

of Department, Russian Federation Ministry 

of Economic Development and Trade 

Head of Directorate, Russian Federation 

Federal Tariffs Service 

Head of Financial and Economic Examination 

at the Financial Control and Audit Department, 

Ministry of Industry and Energy of the Russian 

Federation 

Head of Directorate, Russian Federation 

Federal Tariffs Service 

Deputy Director General, FGUP “FT-Center”; 

Director, Corporate Governance Analysis and 

Strategy Center 

“UES of Russia” with the business companies 

whose shares (ownership interests) are owned 

by RAO “UES of Russia”. 

RAO “UES of Russia” exercises control over 

the current and future activities of the SDCs 

by the Board of Directors determining the 

Awards and Ratings 

in Corporate Governance 

and Information Disclosure 

In 2006, ZAO “MICEX Stock Exchange” named 

RAO “UES of Russia” the winner in the category 

“Best Equity Issuer”. 

RAO “UES of Russia” also became a laureate 

of the Contest “Best Annual Report of Issuer 

Included in the RTS Quotation Lists.” 

The Investor Protection Association in 2006 

declared RAO “UES of Russia” the winner of 

the Russian Leaders in Corporate Governance 

2006 Awards in three categories: “Company 

Exercising the Greatest Influence on Corporate 

Governance Development”, “Company 

with the Best Investor Relations”, “Company 

with the Best Annual Report”. 

Chairman of the Management Board of 

RAO “UES of Russia” Anatoly Chubais was 

named the winner of the Russian Corporate 

Governance Leaders - 2006 Awards in the 

category “Best Corporate Manager”. 

In 2006, the Russian Institute of Directors 

and Expert RA Rating Agency assigned a B++ 

corporate governance rating to RAO “UES of 

Russia”. The rating reflects the Company’s 

sound corporate governance practices. The 

ShareholderS 

Meeting 

The highest governing body of OAO RAO “UES 

of Russia” is a General Shareholders Meeting. 

The procedure for convocation, preparation, 

conduct of the General Shareholders Meeting 

and the tally of votes is set forth in the Regulation 

on General Meeting of Shareholder of 

OAO RAO “UES of Russia” approved by the 

shareholders at the AGM of 2002. 

Shareholders owning, in the aggregate, at 

least 2 percent voting shares of the Company 

may propose items of business for inclusion 

on the AGM agenda. Shareholders’ proposals 

must be submitted in writing to the Company 

not later than 60 days after the financial yearend. 

Such shareholders may also nominate 

candidates for the Board of Directors. The 

number of such candidates should not be 

more than the number of Board members. If 

nominations are submitted for election to the 

Board of Directors at an Extraordinary General 

Meeting of shareholders, they must be received 

by the Company not later than 30 days 

before the date of the meeting. 

The nomination for the Board of Directors 

must set forth each candidate’s name and 

ID details, and the body he/she is being nominated 

for. 

RAO “UES of Russia” has been 

named the company with the 

best investor relations system. 

Members of the Investor Protection 

Association have noted 

the “constant and professional 

dialogue between RAO “UES 

of Russia” and the investors”, 

the “information transparency”, 

and “prompt and timely 

information disclosure”. 

Investors believe that RAO 

“UES of Russia” is the nation’s 

leader in corporate governance, 

saying that no other 

company has had a greater 

influence on the sphere. 

Russia’s electricity reform 

being implemented by RAO 

“UES of Russia” is seen 

as an example to be followed 

by both Russian and international 

energy companies. 

laws and the Company’s internal regulations 

tion of Members of the Auditing Commission 

Company’s stance on the key items of busi- 

descriptions of B++ and B+ ratings may be 

The nomination shall be deemed received 

in the conduct of business, and assessing 

of RAO “UES of Russia” approved by the AGM 

ness of General Shareholder Meetings and 

viewed on the website: www.rid.ru. 

on the day it is delivered to the Company. 

Gazeta newspaper, 

the effectiveness of the Company’s actions to 

on 28 June 2002 (as amended by the AGM of 

Board meetings of the SDCs. Special attention 

An Extraordinary General Meeting of share- 


achieve its goals. Control over the Company’s 

28 June 2006), the Commission members 

is paid to SDCs’ major transactions. 

holders is held pursuant to a decision of the 

financial and business operations is exercised 

were paid remuneration of RUB36,000 in res- 

The efforts undertaken by RAO “UES of 

Board of Directors of RAO “UES of Russia” on 

by the Financial and Corporate Controlling 

pect of 2006. 

Russia” to improve the corporate governance 

its own initiative, on the requirement of the 

Center and the Internal Audit Department. 

The Company advances its interests in the 

are similarly aimed at its subsidiaries and de- 

Company’s Auditing Commission, the Com- 

Pursuant to Russian law and the Charter of 

subsidiaries and dependent companies by us- 

pendent companies. In 2006, work was per- 

pany Auditors, and the shareholder(s) who 

RAO “UES of Russia”, the Auditing Commis- 

ing corporate methods in strict compliance 

formed to cause the SDCs’ management bo- 

hold(s) at least 10% voting shares as of the 

sion of the Company is elected by the share- 

with the laws in force, the SDCs’ charters and 

dies to adopt their own corporate governance 

date on which the relevant notice is given to 

holders at the AGM for a term of one year. The 

regulations. 

codes and regulations on information policy. 

the Board of Directors. The items of business 

Commission has the authority to control the 

The corporate governance system at 

The standard forms of these documents were 

to be considered by the EGM are proposed by 

Company’s financial and business operations 

RAO UES Holding Company is based on the 

drafted by the Company’s experts and recom- 

the person requiring to call the Meeting. 

and monitor compliance with Russian laws. 

Rules of Procedure for interaction of OAO RAO 

mended for approval.


Corporate Governance System 23 


In 2006, OAO RAO “UES of Russia” held two 

General Meetings of shareholders. 

The AGM held on 28 June 2006 approved the 

Board 

of Directors 

The Board of Directors of OAO RAO “UES of 

Russia” is responsible for the overall management 

of the Company’s operations and 

In 2006, the Board of Directors held 

28 meetings and considered over 220 items 

of business. 

Board of Directors Elected on 28 June 2006* 

Company’s 2005 Annual Report and the annual 

acts under the authority granted to it by the 

The most important matters considered by 

financial statements, declared final dividends 

Charter and the Regulation on the Board of 

the Board of Directors of RAO “UES of Russia” 

on its ordinary and preferred shares, approved 

the appointment of the Company Auditors, 

adopted amendments and additions to the 

Company Charter, elected new members of 

the Board of Directors and the Auditing Board 

Directors of RAO “UES of Russia”. 

A Board meeting may be called on the request 

of a member of the Board of Directors, 

the Auditing Commission, the Company Auditors, 

Chairman of the Management Board, 

in 2006 were as follows: the Board of Directors 

revised the Strategy Concept for 2003-2008 

of RAO “UES of Russia” “5+5”; approved the 

measures to complete the reorganization of 

almost all generation companies (WGCs and 

Voloshin, Alexander Stalyevich 

Khristenko, Victor Borisovich 

Androsov, Kirill Gennadyevich 

Chairman of the Board of Directors, RAO “UES of Russia” 

Deputy Chairman of the Board of Directors, RAO “UES of Russia”; Minister of Industry and Energy of 

the Russian Federation 

Deputy Minister of Economic Development and Trade of the Russian Federation 

of the Company, and approved the interested 

party transactions (series of related transactions) 

involving the acquisition by RAO “UES 

of Russia” of new shares in OAO “HydroWGC” 

and OAO “UES FGC”. The meeting results 

and the Management Board. 

Regular Board meetings are convoked by 

the Board of Directors according to the approved 

schedule. 

The Board of Directors approves the List of 

TGCs) comprising the intended final industry 

structure; approved the sale of the shares of 

the first energy retail company, OAO “Yaroslavl 

Retail Company”; determined the approach to 

dealing with the shareholding in OAO “Pow- 

Berezkin, Grigory Viktorovich 

Bugrov, Andrey Evgenyevich 

Gref, German Oskarovich 

Chairman of the Board of Directors, ESN Group 

Managing Director, ZAO “Interros Holding Company”; Chairman of the HR and 

Remunerations Committee under the Board of Directors, RAO “UES of Russia” 

Minister of Economic Development and Trade of the Russian Federation 

can be viewed on the Company’s website 

www.rao-ees.ru. 

The Company’s Extraordinary General Meeting 

held by absentee vote (without a physical 

meeting) on 6 December 2006 approved the 

principal issues to be considered the meetings 

of the Board of Directors of RAO “UES 

of Russia” during the period until the next 

AGM of the Company. The list includes proposals 

made by the shareholders owning, in 

er Machines” and the latter’s development 

strategy; approved the terms of stock option 

agreements offered to the directors general 

and senior executives of RAO UES subsidiaries 

and dependent companies; approved the 

Dementyev, Andrey Vladimirovich 

Nikitin, Gleb Sergeyevich 

Oganesyan, Sergey Aramovich 

Deputy Minister of Industry and Energy of the Russian Federation 

Head of the Directorate for Property Management of Business Sector Organizations, 

Federal Agency for Federal Property Management of the Russian Federation 

Head of the Federal Energy Agency of the Russian Federation 

first phase of the Company’s reorganization 

by way of spin-off of OAO “WGC-5 Holding” 

and OAO “TGC-5 Holding”, elected the Boards 

of Directors of OAO “WGC-5 Holding” and 

OAO “TGC-5 Holding”, and approved the merg- 

the aggregate, not less than 5 percent of the 

Company’s ordinary shares, by the Board 

Chairman and members, by members of the 

Auditing Commission and the Management 

Board of RAO “UES of Russia”. 

Programme for raising large-scale investments 

in the electricity industry; approved the 

list of companies to issue additional shares; 

adopted the Strategy for the energy retail 

companies; approved the divestment of the 

Pushkareva, Olga Stanislavovna 

Remes, Seppo Juha 

Seleznev, Kirill Gennadyevich 

Director, Sector Development Department of the Government of the Russian Federation 

Senior Advisor to Chairman, Finnish Institute under the Parliament of Finland (Sitra); 

Chairman of the Audit Committee under the Board of Directors, RAO “UES of Russia” 

Member of the Management Board, OAO “Gazprom”; Director General, OOO “Mezhregiongaz” 

er of those spin-off companies with and into 

OAO “WGC-5” and OAO “TGC-5”, respectively. 

The meeting also approved the purchase by 

The draft agenda of the Board meeting, explanatory 

note, draft resolutions of the Board 

of Directors, and the relevant accompanying 

Company’s stakes in non-core companies. 

On 22 September 2006, the Board of Directors 

reviewed the key issues relating to 

Urinson, Yakov Moiseyevich 

Chubais, Anatoly Borisovich 

Deputy Chairman of the Management Board, RAO “UES of Russia” 

Chairman of the Management Board, RAO “UES of Russia” 

RAO “UES of Russia” of additional shares 

in OAO “UES FGC”. 

documents are circulated to Board members 

not later than 20 business days before the 

the first phase of RAO UES reorganization 

and recommended them for approval by the 

Yuzhanov, Ilya Arturovich 

Chairman of the Supervisory Board, NOMOS-BANK (ZAO); Chairman of the Appraisal Committee 

under the Board of Directors, RAO “UES of Russia” 

meeting. 

shareholders at the General Meeting. 


The Board of Directors has 15 mem- 


bers elected by the General Shareholders’ 

of Russia” approved several interested party 

The amounts of remuneration and reim- 

The Regulation establishes the following 

cording to the growth of market prices of RAO 

Meeting. 

transactions (as listed in Appendix 6). Pursu- 

bursement of expenses payable to the Board 

components of remuneration to the Board 

“UES of Russia” in the amount of 0.0175 per- 

The Board of Directors elected by the 

ant to the requirements of the Russian laws, 

members are determined in accordance with 

members of RAO “UES of Russia”: remunera- 

cent of the absolute increase in the weighted 

shareholders at the AGM held on 28 June 2006 

the information on such transactions and the 

the Regulation on Remuneration of Members 

tion for participation in Board meetings; remu- 

average value of all ordinary shares based on 

comprises ten Government representatives, 

results of the Board meetings of RAO “UES 

of the Board of Directors for the Performance 

neration based on the net income according 

the market data of NP “RTS SE”. 

including the Management Board Chairman, 

of Russia” were disclosed on a timely basis 

of their Duties and Reimbursement of their 

to the annual financial statements approved 

In 2006, the overall amount of the directors’ 

four representatives of the minority share- 

in the securities issuer’s quarterly filings and 

Expenses Relating to the Performance of their 

by the General Shareholders Meeting of RAO 

remuneration amounted to RUB78,634.28 

holders, and one representative of the Com- 

posted on the corporate website. 

Functions as Board Members, which was ap- 

“UES of Russia” at 0.05 percent of the Com- 

thousand (except for the Government repre- 

pany executives. 

proved by the shareholders. 

pany’s net profit; additional remuneration ac- 

sentatives).




Board of Directors Elected on 29 June 2005* 

During the first phase of OAO RAO “UES 

of Russia” reorganization, the Committee approved 

the valuation of the Company’s shares 

Management 

Board 

The Management Board is a collective executive 

body of RAO “UES of Russia” appointed 

by the Board of Directors and responsible for 

repair and maintenance business of RAO “UES 

of Russia”; Strategy for issuance of additional 

shares by the SDCs of RAO “UES of Russia”, 

for repurchase, which was subsequently ap- 

the day-to-day running of the Company. The 

and many other aspects of the Company’s 

proved by the Board of Directors of RAO “UES 

Management Board performs the functions 

activities. 



Chairman of the Board of Directors, RAO “UES of Russia” 

Deputy Board Chairman; Minister of Industry and Energy of the Russian Federation 

of Russia” and the EGM held on 6 December 

2006. 

The Audit Committee monitored the prepa- 

set forth in the Charter of RAO “UES of Russia” 

and acts pursuant to the Regulation on 

the Management Board of RAO “UES of Rus- 

The criteria for remuneration of the Management 

Board members were set out in the 

Terms and Conditions of Remuneration of Top 


Chairman of Board of Directors, OOO “ESN Energo” 

ration of the Company’s financial statements 

by RAO UES management, and reviewed 

sia” approved by the Company’s shareholders 

at the AGM held 28 June 2002. 

Managers approved by the Board of Directors 

of RAO “UES of Russia” on 25 June 2004. 


Managing Director, ZAO “Interros Holding Company”; Chairman of the HR and 

Remunerations Committee under the Board of Directors, RAO “UES of Russia” 

the Auditor’s Report. The Committee also 

reviews the internal control system in the 

Under the Company Charter, the Management 

Board has the authority to develop and 

The system of incentives (remuneration) for 

the Management Board members provides 


Medvedev, Yury Mitrofanovich 

Minister of Economic Development and Trade of the Russian Federation 

Deputy Head of the Federal Agency for Federal Property Management of the Russian Federation 

subsidia-ries and dependent companies of 

RAO “UES of Russia” on an ongoing basis, which 

makes it possible to identify the deficiencies 

submit to the Board of Directors its proposals 

regarding the key issues of the Company’s 

activities and the long-term plans, and to pro- 

that the bonus amount depends on the degree 

of achievement of the priority targets set by the 

Board of Directors of RAO “UES of Russia”. 


Head of the Federal Energy Agency of the Russian Federation 

and suggest adequate measures to eliminate 

them, and bring those to the attention of the 

duce internal organizational and management 

documents of the Company. 

The total amount of remuneration paid 

to the members of the Management Board 


Rashevsky, Vladimir Valeryevich 

Department Director, Russian Federation Government 

Director General, OAO “SUEK” 

RAO UES senior executives. 

The HR and Remunerations Committee 

reviewed the key aspects of motivating the se- 

In 2006, the Management Board held 

217 meetings (both physical meetings and 

absentee votes) and considered over 

of RAO “UES of Russia” for 2006 was 

RUB205,271.86 thousand. The Management 

Board members of RAO “UES of Russia” 

Remes, Seppo Juha 

Senior Advisor to Chairman, Finnish Institute under the Parliament of Finland (Sitra); 

Chairman of the Audit Committee under the Board of Directors, RAO “UES of Russia” 

nior managers of RAO UES entities to achieve 

the strategic goals of the Company and its 

1,000 items of business. 

In 2006, the Management Board consi- 

are listed in Appendix 2. 


Member of the Management Board, OAO “Gazprom”; Director General, OOO “Mezhregiongaz” 

SDCs: the Committee took decisions on the 

stock option programmes at the RAO UES 

dered issues relating to the Company operations, 

implementation of the sector reform, 


Chubais, Anatoly Borisovich 

Deputy Chairman of the Management Board, RAO “UES of Russia” 

Chairman of the Management Board, RAO “UES of Russia” 

subsidiaries and dependent companies and 

approved the Key Performance Indicators for 

the top managers of RAO “UES of Russia”. 

and raising investments for the industry, 

including the following: the Management 

Board approved the Strategy for commer- 

Sharonov, Andrey Vladimirovich 


First Deputy Minister of Economic Development and Trade of the Russian Federation. 

Chairman of the Supervisory Board, NOMOS-BANK (ZAO); Chairman of the Appraisal 

Committee under the Board of Directors, RAO “UES of Russia” 

The Commission for Investments and Fuel 

Supply was created pursuant to the resolution 

of the Board of Directors of RAO “UES of Russia” 

in November 2006. 

cial metering on the retail electricity market; 

the Standard for development and adoption 

of the five-year investment programme of 

RAO “UES of Russia”; the long-term pro- 


The Commission is responsible for the re- 

gramme for equipment repair for 2006-2010; 

Committees and Commissions 

under the Board of Directors 


The members of the Committees and Commission 

are listed in Appendix 2. 

The Strategy and Reform Committee consi- 

The Appraisal Committee is primarily responsible 

for the valuation of core assets in 

the course of RAO UES restructuring. By now, 

view of key investment projects to be implemented 

by RAO UES entities. Moreover, the 

Commission is engaged in monitoring of the 

volumes and progress made by the SDCs 

the key parameters of the Forecast Electrical 

Balance and RAO UES Holding Company until 

2010; the Social Responsibility and Corporate 

Sustainability Report of RAO “UES of Russia”. 

of Russia” had four Committees and one 

dered matters relating to the establishment of 

the Committee has approved the asset valua- 

in implementing their investment projects. 

In 2006, the following documents were pro- 

Commission: Strategy and Reform Commis- 

the companies of the intended final sector struc- 

tion reports for the establishment of all WGCs 

duced by the Management Board and submit- 

sion, Audit Committee, Appraisal Committee, 

ture, reorganization of RAO “UES of Russia”, 

and TGCs, and the valuation reports for some 

ted for the Board of Directors approval: Strat- 

HR and Remunerations Committee, and 

issuance of additional shares by WGCs and TGCs, 

transmission (trunk grid) companies and en- 

egy in respect of the energy retail companies; 

Investments and Fuel Supply Commission. 

disposal of the Holding Company’s assets, etc. 

ergy retail companies. 

Progress Report on the reform in the energy



Governance 

System 

Governance Structure 

and Methods 

The underlying principle of the Company’s 

Property 

Management 

The property management system at RAO 

the immovable properties were written off or 

dismantled. 

2006 saw major changes in the sharehold- 

Company’s Governance Structure 

General Meeting 

of Shareholders 

governance structure is to identify the respon- 

“UES of Russia” is designed to ensure ef- 

ings in other companies owned by OAO RAO 

sibility centers and strictly determine their 

goals and the resources available to those 

centers. 

The goals of the Corporate Center are to 

shape the overall development and reorganization 

strategy for the Company; set the KPI 

targets for Business Units, Reform Management 

Center and the SDCs of RAO “UES of 

Russia”; perform the coordination and control 

functions; prepare the Company’s financial 

statements, and develop the standards and 

policies for energy companies. 

The goals of the Reform Management 

Center are to formulate and implement a 

common policy for reforming the electricity 

ficient use of the Company’s assets and increase 

shareholder value. 

As of December 31, 2006, OAO RAO “UES 

of Russia” owned the following property: 

shareholdings in 298 joint-stock companies 

(compared to 421 at end-2005), ownership 

interests in 4 limited liability companies, the 

power grid and dispatching facilities (those not 

transferred to OAO “UES FGC” and OAO “UES 

SO-CDA”, respectively), and the property of 

three power plants (to the extent not transferred 

or contributed to the capital of the WGCs). 

Over 2006, the share of property, plant 

and equipment in the structure of assets of 

OAO RAO “UES of Russia” significantly de- 

“UES of Russia”: 

part of the WGCs and TGCs completed their 

establishment; RAO “UES of Russia” transferred 

its shares in the generation companies 

and AO-power plants as capital contributions 

to the respective WGCs and TGCs; 

some regional energos completed unbundling 

by line of business, which resulted in 

RAO “UES of Russia” receiving shares in the 

newly established (spin-off) companies; 

the Company embarked on the strategy to 

sell off its services businesses and noncore 

assets. 

The capital contributions made by OAO RAO 

“UES of Russia” were applied to the Com- 

BOARD OF DIRECTORS 

ALEXANDER VOLOSHIN, Chairman of the Board of Directors 

MANAGEMENT BOARD 

Anatoly Chubais, Chairman of Management Board 

Corporate Center 

YaKOV 

Urinson 

Reform 

Management 

Center 

YURY 

UDALTSOV 

Business Unit 1 

ALEXANDER 

CHIKUNOV 


VLADIMIR 

AVETISYAN 

Hydrogeneration 

Business Unit 

VYACHESLAV 

SINYUGIN 

Networks 

Business Unit 

ANDREY 

RAPPOPORT 

Services 

Business Unit 

VYACHESLAV 

VORONIN 

industry and make the policy for RAO “UES of 

clined due to the following changes in the 

pany’s financial results in connection with 

Russia” in the course of the electricity market 

liberalization. 

The goals of the Business Units are to improve 

the efficiency of the subsidiaries under 

their charge while maintaining and improving 

the reliability and safety of electricity and heat 

supply to consumers, and to ensure implementation 

of the strategy reform at the subsidiaries 

and establishment of companies of 

the intended final sector structure. 

In 2006, RAO “UES of Russia” created 

the Project Center for Pre-sale Preparation 

and Disposal of Assets, which is responsible 

for ensuring efficient disposal of noncore, 

repair and maintenance, and retail 

Company’s property: 

acquisition by OAO “UES FGC” of the power 

grids from RAO “UES of Russia”; 

transfer of the property of the Novosibirskaya 

HPP, Nizhegorodskaya HPP, and 

Saratovskaya HPP as capital contributions 

to OAO “HydroWGC”; 

sale of the property of the Reftinskaya 

TPP and Sredneuralskaya TPP to OAO 

“WGC-5”; 

sale of the property of the Nizhnevartovskaya 

TPP to OAO “WGC-1”; 

acquisition of power grids from OAO “Kubanenergo”. 

In connection with the sale or transfer to 

the liquidation of the following companies: 

OAO “Informenergo”, OAO “Energostroitel”, 

OAO “Biyskaya CHPP-1”, OAO “DSK”, 

OAO “Dalnie Electroperedachi”, and 34 regional 

management companies established in 

the course of regional energos’ restructuring. 

As part of the non-core divestiture process, 

RAO “UES of Russia” sold its holdings 

of shares in the following companies 

in 2006: OAO “NBD-Bank”, OAO “Yurenergo-UES”, 

OAO “Severovostokenergostroy”, 

OAO “TEMBR-Bank”, OAO “Mikhailovskoe Resort”, 

ZAO “East-West Energy Agency”, and 

OAO “Rostopenergo”. 

Information on the ownership and voting in- 

OAO “UES SO-CDA” 

BORIS 

AUYEV 

NP “ATS” 

WGC 3, 5, 6 

TGC 1, 2, 3, 4, 

5, 8, 9, 14 

FEEC AND Energy 

companies in the 

Russian Far East 

Energy Retail 

Companies 

WGC 1, 2, 4 

TGC 6, 7, 10, 

11, 12, 13 

Energy Retail 

Companies 

HydroWGC 

ао-HPPs 

Hydropower 

plants under 

construction 

AO-institutes 

OAO “UES FGC”, 

IDCs, 

TCs and DCs 

3 Regional 

Energos 

ZAO “INTER RAO 

UES” and 

Foreign assets 

OAO “MUS 

Energetiki” 

Services 

companies 

AO-institutes 

Power plants 

under 

construction 

(CCGT) 

assets of RAO “UES of Russia” and generate 

subsidiaries of the immovable properties lo- 

terests of OAO RAO “UES of Russia” in other 

maximum proceeds. 

cated on the land plots leased by RAO “UES 

companies is set forth in Appendix 3. 

of Russia”, the Company surrendered the 

lease of those land plots and terminated the 

relevant lease agreements. It also took steps 

to terminate the lease of the land plots where




Management of Core Assets 

Core assets are the property, plants, and 

equipment owned by the Company and its 

In 2006, as part of the process to consolidate 

the TGCs via a share exchange, the Appraisal 

Committee reviewed and approved the 

calculation of share exchange (conversion) 

ratios for the merger of the distribution companies 

with and into OAO ““Volzhskaya Inter- 

for OAO “Ivanovskie PGU” and OAO “Ivanovskaya 

Generatsiya” for the purpose of the pilot 

project to reorganize OAO “Ivanovo Genera- 

On 8 December 2006, the Board of Directors 

of RAO “UES of Russia” approved the sale 

of the Company’s stakes in 52 energy retail 

mont”, OAO “Motor Transport Enterprise” 

(OAO “Chelyabenergo”), OAO “Engineering 

and Diagnostic Center” (OAO“Chelyab- 

SDCs and used in their core activities (gene- 

valuation reports for TGC-1, TGC-7, TGC-8, 

regional Distribution Company”. The Board 

tion Company” through simultaneous spin-off 

companies through a public auction process. 

energo”). 

ration, transmission, dispatching, distribution, 

and retailing (sales) of electricity and heat), as 

TGC-9, TGC-10, TGC-11, TGC-13, and TGC-14, 

and the contribution of the 100 percent stake 

of Directors approved the consolidation of 

the above TGCs using the share exchange 

and merger. 

In addition, in 2006, appraisers conducted 

Services-related Assets Management 

The proceeds from the sale of the companies’ 

shares exceeded the aggregate reserve 

well as the shares RAO “UES of Russia” and 

in OAO “Orenburg Thermal Generation Com- 

(conversion) ratios calculated by the invest- 

the valuation of shares of OAO “HydroWGC” 

The services-related assets of RAO UES 

price by over RUB488 million. 

its subsidiaries hold in the entities engaged in 

pany” to the capital of OAO “Volzhskaya Ter- 

ment banks based on the valuation reports. 

for the additional share issue, and the assets 

Group are the repair and services companies, 

For some repair companies, RAO “UES of 

such activities. 

ritorial Generation Company”. The Committee 

The investment banks were involved to assist 

of 42 transmission (trunk grid) companies 

i.e. businesses primarily engaged in providing 

Russia” arranged a descending price auction 

A milestone event of 2006 in the core as- 

also considered the valuation reports for OAO 

RAO “UES of Russia” in consolidating TGC 

and the UNEG facilities owned by RAO “UES 

research and development services, repairs 

to sell their shares, with the cut-off price set at 

set management area was the conversion of 

“Samara Distribution Company”, OAO “Sara- 

subsidiaries. Also, the Appraisal Committee 

of Russia” for the purpose of payment for the 

and maintenance of equipment, buildings and 

50 percent of the auction reserve price. In 2006, 

shares in the AO-power plants and regional 

tov Distribution Company”, OAO “Ulyanovsk 

reviewed and approved the valuation reports 

new shares to be issued by OAO “UES FGC”. 

structures used in the generation, transmis- 

the Company disposed of its shares in seven 

generation companies into WGC and TGC 

Distribution Company”, and OAO “Volzhskaya 

In the course of restructuring the energy 

sion, dispatching, distribution, and retailing of 

repair and services companies through de- 

shares as part of the consolidation process. 

Interregional Distribution Company” for the 

companies operating in the Russian Far East, 

electricity and heat. 

scending price auctions (OAO “Electrosetstroy- 

appraisers performed valuation of shares 

As of 31 December 2006, the Company sold 

Lipetskenergo”, OAO “Vladimirenergo- 

Property Structure of OAO RAO "UES of Russia"* 

of OAO “Amurenergo”, OAO “Dalenergo”, 

ZAO “LuTEK”, OAO “Khabarovskenergo”, 

24 out of its 31 services-related companies 

through auctions: OAO “Kurskenergospetsre- 

remont”, OAO “PermGRES-teploavtomatika”, 

OAO “Voronezhenergoremont”, OAO “Astra- 

OAO “Southern Yakutskenergo” for determin- 

mont”, OAO “Tulenergoremont”, OAO “Engi- 

khanenergoremont”, OAO “Energoremstroy” 

ing the share exchange (conversion) ratios 

neering and Production Center”, OAO “Samara 

(OAO “Ryazanskaya TPP”), OAO “KATEK- 

for the merger of those companies with and 

Production and Repair Enterprise”, OAO “Sa- 

energo-remont” (OAO “Berezovskaya TPP”) 

Shares 


Regional Energos (9) 

AO-Power Plants (27) 

WGCs (7) 

TGCs (12) 

Regional Generation Companies (14) 

Regional Retail Companies (62) 

OAO “UES FGC” 

Transmission (trunk grid) Companies (13) 

ZAO “INTER RAO UES” 

Interregional Distribution Companies (4) 

Distribution Companies (57) 

OAO “Russian Communal Systems” 

OAO “Power Machines - ZTL, LMZ, Electrosila, Energomashexport” 

Construction, Logistics and Services Companies (50) 

Scientific Research, Development and Design Companies (22) 

Management Energy Companies (7) 

Regional Management Companies (4) 

Banks (3) 

Insurance Companies (2) 

into OAO “Far Eastern Energy Company”. The 

companies’ assets were contributed to the 

capital of OAO “Far Eastern Energy Company” 

on 1 February 2007. 

The most important events relating to 

the disposal of core assets in 2006 were 

the first auctions to sell shares of RAO UES 

core business subsidiaries—47.36 percent of 

OAO “Yaroslavl Retail Company” and 100 percent 

of OAO “Taymyrenergo”. The proceeds 

from the share sale totalled RUB7,715,324 

million. Also, OAO “Lenenergo” sold its 

12.5 percent stake in OAO “Petersburg Generation 

Company” for RUB4,083 million. 

In 2007, RAO “UES of Russia” plans to sell 

maraenergospetsremont”, OAO “Saratov Production 

and Repair Enterprise”, OAO “Ulyanovsk 

Production and Repair Enterprise”, 

OAO “Ulyanovskenergopetsremont”, OAO “Nevinnomyssk 

Specialized Energy Repair Enterprise”, 

OAO “Energy Repair Enterprise of 

the Konakovskaya TPP”, OAO “Repair and 

Construction Enterprise of the Konakovskaya 

TPP”, OAO “Novocherkassk Energy Repair 

Enterprise”, OAO “Remont Inzhenernykh 

Kommunikatsiy” (spun off from OAO “Ryazanskaya 

TPP”), OAO “Novomichurinsky Energo-remont”, 

OAO “Kirishi Repair Complex”, 

OAO “Engineering Center” (OAO “Nizhny 

Novgorod Generation Company”), OAO “Oren- 

for over RUB180 million. 

Thus, as of 2007, the SDCs of RAO “UES of 

Russia” divested of their holdings in 38 repair 

and services companies. 

In order to make the repair companies 

more attractive for investors, it is provided 

that the Holding Company’s procurement 

entities will maintain a guaranteed volume 

of orders equal to 75 percent of the amount 

of contracts actually delivered during the 

previous 12 months, after the SDC boards 

approve the sale of the repair companies. 

Property 

Property of the Novosibirskaya HPP and Nizhegorodskaya HPP not transferred as capital 

contribution to OAO “HydroWGC” 

Property of the Ulan-Udenskaya CHPP not transferred as capital contribution to OAO “TGC-14” 

Property of the Verkhnetagilskaya TPP not transferred as capital contribution to OAO “WGC-1” 

Power network facilities not transferred as capital contribution or sold to OAO “UES FGC” 

Dispatching facilities not transferred as capital contributions or sold to OAO “UES SO-CDA” 

its stakes in retail and generation companies 

pursuant to the decisions taken by the Russian 

Federation Government and the Board of 

Directors of RAO “UES of Russia” on the electricity 

industry reform and the final phase of 

burgenergoremont”, OAO “TsPRP-Energoservis” 

(OAO “Petersburg Generation Company”), 

OAO “Teploremont” (OAO “Murmanskaya 

CHPP”, OAO “Apatitskaya CHPP”), 

OAO “Kostromaenergorеmont”, OAO “Arkh- 


RAO UES reorganization. 

energoremont”, OAO “Kamchatskenergore-




Non-core Assets 

The non-core assets of RAO UES Group are 

the non-current assets owned by the Com- 

Human Resource Management 

One of the Company’s key goals in personnel 

management is to raise the human resour- 

In 2006, 45.3 percent of the production personnel 

at RAO UES energy companies received 

training under the Company’s advanced and 

Average Annual Headcount 

of OAO RAO "UES of Russia", persons 

In 2006, the Company continued to implement 

its Strategy for non-government pension 

insurance for the employees of RAO UES 

pany and its SDCs comprising the property, 

ces efficiency at the RAO UES entities in the 

further training programmes. 

companies, which seeks to create a long-term 

plant and equipment, and construction projects 

in progress not used in the companies’ 

core businesses (generation, transmission, 

dispatching, distribution and sales of electricity 

and heat) and related businesses (repairs, 

system, metering and accounting services), as 

well as the shares, units, and ownership interests 

held by the Company and its SDCs in the 

entities not engaged in the core and related 

activities. 

In 2006, RAO “UES of Russia” continued the 

work to appraise and divest its non-core assets. 

The Company put in place a new system 

for selling its non-core assets, which allows 

a more precise procedure for decision-taking 

course of the electricity reform. 

The average headcount of RAO “UES of 

Russia” in 2006 was 1,169 employees, a reduction 

of 303 compared to 2005. 

The bulk of the reduction comes from the 

liquidation of the Company’s branch, “UES 

Energy Construction Complex”, as well as liquidation 

of some non-core branches. 

The average number of employees at RAO 

UES entities in 2006 amounted to 469.3 thousand 

people, 460.1 thousand of which were 

production personnel. In 2005, the headcount 

figures were 461.2 thousand and 452.1 thousand, 

respectively. 

The major factors that influenced the head- 

The Company’s key priorities in personnel 

development, professional training, retraining 

and further training in 2006 were: 

to create a personnel development system 

in the subsidiaries and dependent companies; 

to provide training and development 

opportunities for senior executives of 

RAO “UES of Russia” and its SDCs, a measure 

intended to improve the professional 

level of management; 

to offer personnel training programmes 

designed to implement special equipment 

failure prevention measures at power facilities. 


2005 

2004 

TOTAL PERSONNEL 

PRODUCTION PERSONNEL 

1,108 

1,169 

1,176 

1,472 

1,450 

1,849 

non-government pension insurance system 

using a uniform approach, based on common 

goals and principles, and is intended to ensure 

an adequate living standard for the Holding 

Company’s employees after retirement, 

and effective handling of HR issues relating 

to hire, retention and providing incentives 

to the energy companies’ employees. 

In the course of the Strategy implementation, 

the Boards of Directors of 255 companies 

of RAO UES Holding approved their non-governmental 

pension fund plans covering over 

429 thousand employees. 

An important event of year 2006 in the field 

of HR management was the approval by the 

and expanding the range of options available 

count at RAO UES companies in 2006 were 

The Corporate Energy University estab- 

Management Board of RAO “UES of Rus- 

for the sale of assets and makes the process 

more open, competitive, and transparent. 

Decisions on the non-core divestitures are 

the transfer of ownership of municipal-owned 

communal and distribution electricity grids to 

some of the Company’s subsidiaries, and the 

lished pursuant to the decision of the Management 

Board of OAO RAO “UES of Russia” 

provided training in 2006 to over 7 thousand 

Development of Non-Governmental 

Pension Insurance Programmes at the Holding Company’s SDCs 

sia” of the Strategy for Corporate Assistance 

and Corporate Support in Improving Housing 

Conditions for Employees of RAO UES 

taken by the Board of Directors of the Com- 

commissioning of new generating capacity. 

staff members of all categories. 

Subsidiaries. 

pany if the asset’s fair market value is over 

The principal objectives of the HR policy at 

RUB30 million. 

The key methods used to sell the non-core 

assets are as follows: 

ascending price auction; 

descending price auction; 

sale without announcing the price (negoti- 

RAO “UES of Russia” in 2006 were: 

to provide further training, reorientation 

training, and development of personnel; 

to ensure professional and career development; 

to create and develop the human capital re- 


2005 

192 

250 

320 

429 

ated sale). 

In 2006, RAO “UES of Russia” and its 

SDCs sold their shares in the following 

non-core companies: OAO “Mikhaylovskoe 

Resort”, OAO “Severovostokenergostroy”, 

OAO “TEMBR-Bank”, OAO “NDB-Bank”, 

OAO “Rostopenergo”, ZAO “East-West Energy 

Agency”, ZAO “Yurenergo”. 

serve; 

to improve the life and health safety arrangements 

and prevent industrial injuries; 

to develop the non-state pension insurance 

and assist staff members in improving their 

housing conditions. 

2004 

90 

110 

NUMBER OF PROGRAMMES 

EMPLOYEE COVERAGE, '000 PERSONS


Key Performance 

Indicators and Business 

Planning 

The system for running the Parent Company 

and its SDCs based on the key perfor- 

Motivation: The existing KPI system underlies 

the incentive schemes for employees 

and managers of the Company and its 

energy subsidiaries. 

In 2006, the KPI system was introduced 

Programme Implementation KPI designed to 

ensure control over the implementation of the 

RAO UES five-year investment programme. 

Business planning and cost control 

ning and quarterly reporting on financing 

and investment project implementation. The 

new-format business plan provides for the 

calculation of forward-looking, medium-term 

indicators based on the specific scenario pa- 

quality claims, etc. Also, considerable cost 

savings are generated through energy costs 

reduction measures (by accessing the competitive 

segment of the wholesale electricity 

market; reduction of technological and com- 

mance indicators (KPIs) has been in place in 

in all companies of RAO UES Group. It helped 

The system of managing the subsidiaries and 

rameters until 2011. 

mercial losses of energy; reduction of energy 

RAO UES Group since 2004. 

ensure manageability during the sector reform 

dependent companies of RAO “UES of Russia” 

In connection with the anticipated transfer 

consumption for internal and production con- 

This system is used to set targets for each 

period when the companies of the final sector 

includes such instruments of regular mana- 

of control over WGCs and TGCs to new own- 

sumption), and cutting repair costs, including 

subsidiary or dependent company within 

structure were being established, and meet 

gement as business planning and cost mana- 

ers, it is extremely important to guarantee 

through competitive and other procurement 

RAO UES Group based on the Group’s general 

the tough financial and production targets. 

gement. Together with the KPI system, these 

that the investment projects launched by the 

auctions, review of the personnel motivation 

objectives identified by the management bo- 

In 2006, the Company set KPIs for the new 

instruments make up the package which 

companies are brought to completion. In or- 

system, sale of non-core assets, etc. 

Personally, I am happy 

that we completed 

in 2006 the creation of 

a management assessment 

pyramid, beginning with the 

Key Performance Indicators 

for the Chairman and 

members of the Management 

Board, Business Units, 

Reform Management Center 

and Corporate Centre 

of the Parent Company to Directors 

General of RAO UES 

subsidiaries 

Yakov Urinson, 

Deputy Chairman of the Management Board, 

Head of the Corporate Center, 


dies taking into account their individual circumstances 

and needs, such as line of business, 

composition and state of plant assets, 

etc. The KPI are set for different aspects of 

activity: economic efficiency, reliability of 

equipment operation and power supply to 

customers, reform progress, and increase of 

shareholder earnings. 

The principles underpinning the KPI system 

for the Business Units and businesses reporting 

to them are as follows: 

Limited number of KPIs: the number of 

KPIs for each subsidiary/dependent company 

or BU is limited to eight, which helps 

set clear objectives and targets and identify 

management priorities; 

Balanced approach: KPIs are the metrics 

used to assess operational, financial and 

business performance and efficiency of energy 

companies, their technological integrity, 

and the reform progress; 

Comparability: In order to maintain competition 

among the Business Units and SDCs, 

at least one indicator should be universal in 

terms of content, but should have different 

values for different SDCs and BUs. Such indicator 

is Return on Equity (ROE); 

Individual Approach: KPI values were set 

specifically for, and within the context of, 

each SDC or BU; 

interregional companies, WGCs and TGCs. 

The Key Performance Indicators set for the 

subsidiaries of RAO “UES of Russia” in 2006 

were: 

return on equity (ROE); 

reliability criterion: a complex measure assessing 

the reliability of equipment operation 

and power supply to consumers; 

adherence to the restructuring schedule, 

which assesses how timely the corporate 

measures are implemented within the 

framework of the sector restructuring. 

The consistent implementation of the principles 

underlying the KPI system helped significantly 

advance towards the completion of 

the sector reform (achievement of the Reform 

KPI targets), maintain the average efficiency 

of the RAO UES Group assets at 4.55 percent 

(achievement of the ROE KPI targets in 2005), 

ensure reliable operation of the Group entities 

(the Reliability KPI) and labour safety (the 

Number of Industrial Accidents KPI). 

In 2007, the list of KPIs will be generally 

preserved, with some modifications and improvements 

taking into account the sector 

reform progress and the establishment of the 

first companies which will comprise the postreform 

industry structure. Moreover, the KPIs 

set for companies of the intended final sector 

structure for 2007 include the Investment 

helps meet the targets the shareholders set 

for the energy companies’ officers. 

The fundamental principles of business 

planning at the SDCs of RAO “UES of Russia” 

have been maintained for several years, which 

ensures continuity of approach and stability 

of the well-tested procedures: 

business plans are an essential tool for 

achieving target KPIs and are implemented 

in all subsidiaries; 

SDC managers are independent in their 

business planning process and are responsible 

for business plan development and 

implementation; 

business plans are subject to approval by 

the subsidiaries’ Boards of Directors; 

the business planning formats and rules 

remain unchanged during the year. 

The Business planning standard is reviewed 

on an annual basis with a view to reflecting 

the new economic priorities and benchmarks 

in the SDCs’ operations. The new Business 

Planning Standard is designed to ensure 

proactive investment process at the SDCs. 

In order to achieve that goal, the Company 

has significantly revised and expanded the 

investment part of the business plan: it now 

contains a detailed description of the SDCs’ 

investment programme by sources of funds 

and their intended uses, and supports plan- 

der to ensure succession in control over the 

full and intended use of the funds raised by 

the companies, specifically the proceeds from 

their new share offerings, additional sections 

have been included in the business plans and 

corporate regulations. 

Along with the changes to the format of 

business plans, the Company improved the 

business planning procedures for the WGCs 

and TGCs. The number of adjustments to the 

SDCs’ business plans was limited to one regular 

adjustment per quarter during the current 

year. The only exception is one-time additional 

revision of the investment programmes comprising 

the business plan. 

As before, cost management is one of the 

essential regular management tools used by 

RAO “UES of Russia” in running the energy 

subsidiaries. For that purpose, RAO “UES of 

Russia” uses the KPI “Limit for fixed costs per 

MW of installed capacity as of the beginning 

of the year”, which ensures control over the 

semi-fixed costs at generation companies and 

regional energos. The business plans include 

a section “List of Measures Designed to Meet 

KPIs”. The biggest savings are achieved by fuel 

cost reduction efforts, such as technological 

measures to increase efficiency; replacement 

of fuel oil with commercial natural gas; choice 

of alternative fuel suppliers; dealing with fuel 

One of the key areas for cost reduction 

at RAO UES entities is the development of 

competitive and non-competitive regulated 

procurement of products. RAO “UES of Russia” 

has created and is developing a comprehensive 

system for procurement regulation 

and management. The Company’s system of 

Procurement Standards establishes uniform 

rules for procurement and tenders for the 

RAO UES entities. The fundamental principle 

of the Procurement Standards is that the 

key method used in procurement activities 

should be public tendering; non-competitive 

procurements are allowed only in strictly 

prescribed situations subject to approval 

of the Board of Directors or the Company’s 

Central Procurement Body. 

The creation of an effective and efficient 

management system using the KPIs and advanced 

methods of business planning significantly 

contributed to the positive results 

achieved in 2006, both at the Parent Company, 

RAO “UES of Russia”, and most of its SDCs.




Dividend Policy 

The corporate governance system at RAO UES 

Holding Company ensures that the rights of 

In 2006, OAO RAO “UES of Russia” paid 

RUB2,757.6 million in dividends for 2005, 

which was in line with the dividends paid for 

Standards amounted to RUB745,088 million. 

Such amount of net income was due to the revaluation 

of investments in shares of subsid- 

Dividends Declared by the SDCs of RAO "UES of Russia", millions of RUB 

2004 2005 2006 

shareholders of the Parent Company and its 

2004. At the same time, the dividends made 

iaries and dependent companies of RAO “UES 

Dividends 

Total for 2003 for 2004* Total for 2004 for 2005* Total for 2005 for 2006* 

subsidiaries and dependent companies in res- 

13.2 percent of the Company’s net income for 

of Russia” caused by the increased market 

pect of dividend payments are protected in 

2005, up 1.7 percent on the figure for 2004. Of 

prices of the companies’ shares, and was not 

Total 11,781 5,909 5,872 10,118 5,738 4,380 14,239 8,641 5,598 

a sector reform environment. 

RAO “UES of Russia” is guided by the Dividend 

Policy Principles approved by the Board 

of Directors. 

The dividends are calculated in accordance 

with the Revised Methodology for Dividend 

that amount, RUB1,294 million was paid to 

the state, and the remaining part to the Company’s 

minority shareholders. 

Dividends Paid to Shareholders 

of OAO RAO “UES of Russia” for 2006 

supported by any actual cash flows. 

As provided by Article 5.3 of the Company 

Charter, the total amount of dividends payable 

on preferred shares should be at least 10 percent 

of the Company’s net income divided by 

the number of preferred shares, which make 

including: 

dividends paid 

to OAO RAO “UES of Russia” 

dividends payable to other 

shareholders 

8,179 3,749 4,430 5,241 2,544 2,697 10,014 5,464 4,550 

3,602 2,160 1,442 4,877 3,194 1,683 4,225 3,177 1,048 

Calculation of the Company approved by the 

In 2006, the net income of OAO RAO “UES of 

up 25 percent of the Company’s capital. How- 

*interim dividends 

Board of Directors in 2005. 

Russia” according to the Russian Accounting 

ever, the dividend amount per preferred share 

RAO UES Dividend Payment History, thousands of RUB 

should not be less than the dividend amount 

per ordinary share. 

pletely undermine the Company’s investment 

programme and adversely affect the financial 

Thus, the dividend amounts paid by the 

SDCs of RAO “UES of Russia” (taking into ac- 

In order to resolve that issue, it was pro- 

position of OAO RAO “UES of Russia”. 

count the interim dividends declared in 2006) 

posed to shareholders at the EGM to make 

In light of that, the Board of Directors of 

increased 1.4-fold compared to 2005 (taking 

YEAR Ordinary dividends Preferred dividends TOTAL 

amendments and additions to the Company 

RAO “UES of Russia” recommended that the 

into account the interim dividends declared in 

Charter which would make it possible not to 

Annual General Meeting of shareholders vote 

2005) to RUB14,239 million. 

1994 (for 1993)* 66,626,224 3,368,749 69,994,973 

take into account the paper profit from revalu- 

to omit the dividend for 2006. 

1995 (for 1994)* 133,252,448 6,737,498 139,989,946 

1996 (for 1995)* 205,208,770 10,375,747 215,584,517 

1997 (for 1996)* 205,208,770 10,375,747 215,584,517 

ation of equity investments when determining 

the amount of preferred dividends. 

Such decision required a three-thirds majority 

of votes of all preferred shareholders of 

RAO “UES of Russia”. However, the proposed 

Dividend Payments by SDCs 

of RAO "UES of Russia" 

In 2006, the SDCs of RAO “UES of Russia” 

1998 (for 1997) 205,209 19,029 224,238 

amendments were not supported by the pre- 

continued to pay interim dividends. This was 

1999 (for 1998) 255,608 31,542 287,150 

ferred shareholders. 

In light of the need to ensure reliable and 

due to the possibility that, in connection with 

the restructuring and the organizational con- 

2000 (for 1999) 537,647 76,158 613,805 

uninterrupted electricity supply and ensure 

straints and legal constraints, the companies 

2001 (for 2000) 820,835 153,146 973,981 

balance of capacity in the UES of Russia, the 

Company needs to bring more generating 

faced the risk of default in payment of their 

final dividends for 2006 (WGCs, AO-power 

2002 (for 2001) 1,067,086 245,905 1,312,991 

capacity on line, which requires to increase 

plants, and regional generation companies). 

2003 (for 2002) 1,383,107 605,114 1,988,221 

investments in new generation construction 

projects on an annual basis. Implementation 

The amount of interim dividends declared 

by the SDCs of RAO “UES of Russia” for Q1, 

2004 (for 2003) 1,924,858 473,757 2,398,615 

of the investment programme is one of the key 

H1 and 9M 2006, including the taxes, to- 

2005 (for 2004) 2,294,234 463,381 2,757,615 

drivers of the Company’s capitalization growth. 

This means that the dividend payment out of 

talled RUB5,597.6 million, which includes of 

RUB4,549.7 million payable on the shares 

2006 (for 2005) 2,355,797 402,371 2,758,168 

the Company’s net income not fully supported 

owned by OAO RAO “UES of Russia”. 

* scale of prices prior to 1 January 1998. 

by actual receipts of funds would almost com-


Reforming 

the Company 

The restructuring of RAO UES entities is carried 

out pursuant to the laws and regulations 

of the Russian Federation, resolutions of the 

Russian Government and the Board of Directors 

of RAO “UES of Russia”, and the Strategy 

Concept of RAO “UES of Russia” for 2003- 

2008 (“5+5”). 

The sector reform is being implemented 

along the following lines: 

reform of the wholesale and retail electricity 

and capacity markets and development 

of competition in the sector; 

restructuring of the regional energos; 

creation of the electricity market infrastructure; 

establishment of the companies which will 

make up the final sector structure; 

reorganization of OAO RAO “UES of Russia”. 

In 2006, the greater part of the structural 

reform in the sector reform was completed. 

Measures were taken to establish electricity 

market participants and introduce new rules 

for the wholesale and retail electricity markets. 

The electricity reform entered a new 

phase providing for massive investment. 

6

Reforming the Company 39 

Results 

of the Structural 

Reform 

By end-2006, Business 

Unit 1 practically completed 

the restructuring of 

the companies subordinated 

to it. All WGCs and TGCs 

were established, their fiveyear 

investment plans were 

developed, and preparations 

for new share issues were 

started. By 2011, the 

companies will build about 

20,000 MW of generation 

capacity 

The measures under the sector reform programme 

approved by the Russian Government 

and the resolutions of the General Shareholder 

Meeting of RAO “UES of Russia” helped 

achieve significant progress in all aspects 

of the reform: 

unbundling of regional energos by lines 

of business; 

creation of wholesale generation companies 

(WGCs); 

creation of territorial generation companies 

(TGCs); 

consolidation of the Unified National Electricity 

Grid (UNEG) facilities; 

consolidation of the dispatching system; 

restructuring of the energy retailing operations; 

restructuring of the repair & maintenance 

and services businesses. 

Unbundling of Regional 

Energos by Lines of Business 

By 31 December 2006, the Board of Directors 

of RAO “UES of Russia” had approved the restructuring 

of 71 regional energos, 64 of which 

had completed their corporate unbundling. As 

a result of their reorganization, 260 new companies 

were established. 


of Russia” approved the restructuring plan 

for OAO “Tyvaenergo”, and the Management 

Board took individual divisions on the strategy 

for development and restructuring of the isolated 

regional energos, OAO “Kolymaenergo” 

and OAO “Magadanenergo”. 

As the regional energos’ unbundling is 

virtually completed and the continued interregional 

integration of the new companies 

is well underway, the Board of Directors of 

RAO “UES of Russia” approved the liquidation 

of the management companies spun off from 

the reorganized energos. As of 31 December 

2006, the Company liquidated 34 out of its 37 

management companies. It is planned that 

the regional energos’ reorganization and liquidation 

of the management companies will 

be completed in 2007. 

Reorganization of the Regional 

Energos in the Russian Far East 

On 2 September 2005, the Board of Directors 

establishment of OAO “Far Eastern Distribution 

Company” (FEDC) on the basis of 

the distribution grid assets of OAO “Amurenergo”, 

OAO “Dalenergo”, OAO “Khabarovskenergo”, 

and OAO “Yakutskenergo”; 

spin off of the UNEG facilities owned by 

OAO “Amurenergo”, OAO “Dalenergo”, OAO 

“Khabarovskenergo”, and OAO “Yakutskenergo” 

to form their respective whollyowned 

subsidiaries, contribution of the 

UNEG facilities to the subsidiaries’ capital 

and the subsequent merger of those subsidiaries 

with and into OAO “UES FGC”; 

establishment of a single holding company, 

OAO “Far Eastern Energy Company” on 

the basis of assets of OAO “Amurenergo”, 


ZAO “LuTEK” and OAO “Yakutskenergo”. 

In 2006, the general shareholder meetings 

of the Far Eastern regional energos approved 

the transfer of the core assets to the companies 

being established, OAO “Far Eastern 

Generation Company” and OAO “Far Eastern 

Distribution Company” to enable them to start 

operations on 1 January 2007. 

On 1 February 2007, OAO “Far Eastern Energy 

Company” (FEEC) was established as 

a result of the consolidation of OAO “Amurenergo”, 


ZAO “LuTEK”, and OAO “Southern 

Yakutskenergo”. FEEC will perform the elec- 

Establishment of WGCs 

Pursuant to Direction of the Russian Federation 

Government No. 1254-r, dated 1 September 

2003, seven wholesale generation companies 

were created, six of which were based the 

thermal generation assets (thermal WGCs) 

and one on the basis of the hydropower assets 

(OAO “HydroWGC”). 

Thermal WGCs 

In 2005, the Board of Directors of RAO “UES of 

Russia” approved the parameters for the establishment 

of all six thermal WGCs, i.e. the 

terms and ratios for conversion of regional 

energos’ shares into shares in the respective 

thermal WGCs. The shareholders of the AOpower 

plants of all thermal WGCs approved 

the plants’ merger with the respective WGCs. 

In 2006, all thermal WGCs completed their 

establishment and AO-power plants merged 

with the WGCs. Today, all thermal WGCs work 

as consolidated operational companies. 

HydroWGC 

In 2005, the Board of Directors of RAO 

“UES of Russia” approved the post-reform 

model for operation of OAO “HydroWGC”. 

After the establishment of OAO “HydroWGC” 

is completed, the company will manage its 

branches (hydropower plants). Under the 

Russian le-gislation, the Russian Federation 

will be made in the form of cash, shares and 

property of hydropower plants owned by RAO 

“UES of Russia”. 

In December 2006, OAO “HydroWGC” completed 

its new share issue to OAO RAO “UES 

of Russia” in exchange for the property owned 

by RAO “UES of Russia”, including shares in 

OAO “Zagorskaya PSPP”, OAO “Stavropol 

Electricity Generation Company”, OAO “Dagestan 

Regional Generation Company”, 

OAO “Cheboksarskaya HPP”, OAO “Zaramagskie 

HPPs”, OAO “Zelenchukskiye HPPs”, 

OAO “NIIES”, and OAO “Vedeneyev VNIIG”. 

In 2006, measures were launched to reorganize 

OAO “HydroWGC” through consolidation 

of its five subsidiaries (OAO “Kamskaya HPP”, 

OAO “Nizhegorodskaya HPP”, OAO “Chains 

of Verkhnevolzhskie HPPs”, OAO “Saratovskaya 

HPP”, and OAO “Cheboksarskaya HPP”) 

in which HydroWGC holds 100 percent minus 

one share. 

of RAO “UES of Russia” approved the restruc- 

tricity retailing functions and own 100 per- 

is to hold at least 50 percent plus one share in 

turing plan for the energy companies of the Far 

cent shares in OAO “Far Eastern Generation 

OAO “HydroWGC”. 

Alexander Chikunov, 

Member of the Management Board, 

Managing Director 

East IES. The plan provides for: 

establishment of OAO “Far Eastern Generation 

Company” (FEGC) on the basis of 

the generation and heating grid assets of 

OAO “Amurenergo”, OAO “Dalenergo”, OAO 

“Khabarovskenergo”, ZAO “LuTEK”, and the 

non-islanded part of OAO “Yakutskenergo”; 

Company” and OAO “Far Eastern Distribution 

Company”. 

Pursuant to the shareholder resolution 

approved at the AGM of RAO “UES of Russia” 

on 28 June 2006, in order to establish 

OAO “HydroWGC” and increase the state’s 

interest in the company to the level required 

by the legislation, RAO “UES of Russia” is 

taking steps to acquire additional shares in 

of RAO “UES of Russia”, Business Unit 1 

OAO “HydroWGC”. Payment for such shares

INDEX MAP OF TGC AREAS 

AND LOCATION 

OF WGC POWER PLANTS 

tgC-1 

mosenergo 

tgC-2 

tgC-9 

nteC 

tgC-4 

tgC-6 

tgC-5 

tgC-10 

southern tgC 

Volzhskaya tgC 

yeniseiskaya tgC 

tgC-11 

feeC 

kuzbassenergo 

tgC-14 

WHOLESALE 

GENERATION COMPANIES 

WGC based on thermal power generation: 

WGC-1: Iriklinskaya TPP, Kashirskaya TPP, 

WGC-4: Berezovskaya TPP, Shaturskaya TPP, 

Nizhnevartovskaya TPP, Permskaya TPP, 

Smolenskaya TPP, Surgutskaya TPP-2, 

Urengoiskaya TPP, Verkhnetagilskaya TPP 

Yaivinskaya TPP 

WGC based on hydro power generation: 

WGC-2: Pskovskaya TPP, Serovskaya TPP, 

WGC-5: Konakovskaya TPP, Nevinnomysskaya TPP, 

HydroWGC: Akbashskaya HHP, Baksanskaya HPP, 

HPPs of Stavropolenergo, Irganayskaya HPP, 

Novosibirskaya HPP, Sadovaya HPP, Saratovskaya HPP, 

Stavropolskaya TPP, Surgutskaya TPP-1, Troitskaya TPP 

Reftinskaya TPP, Sredneuralskaya TPP 

Bekanskaya HPP, Boguchanskaya HPP, 

Kamskaya HPP, Kora-Ursdonskaya HPP, 

Sayano-Shushenskaya HPP, Sovetskaya HPP, 

Bureyskaya HPP, Cheboksarskaya HPP, 

Kubanskie HPPs, Malaya-Akhtynskaya HPP, Malaya- 

Uchkulanskaya HPP, Upper-Volga HPPs Cascade, 

WGC-3: Cherepetskaya TPP, Gusinoozerskaya TPP, 

WGC-6: Cherepovetskaya TPP, Kirishskaya TPP, 

Chirkeyskaya HPP, Chiryurtskaya HPP, 

Kurushskaya HPP, MGES-3 on the Baksan-Malka 

Volzhskaya HPP, Votkinskaya HPP, Zagorskaya PSPP, 

Kharanorskaya TPP, Kostromskaya TPP, 

Krasnoyarskaya TPP-2, Novocherkasskaya TPP, 

Dzau HPP, Eshkakonskaya HPP, Ezminskaya HPP, 

Channel, Miatlinskaya HPP, Mukholskaya HPP, 

Zaramagskie HPPs, Zelenchukskie HPPs, 

Pechorskaya TPP, Yuzhno-Uralskaya TPP 

Ryazanskaya TPP, TPP-24 

Gergebilskaya HPP, Gizeldonskaya HPP, 

Nizhegorodskaya HPP, Nizhne-Chereksky HPP Cascade, 

Zeyskaya HPP, Zhigulevskaya HPP

I believe that the key 

event of 2006 was 

the determination by the 

Government of the schedule 

for the wholesale and retail 

market liberalization. As the 

Government simultaneously 

designated the date for the 

reorganization of the Parent 

Company, RAO “UES of 

Russia”, it is safe to say that 

the transitional period of the 

electricity reform has been 

de facto completed 

Establishment of TGCs 

As of December 31, 2006, the following corporate 

transactions had taken place: TGC-3 

(OAO “Mosenergo”) completed its establishment; 

OAO “TGC-4”, OAO “TGC-5”, and 

OAO “TGC-14” achieved their intended final 

structure after the consolidation of their regional 

generation subsidiaries; OAO “TGC-12” 

was set up on the basis of the assets of 

OAO “Kuzbassenergo”; OAO “Yeniseyskaya 

TGC” (TGC-13) implemented the first phase 

of its formation. Process is underway to establish 

other territorial generation companies 

(OAO “TGC-1”, OAO “TGC-2”, OAO “Southern 

Generation Company TGC-8”, and OAO “TGC-10) 

as corporate groups, which will subsequently 

merge with and into their holding companies. 

The final structure of OAO “TGC-9” was 

achieved in February 2007, OAO “TGC-6” 

completed the process in March 2007. 

OAO “Volzhskaya TGC” (TGC-7) completed its 

group restructure. 

Consolidation 

of the UNEG Facilities 

In order to administer the Unified National 

Energy Grid (UNEG) facilities, RAO “UES of 

Russia” established in 2002 a wholly-owned 

subsidiary, OAO “Federal Grid Company“ 

(OAO “UES FGC”), and contributed its UNEG 

assets to the capital of OAO “UES FGC”. 

The consolidation of the transmission busi- 

by RAO “UES of Russia” were transferred to 

OAO “UES FGC” as payment for new shares 

in FGC. The remaining TC shares owned by 

RAO “UES of Russia” will be paid for the next 

issue of new shares of OAO “UES FGC”, and 

distributed to OAO “UES FGC” under the balance 

sheet for the separation of OAO RAO 

“UES of Russia”. As provided by Russian law, 

the state must hold at least 75 percent plus 

one share in OAO “UES FGC”. 

In March 2007, the Board of Directors of 

RAO “UES of Russia” approved modifications 

to the model for consolidation of TCs and ITCs 

and the single-phase merger of the TCs and 

ITCs with and into OAO “UES FGC” simultaneously 

with the final phase of reorganization of 

OAO RAO “UES of Russia”. 

On 1 January 2006, OAO “UES FGC” was 

granted its own tariff for electricity transmission 

via the UNEG networks. The property 

of the transmission (trunk grid) companies 

was used by OAO “UES FGC” under usage 

agreements. 

Formation of IDCs 

By end-2006, over 90 percent of the regional 

distribution companies (RDCs) to be spun off 

from the regional energos completed their establishment. 

The next stage provides for the consolidation 

of the RDCs into interregional distribution 

companies (IDCs). In 2004-2005, RAO “UES of 

In 2006, OAO “UES FGC” produced a comprehensive 

Strategy for the development of 

the electricity distribution facilities until 2015. 

The Strategy envisages a new configuration 

for the IDCs and increase in their number. 

Consolidation of the Dispatching 

System 

Under the Russian Federation Government’s 

order, the Rules for dispatch control in the 

electricity industry entered into force with effect 

from 15 May 2006. 

By end-2006, OAO “UES SO-CDA” completed 

the establishment of its branches, Regional 

Dispatch Administrations (RDAs). The 

property owned by the regional energos (except 

for the independent and islanded energy 

companies) which is needed for the RDA operation 

was leased to OAO “UES SO-CDA”. 

It is planned that OAO “UES SO-CDA” will 

purchase the RDA property it is currently 

leasing before the end of the second phase of 

OAO RAO “UES of Russia” reorganization. The 

purchase will be financed with the money provided 

in the System Operator’s service fee. 

Restructuring of the Energy 

Retailing Business 

An important constituent of the electricity 

reform is the demonopolization and development 

of competition in energy retailing. 

After the regional energos’ reorganization, 

Company”, and OAO “Krasnoyarskenergosbyt”, 

for fiduciary management to the 

counterparties selected by the regional administrations; 

transfer of shares in OAO “Vologda Retail 

Company” to OAO “WGC-6” for fiduciary 

management on the terms and conditions 

similar to the terms of the agreement for 

fiduciary management of shares of energy 

retail companies entered into with TGCs; 

the transfer of shares in OAO “Udmurt 

Energy Retail Company”, OAO “Chelyabenergosbyt”, 

and OAO “Novgorod Energy 

Retail Company” for fiduciary management 

to energo retail companies independent of 

RAO “UES of Russia”; 

sale by RAO “UES of Russia” of its 47.36 

percent stake in OAO “Yaroslavl Retail 

Company” through a public auction. 

As of December 31, 2006, the regional regulators 

assigned the status of guaranteeing supplier 

to all RAO UES energy retail companies. 

Under Russian law, guaranteeing suppliers are 

obliged to enter into electricity supply or sale 

contracts with any consumer who submits a request 

to that effect. 

In 2005, as a measure to improve the financial 

stability of energy retail companies, shares 

of the remaining ERCs were transferred for fiduciary 

management to TGCs for a term of one 

year. On 8 December 2006, the Board of Directors 

extended the fiduciary management agree- 

Since 1999, the capitalization 

of RAO “UES of Russia” grew 

to $40 billion from $1 billion. 

The Company’s revenues 

increased from $500 million 

to over $22 billion. In 2007, 

RAO UES subsidiaries expect 

to utilize over $15 billion of investments, 

a 2.5-fold increase 

on the capital investment this 

year and a 150-fold increase 

over the 1999 investment 

budget. And this is not the 

end of the list of Chubais’ accomplishments. 

The Company 

brought on line several large 

generation facilities in different 

regions of Russia. RAO 

“UES of Russia” invested 

lavishly into equipment that 

would help eliminate energy 

shortages in Russia. 

Company magazine, 

20 november 2006 

ness within OAO “UES FGC” was due to the 

Russia” established four wholly-owned sub- 

the energy retail companies started to operate 

ments until the sale of the ERC shares. 

need to comply with the federal laws provid- 

sidiaries, OAO “Center and North Caucasus 

as independent legal entities purchasing elec- 

Also, the Board of Directors of RAO “UES of 

ing that all UNEG-related facilities must be 

IDC”, OAO “North-West IDC”, OAO “Urals and 

tricity on the wholesale market and selling it 

Russia” approved the Company’s Strategy for 

operated by a dedicated entity. 2006 saw the 

Volga IDC”, and OAO “Siberia IDC”. In August 

to the end consumers. 

energy retail companies. According to the Stra- 

establishment of the transmission (trunk grid) 

2006, RAO “UES of Russia” created another 

In 2006, work was continued to implement 

tegy, the principal option will be the sale of ERC 

Yury Udaltsov, 

companies (TCs) on the basis of the UNEG- 

wholly-owned subsidiary, OAO “Southern Grid 

pilot projects to dispose of shares in the en- 

shares through a public auction, with the re- 


Head of the Reform Management Center, 


related assets spun off in the course of the 

regional energos’ reorganization. 

In August 2006, the shares in 42 TCs owned 

Company”, to operate the grid and retail companies 

in the South of Russia during the transitional 

reform period. 

ergy retail companies: 

transfer of shares in OAO “Kaluga Retail 

Company”, OAO “Tambov Energy Retail 

serve price not lower than the fair market value 

determined by an independent appraiser.

44 

Reforming the Company 


Liberalization 

of the Electricity 

Markets 

On 31 August 2006, the Russian Federation 

Government adopted its Resolution No. 529 

On Improving the Operation of the Wholesale 

Electricity (Capacity) Market and Resolution 

No. 530 On Approval of the Rules for the 

Operation of the Retail Electricity (Capacity) 

Markets During the Transitional Period, which 

became effective on 1 September 2006. 

Under the new Rules for the Wholesale 

Electricity (Capacity) Market, with effect from 

1 September 2006, the regulated segment of 

the wholesale market was transformed into a 

system of regulated contracts. The price set 

for each of such contracts is the tariff charged 

by the generation company for the electricity 

supplied by it. In September through December 

2006, 5,175 regulated contracts were concluded 

on the marketplace. 

The deviations segment, which previously 

operated as part of the regulated sector of the 

100 

90 

80 

70 

60 

50 

40 

30 

20 

10 

0 

Phase-in of the Wholesale Electricity Market 

Liberalization in Russia, 2007-2011 

5% 

10% 

15% 

25% 

wholesale electricity (capacity) market, was 

transformed into a balancing market for electricity 

(capacity). The main function of the balancing 

market is to minimize the amounts of 

electricity scheduled for generation and consumption 

in real time, based on the price bids 

and offers submitted by suppliers and market 

participants with regulated consumption. 

The competitive trading segment of the 

new wholesale electricity (capacity) market 

has become the foundation for the day-ahead 

market, in which unregulated prices are calculated 

on the basis of bids and offers. The 

volumes of electricity scheduled for consumption 

and production that are not included in 

the regulated contracts are traded each hour 

at unregulated prices. 

At its meeting held 30 November 2006, the 

Russian Federation Government approved 

the wholesale market liberalization phase-in 

30% 

50% 

60% 

80% 

100% 

schedule (expressed as percentages of electricity 

included in the aggregate electricity 

(capacity) balance for 2007 approved by the 

Federal Tariff Service of Russia). This phasein 

schedule was incorporated in Resolution 

No. 205 of the Russian Federation Government, 

dated 7 April 2007. 

The Rules for the retail markets provide 

that guaranteeing suppliers of electricity will 

be designated in each region of Russia. These 

market participants will be obliged to conclude 

a public contract to supply electricity on 

standard terms with any consumer based in 

its territory which requests the guaranteeing 

supplier to do so. 

The Rules for retail market operation set 

out the new pricing principles for the retail 

electricity market. Deregulation of the retail 

electricity market should be carried out in 

step with the wholesale market deregulation 

so that the market signals reach the end consumers 

of electricity and give them adequate 

information on the actual cost of electricity. 

This is needed to enable sound investment 

decisions to be taken and to provide incentives 

for energy saving measures. All consumers, 

except for households and similar consumer 

groups, have started to purchase part of their 

electricity needs at unregulated prices. 

The households will continue to pay for 

electricity at the tariffs set by the state regulator 

until at least 2011. 

First Phase 

of the Company’s 

Reorganization 

The reform of the Parent Company, RAO “UES 

of Russia”, means that the Company has entered 

the final phase of restructuring, which 

will result in the creation of the intended final 

structure of the electricity industry in Russia 

and establishment of independent companies 

attractive to investors and efficiently operating 

in a competitive market environment. 

The Company’s assets will be distributed 

among its shareholders pro rata to their 

interests in the capital of OAO RAO “UES 

of Russia”. 

The EGM of shareholders of OAO RAO “UES 

of Russia” held on 6 December 2006 approved 

the action to implement the first phase of the 

Company reorganization by spinning off of two 

generation companies—OAO “WGC-5 Holding” 

and OAO “TGC-5 Holding”—from RAO “UES of 

Russia” and their simultaneous merger with 

OAO “WGC-5” and OAO “TGC-5”. 

As resolved by the shareholders at the EGM, 

the new shares in OAO “WGC-5 Holding” and 

OAO “TGC-5 Holding” will be distributed pro 

rata among the existing shareholders of OAO 

RAO “UES of Russia” in the following ratios: 

for each ordinary share in RAO “UES of 

Russia” held, the shareholders will receive 

0.41 of an ordinary share in OAO “WGC-5” 

and 13.59 ordinary shares in OAO “TGC-5”; 

for each preffered share in RAO “UES of 

Russia” held, the shareholders will receive 

0.37 of an ordinary share in OAO “WGC-5” 

and 12.45 ordinary shares in OAO “TGC-5”. 

It is anticipated that, after the first reorganization 

phase is completed, the Russian 

Fe-deration will hold 26.3 percent and at least 

25 percent plus one share in OAO “WGC-5” 

and OAO “TGC-5”, respectively (taking into account 

the new share issues by OAO “WGC-5” 

and OAO “TGC-5” and the sale of the 

25.03 percent stake in OAO “WGC-5” in 2007). 

The resolutions needed to implement the 

proposed reorganization plan have also been 

adopted by the shareholders of OAO “WGC-5” 

and OAO “TGC-5”. 

After the first phase of the Company’s 

reorganization takes place in Q3 2007, the 

shareholders in OAO RAO “UES of Russia” 

will receive shares in OAO “WGC-5” and OAO 

“TGC-5”. This will help elaborate the mechanisms 

for the final phase of RAO “UES of Russia” 

reorganization and create Russia’s first 

private generation companies. 

Semyon Birg, Analyst with 

Finam Investment Company: 

“The Russian Government’s 

resolutions adopted on 7 June 

2006 are an extremely positive 

event, both for the energy 

sector and for RAO “UES 

of Russia”. At an earlier 

date, Russian President 

Vladimir Putin approved the 

energy company’s plans for 

new share offerings in some 

generation companies. We 

believe that these resolutions 

will benefit the electricity 

industry: they will provide 

investments the sector needs 

to finance its development 

and give a new momentum 

to the reform underway at the 

energy companies. 

If the sector reform plans 

are implemented and sector 

succeeds in raising investments, 

we may see the growth 

of RAO UES capitalization 

as investors reassess 

the risks inherent with the 

industry reform.” 

Finance magazine, 

12 June 2006 

from 01.01.07 from 01.07.07 from 01.01.08 from 01.07.08 from 01.01.09 from 01.07.09 from 01.01.10 from 01.07.10 from 01.01.11

46 



Reform Plans 

Regional Energos Unbundling 

by Lines of Business 

In 2007, restructuring is planned to be completed 

at the remaining regional energos, 

OAO “Ingushenergo” and OAO “Tyvaenergo”, 

in accordance with the restructuring plans 

approved for those companies. 

The decision on the restructuring the islanded 

entity, OAO “Yantarenergo”, is expected 

to be taken after a comprehensive plan is produced 

for joint action by RAO “UES of Russia” 

and the Kaliningrad Region Government 

in order to ensure reliable electricity supply 

in the region. 

Restructuring of the Regional 

Energos in the Russian Far East 

1 February 2007 saw the start of operations 

of OAO “Far Eastern Energy Company” 

The peculiarity of the electricity industry in 

the Russian Far East is the existence of technologically 

isolated energy systems: 

OAO “Kamchatskenergo”; 

OAO “Sakhalinenergo”; 

OAO “Yakutskenergo”; 

OAO “Chukotenergo”; 

OAO “Magadanenergo”; 

OAO “Kolymaenergo”. 

With respect to restructuring of such isolated 

energy systems, decisions are taken on 

a case by case basis. 

By now, restructuring has been completed 

at OAO “Kamchatskenergo” and OAO “Yakutsk- 

energo”. 

The Management Board of RAO “UES of 

Russia” has approved the Development Strategy 

for OAO “Sakhalinenergo” for 2006-2010, 

which envisages that the power plants of 

the property of the Kyzylskaya CHPP (currently 

owned by OAO “Tyvaenergo”) will be transferred 

to OAO “Yeniseyskaya TGC” (TGC-13) 

in Q3 2007. 

HydroWGC 

In April 2007, the Board of Directors of 

RAO “UES of Russia” approved the plan for 

accelerated consolidation of OAO “HydroWGC” 

and creation of the company’s final corporate 

structure. 

The approved plan provides that 

OAO “HydroWGC” will issue additional shares 

in favour of the Russian Federation and 

RAO “UES of Russia”. In return for the new 

shares in OAO “HydroWGC” to be issued in 

2007, RAO “UES of Russia” will contribute 

its shareholdings in the companies planned 

to become part of OAO “HydroWGC” and 

The shares in individual WGCs/TGCs to be 

transferred to OAO “HydroWGC State Holding” 

will be subsequently sold and its proceeds will 

be used to finance the HydroWGC Investment 

Programme. 

Also, in the course of its reorganization, OAO 

RAO “UES of Russia” plans to complete the consolidation 

of OAO “HydroWGC” through merger 

of the AO-hydropower plants (HPPs) and the 

companies to be spun off from RAO “UES of 

Russia” (OAO “HydroWGC State Holding” and 

OAO “HydroWGC Minority Holding”) with and 

into OAO “HydroWGC”. The consolidation is expected 

to be completed by 1 July 2008. 

The new model will help ensure the required 

corporate control by the shareholders over the 

operating company, OAO “HydroWGC”, as early 

as 2008 (the stake in HydroWGC held by the 

Russian Federation will be at least 50 percent 

exchange for additional shares issued to the 

state. This step will help increase the Government’s 

direct stake in OAO “UES FGC” to at 

least 75 percent plus one voting share. 

Restructuring of Distribution Assets 

Pursuant to the decision of the Board of Directors 

of RAO “UES of Russia”, OAO “UES FGC” 

is managing shares in the IDCs on a fiduciary 

basis until their intended corporate structure 

is formed. In 2007-2008, steps will be undertaken 

to review, approve and implement the 

Development Strategy for the distribution 

grid, which provides for the development and 

implementation of tariff regulation ensuring 

return on assets (RAB) and creating the conditions 

needed for power grid companies to 

raise long-term debt. It is expected that the 

new tariff system will be introduced in 2008 

Tapio Kuula, Senior Vice 

President of Fortum, Finland: 

“We are watching closely 

the progress on the sector 

reform and are taking part 

in it with keen interest. The 

progress made by Russia in 

restructuring its electricity 

industry is very impressive 

indeed. The pace of sector 

liberalization has outstripped 

some EU countries. I am 

sure that it is the progress 

achieved in the market reform 

that makes Russia’s electricity 

industry attractive to foreign 

investors.” 

(FEEC), the unified holding company estab- 

OAO “Sakhalinenergo” will switch to burning 

RUB5 billion in funds provided by the federal 

plus one share), and make it possible to float 

at up to 10 pilot distribution companies. 

lished on the basis of assets of “OAO “Amur- 

natural gas and take steps to replace their re- 

authorities. 

the company’s shares on the stock market in 

The new configuration for the IDCs was 

Expert Magazine, 

energo”, OAO “Dalenergo”, ZAO “LuTEK”, 

tired capacity and develop the power grid in- 

Under the RAO UES reorganization plan, 

Q2 2008. It will also create the necessary con- 

approved at the meeting of the Interagency 


OAO “Khabarovskenergo”, and OAO “Southern 

frastructure. Measures will be undertaken to 

the Company’s stake in OAO “HydroWGC” and 

ditions for successful implementation of its 

Commission for Electricity Reform chaired by 

Yakutskenergo”. 

improve the company’s financial strength. 

some AO-hydropower plants is to be divided 

investment programme for 2007-2010. 

Russian Federation Industry and Energy Mini- 

To date, the shares of OAO “Far Eastern 

Energy Company” have been registered with 

The Management Board of RAO “UES of 

Russia” also reviewed the Development Stra- 

into the “state-owned” and “minority-owned” 

parts. It is planned that the following compa- 

Consolidation of Transmission Assets 

ster Victor Khristenko, and was adopted by 


the securities regulator. FEEC shares are ex- 

tegy Guidelines for the energy systems in the 

nies will be spun off from RAO “UES of Russia” 

In 2007 and Q1 2008, the transmission (trunk 

in April 2007. 

pected to start trading on the stock market 

in Q2 2007. 

In 2007, it is planned to merge the transmission 

(trunk grid) companies spun off from 

the regional energos based in the Far East of 

Russia—OAO “Khabarovsk Trunk Grid Company”, 

OAO “Yakutsk Trunk Grid Company”, 

OAO “Amurskaya Trunk Grid Company”, 

OAO “Primorskaya Trunk Grid Company”— 

with and into OAO “UES FGC”. 

Magadan Region, OAO “Kolymaenergo” and 

OAO “Magadanenergo”. 

WGCs and TGCs 

In Q2 2007, it is planned to complete the establishment 

of OAO “Volzhskaya TGC” (TGC-7) 

and achieve the intended corporate structure 

of OAO “TGC-11” and OAO “TGC-12” in connection 

with the sale of stakes in OAO “Zapadno-Sibirskaya 

CHPP” and OAO “Yuzhno-Kuzbasskaya 

TPP” owned by RAO “UES of Russia” 

and OAO “Kuzbassenergo”. 

Also, it is expected that 100 percent shares 

and merged with and into OAO “HydroWGC”: 

“HydroWGC Minority Holding”, which will 

receive shares in OAO “HydroWGC” and 

some AO-hydropower plants in the amount 

equal to the minority shareholders’ stake in 

the capital of RAO “UES of Russia”; 

“HydroWGC State Holding”, which will receive 

shares in OAO “HydroWGC” and some 

AO-hydropower plants in the amount proportionate 

to the stake in RAO “UES of 

Russia” owned by the Russian Federation, 

as well as shares in some thermal WGCs 

and TGCs. 

grid) companies spun off from the regional energos 

and the ITCs are to hold extraordinary 

general meetings of shareholders to consider 

the companies’ merger with and into OAO “UES 

FGC”. This step is designed to fully consolidate 

the transmission (trunk grid) infrastructure. 

The consolidation will take place simultaneously 

with the divestiture of OAO “UES FGC” by 

RAO “UES of Russia”. 

It is planned that the federal government will 

allocate funds from the budget in 2008-2010 

to implement the priority projects provided by 

the FGC Investment Programme. These funds 

The new configuration provides that the 

number of the IDCs will be increased to 11 

(exclusive of OAO “Far Eastern Distribution 

Company”). It is based on the principle 

of territorial adjacency and comparability of 

the asset value of the distribution companies 

comprising the IDCs. The IDCs are to be sufficiently 

large, consolidated operating companies 

to be attractive to investors. 

The proposed IDC composition provides 

that the existing technological links among the 

DCs comprising the IDCs will be preserved, 

and the regions which call for special control 

in the company to be created on the basis of 

will be contributed to the company’s capital in 

will be spun off into separate companies.

Reforming the Company 49 

On 1 September 2006, 

a new model of the 

wholesale and retail electricity 

markets was inaugurated, 

which created a fully-fledged 

competitive market for electricity 

in the country. The 

System Operator has developed 

and put in place new 

technologies for operational 

planning, powerful software 

and hardware facilities, created 

and tested the systems 

for information interchange 

with the energy market participants 

and the Administrator 

of Trading System 

Boris Ayuyev, 


RAO “UES of Russia”; Chairman of the 

Management Board, OAO “UES SO-CDA” 

According to the RAO UES Board resolution, 

the new interregional distribution companies, 

OAO “Center and Privolzhye IDC”, OAO “South 

IDC” and OAO “Volga IDC” will be established 

as wholly-owned subsidiaries of RAO “UES of 

Russia”, each with a RUB10 million authorized 

capital. The name of OAO “Center and 

North Caucasus IDC” will be changed to OAO 

“Center IDC”, OAO “Urals and Volga IDC” to 

OAO “Urals IDC”, and OAO “South Grid Company” 

to OAO “North Caucasus IDC”. 

The intended corporate structure of the 

IDCs (except for OAO “Tyumenenergo”, OAO 

“Lenenergo” and the IDC on the basis of the 

Moscow City and Region grid facilities) is expected 

to be achieved after the DCs merge with 

the respective IDCs. If one or more DCs do not 

approve the merger with the IDC to which they 

belong, the IDC will issue new shares and invite 

such DC’s shareholders to exchange their 

shares for shares in the IDC. 

The configuration of the IDC to be formed 

on the basis of the Moscow City and Moscow 

Region distribution grids, and the question of 

which IDC OAO “Yantarenergo” should belong 

to, is expected to be taken by the Board of 

Directors of RAO “UES of Russia” in Q3 2007. 

The RAO UES Board of Directors approved 

the following configurations for the IDCs: 

OAO “North-West IDC” comprising the distribution 

companies spun off from the following 

regional energos: OAO “Arkhenergo”, 

OAO “Vologdaenergo”, OAO “Karelenergo”, 

OAO “Kolenergo”, OAO “Komienergo”, 

OAO “Novgorodenergo”, OAO “Pskovenergo”; 

OAO “Center and Privolzhye IDC”: 

OAO “Vladimirenergo”, OAO “Ivenergo”, 

OAO “Kalugaenergo”, OAO “Kirovenergo”, 

OAO “Marienergo”, OAO “Nizhnovenergo”, 

OAO “Ryazanenergo”, OAO “Tulenergo”, 

OAO “Udmurtenergo”; 

OAO “Center IDC”: OAO “Belgorodenergo”, 

OAO “Bryanskenergo”, OAO “Voronezhenergo”, 

OAO “Kostromaenergo”, 

OAO “Kurskenergo”, OAO “Lipetskenergo”, 

OAO “Oryolenergo”, OAO “Tambovenergo”, 

OAO “Smolenskenergo”, OAO “Tverenergo”, 

OAO “Yarenergo”; 

OAO “Siberia IDC”: OAO “Altayenergo”, 

OAO “Buryatenergo”, OAO “Krasnoyarskenergo”, 

OAO “Kuzbassenergo – Regional 

Electricity Grid Company”, OAO “Omskenergo”, 

OAO “Tomsk Distribution Company”, 

OAO “Tyvaenergo”, OAO “Khakasenergo”, 

OAO “Chitaenergo”; 

OAO “South IDC”: OAO “Astrakhanenergo”, 

OAO “Volgogradenergo”, OAO “Kubanenergo”, 

OAO “Rostovenergo”, OAO “Kalmenergo”; 

OAO “North Caucasus IDC”: OAO “Dagenergo”, 

OAO “Caucasus Energy Management 

Company”, OAO “Nurenergo”, 

OAO “Stavropolenergo”; 

OAO “Volga IDC”: OAO “Mordovenergo”, 

OAO “Orenburgenergo”, OAO “Penzaenergo”, 

OAO “Volzhskaya IDC”, OAO “Chuvashenergo”; 

OAO “Urals IDC”: OAO “Kurganenergo”, 

OAO “Permenergo”, OAO “Sverdlovenergo”, 

OAO “Chelyabenergo”; 

OAO “Tyumenenergo”; 

OAO “Lenenergo”; 

IDC on the basis of the Moscow City and 

Moscow Region distribution grids. 

Restructuring of the Dispatching 

System 

In the course of the reorganization of OAO RAO 

“UES of Russia”, the following steps will 

be taken to ensure that the state holds at 

least 75 percent plus one share in OAO “UES 

SO-CDA”: 

it is planned that, in 2007-2008, according to 

the budget call based on the System Operator’s 

investment programme, the Russian 

Federation will acquire RUB5.22 billion of 

new shares in OAO “UES SO-CDA”; 

It is proposed that OAO RAO “UES of Russia” 

should sell its shares in System Operator 

equal to the “government stake” and 

use the proceeds to finance the FGC investment 

programme (the System Operator’s 

shares comprising the “government stake” 

are to be transferred to “State Holding”); 

The remaining shares equal to the “minority” 

stake (not more than 25 percent plus 

one share, taking into account the additional 

share issue of OAO “UES SO-CDA”) will 

be distributed in equal shares to the “Minority 

Holdings” of the WGCs/TGCs to be 

spun off from RAO “UES of Russia”. In the 

course of the final phase of reorganization 

of OAO RAO “UES of Russia”, these shares 

are expected to be sold to NP “ATS” or its 

successor. 

As a result, the Russian Federation will be 

able to achieve its target of 75 percent plus 

one share in OAO “UES SO-CDA”. 

Restructuring of the Energy Retailing 

Business 

The Strategy adopted by the Board of Directors of 

RAO “UES of Russia” in December 2006 provides 

that the principal method to be used for the disposal 

of shares in the energy retail companies 

(ERCs) will be sale through a public auction with 

the reserve price not lower than the fair market 

value determined by an independent appraiser. 

According to this decision, the sale of the ERC 

shares is to start in Q2 2007 and most of the 

ERCs will be divested in 2007-2008. 

The Board of Directors designated eight energy 

retail companies which are slated to be sold 

in Q2 2007: 

OAO “Belgorod Retail Company”; 

OAO “Vologda Retail Company”; 

OAO “Kolskaya Energy Retail Company”; 

OAO “Kuban Energy Retail Company”; 

OAO “Kuzbass Energy Retail Company”; 

OAO “Nizhny Novgorod Retail Company”; 

OAO “Orenburgenergosbyt”; 

OAO “Sverdlovenergosbyt”. 

All options for the disposal of ERC shares, if 

different from the basic scenario, will be considered 

by the Board of Directors of RAO “UES of 

Russia” on a case by case basis. 

The second round of auctions to sell the ERC 

shares owned by RAO “UES of Russia” is scheduled 

for September 2007. 

The list of ERCs slated for sale includes 

the following companies: OAO “Voronezh Energy 

Retail Company”, OAO “Khakasenergosbyt”, 

OAO “Udmurt Energy Retail Company”, 

OAO “Tver Energy Retail Company”, OAO “Energosbyt 

Rostovenergo”, OAO “Karelia Energy Retail 

Company”, OAO “Kaluga Retail Company”, 

OAO “Bryansk Retail Company”, OAO “Saratovenergo”, 

OAO “Kurgan Energy Retail Company”, 

OAO “Stavropolenergosbyt”, and OAO “Komi 

Energy Retail Company”. 

Second Phase of OAO RAO “UES of 

Russia” Reorganization 

During the second phase of the reorganization 

of OAO RAO “UES of Russia” (2007 - 1 July 

2008), the electricity industry restructuring 

will be completed, all companies of the 

intended final sector structure will be spun 

off from RAO “UES of Russia”, and the Parent 

Company, RAO “UES of Russia”, will cease to 

exist as a legal entity. 

The reorganization of OAO RAO “UES 

of Russia” seeks to achieve the following 

objectives: 

to ensure that the restructuring of the electricity 

industry is accomplished, which will 

bring the transitional period of the sector 

reform to completion; 

to allocate the Company’s assets among 

the state and the minority shareholders 

pro rata to their stakes in OAO RAO “UES of 

Russia”; 

to ensure that the state builds up stakes in 

OAO “UES FGC”, OAO “UES SO-CDA” and 

OAO “HydroWGC” required by the Russian 

legislation; 

to raise funds for the infrastructure companies 

and OAO “HydroWGC” sufficient to 

eliminate the deficit in their investment 

programmes, including by selling the government’s 

stakes in thermal generation 

companies. 

During the second phase of the reform, the 

state is to divest its holdings in the thermal 

generation companies (WGCs and TGCs). 

All assets owned by OAO RAO “UES of Russia”, 

according to the spin-off balance sheet, 

will be provisionally divided into two groups: 

Assets to be distributed to the state: about 

52 percent of the shares held by RAO “UES 

of Russia” in each of the companies forming 

the intended sector structure;

50 



Assets to be distributed to the mino- 

rity shareholders: about 48 percent of the 

shares held by RAO “UES of Russia” in each 

of the companies of the intended sector 

structure. 

The final phase of RAO UES reorganization 

will be implemented through simultaneous 

spin-off and merger (the so-called “combined 

reorganization”), provided by the Federal Law 

On Joint Stock Companies. To that end, the 

Parent Company will spin off “interim” companies 

owning shares in the entities of the 

intended sector structure; simultaneously, 

some of the spin-off companies will merge 

with and into the respective surviving entities. 

In the course of the reorganization, the 

following companies will be spun off from 

RAO “UES of Russia”: 

“State Holding”, which will receive shares 

attributable to the government’s stake (≈52 

“UES of Russia”) in OAO “HydroWGC” and the 

respective thermal WGCs and TGCs in the 

amount which will be depend on the amount 

of funds required to eliminate the investment 

deficit at OAO “HydroWGC” and ensure that 

the Russian Federation owns at least 50 percent 

plus one share in OAO “HydroWGC” (after 

the consolidation of its subsidiaries). 

The spin-off of “HydroWGC State Holding” 

will take place simultaneously with its merger 

with and into OAO “HydroWGC”. 

The aggregate stake in the thermal generation 

companies to be transferred to “State 

Holding” and “HydroWGC State Holding”, 

respectively, are to be pro rata to the aggregate 

stake held by the Russian Federation in 

OAO RAO “UES of Russia”. 

“FGC Minority Holding”, which will own the 

“minority” part of the stake in FGC and the 

transmission (trunk grid) companies (≈48 per- 

merged with and into the respective surviving 

entities forming the intended final sector 

structure. 

Holding Companies, whose shares will 

be distributed among all shareholders in 

RAO “UES of Russia” pro rata to their inte- 

rests in the Company: 

“INTER RAO UES Holding”, the entity owning 

shares in ZAO “INTER RAO UES” and 

shares in some AO-power plants (this Holding 

Company will simultaneously merge 

with ZAO “INTER RAO UES”); 

“IDC Holding”, the entity owning shares in 

the IDCs and distribution companies; 

“Far Eastern and Islanded Power Systems 

Holding”, the entity owning shares in 

OAO “Far Eastern Energy Company”, as 

well as shares in the companies operating 

in the islanded power systems. 

At its meeting of 27 April 2007, the Board 

ation of such companies and joint proposals 

on the reallocation of the shares in the thermal 

generation companies they are entitled 

to receive among the special purpose holding 

companies under the spin-off balance sheet 

of OAO RAO “UES of Russia” in the ratios approved 

by the Board of Directors. 

The Board of Directors of RAO “UES of Russia” 

may take such shareholder proposals into 

account when drawing up the agenda for the 

General Shareholders Meeting of OAO RAO 

“UES of Russia” and preparing Board recommendations 

to the shareholder meeting on the 

RAO UES reorganization. 

In accordance with the requirements of the 

Russian legislation, the minority shareholders 

who vote against the proposed arrangement 

were entitled to receive shares in all companies 

being established pro rata to their interests 

in OAO RAO “UES of Russia”. In that case, 

It is expected that, after the restructuring, 

the state will own: 

over 75 percent of shares in OAO “UES FGC” 

(taking into the funds contributed by the 

federal authorities and the “state-owned” 

part of the shares in the WGCs/TGCs); 

over 75 percent of shares in OAO “UES SO- 

CDA” (taking into the funds contributed by 

the federal government); 

over 50 percent of shares in OAO “HydroWGC” 

(taking into the funds contributed by the 

federal authorities and the “state-owned” 

part of the shares in the WGCs/TGCs); 

over 50 percent of shares in ZAO “INTER 

RAO UES”; 

about 52 percent of shares in “IDC Holding” 

and “Far Eastern and Islanded Regional Energos 

Holding”. 

Taking into account the possibility that the 

state will sell its shares in OAO “WGC-5” and 

Dmitry Medvedev, First Vice 

Prime Minister of the Russian 

Federation: 

“The model for restructuring 


proposed by the Government 

takes full account of the 

interests of the state in the 

consolidation of assets, 

as well as the interests 

of minority shareholders 

of RAO “UES of Russia”. 

Mr. Medvedev highlighted 

that “the proposed model 

would enable all shareholders 

accumulate the energy 

assets they need by way 

of exchange.” 

percent of the shares held by RAO “UES of 

cent of the shares owned by OAO RAO “UES 

of Directors of RAO “UES of Russia” ap- 

the part of the shares in the holding compa- 

OAO “TGC-5”, the state may fully divest its in- 

Russia”) in: 

OAO “UES FGC”; 

the transmission (trunk grid) companies; 

the thermal generation companies. 

All shares in the State Holding will be issued 

to the Russian Federation. The spin-off 

of the State Holding will take place simulta- 

neously with its merger into OAO “UES FGC”. 

As a result of the transfer of the stakes in 

WGCs and TGCs attributable to the state 

share, the government will be able to increase 

its stake in FGC to at least 75 percent plus one 

of Russia”). 

“HydroWGC Minority Holding”, which will 

own the “minority” part of the stake in 

OAO “HydroWGC” (this spin-off is to simultaneously 

merge with and into OAO “HydroWGC”). 

5 WGC Minority Holdings (except for 

WGC-5, which has already completed its spinoff), 

each owning the “minority” part of the 

stake (≈48 percent) in one thermal WGC. 

13 TGC Minority Holdings (except for TGC-5, 

which has already completed its spin-off), 

each owning the “minority” part of the stake 

proved modifications to the framework for the 

Company’s restructuring which provide for 

the spin-off of companies from RAO “UES of 

Russia” whose shares would be allotted only 

to a particular shareholder in RAO “UES of 

Russia”. This step is designed to take into account, 

to the maximum extent possible, the 

opinions of the Company’s shareholders during 

the final phase of the RAO UES reorganization. 

Such special purpose holding companies 

will receive shares in the thermal generation 

companies, OAO “UES FGC”, OAO “HydroWGC” 

nies spun off from RAO “UES of Russia” will be 

issued to all other shareholders (including the 

state and minority shareholders who back the 

proposed reorganization model) taking into 

account the results of the share distribution to 

the dissenting shareholders. 

terests in the thermal generation companies. 

It is anticipated that, after the reorganization, 

the minority shareholders will own: 

up to 100 percent shares in the thermal 

generation companies; 

under 25 percent of shares in OAO “UES 

FGC” and OAO “UES SO-CDA”. 

under 50 percent of shares in OAO 

“HydroWGC” and OAO “INTER RAO UES”; 

about 48 percent of shares in “IDC Holding” 

and “Far Eastern and Islanded Regional 

Energos Holding”. 

Interfax agency, 

17 April 2007 

share. The shares in the thermal generation 

(≈48 percent) in one thermal TGC. 

and other assets such shareholder is entitled 

The EGM of shareholders of OAO RAO “UES 

companies entitled to the State will be sold to 

The 100 percent shares in “FGC Minority 

to which are equivalent to its stake in RAO 

of Russia” to decide on the final phase of the 

private investors, and the proceeds from the 

Holding”, “HydroWGC Minority Holding”, and 

“UES of Russia”. 

Company’s reorganization is scheduled to be 

sale will be used to finance the FGC’s invest- 

the WGC and TGC Minority Holdings will be 

The shareholders of RAO “UES of Russia” 

held in autumn of 2007. 

ment programme. 

distributed only in favour of RAO UES minority 

who wish to create such a special purpose 

The final phase of the RAO UES reorganiza- 

“HydroWGC State Holding”, which will re- 

shareholders. 

holding company for themselves in the course 

tion is expected to be completed by 1 July 2008. 

ceive shares attributable to the government’s 

These Minority Holdings will be spun off 

of reorganization were invited to submit to the 

stake (≈52 percent of the shares held by RAO 

from the Parent Company and simultaneously 

Company their proposals regarding the cre-

FINAL PHASE 

OF OAO RAO “UES OF RUSSIA” 

REORGANIZATION 

Approved by rao “ues of russia“ 

board of directors on 25 may 2007 

SPECIAL 

HOLDINGS 

(AT MINORITY 

SHAREHOLDERS’ 

proposals) 

WGCs, TGCs, 

HydroWGC, 

UES FGC 

FAR 

EASTERN 

AND 

ISLANDED 

POWER 

SYSTEMS 

HOLDING 

OWNERSHIP 

FEEC AND 

ISOLATED 

REGIONAL 

ENERGOS 

IDC 

HOLDING 

11 IDCs 

HYDROWGC 

MINORITY 

HOLDING 

HydroWGC 


HYDROWGC 

STATE 

HOLDING 

SPIN-OFF 

“INTER 

RAO UES 

HOLDING” 

“INTER 

RAO UES” 

5 WGC 

MINORITY 

HOLDINGS 

MERGER AFTER 

THE LAST COMPANY’S SPIN-OFF 

FROM RAO “UES OF RUSSIA” 

13 TGC 

MINORITY 

HOLDINGS 

SIMULTANEOUS SPIN-OFF AND MERGER 

5 WGCs 13 TGCs 

FGC 

MINORITY 

HOLDING 

UES FGC 

STATE 

HOLDING 

Electricity and Capacity Markets 

In Q3-Q4 2007, it is expected that the Russian 

Federation Government will adopt a Resolution 

on competitive capacity trading. 

The competitive capacity market to be introduced 

is primarily intended to ensure that the 

UES of Russia has sufficient generation capacity 

in the short, medium, and long term to satisfy 

the power consumption in the energy system 

at any time, in accordance with the required reliability 

and quality parameters, including sufficient 

reserve power. 

In order to maintain reliability of the UES of 

Russia and ensure electric energy quality, it is 

planned to launch in Q3-Q4 2007 a market for 

system services. The following system services 

will be procured separately: 

to ensure primary regulation for standard 

current frequency; 

to ensure automated secondary frequency 

regulation and active power flows; 

to ensure additional regulation of the reactive 

electric power; 

to ensure that a generating facility (power 

unit) can be started without an external 

source of electric power; 

to take and execute the control actions 

from the centralized emergency protection 

systems. 

Service providers will be selected through 

a special competitive process based on the 

criterion of minimizing the cost of system reliability 

services. The competitive selection will 

be conducted at the election of System Operator 

in the territories of those integrated energy systems 

(IES) which have insufficient resources to 

ensure system reliability and electricity quality. 

It is also planned that the Rules for the 

Wholesale Electricity Market and the Rules for 

the Retail Electricity Market will be amended to 

provide for the creation of a mechanism to incentivize 

voluntary reductions in electricity use. 

When put in place, this mechanism will help relieve 

the capacity shortage in certain areas. 

Beginning on 1 January 2007, several regions 

of Russia (on the decision of the regional tariff 

regulators) will introduce the “pool” method for 

setting the grid tariff. On 1 January 2008, this 

arrangement will be adopted in all constituent 

entities of the Russian Federation. This means 

that a flat-rate tariff will be set for all users of 

the electricity transmission area in the given region 

with one voltage level and similar network 

topology, regardless of whose networks they are 

connected to. 

The electricity reform is the 

guarantee of victory over the 

imminent energy shortages. 

Until recently, energy companies 

had only one source 

of funds for investments, the 

tariff. Now that the sector 

restructuring has been 

completed and the power 

plants have merged with the 

generation companies, WGCs 

and TGCs, the time has come 

for new sources of investment 

in new construction. 

The Government has given its 

go-ahead to the sale of these 

companies’ shares to private 

investors, and investors are 

now beginning to compete for 

the right to put money into the 

development of power plants. 

When this takes place, the 

state, freed from having to be 

concerned about the generation 

facilities, will be able to 

focus on the infrastructural, 

natural monopoly sectors of 

the electricity industry (power 

transmission and dispatching 

operations). 

Rossiyskaya Gazeta newspaper, 

15 November 2006

Regulatory Environment 

and Macroeconomic 

Indicators 

Power Consumption 

Trends 


The last few years have seen an increase 

in electricity production and consumption amid 

economic growth in Russia. In 2000 to 2006, 

electricity use throughout the country rose 

by 13.5 percent. 

Russia’s consumption of electricity in 2006, 

taking into account the plants’ own consumption 

and grid losses, grew 4.2 percent, 2.5 times 

higher than the growth rate of 1.8 percent in 

2005. The total electricity consumption in 

Russia in 2006 reached 980.6 billion kWh. 

Today, the amount and structure of electricity 

demand depend on the development 

of Russia’s industries, with the country’s GDP 

growing 44 percent in 2000-2006 in comparable 

prices. 

Industrial users account for the greater 

part of electricity consumption (about 55 percent), 

and the households and service providers 

consume just under one third of the total 

electricity output. 

At the same time, the energy intensity 

of Russia’s economy is gradually declining. 

Specific electricity consumption per RUB1,000 

of GDP (in comparable prices) declined by 

21 percent from 118.2 kWh in 2000 to 93.4 kWh 

in 2006 The energy intensity is primarily affected 

by the structural changes owing to the 

7

Regulatory Environment and Macroeconomic Indicators 57 

Factors 

Affecting Pricing 

in Electricity 

Industry 

2006 passed by quickly. 

There were successes 

and failures, but positive 

events prevailed. Luckily, the 

work was not routine. I am 

optimistic about the future. 

It is variable, predetermined 

and yet unknown. I am sure 

there will be a lot of new 

and interesting work to 

accomplish the Company’s 

mission 

Pavel Smirnov, 



increase in the services sector as a percentage 

of GDP and growing load of the production 

facilities, which have a significant basic 

component in electricity consumption. So far, 

the energy saving measures being taken by 

electricity consumers have yielded relatively 

modest results in terms of energy intensity 

reduction. 

2006 was characterized by significant slowdown 

in energy intensity decline of Russia’s 

economy, and reversal of the decline in industrial 

consumption. 

In per capita terms, electricity consumption 

in 2000-2006 grew 16.7 percent, reaching 

6,864 kWh in 2006 compared to 5,880 kWh 

in 2000. 

The greater part of electricity is consumed 

in the areas of centralized electricity supply— 

over 98 percent, or 962.6 billion kWh in 2006, 

of which 947 billion kWh is consumed in the 

seven integrated energy systems of Russia. 

The electricity consumption pattern by region 

is quite diverse. The three largest integrated 

energy systems—Urals IES, Center IES, and 

Siberia IES—accounted for 673 billion kWh, 

or over 68 percent of Russia’s total electricity 

consumption in 2006. 

The highest growth rates in electricity 

consumption in 2006 compared to the average 

annual growth rate for the previous five 

years were observed in the energy areas of the 

Middle Volga (from 0.7 percent to 4.2 percent), 

Siberia (from 0.7 percent to 2.8 percent), and 

South of Russia (from 1.5 percent to 4 percent). 

The electricity consumption growth rate 

in the energy areas of the Urals and Center of 

Russia exceeded Russia’s average figures by 

6 percent and 4.5 percent, respectively. As before, 

electricity consumption growth rate was 

low at 0.9 percent in the Far East of Russia. 

In 18 regions of Russia, electricity consumption 

grew by more than 5 percent in 2006: Belgorod 

Region, Voronezh Region, Kaluga Region, 

Ryazan Region, Yaroslavl Region, Moscow 

and Moscow Region, Karelia Republic, Komi 

Republic, Mari El Republic, and Tatarstan Republic, 

Orenburg Region, Chelyabinsk Region, 

Tyumen Region, Tomsk Region, Chechen Republic, 

Ingush Republic, and Krasnodar Kray. 

These regions accounted for more than half of 

the overall electricity consumption growth in 

Russia (21 billion kWh). 

The electricity consumption growth was 

driven by the increased activity in the construction 

investment and retailing sectors in 

most regions of Russia and more production 

capacity coming on stream in the energy-intensive 

industries, such as extractive, oil refining 

and metal industries. 

The basic variant of the electricity consumption 

forecast for 2007-2010 adopted by 

the Russian Federation Government anticipates 

an average growth in electricity demand 

in Russia at 5 percent to 1,196.6 billion kWh by 

2010, including 1,174.8 billion kWh in the areas 

of centralized electricity supply. The electricity 

consumption forecast for 2010 will 

exceed Russia’s annual electricity use of 

1,073.8 billion kWh in 1990 by 122.8 billion kWh, 

or 11.4 percent. 

With electricity and heat tariffs regulated by 

the state, pricing in the energy industry is primarily 

affected by the changes in fuel prices, 

inflation and investments financed with energy 

companies’ own funds. 

The electricity tariffs growth rate in 

1998-2006 were close to the inflation rate 

for industrial products. 

In 2006, the approved tariffs for electri- 

city sold on the wholesale electricity (capacity) 

market grew by 7.5 percent while the 

price growth forecast for gas was 11 percent, 

coal 10.1 percent, and fuel oil 11.2 percent. 

In 2006, the actual price growth was 

11.7 percent for gas, 9.4 percent for coal, 

and 59.2 percent for fuel oil. The gas prices 

were slightly higher than the forecast due to 

increase in gas deliveries at unregulated 

prices. The significant fuel oil price growth 

was dri-ven by the increased demand from 

generation companies during the period of 

abnormally low temperatures in January and 

12 

10 

8 

6 

4 

2 

0 

Industrial Prices vs Electricity Prices* 

3.4 

2.4 

1.7 1.2 

1998 1999 2000 2001 2002 2003 2004 2005 2006 

OIL PRODUCER PRICE INDEX 

FUEL AND POWER PRICE INDEX 

4.8 

3.8 

2.2 

1.7 

*price growth on an accrual basis relative to December 1998 

February 2006 and subsequent increase in 

electricity use in the spring and summer 

of 2006. However, the significant increase in 

energy companies’ expenses did not have an 

influence of regulated tariffs in 2006, which 

are set for a year term. 

The rates of infrastructure entities in 2006 

changed as follows: 

the fee charged by OAO “UES FGC” for the 

transmission of electricity via the UNEG 

grew 56.7 percent; 

the fee charged by OAO “UES SO-CDA” for 

the system reliability services increased by 

12.5 percent; 

the fee charged for the UES functioning 

and development services increased by 

11.0 percent. 

The significant growth of the fee charged by 

OAO “UES FGC” in 2006 was due to the consolidation 

of the transmission (trunk) grids 

which were separated from the distribution 

companies. 

4.0 

3.8 

2.4 

2.2 

4.8 5.3 

4.7 

2.9 

2.7 

MANUFACTURERS PRICE INDEX 

4.7 

3.2 

3.2 

PRICE INDEX FOR ELECTRICITY AND HEAT SUPPLIED 

BY THE HOLDING COMPANY'S ENERGY PROVIDERS 

8.0 

7.9 

4.1 

3.6 

10.9 

10.0 

4.7 

4.0 

10.5 

10.3 

5.2 

4.4

% 

150 

140 

130 

120 

110 

100 

Electricity Tariff Growth and Inflation Dynamic* 

142.3 

120.2 

128.5 

118.6 

126.4 

115.1 

117.1 111.7 

112.0 111.4 

2000 2001 2002 2003 2004 2005 2006 

109.6 

110.9 

110.3 

109.0 

The pricing in the electricity industry in 

2006 was also affected by certain measures 

designed to reform the sector. On 1 January 

2006, most regional generation companies 

started to trade on the wholesale electricity 

market, which made it possible to more efficiently 

handle the load of their power plants. 

The savings these measures produced are estimated 

at RUB4.3 billion, which helped moderate 

the growth of electricity prices. 

The changes in the state regulation of the 

electricity sector, introduction of the new Rules 

for the operation of the wholesale and retail 

electricity markets also had an influence on 

pricing in the sector. In particular, with effect 

from 1 July 2006, Russia’s Federal Tariffs Service 

adopted a new basis for the calculation of 

UNEG transmission fees: instead of the useful 

Electricity 

and Heat Tariffs 

Retail Market 

In 2006, electricity tariffs for end consumers 

were set in accordance with the programme 

for limiting increase in the regulated tariffs 

to the inflation targets for 2004-2006 appro- 

ved by the Russian Federation Government. 

On 1 January 2006, the electricity and heat 

tariffs for end consumers were reviewed for 

the RAO UES energy entities within the average 

release tariff thresholds set by the Federal 

Tariff Service of Russia. 

The thresholds (minimum and maximum 

values) for electricity tariffs set for 2006 were 

5.5% and 7.5% higher, respectively, than the 

targets for 2005. 

The overall increase in the approved tariffs 

for end consumers in 2006 was 7.5 percent 

compared to the target inflation rate 

Among the key achievements 

of the reform, we should first 

of all mention the launch of 

a fully-fledged, competitive 

market for electricity. Today, 

this market is quite small: the 

amount of electricity traded at 

unregulated prices is about 

5-10 percent. Nevertheless, 

this market segment 

is already giving adequate 

price signals needed to attract 

investments. Thus, it is fair 

to say that, today, our country 

has a price benchmark for 

electricity. 

TARIFF GROWTH FOR THE ELECTRICITY SUPPLIED 

BY THE HOLDING COMPANY'S ENERGY PROVIDERS 

*December, year-on-year 

INFLATION 

output measured in kilowatt-hours, the Service 

adopted capacity measured in kilowatts. 

of 8 percent. The highest tariffs in the UES 

of Russia were set for the Khabarovsk Kray 

(178.0 kopecks per kWh) and Arkhangelsk 

Power Market magazine, 


2.6 

Growth of electricity tariffs and prices of products (services) provided 

by other natural monopolies and the residential utilities, times 

2.5 

Region (162.3 kopecks per kWh) and the lowest 

tariffs were set in the Republic of Khakassia 

(27.38 kopecks per kWh). 

The actual inflation in 2006 was 9 percent, 

2.4 

2.2 

2.0 

2.0 

2.2 

2.1 

2.5 

and the actual tariffs in the electricity industry 

grew on average by 9.5 percent. The rates for 

the electricity delivered by RAO UES distribution 

companies increased by 10.3 percent. 

1.8 

1.6 

1.4 

1.2 

1.0 

1.3 

1.3 

1.3 

1.2 

1.6 

1.6 

1.4 

1.3 

2002 2003 2004 2005 2006 2007 

1.9 

1.6 

1.4 

1.7 

1.5 

2.0 

1.7 

The key reason for actual tariffs exceeding 

the approved targets was the significant 

deviation of the actual volumes of electricity 

consumption mix from the planned balance 

of electricity production and consumption approved 

by the Federal Tariff Service of Russia. 

During the past few years, electricity tariffs 

grew against the background of faster growth 

in prices (tariffs) of products and services pro- 

UTILITIES TARIFFS 

GAS PRICES 

RAILWAY TARIFFS 

ELECTRICITY RATES 

vided by the other natural monopolies and the 

residential utilities sector.

60 

Regulatory Environment and Macroeconomic Indicators 


Actual Electricity Rates, by Groups of Consumers 

Indicators 

Electricity rates 

Unit of 

measurement 

December rates 

2004 2005 2006 

Dec 2006/ 

Dec 2005, % 

Average tariff for internal consumers kopeck/kWh 84.62 92.79 102.31 110.3 

Tariffs for industrial and equivalent consumers 

with connected load of over 750 kW 

kopeck/kWh 83.35 90.11 95.60 106.1 

Tariffs for households (including VAT) kopeck/kWh 82.28 97.64 117.23 120.1 

Heat tariffs 

Average tariff RUB/Gcal 302.38 352.98 386.47 109.5 

Tariff for industrial consumers RUB/Gcal 306.00 352.41 395.49 112.2 

Wholesale Market 

In 2006, the number of thermal and hydropower 

plants of the WGCs supplying electricity 

to the wholesale electricity (capacity) market 

grew to 53 from 32 after the power plants, 

which previously formed part of the regional 

energos, entered the market. 

The average increase in tariffs approved by 

the Federal Tariffs Service of Russia for electricity 

supplied to the wholesale market grew 

in 2006 by an average of 15.6 percent over 2005, 

with the tariffs for hydropower plants growing 

by 51.1 percent and the tariffs for thermal 

power plants declining by 6.2 percent. The 

lower growth rate in tariffs for thermal power 

plants was due to the wholesale market entry 

by 16 TPPs which earlier had operated as part 

the income tax) grew by 19 percent, which is 

in accordance with the RAO UES Investment 

Programme 2006 agreed with Russia’s Ministry 

of Economic Development and Trade, 

Ministry of Industry and Energy, Federal Tariff 

Service, and approved by the Russian Federation 

Government. 

The aggregate charges for the services 

provided by the infrastructure organizations 

(OAO RAO “UES of Russia”, OAO “UES FGC”, 

and OAO “UES SO-CDA”) grew by 12 percent 

over 2005. 

Russian President Vladimir 

Putin said that the key objective 

in the energy sector is 

to remove the price disparity 

on the domestic electricity 

market. “The key issue in the 

sector should be an understandable 

and transparent 

pricing policy on the electricity 

and natural gas markets.” 

That is why it is paramount to 

eliminate, in the very near future, 

the price disparity on the 

domestic market for electricity,” 

said Russian President. 

Tariff for housing organizations RUB/Gcal 300.27 367.76 395.49 107.5 

of the regional energy systems. These new 

Nezavisimaya Gazeta newspaper, 

entrants had a tariff lower than the average 


Rates for Electricity Supplied by WGC Power Plants to the Wholesale Electricity 

Market, kopecks per kWh 

tariff on the wholesale market. 

The wholesale market suppliers’ tariffs 

grew considerably faster than those of the 

buyers. This was because of the significant 

The significant increase in electricity ta- 

surplus (about RUB3 billion) provided for the 

2005 2006 2006/2005, % 

riffs for households in 2006 made it possible 

wholesale market in 2005 in order to cover 

to slightly reduce the cross subsidies be- 

the losses incurred by the wholesale market 

Average tariff 47.29 53.06 112.2 

tween industrial and household consumers. 

suppliers during the previous periods. In 2006, 

including: 

The existing cross subsidies hinder the steps 

to further improve the efficiency of industry 

owing to the increased tariffs set for suppliers, 

the surplus was reduced to RUB300 million. 

TPPs 66.59 61.65 92.6 

HPPs 20.26 22.86 112.8 

entities. The total amount of cross subsidies 

in 2006 calculated by the Federal Tariff 

Service of Russia amounted to RUB78 billion 

Subscription Fee 

The subscription fee for the organizational 

(exclusive of VAT). 

services provided by OAO RAO “UES of Rus- 

The electricity tariffs grew by an average 

trial consumers was 95.60 kopecks per kWh. 

The Federal Law On the Federal Budget 

sia” with respect to the operation and develop- 

of 10.3 percent, for industrial consumers by 

The actual tariffs charged to households were 

for 2007 provides for the right of the Rus- 

ment of the UES of Russia was set by the 

6.1 percent and for households by 20.1 per- 

lower than the tariffs approved for house- 

sian Federation Government to grant up to 

Federal Tariff Service of Russia with effect 

cent. The average tariff approved for house- 

holds by the regional energy commissions 

RUB15 billion in subsidies to the constituent 

from 1 January 2006 at RUB48.72 per thou- 

holds for 2006 was 134 kopecks per kWh. The 

due to the benefits existing for different 

entities of the Russian Federation to eliminate 

sand kWh, up 11 percent compared to 2005. 

actual tariff for households, taking into ac- 

groups of population. The total electricity 

interregional cross subsidies. In 2006, the first 

The operational component of the subscrip- 

count the social benefits, was 117.23 kopecks 

allowances to households in 2006 are estimat- 

practical step was made to replace cross sub- 

tion fee was the same as in 2005, while the 

per kWh, whereas the tariff for large indus- 

ed at RUB30 billion. 

sidies with budget finance. 

investment component (taking into account

Ensuring Reliable 

Operation of the 

UES of Russia 


Operation 

of the UES of Russia 

2 0 0 6 

In 2006, RAO UES entities ensured stable 

functioning of the Unified Energy System of 

Russia, which operated 100 percent of the 

time at the standard AC frequency prescribed 

by the state standard, GOST (49.95 – 50.05 Hz). 

In 2006, 100 percent of the time the frequency 

of electric current in the energy pool of Russia, 

CIS countries and the Baltic Republics 

was maintained within the permissible range 

provided by the Standard of RAO “UES of Russia” 

Rules for preventing and eliminating disruption 

in normal operation of the electrical 

component of the energy systems. 

The annual peak load of the UES power 

plants was recorded on 23 January 2006, 

with the AC frequency of 50.01 Hz and the 

outdoor temperature of -23.2°C (8.7°C below 

normal and 12.8°C lower than in 2005). The 

peak load reached 146.4 thousand MW, up 6.6 

percent over 2005. 

8

I believe that our success 

in 2006 was due 

to the teams of professionals 

in Moscow and the regions. 

The team spirit manifested 

itself most strongly in the 

period of abnormally low 

temperatures last winter. 

It was the mobilization of all 

resources, not only technological 

ones, but, in the first 

place, human resources, 

that made it possible 

to stand up to the challenges 

of weather 

In 2006, the UES of Russia operated in parallel 

with the energy systems of Belarus, Estonia, 

Latvia, Lithuania, Georgia, Azerbaijan, 

Kazakhstan, Ukraine, Moldova, and Mongolia. 

The energy systems in the countries of Central 

Asia—Uzbekistan, Kyrghyzstan, and Tajikistan—operated 

in parallel with the UES of 

Russia through Kazakhstan’s energy system. 

Finland’s energy system, which is part of 

NORDEL, the Nordic countries’ energy pool, 

operated in an interconnected mode with 

the UES of Russia via the Vyborg conversion 

plant. Electricity from Russia’s power grid 

was also supplied to selected areas of Norway 

and China. 

Operational management in the UES of 

Russia is handled by OAO “UES SO-CDA”, 

which has a three-tier structure of dispatch 

operation: the Central Dispatch Administration 

of the UES of Russia, Integrated Dispatch 

Administrations, and Regional Dispatch 

Administrations (CDA-IDAs-RDAs). 

The key functions performed by OAO “UES 

SO-CDA” are to: 

ensure compliance with the established 

reliability parameters for the functioning 

of the Unified Energy System of Russia and 

electricity quality; 

manage the operational modes of the energy 

facilities pursuant to the Principal Rules 

for the operation of the wholesale and retail 

markets; 

develop optimal daily schedules for the 

operation of power plants and grids of the 

UES of Russia, etc. 

The dispatch entities, with the assistance 

of other industry infrastructure organizations, 

address the strategic goals for optimizing the 

operational modes of the UES of Russia in the 

mid- and long-term perspectives, including: 

forecasting consumption of electricity and 

capacity, and development of capacity and 

electric power balances; 

determination of the transfer capability 

of the UES power grid; 

optimising the use of energy resources and 

carrying out overhaul of generation equipment, 

etc. 

In 2006, measures were implemented to 

improve the process to calculate, analyse, and 

manage the operational modes. A good deal 

of work was done to develop and increase 

the reliability of the telecommunication, 

dispatching, UPS and engineering systems. 

OAO “UES SO-CDA” organized system-wide 

and cross-system emergency response drills 

and trainings to strengthen the interaction with 

the crews of Russia’s Emergencies Ministry, 

with the participation of the authorities of 

large cities and regions. 

In the spring of 2006, RAO “UES of Russia” 

launched the development of programmes to 

ensure reliable power supply in the so-called 

“peak load areas” (i.e. areas which experience 

capacity shortages during peak load periods). 

RAO “UES of Russia”, its energy companies 

and the regional administrations have already 

approved Five-Year Reliability Assurance and 

Energy Industry Development Programmes 

for the following regions of Russia: Moscow, 

2007, similar programmes will be developed 

and agreements will be signed with 17 regional 

administrations. 

The Reliability and Development 

Headquarters of the UES of Russia are 

responsible for controlling and coordinating 

the performance of obligations by RAO “UES 

of Russia” and its energy companies operating 

in the regions with whose administrations the 

relevant agreements were signed. 

In the course of preparations for the 2006- 

2007 autumn and winter period, as a measure 

to ensure operational reliability, RAO “UES 

of Russia” signed Agreements on interaction 

in the event of danger of emergence 

and appearance of power blackouts with 

18 regional administrations. Under these 

Agreements, Headquarters for ensuring 

security of power supply to consumers were 

set up in each region, consisting of regional 

officials and energy companies’ officers. The 

primary focus of such HQs’ activities will be 

on coordinating efforts and prompt decisiontaking 

in order to prevent and eliminate the 

consequences of power blackouts. 

During 2006, RAO UES entities repaired 

generators having an aggregate capacity of 

72.2 thousand MW, power boilers with the 

steam capacity of 144.9 thousand t/h, and 

hot-water boilers with a total heat capacity of 

6.6 thousand Gcal/h; 443.6 km of heating 

network pipelines were replaced. 

RAO UES companies met their targets 

for repairs of power networks set for the 

year. In 2006, OAO “UES FGC” repaired 

management measures were implemented in 

over 20 thousand hectares; the repair crews 

replaced over 28 thousand insulators and 

over 100 km of lightning protection cables. As 

part of the R&M activities carried out by the 

transmission (trunk grid) companies of OAO 

“UES FGC”, 100 compressors, 2 reactors, over 

2 thousand disconnecting switches, and over 

800 circuit breakers were repaired. 

The distribution companies cleared 

about 88 thousand hectares of high-voltage 

power line routes and replaced nearly 

800 transformers which had reached the end 

of their service life. Complete overhaul was 

made in about 5 thousand substations, nearly 

42 thousand distribution points and 10/0.4 kV 

transformer stations, about 66 thousand 

km of high-voltage lines of 35 kV and 

more, over 183 thousand high-voltage lines 

of 0.4 kV to 10 kV. 

Winter readiness certificates were received 

by 1,018 out of 1,019 RAO UES companies, except 

for OAO “Tyvaenergo”, where consumer 

non-payments prevented the company from 

meeting the fuel stockpiling targets for the 

autumn and winter period. 

It appears that the Unified Energy 

System of Russia is going 

through one of the most exciting 

periods in its development. With 

the electricity reform nearing 

completion, the new sector 

structure is being created in 

which RAO UES spinoffs—WGCs, 

TGCs and energy retail companies—will 

play a major role. 

However, the UES of Russia will 

remain the backbone ensuring 

reliable power to customers. 

Izvestia newspaper, 


Saint Petersburg, Tyumen (including the 

28 autotransformers of 110-1,150 kV in its 

Tyumen Region, Khanty-Mansi Autonomous 

own networks, 17 reactors of 110-1,150 kV, 

Okrug and Yamalo-Nenets Autonomous 

over 200 110-1,150 kV switchgears, over 

ANDREY TRAPEZNIKOV, 

Okrug), Moscow Region, Sverdlovsk Region, 

500 disconnecting switches, 166 compressors, 


Nizhny Novgorod Region, Chelyabinsk Region, 

and over 4 thousand foundations under grid 


and Krasnodar Kray. It is planned that, by end- 

facilities. In addition, lineside vegetation

For me, the year 2006 

was remarkable in 

that RAO UES energy companies 

started to implement 

international standards in 

quality management, environmental 

management and 

personnel health and safety 

management. These measures 

will result in improved 

quality of management and 

increased reliability 

and safety of equipment 

and personnel 

Technical Policy 

In order to improve the reliability and operational 

stability of the UES of Russia, raise 

the efficiency of electricity and heat generation, 

and ensure power, industrial and environmental 

safety at RAO “UES of Russia”, the 

Holding Company identified the key areas of 

its research policy reflecting the most advanced 

technical solutions and performance 

parameters of power equipment, which are to 

be used in the energy companies’ investment 

programmes. 

In 2005, RAO “UES of Russia” produced 

the Statement of the Technical Policy Concept 

for the Period until 2009. In order to further 

develop the Concept, in 2006 OAO “UES 

FGC”, OAO “UES SO-CDA”, OAO “HydroWGC”, 

and nearly all generation and power grid 

companies adopted their own Regulations 

on Technical Policy. 

As part of the process to develop the Strategy 

(Target Vision) for the Development of the 

Electricity Industry in Russia for the Period 

Until 2030, RAO “UES of Russia” is preparing 

its best practice recommendations on the 

key principles of technical policy in the Russian 

electricity industry, Fundamentals of the 

Technical Policy for the Electricity Industry 

in Russia for the Period until 2030. 

One of the key areas of the Holding Company’s 

research policy, which is intended to significantly 

raise the efficiency of thermal power 

plants, is the broad adoption of the combined- 

coal-burning and nuclear power plants. CCGT 

plants do not put any extra strain on the environment, 

they are relatively small in size and 

easier to site near the energy consumption 

centers. 

Another important area for implementation 

of new advanced technology and equipment is 

the construction of coal-fired thermal power 

plants using the traditional steam technology 

and power units using ultra supercritical 

live steam conditions (Po = 30÷32 MPa; 

t°= 600÷620), including circular fluidized-bed 

(CFB) boilers. This helps increase the efficiency 

of coal-fired power units to 46-48 percent 

and effectively burn low-quality coals, reduce 

specific fuel consumption by 15-20 percent 

while complying with strict environmental requirements. 

The construction of tidal power plants 

(TiPPs) with next-generation orthogonal 

(cross-stream) turbines is one of the priority 

areas for development in the hydropower 

sector. TiPPs may operate in any load schedule 

area, do not pollute the atmosphere and 

do not have an inundation zone. Investments 

needed to construct a TiPP are comparable 

to those of HPP construction. When the estimated 

performance of orthogonal hydraulic 

units is confirmed in tests and the technology 

for float-on method for TiPP construction 

is verified, energy companies will be able to 

start building new powerful and energy-ef- 

Under the Regulation on Technical Policy of 

OAO “UES FGC” approved in 2006, the company 

developed a number of special-purpose 

programmes and regulatory documents designed 

to further improve the technical policy 

in the grid system, including the following: 

replacement of obsolete equipment with 

modern equipment, fitting out the enterprises 

with advanced facilities for technical 

diagnostics and monitoring of electrical 

equipment and power transmission lines; 

creation and implementation of faceted steel 

towers for 35-500 kV transmission lines; 

creation of controlled transmission lines; 

creation of an automated dispatching system 

for grid control centers; 

creation of digital systems for data transmission 

through ‘dark’ optical fibres in line 

and cable facilities. 

In 2006, OAO “UES FGC” implemented 

steps to install improved electrical insulators, 

replace valve-type arresters, and high-voltage 

bushings in the interconnected power grids. 

New types of pylons have been designed and 

tested for 35-110 kV and 330 kV transmission 

lines. FGC put into operation a Unified Digital 

Telecommunication Network for the Electri-city 

Industry which supports information 

exchange among industry participants, including 

subdivisions of RAO “UES of Russia”, 

OAO “UES FGC”, and OAO “UES SO-CDA”. 

An important factor that affects implemen- 

chines, technology and equipment for flexible 

transmission lines; 

creation of technologies and devices using 

high-temperature superconductivity; 

development of design solutions, equipment, 

systems and methods of monitoring 

for the creation of next generation substations 

and transmission lines. 

The unique modular power unit 

manufactured by the famous 

Sevmash plant to order of HydroWGC, 

a RAO UES subsidiary, 

is equipped with a 1,500 kW 

orthogonal turbine designed 

by Russian scientists and engineers 

and has no counterparts 

in the world. The peculiar 

feature of such turbine is that 

the direction of its rotation is the 

same during the ebb and flow 

of the tide, which increases its 

efficiency significantly to 60-70 

percent, and reduces the cost 

of building such units by 30-40 

percent. 

Rossiyskaya Gazeta newspaper, 


cycle technology. The use of cogeneration will 

ficient tidal power plants (Mezenskaya TiPP 

tation of the technical policy of OAO “UES 

increase their efficiency from 30-35 percent 

on the White Sea and Tugurskaya TiPP on the 

FGC” is conducting research under the Com- 

to 50-60 percent, minimize the environmen- 

Sea of Okhotsk). 

prehensive Technical Research Programme 

tal impact, and reduce fuel consumption for 

of OAO “UES FGC”, including R&D in the key 

Victor Pauli, 

Member of Management Board, Chief 

Technical Inspector, RAO “UES of Russia” 

electricity generation by 25-35 percent. The 

project turnaround time for power plants with 

combined-cycle units may be as short as two 

years from the construction launch until commissioning, 

which is much faster than for 

areas of power grid development, such as: 

development of new technologies, including 

the Flexible Alternating Current Transmission 

Systems (FACTS) using advanced 

power electronics and asynchronized ma-


Investment Phase 

of the UES Development 

Investment Needs 

of the UES of Russia 

2 0 0 6 

According to the forecast approved by the 

Russian Federation Government at its meeting 

of 30 November 2006, the Country’s electricity 

consumption will grow by an average of 

5 percent annually until 2011, which means 

that that energy companies will need to build 

and bring on line 40.9 thousand MW of new generation 

capacity duing that period. Of that 

amount, 33.3 thousand MW will be built by 

the energy companies established in the 

course of restructuring of RAO UES entities. 

According to the RAO UES companies’ investment 

programmes, the amount of generation 

capacity to be brought on line will increase 

tenfold by 2011. 

RAO UES energy companies will need 

RUB3.1 trillion in funds to finance their investment 

programmes until 2011. The investment 

programme implementation will help 

satisfy the demand for electricity and heat 

from the expanding economy and household 

consumers and prevent capacity shortages 

in the areas where the economic growth 

is most rapid. 

9

70 

Investment Phase of the UES Development 


2 0 0 6 

Planned Additions of Generation 

and Grid Capacity by RAO UES Entities 

Unit of 

measurement 2006 2007 2008 2009 2010 TOTAL 

Generation: total for Holding Company MW 1,252 2,281 2,222 8,196 19,300 33,251 

including: 

Thermal Power Plants MW 1,196 1,474 1,596 6,896 17,209 28,371 

Hydropower plants MW 56 696 467 1,205 1,963 4,387 

Small-scale HPPs owned by TGCs. MW — 111 159 95 128 493 

Length of HV lines of the UNEG km 639 975 1,230 4,256 5,360 12,460 

Transformer capacity of the UNEG MVA 4,124 8,583 13,203 27,312 28,120 81,342 

Sources 

of Investment 

The development and implementation of the 

RAO UES Investment Programme was made 

possible owing to the consistent and dedicated 

policy of reforming the electricity industry, 

which unlocks the investment potential of private 

(non-governmental) sources of finance. 

The large-scale construction of generation 

facilities will be financed with own capital of 

the energy companies, proceeds from the offerings 

new WGC and TGC shares to private 

investors, the use of project finance mechanisms, 

direct private investments, and debt 

financing. The RAO UES Investment Programme 

provides that the construction of 

power units will also be financed with funds 

provided by private investors under the invest- 

approved the list of thermal generation companies 

which may place additional shares to 

private investors. The list includes the following 

thermal generation companies: WGC-1, 

WGC-2, WGC-3, WGC-4, WGC-5, WGC-6, 

TGC-1, TGC-3, TGC-4, TGC-5, TGC-7, TGC-8, 

TGC-9, TGC-10, TGC-12, and TGC-13. 

It may be decided in 2007 on whether 

it is advisable for TGC-2, TGC-6, TGC-11, and 

TGC-14 to issue new shares. 

The proceeds that the WGCs and TGCs may 

receive from share offerings in 2006-2008 

are estimated at over RUB400 billion. 

The bulk of funds from the companies’ 

new share issues is anticipated in 2007-2008. 

In order to ensure that their investment pro- 

The new share issue by WGC-5, 

a Russian generation company, 

was sold to a group of international 

investors for US$459m. 

One share was valued at 9 cents, 

which was close to the upper 

boundary of the price range. 

The IPO of WGC-5 was the first 

test of the equity markets which 

is part of the modernization of 

the entire energy sector 

in Russia. The transaction is 

likely to whet the investors’ appetite 

for future projects relating 

to RAO UES reorganization. 

Reactive power of the UNEG Mvar 1,200 540 1,520 1,980 540 5,780 

ment guarantee mechanism. 

The principal source of investments in the 

grammes are properly financed in 2007-2008, 

the generation companies will have to rely 

Financial Times 

Length of distribution lines km 1,357 1,434 4,762 4,748 6,033 18,334 

power grids and dispatching facilities will be 

strongly on other sources of finance available 

1 november 2006 

Transformer capacity of distribution 

substations 

MVA 999 4,051 6,378 5,664 9,533 26,625 

charges for the transmission and dispatching 

services, payments for new user connections, 

debt finance and the proceeds from the 

to them, i.e. own capital and debt funds. 

In November 2006, OAO “WGC-5” placed its 

new shares on the stock market. The inves- 

new share offerings of OAO “UES FGC” and 

tors were offered 5.1 billion shares in WGC-5, 

The RAO UES generation companies will 

spend over RUB700 billion on the development 

The investments to be made by OAO “UES 

OAO “UES SO-CDA” to the state, and from the 

or 14.4 percent of the company’s increased 

spend RUB1.8 trillion to build new power 

of the distribution infrastructure by 2011, and 

SO-CDA” in 2006-2010 will be focussed on the 

sale of the shares in thermal generation com- 

authorized capital. The investors’ appetite for 

units. A greater part of the new capacity will 

be built on the sites of the existing power 

plants, which will significantly reduce the cost 

of creating the necessary transport and network 

infrastructure. 

The large-scale generation capacity expansion 

projects will be accompanied with the 

construction of the corresponding power grids. 

The following UNEG facilities are scheduled 

for construction in 2006-2010: 12 thousand 

km of transmission lines, 81 thousand MVA of 

transformer capacity, and nearly 5.8 thousand 

Mvar of reactive power. It is planned that the 

the total amount to be spent on the development 

of the entire power grid infrastructure 

will make more than RUB1.3 trillion. 

In 2006-2010, the investment program- 

me of OAO “UES SO-CDA” will total 

RUB24,108 million. 

following: 

development of the calculation, analysis 

and regulation process of the operational 

modes; 

development of technologies to support 

market trading; 

increasing the reliability of professional actions 

by staff members; 

increasing the reliability of the information 

technology and telecommunication 

system; 

improvement of the infrastructure supporting 

the dispatch administration. 

panies (WGCs and TGCs) owned by RAO “UES 

of Russia” to private investors. 

Additional Share Issues of Generation 

Companies 

One of the sources of finance for generation 

companies’ investment projects are additional 

share issues by WGCs and TGCs to private investors. 


of Russia” took decisions in principle aimed 

at attracting private investment through issuance 

of additional shares in thermal genera- 

the shares significantly exceeded the number 

of shares on offer, tenfold at the lower bound 

of the price range and eightfold at the upper 

bound. The bidders were both Russian and 

international institutional and strategic investors. 

WGC-5 raised USD459 million in its IPO. 

The issuance of new shares by WGC-5 is 

the first experience in Russia’s electric power 

industry in attracting large-scale private investment 

in electricity generation companies. 

The company will use the offering proceeds to 

build new power capacity in the areas of Russia 

which suffer from energy shortages and to 

distribution companies will build over 18 thou- 

tion companies. 

revamp the existing power plants of WGC-5. 

sand km of new lines and 26 thousand MVA 

The Board of Directors at its meetings of 

In March 2007, OAO “WGC-3” completed 

of transformer capacity. The companies will 

23 June, 30 August and 29 September 2006 

the first placement of shares to a strategic in-

Investment Phase of the UES Development 

73 

vestor. The highest price, USD3.084 billion, for 

the 18 billion ordinary shares (37.9 percent of 

The mechanism applies only to investments 

in the creation of new generation capacity, i.e. 

Sources of Finance for Investment Programmes of the Generation Companies of 

RAO “UES of Russia”, billions of RUB 

the WGC-3 increased authorized capital) was 

investments aimed at addressing capacity 

offered by Norilsk Nickel Group. 

shortages in certain regions of Russia. The 

In May 2007, OAO “TGC-5” was the first 

IGM is not intended to attract investments for 

2006 2007 2008 2009 2010 TOTAL % 

among the territorial generation companies 

projects to modernize the existing generation 

to issue its new shares to a private strategic 

facilities which do not result in the expansion 

Own funds 54.9 63.9 82.6 113.0 203.2 517.6 29 

investor. The company issued 329.734 billion 

ordinary shares, which makes 26.8 per- 

of their installed capacity. 

The Russian Federation Ministry of Industry 

New share issues and proceeds from asset sales — 101.9 149 139.9 67.4 458.2 26 

cent of its increased capital, and raised over 

and Energy has prepared an order to hold a 

Raised funds 29.2 52.3 51.2 118.3 129.8 380.8 21 

Since my first day in 

the electricity sector, 

I have wanted to be involved 

in the construction of new 

power plants and major 

projects to modernize power 

equipment. Last year saw 

the launch of numerous new 

projects. Today, these plans 

are viewed as feasible not only 

by sector workers, but also by 

the heads of regional governments 

USD450 million. 

The offerings by the three generation companies 

alone—WGC-3, WGC-5 and TGC-5— 

raised USD4 billion in funds for the electricity 

industry. This amount is much bigger than the 

aggregate public expenditure in the electricity 

sector over the past decades. 

The funds raised by WGC-3, WGC-5 and 

TGC-5 will be used to implement investment 

projects—construction of new and modernization 

of the existing generation capacity. 

Investment Guarantee Mechanism 

In light of the need to ensure investments in 

the electricity industry during the transitional 

period, the Russian Federation Government, 

by its Resolution No. 738 of 7 December 2005, 

approved the use of the investment guarantee 

mechanism (IGM) as an instrument to stimulate 

investments during the transitional period 

which provides additional guarantees and 

tender to procure the construction of a thermal 

power plant of up to 1,200 MW near the 

Tarko-Sale Substation in the Tyumen Region. 

Also, an order is pending approval from the 

ministries and government agencies of Russia 

regarding the siting of generation facilities at 

the Urengoyskaya TPP in the Tyumen Region 

and Serovskaya TPP in the Sverdlovsk Region. 

The investment programme also includes IGM 

projects on the sites of the Shchekinskaya 

TPP (Tula Region), Petrovskaya TPP (Moscow 

Region), and the TPP in the neighbourhood of 

the city of Syktyvkar. RAO “UES of Russia” and 

OAO “UES SO-CDA” are considering a list of 

pumped storage power plants (PSPPs) and 

coal-fired TPPs with an aggregate installed 

capacity of 25 thousand MW, whose construction 

may be feasible only within the framework 

of the IGM. 

Funds from outside investors provided 

for IGM projects 

— 3.3 38.1 46.7 52.4 140.5 8 

Federal budget 0.1 7.0 7.9 12.0 — 27.0 2 

Other (including VAT recovery, capital lease, 

funds from outside investors) 

Sources of Finance for Investment Programmes of Grid Companies and OAO “UES 

SO-CDA”, billions of RUB 

10.9 42.0 72.1 72.9 58.3 256.2 14 

2006 2007 2008 2009 2010 TOTAL % 

Own funds 69 90 83 100 141 483 37 

Charges for technological connection 

to power grids 

5 59 75 66 48 253 19 

Proceeds from asset sales — 37 111 56 80 284 22 

Federal budget — 25 24 48 — 97 7 

Raised funds 11 28 45 29 25 138 11 

incentives to investors. Such a mechanism is 

Other (including VAT recovery, capital lease) — 8 13 15 20 56 4 

intended as a measure to safeguard investors 

from most market risks. 

Under the IGM, investors are guaranteed a 

certain return on their investments in the construction 

of new capacity in Russia by setting a 

special fee for the services aimed at the creation 

Boris Vainzikher, 

of the long-term technological reserve of ca- 


pacity (similar to the capacity fee) under a long- 

Technical Director, RAO “UES of Russia” 

term agreement with OAO “UES SO-CDA”.

2006 saw the 

establishment 

of HydroWGC, Europe’s 

largest company producing 

electricity using renewable 

energy sources. We launched 

the construction of the 

Boguchanskaya HPP with 

the design capacity 

of 3,000 MW. This project 

is the largest one in Russia’s 

electricity industry over the 

past decade 

Funds Contributed by the Federal 

Government to Increase the Russian 

Federation’s Stake in OAO “UES 

FGC”, OAO “UES SO-CDA”, and OAO 

“HydroWGC” 

To implement their investment programmes, 

the electricity infrastructure companies needed 

government support in the form of capital 

contributions to OAO “UES FGC”, OAO “UES 

SO-CDA”, OAO “HydroWGC”. The amount of 

such contributions is determined in accordance 

with Federal Laws No. 35-FZ On the 

Electric Power Industry and No. 36-FZ On 

Specific Features of Functioning of Electric 

Power Industry During the Transitional Period, 

which provide that the state must hold at least 

75 percent plus one share in OAO “UES FGC” 

and OAO “UES SO-CDA”, and at least 50 percent 

in OAO “HydroWGC”. Another factor determining 

the amount of capital contributions 

is the amount provided the companies’ investment 

programmes. 

RAO “UES of Russia” submitted to the Russian 

Federation Ministry of Industry and Energy 

a proposal that the Russian Federation 

acquire shares in OAO “UES FGC”, OAO “UES 

SO-CDA”, OAO “HydroWGC” in 2007-2010: 

RUB91.78 billion worth of shares in OAO “UES 

FGC”, RUB5.22 billion worth of shares in OAO 

“UES SO-CDA”, and RUB23.0 billion worth 

Energy Grid (UNEG), and cash. The Russian 

Federation paid RUB22.48 billion in cash for 

the additional shares in FGC in accordance 

with the Federal Law On the Federal Budget 

for Year 2007. 

As a result of the share issue, the Russian 

Federation, through the Federal Agency for 

Federal Property Management, now holds 

a 12.44 percent of OAO “UES FGC”, and the 

stake held by RAO “UES of Russia” declined to 

87.56 percent. 

It is planned that the deficit of the Investment 

Programmes of OAO “UES FGC” and 

OAO “HydroWGC” will be eliminated after 

the sale of the shares in 5 thermal WGCs and 

13 TGCs (i.e. all companies except for WGC-5 

and TGC-5, which will have been spun off from 

RAO “UES of Russia” by that time within the first 

reorganization phase) owned by the state during 

the final phase of RAO UES reorganization. 

Greenhouse Emissions 

Trading System 

One of the sources of investment in the electricity 

industry is the use of the joint implementation 

(JI) mechanism provided by Article 

6 of the Kyoto Protocol to the UN Framework 

Convention on Climate Change. An investment 

project being implemented as a JI project 

is intended to generate greenhouse gas 

In order for energy companies to meet the 

eligibility requirements and benefit from the 

Kyoto Protocol mechanisms, the companies 

are required to estimate their greenhouse 

emissions and make the appropriate register 

of emissions. For an investment project to 

be structured as a JI project, special project 

documentation must be produced in the PIN 

and PDD format and verified by an independent 

entity accredited by the UN, and receive 

the relevant approvals on the national and 

international levels. 

RAO “UES of Russia” has put in place the 

necessary infrastructure and methodology 

which will facilitate carbon reduction finance 

in investment projects. The work is coordinated 

by a dedicated wholly-owned subsidiary 

of RAO “UES of Russia”, Energy Carbon Fund. 

Standards have been produced for the preparation 

of JI projects and detailed assessment 

of greenhouse gas emissions at RAO UES 

entities. Preparations are well underway to 

implement the Kyoto Protocol mechanisms: 

greenhouse to date emissions inventories 

have been prepared for 125 energy facilities. 

The Energy Carbon Fund, together with 

the RAO UES energy companies, has started 

drafting documentation for the first priority 

projects in the PIN and PDD formats, and is in 

the process of negotiations with the potential 

sumers. In order to regulate the technical 

connection process, the Russian Federation 

Government adopted Resolution No. 861, dated 

27 December 2004, approving the Rules for 

Technical Connection of Energy Consuming 

Devices (Energy Units) of Legal and Natural 

Persons to Power Grids. Pursuant the Connection 

Rules, the Federal Tariffs Service of 

Russia approved its Methodological Guidance 

for Determining the Amount of the Fee for 

Connection to Power Grids. 2006 saw continued 

work to improve the legal framework 

for technical connections, and on 27 March 

2007 some amendments were made to the 

Resolution which provided that the connection 

fee must necessarily include an investment 

component. 

It is expected that, in 2006-2010, the connection 

fee receipts will make over RUB252 billion. 

These receipts will be used to finance the 

investment programmes in distribution and 

transmission grids. 

Andrey Dementyev, Deputy Head 

of the Russian Federation 

Ministry of Industry and Energy: 

“We are impressed with the results 

of the first IPO completed 

by WGC-5. I’m not only speaking 

of the amount of money raised, 

but also by the investor pool, 

which includes foreign energy 

companies, Russian financial 

organizations, Russian energy 

companies, and international 

institutional investors. The 

“pilot” IPO demonstrated that 

major investors are beginning to 

develop their financial strategies 

with regard to the prospects 

of the development of the 

Russian energy sector. We can 

already see that the sector is 

turning into an efficient business 

before our eyes“. 



of shares in OAO “HydroWGC”. 

reductions which may be sold to an interested 

ERU buyers. Currently, documentation is be- 

On 20 March 2007, OAO “UES FGC” complet- 

buyer. 

ing prepared for 20 investment projects. 

ed its additional share issue. The RUB80 billion 

share issue was registered with the securities 

regulator on 21 March 2006. The shares were 

In 2006, the RAO UES Investment Programme 

was reviewed to determine whether 

certain projects could be implemented as 

Payment for Connection 

of New Users to Power Grids 

issued by private placement to RAO “UES of 

JI projects. The potential greenhouse gas re- 

One of the sources of finance for the invest- 

Vyacheslav Sinyugin, 

Russia” and the Russian Federation. 

ductions are estimated at 25.6 million tonnes 

ment projects in the power grids, especially in 


In return for the additional shares in FGC, 

of CO2, which may bring over EUR180 million 

the distribution networks, is the fee charged 

Managing Director, RAO “UES of Russia”; 

RAO “UES of Russia” transferred its shares in 

in funds from carbon reduction projects. 

to new consumers for grid connection. In 


the transmission (trunk grid) companies, net- 

2004-2006, the legal framework was created 

OAO “HydroWGC” 

work facilities relating to the Unified National 

for charging the connection fee to new con-

Electricity 

And Heat Markets 

Wholesale 

Electricity Market 

In 2006, the wholesale electricity (capacity) 

market in Russia had 249 participants, including 

146 subsidiaries and dependent companies 

of RAO “UES of Russia”: 216 participants 

in the price area of the European part 

of Russia and Urals (the first price area) and 

33 participants in the price area of Siberia (the 

second price area). 

In January to August 2006, the wholesale 

market operated in accordance with Russian 

Federation Government Resolution 

No. 643 On the Rules for the Wholesale 

Electricity (Capacity) Market for the Transitional 

Period and was divided into two segments: 

the regulated segment, which included the 

“deviations” market where electricity was 

bought and sold at the electricity tariffs 

which take into account the capacity; 

the unregulated (free trading) segment, 

where insignificant volumes of electricity 

were sold at unregulated prices (13.7 percent 

of the total amount of electricity sold 

in the first price area and 3.2 percent in the 

second price area). 


10

Electricity And Heat Markets 79 


900 

Average Daily Prices for Electricity on the Day-Ahead Market, RUB/MWh* 

One of the key features of this market model 

was that the buyer who failed to purchase 

Prices in the Unregulated Segment 

and Day-Ahead Market 

consumers had the right to buy more electri-city 

than suppliers could sell, and, on the 

800 

electricity in the unregulated segment could 

turn to the regulated segment and purchase 

The weighted average price of electricity 

in the unregulated segment in January-August 

other hand, those buyers who failed to purchase 

electricity in the free trading segment 

700 

the necessary amount of electricity at the tariff 

2006 was RUB574.8 per MWh. In the European 

bought it in the regulated segment at their 

600 

set by the Federal Tariffs Service of Russia. 


and Urals price area, the weighted ave-rage 

electricity price was RUB582.1 per MWh, 

tariff for electricity taking into account the 

capacity. Thus, the price in the free trading 

500 

Government adopted its Resolution No. 529 

while in the Siberian price area, which has 

segment was approximately the level of tar- 

400 

On Improving the Operation of the Wholesale 

Electricity (Capacity) Market which became 

a high percentage of hydropower generation, 

the weighted average price was RUB457.9 

iff average for all buyers of electricity taking 

into account the capacity in 2006, which in the 

300 

effective on 1 September 2006. Pursuant to 

per MWh. 

European part of Russia and Urals stood at 

200 

the Resolution, the regulated segment was 

transformed into a system of regulated con- 

In September-December 2006, the weighted 

average electricity price in the day-ahead 

RUB590.0 per MWh and in the Siberia at 

RUB431.5 per MWh. 

100 

tracts, and the unregulated prices are set on 

market segment was RUB384.6 per MWh. 

After the new wholesale market model was 

0 

1 6 11 16 21 26 31 5 10 15 20 25 30 4 9 14 19 24 29 4 9 14 19 24 29 3 8 13 18 23 28 3 8 13 18 23 28 

July August September October November December 

the day-ahead market as a result of selection 

by the Administrator of Trading System of 

the price bids and offers submitted by buyers 

and sellers for the full volumes of electricity 

In the European and Urals price zone, the 

weighted average price was RUB449.0 per 

MWh, and in the Siberian price zone RUB122.4 

per MWh. 

introduced, the unregulated market prices 

were set according to the demand and supply 

from the market participants, both under unregulated 

bilateral contracts and under bids 

supply or purchase, taking into account the 

The lower unregulated price after the new 

and offers submitted by electricity buyers and 

1ST PRICE AREA “EUROPE + URALS“: 

contracts made at unregulated prices. The 

wholesale electricity (capacity) market model 

sellers on the day-ahead market auctions and 

WEIGHTED AVERAGE ELECTRICITY PRICE 

deviations segment was transformed into 

was put in place is due to the fact that in the 

on the balancing market. 

WEIGHTED AVERAGE ELECTRICITY TARIFF 

a balancing market. 

free trading segment, on the one hand, the 

2ND PRICE AREA “SIBERIA“: 

WEIGHTED AVERAGE ELECTRICITY PRICE 

WEIGHTED AVERAGE ELECTRICITY TARIFF 

* H2 2006 

600 

Weighted Average Prices 

of the Day-Ahead Market, By Hour, RUB/MWh 

1st Price Area 

250 

Weighted Average Prices 

of the Day-Ahead Market, By Hour, RUB/MWh 

2nd Price Area 

500 

400 

300 

200 

100 

200 

150 

100 

50 

0 

0 

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 

hour 

hour 

WORKING DAYS: SEPTEMBER-DECEMBER 

WORKING DAYS: SEPTEMBER-DECEMBER 

NON-WORKING DAYS: SEPTEMBER-DECEMBER 

NON-WORKING DAYS: SEPTEMBER-DECEMBER

80 

Electricity And Heat Markets 


The unregulated prices on the wholesale 

market in September-December 2006 were 

declining month on month: in September, 

the average market price was RUB403.1 per 

MWh, in October RUB401.2 per MWh, in November 

RUB386.2 per MWh, and in December 

RUB354.5 per MWh. In the price area of the 

European part of Russia and Urals, this decline 

was due to the increase in gas deliveries 

at regulated prices to the thermal power 

plants in Q4 2006. In the price zone of Siberia, 

owing to the high water levels on the rivers, 

the hydropower plants were able to increase 

compared to average prices indicate that 

there are some power grid bottlenecks, which 

makes it impossible to transmit the required 

amounts of electricity from the cheaper generators 

based in the neighbouring regions. 

The same applies to the areas with relatively 

low prices. For instance, the electricity prices 

in the republics located in the Northern Caucasus 

are significantly higher than the ave- 

rage prices in the 1st price area (28.3 percent 

in September – December 2006). This was due 

to the network constraints, as these republics 

are separated from the remaining regions of 

51.9 billion kWh of electricity in the unregulated 

market segment, or 82.3 percent of all 

electricity purchased by all participants of this 

wholesale market segment. At the same time, 

electricity supplies in the unregulated market 

segment by the SDCs of RAO “UES of Russia” 

amounted to 46.7 billion kWh, which makes 

71.2 percent of the total electricity sales in the 

segment. The SDCs of RAO “UES of Russia” 

accounted for 66.9 percent of the total electricity 

sales in the European and Urals price 

area, and 62.0 percent in Siberia’s price area. 

In the regulated segment, electricity sup- 

Electricity Sales in Regulated Market Segment, 

million kWh 

Deliveries January – August 2006 

Suppliers: SDCs of RAO “UES of Russia” 329,468.5 

including imports 2,732.3 

Other suppliers 167,466.0 

Total 496,934.5 

The start of the electricity market 

liberalization is the major 

event among the significant 

events which took place in the 

Russian electricity industry 

in 2006. The market launch 

breathed life into the intended 

sector structure which, 

whithout that, despite the 

successful restructuring 

of RAO “UES of Russia”, would 

remain a beautiful, but useless 

scheme. 

their electricity supply to the market, “forcing 

out” the electricity generated by the thermal 

power plants, which resulted in significant 

price reductions in the 2nd price area. 

the Integrated Energy System of the Northern 

Caucasus. Meanwhile the Murmansk Region 

has low prices (19.8 percent lower than the 

weighted average prices in the 1st price area 

plies in both price areas, without taking into 

account the deviations segment, amounted to 

497.0 billion kWh in January – August 2006, 

including 390.2 billion kWh in the first price 

Electricity Purchases in Regulated Market Segment, 

million kWh 



During the period since the launch of the 

new market model on 1 September 2006, the 

in September – December 2006), which are 

shaped by the cheap electricity generated by 

zone, 273.2 billion kWh of which was supplied 

by the SDCs of RAO “UES of Russia”. In the 

Purchases January - August 2006 

prices within the 24-hour cycle changed as follows: 

during the minimum load hours (00:00 

the hydropower plants and the Kolskaya NPP 

and the existence of network constrains which 

second price zone, the sales amounted to 

106.8 billion kWh, including 56.3 billion kWh 

Buyers: SDCs of RAO “UES of Russia” 359,566.6 

to 04:00 hours) were lower by 50 percent- 

limit the electricity transmission from the 

sold by the SDCs of RAO “UES of Russia”. 

Including for export 11,423.0 

33 percent than the prices during the peak load 

hours (19:00 to 21:00 hours), which provided 

generators to the neighbouring regions. 

Thus, the operation of the new market 

The amount of electricity purchased in the 

regulated segment, without taking into ac- 

Other buyers 133,778.5 

incentives to consumers to carry out energy 

model will create signals necessary to identify 

count the deviations sector, in January-Au- 

Total 493,345.1 

saving measures and change their load pro- 

bottlenecks in the power grids and assess the 

gust 2006 made 493.3 billion kWh for both 

files. The incentives to cut energy consump- 

value of the existing constraints, and conse- 

price areas, including 390.5 billion kWh in the 

tion during the hours with the highest prices 

quently, evaluate the effectiveness of invest- 

first price area (SDCs of RAO “UES of Russia”: 

and, accordingly, the peak load in the energy 

ment projects in the transmission grids. 

300.5 billion kWh). In the second price area, 

system are created not only for the wholesale 

market buyers, but also for consumers on 

the retail market (except for households), for 

which energy retail companies started to use, 

Electricity Sales/Purchases in the 

Unregulated and Regulated Markets, 

January – August 2006 

the figure was 102.9 billion kWh, including 

59.1 billion kWh worth of electricity purchased 

by the SDCs of RAO “UES of Russia”. 

The number of contracts made at unregu- 

effective in September 2006, the unregulated 

The electricity sales of the unregulated market 

lated prices in January – August 2006 was 

prices of the wholesale market for the calcu- 

segment in January – August 2006 amounted 

as follows: 409 contracts in the first price area, 

lation of the cost of electricity supplied. 

to 65.6 billion kWh (or 11.7 percent of the total 

including 407 contracts made by the SDCs 

The difference in prices set for different 

supplies without the deviations segment), in- 

of RAO “UES of Russia”; and 25 contracts in the 

regions suggests that the transmission ca- 

cluding 61.6 billion kWh in the first price zone 

second price area, including 24 contracts en- 

pability of the networks plays an important 

and 4.0 billion kWh in the second price zone. 

tered into by the SDCs of RAO “UES of Russia”. 

role in shaping the electricity prices on the 

Over the first eight months of 2006, the 

new market: higher prices in certain regions 

SDCs of RAO “UES of Russia” purchased

82 



Results of RAO UES Energy Companies’ Operation in the Balancing Market, 2006 

Indicator 

Deviations in generation 

Share of planned generation volume, % 

Cost, of which: 

Liabilities (millions of RUB) 

Claims (millions of RUB) 

Deviations in consumption 

Share of planned consumption volume, % 

Cost, of which: 

Liabilities (millions of RUB) 

Claims (millions of RUB) 

* deviations due to a cause which did not depend on the wholesale market participant and was caused by the 

actions of other wholesale market participants, owners of the power grid facilities, the Administrator of Trading 

System or System Operator. 

Price zone 

Deviations owing 

to “external initiative”* 

volume 

increase 

volume 

reduction 

Deviations owing 

to “own initiative” 

volume 

increase 

volume 

reduction 

Europe and Urals 2.3 2.2 0.6 0.6 

Siberia 1.9 2.8 0.4 0.4 

Europe and Urals 0.0 2,842.4 0.0 2,942.5 

Siberia 0.0 442.7 0.0 243.2 

Europe and Urals 9,581.4 0.0 403.0 0.0 

Siberia 820.8 0.0 49.6 0.0 

Europe and Urals 0.0 2.8 1.8 1.4 

Siberia 0.0 0.0 0.9 1.2 

Europe and Urals 0.0 37.5 0.0 2,880.3 

Siberia 0.0 0.0 0.0 264.5 

Europe and Urals 0.0 0.0 6,827.7 0.0 

Siberia 0.0 0.0 533.8 0.0 

The amount of electricity to be sold under 

the trading schedule in September to December 

2006 was 279.6 billion kWh, including 

223.1 billion kWh in the first price area and 

56.4 billion kWh in the second price area. The 

SDCs of RAO “UES of Russia” accounted for 

185.5 billion kWh of that amount. 

In September - December 2006, the buying-in 

volumes in each hour of trading in 

the first price area averaged 8.6 percent of 

the trading schedule for the generators, and 

in the second price area the figure was 14.5 

percent. The volume of trading at unregulated 

prices in Siberia was higher than the volume 

of unregulated trading in the first price area 

because it is possible to generate more electricity 

on the HPPs in Siberia. 

The amount of electricity purchased under 

regulated contracts schedule in September to 

December 2006 was 268.3 billion kWh, including 

201.1 billion kWh by the SDCs of RAO “UES 

of Russia”. The figure for the first price area 

was 212.8 billion kWh, and in the second price 

area 55.5 billion kWh. 

In each month, the volumes of electricity 

purchased in excess of the volumes provided 

under the regulated contracts by the energy 

retail companies, which sold the appropriate 

area (all of which were made with the participation 

of the SDCs of RAO “UES of Russia”), including 

62 contracts to secure the performance 

of regulated contracts. 

Results of the Balancing Market 

According to the balancing market rules, the 

production and consumption volumes as well 

as equilibrium prices for electricity on the 

balancing market are determined based on 

the competitive selection of bids and offers 

submitted by participants and suppliers of the 

wholesale market with regulated consumption 

according to a procedure similar to the competitive 

selection of price bids and offers on the 

day-ahead market. 

In 2006, the production and consumption 

deviation figures on the wholesale market 

were not more than 3 percent higher than the 

target values. This suggests that the sector 

participants have been able to adapt themselves 

adequately to the new rules of the 

wholesale market. 

The state has drastically 

changed its approach to the 

reform of the electricity market, 

say analysts of Aton investment 

company. Currently, the 

liberalization of the wholesale 

electricity market is seen as the 

main way for raising additional 

investments in the sector. The 

government is inclined to raise 

electricity tariffs rather than 

subsidize consumers by setting 

lower prices. Analysts say 

that RAO “UES of Russia” is the 

most liquid company whose 

shares enable investors to take 

part in the electricity market 

liberalization. 



amounts at unregulated prices on the retail 

Deliveries/Purchases of Electricity 

under Regulated Contracts and on the 

Day-Ahead Market of the Wholesale 

Market (September – December 2006) 

After the new wholesale market model was 

introduced on 1 September 2006, suppliers 

were given a possibility to buy in electricity 

to meet their electricity supply obligations to 

power plants do not produce electri-city in order 

to perform their obligations to buyers under 

regulated contracts but buy in electricity at unregulated 

prices from other power plants. The 

market, amounted, on the average (in September 

to December 2006), to 2.2 percent 

of the trading schedule for purchases in the 

first price area and 1.3 percent in the second 

price area. 

In September – December 2006, 276.3 billion 

buyers under regulated contracts. 

amount of trading among the electricity produc- 

The numbers of unregulated contracts 

kWh of electricity was sold under regulated 

This arrangement facilitate a more efficient 

ers at unregulated prices currently exceeds the 

made on the day-ahead market in Septem- 

contracts, of which the SDCs of RAO “UES of 

use of generation capacity compared to the 

volume of electri-city purchased by electricity 

ber – December 2006 were as follows: 72 in 

Russia” accounted for 184.9 billion kWh. The 

previous market model. 

consumers. This means that, event with a low 

the first price area, of which 56 were made by 

amount of electricity sold was 218.0 billion 

The possibility of such buying-in between sup- 

level of market liberalization, a mechanism has 

the SDCs of RAO “UES of Russia”, including 

kWh in the first price area and 58.3 billion kWh 

pliers is one of the efficiency indicators charac- 

been put in place which allows to optimize the 

9 contracts to secure the performance of 

in the second price area. 

terizing the wholesale market. The less efficient 

load for the entire volume of production. 

regulated contracts; 136 in the second price

84 


Electricity And Heat Markets 85 


Retail Electricity 

Markets 


Government adopted its Regulation No. 530 

On Approval of the Rules for the Operation of 

based in their respective areas who request 

for such contracts to be made. 

The emergence of market relationships 

Industrial consumers account for the greater 

part of electricity consumption, 53.1 percent 

of the total electricity supplies in 2006. 

Heat Market 

In 2006, the total productive supply of 

heat by RAO UES entities amounted to 

434.7 million Gcal. 

Structure of Effective Heat Supply, % 

the Retail Electricity (Capacity) Markets Dur- 

in the sector is to lead to the development of 

Over the year, the share of electricity con- 

In 2006, no significant changes took place 

ing the Transitional Period, which became the 

competition on the retail electricity markets. 

sumed by households increased by 0.8 per- 

in the heat consumption structure in terms 

most important event of 2006 in the creation 

Besides the energy retail companies and 

centage points to 9.5 percent. 

of volume by consumer groups. The share 

of the intended structure of competitive retail 

unrestructured regional energos, in 2006 

of industrial consumers grew 2.1 percentage 

electricity markets in Russia. The Regula- 

electricity on the wholesale market was pur- 

points to 27.5 percent. The share of residential 

tion established the principles of interaction 

chased by 67 market participants (qualifying 

utilities declined by 4.5 percentage points to 

among retail market entities during the tran- 

consumers and independent retailers). 

43.1 percent. 

sitional period of the electricity reform. 

The volume of electricity delivered by the RAO 

According to these Rules, the regional regulators 

assigned the status of guaranteeing 

suppliers to all of RAO UES energy retail com- 

UES energy retail companies to their own consumers 

(without taking into account the power 

consumed to transport electricity) in 2006 grew 

Heat Output by 

RAO UES Energy Companies, 2006 

panies and the unrestructured regional ener- 

0.1 percent over 2005 to 607.1 billion kWh. 

gos (a total of 69 companies). The guarantee- 

The electricity deliveries did not change 

ing suppliers are obliged to make a contract 

to supply or sell electricity with any consumer 

significantly by consumer groups compared 

to 2005. 

IES 

million Gcal 

Total for the 

Holding Company 

434.7 

Structure of Effective Supply of Electricity, 

By Consumer Groups of RAO UES Energy Retail Companies 

Center 129.2 

North-West 41.1 

Consumer groups 

2005 2006 

billion kWh % billion kWh % 

Volga area 47.1 

South 6.9 

TOTAL 606.2 100 607.1 100 

including: 

Industrial and equivalent consumers 327.9 54.0 322.5 53.1 

Urals 124.3 

Siberia 63.7 

Far East of Russia 22.4 

Electric traction transport 36.4 6.0 36.6 6.0 

Non-industrial consumers 59.9 10.0 62.9 10.4 

Agribusiness consumers 13.9 2.3 13.3 2.2 

Households 53.1 8.7 57.4 9.5 

Cities/towns 9.6 1.6 9.4 1.5 

Other electricity suppliers 105.4 17.4 104.9 17.3


2 0 0 6 

Production 

Results 

Generation 

At end-2006, the installed capacity of the 

RAO UES power plants stood at 159.2 thousand 

MW, an increase of 1.3 thousand MW 

over 2005. The installed capacity growth was 

driven by the construction and commissioning 

of new generating capacity. 

After power unit 2 was brought on line at 

the Severo-Zapadnaya CHPP, the plant’s electrical 

capacity increased twofold to 900 MW. 

This helped improve the reliability of power 

supply to customers in Saint Petersburg and 

the surrounding Leningrad Region, which are 

on the list of regions suffering from capacity 

shortages during peak load periods. After the 

commissioning of unit 4 at the Khabarovskaya 

CHPP-3, the plant’s installed capacity reached 

720 MW, which made it the largest cogeneration 

plant in Russia’s Far East. 

In 2006, the combined installed capacity of 

the WGC power plants amounted to 76 thousand 

MW (or 47.7 percent of the total capacity 

of the Holding Company’s plants) and the capacity 

of TGCs’ power plants stood at 50 thousand 

MW, or 31.4 percent. 

11

88 

Production Results 

Production Results 89 


Electricity and Heat Generation Structure: 

Russian Federation Power Plants vs. RAO UES Power Plants 

skaya TPP (by 18.5 percent), Ryazanskaya TPP 

(by 17.7 percent), Stavropolskaya TPP (by 14.4 

percent), Krasnoyarskaya TPP-2 (by 17.6 per- 

Fuel Supply 

In 2006, the RAO UES power plants purchased 

fuel worth RUB344,373.7 million, including 

debts owed for fuel amounted to RUB6,536.4 

million, a decrease of RUB264.0 million, 

or 3.9 percent, compared to the year before. The 

Unit of 

measurement 2004 2005 2006 

cent), Gusinoozerskaya TPP (by 11.6 percent) 

and Pechorskaya TPP (by 9.3 percent). 

RUB228,982.1 million worth of natural gas, 

RUB72,104.1 million of coal, and RUB43,287 mil- 

debts owed for coal declined by RUB386.1 million, 

while the RUB838.7 million debt owed to 

The heat output by the RAO UES enter- 

lion of fuel oil. 

the gas suppliers was paid off, and an advance 

Electricity generation in the Russian Federation billion kWh 931.9 953.1 995.6 

prises in 2006 amounted to 477.8 million Gcal, 

Taking into account the repayment of previ- 

payment of RUB531.9 million was made. 

including: 

up 2.7 percent compared to 2005. The WGC 

power plants increased their heat generation 

ous years’ debts and the contracts made with 

fuel suppliers (mostly coal suppliers) on a de- 

As a measure to reduce its fuel costs, RAO 

UES companies continued to pursue their 

TPPs, Russian Federation billion kWh 609.4 629.2 664.1 

by 3.7 percent, the TGC plants by 2.4 percent, 

ferred payment basis, the fuel payments totalled 

practices of competitive and regulated procure- 

HPPs, Russian Federation billion kWh 177.8 174.4 175.0 

and the AO-power plants that are not part 

of the WGCs or TGCs increased their heat 

RUB344,373.7 million, including RUB72,660.3 

million for coal, RUB415,394.9 million for fuel 

ment. Nearly all energy companies procured 

fuel oil and coal using a competitive process. 

NPPs, Russian Federation billion kWh 144.7 149.5 156.5 

output by 3.6. percent. 

oil, and RUB230,572.7 million for natural gas. 

2006 saw continued activities of the e-trading 

Electricity generation by RAO UES power plants billion kWh 651.9 665.4 695.0 

As at 1 January 2007, the Holding Company’s 

systems, B2B-energo.ru and TZS-Elektra.ru. 

including: 

RAO UES thermal power plants billion kWh 521.4 540.8 569.1 

RAO UES hydropower plants billion kWh 130.5 124.6 125.9 

Electricity generation by RAO UES power plants 

as a percentage of total electricity output in Russia 

Electricity generation by RAO UES TPPs 

as a percentage of electricity output in Russia 

Electricity generation by RAO UES HPPs 

as a percentage of electricity output in Russia 

% 70.0 69.8 69.8 

% 85.6 86.0 85.7 

% 73.4 71.4 71.9 

Heat output in the Russian Federation million Gcal 1,434.4 1,436.0 1,459.0 

Heat deliveries by RAO UES energy companies million Gcal 465.8 465.2 477.8 

Heat output by RAO UES entities as a percentage 

of total heat production in Russia 

% 32.5 32.4 32.7 

Fuel Deliveries to Power Plants in the Russian Federation and RAO UES Holding Company 

Gas, billion m3 


Growth 

in absolute 

terms % 

Total for power plants in the Russian Federation 151.8 157.3 +5.5 3.6 

including: 

power plants of RAO UES Holding Company 142.6 148.1 +5.5 3.8 

Coal, million tons 


The amount of electricity generated in Russia 

in 2006 was 995.6 billion kWh, an increase 

of 4.5% compared to 2005. 

ximately the same level as in 2005. RAO UES 

thermal power plants generated 569.1 billion 

kWh in 2005, up 5.2 percent year-on-year. 

In 2006, the WGC power plants increased 

electricity output by 6.7 percent over 2005, 

and the TGC plants’ output rose marginally 

including: 

power plants of RAO UES Holding Company 104.9 111.8 +6.9 6.6 

Electricity generation by the Holding Company’s 

plants amounted to 695.0 billion kWh 

in 2006, which represents an increase of 4.4 

The output of the Holding Company’s hydro 

power plants rose by 1.0 percent to 125.9 billion 

kWh. The modest increase in the HPP 


The following large thermal power plants 

increased their generation in 2006 compared 

Fuel oil, ‘000 mt 


percent over 2005. The share of the RAO UES 

energy companies in the nation’s electricity 

output was 69.8 percent, remaining at appro- 

generation was due to the lower water inflow 

in the major river basins in the European part 

of Russia in Q2 2006. 

to 2005: Troitskaya TPP (by 82.3 percent), 

Konakovskaya TPP (by 29.2 percent), Kirishskaya 

TPP (by 21.6 percent), Novocherkas- 

including: 

power plants of RAO UES Holding Company 4.6 7.5 +2.9 63.0

In my opinion, the 

main event of the year 

was the successful operation 

during the 2005-2006 autumn 

and winter period of peak 

consumption, which was a 

major endurance test for 

many energy companies. 

During the period, we worked 

in extremely adverse conditions 

caused by abnormally 

low temperatures. And 

we worked well and without 

failures. I am proud 

of my colleagues who demonstrated 

the highest level 

of professionalism 

Fuel Consumption Mix at the Holding Company’s TPPs in 2006 

Fuel 

Unit of 

measurement 

Inventories 

as of 

31 dec 2005 Deliveries Consumption 

Inventories 

as of 

31 dec 2006 

Coal ‘000 mt 14,556 111,764 109,217 17,096 

Fuel oil ‘000 mt 2,680 7,465 6,171 3,740 

Natural gas ‘000 m3 148,077 148,077 

Fuel Prices (with VAT and Transportation Costs) 

2005 2006 2006/2005, % 

Coal, RUB/mt 658.7 720.9 109.4 

Fuel oil, RUB/mt 3,758.6 5,984.8 159.2 

Natural gas, RUB/’000 m3 1,388.4 1,550.7 111.7 

Average, % 118.3 

The part of the gas supplies were purchased 

on the gas exchange from OAO “Gazprom”. The 

savings generated by RAO UES entities in 2006 

owing to competitive fuel procurement totalled 

RUB1,543 million. 

In 2006, gas supplies to the RAO UES power 

plants rose 3.8 percent over 2005. Independent 

gas suppliers accounted for 34.5 percent 

of the total gas supplies to the plants. 

The coal purchases by the RAO UES 

power plants in 2006 grew 6.6 percent 

in year-on-year terms. The purchases of 

furnace fuel oil grew 63 percent due to the 

The share of natural gas in the fuel consumption 

mix of the RAO UES power plants 

declined by 0.6 percent in 2006 over 2005 to 

70 percent; the share of coal decreased by 

0.1 percent to 26 percent, while the fuel oil 

consumption grew 0.7 percent to 3.4 percent. 

In 2006, the prices of fuel supplied to the 

RAO UES power plants rose 18.3 percent 

compared to 2005: gas prices increased by 

11.7 percent, coal prices by 9.4 percent, and 

fuel oil prices by 59.2 percent. The fuel oil 

prices surged in January and February 2006 

due to the increased domestic demand dri- 

Fuel Inventories, Supplies, and Consumption 

at RAO "UES of Russia" Thermal Power Plants, % 

26 

reaching RUB6,783.7 per tonne in Q3 2006. 

The prices stopped growing in Q4 because of 

the relatively warm weather for the time of the 

year which led to lower fuel oil consumption. 

In Q1 2006, the RAO UES power plants experienced 

shortages of fuel after Gazprom 

imposed restrictions on gas supply to power 

plants in the second half of January and first 

half of February. At the same time, electricity 

consumption in the European part of Russia 

during the period grew by 12.6 percent, 

while the electricity output by the thermal 

power plants of RAO “UES of Russia” increased 

by 16.9 percent and the heat output 


3.4 

0.6 

2006 OTHER 

In order to ensure uninterrupted power 

70 

NATURAL GAS 

COAL 

FUEL OIL 

The coal consumption in the European part of 

Russia rose 2.4 times. 

In Q2-Q4 2006, special attention was paid 

to purchasing the necessary amounts of fuel 

and building up the required fuel stockpiles at 

the power plants by the start of the 2006-2007 

autumn-winter period. 

By the beginning of the autumn-winter 

period the fuel inventory targets had 

been raised. The fuel stockpiles held by the 

RAO UES power plants totalled 2.9 million 

tonnes of fuel oil, 16.4 million tonnes of coal, 

which exceeded the targets by 13.9 percent and 

15.0 percent, respectively. 

The power plants of RAO 

“UES of Russia” are operating 

at maximum loads. On 

17 January, a historic peak 

load of 14.6 million kW was 

recorded in the energy system 

of the European part of Russia 

over the past 15 years. 

RAO UES chief executive has 

warned that the load is likely 

to increase and “we should 

be prepared for their increase 

tomorrow and on subsequent 

days”. 

Nezavisimaya Gazeta newspaper, 

20 January 2006 

necessity to replace gas during the periods 

ven by the extremely cold weather and the 

supply and meet the increased electricity and 

Vladimir Avetisyan, 

of abnormally low temperatures in Janu- 

global oil price hikes. The fuel oil prices rose 

heat demand, RAO UES power plants started 


ary-February 2006, when OAO “Gazprom” 

35.3 percent month-on-month in February 

to burn standby fuels (fuel oil and coal). The 

Managing Director of RAO “UES of Russia”, 

imposed restrictions on gas deliveries to the 

to RUB6,305.5 per tonne. The fuel oil prices 

actual daily fuel oil consumption grew 12-fold 


power plants. 

continued climbing until September 2006, 

on average, and on some days even 20-fold.

Electricity 

Transmission 

and Distribution 

In 2006, the Holding Company’s power grids 

were managed by RAO “UES of Russia” and 

The key efficiency indicator for the measures 

to reduce commercial losses of electri- 

Electricity Supplies to Distribution Networks, 

by Energy Areas, billion kWh 

OAO “UES FGC”. The companies operated 

city in the distribution networks is the number 

2,476.8 thousand km of electricity lines, in- 

of violations revealed in the electricity settle- 

cluding 122.2 thousand km of bulk transmission 

(trunk grid) lines and transformer sub- 

ment system and the electricity consumption 

without having concluded a contract. In 2006, 

0 50 100 150 200 

stations of all voltages having a total capacity 

of 562,766.67 MVA. 

In 2006, the consolidated electricity de- 

as many as 242 thousand violations by consumers 

were discovered, and the electricity 

retailers made up acts for the return or pay- 

Center and north 

Caucasus iDC 

162.4 

157.8 

In 2006, trunk grid 

companies were spun 

off from the regional energos, 

and OAO “FGC UES” started 

to manage them. Thus, the 

necessary conditions have 

been put in place to create 

a comprehensive strategic, 

technological, organizational 

and economical development 

of the country’s power grids. 

I think everybody has noticed 

that 

liveries from the UNEG networks to the distribution 

companies’ grids, unrestructured 

regional energos, and direct consumers on 

the wholesale electricity market amounted to 

433,531.2 million kWh. 

The distribution companies delivered 

676,376 million kWh of electricity to consumers 

in 2006. 

In 2006, significant reductions in electricity 

losses were achieved in the networks of different 

voltage levels. 

OAO “UES FGC” was able to cut electricity 

losses in 2006 by 0.04 percentage points 

to 3.71 percent from 3.75 percent. This was 

made possible by the installation of advanced 

metering equipment and improved performance 

of personnel in the metering process, 

reconciliation and calculation of electricity 

losses. 

In 2006, OAO “UES FGC” put into trial use 

an automated electricity metering system 

ment of 499 million kWh of electricity. 

In 2006, RAO UES grid companies provided 

technological connection services to new users 

amid the continued increase in consumer demand 

for capacity. The total amount of capacity 

connections in 2006 amounted to 2,859,940 kW. 

Connection fees were introduced in 41 regions 

of the Russian Federation. The total 

amount of connection charges in 2006 was 

in excess of RUB5 billion, which were invested 

in the distribution grid facilities. 

north-west 

iDC 

urals and 

Volga iDC 

siberia iDC 

oAo "southern grid 

Company" 

oAo "moscow united 

electricity grid Company" 

(moesk) 

oAo "moscow City electricity 

Distribution Company" 

(mgesk) 

14.8 

15.0 

36.3 

34.5 

65.7 

67.8 

68.3 

65.1 

98.7 

94.5 

230.0 

218.4 

(ASKUE) for the networks of 330 kV and more. 

By 2010, FGC will create an automated information 

and commercial metering system 

(AIIS KUE) for the UNEG facilities. 


The actual losses in the distribution grids 

amounted in 2006 to 8.69 percent, down from 

2005 

Andrey Rappoport, 

10.02 percent in 2005, which demonstrates 


that the loss-reduction measures in the sec- 

Managing Director, RAO “UES of Russia”; 

tor were quite effective. 


OAO “UES FGC”

94 

Production Results 


Electricity Sales 

As of December 31, 2006, the following retail 

units operated in RAO UES Holding Company: 

71 companies engaged in electricity sales, 

including 62 energy retail companies and 

9 regional energos which were not unbundled; 

30 companies engaged in heat sales, including 

6 WGCs, 14 TGCs and 10 other 

companies. 

The level of payments for the electricity 

supplied by the RAO UES retail units in 2006 

was 100 percent. Compared to 2005, there 

was an increase in electricity sales to industrial 

consumers and utilities organizations. As 

of 1 January 2007, the consumers’ arrearage 

amounted to RUB21.9 billion. 

The level of payments for heat by Holding 

Company’s customers in 2006 amounted 

to 99.8 percent, with the debt owed by cus- 

tional Period of the Electricity Reform (the 

Retail Market Rules) were adopted, the Holding 

Company’s energy retail units have been 

translating the free (unregulated) prices to the 

retail market. Pursuant to the requirements 

of the Retail Market Rules, the RAO UES energy 

retail companies took steps in 2006 to 

renew the electricity supply contracts with 

customers. 

In order to raise the quality of services provided, 

the energy retailers were working to 

improve the systems for settlement with consumers. 

In the Belgorod Region, Perm Region, 

the cities of Moscow and Saint Petersburg, 

and other regions of Russia, the energy retail 

companies installed electronic terminals to 

receive payments from household customers. 

In some regions, the energy retail companies 

created call centers to handle customer 

The RAO UES energy retail units have been 

given the following tasks on the retail electricity 

market for 2007: 

to preserve the customer base and increase 

electricity sales; 

to complete the campaigns to bring the existing 

power supply agreements into line 

with the new pricing rules which provide for 

the translation of unregulated prices from 

the wholesale market; 

to ensure successful participation in tenders 

scheduled for June - September 2007 

to obtain the status of a guaranteeing supplier, 

which will come into effect beginning 

in 2008; 

to increase the market value of energy retail 

companies. 

Electricity Consumer Mix 


Holding Company, % 

11.1 

10.0 

24.8 

7.4 


46.7 

Heat Consumer Mix 


Holding Company, % 

20 

25 

10 

1 


44 

For the past three years, the 

electricity industry in Russia 

has been in the midst of revolutionary 

events. The companies 

which found themselves in an 

unregulated marketplace have 

been learning to exist in a competitive 

environment. They now 

have to compete for consumers 

by reducing the prices of their 

services and offering more favourable 

and convenient terms 

of supply. They also have a 

broad range of new incentives to 

seriously embrace management 

innovation and business process 

automation. 

tomers for the heat consumed standing at 

relations. 

RUB22.0 billion as of 1 January 2007. 

In connection with the upcoming reorgani- 

MANUFACTURING INDUSTRIES 

MANUFACTURING INDUSTRIES 

Company Secret magazine, 

In 2006, the RAO UES energy retail companies 

had contractual relationships with over 

zation of OAO RAO “UES of Russia” and the 

transfer of its functions, inter alia, to SROs, 

RESIDENTIAL UTILITIES 

RESIDENTIAL UTILITIES 

23 October 2006 

700 thousand industrial consumers (legal 

a decision was taken in 2006 to establish Non- 

HOUSEHOLDS 

HOUSEHOLDS 

entities) and 30 million individual customers 

(households). 

profit Partnership of Guarantee Suppliers and 

Energy Retail Companies (including the SDCs 

TRANSPORT AND TELECOMS 

TRANSPORT AND TELECOMS 

After the Rules for the Functioning of Re- 

of RAO “UES of Russia” and independent mar- 

OTHER CONSUMERS 

OTHER CONSUMERS 

tail Electricity Markets During the Transi- 

ket participants).

Investment Activities 97 


Investment 

Activities 

The investments in the fixed assets of RAO 

UES companies totalled RUB160.3 billion 

in 2006, an increase of 36,2% over 2005. 

city of the Irganayskaya HPP was increased 

by 146 MW after raising the dam level. 

The key start-ups at the thermal pow- 

TiPP, the Malye HPPs in Dagestan, 

and the Gelbakhskaya HPP. Modernization 

projects were implemented to replace the 

The new distribution facilities that came 

on line during the year included 2,055 km of 

low-voltage lines and 1,527 MVA of transform- 

In the Leningrad Energy System, 53.7 km of 

the second circuit of the 330 kV line were built 

between the Leningradskaya and Vostoch- 

In 2006, 26 power units with an aggregate 

er plants included the commissioning of 

hydropower units at the Volzhskaya HPP and 

er capacity, and the projects to upgrade and 

naya Substations, which ensured uninter- 

capacity of 1,651.5 MW were put into operation 

po-wer unit 2 (450 MW) at the Severo- 

Kamskaya HPP. 

modernize distribution infrastructure involved 

rupted transit of electricity to customers in 

throughout the Holding Company. Of these, 

Zapadnaya CHPP, power unit 4 (180 MW) 

In 2003-2006, the Investment Programme 

6,242 km of low-voltage lines and 3,918 MVA 

the northern and north-eastern parts of Saint 

596 MW were financed by OAO RAO “UES of 

at the Khabarovskaya CHPP-3, power unit 2 

of OAO RAO “UES of Russia” was divided 

of transformer capacity. 

Petersburg and the surrounding Leningrad 

Russia”. During the year, 14 generating units 

(180 MW) at the Chelyabiskaya CHPP-3, 

to create own investment programmes for 

Special emphasis was placed in 2006 on 

Region. The capacity of the 330 kV Vostoch- 

with a combined capacity of 1,262.7 MW were 

a 180 MW power unit at the Pravoberezhnaya 

OAO “UES FGC” and OAO “UES SO-CDA” (in 

the construction and overhaul of the power 

naya Substation was increased by 500 MVA, 

brought on line at the thermal power plants. 

CHPP of TGC-1, etc. 

2003) and OAO “HydroWGC” (in 2006). 

grid facilities in the so-called “peak load ar- 

significantly improving the reliability of pow- 

The hydropower plants put on stream 94.8 MW 

In the hydropower sector, the projects com- 

In 2006, OAO “UES FGC” put into operation 

eas”—Moscow Region, Leningrad Region, 

er supply to consumers in the eastern and 

of new capacity. Some 148 MW of hydropower 

missioned included the Malaya Mezenskaya 

640 km of new transmission lines, 4,124 MVA 

Tyumen Region, and Kuban. 

north-eastern parts of Saint Petersburg and 

units were replaced, and the available capa- 

of transformer capacity, and 1,200 Mvar of re- 

In the Moscow Energy System, 580 MVA of 

the Leningrad Region. 

active power. The amount of funds spent on 

transformer capacity was added to the 750 kV 

In the Tyumen Energy System, a capacity ex- 

the Investment Programme of OAO “UES FGC” 

Bely Rast Substation. As a result, 350 MW of 

pansion project was implemented at the 500 kV 

in 2006 totalled RUB36.2 billion, a 1.3-fold 

additional capacity was brought on stream in 

Kholmogorskaya Substation, increasing its 

increase over 2005. 

the North-Western power node of the Moscow 

capacity by 501 MVA and enhancing power 

The following new grid facilities became 

Energy System, an area which suffers from 

supply to the major oil and gas operations 

operational in 2006: 500 kV transmission line 

electricity shortages. Overhaul projects were 

in the Yamalo-Nenets Autonomous Okrug 

“Oznachennoe – Aluminievaya” with the 500 kV 

completed at three 220 kV substations (Gri- 

and the northern part of the Tyumen Region. 

Aluminievaya Substation; 220 kV transmission 

bovo, Radishchevo, Shmelyovo). This helped 

The capacity of the 220 kV Muravlenkovskaya 

line “Blagoveshchenskaya – Sirius”; 500 kV 

increase the transmission capability of the 

Substation rose by 125 MVA, a project which 

Zvezda Substation; 330 kV Frunzenskaya Sub- 

220 kV lines and electricity deliveries into the 

improved the reliability of power to the oil and 

station; 330 kV Novgorodskaya-2 Substation; 

Moscow Energy System. 

gas fields. 

220 kV transmission line “Volgodonskaya NPP 

– Salsk” and capacity extension project at the 

220 kV Salsk Substation; 500 kV transmission 

line “Gusinoozerskaya TPP – Petrovsk-Zabai- 

Investments in fixed assets by RAO UES 

companies, billions of RUB* 

kalsky”, and 500 kV Khekhtsir Substation. 

The investments in the distribution networks 

grew 1.8-fold in 2006 to RUB41.7 billion 

from RUB23.3 billion. At some distribution 

companies, the investments increased three- 


2005 

117.7 

160.3 

12 

to four-fold. The major regional distribution 

companies’ investment figures for 2006 were 

as follows: OAO “Moscow United Electricity 

Distribution Company”: RUB10.2 billion, 

OAO “Moscow City Electricity Distribution 

2004 

2003 

2002 

57.0 

74.0 

103.6 

Company”: RUB3,95 billion, OAO “Lenenergo”: 

RUB2.9 billion, OAO “Tyumenenergo”: RUB3.2 

billion, OAO “Kubanenergo”: RUB1.4 billion. 

*in current prices (including VAT).

Investment Activities 99 

The amount of own funds spent by RAO 

“UES of Russia” on its investment programme 

Zelenchukskaya HPP 

(design capacity: 160 MW) 

Financing of the Investment Programme Projects of OAO RAO “UES of Russia”, 

OAO “UES FGC”, OAO “UES SO-CDA”, and OAO “HydroWGC”, billions of RUB 

in 2006 grew 6.3 percent compared to 2005 to 

The project to complete the water intake facil- 

RUB20.3 billion, of which RUB8.5 billion was 

ity at the Bolshoy Zelenchuk river has helped 

used to pay off its loan obligations. 

double the hydropower plant’s output without 

2002 2003 2004 2005 2006 

In 2007, the financing to be provided for the 

increasing its installed capacity. The facility 

investment programmes of OAO RAO “UES of 

was completed in December 2006. 

OAO RAO “UES of Russia” 22.3 20.4 23.9 25.2 3.1 

Russia”, OAO “UES FGC”, OAO “UES SO-CDA”, 

and OAO “HydroWGC” will reach RUB175.4 

Irganayskaya HPP 

OAO “UES FGC” – 11.5 21.3 28.3 34.0 

billion. 


OAO “UES SO-CDA” – 0.5 1.3 1.4 1.5 

Our R&D teams have 

demonstrated their 

ability to help implement 

the investment programme 

of RAO “UES of Russia” by 

successfully competing and 

winning 70% of the tenders 

to procure design works 

held last year. I am also very 

pleased that, in 2006, the staff 

of RAO “UES of Russia” and 

NPO “Saturn” completed their 

fifteen-year work to launch 

series production of a 110 MW 

gas turbine unit meeting the 

world’s best standards 

OAO RAO “UES of Russia” will spend 

RUB12 billion of own money on its 2007 Investment 

Programme. 

The Company’s investment programme for 

2006 focused on the priority projects in the 

Unified Energy System of Russia, including 

the facilities which were transferred to the 

control of OAO “HydroWGC” in H2 2006. 

Bureyskaya HPP 

(design capacity: 2,000 MW) 

The construction of this power plant will help 

ensure reliable and uninterrupted power to 

customers in the Russian Far East and reduce 

the region’s dependence on the expensive fuel 

that has to be transported to the area. The two 

last hydropower units with the aggregate capacity 

of 667 MW are scheduled to go on line in 

2007, with the power plant reaching its design 

capacity. 

Boguchanskaya HPP 

(design capacity: 3,000 MW) 

The construction of this hydro power plant 

will help meet the demand for electricity 

Two 200 MW generating units have been put 

into operation at the power plant. With the 

reservoir level standing at 483 meters (the 

top of the reservoir capacity allocated to joint 

use), the aggregate capacity of the units is 

214 MW. After the dam is filled and the reservoir 

level is elevated to 521 meters, the hydraulic 

units will reach their design capacity, 

which will increase reliability of the power 

supply to consumers in the North Caucasus. 

The target level of 521 meters is expected to 

be achieved in July 2007. 

Zaramagskie HPPs 


When commissioned, the power plant will 

supply more than half of the electricity 

requirements in North Ossetia. The power 

plant will be fully built in 2010. 

Chain of Nizhnechereksky HPPs 

(chain’s design capacity: 120 MW) 

The Aushigerskaya HPP (60 MW) was brought 

on line in 2002. A project is now underway to 

build the Sovet-skaya HPP. When the power 

OAO “HydroWGC” – – – – 27.8 

Total 22.3 32.4 46.5 54.9 66.4 

Ivanovskaya TPP 

(design capacity: 701.7 MW) 

The project is intended to roll out serial production 

of GTE-110 gas turbine unit, the key 

element of PGU-325 combined-cycle gas 

turbines, which are intended to replace the 

200-300 MW steam power units widely used 

in the UES of Russia. Such modernization will 

increase efficiency of generation units from 

35-38 percent to 51 percent and help reduce 

consumption of natural gas by 30% at each 

upgraded unit. The first unit is scheduled 

to become operational in 2007, and the 

second in 2009. 

Mobile GTPPs 


In order to ensure reliable operation of the 

Moscow Energy System during the winter 

peak load period of 2006-2007, RAO “UES of 

“UES SO-CDA” recommended the following 

sites for the installation of the Mobile GTPPs: 

Rublevo 110 kV Substation (3 gas turbine units), 

Syrovo 110 kV Substation (2 gas turbine units), 

Pushkino 110 kV Substation (3 gas turbine 

units), and Daryino 110 kV Substation (2 gas 

turbine units). 

The gas turbine units are to be installed 

on the sites of the existing substations, and 

deliver power to buses of those substations. 

In 2007, it is planned that all ten units will 

be installed and brought on line. As of 1 March 

2007, two units were put into operation at the 

Daryino 110 kV Substation. 

from the energy and industrial consumers based 

plant goes on line in 2008, it will help enhance 

Russia” decided to install ten mobile gas tur- 

in the Lower Angara region and help eliminate 

power supply in the North Caucasus energy 

bine power plants (GTPPs), 22.5 MW each, 

Vyacheslav Voronin, 

the winter peak energy shortfall in the area. 

system. 

near the substations of the Moscow Energy 


The power plant is scheduled for commission- 

System which have the greatest load. Based 

Managing Director of RAO “UES of Russia”, 

ing in 2012. The first three hydropower units are 

on the balance loads recorded during the 

Services Business Unit 

expected to be brought on line in 2009. 

2005-2006 autumn and winter period, OAO

Company’s Finance 

Financial Management 

and Financial 

Market Operations 

As before, in 2006, OAO RAO “UES of Russia” 

targeted the following priorities in its financial 

markets operations: idle cash management 

and raising debt to finance its current operations 

and investment projects. 

The Company’s idle cash management policy 

seeks to achieve the maximum efficiency 

of financial investments while optimizing the 

risk/return profile. The maximum return on 

financial investments was achieved by placing 

the Company’s available funds at the highest 

possible interest rates, equal to or above the 

average market rates, with Russia’s largest 

credit institutions which have the highest reliability 

and enjoy excellent reputation on the 

financial market. Banks were selected based 

on their performance, with exposure limits set 

for each counterparty bank. 

Depending on the maturities, the instruments 

used for funds placement were bank 

deposits and maintaining minimum balances 

on current accounts (for a term of 

up to six months), bank promissory notes 

and transfer of funds into fiduciary management 

(for a term of six months or more). 


13

Company’s Finance 103 

The Company’s Financial Committee, created 

to secure the obligations of RAO UES subsi- 

control over the proper use of funds contri- 

Loans and Other Borrowings of OAO RAO “UES of Russia”* 

in 2004, is responsible for safeguarding the interests 

of the Company and its shareholders, 

taking strategic decisions in implementing its 

activities, and approving exposure limits for 

diaries is proof of the SDCs’ more stable financial 

position and their ability to independently 

raise debt, including by using new financing 

structures. 

buted to the capitals of the SDCs in the process 

of forming their intended structure. 

Company’s Credit Ratings 

Loan/Debt 

Amount in the 

currency of 

loan/debt, 

millions of USD 

Date of receipt 

Amount 

outstanding, 

millions 

of RUB** 

counterparty banks. 

Efficient liquidity management and optimi- 

The Company’s own borrowings were raised 

to finance the Investment Programme of RAO 

The high credit quality and stable financial 

position of OAO RAO “UES of Russia” are 

Ministry of Finance of the Russian 

Federation (IBRD loan) 

29 4 September 2000 411,637 

zation of the idle cash placements structure 

from an earnings perspective delivered good 

“UES of Russia”. In Q1 2006, the Company 

received a RUB4.5 billion in credit, and fully 

confirmed by the ratings assigned to it by 

the leading Russian and international rating 

Promissory Notes issued by RAO “UES of Russia” 

The electricity reform 

has entered its investment 

phase. The investment 

programme for RAO UES 

companies has been approved 

at about RUB3.1 trillion. 

34,000 MW of new generation 

capacity is to come on line by 

2011. I am sure that, after our 

subsidiaries separate from 

RAO “UES of Russia”, they 

will not lose the momentum 

in the implementation of 

these major projects 

results in 2006, bringing the same rate of return 

on these transactions as in 2005. 

The focus of the Company’s debt policy 

in 2006 was on carrying out own borrowings, 

including by issuing promissory notes, 

and providing sureties for its subsidiaries’ 

borrowings. 

By end-2006, the volume of sureties granted 

fell by 76 percent compared to 2005 due to 

timely repayment by the SDCs of their debt obligations 

owed to the lenders. The significant 

reduction in the amount of sureties granted 

Company's Bank Debt and Changes 

in Loan Portfolio, millions of RUB 

1 Jan 2007 

1 Jan 2006 

0 

1,000 

2,000 

3,000 

repaid the debt in a timely manner, with the 

obligations under the loans raised previously 

performed ahead of schedule. 

In general, the Company’s debt portfolio by 

end-2006 was characterized by an increase in 

the outstanding bank loans as compared to 

the opening balance. The bulk of the credit facilities 

and loans are obligations on the Company’s 

own interest-free promissory notes, 

which is why the Company does not have almost 

any debt servicing costs. These promissory 

notes were issued in order to maintain 

4,000 5,000 6,000 7,000 8,000 

agencies. 

The current credit ratings of OAO RAO “UES 

of Russia” are high, which suggests that the 

Company’s main performance indicators correspond 

to the level needed for full and timely 

performance by the Company of its financial 

obligations. 

Promissory notes description 

and maturity 

Non-interest bearing promissory 

notes payable on demand, but not 

earlier than 1 January 2007 

Non-interest bearing promissory 

notes payable on demand 

Date of issue 

Principal 

(millions 

of RUB) 

Balance of 

principal 

outstanding 

millions of RUB 

August 2006 4,668.030 4,668.030 

August 2006- 

November 2006 

3,058.965 3,058.965 

Total 8,138.632 


** translation based on the exchange rate as at 31 December 2006 

Current Credit Ratings of OAO RAO “UES of Russia” 

Rating Agency 

International 

scale 

Credit Ratings 

National 

scale 

1 Jan 2005 

Standard & Poor’s* BB/Outlook Stable RuAA 

Expert RA — A+ 

Moody’s Interfax Rating Agency — Aa3.ru 

OWN PROMISSORY NOTES 

RAO "UES OF RUSSIA" BONDS, SERIES P2 

Sergey Dubinin, 

Member of Management Board, 

Financial Director, RAO “UES of Russia” 

COMMERCIAL BANKS 

EBRD 

RUSSIAN MINISTRY OF FINANCE (IBRD LOAN 4181-RU) 

*The Company’s ratings were last updated in early February 2007. 

The previous ratings: international scale “B+/Evolving”, national scale “RuA+”.

104 




Company’s Financial 

Performance 

Financial Highlights of OAO RAO “UES of Russia”, millions of RUB 

Revenues from Sales of Products and Services of OAO RAO "UES of Russia", % 

Indicators 2004 2005 2006 2006/2005, % 2006/2005, (+;-) 

3.7 

2.6 

1.6 

0.6 

Sales revenues* 42,057 32,579 40,297 123.7 7,718 

14.6 

13.8 

22.9 

Expenses* (cost of goods sold, selling and administrative 

expenses) 

10,215 5,926 6,790 114.6 864 

Sales profit 31,842 26,653 33,507 125.7 6,854 

Sales profit/revenue, kopecks per RUB 0.76 0.82 0.83 101.6 0.01 

2004 

2005 


Other income 97,265 80,184 768,939 959.0 688,755 

18.1 

including: 

63.6 

82.0 

76.5 

income from revaluation of financial investments — — 717,657 — — 

Income from surplus cash investment 1,618 847 1,081 127.6 234 

Other expenses 101,884 81,874 47,504 58.0 -34,370 

SUBSCRIPTION FEE (SERVICES RELATING TO ORGANIZING DEVELOPMENT OF THE UES OF RUSSIA) 

EXPORTS 

including: 

INCOME FROM PARTICIPATION IN OTHER ENTITIES 

SALES OF OTHER GOODS, PRODUCTS, WORKS, AND SERVICES 

Debt and loans servicing 714 380 276 72.6 -104 

Profit before taxes 27,223 24,964 754,942 3,024.1 729,978 

Profit tax and other required payments 3,154 4,066 9,854 242.4 5,788 

Income tax/revenue, kopecks per RUB 0.07 0.12 0.24 195.9 0.12 

Net (undistributed) profit 24,069 20,898 745,088 3,565.4 724,190 

Sales Revenues and Profit of OAO RAO “UES of Russia”, millions of RUB 

including: 

from share revaluation — — 717,657 — — 

actual net profit 24,069 20,898 27,431 131.3 6,533 

* income and expenses for 2004 and 2005 were recalculated due to the changes in the Company’s accounting policies covering the income from investments. 

Indicators 

Net revenues from the sale of goods, 

products, works, and services 

Sales profit 

2004 2005 2006 2004 2005 2006 

Total 42,057 32,579 40,297 31,842 26,653 33,507 

including: 

Compared to 2005, the revenues genera- 

made or provided by the Company, trading and 

due to the revaluation of financial investments 

Subscription fee 26,764 26,723 30,818 23,534 22,845 25,656 

ted by RAO “UES of Russia” from the sale of 

goods, products, works and services in 2006 

administrative expenses) during the reporting 

year grew by RUB864 million (or 14.6 percent) 

in subsidiaries whose shares are quoted on 

two marketplaces, NP “RTS Stock Exchange” 

Income from participation in other entities 7,596 4,484 9,224 6,940 3,890 7,799 

grew by RUB7,718 million, or 23.7 percent, 

to RUB6,790 million. 

and ZAO “MICEX Stock Exchange”. 

Exports 6,134 844 — 721 -103 — 

to RUB40,297 million. The expenses (cost of 

goods, products, works, and services sold, 

The dramatic increase in the net income of 

OAO RAO “UES of Russia” during the year was 

The services to organize the operation 

and development of the UES of Russia in the 

Sales of other goods, products, works, and services 1,563 528 255 647 21 52

106 



Company’s accounted for 76.5 percent of the 

total sales revenue, down 5.5 percentage 

points compared to 2005; the share of income 

from participation in other businesses increased 

by 9.1 percentage points to 22.9 percent, 

while the share of revenues from other 

activities declined by 1 percentage point to 0.6 

percent of the total sales. The revenues from 

the services relating to organizing the operation 

and development of the UES climbed by 

RUB4,095 million, or 15.3 percent; the income 

from participation in other entities increased 

by RUB4,740 million (105.7 percent), and the 

re-venue from other activities (lease, sale of 

other goods, products and services) decreased 

by RUB273 million. 

The Company’s total profit from sales in 

2006 amounted to RUB33,507 million, up from 

RUB26,653 million in 2005. The profit from 

sales of services in 2006 totalled RUB25,656 

million, which represents an increase of 

RUB2,811 million, or 12.3 percent over 2005. 

The profit from the participation in other companies 

amounted to RUB7,799 million (2005: 

RUB3,890 million). The profit from sales of 

other industrial and non-industrial goods, 

were reflected at their market value as of the 

end of the reporting year. The revaluation of 

shares of RUB717,657 million is shown in the 

book value of investments in the subsidiaries 

and dependent companies and other income 

items of the Company for 2006. Because of 

that, the other income items exceeded the 

expenses by RUB721,435 million, and the 

Company’s net income surged to RUB745,088 

million (taking into account the revaluation of 

its shareholdings). 

The actual profit earned by OAO RAO “UES 

of Russia” in 2006, without taking into account 

the unrealized gains (the so-called “paper 

profit”), amounted to RUB27,431 million, up 

RUB6,533 million, or 31,3 percent, compared 

to the 2005 net profit. The net profit margin 

for the reporting year rose 4 percentage points 

over 2005, reaching 68.1 percent. 

The Company’s return on total assets 

(ROTA) in 2006 made 10.6 percent (2005: 

7.4 percent), and the return on equity (ROE) 

increased to 8 percent from 6.5% in 2005. 

Company’s Financial Profile 

The Company’s current financial position is 

companies accounted for 93.8 percent of the 

Company’s total assets, whereas the share 

of the fixed assets and construction in progress 

was 0.6 percent, down from 3.6 percent 

at end-2005. The percentage of current assets 

to total assets fell by 12.6 percentage points 

to 4.9 percent as of 31 December 2006. 

The net assets of the Company increased 

in 2006 by RUB742,462 million (3.2-fold) 

to RUB1,073,496 million at end-2006. 

The following changes took place in the 

structure of fixed assets: 

the fixed assets and construction in process 

were reduced after they were transferred, 

as capital contributions, to the subsidiaries 

(current assets account for 0.7 percent of 

the total assets); 

the share of investments in subsidiaries 

and dependent companies was up 5.9 percentage 

points to 98.6 percent of the total 

assets; 

there was a decline in other long-term investments, 

investments in other entities, 

and percentages of loans to subsidiaries. 

The value of fixed assets and construction 

in progress fell by RUB5,521 million to 

period increased by RUB7,110 million (or 76.8 

percent) to RUB16,363 million from RUB9,253 

million, chiefly due to increased investments 

in securities (promissory notes) of the subsidiaries 

and dependent companies (by RUB4,825 

million) and bank deposits (by RUB1,722 million). 

The short-term loans granted to energy 

companies fell by RUB1,035 million. Cash 

and short-term financial investments as a 

percentage of working capital rose by 15.2 

percent to 30.8 percent. 

Non-current Assets Structure 


0.7 0.5 

0.2 


The accounts receivable were down by 

RUB12,851 million, or 26.5 percent, with the 

long-term receivables falling by RUB4,001 

million due to the termination of co-investment 

agreements, and the short-term receivables 

decreasing by RUB8,850 million as a result 

of collection of old debts and repayment 

of non-interest bearing promissory notes. The 

accounts receivable as a percentage of the 

working capital was down by 14.5 percentage 

points. 

Current Assets Structure 


25.0 

5.8 

1.2 

1.0 


“Now investors will be able 

to see which segment of the 

electricity industry is more 

attractive”, says Dmitry Skryabin, 

an analyst with Aton Investment 

Co. According to Mr. 

Skryabin, the IFRS financial 

statements of RAO “UES of 

Russia” for 2006 suggest that 

the power grids are the most 

attractive investment target. 

The analyst also notes that 

the distribution grids are more 

profitable than the generation 

assets, which are popular with 

strategic and portfolio investors 

alike. 


30 August 2006 

works, and services was RUB52 million (as 

compared to RUB21 million in 2005). 

characterized by the following changes in the 

key financial indicators. 

RUB6,647 million at end-2006. 

As of year-end, the value of long-term fi- 

98.6 

67.0 

The return on sales in 2006 stood at 83.2 kopecks 

per RUB1 of sales revenue, an increase 

Assets 

nancial investments grew by RUB757,935 

million to RUB1,024,638 million. Of that 

of 1.3 kopecks (or 1.6 percent) over 2005. 

As of 31 December 2006, the Company’s 

amount, the value of investments in subsi- 

Over the reporting period, the income from 

idle cash management grew by RUB234 million, 

or 27.6 percent from the year before. 

The debt service expenses in 2006 de- 

investments in subsidiaries whose shares are 

traded on NP “RTS Stock Exchange” and ZAO 

“MICEX Stock Exchange” were reflected at 

their current market value (RUB717,657 mil- 

diaries and dependent companies climbed 

by RUB758,297 million, or 15.7 percent (the 

revaluation of shares to reflect the market 

value of the subsidiaries traded on the RTS 

INVESTMENTS IN SUBSIDIARIES 

AND DEPENDENT COMPANIES 

CONSTRUCTION IN PROGRESS 

ACCOUNTS RECEIVABLE 

SHORT-TERM FINANCIAL INVESTMENTS 

creased by RUB104 million, or 27.4 percent, 

lion), which resulted in more than a threefold 

and MICEX accounts for RUB717,657 million 

FIXED ASSETS 

CASH 

compared to 2005. 

In 2006, OAO RAO “UES of Russia” made 

increase (by RUB746,089 million) in the book 

value of assets owned by RAO “UES of Rus- 

of the increase). 

The changes in the structure of current as- 

OTHER NON-CURRENT ASSETS 

WORK IN PROGRESS (INVENTORIES) 

adjustments to the value of investments in 

the subsidiaries traded on the RTS and MICEX 

Stock Exchanges. Those financial investments 

sia”. As of the year-end, the Company’s total 

assets stood at RUB1,084,649 million. 

Investments in subsidiaries and dependent 

sets might be summed up as follows: 

The Company’s quick assets (cash and 

short-term investments) over the reporting 

OTHER CURRENT ASSETS

108 




The share of inventories changed insignificantly 

by 0.1 percent to 1 percent. 

The share of Value Added Tax on purchases 

and other current assets declined from 

1.6 percent to 1.2 percent. 

The following events had an effect on the 

Company’s performance indicators: 

in 2006, there was an increase in the Company’s 

accounts payable, as RAO “UES of 

Russia” issued non-interest bearing pro- 

the proceeds from the sale of promissory 

notes were used to refinance the bank 

loan raised to acquire shares in OAO 

“Power Machines” and invested in financial 

instruments; 

Debt Capital Structure of the Company, millions of RUB 

indicator 

31 DecEMber 

2005 

31 DecEMber 


Percentage 

of total, as of 


Liabilities 

In 2006, equity as a percentage of total liabilities 

and equity of the Company increased by 

1.2 percentage points. The percentage of bank 

loans and borrowings decreased by the same 

missory notes payable on demand in order to 

ensure that the funds paid as capital contributions 

to the subsidiaries are used for their 

designated purpose in the course of forming 

their ultimate corporate structures; 

the current assets declined due to the capitalization 

of the loans granted to subsidia- 

ries and dependent companies. 

All principal indicators characterizing 

the stability of the Company’s financial and 

economic performance are within the opti- 

Total accounts payable 6,519 10,210 100 

including: 

Loans and bank facilities: 4,137 8,149 79.8 

short-term 3,740 7,727 75.7 

amount. 

The short-term liabilities accounted for 

a greater part of borrowed funds at 87.9 percent, 

whereas the long-term payables (including 

deferred tax liabilities) made 8.4 percent 

and long term debt and loans represented 

Liabilities and Equity Structure 


mum range. 

Borrowings Structure 


long-term 397 422 4.1 

Accounts payable: 2,382 2,061 20.1 

short-term 1,876 1,901 18.6 

long-term 506 160 1.6 

3.7 percent of the total debt. 

The increase in the total amount of borrowings 

in 2006 was due to the issuance by 

0.8 

0.2 

0.1 

8.4 

4.1 

3.7 

Financial Ratios of the Company 

RAO “UES of Russia” of non-interest bearing 

promissory notes payable on demand. 

The short-term payables were down 

16.5 


by RUB25 million compared to 2005 due to 

the increased amount of debt owed to other 



Cash ratio 1.59 1.68 

creditors). 

Quick ratio 5.45 3.08 

As of 31 December 2006, OAO RAO “UES 

of Russia” had quick assets (cash and cash 

equivalent) exceeding by 1.4 times the total 

98.9 

67.3 

Current ratio 10.18 5.44 

Equity/Total Assets ratio 0.98 0.99 

amount of borrowings, including the deferred 

taxes and short-term liabilities, and by 2 times 

Own funds ratio 0.44 0.38 

the liabilities on loans and credits. 

This means that there is no risk of default 

by OAO RAO “UES of Russia” on the loans 

EQUITY CAPITAL 

SHORT-TERM LOANS AND DEBT 

and debt. 

SHORT-TERM ACCOUNTS PAYABLE 

SHORT-TERM ACCOUNTS PAYABLE 

Analysis of the Company’s assets and liabilities 

suggests that OAO RAO “UES of Russia” 

has a satisfactory balance sheet structure and 

a steady financial position. 

OTHER LONG-TERM ACCOUNTS PAYABLE 

AND DEFERRED TAX LIABILITIES 

OTHER SHORT-TERM LIABILITIES 

OTHER LONG-TERM ACCOUNTS PAYABLE 

AND DEFERRED TAX LIABILITIES 

LONG-TERM LOANS AND DEBT 

OTHER LIABILITIES

110 




Auditor’s Report 

Assessment of the Auditor’s Report on 

the 2006 statutory financial (accounting) 

statements of OAO RAO “UES of 

Russia” prepared by ZAO “PricewaterhouseCoopers 

Audit” 

The Audit Committee under the Board of Directors 

of RAO “UES of Russia” reviewed the 

Company’s statutory financial (accounting) 

statements for 2006, and discussed with the 

Company’s management and auditors, ZAO 

“PricewaterhouseCoopers Audit”, the audit 

process, efficiency and effectiveness of the 

Company’s internal controls, as well as the 

completeness and quality of the statutory 

financial statements. The Audit Committee 

also reviewed the Auditor’s Report on the statutory 

financial (accounting) statements of the 

Company for 2006. 

Based on the information received during 

the review of the Company’s statutory financial 

(accounting) statements and having dis- 

About the Auditor 

ZAO “PricewaterhouseCoopers Audit” won 

the tender for the audit of the financial statements 

of RAO “UES of Russia” (the Company) 

for the period of 3 years starting from 2006; 

the tender was held in accordance with the 

requirements of Federal Law No. 94-FZ of 21 

July 2005 “On the placement of orders for the 

delivery of goods, works, services for state and 

municipal needs”. ZAO “Pricewaterhouse- 

Coopers Audit” was approved as the official 

auditor of the Company and the RAO “UES of 

Russia” Group for 2006 by the resolution of 

the Annual General Meeting of Shareholders 

dated 28 June 2006. 

The total fee for services provided for the 

audit of the Company’s financial (accounting) 

reports for 2006 prepared in accordance with 

RAR and services provided for the audit of the 

financial statements of the Company for 2006 

and the consolidated financial statements of 

Following is the audit opinion of ZAO 

“PricewaterhouseCoopers Audit” on the 

results of their audit of the 2006 statutory 

financial (accounting) statements of RAO “UES 

of Russia” (Company). Said statutory financial 

(accounting) statements are not included in 

this Annual Report. Accordingly, references 

in the audit opinion to the “Attached statutory 

financial (accounting) statements” and to 

the information contained in the “Notes to 

statutory financial (accounting) statements” 

refers to the documents not included in this 

Annual Report. 

The audit opinion applies only to the 2006 

statutory financial (accounting) statements 

of RAO “UES of Russia” (Company) and 

notes thereto. Copies of this documents may 

be obtained in the principal offices of RAO 

“UES of Russia” or from the Internet site: 

www.rao-ees.ru 

cussed its preparation with the management 

the RAO “UES of Russia” Group for 2006 pre- 

and auditors of the Company, the Audit Com- 

pared in accordance with IFRS is RUB150.45 

mittee recommends that the Board of Direc- 

million, including VAT. 

tors approve the statutory financial (accounting) 

statements of the Company for 2006 and 

the Auditor’s Report, and submit them for 

shareholder approval at the Annual General 

Meeting of shareholders of the Company. 

Chairman of the Audit Committee 

under the Board of Directors 


S. Remes

112 



2 0 0 6 ANNUAL REPORT OF RAO “UES OF RUSSIA”

114 




Statutory Financial Statements 


Balance Sheet of OAO RAO “UES of Russia”, as of 31 December 2006, millions of RUB 

Balance Sheet of OAO RAO “UES of Russia”, as of 31 December 2006, millions of RUB 

1 january 2006 31 december 2006 

1 january 2006 31 december 2006 

ASSETS 338,560 1,084,649 

Intangible assets 2 2 

Fixed assets 5,902 1,586 

Construction in progress 6,266 5,061 

Income-bearing investments in tangible assets 292 196 

Long-term financial investments 266,703 1,024,638 

Deferred tax assets — — 

Other non-current assets — — 

Inventories 642 507 

Value Added Tax on goods purchased 971 621 

Accounts receivable (payment expected beyond 12 months of the reporting date) 25,972 21,971 

Accounts receivable (payments expected within 12 months of the reporting date) 22,553 13,703 

Short-term financial investments 7,302 13,295 

Cash 1,951 3,068 

Other current assets 4 1 

EQUITY AND LIABILITIES 338,560 1,084,649 

Authorized capital 21,558 21,558 

Treasury shares – – 

Additional capital 97,842 91,758 

Legal reserve 3,234 3,234 

Targeted financing — — 

Retained earnings of the previous years 208,266 211,521 

Retained earnings of the reporting year — 745,088 

Borrowings and bank loans 397 422 

Deferred tax liabilities 786 806 

Other long-term liabilities 506 160 

Borrowings and bank loans 3,740 7,727 

Accounts payable 1,876 1,901 

Income payable to members (founders) 221 137 

Income of future periods 134 337 

Reserves for future expenses and payments — — 

Other current liabilities — — 

The information presented above has been 

extracted by RAO “UES of Russia” Management 

from the full set of statutory financial 

(accounting) statements. The Auditor’s Opinion 

presented in the previous section was issued 

on the full set of statutory financial (accounting) 

statements (which are not included in this 

document) and does not apply to the condensed 

version of the Balance Sheet and Profit and 

Loss Account presented above. The extracted 

condensed financial statements should be 

read in conjunction with the full set of audited 

statutory financial (accounting) statements. 

The Company’s statutory financial (accounting) 

statements for 2006 under the Russian 

Accounting Standards are prepared in accordance 

with the Regulation on the Accounting 

Policies approved by Order No. 967 of OAO RAO 

“UES of Russia”, dated 29 December 2006. The 

summary of the Company’s accounting policies 

are set forth in the Explanatory note to the 

statutory financial (accounting) statements 

of the Company for 2006. Copies of these documents 

are available on request from RAO “UES 

of Russia” or may be viewed on the corporate 

website at www.rao-ees.ru.

116 




Statement of Income of OAO RAO “UES of Russia”, millions of RUB 

Indicator 2005 2006 

Income from and expenses on ordinary activities 

Sales of goods, products, works, and services (less VAT, excise duties, and similar required payments) 

32,579 40,297 

Cost of goods, products, work, and services sold (1,420) (563) 

Gross profit 31,159 39,734 

Sales expenses (190) — 

General business expenses (4,316) (6,227) 

Gross profit from sales 26,653 33,507 

Other income and expenses 

Interest receivable 847 1,081 

Interest payable (380) (276) 

Other income 79,337 767,858 

Other expenses (81,493) (47,228) 

Profit before taxes 24,964 754,942 

Income tax and other similar required payments (4,066) (9,854) 

Net income from operations 20,898 745,088 

Net (undistributed) income of the reporting period 20,898 745,088 

STATEMENT OF OPINION of the Auditing 

Commission on the Results of Audit 

of the Operations of OAO RAO “UES of Russia” 

in 2006 

The following has been found based on the results of the audit of the 

Company’s financial and business operations in 2006: 

1. The sales revenue amounted to RUB40,297 million. 

2. Profit from the subscription fee amounted to RUB30,419 million. 

3. The Company’s profit from sales amounted to RUB33,507 million. 

4. Profit before taxes amounted to RUB754,942 million. 

5. The Company’s net profit to be distributed by shareholder resolution 

amounted to RUB745,088 million. 

6. The shareholders’ equity of the Company amounted to RUB1,073,159 

million, or 98.94 percent of all of the Company’s funds, broken down 

as follows: 

authorized capital: RUB21,558 million; 

additional capital: RUB91,758 million; 

legal reserve: RUB3,234 million; 

retained earnings of previous years: RUB211,521 million; 

retained earnings of reporting period: RUB745,088 million. 

7. The liabilities on the Company’s borrowings as of 31 December 2006 


8. The Company’s non-current assets stood at RUB1,031,483 million. 

9. The Company’s current assets amounted to RUB53,166 million. 

10. The accounts receivable amounted to RUB35,674 million at end- 

2006. 

11. The short term investments as of the end of the reporting period 


12. The current ratio in 2006 was 5.44 with the required value of >=2. 

The Return on Total Assets (ROTA) and Return on Equity (ROE) were 

as follows: 

ROTA stood at 10.6 percent at end-2006 (2005: 7.4 percent); 

ROE was 8.0 percent (2005: 6.5 percent). 

The net profit received during the reporting period amounted to 

RUB745,088 million, up RUB724,190 million compared to RUB20,898 

million in 2005. 

The sharp growth in the net profit was due to the adjustment made 

to the value of the Company’s financial investments (shares in the subsidiaries 

and dependent companies of OAO RAO “UES of Russia” whose 

shares are traded on the RTS and MICEX stock exchanges). However, 

that profit was not accompanied with any real growth of earnings. 

Payment of dividends for 2006 from “paper profit” would lead to adversely 

affect the financial position of OAO RAO “UES of Russia”. 

It should be highlighted that the quick ratio and current liquidity ratios 

declined compared to 2005. 

The analysis of the Company’s assets and liabilities demonstrates 

that OAO RAO “UES of Russia” has a satisfactory balance sheet structure 

and a steady financial position. 

Conclusions: 

We have not found any instances of non-compliance with the constitutive 

documents of RAO “UES of Russia”, resolutions of the General 

Meeting of shareholders, and meetings of the Board of Directors and 

the Management Board. 

The financial and business activities of OAO RAO “UES of Russia” 

in 2006 was in compliance with the Russian Federation statutory accounting 

and reporting requirements and the legal acts of the Russian 

Federation governing the financial and business operations. 

The data contained in the statutory annual financial statements of 

OAO RAO “UES of Russia” for 2006 are confirmed as true and correct, 

based on random selection of the original documents made available 

to the Auditing Commission. 

Chairman of the Auditing 

Commission of RAO “UES of Russia” 

M.S. Bystrov


International 

Activities 

The strategic objectives of RAO “UES of Russia” 

in international cooperation are as follows: 

synchronizing the energy systems of Russia, 

the CIS countries, and the Baltic Republics 

with the North and West European 

energy pools; 

assistance in the creation and development 

of a common European market for electricity 

and capacity; 

attracting foreign investments in the development 

and modernization of Russia’s 

electricity industry; 

organizing cooperation in the domain of 

technical innovations, creation and attraction 

to Russia of new technologies; 

promoting the development of competitive 

trading in electricity and power equipment. 

14

International Activities 121 

Foreign Assets 

and Projects 

In 2006, our negotiations 

with China on 

large-scale exports of electricity 

from Russia entered 

an implementation phase. 

A contract was signed to 

develop the first phase of the 

project. Furthermore, the 

work underway at the Parent 

Company to develop social 

reporting, non-financial risk 

management, customer relationship 

management is also 

introduced at all RAO UES 

subsidiaries 

International Organizations 

in Whose Activities RAO “UES 

of Russia” Participates 

RAO “UES of Russia” closely cooperates or is 

a full or associated member of the following 

international organizations: 

World Energy Council (WEC); 

Conseil Internationale des Grandes Reseaux 

Electriques a Haute Tension 

(CIGRE); 

World Economic Forum (WEF); 

European Union of the Electricity Industry - 

EURELECTRIC; 

e8; 

BALTREL - Baltic Ring Electricity Co-operation 

Committee; 

International Chamber of Commerce (ICC); 

Russo-British Chamber of Commerce 

(RBCC); 

Electric Power Council of the Commonwealth 

of Independent States (EPC CIS); 

International Commission on Large Dams 

(ICOLD/Commission Internationale des 

Grandes Barrages, CIGB); 

International Association of Hydraulic Research 

(IAHR); 

International Energy Agency (IEA); 

Edison Electric Institute (EEI). 

EU-Russia Energy Dialogue. 

West-East Energy Systems Interconnection. 

Integration of the energy systems of Russia, 

the CIS countries and the Baltic republics with 

the North and West European energy pools is 

one of the key priorities for the Company. The 

project is being implemented jointly with the 

Union for the Coordination of Transmission 

of Electricity (UCTE). 

In 2006, RAO “UES of Russia” and UCTE 

continued development of the Feasibility Study 

on the synchronous interconnection of UCTE 

and the UES of Russia and the energy systems 

of the CIS and Baltic states which operate in 

parallel with the UES. In December 2006, the 

draft Conceptual Report was prepared, which 

states that the preliminary results of the work 

done did not reveal any fundamental technical 

barriers to synchronous interconnection between 

the UES of Russia, the CIS and Baltics’ 

energy systems and the UCTE. 

The energy assets located abroad, which 

are part of RAO UES Holding Company, are 

owned or managed by ZAO “INTER RAO UES” 

(60 percent of which is held by RAO “UES of 

Russia” and 40 percent by Rosenergoatom). 

In the management of its foreign assets, 

the Company seeks to: 

increase the capitalization of RAO UES entities; 

improve its financial and production indicators 

and increase the operational efficiency 

of the RAO UES companies; 

expand the production and energy retail activities 

of the RAO UES entities; 

maintain parallel operation of the UES 

of Russia and the energy systems in the 

neighbouring countries; 

expand the export and import relationships 

with different countries. 

Foreign Power Assets Controlled By 

RAO “UES of Russia” or its Entities 

Republic of Armenia 

100 percent stake in ZAO “Armenia Electricity 

Grids” (the distribution company which 

owns the 0.4-110 kV networks and supplies 

electricity to all consumers in Armenia and 

provides maintenance services for all overhead 

and cable transmission lines, transformer 

substations, and distribution stations); 

90 percent stake in ZAO “International 

Power Corporation” which operates the 

The right to manage the 100% stake in 

ZAO “Armenian Nuclear Power Plant” under 

a fiduciary arrangement. The plant’s 

installed capacity is 815 MW. The principal 

line of business is electricity generation 

and sales. 

Republic of Georgia 

75 percent stake in AO “Telasi” (distribution 

company which owns the 0.4-110 kV networks 

and substations. The Company is engaged 

in electricity distribution and sales); 

100% stake in OOO “Mtkvari Energetika” 

(the company owns power units 9 and 10 

at the Tbilisskaya TPP, each having an installed 

capacity of 300 MW. The Company’s 

principal line of business is electricity generation 

and sales); 

The right to manage 100 percent shares in 

AO “Khrami HPP I” and AO “Khrami HPP II” 

(to hydropower plants each having installed 

capacity of 110 MW. The company’s principal 

lines of business are electricity generation 

and sales). 

Republic of Kazakhstan 

50 percent shares in OAO “Ekibastuzskaya 

TPP-2 Station” (which owns the Ekibastuzskaya 

TPP-2 with 1,000 MW installed capacity 

(two units of 500 MW). The company’s principal 

lines of business are electricity generation 

and sales). 

Finland 

100 percent shares in RAO NORDIC Oy, the 

company selling the electricity imported from 

Russia on the Nordic wholesale electricity market. 

The company is a participant of Nord Pool. 

Republic of Turkey 

70 percent shares in TGR Enerji, a company 

engaged in wholesale electricity trading. 

Promising Projects 

In 2006, RAO “UES of Russia” continued implementation 

of a number of investment projects 

abroad. 

Tajikistan: 

Construction of the Sangtuda HPP-1 

The Sangtuda HPP-1 is part of the chain of hydropower 

plants located on the Vakhsh River 

in the Republic of Tajikistan. The power plant’s 

designed capacity is 670 MW (four turbines, 

167.5 MW each). 

As provided by the Agreement between 

Tajikistan’s Government and the Russian Government 

on the procedure for and conditions 

of shared participation in the construction of 

the Sangtuda HPP-1, RAO “UES of Russia” 

acts as the authorized organization on the Russian 

side. On 15 December 2005, the Board of 

Directors of OAO “Sangtuda HPP-1” approved 

the estimated cost of the project to complete 

the Sangtuda HPP-1 at USD598.87 million. 

property of the Sevan-Razdansky chain of 

Republic of Moldova 

seven HPPs. The installed capacity of the 

power plants is 560 MW. The Company’s 

principal line of business is electricity gene- 

ration and sales; 

51 percent shares in ZAO “Moldavskaya TPP”, 

the company which owns the Moldavskaya 

TPP with 2,520 MW installed capacity. The 

company’s principal lines of business are 

Leonid Drachevsky, 

electricity generation and sales. 


RAO “UES of Russia”

122 

International Activities 


Under the Memorandums signed by the 

Russian Government and the Tajikistan Government 

on taking a joint decision to issue 

shares of OAO “Sangtuda HPP-1”, dated 6 December 

2005 (as amended on 14 March 2006) 

and 31 July 2006, the total amount of funds allocated 

for the project made USD297 million, 

which includes the following sources of funds: 

USD150 million in funds from the Russian 

Federation budget for 2005 and 2006; 

USD20 million to cancel the sovereign 

debt owed by Tajikistan to the Russian 

Federation; 

USD16.1 million in funds under the Investment 

Programme of OAO RAO “UES of 

Russia”; 

USD110.2 million in funds under the Investment 

Programme of OAO “UES FGC”; 

USD950 thousand in funds provided by ZAO 

“INTER RAO UES”. 

The Tajikistani side is to transfer the construction 

in progress facilities of the Sangtuda 

HPP-1 owned by it. In 2005-2006, Tajikistan 

contributed USD98 million worth of construc- 

China: Development of the Energy Sector in 

the Russian Far East and Plans to Launch 

Large-Scale Electricity Exports from Russia 

Pursuant to the Agreement on Long-term Cooperation 

signed in 2005, RAO “UES of Russia” 

and State Power Grid Corporation of China 

signed on 21 March 2006, within the framework 

of the visit of Russian President Vladimir Putin 

to the People’s Republic of China, an Agreement 

on the comprehensive feasibility study 

for the Project to increase electricity exports 

from the Russian Federation to China. 

Under the Agreement, the Project will be 

implemented in three phases, with the export 

volume target set at 60 billion kWh annually. 

The first phase, scheduled for 2008-2012, 

will see an increase in cross-border electricity 

supplies of excess electricity generated in the 

East IES of Russia. Electricity exports during 

phase 1 will make 4.5 billion kWh per year. 

During the second phase in 2012-2015, 

3,500 MW of new generation capacity will be 

built in the Far Eastern energy system, with 

exports scheduled to rise by 18 billion kWh to 


and Imports 

Beginning in 2006, the export and import operations 

of RAO UES entities, all authority 

to perform export and import contracts and 

agreements was transferred to ZAO “INTER 

RAO UES” (RAO “UES of Russia” holds a 

60 percent stake in this company, and Ros- 

energoatom holds the remaining 40 percent). 


In 2006, ZAO “INTER RAO UES” exported 

20.5 billion kWh of electricity, down 1.6 billion 

kWh compared to 2005. The decrease in 

exports was in line with the resolutions taken 

by the Coordination Group of RAO “UES of 

Russia” for the 2006-2007 autumn and winter 

preparations, which gave priority to electricity 

supplies to Russia’s internal market due 

to the increased power consumption in the 

country. In this connection, Russia reduced 

its electricity exports to Belarus, Azerbaijan, 

Georgia, and Moldova. 

The bulk of electricity exports in 2006 went 

to Finland (over 50 percent of Russia’s electricity 

exports), Belarus (about 11 percent), 

Electricity Exports, 

by Country (%) 

FINLAND 54% 

BELARUS 11% 

KAZAKHSTAN 9% 

LITHUANIA 7% 


GEORGIA 3% 

MOLDOVA 2% 

CHINA 2% 

MONGOLIA 1% 

Belarus 

In 2006, the electricity supplies to this country 

totalled 2,345.16 million kWh, a twofold decrease 


Moldova 

The electricity exports to the Republic of Moldova 

in 2006 amounted to 402.82 million kWh, 

down 50 percent from the 2005 level. Such a 

reduction in export volumes was due to the 

fact that Russia and Ukraine failed to reach an 

agreement on the transit of Russian electricity 

via Ukraine, which is why the agreement 

was terminated effective June 2006. 

Kazakhstan 

In 2006, the exports of electricity to the northern 

areas of Kazakhstan amounted to 1,868.81 

million kWh, which is nearly the same level as 

the year before. 

Latvia 

In 2006, due to the lower water inflow on the 

Daugava River and reduction in the output 

The electricity sector liberalization 

is creating new opportunities 

for a synchronous 

interconnection between 

the UES of Russia and the 

European energy pool. The 

potential of such interconnection 

is boosted by the common 

interest that Russia and EU’s 

energy companies and consumers 

have in improving the 

reliability of the energy supply 

and diversifying sources of 

power, as well as by the availability 

of a well-developed grid 

infrastructure needed for the 

interconnection and efficient 

operational management 

in the synchronized energy 

pools of Russia and the CIS 

countries. 

tion in progress to the company. 

22.5 billion kWh annually. 

Kazakhstan and Lithuania (9 percent and 

LATVIA 5% 

NORWAY 1% 

of Latvia’s HPPs, the demand for Russian 

2006 saw the launch of construction and 

installation works at all hydraulic facilities of 

the Sangtuda HPP-1. On 15 December 2006, a 

The third phase (after 2015) provides for a 

further increase in electricity exports to China 

by another 38 billion kWh. Electricity will be sup- 

7 percent, respectively). 

Electricity supplies to Norway and the 

northern areas of Finland from the dedicated 

AZERBAIJAN 4% 

electricity in Latvia increased by 561.18 million 

kWh compared to 2005 reaching 1,086.34 

million kWh. 



closure dam was completed across the Vakhsh 

plied by the coal-fired power plants built close 

hydrogenerators of the Borisoglebskaya HPP, 

River. The plant’s first hydroelectric unit is 

scheduled to go on line in December 2007. 

to coal basins. In addition, RAO “UES of Russia” 

will explore the possibility of exporting the electricity 

generated by the newly-built HPPs. The 

Rayakoski HPP, and Kaitakoski HPP were 

carried out under the cross-border trade arrangements. 


to the FSU Countries 

Lithuania 

In 2006, the electricity exports from Russia to 

Lithuania made 1,413.61 million kWh, up 801 

plants’ installed capacity intended for electricity 

Azerbaijan 

million kWh on the year before. The increase 

exports will make 6,000-6,400 MW. 

The electricity exports to Azerbaijan in 2006 

in the exports was due to the decommission- 

On 9 November 2006, the companies signed 

amounted 755 million kWh, down 247.29 mil- 

ing of one of the two power units at the Ig- 

a contract to supply electricity to China under 

lion kWh compared to 2005. 

nalina NPP and the emergency stoppage of 

the first phase of the Project and pursuant to 

turbine generator No. 3 at the nuclear power 

the Agreement on the principles of the Project 

Georgia 

plant in November and December 2006. 

implementation. 

In 2006, the electricity exports to Georgia totalled 

570 million kWh, a decrease of 220 million 

kWh from 2005.

124 

International Activities 



to the Non-FSU Countries 

Finland 

In 2006, the electricity exports from Russia 

to Finland made 11,150.38 million kWh, up 

290.38 million kWh on the year before. Such 

an increase was due to the performance of 

contractual obligations and the favourable 

situation on the Nord Pool market. 

Mongolia 

Mongolia’s electricity market is generally 

well-balanced, and the electricity imported 

the isolated border areas. In 2006, the electricity 

exports from Russia to Mongolia made 

174.22 million kWh, which is nearly the same 

as the year before. 

China 

In 2006, Russia increased its electricity deliveries 

to China to 522.91 million kWh, up 

30.98 million kWh compared to 2005. This was 

made possible by the commissioning of the 

cross-border 220 kV transmission line Blagoveshchenskaya 

— Sirius. 

Electricity Imports 

In 2006, ZAO “INTER RAO UES” imported 5.12 

billion kWh of electricity, a nearly 50 percent 

drop compared to 2005. 

Such a decrease compared 2005 was due 

to the reduction in the electricity imports from 

Kazakhstan, Lithuania, Ukraine, and Azerbaijan. 

Kazakhstan accounts for over 70 percent 

of all electricity imports in Russia, Lithuania, 

and Ukraine each account for approximately 

10 percent, and Azerbaijan has a 6 percent 

share. 

The reduction in imports was due to the 

Electricity Imports by Country,% 


Ukraine 

Electricity imports from Ukraine’s energy system 

amounted to 498.11 million kWh, down 

2,330.89 million kWh from the year before. 

Such a decrease was due to the lack of a contract 

the until November 2006. 

Kazakhstan 

Imports of electricity from Kazakhstan ensure 

uninterrupted power supply to consumers in 

the areas of the Russian Federation bordering 

on Kazakhstan, and to supply cheaper 

electricity to the Russian market. Russia im- 

Boris Titov, Chairman of the 

Delovaya Rossiya Association 

of Entrepreneurs: 

“RAO “UES of Russia” is 

known to have assets abroad. 

Each megawatt generated by 

the RAO UES facilities will 

primarily work for the benefit 

of Russia. The Company is 

obviously turning the import/ 

export balance in favour of 

domestic consumers.” 

from Russia is chiefly used to meet the peak 

changes in the electricity prices which were 

ported 3,676.86 million kWh of electricity from 

Stroitelnaya Gazeta newspaper, 

demand and supply electricity to customers in 

unacceptable for Russia based on the energy 

Kazakhstan in 2006, down 182 million kWh 

20 October 2006 

tariffs and balances approved for 2006. 


Electricity Exports, billions kWh 

0 5 10 15 20 25 


5.942 14.590 

Lithuania 

Electricity imports from Lithuania are intended 

for consumers in the Kaliningrad Region 

and ensure uninterrupted power supply in this 

area suffering from energy shortfalls. This also 

helps reduce the transit of Russian electricity 

via the energy systems of the Baltic Republics 

and Belarus. Russia imported 507.41 million 

kWh of electricity from Lithuania in 2006, a fall 

of 2,446.59 million kWh compared to 2005. 

KAZAKHSTAN 72% 

LITHUANIA 10% 

UKRAINE 10% 

AZERBAIJAN 6% 

BELARUS 1% 

LATVIA 0.7% 

MONGOLIA 0.3% 

2005 

10.380 12.879 

2004 

6.607 12.173 

2003 

8.397 12.265 

2002 

8.799 9.562 

NON-FSU COUNTRIES 

FSU COUNTRIES

Corporate Social Responsibility 127 


Corporate Social 

Responsibility 

Corporate Social Responsibility: Underlying 

Principles and Implementation 

Framework 

RAO “UES of Russia” consistently puts into its 

business practice the principles of the Social 

Charter of Russian Business that is predicated 

on recognition of close ties between the 

Company’s business interests and its economic 

and social responsibility. 

In RAO “UES of Russia”, CSR is implemented 

through a non-financial risk management 

system, which was completed in 2006. The 

system incorporates international standards 

and COSO-II risk management guidelines, 

AA1000SES stakeholder engagement standards, 

GRI guidelines for financial reporting 

(G3 Guidelines), AA1000AS audit standards, 

and ISAE 3000. The System provides for: 

identification and monitoring of non-financial 

risks; 

risk optimization project management; 

information support and non-financial reporting; 

personnel training and professional development, 

including training of employees of 

subsidiaries and dependent companies of 

RAO “UES of Russia”. 

In 2006, RAO “UES of Russia” introduced 

the Non-Financial Risks Management Concept, 

Environment Policy Concept, Charity 

and Sponsorship Corporate Policy Concept. 

For the purpose of ensuring successful implementation 

of the Concepts, RAO “UES of 

Russia” made certain changes to the existing 

corporate standards, including investment activity 

standards, approved HSE programs and 

initiatives on other issues of social concern, 

established a permanent framework for conflict 

prevention and resolution involving trade 

unions, consumer protection agencies, business 

associations, and other stakeholders. 

RAO UES subsidiaries and dependent 

companies are implementing the Company’s 

environmental and social initiatives and introducing 

a system for non-financial risk 

management and non-financial reporting. 

Major Activities on 

Non-Financial Risk Optimization 

of cross-subsidies under various scenarios; 

differentiation of power consumption 

by various categories of households; 

consumer satisfaction with the performance 

of energy companies. 

Non-financial risk management focused on: 

streamlining relationships with consumers 

and establishing a conflict resolution 

framework; 

ensuring affordability of electricity and 

heating supply, including new consumer 

connection to the distribution grids; 

improving the quality of power and heating 

supply to health-care facilities as provided 

for in the Agreement signed by the Ministry 

of Health Care and Social Development 

of Russia, Rostekhnadzor, and RAO “UES 

of Russia”, which came into force in 2006; 

enhancing environmental security of power 

facilities including measures to be considered 

in the course of investment project development 

and implementation; 

increasing efficiency of social partnership, 

including control over performance of the 

Industry Tariff Agreement; establishing 

a framework for social and employment 

conflict resolution (in conjunction with the 

Power Industry Employers Association and 

All-Russia Power Industry Trade Union); 

enhancing information transparency of energy 

companies on environment and other 

matters of social concern. 

Establishment of the Customer Relations 

In 2006, RAO “UES of Russia”, Delovaya 

Rossiya, and OPORA Rossii business associations 

entered into an Agreement to cooperate 

on key issues in the energy industry, whereby 

a Tripartite Advisory Board was set up. There 

is also a standing task force dealing with social 

and employment issues that consists of 

representatives of RAO “UES of Russia”, All- 

Russia Power Industry Trade Union, and Association 

of Energy Industry Employees. 

Public hearings on social responsibility and 

corporate sustainability of RAO “UES of Russia” 

became a landmark event in the area of 

stakeholder relations in 2006. 

In 2006, RAO “UES of Russia” published its 

2004-2005 Report on Social Responsibility and 

Corporate Sustainability, which was audited by 

Ernst & Young. This was the first report by a 

Russian company prepared in accordance 

with the G3 GRI Guidelines. 

The performance of RAO “UES of Russia” 

in the area of non-financial risk management 

and non-financial reporting was acknowledged 

in ratings and awards organized by international 

institutions. 

Promoting CSR Business Practices 

in Subsidiary Energy Companies 

In 2006, three training courses on management 

of non-financial risks and corporate social 

reporting were developed and formed the 

basis for six training events and workshops, 

which were attended by representatives 

15 

In 2006, the Company completed an analysis 

of non-financial risks associated with the investment 

stage of RAO UES restructuring and 

produced mid-term estimates that also cover 

the post-reorganization period. Research and 

Management Headquarters at RAO “UES 

of Russia” was a systemic solution to management 

of the entire range of non-financial 

risks associated with customer relations. 

The principal goals of the CRM Headquarters 

of over 70 energy companies of RAO UES 

Holding Company. 

Last year, RAO “UES of Russia” held its 

Social Power Annual Awards for the second 

time. 44 energy companies submitted over 

risk forecasting activities engaging leading 

are conflict resolution, control over perfor- 

60 applications in six categories, including 

scientific and advisory centers covered: 

forecasting implications of elimination 

mance of subsidiaries, and ensuring efficient 

feedback. 

“Customer Servicing Quality”, “Occupational 

Safety”, “Environmental and Charitable Programmes”, 

etc.

In 2006, people 

stopped arguing 

whether the electricity sector 

reform would be implemented. 

The reform opponents 

lost their last hope. Politicians, 

officials, journalists, 

and, importantly, ourselves, 

our staff, not only realized, 

but also felt that we are 

on the home straight. Surprisingly, 

it is getting more 

and more interesting 

to work here 

SDCs of RAO “UES of Russia” implemented 

a range of pilot projects on non-financial risk 

management. Leveraging on the experience 

gained by RAO “UES of Russia”, seven gene- 

ration companies published their CSR brochures. 

In 2006, OAO RAO “UES of Russia” joined 

two leading international associations dealing 

with social responsibilities issues - International 

Business Leaders Forum (IBFL) 

and Transparency Enhancement Association 

(AccountAbility). Being an e8 member, the 

Company takes part in the development of an 

international standard for non-financial reporting 

in the energy industry, the GRI Electric 

Utility Sector Supplement. 

To keep the public informed about the 

Company’s major activities and performance 

in 2006, RAO “UES of Russia” participated 

in the following industry events: 

Russia Power-2006; 

Hanover Trade Fair; 

International Safety in Power Idustry-2006; 

Power Gen Europe-2006; 

8th Specialist Exhibition “Fuel”. “Power Industry” 

within the framework of the Great 

Rivers-2006 Forum; 

3rd Specialist Exhibition “Ecology in Power 

Industry - 2006”; 

IT in Power Industry exhibition and conference; 

Energy Asia-2006; 

International Industrial and Economic Forum 

“Russia United”; 

Reliability of UES of Russia exhibition and 

conference; 

9th International Exhibition and Congress 

“Energy Savings and Energy Efficiency”; 

Plans and Priorities 

The priorities for RAO “UES of Russia” in corporate 

social responsibility in 2007 - 2008 are: 

improving the quality of services delivered 

to customers of grid, distribution and generation 

companies; 

increasing the efficiency of non-financial 

risk management, including environment 

risks in the course investment project development 

and implementation by RAO 

“UES of Russia” and its subsidiaries; 

ensuring proper performance under the 

Power Industry Tariff Agreement and other 

employer’s obligations; reducing the number 

of incidents resulting in occupational 

injuries; 

promoting the CSR policy of OAO RAO “UES 

of Russia” in companies of the post-reform 

sector structure. 

The 2006 - 2007 Report on social responsibility 

and corporate sustainability of RAO “UES 

of Russia” will be published in 2008 based on 

a new non-financial reporting standard for 

electricity utilities (GRI Electric Utility Sector 

Supplement). In 2007, RAO “UES of Russia” 

periodically posts on its web-site information 

brochures for various stakeholders, including 

brochures on Non-Financial Risk Management, 

Consumer Relations, Public Hearings 

for Assessing Investment Project Implications 

for Environment, etc. 

Environment Policy. Facilitating 

Energy Savings 

The major lines of the Company’s Environment 

Policy for 2007-2008 were approved by a 

resolution by the Management Board of RAO 

“UES of Russia” of 25 September 2006. 

The objective of the RAO UES environment 

policy is ensuring a due level of environmental 

security, raising RAO UES energy companies’ 

capitalization by ensuring reliable 

and environment-friendly power generation, 

transmission, and distribution, and increasing 

investment attractiveness of the energy 

companies. 

It is very important for the Company to take 

into account statements made by securities 

market players and major banks concerning 

an environmentally responsible approach 

to corporate lending, the so called Equator 

Principles approved by major banks (banks 

account for 80 percent of total project finance 

loans in emerging markets). 

In 2006, RAO “UES of Russia” put considerable 

efforts into implementation of conceptual 

documents of the Holding Company, such as 

the Environment Policy of RAO “UES of Russia” 

and the Program for Implementation of 

RAO “UES of Russia” Environment Policy 

for 2006. The Company’s management appointed 

corporate officers to take charge of 

environment activities in subsidiaries; there 

were seven pilot energy companies identified 

for the purpose of launching an environment 

management and environment audit system; 

the Company invested a lot of time and effort 

into the development of corporate regulations 

governing environment safety issues. 

In 2006, there were meetings held with representatives 

of WWF, All-Russia Nature Protection 

Society, EColine, Greenpeace of Russia, 

Russian Regional Environment Center, and 

ANO NERA to discuss various issues of environment 

activities of RAO “UES of Russia”. 

As part of its environment management 

and environment audit activities, the Company 

developed and approved a Framework 

Program and Framework Regulation governing 

the procedure for environmental audit at 

RAO UES energy companies, as well as environment 

auditor certification systems for conformity 

with the corporate requirements. The 

Company also started the implementation of 

pilot projects to implement environment management 

and audit systems in WGCs, TGCs, 

and IDCs. 

In 2006, RAO “UES of Russia” and subsidiaries 

carried out the first series of public 

hearings for the purpose of assessing environmental 

implications of investment projects. 

The objective of the hearings was both 

to provide the public and environment organizations 

with objective information on the 

projects and to obtain recommendations on 

environment activities. 

In response to a proposal presented by 

environmental organizations, RAO “UES of 

Russia” supported the Program for Promotion 

of Energy Efficiency and Efficient Use of 

Resources in the Public Sector and Utilities, 

which was implemented by non-for-profit 

organizations. The Practical Guidelines for 

Energy Savings posted on the Company’s 

website were one of the deliverables of the 

above-mentioned program. 

Pavel Rozhkov, Mission Head 

at the Paralympic Games: 

“RAO “UES of Russia” is the 

general sponsor of the Russian 

national team. They gave 

our team 8.5 million rubles 

before the Winter Games 

in Turin, and thanks to them, 

we had absolutely no difficulties 

purchasing special outfit 

and making preparations.” 

Moskovskaya Pravda newspaper, 

4 July 2006 

Leonid Gozman, 

8th International Specialist Exhibition “En- 


ergy Savings - 2006”. 

RAO “UES of Russia”

Appendix 

2 0 0 6 


16

132 APPENDIX 1 2 0 0 6 ANNUAL REPORT OF RAO “UES OF RUSSIA” 133 

Corporate Governance 

Code Compliance Report* 

CORPORATE GOVERNANCE CODE REGULATION COMPLIANCE COMMENTS 

Company’s Corporate Governance Practices 

Board of Directors 

The Revised Corporate Governance Code of OAO RAO “UES of Russia” was approved by the 

Company’s Board of Directors on 26 May 2006. The Company monitors, on an ongoing basis, 

compliance with the provisions of the Corporate Governance Code of RAO “UES of Russia”. 

The Company should comply with the 

procedure for electing and dismissing 

Board members. 

Yes 

The procedure for election of the Board of Directors of OAO RAO 

“UES of Russia” is set out in Section 11.2 of the Company Charter 

and Section 1.3 of the Regulation on the Board of Directors. 

The current Board members were elected by cumulative voting 

at the AGM held 28 June 2006. The Board of Directors has 

15 members, two of which are simultaneously members of the 

Company’s Management Board. The Chairman of the Board 

of Directors was unanimously elected at the Board meeting 

of 28 July 2006 (Board Minutes No. 225). 


The Company Charter should contain 

a provision that Board members may 

be elected only by cumulative voting. 

Yes 

As provided by Section 11.2 of the Company Charter, members 

of the Board of Directors of OAO RAO “UES of Russia” are elected 

by cumulative voting at a general shareholder meeting. 

Corporate governance principles and structure 

Compliance with the corporate 

governance principles. 

Yes 

The main corporate governance principles are set out in the 

Corporate Governance Code. The Management Board of 

RAO “UES of Russia” ensures compliance with these principles. 

Accountability. The Board of Directors of the Company 

is accountable to all shareholders in accordance with 

the applicable laws. 

Fairness. The Company’s management bodies ensure protection 

of shareholders’ rights and legitimate interests. 

Transparency. The Company discloses information about 

all material facts relating to its activities. 

Responsibility. The Company recognizes the rights 

of all stakeholders under the applicable laws. 

There should be no restrictions as to the 

number of times a person may be elected 

a Board member. 

The Board of Directors of the Company 

should have at least three independent 

directors. 


should have no more than 25 percent 

of executive directors that are simultaneously 

employees of the Company. 

Yes 

Yes 

Yes 

As provided by Section 11.2 of the Company Charter, persons 

elected members of the Board of Directors of OAO RAO “UES 

of Russia” may be re-elected an unlimited number of times. 

Pursuant to the shareholder resolution adopted by the AGM 

of RAO “UES of Russia” on 28 June 2006, the following directors 

qualifying as independent were elected to the Board of Directors 

of the Company: Grigory Beryozkin; Andrey Bugrov; Kirill 

Seleznyov; and Seppo Remes. 

Out of the 15 Board members, two are Company employees 

(Chairman of the Company’s Management Board Anatoly Chubais 

and Deputy Chairman of the Management Board Yakov Urinson), 

which makes less than 25 percent. 

The Company should have internal 

regulations governing activities 

of its management and control 

bodies and their compliance with 

the applicable laws. 

Yes 

OAO RAO “UES of Russia” has approved the following 

bylaws: Charter, Regulation on the General Shareholders’ 

Meeting, Regulation on the Board of Directors; Regulation 

on Remuneration of Members of the Board of Directors for 

the Performance of their Duties and Reimbursement 

of their Expenses Relating to the Performance of their 

Functions as Board Members; Regulation on the Activities 

of the Auditing Commission; Regulation on Remuneration 

of Members of the Auditing Commission for the Performance 

of their Duties and Reimbursement of their Expenses 

Relating to Visits to the Company’s Facilities; Regulation 

on the Management Board. 

All these documents are in compliance with the Russian 

statutory provisions. The most recent amendments to the 

Company’s regulations were approved by the shareholders 

at the AGM of RAO “UES of Russia” held on 28 June 2006. 

The Company should comply with 

the principle that the Company’s chief 

executive may not hold the position 

of the Board Chairman. 

The Company’s Board of Directors should 

have the following Committees: Audit 

Committee, HR and Remunerations Committee, 

Strategy and Reform Committee, 

and Appraisal Committee. 

The Audit Committee and HR and Remunerations 

Committee should be headed 

by independent directors. 

Yes 

Yes 

Yes 

The Company’s chief executive (Chairman of the Management 

Board) is Anatoly Chubais. The Board meeting held 28 July 2006 

(Board Minutes No. 225) elected Alexander Voloshin as Chairman 

of the Board of Directors. 

The Company has the following committees under the Board 

of Directors: Audit Committee, HR and Remunerations Committee, 

Strategy and Reform Committee, and Appraisal Committee. 

The Committees’ activities are governed by the approved regulations. 

The Board meeting held 28 July 2006 elected Seppo Remes 

as Chairman of the Audit Committee. Mr. Remes is a member 

of the Company’s Board of Directors meeting the independence 

requirements. 

The Board meeting held 28 July 2006 elected Andrey Bugrov 

as Chairman of the HR and Remunerations Committee. 

Mr. Bugrov is a member of the Company’s Board of Directors 

meeting the independence requirements. 

The regulations governing the 

activities of the Company’s management 

and control bodies should be available 

on the corporate website. 

*H2 2006 

Yes 

The following bylaws and regulations governing the activities 

of the Company’s management and control bodies may 

be viewed on the corporate website of RAO “UES of Russia”: 

Charter; Regulation on the General Shareholders’ Meeting; 

Regulation on the Board of Directors; Regulation on 

Remuneration of Members of the Board of Directors for the 

Performance of their Duties and Reimbursement of their 

Expenses Relating to the Performance of their Functions as 

Board Members; Regulation on the Activities of the Auditing 

Commission; Regulation on Remuneration of Members of the 

Auditing Commission for the Performance of their Duties and 

Reimbursement of their Expenses Relating to Visits to the 

Company’s Facilities; Regulation on the Management Board. 

The Company should have an approved 

schedule for holding Board meetings. 


should hold its meetings no less frequently 

than once a quarter. 

The Company’s internal regulations should 

set out the procedure for holding meetings 

of the Board of Directors of the Company. 

Yes 

Yes 

Yes 

On 28 July 2006, the Board of Directors of RAO “UES of Russia” 

approved the tentative list of matters to be considered at the 

Board meetings in July 2006 to June 2007. Also, the Company’s 

Board of Directors approves Board meeting schedules for each 

quarter. 

As provided by Section 7.2 of the Regulation on the Board 

of Directors of RAO “UES of Russia”, Board meetings are held 

as needed, but no less frequently than once a quarter. 

In the second half of 2006, the Board of Directors held 

15 meetings (Board Minutes No. 225-239). 

The rules of procedure for the preparation for and holding 

of Board meetings are set out in the Regulation on the Board 

of Directors of RAO “UES of Russia” approved by the general 

shareholders’ meeting on 28 June 2002 (as amended).




Information on the amounts of remuneration 

paid to the members of the Company’s 

Board of Directors is available to the general 

public on the corporate website. 

Yes 

The provisions concerning payment of remuneration 

to the Board members is set out in the Regulation on Remuneration 

of Members of the Board of Directors for the Performance 

of their Duties and Reimbursement of their Expenses Relating 

to the Performance of their Functions as Board Members approved 

on 26 June 2002 (as amended), which may be viewed on 

the corporate website. 


information disclosure requirements, 

including through the Internet. 

General Meeting of Shareholders 

Yes 

The Company discloses information in the manner and within 

the time frame required by the Russian securities laws, including 

publication on the website of RAO “UES of Russia”. 

No loans should be provided to Board 

members. 

The Board members should comply 

with their responsibilities set out in the 

Company’s regulatory documents. 

Yes 

Yes 

During the reporting period, no loans were provided 

to the members of the Board of Directors of the Company. 

The members of the Board of Directors of RAO “UES of Russia” 

are in compliance with their obligations provided by Section 

3 of the Regulation on the Board of Directors of the Company. 

Shareholders should receive notice 

of the General Shareholder Meeting 

of the Company. 

Yes 

The procedure for notifying shareholders of a General Shareholder 

Meeting of RAO “UES of Russia” is set forth in Section 

10.5 of the Company Charter. In H2 2006, the Company held 

an Extraordinary General Meeting of shareholders. The notice 

of the EGM held on 6 December 2006 was published 

on 26 September 2006 in the Izvestia newspaper and posted 

on the website of RAO “UES of Russia”. 

Management Board and Chairman of the Management Board 

Compliance with the procedure for election 

of the Chairman and members of the 

Management Board. 

The rules of procedure for the activities of 

the Management Board of the Company 

should be complied with. 

The Company should have in place a system 

of remuneration of the Management 

Board approved by the Board of Directors. 

Members of the Management Board 

have an obligation to avoid any actions 

that present a potential or actual conflict 

between their interest and the interests 

of the Company; if such conflict occurs, it 

should be disclosed to the Board of Directors 

of the Company. 

The members of the Management Board 

should disclose to the Company any information 

regarding their business activities 

not related to the Company’s interests. 

Yes 

Yes 

Yes 

As provided by Section 11 of the Company Charter and Section 

2 of the Regulation on the Management Board of RAO “UES 

of Russia”, Management Board members are nominated 

by the Management Board Chairman and appointed by the Board 

of Directors. During the reporting period, the Board of Directors 

of the Company approved the appointment of Victor Pauli 

as Management Board member on the nomination of the 

Management Board Chairman (Board minutes No. 237, dated 

8 December 2006). The procedure for the appointment of Victor 

Pauli was complied with. 

Pursuant to Section 5 of the Regulation on the Management 

Board of RAO “UES of Russia”, meetings of the Management 

Board are held according to the plan approved by the Management 

Board Chairman. 

The system for incentivizing (remunerating) members 

of the Management Board was approved by the Board 

of Directors of RAO “UES of Russia” (Board Minutes No. 172, 

dated 25 June 2004, as amended). 

Yes There were no violations during the second half of 2006. 

Yes There were no violations during the second half of 2006. 

The procedure for making modifications 

to the agenda items of a General Shareholder 

Meeting should be complied with. 

The Company shareholders should be 

given a possibility to review the list of persons 

entitled to participate in the General 

Shareholder Meeting of the Company, beginning 

on the date of notice of the General 

Shareholder Meeting and until the meeting 

is closed (in case of a physical meeting), 

or until the closing date for receipt of ballots 

(where the voting is conducted without 

a physical meeting). 

The Company shareholders should have 

a possibility to review the documents relating 

to the General Shareholder Meeting 

through electronic communications media, 

including the Internet. 

The General Shareholder Meeting must 

be attended by the then current members 

of the Board of Directors, the Management 

Board, members of the executive 

bodies, the Auditing Commission, and the 

Company Auditors. 

Dividend Policy 

Yes 

Yes 

Yes 

Yes 

The procedure for making modifications to the agenda items of a 

General Shareholder Meeting of RAO “UES of Russia” is set forth 

in Section 10.6 of the Company Charter. The Company received no 

motions from its shareholders to modify the agenda items. 

Pursuant to Section 10.4. of the Company Charter, the Company 

makes the list of persons entitled to participate in the General 

Shareholder Meeting available for review upon request of such 

persons, provided that they are entitled to at least 1 percent of 

votes. However, the document and mailing address details of the 

individuals included on the list may not be provided without their 

consent. 

As provided by Article 52 of the Law On Joint Stock Companies, 

shareholders of RAO “UES of Russia” will have 20 days before 

the General Shareholder Meeting, or 30 days, if the Meeting 

agenda includes a proposal to reorganize the Company, to review 

the documents relating to the General Meeting of Shareholders 

through the Internet. RAO UES Order No. 29 of 23 January 

2007 sets out the procedure for the publication of such information 

on the corporate website. The documents relating to the 

Extraordinary General Meeting of shareholders were published 

on the Company website in the Section “Shareholder and Investor 

Relations”. 

The Extraordinary General Meeting of RAO “UES of Russia” 

of 6 December 2006 was held by postal vote (without a physical 

meeting), which means that the directors, officers and auditors 

were not expected to attend. 

Interaction between the Board of Directors and the executive bodies 

The Management Board should report on 

its activities to the Board of Directors of 

the Company. 

Company Shareholders 

Yes 

Shareholder Rights, Protection of Shareholder Rights 

Observance of the shareholders’ right to 

receive timely information. 

Yes 

During H2 2006, two quarterly reports on the activities 

of the Management Board of the Company were submitted to the 

Board of Directors, in Q2 and Q3 2006 (Board Minutes No. 225 

of 28 August 2006 and No. 234 of 27 October 2006, respectively). 

The Company provides information to shareholders 

in the manner and within the time frame required 

by the Russian laws, Charter and Regulation on the Information 

Policy of RAO “UES of Russia”. 


Regulation on the Dividend Policy. 


procedure and time frame for dividend 

payment. 

Yes 

Yes 

The current methodology used by RAO “UES of Russia” 

in the calculation of dividends was approved by the Board 

of Directors on 28 January 2005 (Board Minutes No. 186). 

Under Section 8.1. of the Charter of RAO “UES of Russia”, 

the Company may, once a year, decide on the dividend payment. 

The dividends are paid out of the Company’s net income for the 

current year. The Company shareholders decide on payment 

of the annual dividends and the dividend amount to be paid 

on different classes of shares at the General Meeting as recommended 

by the Board of Directors. 

The AGM of RAO “UES of Russia” held on 28 June 2006 approved 

the dividend payment amounts and set 1 December 2006 

as the dividend payment deadline. 

The Company paid the dividends to its shareholders by that 

deadline.




Information Disclosure and Transparency 

Information Disclosure Policies and Practices 

The Company should have an internal regulation 

approved by the shareholders which sets 

out the policies for the review of the Company’s 

activities by the Auditing Commission. 

Yes 

The Regulation in the Activities of the Auditing Board 

of RAO “UES of Russia” was approved by the AGM held 

on 22 June 2002. 


Regulation on the Information Policy. 

Yes 

On 23 June 2006, the Board of Directors of RAO “UES of Russia” 

approved the Restated Regulation on Information Policy of the 

Company (Board Minutes No. 224). 

The Company should ensure compliance 

with the regulation setting out the policies 

for the review of the Company’s activities 

by the Auditing Commission. 

Yes 

The Regulation on the Activities of the Auditing Commission 

of the Company is being complied with. 

Information disclosure 

on the corporate website 

Yes 

The Company updates its website on a daily basis. Managers 

of RAO “UES of Russia” ensure information disclosure pursuant 

to the Regulation on Information Policy and Order On implementing 

a new structure of the corporate website and ensuring regular 

disclosure of information on the activities of OAO RAO “UES of 

Russia” on its website. 

The Auditor’s Report should be reviewed 

by the Audit Committee of the Company 

before the report is submitted for approval 

by the Company shareholders. 

Yes 

The Audit Committee under the Board of Directors of the Company 

will review the Company’s financial statements (accounts) 

for 2006 and prepare its opinion of the Auditor’s report on these 

statements prior to submitting its opinion to the General Shareholder 

Meeting scheduled for 27 June 2007. 

Information disclosure in Annual 

and Quarterly reports. 

Yes 

Pursuant to the Regulation on Information Policy, RAO “UES 

of Russia” regularly discloses information on the Company’s 

activities in its annual and quarterly reports. Order No. 739 of 

23 October 2006 currently in effect governs the procedure for 

making available the information which is needed for the issuer’s 

quarterly report. During the reporting period, the Company issued 

quarterly issuer reports for Q2 and Q3 2006. The reports are 

published on the corporate website of RAO “UES of Russia” in the 

Shareholder and Investor Relations section. 

Ownership Structure 

The Company should disclose information 

on the beneficial owners holding 5 or more 

percent of its voting shares. 

Yes 

Pursuant to the Regulation on Information Policy, the Company 

endeavours to disclose information on the beneficial owners of 

5 or more percent of its voting shares based on the information 

provided by the registered holders of the 5 or more percent 

of the Company’s voting shares. 

Availability of an English website. Yes The website of RAO “UES of Russia” has an English version. 

Company Restructuring and Relationships with its Subsidiaries and Dependent Companies 

Availability of a document approved by the 

Board of Directors of the Company which 

regulates the use of the insider information 

(i.e. material information about 

the Company’s activities, its shares and 

other securities, and securities transactions 

which is not publicly available and 

may have a material effect on the market 

value of the Company’s shares and other 

securities). 

Financial Statements 

Yes 

At its meeting held 27 May 2005, the Board of Directors approved 

the Procedure for the declaration of insider deals in securities 

of OAO RAO “UES of Russia” and its SDCs by the persons with 

access to insider information (Board Minutes No. 196). 

Company Restructuring 


reorganization concept statement. 

Yes 

The principal document setting out, at the corporate level, the 

objectives and goals of the electricity industry reform and the 

concept for the Company reorganization is the Strategy Concept 

of RAO “UES of Russia” for Years 2003-2008 “5+5”, which was 

adopted by the Board of Directors on 29 May 2003. 

On 3 February 2006, the Board of Directors of RAO “UES of Russia” 

unanimously approved the Supplement “Territorial Generation 

Companies to be Established on the Basis of the Assets of 

RAO UES Holding Company” to the Company’s Strategy Concept 

for Years 2003-2008, and on 26 February 2006, the Supplement 

“Wholesale Companies of the Electricity Market”. 

The Company should maintain accounting 

records and prepare statutory financial 

statements (accounts) in accordance with 

the Russian Accounting Standards. 

The Company should release its financial 

statements (accounts) in accordance with 

the IFRS. 

Control of Business Activities 

The Company should have an internal 

control policy approved by the Board 

of Directors setting out the internal control 

framework for the Company activities. 

Yes 

Yes 

Yes 

The Company prepares statutory financial statements 

in accordance with the Russian Accounting Standards 

on a quarterly basis. 

The Consolidated Interim Financial Statements of RAO UES 

Group for the six months ended 30 June 2006 were signed and 

released on 5 December 2006. The Consolidated Financial Statements 

of RAO UES Group for the first nine months of 2006 and 

for 2006 are under preparation as of the time this Annual Report 

is being prepared. 

The Regulation on Internal Control Procedures of RAO “UES of 

Russia” was approved by the Board of Directors on 16 March 2006 

(Board Minutes No. 217). 

The Company should ensure observance 

of the rights of the Company’s shareholders 

in the reorganization process. 

Yes 

Principles and Practices of Relationships with the Subsidiaries and Dependent Companies 

In order to safeguard the rights and interests of the Company 

shareholders, shares of the new companies created in the 

process of the Company’s reorganization are distributed to its 

shareholders pro rata to their holdings in compliance with the 

applicable Russian laws and regulations. 

The Company shareholders who do not take part in the voting or 

vote against the reorganization are entitled to require the Company 

to purchase all or part of their shares, which provides an 

additional safeguard of shareholders’ rights in the course of the 

Company’s reorganization. Such shares are to be purchased at a 

price determined by the Board of Directors of RAO “UES of Russia” 

with the involvement of an independent appraiser. The procedure 

for such share repurchase is established by the Federal Law 

On Joint Stock Companies and is set out in the notice 

of the General Shareholder Meeting of the Company circulated 

to the shareholders. 

The Company should have a dedicated internal 

control department to oversee compliance 

with the Regulation on Internal Control. 

Yes 

The Company has dedicated departments in charge 

of the internal control compliance. 

The Company should have approved Rules 

for the interaction with the Subsidiaries 

and Dependent Companies. 

Yes 

The Board of Directors approved the Restated Procedure for 

Interaction with Business Companies Whose Shares (Ownership 

Interests) are Held by RAO “UES of Russia” on 21 April 2006 

(Board Minutes No. 220).


Information on Members of the Board of Directors, 

Management Board, Committees and Commissions under 


NAME BRIEF INFO POSITION 


Born in 1974 

Education: University 

Citizenship: Russia 

Director General, OOO “Mezhregiongaz”; member 

of the Management Board, Head of the Marketing, 

Gas and Liquid Hydrocarbons Processing Department, 

OAO “Gazprom” 


Born in 1944 

Education: University, 

Doctor of Economics, Professor 



Head of the Corporate Center, 


Board of Directors of RAO “UES of Russia” Elected on 28 June 2006* 

Chubais, Anatoly Borisovich* 

Born in 1955 

Education: University, Candidate of Economic 

Sciences, Associate Professor 






Born in 1956 



Board Chairman 


Born in 1960 


Candidate of Economic Sciences 


Chairman of the Supervisory Board, 

ZAO “NOMOS-BANK” 


Born in 1957 


Doctor of Economics 


Deputy Board Chairman; Minister of Industry 

and Energy of the Russian Federation 

*owns 0.00195% shares in OAO RAO “UES of Russia” 

Committees and Commissions under the Board of Directors of RAO “UES of Russia”** 

Androsov, Kirill Gennadyevich 



Born in 1972 



Born in 1966 


Candidate of Chemical Sciences 


Born in 1952 




Deputy Minister of Economic Development 

and Trade of the Russian Federation 


Managing Director, ZAO “Interros Holding 

Company” 

Audit Committee. Committee members 

Remes Juha Seppo 



Born in 1955 



Born in 1960 



Born in 1966 



Committee Chairman, 

Senior Advisor, Finnish National Fund for 

Research and Development (Sitra) under 

the supervision of the Finnish Parliament 





Born in 1964 



Minister of Economic Development and Trade 



Born in 1952 




Company” 

Dementyev, Andrey Vladimirovich 

Born in 1967 



Deputy Minister of Industry and Energy 


Appraisal Committee . Committee members 

Nikitin, Gleb Sergeyevich 




Born in 1977 



Born in 1953 



Born in 1955 




Born in 1955 



Citizenship: Finland 

Head of the Directorate for Property Management 

of Business Sector Organizations, Federal Agency 

for Federal Property Management of the Russian 

Federation 

Head of the Federal Energy Agency 


Director, Sector Development Department 

of the Government of the Russian Federation 

Senior Advisor, Finnish National Fund 

for Research and Development (Sitra) under 

the supervision of the Finnish Parliament 


Kosarev, Sergey Borisovich 

Akhanov, Dmitry Sergeyevich 

Buyanov, Mikhail Ivanovich 


Born in 1960 



Born in 1960 

Education: University, Candidate of Historical 

Sciences, Associate Professor 

Born in 1975 


Born in 1949 


Candidate of Technical Sciences 

Born in 1964 





Head of the Property Relations Department, 


Head of the Strategy Department of the Reform 

Management Strategy, Head of the Project Implementation 

Center, RAO “UES of Russia” 

Head of the Electricity Industry Directorate, 

Federal Energy Agency of the Russian Federation 

Deputy Head of the Federal Agency for Management 

of Special Economic Zones of the Russian 

Federation 

* positions held at the time of election 

**positions held by members of all the Committees and Commissions at the time of election




Kaminsky, Alexey Vladimirovich 

Kats, Yury Iosifovich 

Makshakov, Sergey Vladimirovich 

Born in 1964 


Born in 1963 


Born in 1963 



Deputy Head of Directorate, Head of Valuation 

Division of the Directorate for Property Accounting, 

Analysis, Valuation, and Control of its Use, 

Federal Agency for Federal Property Management 


Director General, “ESN Energo” 

Head of Bookkeeping and Tax Accounting Department 

of the Corporate Center, RAO “UES of 

Russia” 

Buyanov, Mikhail Ivanovich 

Gabov, Andrey Vladimirovich 

Kachay, Alexey Romanovich 

Klekovkin, Anton Igorevich 

Born in 1949 


Candidate of Technical Sciences 

Born in 1973 

Education: University, Candidate of Law 

Born in 1977 


Born in 1973 


Head of the Electricity Industry Directorate, Federal 

Energy Agency of the Russian Federation 

Corporate Governance and Shareholder Relations 

Department [of the Corporate Center], 


Deputy Head of the Strategy Department, 


Director of Investment Projects Division, 

ZAO “Interros Holding Company” 

Matvienko, Alexey Vasilyevich 

Mironosetsky, Sergey Nikolaevich 

Born in 1973 


Born in 1965 


Investment Manager, ZAO “Interros Holding 

Company” 

Deputy Director General, OAO “SUEK Holding 

Company” 

Kurbatov ,Mikhail Yuryevich 

Born in 1981 


Deputy Head of Division for Restructuring of the 

Electricity and Utilities Sector at the Department 

for State Regulation of Tariffs and Infrastructure 

Reforms, Ministry of Economic Development and 

Trade of the Russian Federation 

Mikhaylova, Elena Vladimirovna 

Born in 1977 


Deputy Director General for Corporate 

and Property Relations, OOO “Mezhregiongaz” 


Born in 1965 



Company” 

Myasnikov, Victor Mikhaylovich 

Tabakova, Svetlana Alekseyevna 

Born in 1967, 


Born in 1955 


Deputy Director of the Budget Policy and Finance 

Department, Ministry of Industry and Energy 


President of the Russian Appraisers Association 

Nikulov, Alexander Evgenyevich 

Pirozhenko Alexander Aleksandrovich 

Born in 1967 


Born in 1977 


Director General, ZAO “Promregion Holding” 

Deputy Head of Directorate for Control and 

Supervision in the Fuel and Power Sector, Federal 

Antimonopoly Service of the Russian Federation 


Born in 1955 




Research and Development (Sitra) under the 

supervision of the Finnish Parliament 

Redkin, Yury Vasilyevich 

Born in 1950 


Head of the Energy Division at the Sector Development 

Department, Government of the Russian 

Federation 

Fedotova, Marina Alekseyevna 

Shkolnikov, Yury Viktorovich 

HR and Remunerations Committee. Committee members 



Born in 1955 


Doctor of Economics, Professor 

Born in 1960 



Born in 1952 



Born in 1974 


Rector of the Professional Appraisal Institute, 

Prorector for Scientific Work, Financial Academy 

under the Government of the Russian Federation 


NP “Russian Board of Appraisers” 



Company” 

Director General, OOO “Mezhregiongaz”; member 

of the Management Board, Head of the Marketing, 

Gas and Liquid Hydrocarbons Processing 

Department, OAO “Gazprom” 


Romanovsky, Anatoly Anatolyevich 

Ryzhov, Sergey Vladimirovich 

Skribot Wolfgang 

Slobodin, Mikhail Yuryevich 

Sukhov, Alexey Albertovich 

Born in 1955 



Born in 1967 


Born in 1968 


Born in 1966 


Born in 1972 


Born in 1971 



Research and Development (Sitra) under the 

supervision of the Finnish Parliament 

Hermitage Capital Management Ltd 

Vice President, ZAO “ESN” 

Managing Director, Corporate Finance 

Department, ZAO “Gazprombank” 

Director General, ZAO “KES” 

Deputy Director of the Department for Structural 

and Tariff Policies in Natural Monopolies, Ministry 

of Industry and Energy of the Russian Federation 


Born in 1966 




Udaltsov, Yury Arkadyevich 

Born in 1961 


Candidate of Physics and Mathematics 

Member of the Management Board, Head of the 

Reform Management Center, 


Strategy and Reform Committee. Committee members 

Herne David 

Akhanov, Dmitry Sergeyevich 

Born in 1971 


Born in 1975 



Managing Director, Halcyon Advisors 

Head of the Strategy Department of the Reform 

Management Strategy, Head of the Project Implementation 

Center, RAO “UES of Russia” 


Born in 1960 



Commission for Investments and Ensuring Fuel Supplies Needed for Investment Projects 

under the Board of Directors of RAO “UES of Russia” 

Zadernyuk, Andrey Fedorovich 

Born in 1943 




Technical Director, OAO “Mezhregionenergo” 

Branis, Alexander Markovich 

Born in 1977 


Director, Prosperity Capital 

Abakumov, Alexey Mikhaylovich 

Born in 1972 


Director for Commerce, OOO “Energoauditcontrol 

Engineering Center”



Abyzov, Mikhail Anatolyevich 

Born in 1972 


Chairman of Board of Directors, OOO “RUKOM” 

Branis, Alexander Markovich 

Born in 1977 


Director, Prosperity Capital 


Born in 1964 


Deputy Head of the Federal Agency for Management 

of Special Economic Zones of the Russian 

Federation 

Dubinin, Sergey Konstantinovich 

Fedorov, Denis Vladimirovich 

Herne David 

Kazinets, Leonid Aleksandrovich 

Born in 1950 


Doctor of Economics 

Born in 1978 



Born in 1971 


Born in 1966 


member of Management Board, Financial 

Director, RAO “UES of Russia” 

Advisor to Director General, 

OOO “Mezhregiongaz” 

Managing Director, Halcyon Advisors 

Advisor to Chairman of Management Board 


Management Board of RAO “UES of Russia”* 

NAME POSITION RESPONSIBILITIES 

Chubais, Anatoly 

Borisovich** 

Chairman of the Management 

Board since 1998 

Shaping the corporate policy and development 

strategy for OAO RAO “UES of 

Russia”; organizing its activities; government 

relations 

YEAR OF 

BIRTH 

1955 

EDUCATION 

University, Candidate 

of Economic Sciences, 

Associate Professor 

Kravchenko, Vyacheslav Mikhaylovich 

Kurbatov, Mikhail Yuryevich 

Klekovkin, Anton Igorevich 

Lebedinsky, Vladimir Igorevich 

Born in 1967 


Born in 1981 


Born in 1973 

Education: University, Master of Sciences 

Born in 1974 



Director of the Department for Structural and 

Tariff Policies in Natural Monopolies, Ministry 

of Industry and Energy of the Russian Federation 

Head of the Division for Restructuring of the 

Electricity and Utilities Sector at the Department 

for State Regulation of Tariffs and Infrastructure 

Reforms, Ministry of Economic Development 

and Trade of the Russian Federation 

Director of Investment Projects Division, 

ZAO “Interros Holding Company” 

Deputy Head of the Valuation Division, Federal 

Agency for Federal Property Management 


Corporate Center 

Urinson, 

Yakov Moiseyevich 

Drachevsky, 

Leonid Vadimovich 

Deputy Chairman of the 

Management Board, Head 

the Corporate Center; 

member of the Management 


Deputy Chairman of the 

Management Board; 

member of the Management 


Responsible for organizing the economic, 

production, information and technology 

processes, organization of capital 

management, formulation and implementation 

of the Company’s economic, 

financial, accounting, and HR policies 

Organization of the Company’s internal 

and external relations, advancement of 

its interests in the public domain 

in Russia and abroad 

1944 

1941 University 

University, Doctor 

of Economics, Professor 


Nikitin, Daniil Nikolaevich 

Petrov, Dmitry Yuryevich 

Pustoshilov, Pavel Petrovich 

Redkin, Yury Vasilyevich 

Romanenkova, Yulia Vasilyevna 

Born in 1965 


Born in 1972 


Born in 1977 



Born in 1974 


Born in 1950 


Born in 1969 



Company” 

Chairman of the Board of Directors, 

OOO “Power Management Consulting” 

Chief Advisor of the Expert Directorate under 

the President of the Russian Federation 

Head of the Financial Policy Department, 


Head of the Energy Division at the Sector Development 

Department, Government of the Russian 

Federation 

Director General, ZAO “Russian Trust Company” 

Ayuev, Boris Ilyich*** 

Vaynzikher, Boris 

Feliksovich**** 

Gozman, 

Leonid Yakovlevich 

Dubinin, Sergey 

Konstantinovich 

member of Management 

Board since 2004; Chairman 

of the Management 

Board, OAO “UES SO-CDA” 







Responsible for organizing the dispatching 

and control functions in the Unified 

Energy System of Russia 

1957 

Technical Director 1968 University 

Government and Community Relations 

Officer 

1950 

Chief Financial Officer 1950 


of Technical Sciences 


of Psychological Sciences, 

Associate Professor 

University, Doctor 

of Economics 

Ryzhov, Sergey Vladimirovich 

Born in 1968 


Vice President, ZAO “ESN” 

Pauli, Victor Karlovich***** 


Board since 2006 

Deputy Technical Director, Chief Technical 

Inspector 


Rutenberg, Alexander Borisovich 

Born in 1947 


Deputy Head of the Financial and Economic Directorate, 

Federal Energy Agency of the Russian 

Federation 

Smirnov, 

Pavel Stepanovich 



Legal support of the Company’s activities 1952 


of Law, Doctor 

of Economics 

Skaterschikov, Sergey Sergeyevich 

Smelov, Eduard Yuryevich 

Born in 1972 

Education: University, MBA 

Born in 1965 


President, OOO “Indexatlas” 

Senior Vice President for Strategy and Development, 

ZAO “KES” 

Trapeznikov, Andrey 

Vladislavovich 

*as of 31 December 2006 



Implementation of the Company’s 

common information policy 

1961 University


Information on Stakes and Voting Shares Held by 

OAO RAO “UES of Russia” in Other Joint Stock Companies* 

NAME POSITION RESPONSIBILITIES 

YEAR OF 

BIRTH 

EDUCATION 

Company name 

Date of company’s 

official registration 

Stake held by 


Percentage of voting 

shares held by 


Reform Management Center 

Companies in which OAO RAO “UES of Russia” Holds 100% Voting Shares 

Udaltsov, 

Yury Arkadyevich 

Business Units (BUs) 


Board since 2004; Head 

of Reform Management 

Center 

Responsible for formulating and ensuring 

a common policy approach for restructuring 

the SDCs and creating the target 

sector structure Formulation of the 

Company’s policy in the electricity market 

liberalization process 

1961 


of Physics 

and Mathematics 

The Management Board members in charge of the BUs are responsible for raising the operating efficiency at the 

SDCs of RAO “UES of Russia”, completion of the SDC restructuring, ensuring reliable and secure supply of electricity 

and heat to customers, implementation of the Company’s investment programme. 

REGIONAL ENERGOS 

Open Joint Stock Company for Power and Electrification 

“Yantarenergo” 

AO-POWER PLANTS 

14.01.1994 100% 100% 

Open Joint Stock Company “Ivanovskie CCGTs” 02.07.2004 100% 100% 

Chikunov, 

Alexander Vasilyevich 

member of Management Board since 2004; Managing Director 



Open Joint Stock Company 

“Mobile Gas Turbine Power Plants” 

24.07.2006 100% 100% 

Avetisyan, 

Vladimir Evgenyevich 

Voronin, Vyacheslav 

Pavlovich****** 

Rappoport, 

Andrey Natanovich 




of RAO “UES of Russia”, “Services” Business Unit 


of RAO “UES of Russia”, “Networks” Business Unit; 

Chairman of the Management Board, OAO “UES FGC” 



1963 


of Sociological Sciences 

Open Joint Stock Company “Sochinskaya TPP” 01.11.2002 100% 100% 

Open Joint Stock Company “Federal Grid Company 

of the Unified Energy System” (FGC) 

ENERGY MANAGEMENT COMPANIES 


“Northern Energy Management Company” 

25.06.2002 100% 100% 

02.08.2001 100% 100% 

Sinyugin, Vyacheslav 

Yuryevich******* 


of RAO “UES of Russia”, “Hydrogeneration” Business Unit; 

Chairman of the Management Board, OAO “HydroWGC” 

All members of the Management Board of RAO “UES of Russia” are citizens of the Russian Federation. 

**owns 0.00195 percent of shares in RAO “UES of Russia” 

***owns 0.0000124 percent of shares in RAO “UES of Russia” 

****owns 0.00003 percent of shares in RAO “UES of Russia” 

*****owns 0.000044 percent of shares in RAO “UES of Russia” 

******owns 0.000009 percent of shares in RAO “UES of Russia” 

*******owns 0.000092 percent of shares in RAO “UES of Russia” 

1969 


of Law 

Open Joint Stock Company “Middle-Volga 

Interregional Energy Management Company” 

13.12.2000 100% 100% 

Open Joint Stock Company “Southern Grid Company” 04.08.2006 100% 100% 


“Urals Energy Management Company” 


“Far Eastern Energy Management Company” 

OPERATIONAL DISPATCHING COMPANIES 

08.10.2002 100% 100% 

16.07.2001 100% 100% 

Information About Transactions Entered into Between Company and the Members of its Management Bodies 

In order to ensure disclosure of information about the transactions made by the members of the Board of Directors or the Management Board 

of OAO RAO “UES of Russia” (the “Company”) in accordance with the provisions of the Regulation on the Information Policy of the Company approved 

by the Board of Directors on 23 June 2006 (Board minutes No. 224), the Company has put in place arrangements to collect the relevant 

information by submitting request for disclosure to each member of the Board of Directors and Management Board of the Company. 

According to the information received from the directors and officers, no such transactions were made between 23 June 2006 

and 31 March 2007. 

Open Joint Stock Company “Central Dispatch Administration 

of the Unified Energy System of the Russian Federation” 

Open Joint Stock Company “System Operator – Central 

Dispatch Administration of the Unified Energy System” 

* as of 31 December 2006 

20.04.1993 100% 100% 

17.06.2002 100% 100%


Company name 



Stake held by 





Company name 



Stake held by 





SCIENTIFIC RESEARCH, DEVELOPMENT AND DESIGN COMPANIES 

Open Joint Stock Company “ChirkeiGESstroy” 06.03.1993 100% 100% 

Open Joint Stock Company “All-Russian Combustion 

Engineering Research Institute Awarded Two Orders 

of Red Banner of Labour” 

07.12.1993 100% 100% 

Open Joint Stock Company “Severovostokstroindustriya” 05.08.1993 100% 100% 

Open Joint Stock Company “Bureyagesstroy” 27.09.2000 100% 100% 

Open Joint Stock Company “Scientific Research Institute 

for Economics of Electric Power Industry” 

27.10.1993 100% 100% 

Closed Joint Stock Company 

“Energodental” (subsidiary of RAO “UES of Russia”) 

15.04.1996 100% 100% 


“Institute of Corporate Governance” 

29.10.2000 100% 100% 

Open Joint Stock Company “Aviaenergo Airlines” 30.06.1994 100% 100% 


“VNIPIenergoprom Association” 

27.10.1993 100% 100% 

Open Joint Stock Company “UES Center for Settlement 

of Accounts Receivable and Payable” 

07.10.1999 100% 100% 

Open Joint Stock Company “Dedicated Design Bureau 

for Combustion Engineering Equipment VTI” 

14.12.1993 100% 100% 


“Electrification Exhibition Pavilion” 

07.10.2005 100% 100% 

Open Joint Stock Company “TsOTenergo” 12.10.1993 100% 100% 


“Agency for Power Balance Forecasting” 

04.08.2005 100% 100% 


“G.M. Krzhizhanovsky Power Engineering Institute” 

22.11.1993 100% 100% 

REGIONAL GENERATION COMPANIES 

Open Joint Stock Company “UES Engineering Center – 

Gidroproekt, Lengidroproekt, Teploelektroproekt, 

ORGRES Firm” 

30.09.1993 100% 100% 


“Orenburg Heat Generation Company” 

01.07.2005 100% 100% 


“Energy Industry Science and Technology Center” 

17.07.2006 100% 100% 

Open Joint Stock Company “CNII NPKenergo” 02.11.1993 100% 100% 

REGIONAL RETAIL COMPANIES 


“Karelia Energy Retail Company” 

01.01.2005 100% 100% 


for High Voltage DC Transmission of Electricity” 

10.06.1993 100% 100% 


“Chuvash Energy Retail Company” 

01.01.2005 100% 100% 


“Povolzhye Engineering Center for Energy Industry” 

28.07.1999 100% 100% 


“Karachaevo-Cherkesskenergo” 

10.11.1993 100% 100% 


“Southern Power Engineering Center” 

Open Joint Stock Company “Urals Power Engineering 

Center – UralVNIPIEnergoprom, Uralselenergoproekt, 

UralTEP, UralORGRES, UralVTI, Uralenergosetproekt, 

Chelyabenergosetproekt” 

Open Joint Stock Company “Siberian Scientific Research, 

Design and Development Institute for Power Engineering 

Systems and Electric Power Grids” 

07.04.1993 100% 100% 

26.03.1993 100% 100% 

12.07.1993 100% 100% 

Open Joint Stock Company “Kalmenergosbyt” 28.10.2005 100% 100% 

Open Joint Stock Company “Orenburgenergosbyt” 01.07.2005 100% 100% 


“Tyumen Energy Retail Company” 

01.07.2005 100% 100% 

Open Joint Stock Company “Altayenergosbyt” 06.07.2006 100% 100% 

Open Joint Stock Company “Khakasenergosbyt” 01.07.2005 100% 100% 

Open Joint Stock Company “Dalselenergoproekt Scientific 

Research, Design, Development and Technology Institute” 

19.04.1993 100% 100% 

WHOLESALE GENERATION COMPANIES 

CONSTRUCTION, SUPPLY AND SERVICE ORGANIZATIONS 


“Federal Hydrogeneration Company” 

26.12.2004 100% 100% 


“Main Computation Center for Energy Industry” 


“Energostroisnabkomplekt UES” 

17.05.1993 100% 100% 

09.06.2001 100% 100% 

Open Joint Stock Company “Volgaenergosnabkomplekt” 25.03.1993 100% 100% 

INTERREGIONAL DISTRIBUTION COMPANIES 

Open Joint Stock Company “Center and North 

Caucasus Interregional Distribution Company” 


“North West Interregional Distribution Company” 

17.12.2004 100% 100% 

23.12.2004 100% 100% 


“Sevkavgidroenergostroy” 

08.02.1993 100% 100% 


“Urals and Volga Interregional Distribution Company” 

28.02.2005 100% 100%


Company name 



Stake held by 





Company name 



Stake held by 






“Siberia Interregional Distribution System” 

DISTRIBUTION COMPANIES 

04.07.2005 100% 100% 


Open Joint-Stock Company “Sixth Generation Company 

of Wholesale Electricity Market” (WGC-6) 

17.03.2005 93.48% 93.48% 

Open Joint Stock Company “Karelenergo” 28.04.1993 100% 100% 

Open Joint-Stock Company “First Generation Company 


23.03.2005 91.68% 91.68% 


of the Chuvash Republic “Chuvashenergo” 

12.04.1993 100% 100% 

Open Joint-Stock Company “Fourth Generation Company 


04.03.2005 89.60% 89.60% 


“Orenburgenergo” 

26.01.1993 100% 100% 

Open Joint-Stock Company “Second Generation Company 


09.03.2005 80.93% 80.93% 


“Tyumenenergo” 

12.03.1993 100% 100% 

Open Joint-Stock Company “Fifth Generation Company 


27.10.2004 75.03% 75.03% 


“Khakasenergo” 

TERRITORIAL GENERATION COMPANIES 


“Territorial Generation Company No. 11” 

Companies in which RAO “UES of Russia” Holds 75%-100% Voting Shares 


27.09.1993 100% 100% 

26.08.2005 100% 100% 


Open Joint Stock Company “Kalmenergo” 03.02.1993 96.40% 96.40% 




Companies in which RAO “UES of Russia” Holds 51%-75% Voting Shares 


01.07.2005 81.56% 81.56% 


“Kamchatskenergo” 

09.04.1993 98.68% 98.68% 

Altay Kray Open Joint Stock Company 

for Power and Electrification “Altayenergo” 

30.07.1993 54.66% 72.23% 


Open Joint Stock Company “Kaliningradskaya CHPP-2” 01.10.1998 90.90% 90.90% 

Open Joint Stock Company “Shchekinskie PGU” 20.04.1998 85.58% 85.58% 

Open Joint Stock Company for Power and electrification 

“Kolyma Production and Energy Company” 

24.02.1995 78.63% 78.63% 

Open Joint Stock Company “Bureyskaya HPP” 14.04.1998 78.52% 78.52% 



for Power and Electrification “Magadanenergo” 



“Severo-Zapadnaya CHPP” (North-West CHPP) 

13.04.1993 49.00% 64.39% 

22.02.1995 66.45% 66.45% 

Open Joint Stock Company “KubanGRES” (Kuban TPP) 03.12.1997 60.53% 60.53% 


“Luchegorsk Fuel and Energy Complex” (LuTEK) 

01.12.1997 56.33% 56.33% 


“North-Western Power Engineering Center” 


“Siberian Energy Science and Technology Center” 

02.11.1993 99.77% 99.77% 

04.06.1993 99.02% 99.02% 

Open Joint Stock Company “Experimentalnaya TPP” 19.06.2001 51.38% 51.38% 

Open Joint Stock Company “Murmanskaya CHPP” 01.10.2005 49.20% 65.52% 



Open Joint Stock Company “Geotherm” 30.08.1994 71.61% 71.61% 

Open Joint Stock Company “Test Bed of Ivanovskaya TPP” 04.11.2004 83.53% 83.53% 

Open Joint Stock Company “Tomskenergoremont” 31.03.2005 52.03% 52.03% 

Open Joint Stock Company “Dalenergostroyindustria” 13.09.1999 76.64% 76.64% 

Open Joint Stock Company “Tomskelectrosetremont” 31.03.2005 52.03% 52.03% 

Open Joint Stock Company “Tsentr Energetiki” 21.09.1992 75.03% 75.03% 

Open Joint Stock Company “Tver Energy Repair Company” 11.01.2005 49.00% 65.33%


Company name 



Stake held by 





Company name 



Stake held by 





Open Joint Stock Regional Power and Electrification 

Company “Corporate Service Systems” 


“Sverdlovsk Energy Service Company” 

01.03.1993 49.00% 65.29% 

01.04.2005 49.00% 65.33% 

Open Joint Stock Company “Marienergosbyt” 01.01.2005 64.44% 70.07% 

Open Joint Stock Company for Power 

and Electrification “Samaraenergo” 

09.04.1993 55.46% 55.79% 

Open Joint Stock Company “Permenergospetsremont” 01.04.2005 49.00% 64.36% 

Open Joint Stock Company “Stavropolenergosbyt” 01.04.2005 55.13% 71.94% 

Open Joint Stock Company “Permenergoremont” 01.04.2005 49.00% 64.36% 


“Mordovia Energy Retail Company” 

01.02.2005 53.14% 53.14% 


“Mobile Power Engineering” 

29.08.1994 49.00% 65.33% 

Open Joint Stock Company “Kaluga Retail Company” 01.04.2004 52.25% 52.25% 

Open Joint Stock Company “Energotekhkomplekt” 16.07.1993 49.00% 65.33% 


“Tomsk Energy Retail Company” 

31.03.2005 52.03% 59.88% 


“Smolensk Energy Repair Company” 

01.02.2005 48.68% 59.26% 

Open Joint Stock Company “Krasnoyarksenergosbyt” 01.10.2005 51.75% 66.33% 


“South Yakutia Energy Company” 

01.11.2006 47.39% 55.32% 


for Power and Electrification “Amurenergo” 

10.06.1993 50.62% 57.81% 

Open Joint Stock Company “Yarenergoremont-Holding” 22.11.2004 47.36% 59.81% 

Open Joint Stock Company “ATP Yarenergo-Holding” 22.11.2004 47.36% 59.81% 

INSURANCE COMPANY 


“Energozashchita Insurance Broker” 


13.09.2004 61.00% 61.00% 


“Ivanovo Energy Retail Company” 


“Kolskaya Energy Retail Company” 


“Tambov Energy Retail Company” 


“Voronezh Energy Retail Company” 

01.01.2005 49.66% 56.55% 

01.10.2005 49.20% 65.52% 

11.01.2005 49.01% 56.01% 

31.08.2004 49.01% 65.35% 


“Tomskenergo” 

17.03.1993 52.03% 59.88% 


“Novgorod Energy Retail Company” 

01.04.2005 49.00% 62.86% 

Open Joint Stock Company “Kurgan Generation Company” 01.07.2006 49.00% 53.81% 


“Omsk Electricity Generation Company” 


“Ulyanovsk Territorial Generation Company” 


“Saratov Territorial Generation Company” 


“Samara Territorial Generation Company” 

REGIONAL MANAGEMENT COMPANIES 

Closed Joint Stock Company for Development of International 

Electric Relations “INTER RAO UES” 

03.08.2005 49.00% 60.39% 

03.04.2006 49.00% 65.33% 

03.04.2006 48.50% 64.04% 

01.04.2006 42.82% 55.35% 

26.05.1997 60.00% 60.00% 

Open Joint Stock Company “Tyvaenergo-Holding” 01.10.2005 51.75% 66.33% 


“North-West Energy Management Company” 


01.10.2005 49.00% 57.40% 

Open Joint Stock Company “Oryol Retail Company” 01.04.2005 49.00% 60.35% 

Open Joint Stock Company “Tver Energy Retail Company” 11.01.2005 49.00% 65.33% 

Open Joint Stock Company “Belgorod Retail Company” 01.10.2004 49.00% 65.29% 


“Nizhny Novgorod Retail Company” 


“Kurgan Energy Retail Company” 


“Udmurt Energy Retail Company” 

01.04.2005 49.00% 62.30% 

01.07.2006 49.00% 53.81% 

01.01.2005 49.00% 55.39% 

Open Joint Stock Company “Chelyabenergosbyt” 31.01.2005 49.00% 58.06% 


“Penza Energy Retail Company” 

01.01.2005 49.00% 60.21% 

Open Joint Stock Company “Chita Energy Retail Company” 30.12.2005 49.00% 62.16% 

Open Joint Stock Company “Sverdlovenergosbyt” 01.04.2005 49,00% 65.33% 

Open Joint Stock Company “Perm Energy Retail Company” 01.04.2005 49.00% 64.36% 

Kabardino-Balkaria Open Joint Stock Company for Power 

and Electrification (“Kabbalkenergo”) 

11.12.1992 65.27% 65.27% 

Open Joint Stock Company “Kurskenergosbyt” 01.02.2005 49.00% 59.47%


Company name 



Stake held by 





Company name 



Stake held by 





Open Joint Stock Company “Petersburg Retail Company” 01.10.2005 49.00% 57.40% 

Open Joint Stock Company “Krasnoyarskenergo” 21.04.1994 52.24% 52.24% 

Open Joint Stock Company “Bryansk Retail Company” 01.10.2004 49.00% 65.22% 

Open Joint Stock Company “Tomsk Distribution Company” 31.03.2005 52.03% 59.88% 

Open Joint Stock Company “Kostroma Retail Company” 01.01.2005 49.00% 65.33% 


and Electrification “Ulyanovskenergo” 

23.12.1992 49.00% 65.33% 

Open Joint Stock Company “Dalenergo” 07.04.1993 48.99% 65.33% 

Open Joint Stock Company “Volgogradenergosbyt” 01.01.2005 48.99% 61.33% 

Open Joint Stock Company “Smolenskenergosbyt” 01.02.2005 48.68% 59.26% 


and Electrification “Belgorodenergo” 


and Electrification “Smolenskenergo” 


and Electrification “Ivenergo” 


and Electrification “Kolenergo” 

01.04.2005 50.43% 64.61% 

12.03.1993 49.85% 60.51% 

13.01.1993 49.66% 56.55% 

10.02.1993 49.27% 65.53% 


and Electrification “Khabarovskenergo” 

07.05.1993 48.48% 60.21% 


and Electrification “Volgogradenergo” 

24.06.1993 49.27% 61.48% 

Open Joint Stock Company “Energosbyt Rostovenergo” 11.01.2005 48.43% 62.76% 


and Electrification “Tambovenergo” 

30.12.1992 49.01% 56.01% 


and Electrification “Saratovenergo” 

05.03.1993 48.36% 64.04% 


and Electrification “Voronezhenergo” 

11.12.1992 49.01% 65.35% 

Open Joint Stock Company “Kirovenergosbyt” 01.05.2005 48.17% 63.96% 

Open Joint Stock Company “Yakutskenergo” 08.06.1994 47.39% 55.32% 



and Electrification “Sverdlovenergo” 


and Electrification “Novgorodenergo” 

15.02.1993 49.01% 65.34% 

25.01.1993 49.00% 62.86% 

Open Joint-Stock Company “Third Generation Company 


23.11.2004 59.72% 59.72% 


and Electrification “Oryolenergo” 

26.11.1992 49.00% 60.35% 

TRANSMISSION (TRUNK GRID) COMPANIES 


“Tver Energy System” (Tverenergo) 

11.08.1993 49.00% 65.33% 


“Samara Transmission Company” 

01.04.2006 55.03% 55.35% 

Nizhny Novgorod Open Joint Stock Company 

for Power and Electrification “Nizhnovenergo” 

19.08.1993 49.00% 62.30% 


“Saratov Transmission Company” 

03.04.2006 53.13% 64.04% 


and Electrification “Udmurtenergo” 

16.04.1993 49.00% 55.39% 

Open Joint Stock Company “Kurgan Trunk Grid Company” 01.07.2006 49.00% 53.81% 

Open Joint Stock Company “Chita Trunk Grids” 30.12.2005 49.00% 62.16% 



“Caucasus Energy Management Company” 


and Electrification “Marienergo” 


and Electrification “Lenenergo” 

01.08.2001 67.34% 67.34% 

25.02.1993 64.44% 70.07% 

22.01.1993 56.01% 56.01% 

Open Joint Stock Company “Stavropolenergo” 01.02.1993 55.13% 71.94% 


and Electrification “Chelyabenergo” 


and Electrification “Penzaenergo” 


and Electrification “Chitaenergo” 


and Electrification “Arkhenergo” 


and Electrification “Permenergo” 


and Electrification “Kurskenergo” 

18.02.1993 49.00% 58.06% 

12.11.1992 49.00% 60.21% 

10.02.1993 49.00% 62.16% 

02.11.1993 49.00% 59.05% 

21.12.1992 49.00% 64.36% 

16.02.1993 49.00% 59.47% 

Open Joint Stock Company “Mordovenergo” 15.01.1993 53.14% 53.14% 

Open Joint Stock Company “Bryanskenergo” 26.02.1993 49.00% 65.22% 


and Electrification “Kalugaenergo” 

20.01.1993 52.25% 52.25% 


and Electrification “Kostromaenergo” 

28.01.1993 49.00% 65.33%


Company name 



Stake held by 





Company name 



Stake held by 






“Ulyanovsk Distribution Company” 

03.04.2006 49.00% 65.33% 

Open Joint Stock Company “Mosteplosetenergoremont” 01.04.2005 50.90% 50.90% 


“Saratov Distribution Company” 

03.04.2006 48.50% 64.04% 

Open Joint Stock Company “Rostovenergo” 13.04.1993 48.43% 62.76% 

Open Joint Stock Company “Mosenergosetstroy” 01.04.2005 50.90% 50.90% 

Joint Stock Company 

“United Energy System GruzRosenergo” 

09.09.1996 50.00% 50.00% 

Yaroslavl Open Joint Stock Company for Power 

and Electrification “Yarenergo” 

11.01.1993 47.36% 59.81% 

Open Joint Stock Company “Diagnostics for Hydraulic, 

Electrical and Other Critical Facilities” 

09.07.1993 49.11% 49.11% 


“Samara Distribution Company” 

01.04.2006 43.21% 55.35% 

Open Joint Stock Company “Yugenegosnabsbyt Specialized 

Components and Equipment Supply Administration” 

25.12.1992 49.02% 49.02% 



“Nizhny Novgorod Energy Repair Company” 

01.04.2005 49.00% 49,00% 



22.03.2005 64.83% 64.83% 


“Penza Energy Repair Company” 

01.01.2005 49.00% 49.00% 



27.04.2005 61.85% 61.85% 


“North East Energy Company” 

13.04.1994 49.00% 49.00% 


“Yeniseyskaya Territorial Generation Company (TGC-13)” 

01.07.2005 56.92% 56.92% 


“UES Energy Construction Complex” 

02.02.2006 49.00% 49.00% 



Companies in which OAO RAO “UES of Russia” Holds 25%-51% Voting Shares 



and Electrification “Ingushenergo” 


and Electrification “Sakhalinenergo” 

Chechen Republic power and electrification 

open-type joint stock company “Grozenergo” 



“Pilot and Production Verkhne-Mutnovskaya GeoTPP” 

25.03.2005 55.67% 55.67% 

21.01.1997 49.00% 49.00% 

21.06.1993 49.00% 49.00% 

17.02.1993 49.00% 49.00% 

08.04.2005 48.04% 48.04% 

Open Joint Stock Company “Zelenchuckskie HPPs” 10.03.1998 46.48% 46.48% 

MANAGEMENT ENERGY COMPANY 


“Moscow Management Power Grid Company” 


03.10.2005 50.00% 50.00% 

Open Joint Stock Company “Central Design Bureau 

for Modernization and Repair of Power Generating 

Equipment at Power Plants” 

Open Joint Stock Company “Sibtekhenergo” – Engineering 

Firm for Adjustment and Improvement of Technology and 

Operation of Electric Power Equipment of Enterprises and 

Systems” 

Joint Venture - closed joint stock company “Pontoel Intergovernmental 

Dispatch Center for Operational Dispatch 

and Coordination of Parallel Work of Energy Systems” 

02.02.1993 49.00% 49.00% 

22.12.1992 48.99% 48.99% 

11.10.1994 40.00% 40.00% 

Open Joint Stock Company “Russian Communal Systems” 26.06.2003 25.00% 25.00% 



“Komi Regional Generation Company” 


“Norilsk-Taymyr Energy Company” 

01.07.2006 50.12% 50.35% 

14.06.2005 49.00% 49.00% 

Open Joint Stock Company “Kuban Generation Company” 01.07.2006 49.00% 49.00% 


“Arkhangelsk Generation Company” 

Kuzbass Open Joint Stock Company for Power 

and Electrification (“Kuzbassenergo”) 

01.04.2005 49.00% 49.00% 

30.12.1993 49.00% 49.00% 


“Specialized Design Bureau for Repair and Modernization” 

01.04.2005 50.90% 50.90% 


“North-Ossetia Hydrogeneration Company” 

02.11.2005 43.98% 43.98% 


REGIONAL MANAGEMENT COMPANIES 


“Moscow Heat Distribution Company” 

01.04.2005 50.90% 50.90% 


“Management Energy Company” 

01.04.2005 50.90% 50.90%


Company name 



Stake held by 





Company name 



Stake held by 






“Buryatia Management Company” 

30.12.2005 46.80% 46.80% 


“Moscow City Electricity Distribution Company” 

01.04.2005 50.90% 50.90% 



“Moscow United Electricity Distribution Company” 

01.04.2005 50.90% 50.90% 


“Dagestan Energy Retail Company” 

01.07.2005 51.00% 51.00% 


“Komienergo Joint Stock Energy Company” 

11.02.1993 50.11% 50.35% 

Open Joint Stock Company “Mosenergosbyt” 01.04.2005 50.90% 50.90% 

Open Joint Stock Company “Komi Energy Retail Company” 01.07.2006 50.11% 50.35% 


“Lipetsk Energy Retail Company” 


and Electrification “Sevkavkazenergo” 


“Vladimir Energy Retail Company” 

11.01.2005 49.02% 49.02% 

28.04.1993 49.00% 49.00% 

01.01.2005 49.00% 49.00% 

Open Joint Stock Company “Vologda Retail Company” 01.10.2005 49.00% 49.00% 


“Omsk Energy Retail Company” 


“Kuban Energy Retail Company” 

03.08.2005 49.00% 49.00% 

01.07.2006 49.00% 49.00% 

Open Joint Stock Company “Arkhangelsk Retail Company” 01.04.2005 49.00% 49.00% 


“Kuzbass Energy Retail Company” 

01.07.2006 49.00% 49.00% 

Open Joint Stock Company “Tula Retail Company” 01.04.2005 49.00% 49.00% 


and Electrification “Lipetskenergo” 

22.12.1992 49.02% 49.02% 

Open Joint Stock Company “Vladimirenergo” 19.11.1992 49.00% 49.00% 


and Electrification “Kurganenergo” 


and Electrification “Vologdaenergo” 


and Electrification “Omskenergo” 


and Electrification of Kuban (“Kubanenergo”) 

Open Joint Stock Company “Kuzbassenergo – 

Regional Electricity Grid Company” 


and Electrification “Tulenergo” 


and Electrification “Ryazanenergo 


and Electrification “Pskovenergo” 

05.02.1993 49.00% 49.00% 

10.02.1993 49.00% 49.00% 

14.12.1992 49.00% 49.00% 

10.02.1993 49.00% 49.00% 

01.07.2006 49.00% 49.00% 

25.12.1992 49.00% 49.00% 

26.10.1992 49.00% 49.00% 

13.01.1993 49.00% 49.00% 


“Ryazan Energy Retail Company” 

11.01.2005 49.00% 49.00% 


and Electrification “Astrakhanenergo” 

11.12.1992 48.66% 48.66% 


“Astrakhan Energy Retail Company” 

11.01.2005 48.66% 48.66% 


and Electrification “Kirovenergo” 

30.11.1992 48.17% 48.17% 

Open Joint Stock Company “Buryatenergosbyt” 30.12.2005 46.80% 46.80% 


and Electrification “Buryatenergo” 

24.05.1993 46.80% 46.80% 




“Trunk Electricity Grid of the Komi Republic” 

01.07.2006 50.11% 50.35% 


and Electrification “Mosenergo” 

06.04.1993 50.90% 50.90% 

Open Joint Stock “Kuban Trunk Grids” 01.09.2006 49.00% 49.00% 



09.12.2004 50.03% 50.03% 


“Kuzbassenergo Trunk Electricity Grids” 

01.07.2006 49.00% 49.00% 


“Southern Generation Company - TGC-8” 

22.03.2005 50.01% 50.01% 


“Buryatia Electricity Trunk Grids” 

30.12.2005 46.80% 46.80% 



07.12.2004 49.45% 49.45% 




19.04.2005 49.19% 49.99% 

Dagestan Open Joint Stock Company for Power 

and Electrification “Dagenergo” 

13.11.1992 51.00% 51.00% 



20.04.2005 47.32% 50.02%


Company name 



Stake held by 





Company name 



Stake held by 





Companies in which OAO RAO “UES of Russia” Holds under 25% of Voting Shares 


Open Joint Stock Company “Energougol” 03.10.1996 16.50% 16.50% 

Open Joint Stock Company “Zarubezhenergostroy” 09.12.1992 9.51% 9.51% 

Open Joint Stock Company “Nurenergo” 04.12.2001 23.00% 23.00% 


“Trest Severovostokenergostroy” 

29.10.1992 8.78% 8.78% 

Bashkiria Open Joint Stock Company for Power 

and Electrification “Bashkirenergo” 

02.11.1992 21.27% 22.29% 


“National Energy Export-Import Company” 

19.08.1993 2.30% 2.30% 


Open Joint Stock Company “Gazenergo” 08.01.1997 0.48% 0.48% 

Open Joint Stock Company “Zapadno-Sibirskaya CHPP” 

(West Siberian CHPP) 

01.07.2006 22.97% 22.97% 

Foreign Economic Closed Joint Stock Company 

for Cooperation in Energy Industry “ASEN” 

27.07.1992 0.15% 0.15% 

Open Joint Stock Company “Yuzhno-Kuzbasskaya TPP” 01.07.2006 22.97% 22.97% 

Open Joint Stock Company “Sulakenergo” 25.12.1998 12.38% 12.38% 


“Noglikskaya Gas-Fired Power Plant” 

09.08.1996 9.76% 9.76% 

Open Joint Stock Company “Sangtuda HPP-1” 02.03.2005 4.12% 4.12% 

Open Joint Stock Company “Zaramagskie HPPs” 10.05.2000 2.84% 2.84% 

Open Joint Stock Company “Vilyuiskaya HPP-3” 07.05.1999 1.90% 1.90% 


“Moscow Communications Center of Energy Sector” 

BANKING ORGANIZATIONS 

Open Joint Stock Company “Interbank Union – 

Unified Electric Energy Complex” 


“Commercial Bank “Evrositibank” 

Joint Stock Commercial Investment Industry 

and Construction Bank “Stavropolye” (OAO) 

05.07.1993 0.01% 0.01% 

18.08.1995 2.70% 2.70% 

20.08.1992 1.69% 1.69% 

27.07.1992 0.01% 0.01% 

Open Joint Stock Company “Krasnoyarskaya HPP” 07.10.1993 0.12% 0.12% 

INSURANCE COMPANIES 

Open Joint Stock Company “Kamskaya HPP” 10.02.1993 1 share 

Open Joint Stock Company “Nizhegorodskaya HPP” 09.12.2003 1 share 

Open Joint Stock Company “Saratovskaya HPP” 05.12.2003 1 share 

Open Joint Stock Company “Energogarant Insurance 

Joint Stock Company” 


28.08.1992 0.10% 0.10% 

Subsidiary Open Joint Stock Company 

“Upper Volga HPP Cascade” 

28.01.1993 1 share 


and Electrification “Novosibirskenergo” 

23.02.1993 14.18% 16.85% 

Open Joint Stock Company “Cheboksarskaya HPP” 01.01.2005 1 share 


ENERGY MANAGEMENT COMPANY 

Open Joint Stock Company “Sibirenergo” 15.12.2006 14.18% 16.85% 


“HydroWGC Management Company” 

16.04.2001 0,67% 0,67% 




“Khakass Transmission Company” 

01.07.2005 1 share 

OAO “Engineering Center” 16.12.2005 14,18% 16,85% 

Open Joint Stock Company “All-Russia Science 

and Research Institute of Hydraulic Engineering” 


for Power Engineering Facilities” 

22.07.1993 1 share 

05.01.1994 1 share 


“Orenburg Electricity Trunk Grids” 


“Tyumen Trunk Grid Company” 

01.10.2005 1 share 

01.09.2005 1 share 

Open Joint Stock Company “Chuvash Trunk Grids” 01.09.2005 1 share 


Open Joint Stock “Karelian Trunk Grids” 01.09.2005 1 share 

Open Joint Stock Company “Power Machines – ZTL, LMZ, 

Electrosila, Energomashexport” 

02.04.2003 22,43% 22,43% 

Total Joint Stock Companies 298


MEMBERSHIP OF OAO RAO “UES OF RUSSIA” IN NOT-FOR-PROFIT 

PARTNERSHIPS AND ORGANIZATIONS 

RAO UES Subsidiaries With Shares 

Traded on Stock Markets* 

Currently, OAO RAO “UES of Russia” participates in the activities of 20 not-for-profit 

organizations, including 13 not-for-profit partnerships, 3 funds and foundations, 

1 union, 1 association, and 2 not-for-profit entities. 

Not-for-profit Partnerships 

Non-profit Partnership “Administrator of Trading System of the Wholesale 

Electricity Market of the Unified Energy System” 

Not-for-profit Partnership “Innovations in Energy Sector” 

Not-for-profit Partnership “Corporate Educational and Research Center 

of the Unified Energy System” 

Not-for-profit Partnership “Energoremfond” 

Not-for-profit Partnership “Russian National Committee of the Conseil 

Internationale des Grandes Reseaux Electriques a Haute Tension (CIGRE) 

Not-for-Profit Partnership for Promoting Development of the Legal 

Framework for the Fuel and Energy Industry “Energy Club of Russia” 

Company Name 

Class of 

Shares** 

ZAO MICEX Stock 

Exchange 

OAO “RTS Stock Exchange” 

EXCHANGE MARKET 

CLASSICAL MARKET 

OAO “Astrakhanenergo” ord. ASRE ASREG ASRE 

OAO “Astrakhan Energy Retail Company” ord. ASSB ASSBG ASSB 

Not-for-profit Partnership “Gas Market Coordinator” 

Non-profit Partnership “Moscow Stock Exchange” 

Not-for-profit Partnership “Association of Land and Real Property Owners and 

Investors” 

Not-for-profit Partnership “National Corporate Governance Council” 

Not-for-profit Partnership of Guaranteeing Suppliers and Energy 

Retail Companies 

Not-for-profit Partnership “Corporate Dispute Resolution Center” 

OAO “Arkhenergo” 

OAO “Arkhangelsk Generation Company” 

ord. ARHE ARHEG ARHE 

pref. ARHEP ARHEPG ARHEP 

ord. ARGR ARGRG ARGR 

pref. ARGRP ARGRPG ARGRP 

Not-for-profit Partnership “Interregional Oil and Gas Complex Exchange” 

(NP “IOCE”) 

OAO “Arkhangelsk Retail Company” 

ord. ARSB ARSBG ARSB 

pref. ARSBP ARSBPG ARSBP 

Funds and Foundations 

OAO “Bashkirenergo” 

ord. – BEGYG BEGY 

pref. – BEGYPG BEGYP 

Non-governmental Pension Fund of the Electricity Industry 

Not-for-profit Foundation “Global Energy” 

OAO “Belgorodenergo” 

ord. BLRS BLRSG BLRS 

pref. BLRSP BLRSPG BLRSP 

Not-for-profit Investment Environmental Organization “Energy Carbon Fund” 

OAO “Belgorod Retail Company” 

ord. BLSB BLSBG BLSB 

pref. BLSBP BLSBPG BLSBP 

Unions 

OAO “Bryanskenergo” 

ord. BREN BRENG BREN 

pref. BRENP BRENPG BRENP 

All-Russia Industry Union of Energy Industry Employers 

OAO “Bryansk Retail Company” 

ord. BNSB BNSBG BNSB 

pref. BNSBP BNSBPG BNSBP 

Associations 

Electricity Industry Association “Unified Electrical Power Complex Corporation” 

OAO “Buryatenergosbyt” ord. BUSB BUSBG BUSB 

OAO “Vladimirenergo” ord. VLEN VLENG VLEN 

OAO “Vladimir Energy Retail Company” ord. VDSB VDSBG VDSB 

Other not-for-profit entities 

Edison Electric Institute, Inc. 

Non-governmental not-for-profit educational establishment 

“Institute for Management” 

OAO “Volgogradenergo” 

OAO “Volgograd Energy Retail Company” 

ord. VGEN/VGEN1 VGENG VGEN 

pref. 

VGENP/ 

VGENP1 

VGENPG 

VGENP 

ord. VGSB VGSBG VGSB 

pref. VGSBP VGSBPG VGSBP 

*as at 31 March 2007 

**ord. – ordinary shares; pref. – preferred shares


Company Name 

Class of 

Shares 


Exchange 




Company Name 

Class of 

Shares 


Exchange 




OAO “Volzhskaya HPP” 

ord. – VOLGG VOLG 

pref. – VOLGPG VOLGP 

OAO “Kostroma Retail Company” 

ord. KTSB KTSBG KTSB 

pref. KTSBP KTSBPG KTSBP 

OAO “Vologdaenergo” ord. VOLE VOLEG VOLE 

OAO “Vologda Retail Company” ord. VOSB VOSBG VOSB 

ord. VZEN VZENG VZEN 

OAO “Voronezhenergo” 

pref. VZENP VZENPG VZENP 

ord. VRSB VRSBG VRSB 

OAO “Voronezh Energy Retail Company” 

pref. VRSBP VRSBPG VRSBP 

ord. VOTG VOTGG VOTG 

OAO “Votkinskaya HPP” 

pref. VOTGP – – 

pref. – VLGSPG VLGSP 

OAO “Dagenergo” ord. DGEN DGENG DGEN 

OAO “Dagestan Energy Retail Company” ord. DASB DASBG DASB 

OAO “Dagestan Regional Generation Company” ord. DAGR DAGRG DAGR 

ord. – VLGSG VLGS 

OAO “Zhigulevskaya HPP” 

pref. – VLGSPG VLGSP 

OAO “Zagorskaya PSPP” ord. ZAGR ZAGRG ZAGR 

ord. – ZYGSG ZYGS 

OAO “Zeyskaya HPP” 

pref. – ZYGSPG ZYGSP 

ord. IVEN IVENG IVEN 

OAO “Ivenergo” 

pref. IVENP IVENPG IVENP 

ord. IVSB IVSBG IVSB 

OAO “Ivanovo Energy Retail Company” 

pref. IVSBP IVSBPG IVSBP 

OAO “Kalugaenergo” ord. KLEN KLENG KLEN 

OAO “Kaluga Retail Company” ord. KLSB KLSBG KLSB 

ord. RU0009100366 KIREG KIRE 

OAO “Kirovenergo” 

pref. RU0009100374 KIREPG KIREP 

ord. KISB KISBG KISB 

OAO “Kirovenergosbyt” 

pref. KISBP KISBPG KISBP 

ord. KOLE KOLEG KOLE 

OAO “Kolenergo” 

pref. – KOLEPG KOLEP 

OAO “Krasnoyarskenergo” 

ord. KRNG KRNGG KRNG 

pref. KRNGP KRNGPG KRNGP 

OAO “Krasnoyarskaya HPP” ord. KRSG KRSGG KRSG 

OAO “Kubanenergo” ord. KUBE KUBEG KUBE 

OAO “Kuzbassenergo” ord. KZBE KZBEG KZBE 

OAO “Kurganenergo” 

OAO “Kurskenergo” 

OAO “Kurskenergosbyt” 

OAO “Lenenergo” 

ord. – KRGEG KRGE 

pref. – KRGEPG KRGEP 

ord. KUEN KUENG KUEN 

pref. KUENP KUENPG KUENP 

ord. KUSB KUSBG KUSB 

pref. KUSBP KUSBPG KUSBP 

ord. LSNG LSNGG LSNG 

pref. LSNGP LSNGPG LSNGP 

OAO “Lipetskenergo” ord. LIEN LIENG LIEN 

OAO “Lipetsk Energy Retail Company” ord. LPSB LPSBG LPSB 

OAO “Magadanenergo” 

OAO “Marienergo” 

OAO “Marienergosbyt” 

ord. – MAGEG MAGE 

pref. – MAGEPG MAGEP 

ord. – MIENG MIEN 

pref. – MIENPG MIENP 

ord. MISB MISBG MISB 

pref. MISBP MISBPG MISBP 

OAO “Mosenergo” ord. MSNG MSNGG MSNG 

OAO “Mosenergosbyt” ord. MSSB MSSBG MSSB 

OAO “Moscow City Electricity Distribution Company” 

OAO “Moscow United Electricity Grid Company” 

(MOESK) 

ord. MGSV MGRSG MGRS 

ord. MSRS MSRSG MSRS 

OAO “Moscow Heat Distribution Company” ord. MSSV MSSVG MSSV 

OAO “Mordovenergo” ord. MREN MRENG MREN 

OAO “Mordovia Energy Retail Company” ord. MRSB MRSBG MRSB 

OAO “Kolenergosbyt” 

ord. – KOSBG KOSB 

pref. – KOSBPG KOSBP 

OAO “Murmanskaya CHPP” 

ord. – MUGSG MUGS 

pref. – MUGSPG MUGSP 

OAO “Komienergo” 

ord. KOEN KOENG KOEN 

pref. – KOENPG KOENP 

OAO “Nizhnovenergo” 

ord. NNGE NNGEG NNGE 

pref. NNGEP NNGEPG NNGEP 

OAO “Kostromaenergo” 

ord. KOSG KOSGG KOSG 

pref. KOSGP KOSGPG KOSGP 

OAO “Nizhny Novgorod Retail Company” 

ord. NNSB NNSBG NNSB 

pref. NNSBP NNSBPG NNSBP


Company Name 

Class of 

Shares 


Exchange 




Company Name 

Class of 

Shares 


Exchange 




OAO “Novgorodenergo” 

ord. NGNR NGNRG NGNR 

pref. NGNRP NGNRPG NGNRP 

OAO “Samaraenergo” 

ord. – SAGOG SAGO 

pref. – SAGOPG SAGOP 

ord. NGSB NGSBG NGSB 

OAO “Novgorod Energy Retail Company” 

pref. NGSBP NGSBPG NGSBP 

ord. – NVNGG NVNG 

OAO “Novosibirskenergo” 

pref. – NVNGPG NVNGP 

OAO “WGC-1” ord. OGKA OGKAG OGKA 

OAO “WGC-2” ord. OGKB OGKBG OGKB 

OAO “WGC-3” ord. OGKC OGKCG OGKC 

OAO “WGC-4” ord. OGKD OGKDG OGKD 

OAO “WGC-5” ord. OGKE OGKEG OGKE 

OAO “WGC-6” ord. OGKF OGKFG OGKF 

ord. OREN ORENG OREN 

OAO “Oryolenergo” 

pref. ORENP ORENPG ORENP 

ord. ORSB ORSBG ORSB 

OAO “Oryolenergosbyt” 

pref. ORSBP ORSBPG ORSBP 

ord. – OMNGG OMNG 

OAO “Omskenergo” 

pref. – OMNGPG OMNGP 

ord. – OMGRG OMGR 

OAO “Omsk Electricity Generation Company” 

pref. – OMGRPG OMGRP 

ord. OMSB OMSBG OMSB 

OAO “Omskenegosbyt” 

pref. OMSBP OMSBPG OMSBP 

ord. PNZE PNZEG PNZE 

OAO “Penzaenergo” 

pref. PNZEP PNZEPG PNZEP 

ord. PZSB PZSBG PZSB 

OAO “Penza Energy Retail Company” 

pref. PZSBP PZSBPG PZSBP 

ord. PMNG PMNGG PMNG 

OAO “Permenergo” 

pref. PMNGP PMNGPG PMNGP 

ord. PMSB PMSBG PMSB 

OAO “Perm Energy Retail Company” 

pref. PMSBP PMSBPG PMSBP 

ord. – PBSBG PBSB 

OAO “Petersburg Retail Company” 

pref. – PBSBPG PBSBP 

OAO “Pskovenergo” ord. PSEN PSENG PSEN 

ord. RTSE RTSEG RTSE 

OAO “Rostovenergo” 

pref. RTSEP RTSEPG RTSEP 

OAO “Saratovenergo” 

OAO “Sayano-Shushenskaya HPP” 

OAO “Sverdlovenergo” 

OAO “Sverdlovenergosbyt” 

OAO “Smolenskenergo” 

OAO “Smolensk Energy Retail Company” 

OAO “Stavropolenergo” 

OAO “Stavropol Electricity Generation Company” 

OAO “Tambovenergo” 

OAO “Tambov Energy Retail Company” 

ord. – SAREG SARE 

pref. – SAREPG SAREP 

ord. – SSHGG SSHG 

pref. – SSHGPG SSHGP 

ord. SVER SVERG SVER 

pref. SVERP SVERPG SVERP 

ord. SVSB SVSBG SVSB 

pref. SVSBP SVSBPG SVSBP 

ord. – SILMG SILM 

ord. SMOE SMOEG SMOE 

pref. SMOEP SMOEPG SMOEP 

ord. SMSB SMSBG SMSB 

pref. SMSBP SMSBPG SMSBP 

ord. STRG STRGG STRG 

pref. STRGP STRGPG STRGP 

ord. – STGRG STGR 

pref. – STGRPG STGRP 

ord. TAEN TAENG TAEN 

pref. TAENP TAENPG TAENP 

ord. TASB TASBG TASB 

pref. TASBP TASBPG TASBP 

OAO “TGC-1” ord. TGKA TGKAG TGKA 

OAO “TGC-2” 


ord. TGKB TGKBG TGKB 

pref. TGKBP TGKBPG TGKBP 

ord. TGKD TGKDG TGKD 

pref. TGKDP TGKDPG TGKDP 

OAO “TGC-5” ord. TGKE TGKEG TGKE 

OAO “TGC-6” ord. TGKF TGKFG TGKF 

OAO “Southern Generation Company TGC-8” ord. TGKH TGKHG TGKH 

OAO “TGC-9” ord. TGKI TGKIG TGKI 

OAO “TGC-13” ord. – TGKMG TGKM 


ord. 

TGKN/ 

TGKN–001D/ 

TGKN–002D/ 

TGKN–003D 

TGKNG 

TGKN 

OAO “Ryazanenergo” ord. RZEN RZENG RZEN 

OAO “Ryazan Energy Retail Company” ord. RZSB RZSBG RZSB 

OAO “Tverenergo” 

ord. TVRE TVREG TVRE 

pref. TVREP TVREPG TVREP


Company Name 

OAO “Tver Energy Retail Company” 

OAO “Tomskenergo” 

OAO “Tomsk Distribution Company” 

Class of 

Shares 


Exchange 




ord. TVSB TVSBG TVSB 

pref. TVSBP TVSBPG TVSBP 

ord. TOME TOMEG TOME 

pref. – TOMEPG TOMEP 

ord. TORS TORSG TORS 

pref. TORSP TORSPG TORSP 

Financing of RAO UES Investment Programme 

Projects in 2006*, millions of RUB 

ord. TOSB TOSBG TOSB 

OAO “Tomsk Energy Retail Company” 

pref. TOSBP TOSBPG TOSBP 

OAO “Tulenergo” ord. TLEN TLENG TLEN 

OAO “Tula Retail Company” ord. TLSB TLSBG TLSB 

Project name 

Amount of 

Financing 

Source(s) of Finance 

Funds 

designated for 

investment Depreciation Budgetary funds 

OAO “Udmurtenergo” 

OAO “Udmurt Energy Retail Company” 

OAO “Chelyabenergo” 

OAO “Chelyabenergosbyt” 

OAO “Chitaenergo” 

ord. UDME UDMEG UDME 

pref. UDMEP UDMEPG UDMEP 

ord. UDSB UDSBG UDSB 

pref. UDSBP UDSBPG UDSBP 

ord. CHNG CHNGG CHNG 

pref. CHNGP CHNGPG CHNGP 

ord. CLSB CLSBG CLSB 

pref. CLSBP CLSBPG CLSBP 

ord. – CHIEG CHIE 

pref. – CHIEPG 

Total 23,245 20,284 1,147 1,814 

THERMAL POWER PLANTS: 10,213 10,113 — 100 

Kaliningradskaya CHPP-2 5,052 4,952 — 100 

Ivanovskie PGU 5,161 5,161 — — 

HYDROELECTRIC POWER PLANTS: 9,798 8,651 1,147 — 

Bureyskaya HPP 4,427 3,294 1,133 — 

ord. CHSB CHSBG CHSB 

OAO “Chita Energy Retail Company” 

pref. CHSBP CHSBPG CHSBP 

ord. RTSB RTSBG RTSB 

OAO “Energosbyt Rostovenergo” 

pref. RTSBP RTSBPG RTSBP 

OAO “Yakutskenergo” ord. YKEN YAENG YAEN 

Irganayskaya HPP 1,200 1,194 6 — 

Boguchanskaya HPP 2,664 2,664 — — 

Zaramagskie HPPs 208 200 8 — 

OAO “Yarenergo” 

OAO “Yaroslavl Retail Company” 

ord. YARE YAREG YARE 

pref. YAREP YAREPG YAREP 

ord. YRSB YRSBG YRSB 

pref. YRSBP YRSBPG YRSBP 

Zelenchukskie HPPs 799 799 — — 

Series of Nizhne-Cherekskie HPPs 

(Sovetskaya HPP) 

200 200 — — 

Malaya Mezenskaya Tidal PP 300 300 — — 

BUREYSKAYA HPP INPOUNDMENT AREAS 3,214 1,500 — 1,714 

DESIGN & EXPLORATION WORK 20 20 — — 

*according to List No.70-e/b, dated 3 December 2005, approved by the Administration of the Russian Federation Federal Tariff Service


Information on Transactions Made by 

OAO RAO “UES of Russia” in 2006 

In 2006, RAO “UES of Russia” did not enter into: 

operation of the power plants. The fee payable to the 

25 September 2000, only to the extent of the principal 

Services Agreement between OAO RAO “UES of Russia” 

Service Provider is RUB4,400,000 (inclusive of VAT) (Board 

amount (without any fines or penalties accrued on the 

(as the Principal) and ZAO “APBE” (as the Service Provider”) 

any transactions with state-owned companies (state 

Minutes No. 218, dated 31 March 2006). 

Debtor’s debt) (Board Minutes No. 224, dated 23 June 2006). 

to prepare a report on the theme “Feasibility study for the 

unitary enterprises, joint-stock companies in which the 

Project of large-scale electricity exports to China based on 

government has a controlling interest (50 percent plus 

Services Contract between OAO RAO “UES of Russia” 

Cooperation Agreement between OAO “HydroWGC”, 

the analysis of the projected energy and capa-city balances 

one share) or a “golden share”; 

(as the Principal) and OAO “ENIN” (as the Service Provider) 

OAO RAO “UES of Russia”, OAO “RUSAL”, RUSAL Limi- 

in the power systems (IES) of Siberia and Far East of Russia 

to develop the target vision (strategy) for the development of 

ted, and RUSAL Energy Limited to provide joint (by 

for the period until 2020 and taking into account the influ- 

any transactions with the Company shareholders hold- 

Russia’s electricity industry for the period until 2030. The fee 

OAO “HydroWGC” and OAO “RUSAL”) financing, construc- 

ence of the Project on the cost and reliability of electricity 

ing 5 percent or more of the Company’s shares. 

payable to the Service Provider is RUB106,200,000 (inclusive 

tion and start of operation of the Boguchanskaya HPP, and 

generation and transmission in these energy systems. The 

of VAT) (Board Minutes No. 218, dated 31 March 2006). 

joint financing, construction, and operation of the Bogu- 

fee payable to the Service Provider is RUB35,400,000 (inclu- 

In 2006, RAO “UES of Russia” entered into the following 

chansk Aluminium Plant. The total amount of funds to be 

sive of VAT) (Board Minutes No. 225, dated 28 July 2006). 

interested party transactions. 

Supplementary Agreement to the Services Contract 

spent on the project (including by the parties) will be not 

No. 1-72-01/1062 of 4 August 2005 between 

more than USD3,274,000,000. The value of property (cash) 

Contract between OAO RAO “UES of Russia” (as the Princi- 

Information on the Interested Party Transactions Ap- 

OAO RAO “UES of Russia” and ZAO “APBE” extending 

to be transferred by OAO RAO “UES of Russia” under the 

pal) and OAO “VTI” (as the Service Provider) to conduct an in- 

proved by the General Shareholders’ Meeting of RAO 

the date of expiry of the Contract from 31 December 2005 

transaction will be USD190,000,000. The first phase of the 

vestment feasibility study and prepare technical documenta- 

“UES of Russia” in 2006: 

to 31 December 2006, provided that the other essential 

Boguchanskaya HPP project and Boguchansk Aluminium 

tion required for the creation of a pilot hybrid power unit using 

terms and conditions of the Contract remain unchanged 

Plant is scheduled to be completed in Q4 2009 (Board Min- 

solid oxide fuel cells (SOFC) at VTI’s experimental CHPP. The 

Transaction (or a series of related transactions) 

(Board Minutes No. 218, dated 31 March 2006). 

utes No. 224, dated 23 June 2006). 

fee payable to the Service Provider is RUB2,900,000 (inclusive 

involving the acquisition by OAO RAO “UES of Russia” of 

of VAT) (Board Minutes No. 226, dated 17 August 2006). 

37,004,950,730 additional shares in OAO “HydroWGC” at 


Share Purchase Agreement between OAO RAO “UES of 

RUB1.01 per share (approved by the AGM of 28 June 2006). 

(as the Principal) and ZAO “APBE” (as the Service Provider) 

Russia” (as the Buyer) and OAO “Sangtuda HPP-1” (as the 

Supplementary Agreement No. 1 to Services Contract 

to provide services included in the list of services to organize 

Seller) to purchase 2,383 shares in OAO “Sangtuda HPP-1” 

No. 5/06, dated 03 April 2006 , between OAO RAO “UES of 

Transaction (or a series of related transactions) 

the operation and development of the Unified Energy System 

worth a total of TJS7,249,086. The transaction amount is 

Russia” and OAO “ENIN” to develop the target vision (stra- 

involving the acquisition by OAO RAO “UES of Russia” of 

of Russia approved by Resolution of the Russian Federation 

RUB62,453,347. The Buyer may acquire a greater or lesser 

tegy) for the development of Russia’s electricity industry 

67,019,241,788 additional shares in OAO “UES FGC” at 

Government No. 792, dated 30 December 2003. The fee pay- 

number of shares in Sangtuda HPP-1 depending on the 

for the period until 2030. The Supplementary Agreement 

RUB0.50 per share (approved by the AGM of 28 June 2006). 

able to the Service Provider is RUB157,039,000 (inclusive of 

TJS/RUB exchange rate published by the Russian Central 

identifies three phases of the Contract, and the other 

VAT) (Board Minutes No. 218, dated 31 March 2006). 

Bank (Board Minutes No. 225, dated 28 July 2006). 

essential terms and conditions of the Contract remain 

Transaction (or a series of related transactions) involving 

unchanged (Board Minutes No. 226, dated 17 August 2006). 

the acquisition by OAO RAO “UES of Russia” of 20,000,000,000 

Share Purchase Agreement between OAO “Ulyanovsk- 

Contracts between OAO RAO “UES of Russia” (as the 

additional shares in OAO “UES FGC” at RUB0.50 per share 

energo (as the Seller) and OAO RAO “UES of Russia” 

Principal) and OAO “UES Engineering Center” (as the 

Agreement to assign the rights and obligations under 

(approved by the EGM of 6 December 2006). 

(as the Buyer) to sell 500,000,000 shares in OAO “Ulya- 

Service Provider) to carry out works (preparation of an 

Investment Agreement No. №00-(I)002939(02), dated 22 May 

novsk Trunk Grids” for a total value of RUB722,373,000 

information memorandum on the fuel balance and qua- 

1996, between OAO RAO “UES of Russia” and OAO “UES SO- 

Information on Interested Party Transactions Approved 

(Board Minutes No. 221, dated 11 May 2006). 

lity of different fuels in 2005; analysis of the consumption 

CDA” (Board Minutes No. 228, dated 19 September 2006). 

by the Board of Directors of RAO “UES of Russia” in 2006: 

of different fuels by power plants and boiler houses for 

Surety Agreement between OAO RAO “UES of Russia” (as 

the reporting year, by equipment categories; compilation 

Contract between OAO RAO “UES of Russia” (as the 


the Lender) and OAO “Russian Communal Systems” (as the 

of an electronic reference book “Technical and Economic 

Principal) and OAO “UES Engineering Center” (as the 

(as the Principal) and OAO “ENIN” (as the Service Pro- 

Surety) to secure the performance of obligations of OAO “Ud- 

Performance Indicators and Cost of Fuels by Type of Fuel 

Service Provider) to produce a feasibility study for the con- 

vider) to determine the rational combination of coals from 

murt Energy Retail Company” (as the Debtor) to the Lender 

(gas, fuel oil, coal)”, taking into account the restructuring 

struction and operation of the electric generation facility 

different coal fields to be burned by the power plants of 

arising under Contract to provide services included in the list 

and reorganization underway at OAO RAO “UES of Russia”. 

on the site of the Shchekinskaya TPP. The fee payable to 

RAO “UES of Russia” designed for the coals mined in the 

of services to organize the operation and development of the 

The fee payable to the Service Provider is RUB2,900,000 (in- 

the Service Provider is RUB3,000,000 (inclusive of VAT) 

Moscow Region in order to ensure reliable and efficient 

Unified Energy System of Russia, No. AP-U-8/3063, dated 

clusive of VAT) (Board Minutes No. 225, dated 28 July 2006). 

(Board Minutes No. 228, dated 19 September 2006).


Partnership Agreement to carry out joint activities to 

the amount of the remuneration payable to the Fiduciary 

Accounting Standards and assets valuation under IFRS. 

gement) and OAO “TGC-10” (as the Fiduciary Manager), to 

design, construct, and commission power units No. 3 and 

Manager for 2006 (Board Minutes No. 235, dated 

The fee payable to the Agent is 0.05 percent of the agree- 

change the method used to calculate the amount of the 

No. 4 of the CHPP-27 of OAO “Mosenergo”, unit No. 8 of 

20 November 2006). 

ment amount (RUB2,395,200), inclusive of VAT (Board 

remuneration payable to the Fiduciary Manager for 2006 

the CHPP-26 of OAO “Mosenergo”, and unit No. 11 of the 

Minutes No. 237, dated 8 December 2006). 

(Board Minutes No. 238, dated 21 December 2006). 

CHPP-21 of OAO “Mosenergo”, and other facilities (subject 

Supplementary Agreement to Agreement for Fiduciary 

to prior written agreement of the partners), entered into 

Management of Shares in OAO “Perm Energy Retail Com- 

Agency Agreement between OAO RAO “UES of Rus- 

Supplementary Agreement to the Agreement for 

by OAO “Mosenergo”, OAO RAO “UES of Russia”, and 

pany” No. 109/1-DU, dated 20 April 2006, between 

sia” (as the Agent) and OAO “TGC-9” (as the Principal) to 

fiduciary management of shares in OAO “Vladimir Energy 

OAO “Gazprom” and/or its affiliates to be designated by 

OAO RAO “UES of Russia” (as the Management Settlor) 

arrange for the fixed assets revaluation under Russian Ac- 

Retail Company”, dated 25 November 2005, between 

OAO “Gazprom” in writing. OAO “Mosenergo” is to contrib- 

and OAO “TGC-9” (as the Fiduciary Manager). The Supple- 

counting Standards and assets valuation under IFRS. The 

OAO RAO “UES of Russia” (as the Settlor of Fiduciary Mana- 

ute not less than RUB37,000,000,000 and not more than 

mentary Agreement changes the method used to calculate 

fee payable to the Agent is 0.05 percent of the agreement 

gement) and OAO “TGC-6” (as the Fiduciary Manager), 

RUB60,000,000,000 in cash; OAO RAO “UES of Russia” is 


amount (RUB2,963,200), inclusive of VAT (Board Minutes 

to change the method used to calculate the amount of the 

to contribute RUB1,000 in cash; the Strategic Investor is 


No. 237, dated 8 December 2006). 


to contribute RUB1,000 in cash (Board Minutes No. 234, 



dated 27 October 2006). 

Agency Agreement between OAO RAO “UES of Russia” 


(as the Agent) and OAO “Mosenergo” (as the Principal) to 

Supplementary Agreement to the Agreement for fidu- 


Management of Shares in OAO “Sverdlovenergosbyt” 


ciary management of shares in OAO “Penza Energy Retail 

Management of Shares in OAO “Kolskaya Energy Retail 

No. 109/2-DU, dated 20 April 2006, between OAO RAO “UES 


Company”, dated 25 November 2005, between OAO RAO 

Company” No. 101/2-DU, dated 20 April 2006, between 

of Russia” (as the Management Settlor) and OAO “TGC-9” 


“UES of Russia” (as the Settlor of Fiduciary Management) 


(as the Fiduciary Manager). The Supplementary Agreement 


and OAO “TGC-6” (as the Fiduciary Manager), to change 


changes the method used to calculate the amount of the 


the method used to calculate the amount of the remu- 



neration payable to the Fiduciary Manager for 2006 (Board 


(Board Minutes No. 235, dated 20 November 2006). 

Agency Agreement between OAO RAO “UES of Rus- 

Minutes No. 238, dated 21 December 2006). 


sia” (as the Agent) and OAO “WGC-6” (as the Principal) to 


Agreement for Fiduciary Management of Shares in 



OAO “Orenburgenergosbyt” between OAO RAO “UES of Rus- 


ciary management of shares in OAO “Mordovia Energy 


sia” (as the Settlor of Fiduciary Management) and 


Retail Company”, dated 25 November 2005, between 

Management of Shares in OAO “Karelia Energy Retail 

OAO “Volzh-skaya TGC” (as the Fiduciary Manager) for a term 


OAO RAO “UES of Russia” (as the Settlor of Fiduciary 


of one year after the creation of the parties’ rights and obliga- 


Management) and OAO “TGC-6” (as the Fiduciary 


tions (Board Minutes No. 235, dated 20 November 2006). 

Manager), to change the method used to calculate 






ciary management of shares in four Interregional Trans- 



(as the Agent) and OAO “WGC-3” (as the Principal) 

mission Companies No. 1-78/05-12, dated 1 December 

21 December 2006). 


to arrange for the fixed assets revaluation under Russian 

2005, between OAO RAO “UES of Russia” (as the Settlor of 


Accounting Standards and assets valuation under IFRS. 

Fiduciary Management) and OAO “UES FGC” (as the Fidu- 


The fee payable to the Agent is 0.05 percent of the 

ciary Manager) to extend the term of the Agreement for six 

ciary management of shares in OAO “Ivanovo Energy Retail 


agreement amount (RUB3,327,500), inclusive of VAT 

months (Board Minutes No. 235, dated 8 December 2006). 

Company”, dated 25 November 2005, between OAO RAO 

Management of Shares in OAO “Petersburg Energy Retail 


“UES of Russia” (as the Settlor of Fiduciary Management) 



and OAO “TGC-6” (as the Fiduciary Manager), to change 



ciary management of shares in OAO “Tyumen Energy Retail 

the method used to calculate the amount of the remu- 


(as the Agent) and OAO “TGC-1” (as the Principal) to 

Company”, dated 7 December 2005, between 

neration payable to the Fiduciary Manager for 2006 (Board 


arrange for the fixed assets revaluation under Russian 

OAO RAO “UES of Russia” (as the Settlor of Fiduciary Mana- 

Minutes No. 238, dated 21 December 2006).


Company Bylaws* 

DOCUMENT NAME 

KEY PROVISIONS 

DOCUMENT NAME 

KEY PROVISIONS 

Regulation on the General Shareholder Meeting of OAO RAO “UES 

of Russia” (approved by the Annual General Meeting of shareholders 

of RAO “UES of Russia” held 28 June 2002, amended by the 

Annual General Meeting of shareholders of RAO “UES of Russia” 

held 30 May 2003) 

The Regulation sets out the procedure for convocation, preparation, 

holding the General Shareholder Meeting of RAO “UES of Russia” 

and tallying the votes. 

Regulation on the HR and Remunerations Committee under the 

Board of Directors of RAO “UES of Russia” 

(approved by the Board of Directors of OAO RAO “UES of Russia” 

on 26 April 2005 (Board minutes No. 194) 

The Regulation establishes the Committee functions, status, 

and the procedure for its activities. 

Regulation on the Board of Directors of OAO RAO “UES of Russia” 

(approved by the Annual General Meeting of shareholders 

of RAO “UES of Russia” held 28 June 2002, amended by the Annual 

General Meetings of shareholders of RAO “UES of Russia” held 

30 May 2003 and 28 June 2006) 

Regulation on Remuneration of Members of the Board of Directors 

of RAO “UES of Russia” for the Performance of their Duties and 

Reimbursement of their Expenses Relating to the Performance 

of their Functions as Board Members 

(approved by the Annual General Meeting of shareholders of 

RAO “UES of Russia” held 28 June 2002, amended by the Annual 

General Meetings of shareholders of RAO “UES of Russia” held 

30 May 2003 and 29 June 2005) 

Regulation on the Activities of the Auditing Commission 


(approved by the Annual General Meeting of shareholders 

of RAO “UES of Russia” held 28 June 2002) 

Regulation on Remuneration of Members of the Auditing Commission 

for the Performance of their Duties and Reimbursement 

of their Expenses Relating to Visits to the Company’s Facilities 

(approved by the Annual General Meeting of shareholders of 

RAO “UES of Russia” held 28 June 2002, amended by the Annual 

General Meetings of shareholders of OAO RAO “UES of Russia” 

held 30 May 2003 and 28 June 2006) 

The Regulation sets out the functions and responsibilities 

of the Board of Directors of RAO “UES of Russia”. 

The Regulation sets out the criteria and procedure for 

remuneration the members of the Board of Directors 


The Regulation sets out the functions and responsibilities 

of the Auditing Commission of the Company. 

The Regulation sets out the criteria and procedure 

for remuneration of the members of the Auditing Board 


Regulation on the Strategy and Reform Committee under the Board 

of Directors of OAO RAO “UES of Russia” 


on 8 September 2001 (Board minutes No. 101) 

Regulation on the Commission for Investments and Ensuring Fuel 

Deliveries Needed for Investment Projects under the Board 

of Directors of OAO RAO “UES of Russia” 


on 9 February 2007 (Board minutes No. 242) 

Corporate Governance Code of RAO “UES of Russia” 

(approved by the Board of Directors of RAO “UES of Russia” 

on 26 May 2006 (Board minutes No. 222) 

Regulation on Internal Control Procedures of RAO “UES of Russia” 


on 16 March 2006 (Board minutes No. 217) 

Regulation on Information Policy of OAO RAO “UES of Russia” 


on 23 June 2006 (Board minutes No. 224) 





The Code is a set of corporate governance principles of RAO “UES 

of Russia” based on the Code of Corporate Conduct recommended 

by Russia’s Federal Service for Financial Markets and the Company 

bylaws, which are complied with by the Company 

The Regulation sets out the internal control rules 

for RAO “UES of Russia”. 

The Regulation sets out the rules and principles of information disclosure, 

list of information and documents required to be disclosed 

to shareholders, creditors, and potential investors, as well as to 

securities industry members, government authorities and other 

stakeholders, and determines the manner and timeframes for such 

disclosures and filings. 

Dividend Calculation Methodology of RAO “UES of Russia” 


on 25 April 2003 and 28 April 2003 (Board minutes No. 142) 

Regulation on the Management Board of OAO RAO “UES of Russia” 

(approved by the Annual General Meeting of shareholders of RAO 

“UES of Russia” held 28 June 2002, amended by the Annual General 

Meetings of shareholders of OAO RAO “UES of Russia” held 

28 June 2006) 

Regulation on the Appraisal Committee under the Board 

of Directors of RAO “UES of Russia” 


on 30 July 2004 (Board minutes No. 173) 

Regulation on the Audit Committee under the Board of Directors 



on 14 December 2005 (Board minutes No. 210) 

The Methodology determines the criteria for the calculation 

of dividends for the reporting year to be paid by the Company 

to the holders of its preferred and ordinary shares. 

The Regulation sets out the timing and procedure for convocation 

and holding meetings of the Management Board, the quorum 

requirements for such meetings, the procedure for resolutions 

by the Management Board and implementation controls. 





Procedure for Declaration of Insider Deals in securities 

of OAO RAO “UES of Russia” and its SDCs by Persons with 

Access to Insider Information. 

Procedure for Interaction by OAO RAO “UES of Russia” with 

Business Companies Whose Shares (Ownership Interests) 

are Held by RAO “UES of Russia” 


on 21 April 2006 (Board minutes No. 220) 

The Regulation imposes requirements on the persons who have 

access to insider information, and sets out the procedure by which 

such persons are to give notice of their transactions in the securities 

of the Company and its SDCs, the procedure for disclosure 

of information about the insider deals 

The Procedure governs the exercise by the Company of its rights as 

shareholder in respect of its subsidiaries and dependent companies 

which rights are evidenced by shares or ownership interests in order 

to ensure effective participation of Company representatives in general 

meetings of shareholders, meetings of the Boards of Directors 

and activities of the Auditing Commissions of its SDCs. The Procedure 

further defines the general conditions of corporate interaction 

between the Company and its SDCs along the lines described in the 

document, such as corporate planning, organization and control 

over corporate actions when SDCs’ management bo-dies are to 

consider issues which require, under the Charter of RAO “UES 

of Russia”, to determine the Company’s stance on the issue. 

*these documents are fully disclosed on the website of RAO “UES of Russia” in the Section “About the Company” > “Disclosure of Documents”


Major Corporate Events in 2006* 

1 January 

OAO “Yuzhnoe Yakutskenergo”, the subsidiary established 

OAO “Volzhskaya Territorial Generation Company” 

as a result of spin-off of the Southern energy area 

(OAO “TGC-7”) starts operations. 

of OAO “Yakutskenergo”, completes its official registration. 

This step is part of the process to restructure the energy 

The generation companies established in the course of systems in the Far East of Russia. 

the energy sector reform start selling electricity on the 

wholesale market. The companies are granted the status 26 February 

of direct participants of the wholesale market. 

The Board of Directors of RAO “UES of Russia” unanimously 

approves the Supplement “Generation Companies 

13 January 

of the Wholesale Electricity Market” to the Company’s 

RAO “UES of Russia” and OAO “Russian Railways” enter Strategy Concept for Years 2003-2008 “5+5. 

into an agreement on interaction and coordination of 

information exchange to prevent and eliminate emergencies 

which cause power supply disruption to the railway The Global Finance Magazine releases its ranking of the 

1 March 

infrastructure. 

“Best Companies in Russia”, naming RAO “UES of Russia” 

the country’s best electricity company for the year 2005. 

27 January 

RAO “UES of Russia” and Germany’s Association of the 2 March 

Electrical Engineering and Electronics Industry sign a RAO “UES of Russia” and Hungary’s MVM sign 

Memorandum of Understanding on cooperation in developing 

supplies of advanced electric and electronic equipment. 

a Memorandum of Cooperation. 

15 March 

1 February 

RAO “UES of Russia” and the Russian Academy of Sciences 

sign a Cooperation Agreement, which covers joint 

OAO “Kalmenergosbyt”, a spin-off of OAO “Kalmenergo”, 

starts operations. 

actions by RAO “UES of Russia” and the Academy to create 

the scientific and technological groundwork for the development 

of the Unified Energy System of Russia. 

3 February 

The Board of Directors of RAO “UES of Russia” unanimously 

approves the Supplement “Territorial Generation Simulation trading is launched on the wholesale electricity market 

using a new trading model. It attracts over 150 participants, 

Companies to be Established on the Basis of the Assets 

of RAO UES Holding Company” to the Company’s Strategy including about 100 subsidiaries of RAO “UES of Russia”. 

Concept for Years 2003-2008 “5+5”. 

21 March 

9 February 

RAO “UES of Russia” and China’s State Power Grid Corp. 

WGC-3 shares are admitted to trading on the trading sign Agreement on Feasibility Study for Sales of Russian 

floors of NP “RTS Stock Exchange” and OAO “RTS Stock Electricity to China. 

Exchange”. 

29 March 

14 February 

RAO “UES of Russia” approves the List of 19 top priority 

OAO “WGC-3” shares start trading on the trading floor sites for generation projects to go on line across the 

of ZAO “MICEX Stock Exchange. 

Unified Energy System of Russia. 

RAO “UES of Russia” and the Ministry of Foreign Affairs of 

Russia sign an Agreement on Cooperation. 

31 March 

OAO “TGC-5” completes its reorganization, after 

OAO “Vyatskaya Electricity and Heat Company”, 

OAO “Mari Regional Generation Company”, OAO “Udmurt 

Territorial Generation Company”, and OAO “Chuvash 

Generation Company” merge with and into OAO “TGC-5”. 

OAO “TGC-5” is the first generation company to have 

completed the interregional consolidation. 

The Board of Directors approves the Investment 

Programme of RAO “UES of Russia” for 2007. 

1 April 

Official registration is granted to OAO “Samara Territorial 

Generation Company”, OAO “Samara Distribution Company” 

and OAO “Samara Trunk Company”, the companies 

spun off from the regional energo, OAO “Samaraenergo”. 

3 April 

OAO “WGC-5” completes its reorganization through merger 

of OAO “Konakovskaya TPP” and OAO “Nevinnomysskaya 

TPP” with and into WGC-5”. 


of OAO “Kostromskaya TPPK”, OAO “Cherepetskaya TPP”, 

OAO “Pechorskaya TPP”, OAO “Yuzhnouralskaya TPP”, 

OAO “Kharanorskaya TPP”, and OAO “Gusinoozerskaya 

TPP” with and into WGC-3. 

Official registration is granted to OAO “Saratov Territorial 

Generation Company”, OAO “Saratov Distribution Company” 

and OAO “Samara Trunk Company”, spun off from 

OAO “Saratovenergo”, and to OAO “Ulyanovsk Territorial 

Generation Company”, OAO “Ulyanovsk Distribution Company”, 

spun off from OAO “Ulyanovskenergo”. 

5 April 

The Grozny 330 kV substation becomes operational 

in the Republic of Chechnya. 

18 April 

RAO “UES of Russia” and OAO “UES SO-CDA” approve 

the List of five project sites for the construction of energy 

facilities under the Guaranteed Investment Mechanism. 

21 April 

The Board of Directors of RAO “UES of Russia” approves the 

merger of two regional generation companies – OAO “Omsk 

Generation Company” and OAO “Tomskenergo” – with and 

into OAO “TGC-11”. 

The Board of Directors of RAO “UES of Russia” approves 

the sale of the Company’s 47.36% stake in OAO “Yaroslavl 

Retail Company” through a public auction. 

28 April 

OAO RAO “UES of Russia” is named a Laureate of IT 

Leader Awards 2006 in the category “Outstanding Contribution 

to IT Development in Russia”. 

The FSFM of Russia registers new share issues 

of OAO “TGC-9”. 

5 May 

OAO “TGC-6” completes its reorganization, after the additional 

shares in OAO “TGC-6” are exchanged for shares 

in OAO “Nizhny Novgorod Generation Company”, 

OAO “Ivanovo Generation Company”, OAO “Penza Generation 

Company”, OAO “Vladimir Generation Company”, 

and OAO “Mordovia Heat Network Company”. 

12 May 

The FSFM of Russia registers the new share issues 

of OAO “TGC-8”. 

20 May 

The first MW power unit with a capacity of 180 MW 

of electricity and 260 Gcal/h of heat is brought on line 

at the Pravoberezhnaya CHPP in Saint Petersburg. 

25 May 

RAO “UES of Russia” and the Moscow City Government 

sign an Agreement on Cooperation in implementing top 

priority measures to construct and modernize electric 

power facilities in the city of Moscow. 

26 May 


the resolution to complete the establishment of the final 

corporate structure of OAO “TGC-1” through the merger 

of OAO “Petersburg Generation Company”, OAO “Kolskaya 

Generation Company”, OAO “Karelenergogeneratsiya”, and 

OAO “Apatitskaya CHPP” with OAO “TGC-1”; and later on, 

transfer of shares in OAO “Murmanskaya CHPP” as payment 

for additional shares in TGC-1. 

The Board of Directors approves the merger of 

OAO “TGC-10” and OAO “Chelyabinsk Generation Company” 

with and into OAO “Tyumen Regional Generation 

Company”, which is subsequently renamed OAO “TGC-10”. 

The Board of Directors approves the revised Corporate 

Governance Code of RAO “UES of Russia”.


5 June 

OAO “WGC-2” and OAO “WGC-6” complete the exchange of 

their additional shares for shares in the AO-power plants 

OAO “Shaturskaya TPP-5”, OAO “Yaivinskaya TPP”, and 

OAO “Surgutskaya TPP-2” merge with and into WGC-4. 

20 July 

Shares of OAO “ WGC-2”, OAO “TGC-5”, 

and OAO “TGC-6” start trading on the trading floor 

10 August 

The FSFM of Russia registers the share placement reports 

filed by OAO “TGC-2”. 

held by RAO “UES of Russia” and minority shareholders. 

6 July 

of NP “RTS Stock Exchange”. 

RAO “UES of Russia” holds a public auction to sell its 

15 August 

8 June 

The MICEX Stock Exchange names RAO “UES of Russia” 

the Best Stock Issuer. 

47.36 percent stake in OAO “Yaroslavl Retail Company”. 

Official registration is granted to OAO “Altayenergosbyt” 

Shares of OAO “WGC-5” start trading on the trading floor 

of ZAO “MICEX Stock Exchange”. 

Shares of OAO “ WGC-6” and OAO “SGC TGC-8” start trading 

on the trading floors of NP “RTS Stock Exchange” 

and OAO “RTS Stock Exchange”. 

13 June 

RAO “UES of Russia” and the Italian electricity company 

spun off from OAO “Altayenergo”. 

7 July 

The FSFM of Russia registers share placement reports 

of OAO “WGC-4”. 


of OAO “RTS Stock Exchange”. 

ENEL sign a Memorandum of Cooperation. 

Shares in OAO “WGC-3” are included in the MICEX Quota- 

27 July 

23 June 


tion List “B”. 

11 July 

The St.-Petersburg Government and RAO “UES of Russia” 

sign an Agreement on carrying out priority measures 

to build and modernize the electric power facilities in the 

24 August 

Share issues of OAO “WGC-6” are registered with the 

FSFM of Russia. 

a list of pilot projects to issue WGC and TGC additional 

Shares of OAO “WGC-5” are included in the Quotation List 

Leningrad Energy System. 

shares intended to raise funds needed for the development 

of thermal generation facilities. The list includes 

OAO “WGC-3”, OAO “WGC-4”, OAO “WGC-5”, OAO “Mosenergo”, 

and OAO “TGC-9”. 

“B” of NP “RTS Stock Exchange”. 

12 July 

Shares of OAO “TGC-6” start trading on the trading floor 

28 July 

The Board of Directors approves the new share issue 

of OAO “WGC-5” in order to raise funds needed to develop 

29 August 

Additional shares of OAO “Southern Generation Company 

- TGC-8” start trading on the trading floor of ZAO “MICEX 

Stock Exchange”. 


the thermal generation. 


30 August 

the measures to complete the establishment of OAO 

“TGC-14”, which comprises the generating assets of OAO 

Shares of OAO “TGC-4” are included in the Schedule 

of non-listed securities of ZAO “MICEX Stock Exchange”. 

The Board of Directors approves the final phase of establishment 

of OAO “Southern Generation Company TGC-8”, 

The 500 kV “Zvezda” substation is put into operation 

in the Kostroma Region. 

“Buryatgeneratsiya” and OAO “Chita Generation Company”. 

The Board of Directors approves the revised Regulation on 

Information Policy of RAO “UES of Russia”. 

14 July 

Shares of OAO “WGC-4” are included in the Schedule 

of non-listed securities of OAO “RTS Stock Exchange”. 

which envisages the merger of OAO “Kuban Generation 

Company” with and into OAO “SGC TGC-8”. 

31 July 

The Board of Directors of OAO RAO “UES of Russia” 

approves the restructuring plan for OAO “Tyvaenergo” 

according to the scenario different from the basic one. 

The Office of the Presidential Plenipotentiary in the Urals 

28 June 

RAO “UES of Russia” holds its Annual General Meeting. 

The shareholders approve the Annual Report, declare 

17 July 

Official registration is granted to OAO “Energy Industry Science 

and Technology Center”. The company is established 

Federal District, the Tyumen Region Administration and 

Administration of the and Yamalo-Nenets Autonomous Okrug-Yugra, 

Administration of the Yamalo-Nenets Autono- 

The Board of Directors approves the new share issues 

by OAO “WGC-3”, OAO “WGC-4”, and OAO “TGC-9” to raise 

funds needed to develop thermal generation. 

dividends, elect members of the Board of Directors, the 

as a result of consolidation of the following leading scien- 

mous Okrug, RAO “UES of Russia” sign an Agreement on 

Auditing Commission, and the Company Auditors, the 

acquisition of additional shares in OAO “HydroWGC” and 

OAO “UES FGC”, adopt amendments and additions to the 

Company Charter and other bylaws. 

tific, research and development institutes of the electricity 

industry, OAO “VNIIE”, OAO “NIC VVA”, OAO “ROSEP”, and 

OAO “SibNIIE”. 

Shares of OAO “ WGC-2”, OAO “TGC-5”, 

carrying out priority measures to build and modernize the 

electric power facilities in the Tyumen Energy System. 

2 August 

New shares of OAO “WGC-4” start trading on the trading 

1 September 

Pursuant to the Resolution of the Government of the 

Russian Federation of 31 August 2006, the new liberalized 

model for the wholesale and retail electricity markets 

(NWREM) is launched. 

29 June 

RAO UES subsidiaries OAO “Belgorodenergo” and OAO “Corporate 

Service Systems” are the first Russian energy companies 

to have obtained Certificates of Conformity of their 

Quality Management Systems to GOST R ISO 9001-2001 

standard and international ISO 9001:2000 standard. 

and OAO “TGC-6” start trading on the trading floor 


19 July 

RAO “UES of Russia” holds a public auction to sell its 

100% percent stake in OAO “Taymyrenergo”. 

floor of ZAO “MICEX Stock Exchange”. 

3 August 

The Russian Government approves the Investment 

Programme 2007 of OAO RAO “UES of Russia”. 

Official registration is granted to four transmission (trunk 

grid) companies, OAO “Kuban Transmission Grids”, 

OAO “Khabarovsk Transmission Grid Company”, 

OAO “Yakutskaya Transmission Grid Company”, 

and OAO “Amurskaya Transmission Grid Company”. 

4 August 

1 July 

13 new companies spun off from OAO “Komienergo”, 

OAO “Kubanenergo”, OAO “Kuzbassenergo”, and 



Official registration is granted to OAO “Southern Grid 

Company”. 

5 September 

Official registration is granted to OAO “Primorskaya Trunk 

Grid Company” spun off from OAO “Dalenergo”. 

OAO “Kurganenergo” register with the state authorities. 


7 August 

OAO “WGC-4” completes reorganization after 

OAO “Bere-zovskaya TPP”, OAO “Smolenskaya TPP”, 


RAO UES Management Board approves the RAO UES entities’ 

Investment Programme for 2006-2010. 

15 September 

OAO “TGC-4” completes consolidation of its subsidiaries—OAO 

“Bryansk Generation Company”, OAO “Voronezh


Generation Company”, OAO “Kaluga Generation Company”, 

1 October 

1 November 

12 December 

OAO “Kursk Generation Company”, OAO “Lipetsk Genera- 

OAO “Altayenergosbyt”, the retail spin off of OAO “Altayen- 

The reorganization of OAO “TGC-1” is completed after the 

The 750 kV “Bely Rast” substation is put into operation in 

tion Company”, OAO “Oryol Generation Company”, 

ergo”, starts operations. 

merger of OAO “Petersburg Generation Company”, OAO “Kol- 

the Moscow Region. 

OAO “Priokskaya Territorial Generation Company”, 

skaya Generation Company”, OAO “Karelenergogeneratsiya”, 

OAO “Ryazan Heat Supply Company”, OAO “Smolensk 

5 October 

and OAO “Apatitskaya CHPP” with and into OAO “TGC-1”. 

Chairman of the Management Board of RAO “UES of Rus- 

Generation Company”, OAO “Tambov Generation 

RAO “UES of Russia” and the European electricity and heat 

sia” Anatoly Chubais is named the winner of the Russian 

Company”, and OAO “Heat Energy Company”. 

generator “VGB PowerTech. e.V.” sign a Memorandum on 

15 November 

Corporate Governance Leaders Awards in the category 

Cooperation in developing the market of bilateral contracts 

Shares of OAO “TGC-5” are included in the Quotation List 

“Best Corporate Manager” for the third year running. 

Shares of OAO “ TGC-9” start trading on the trading floor of 

to supply products, services and technologies. 


NP “RTS Stock Exchange” and OAO “RTS Stock Exchange”. 

14 December 

12 October 

20 November 

The Sverdlovsk Region Administration and RAO “UES of 

22 September 

RAO “UES of Russia”, the Delovaya Rossiya Entrepreneur- 

The Moscow Region Administration and RAO “UES of 

Russia” sign an Agreement on Cooperation in implement- 

The first 146 MW power unit comes on line at the Irganays- 

ial Association (“Business Russia”) and OPORA Rossii 

Russia” sign an Agreement on cooperation in implement- 

ing capital investment projects to build and refurbish 

kaya HPP (Dagestan). 

Association sign an Agreement on Joint Action to Address 

ing capital investment projects to build and refurbish the 

electric power facilities in the region’s energy system 

Key Issues in the Electricity Sector. 

electric power facilities in the Moscow Region. 

for the period until 2011. 

29 September 

The Board of Directors of RAO “UES of Russia” approved the 

18 October 

23 November 

16 December 

“second tier” of projects to place additional shares in WGCs 


RAO “UES of Russia” and Finland’s Fortum sign a Memo- 

Phase 3 of the Zelenchukskaya HPP is put into operation 

and TGCs in order to raise investments for the development 


randum of Understanding on the implementation of the 

in the Karachay-Cherkessia Republic. 

of thermal generation facilities. The list of projects includes: 

Kyoto Protocol mechanisms in Russia. 

OAO “WGC-1”, OAO “WGC-2”, OAO “WGC-6”, OAO “TGC-1”, 

24 October 

18 December 

OAO “TGC-4”,OAO “TGC-5”, OAO “Volzhskaya TGC” (“TGC-7”), 

The Kamchatka Region Administration, RAO “UES of Rus- 

29 November 

Unit 4 of the Khabarovskaya CHPP-3 comes on line. 

OAO “Southern Generation Company TGC-8”, OAO “TGC-10”, 

sia”, and OAO “FEEMC” sign an Agreement on cooperation 

The second generating unit of 450 MW is commissioned 

OAO “Kuzbassenergo” (“TGC-12”), and OAO “TGC-14”. 

in the development of the region’s electricity sector and 

at the Severo-Zapadnaya CHPP in Saint Petersburg. 

25 December 

reducing its dependence on external fuel supplies. 

Power unit 2 is put into operation at the Chelyabinskaya 

The Bard of Directors approves the new share issue by 

Shares of OAO “WGC-4” are included in the Quotation List 

CHPP-3. 

OAO “Mosenergo” (TGC-3) to raise funds needed to develop 

25 October 


the thermal generation. 

The FSFM of Russia registers the share issues of OAO “Ty- 

The Chelyabinsk Region Administration and RAO “UES of 

vaenergosbyt”, the retail spin-off of OAO “Tyvaenergo”. 

30 November 

Russia” sign an Agreement on Cooperation in implement- 

The Board of Directors approves the procedure for the re- 

RAO “UES of Russia” is awarded a Medal and Diploma of 

ing capital investment projects to build and refurbish the 

organization of OAO “TGC-9” through merger of OAO “Komi 

27 October 

the International Exhibition and Congress “Energy Saving 

electric power facilities in the region’s energy system for 

Regional Generation Company” with and into TGC-9. 

The Board of Directors of RAO “UES of Russia” introduces 

2006” “For environmental policy, innovation approach to 

the period until 2011. 

a lock-up period of 180 days after the new share offering 

the creation of the regulatory framework and the infra- 

OAO “WGC-1” completes its reorganization through 

of OAO “WGC-5” for the sale of the 25% plus one share in 

structure needed to implement an environmental manage- 

26 December 

merger of its subsidiaries OAO “Nizhnevartovskaya TPP”, 

OAO “WGC-5” held by RAO “UES of Russia”. 

ment and environmental audit system”. 

The FSFM of Russia registers the new share issue 

OAO “Urengoiskaya TPP”, OAO “Iriklinskaya TPP”, 

of OAO “WGC-3”. 

OAO “Kirishskaya TPP”, and OAO “Permskaya TPP”. 

The Board approves the merger of OAO “Nizhny Novgorod 

6 December 

Generation Company”, OAO “Penza Generation Company”, 

The Extraordinary General Meeting of shareholders of 

27 December 


OAO “Mordovia Generation Company”, OAO “Mordovia Heat 

RAO “UES of Russia” approves the spin-off of OAO “WGC-5” 

The Nizhny Novgorod Region Administration and RAO “UES 

of OAO “Pskovskaya TPP”, OAO “Serovskaya TPP”, 

Network Company”, OAO “Ivanovo Generation Company”, 

and OAO “TGC-5” from RAO “UES of Russia” in the course 

of Russia” sign an Agreement on Cooperation in imple- 

OAO “Stavropolskaya TPP”, OAO “Surgutskaya TPP-1”, 

and OAO “Vladimir Generation Company with and into 

of the first phase of the Company’s reorganization. 

menting capital investment projects to build and refurbish 

and OAO “Troitskaya TPP” with and into OAO “WGC-2”. 

OAO “TGC-6”, which will bring the process to establish the 

the electric power facilities in the region’s energy system 

TGC-6 target structure to completion. 

8 December 

for the period until 2012. 

OAO “WGC-6” completes reorganization through merger of 


its subsidiaries OAO “TPP-24” (GRES-24), OAO “Kirishska- 

30 October 

the revised Programme for the preparation and issuance 


ya TPP”, OAO “Ryazanskaya TPP”, OAO “Novocherkasskaya 

RAO “UES of Russia” and Germany’s Association of the 

of additional shares in OAO “TGC-5” intended to raise 


TPP”, OAO “Krasnoyarskaya TPP-2”, OAO “Cherepovets- 

Electrical Engineering and Electronics Industry (ZVEI) sign 

funds to finance the development of thermal generation. 

kaya TPP” with and into OAO “WGC-6”. 

a Memorandum on Cooperation in developing the market 

of bilateral supplies, standardization, and certification 


OAO “TGC-14” completes establishment of its final corpo- 

of energy equipment. 

the final phase of establishment of OAO “SGC TGC-8” 

rate structure after the merger of its subsidiaries, 

OAO “Buryatgeneratsiya” and OAO “Chita Generation 

through the merger of OAO “Kuban Generation Company” 

with and into OAO “SGC TGC-8”. 

*all company news and corporate events can be found 

at RAO ”UES of Russia” web-site in the section ”Company News” 

Company”.


Glossary 

ABBREVIATIONS 

ABBREVIATIONS 

ATS 

Non-Profit Partnership “Administrator of the Trading System of the UES Wholesale Electricity Market” (NP “ATS”) 


OAO “System Operator-Central Dispatch Administration of the Unified Energy System” 

AWP 

Autumn-winter period 

ord. 


CCGT 

Combined-cycle gas turbine 

PTL 

Power transmission line 

CHPP 

Combined heat and power plant 

pref. 


FTS 

Russian Federation Federal Tariffs Service 

RDA 

Regional Dispatch Administration 

GC 

Regional Grid Company 

REC 

Regional Energy Commission 

GeoTPP 

Geothermal power plant 

Regional Energo 

Open joint-stock regional power and electrification company 

GTU (GTPP) 

Gas turbine unit (gas-turbine power plant) 

RGC 

Regional Generation Company 

HPP 

Hydroelectric power plant 

SDCs 

Subsidiaries and Dependent Companies of OAO RAO “UES of Russia” 

HV line 

High-voltage transmission line 

STC 

Science and Technology Center 

IDA 

Integrated Dispatch Administration 

TC 

Transmission (trunk grid) company 

IDC 

Interregional Distribution Company 

TGC 

Territorial Generation Company 

IES 

Integrated Energy System 

TPP 

Thermal power plant 

IGM 

Investment Guarantee Mechanism 

UES of Russia 

Unified Energy System of Russia 

ITC 

Interregional Transmission Company 

WEM 

Wholesale Electricity Market 

KPI 

Key performance indicators 

WEM FTS 

Competitive (free trading) segment of the Wholesale Electricity Market 

NP 

Not-for-profit Partnership 

WEM RS 

Regulated segment of the Wholesale Electricity Market 

NPP 

Nuclear power plant 

WGC 

Wholesale Generation Company 

OAO “FGC” 

OAO “Federal Grid Company of the Unified Energy System”


TERMS 

TERMS 

Backbone transmission lines 

Balancing market 

Completion of reorganization 

Cross-subsidization, cross-subsidies 

Deviations segment 

Distribution Company, DC 

Energy R&M/services company 

Free trading segment 

A power transmission line with the highest voltage which ensures the required reliability 

and robustness of the energy system as a whole 

Segment of the wholesale electricity market where deviations between the actual and scheduled 

electricity demand/supply are traded. 

A company is deemed to be reorganized upon state registration of the newly established legal 

entities (except for reorganization through merger). If a company merges with another company, 

the former is deemed reorganized with effect from the date on which an entry is made 

in the Unified State Register of Legal Entities regarding termination of the merged company. 

Setting energy tariffs (rates) below the economically efficient level for one group of consumers 

(subsidized consumers) owing to higher tariffs (rates) set for other consumer groups (subsidizing 

consumers). 

A system of relationships among wholesale market participants relating to electricity trading 

within the range of deviations in actual hourly generation/consumption of electricity from the 

planned hourly generation/ consumption. 

An open joint-stock company established as a result of regional energos’ restructuring on the 

basis of power grid assets which do not belong to the Unified National (All-Russia) Energy Grid. 

An enterprise whose core business is providing research and development services, repairs 

and maintenance of equipment, buildings and structures used in the generation, transmission, 

dispatching, distribution, and retailing of electricity and heat. 

A segment of the wholesale market where part of electricity is traded at free (unregulated) 

prices through bilateral purchase/sale contracts and through selection of price offers submitted 

by buyers and sellers. 

Retail Heat Market 

Subscription fee 

Target structure of the electricity 

industry 

Territorial Generation Company, TGC 

Transmission (trunk grid) company, TC 

Unified Energy System of Russia, UES 

of Russia 

Unified National (All-Russia) Energy 

Grid, UNEG 

The marketplace for heat (heat capacity) bringing together energy retailers and consumers. 

The fee charged for the services relating to the operation and development of the Unified Energy 

System of Russia 

The corporate structure of the electricity industry upon completion of key restructuring (i.e. creation 

of all companies and their separation from OAO RAO “UES of Russia”, including measures 

to guarantee direct ownership of RAO UES shareholders in spin-off companies, increasing the 

state’s interest in OAO “UES FGC” and OAO “UES SO-CDA” to meet the requirements of the 

Russian law, reduction of the state’s interest in generation companies (except for hydroppower 

and nuclear power plants), and ensuring that most generation companies are independent of 

each other. 

An open joint-stock company being established in the course of interregional integration of 

regional energos’ generating assets (regional generation companies), except for the generating 

assets to be transferred to WGCs. 

An open joint-stock company established as a result of a reorganization of a regional energo 

involving the transfer of the regional energo’s power grid facilities related to the Unified 

National (All-Russia) Energy Grid. 

All generation facilities and other property relating to generation (including co-generation 

of electricity and heat) and transmission of electricity in an environment of centralized 

dispatching. 

The system of power grids and other grid infrastructure facilities owned or otherwise held 

(as provided by the applicable Russian laws) by electricity industry entities and ensuring reliable 

power to customers, supporting the operation of the wholesale electricity market, and synchronous 

operation of Russia’s energy system with those of other countries 

Interregional Company 

Interregional Distribution Company, IDC 

A company to be created through consolidation of grid or generation companies established 

in the course of the electricity industry reform in the Russian Federation after the regional 

energos’ restructuring. 

An open joint-stock company to be created on a territorial basis to manage DCs. 

Wholesale Generation Company, WGC 

The generation company created on the basis of power plants pursuant to the Guidelines 

for Reforming the Electric Power Industry adopted by Resolution of the Russian Federation 

Government No. 526 of 11 July 2001, Order of the Russian Federation Government 

No. 1254-r of 01 September 2003 (as amended by Order of the Russian Federation Government 

No. 367-r of 25 October 2004) 

Interregional Transmission Company, 

ITC 

Price translation 

An open joint-stock company established pursuant to Order of the Russian Federation Government 

No. 1939-r of 29 December 2003 and Resolution of the Board of Directors 

of OAO RAO “UES of Russia” (Minute No. 125 dated 15 August 2002). 

Settlement of retail electricity market trades at unregulated prices determined based 

on the existing wholesale electricity prices. 

Wholesale Electricity (Capacity) Market, 

WECM 

The marketplace for a special commodity, i.e. electricity (capacity), within the Unified Energy 

System of Russia, which is part of Russia’s common economic space. The market participants 

are large electricity generators and customers that have the status of wholesale market participants. 

Market participants operate under the Wholesale Market Rules adopted by the Russian 

Federation Government pursuant to the Federal Law “On Electric Power Industry”. 

The eligibility criteria for including electricity generators and consumers to the category of 

major generators or major consumers are set by the Government of the Russian Federation. 

Regional Generation Company, RGC 

An open joint-stock company established as a result of a regional energo’s restructuring 

on the basis of generating assets not transferred to TGCs 

Regulated sector of the wholesale 

electricity (capacity) market 

A segment of the wholesale market where part of electricity and capacity is traded based at the 

rates set by the federal authority for regulation of natural monopolies according to the Federal 

Law “On State Regulation of Electricity and Heat Tariffs in the Russian Federation”


Contact Info 

EDITORIAL ASSUMPTIONS IN THE ANNUAL REPORT 

TERM 

SDCs of OAO RAO “UES of Russia” 


Board of Directors of OAO RAO “UES of Russia” 

Charter of OAO RAO “UES of Russia” 


UNITS OF MEASUREMENT 

Possible wording 

SDCs of RAO “UES of Russia” 

Energy entities of the Holding Company 

Holding Company’s enterprises 

Undertakings of the Holding Company 

Subsidiaries of RAO “UES of Russia” 


Board of Directors of RAO “UES of Russia” 

Charter of RAO “UES of Russia”, Charter 

Parent Company 

Company 

Head Company 

Gcal Gigacalorie Unit of heat energy 

Gcal/h Gigacalorie/hour Unit of heat power 

Hz Hertz Unit of frequency of the alternating electric 

current 

kV Kilovolt Unit of electric potential 

kVA Kilovolt-Ampere Unit of electrical load used in power 

engineering. 

kWh Kilowatt-hour Unit of measurement of electric energy 

generated 

kW kilowatt Unit of electric power 

MW megawatt Unit of electric power 

Russian Power and Electrification 

Open Joint-Stock Company “UES 

of Russia” (RAO “UES of Russia”): 

Legal Address: 119526 Moscow, 

prospekt Verdnadskogo 101, bldg. 3 

Mailing Address: 119526 Moscow, 

prospekt Verdnadskogo 101, bldg. 3 

www.rao-ees.ru 

Corporate Governance and 

Shareholder Relations Department 

of the Corporate Center, RAO “UES of 

Russia”: 

Shareholder Hotline 

Mon-Fri, 13:00-16:00 

Tel.:+7 (495) 620-16-09 

e-mail: ir@rao.elektra.ru 

COMPANY AUDITORS: 

ZAO “PricewaterhouseCoopers Audit” 

Address: 115054 Moscow, 

Kosmodamianskaya naberezhnaya 52, 

bldg. 5 

Tel. +7 (495) 967-60-00 

FAX: +7 (495) 967-60-01 

www.pwc.com 

Depositary Banks: 

Deutsche Bank Trust Company 

Americas (ADR) 

4 Albany Street, New York, USA 

www.db.com 

Bank of New York (GDR) 

620 Avenue of the Americas, 

New York, 10011 

www.bankofny.com 

Registrar: 

ZAO “STATUS Registration Company” 

Address: 109544, Moscow, ul. Dobrovolcheskaya 1/64 

Tel.: +7 (495) 974-83-50, (495) 632-72-56 

www.rostatus.ru 

Registrar Branches: 

Voronezh Branch: 

Oryol Branch: 

Voronezh, ul. Feoktistova 6 

Oryol, ul. Oktyabrskaya 35, Office 613 

Tel.: +7 (4732) 53-13-54 

tel.: +7 (4862) 47-57-70 

Magnitogorsk Branch: 

Krasnodar Branch: 

Magnitogorsk, ul. Zavenyagina 9 Krasnodar, ul. Krasnoarmeyskaya 30/1, 

Office 902 

Tel.: +7 (3519) 25-60-22 

Tel.: +7 (861) 274-88-85 

Samara Branch: 

Kaluga Branch: 

Samara, ul. Galaktionovskaya 132, 

Kaluga, ul. Saltykova-Shchedrina 23, 

bldg. 412 

Office 3 

Tel.: +7 (846) 332-41-77 

Tel.: +7 (484) 256-43-06 

Alekseyevka Branch: 

St. Petersburg Branch: 

Belgorod Region, Alekseyevka, ul. 

St. Petersburg, Vasilyevsky Island, 

Frunze 2a 

4-liniya, 13, Liter A, Room 4-N 

Tel.: +7 (47234) 3-25-18 

Tel.: +7 (812) 703-56-63 

Kemerovo Branch: 

Kemerovo, pr. Sovetsky 27, Office 405 

Tel.: +7 (3842) 49-60-64 

t/h tonnes per hour Unit of steam output 

tce 

Tonne of coal equivalent


LIST OF SBERBANK BRANCHES ACTING AS RE-REGISTRATION 

AGENTS FOR SHARES OF OAO RAO “UES OF RUSSIA” 

BRANCH NAME 

Cheremkhovo Branch of Sberbank 

No.2423 

POSTAL 

CODE 

CONSTITUENT 

ENTITY 

OF RUSSIA 

CITY/TOWN 

ADDRESS 

STREET NAME 

TELEPHONE NUMBER 

665413 Irkutsk Region Cheremkhovo ul. Nekrasova, 17 +7(39546) 5-24-94 

As a measure to provide ownership registration services to the shareholders in OAO RAO “UES of Russia” residing 

in different regions of the Russian Federation, the Company’s Registrar, ZAO “STATUS Registration Company”, entered into 

a re-registration agency agreement with the Savings Bank of Russia (Sberbank). Under the agreement, over 300 Sberbank 

branches will act as drop agents to take instructions on behalf of the Registrar for entries to be made on the share register 

of OAO RAO “UES of Russia”. 

You may contact the Sberbank Branches listed below for all matters relating to re-registrations of securities and obtaining 

account statements and extracts from the share register. 

Ust-Kut Branch of Sberbank No.2425 665780 Irkutsk Region Ust-Kut ul. Kirova, 21A +7(39565) 5-19-28 

Slyudyanka Branch of Sberbank No.2444 665900 Irkutsk Region Slyudyanka 

ul. Parizhskoy Kommuny, 

7 

+7(39544) 5-16-43 

Angarskoe Branch of Sberbank No.7690 665835 Irkutsk Region Angarsk Mikrorayon 7, 25 +7(3951) 50-45-19 

Ust-Ilimsk Branch of Sberbank No.7966 666686 Irkutsk Region Ust-Ilimsk prospekt Mira, 70 +7(39535) 9-00-14 

Shelekhov Branch of Sberbank No.7990 666020 Irkutsk Region Shelekhov Kvartal 8, 16 +7(39510) 4-00-76 

BRANCH NAME 

POSTAL 

CODE 

CONSTITUENT 

ENTITY 


CITY/TOWN 

ADDRESS 

STREET NUMBER 


City Branch of Sberbank No.8586 664007 Irkutsk Region Irkutsk 

ul. Dekabrskikh 

Sobyty, 23A 

+7(3952) 25-76-65 

Altay Head Office of Sberbank 656038 Altay Kray Barnaul 

Tsentralno-Chernozemny Head Office 

of Sberbank 

394006 

Belgorod Branch No.8592 308600 

Voronezh 

Region 

Belgorod 

Region 

Komsomolsky prospekt, 

106A 

+7(3852) 39-94-90 

Voronezh ul. 9-Yanvarya, 28 +7(4732) 72-72-57 

Belgorod prospekt Lenina, 52 +7(4722) 32-69-39 

Lipetsk Branch No.8593 398600 Lipetsk Region Lipetsk ul. Pervomayskaya, 2 +7(4742) 42-17-10 

Tambov Branch No.8594 392036 Tambov Region Tambov ul. K. Marksa, 130 +7(4752) 79-05-34 

Oryol Branch No.8595 302028 Oryol Region Oryol ul. Brestskaya, 8 +7(4862) 77-72-63 

Kursk Branch No.8596 305004 Kursk Region Kursk ul. Lenina, 67 +7(4712) 55-77-29 

Urals Head Office of Sberbank 620014 

Chelyabinsk Branch of Sberbank No.8597 454048 

Sverdlovsk 

Region 

Chelyabinsk 

Region 

Ekaterinburg ul. Moskovskaya, 11 +7(3432) 69-52-04 

Chelyabinsk ul. Entuziastov, 9A +7(3512) 67-14-23 

Zakamensk Branch of Sberbank No.2433 671930 Burya Republic Zakamensk ul. Lenina, 25 +7(30137) 4-50-91 

Selenginskoe Branch of Sberbank 

No.2434 

671280 Burya Republic Gusinoozersk ul. Klyuchevskaya, 26 +7(30145) 4-59-24 

Buryat Branch of Sberbank No.8601 670031 Burya Republic Ulan-Ude ul. Tereshkovoy, 3B +7(3012) 28-50-44 

Kyakhta Branch of Sberbank No.2439 671830 Burya Republic Kyakhta ul. Lenina, 52 +7(30142) 9-21-78 

Buryat Branch of Sberbank No.8601 670031 Burya Republic Ulan-Ude ul. Tereshkovoy, 3B +7(3012) 28-50-44 

Nerchinsk Branch of Sberbank No.4171 673400 Chita Region Nerchinsk ul. Sovetskaya, 26 +7(30242) 4-11-99 

Chernyshevsk Branch of Sberbank 

No.4175 

673460 Chita Region 

Chernyshevsk 

ul. Tsentralnaya, 23 +7(30265) 2-23-73 

Borzya Branch of Sberbank No.4178 674600 Chita Region Borzya ul. Pushkina, 17 +7(30233) 3-16-53 

Chita Branch of Sberbank No.8600 672010 Chita Region Chita 

ul. Imeni Poliny 

Osipenko, 40 

+7(3022) 33-60-29 

Shilka Branch of Sberbank No.4181 673370 Chita Region Shilka ul. Lenina, 31 +7(30244) 2-25-69 

Bashkir Branch of Sberbank No.8598 450059 

Bashkortostan 

Republic 

Ufa ul. Richarda Zorge, 5 +7(3472) 24-65-45 

Petrovsk-Zabaykalsky Branch of Sberbank 

No.4190 


Petrovsk- 

Zabaykalsky 

ul. Sportivnaya, 25 +7(30236) 2-15-70 

Kurgan Branch of Sberbank No.8599 640022 Kurgan Region Kurgan ul. Gogolya, 98 +7(3522) 48-96-88 

Baley Branch of Sberbank No.4219 673450 Chita Region Baley ul. Sovetskaya, 42 +7(30232) 5-16-38 

Baykal Head Office of Sberbank 664047 Irkutsk Region Irkutsk ul. Deputatskaya, 32 +7(3952) 25-41-57 

Krasnokamensk Branch of Sberbank 

No.8005 


Krasnokamensk 

prospekt Stroiteley +7(30245) 2-86-80 

Kirensk Branch of Sberbank No.687 666710 Irkutsk Region Kirensk 

ul. Kommunisticheskaya, 

2 

+7(39568) 2-16-08 

Khilok Branch of Sberbank No.8091 673200 Chita Region Khilok ul. Lenina, 10 +7(30237) 2-16-60 

Nizhneudinsk Branch of Sberbank 

No.2406 

665110 Irkutsk Region Nizhneudinsk ul. Oktyabrskaya, 68 +7(39517) 7-15-14 

East Siberia Head Office of Sberbank 660028 

Krasnoyarsk 

Kray 

Krasnoyarsk 

prospekt 

Svobodny, 46 

+7(3912) 59-80-55 

Bodaybo Branch of Sberbank No.587 666904 Irkutsk Region Bodaybo ul. Uritskogo, 32 +7(3952) 25-69-51 

Abakan Branch No.8602 655017 

Republic of 

Khakassia 

Abakan ul. Pushkina, 165 +7(39022) 5-94-11 

Tayshetsk Branch of Sberbank No.2410 665008 Irkutsk Region Tayshet ul. Gagarina, 94 +7(39563) 2-04-33 

Kyzyl Branch No.8591 667000 Republic of Tyva Kyzyl ul. Kochetova, 34A +7(39422) 3-59-33 

Bratsk Branch of Sberbank No.2413 665708 Irkutsk Region Bratsk ul. Lenina, 7 +7(3953) 43-48-31 

Nizhne-Ilimsk Branch of Sberbank 

No.2419 

665653 Irkutsk Region 

Zheleznogorsk-Ilimsky 

Kvartal 6, 9 +7(39566) 3-29-40 

Tulun Branch of Sberbank No.2420 665210 Irkutsk Region Tulun ul. Lenina, 5 +7(39530) 2-29-61 

Severo-Vostochny Head Office 

of Sberbank 

685000 

Susuman Branch of Sberbank No.7249 686314 

Magadan 

Region 

Magadan 

Region 

Magadan ul. Pushkina, 11/11 +7(4132) 23-08-57 

Susuman ul. Bilibina, 3 +7(245) 2-16-53 

Usolskoe Branch of Sberbank No.2421 665470 Irkutsk Region 

Usolye-Sibirskoe 

ul. Ordzhonikidze, 31 +7(39543) 6-32-34 

Chaunskoe Branch of Sberbank No.7253 689400 

Chukotka 

Autonomous 

Okrug 

Pevek ul. Kuvaeva, 49 +7(42737) 4-19-30


BRANCH NAME 

POSTAL 

CODE 

CONSTITUENT 

ENTITY 


CITY/TOWN 

ADDRESS 

STREET NAME 


BRANCH NAME 

POSTAL 

CODE 

CONSTITUENT 

ENTITY 


CITY/TOWN 

ADDRESS 

STREET NAME 


Bilibino Branch of Sberbank No.7820 689450 

Chukotka 

Autonomous 

Okrug 

Bilibino 

Mikrorayon Vostochny, 

1, bldg. 4 

+7(42738) 2-45-14 

Smolensk Branch of Sberbank No.8609 214025 

Smolensk 

Region 

Smolensk 

ul. Polka Normandiya-Neman, 

23 

+7(4812) 38-12-60 

Chukotka Branch of Sberbank No.8557 689000 

Chukotka 

Autonomous 

Okrug 

Anadyr ul. Beringa, 6 +7(42722) 2-17-01 

Volgo-Vyatsky Head Office of Sberbank 603005 

Nizhny Novgorod 

Region 

Nizhny 

Novgorod 

ul. Oktyabrskaya, 35 +7(8312) 17-98-61 

Kirov Branch of Sberbank No.8612 610000 Kirov Region Kirov ul. Derendyaeva, 25 +7(8332) 65-13-22 

Aldanskoe Branch of Sberbank No.1049 678900 

Sakha (Yakutia) 

Republic, Aldansky 

Ulus 

Aldan ul. Lenina, 9 +7(41145) 3-69-03 

Bank Tatarstan Branch of Sberbank 

No.8610 

420012 

Tatarstan 

Republic 

Kazan ul. Butlerova, 44 +7(8432) 64-61-00 

Srednekolymskoe Branch of Sberbank 

No.5034 

678790 


Republic, 

Srednekolymsky 

Ulus 

Srednekolymsk 

ul. Yaroslavskogo, 26 +7(41156) 4-14-91 

Mary El Branch of Sberbank No.8614 424000 

Mari El 

Republic 

Yoshkar-Ola ul. Pushkina, 30 +7(8362) 68-42-31 

Vladimire Branch of Sberbank No.8611 600015 Vladimir Region Vladimir prospekt Lenina, 36 +7(4922) 24-06-26 

Yakutsk Branch of Sberbank No.8603 677027 


Republic 

Yakutsk ul. Oktyabrskaya, 17 +7(4112) 42-08-13 

Mordovia Branch of Sberbank No.8589 430033 

Republic 

of Mordovia 

Saransk 

prospekt 70 let 

Oktyabrya, 86 

+7(8342) 29-58-25 

Vilyuysk Branch of Sberbank No.5037 678200 


Republic, 

Vilyuisky Ulus 

Vilyuysk ul. Oktyabrskaya, 7 +7(41132) 4-13-70 

Chuvash Branch of Sberbank No.8613 428000 

Chuvash 

Republic 

Cheboksary prospekt Moskovsky, 3 +7(8352) 42-09-69 

Nyurba Branch of Sberbank No.5038 678450 

Khangalasskoe Branch of Sberbank 

No.5043 

678000 


Republic, Nyurbinsky 

Ulus 


Republic, Khangalassky 

Ulus 

Nyurba ul. Lenina, 32/2 +7(41134) 2-24-87 

Pokrovsk ul. Ordzhonikidze, 14 +7(41144) 4-37-87 

Siberia Head Office of Sberbank 630091 

Kemerovo Branch of Sberbank No.8615 650066 

Novosibirsk 

Region 

Kemerovo 

Region 

Novosibirsk prospekt Krasny, 46 +7(3832) 69-84-61 

Kemerovo 

prospekt 

Oktyabrsky, 53 

+7(3842) 35-17-37 

Tomsk Branch of Sberbank No.8616 634061 Tomsk Region Tomsk prospekt Frunze, 90/1 +7(3822) 26-13-99 

Olekminsk Branch of Sberbank No.5044 678100 

Lensk ranch of Sberbank No.5045 678144 


Republic, Olekminsky 

Ulus 


Republic, 

Lensky Ulus 

Olekminsk ul. Molodezhnaya, 10 +7(41138) 4-17-87 

Lensk ul. Lenina, 66 +7(41137) 4-11-27 

West Urals Head Office of Sberbank 614990 Perm Region Perm ul. Ordzhonikidze, 4 +7(3422) 10-26-33 

Komi Branch No.8617 167981 Komi Republic Syktyvkar 

Udmurt Branch No.8618 426057 

Udmurt Republic 

GSP-1, 

ul. Sovetskaya, 18 

+7(8212) 21-68-57 

Izhevsk ul. Krasnaya, 105 +7(3412) 48-95-39 

Mirny Branch of Sberbank No.7800 678170 

Neryungri Branch of Sberbank No.8155 678965 


Republic, 

Mirninsky Ulus 


Republic, 

Neryungrinsky 

District 

Mirny ul. Komsomolskaya,13 +7(41136) 4-20-93 

Neryungri ul. K. Marksa, 9 +7(41147) 4-69-80 

Adygei Branch of Sberbank No.8620 385011 Adygei Republic Maykop ul. Dimitrova, 4/2 +7(87725) 3-93-00 

Rostov Branch No.5221 344 082 Rostov Region 

South-West Head Office of Sberbank 344006 Rostov Region 

Rostovna-Donu 

Rostovna-Donu 

Per. Bratsky, 41 +7(863) 267-35-52 

ul. Pushkinskaya, 116 +7(8632) 67-07-59 

Kamchatsk Branch of Sberbank No.8556 683031 

Kamchatskaya 

Region 

Petropav- 

lovsk- 

Kamchatsky 

ul. Lukashevskogo, 2 +7(4152) 11-06-50 

Millerovo Branch No.275 346130 Rostov Region Millerovo Per. Gazetny, 5A +7(215) 3-07-67 

Salskoe Branch of Sberbank No.0625 347630 Rostov Region Salsk ul. Kirova, 5 +7(86372) 3-24-99 

Kamchatsk Branch of Sberbank No.4196 684415 

Kamchatskaya 

Region 

Ust- 

Kamchatsk 

ul. 60 let 

Oktyabrya, 29 

+7(41534) 2-05-78 

Taganrog Branch of Sberbank No.1548 347900 Rostov Region Taganrog ul. Petrovskaya, 74 +7(8634) 61-36-86 

Srednerussky Head Office of Sberbank 109544 Moscow Moscow 

ul. Bolshaya Andronyevskaya, 

8 

+7(495) 785-45-10 

Novocherkassk Branch of Sberbank 

No.1799 

346429 Rostov Region 

Novocherkassk 

pr. Platovsky, 59B +7(86352) 2-18-05 

Tula Branch of Sberbank No.8604 300000 Tula Region Tula Pl. Chelyuskintsev, 1 +7(4872) 32-88-39 

Bryansk Branch of Sberbank No.8605 241011 Bryansk Region Bryansk prospekt Lenina, 10B +7(4832) 66-06-92 

Ryazan Branch of Sberbank No.8606 390000 Ryazan Region Ryazan ul. Pozhalostina, 19 +7(4912) 21-59-53 

Tver Branch of Sberbank No.8607 170000 Tver Region Tver ul. Trekhsvyatskaya, 8 +7(4822) 49-09-53 

Kaluga Branch of Sberbank No.8608 248003 Kaluga Region Kaluga ul. M. Gorkogo, 63 +7(4842) 79-79-71 

Novocherkassk Branch of Sberbank 

No.1799 

Kamensk Branch of Sberbank No.1801 347800 Rostov Region 

346700 Rostov Region Aksay ul. Dzerzhinskogo, 1D +7(250) 5-81-82 

Kamenk- 

Shakhtinsky 

ul. Lenina, 49 +7(265) 7-38-13 

M-Kurganskoe Branch of Sberbank No.1820 346970 Rostov Region M-Kurgan ul. Pobedy, 9 +7(86341) 3-21-40 

Zernogradskoe Branch of Sberbank No.1824 347740 Rostov Region Zernograd ul. Lenina, 2 +7(8259) 3-28-02


BRANCH NAME 

POSTAL 

CODE 

CONSTITUENT 

ENTITY 


CITY/TOWN 

ADDRESS 

STREET NAME 


BRANCH NAME 

POSTAL 

CODE 

CONSTITUENT 

ENTITY 


CITY/TOWN 

ADDRESS 

STREET NAME 


Morozovskoe Branch of Sberbank No.1835 347210 Rostov Region Morozovsk ul. Podtelkova, 27 +7(86314) 4-12-84 

Bataysk Branch of Sberbank No.5154 346880 Rostov Region Bataysk ul. Rabochaya, 77 +7(254) 2-21-59 

Bataysk Branch of Sberbank No.5154/026 346780 Rostov Region Azov ul. Leningradskaya, 61 +7(242) 4-48-58 

Rodionovo-Nesvetayskoe Branch 

of Sberbank No.5190 


Novoshakhtinsk 

ul. Sadovaya, 34 +7(86369) 2-27-02 

Lazarevskoe Branch of Sberbank No.1849 354217 Krasnodar Kray Lazarevskoe ul. Pavlova, 87A +7(8622) 72-16-46 

Krymsk Branch of Sberbank No.1850 353380 Krasnodar Kray Krymsk ul. Lenina, 217 +7(86131) 4-63-88 

Labinsk Branch of Sberbank No.1851 352500 Krasnodar Kray Labinsk ul. Konstantinova, 86 +7(86169) 2-79-03 

Predgornoe Branch of Sberbank No.1853 352690 Krasnodar Kray Apsheronsk ul. Klubnaya, 25 +7(86152) 2-27-42 








Sloboda Rodionovo-Nesvetayskaya 

ul. Pushkinskaya, 33 +7(86340) 3-11-89 

346350 Rostov Region Krasny Sulin ul. Zavodskaya, 1 +7(86367) 5-32-33 

347879 Rostov Region Gukovo ul. Shakhterskaya, 72 +7(86361) 3-21-90 

Predgornoe Branch of Sberbank No.1853 353290 Krasnodar Kray 

Goryachy 

Klyuch 

ul. Lenina, 96 +7(86159) 4-30-62 

Predgornoe Branch of Sberbank No.1853 352630 Krasnodar Kray Belorechensk ul. Gogolya, 51 +7(86155) 2-56-52 

Novokubansk Branch of Sberbank No.5213 352240 Krasnodar Kray Novokubansk ul. Pervomayskaya, 95 +7(86195) 3-29-99 

Povolzhsky Head Office of Sberbank 443011 Samara Region Samara ul. Novo-Sadovaya, 305 +7(8462) 98-19-37 

Donetsk Branch of Sberbank No.7749 346330 Rostov Region Donetsk ul. Gorkogo, 60 +7(86368) 2-31-36 

Volgodonsk Branch of Sberbank No.7931 347360 Rostov Region Volgodonsk ul. Koshevogo, 2 +7(86392) 3-38-82 

Volgodonsk Branch of Sberbank No.7931 347320 Rostov Region Tsimlyansk ul. Lenina, 31/30 +7(86392) 6-21-30 

Belaya Kalitva Branch of Sberbank 

No.8273 


Belaya 

Kalitva 

Krasnodar Branch of Sberbank No.8619 350000 Krasnodar Kray Krasnodar 

ul. Petrova, 48 +7(86313) 2-64-39 

ul. Gimnazicheskaya, 

65 

+7(8612) 19-02-33 

Novorossysk Branch of Sberbank No.68 353900 Krasnodar Kray Novorossysk ul. Sovetov, 14 +7(8617) 60-75-62 

Kurganinsk Branch of Sberbank No.1584 352430 Krasnodar Kray Kurganinsk ul. Komsomolskaya, 79 +7(86147) 2-31-21 

Volgograd Branch of Sberbank No.8621 400005 

Volgograd 

Region 

Volgograd 

ul. Kommunisticheskaya, 

40 

+7(8442) 74-20-91 

Saratov Branch of Sberbank No.8622 410600 Saratov Region Saratov ul. Vavilova, 1/7 +7(8452) 50-82-03 

Orenburg Branch of Sberbank No.8623 461300 

Orenburg 

Region 

Orenburg ul. Volodarskogo, 16 +7(3532) 72-52-86 

Penza Branch of Sberbank No.8624 440600 Penza Region Penza ul. Suvorova, 81 +7(8412) 42-98-98 

Astrakhan Branch of Sberbank No.8625 414000 

Ulyanovsk Branch of Sberbank No.8588 432700 

Astrakhan 

Region 

Ulyanovsk 

Region 

Astrakhan ul. Kirova, 41 +7(8512) 32-11-44 

Ulyanovsk ul. Engelsa, 15 +7(8422) 41-32-67 

Eysk Branch of Sberbank No.1798 353680 Krasnodar Kray Eysk 

ul. B. Khmelnitskogo, 

86 

+7(86132) 7-05-65 

North West Head Office of Sberbank 191124 St. Petersburg 

Sankt-Peterburg 

ul. Krasnogo Tekstilschika, 

2 

+7(812) 329-86-53 

Kropotkinskoe Branch of Sberbank 

No.1586 

352380 Krasnodar Kray Kropotkin ul. Krasnaya, 144 +7(86138) 6-17-12 

Kaliningrad Branch of Sberbank No.8626 236006 

Kalinigrad 

Region 

Kaliningrad 

prospekt 

Moskovsky, 24 

+7(4112) 35-17-10 

Tikhoretsk Branch of Sberbank No.1802 352120 Krasnodar Kray Tikhoretsk ul. Oktyabrskaya, 22A +7(86196) 7-05-14 

Temryuk Branch of Sberbank No.1803 353500 Krasnodar Kray Temryuk 

ul. Oktyabrskaya, 

137, bldg. 1 

+7(86148) 5-37-23 

Anapa Branch of Sberbank No.1804 353440 Krasnodar Kray Anapa ul. Lenina, 14 +7(86133) 4-54-16 

Murmansk Branch of Sberbank No.8627 183038 

Karelian Branch of Sberbank No.8628 185035 

Murmansk 

Region 

Karelian Republic 

Murmansk prospekt Lenina, 37 +7(8152) 28-03-78 

Petrozavodsk ul. Antikaynena, 2 +7(8142) 71-94-10 

Tuapse Branch of Sberbank No.1805 352800 Krasnodar Kray Tuapse ul. K. Marksa, 36 +7(86167) 3-04-03 

Central Branch of Sberbank No.1806 354000 Krasnodar Kray Sochi ul. Gorkogo, 36 +7(8622) 62-28-29 

Gelendzhik Branch of Sberbank No.1807 353460 Krasnodar Kray Gelendzhik ul. Kirova, 56 +7(86141) 3-17-80 

Novgorod Branch of Sberbank No.8629 173025 

Novgorod 

Region 

Veliky 

Novgorod 

Pskov Branch of Sberbank No.8630 180000 Pskov Region Pskov 

prospekt Mira, 44/20 +7(81629) 8-62-30 

prospekt 

Oktyabrsky, 23/25 

+7(8112) 19-88-48 

Pavlovskaya Branch of Sberbank No.1813 352040 Krasnodar Kray Pavlovskaya ul. Pushkina, 245 +7(86191) 5-44-98 

Korenovsk Branch of Sberbank No.1814 353158 Krasnodar Kray Korenovsk ul. Krasnaya, 108 +7(86142) 4-54-84 

Ust-Labinsk Branch of Sberbank No.1815 352330 Krasnodar Kray Ust-Labinsk ul. Krasnaya, 287A +7(86135) 4-13-42 

Far East Head Office of Sberbank 680011 

Nikolaevsk Branch of Sberbank No.692 682460 

Khabarovsk 

Kray 

Khabarovsk 

Kray 

Khabarovsk ul. Brestskaya, 4 +7(4212) 78-32-35 

Nikolaevskna-Amure 

ul. Kantera, 29 +7(2352) 2-37-64 

Timashevsk Branch of Sberbank No.1816 352700 Krasnodar Kray Timashevsk ul. Lenina, 154A +7(86130) 4-41-41 

Slavyansk Branch of Sberbank No.1818 353560 Krasnodar Kray 

Slavyanskna-Kubani 

ul. Krasnaya, 68 +7(86146) 2-40-37 

Armavirskoe Branch of Sberbank No.1827 352931 Krasnodar Kray Armavir ul. Shaumyana, 6 +7(86137) 4-29-83 

Sovetskaya Gavan Branch of Sberbank 

No.4154 

682880 

Central Branch of Sberbank No.4205 681017 

Khabarovsk 

Kray 

Khabarovsk 

Kray 

Sovetskaya 

Gavan 

Komso- 

molsk-na- 

Amure 

Ploschad Pobedy, 7 +7(238) 4-46-32 

ul. Alleya Truda, 57/8 +7(27) 57-82-56


BRANCH NAME 

POSTAL 

CODE 

CONSTITUENT 

ENTITY 


CITY/TOWN 

ADDRESS 

STREET NAME 


BRANCH NAME 

POSTAL 

CODE 

CONSTITUENT 

ENTITY 


CITY/TOWN 

ADDRESS 

STREET NAME 


Chegdomyn Branch of Sberbank No.5529 682030 

Khabarovsk 

Kray 

Chegdomyn ul. Tsentralnaya, 48 +7(249) 5-48-49 

Velsk Branch of Sberbank No.4065 165150 

Arkhangelskaya 

Region 

Velsk ul. Dzerzhinskogo, 58 +7(81836) 6-16-32 

Birobidzhan Branch of Sberbank No.4157 682200 

Jewish Autonomous 

Region 

Birobidzhan 

ul. Sholom- 

Aleykhema, 16 

+7(42622) 4-02-09 

Kotlas Branch of Sberbank No.4090 165300 


Region 

Kotlas ul. Kuznetsova, 16 +7(81837) 5-24-02 

Ussurysk Branch of Sberbank No.4140 69251 Primorsky Kray Ussurysk ul. Oktyabrskaya, 56 +7(4234) 32-29-40 

Spassk Branch of Sberbank No.4141 692245 Primorsky Kray Spassk-Dalny ul. Leninskaya, 42 +7(42352) 2-29-43 

Dalnerechensk Branch of Sberbank 

No.4155 

692100 Primorsky Kray 

Dalnerechensk 

ul. Lenina, 61 +7(42356) 2-20-66 

Arsenyev Branch of Sberbank No.7718 692337 Primorsky Kray Arsenyev ul. Leninskaya, 10B +7(42361) 4-46-62 

Kotlas Branch of Sberbank No.4090 (dop. 

Ofis) 

Severodvinsk Branch of Sberbank 

No.5494 

165651 

164501 

Novodvinsk Branch of Sberbank No.8218 164900 


Region 


Region 


Region 

Koryazhma ul. Kirova, 29 +7(81837) 3-01-63 

Severodvinsk ul. Plyusnina, 11 +7(8184) 58-15-98 

Novodvinsk ul. Sovetov, 7 +7(81852) 4-58-32 

Nakhodka Branch of Sberbank No.7151 692904 Primorsky Kray Nakhodka ul. Portovaya, 3 +7(4236) 67-90-41 

Nenets Branch of Sberbank No.1582 166000 

Nenets Autonomous 

Okrug 

Naryan-Mar ul. Lenina, 16 +7(81853) 4-24-43 

Primorskoe Branch of Sberbank No.8635 690950 Primorsky Kray Vladivostok ul. Semenovskaya, 22 +7(4232) 42-20-15 

Okha Branch of Sberbank No.4170 694460 

Sakhalinskaya 

Region 

Okha ul. Sovetskaya, 32 +7(42437) 2-36-79 

Vologda Branch of Sberbank No.8638 160035 Vologda Region Vologda 

ul. Predtechenskaya, 

33 

+7(8172) 72-83-17 

Ivanovo Branch of Sberbank No.8639 153009 Ivanovo Region Ivanovo ul. Lezhnevskaya, 159 +7(4932) 24-03-46 

Poronaysk Branch of Sberbank No.7311 694240 

Sakhalinskaya 

Region 

Poronaysk ul. Oktyabrskaya, 68 +7(42431) 5-08-83 

Kostroma Branch of Sberbank No.8640 156005 

Kostroma 

Region 

Kostroma ul. Nikitskaya, 33 +7(4942) 39-03-49 

Kurilsk Branch of Sberbank No.7320 694530 

Sakhalinskaya 

Region 

Kurilsk ul. Kurilskaya, 5 +7(42454) 4-21-70 

North-Caucasus Bank 355035 Stavropol Kray Stavropol ul. Lenina, 361 +7(8652) 30-83-31 

Yuzhno-Sakhalinsk Branch of Sberbank 

No.8567 

693020 

Sakhalinskaya 

Region 

Yuzhno- 

Sakhalinsk 

ul. Amurskaya, 61 +7(4242) 77-11-49 

Budennovsk Branch of Sberbank 

No.1812 

356800 Stavropol Kray Budennovsk 

ul. Oktyabrskaya, 

59/61 

+7(86559) 4-26-59 

Svobodny Branch of Sberbank No.1456 676450 

Tynda Branch of Sberbank No.3707 676080 

Amurskaya 

Region 

Amurskaya 

Region 

Svobodny ul. Lenina, 79 +7(41643) 2-57-08 

Tynda 

ul. Krasnaya 

Presnya, 1 

+7(41656) 3-28-74 

Blagodarny Branch of Sberbank No.1860 356420 Stavropol Kray Blagodarny ul. Sovetskaya, 363A +7(886549) 2-13-40 

Georgievsk Branch of Sberbank No.1811 357820 Stavropol Kray Georgievsk ul. Kalinina, 11 +7(87951) 2-87-96 

Kirovskoe Branch of Sberbank No.5231 357300 Stavropol Kray Novopavlovsk Pl. Lenina, – +7(87938) 2-26-74 

Belogorskoe Branch of Sberbank No.4133 676850 

Zeyskoe Branch of Sberbank No.4159 676244 

Selemdzhinskoe Branch of Sberbank 

No.4163 

Blagoveschensk Branch of Sberbank 

No.8636 

676560 

675000 

Amurskaya 

Region 

Amurskaya 

Region 

Amurskaya 

Region 

Amurskaya 

Region 

Belogorsk ul. Lenina, 55 +7(41641) 2-33-22 

Zeya Mikrorayon Svetly, 55 +7(41658) 2-40-67 

Ekimchan 

Blagoveschensk 

ul. Komsomolskaya, 

16 

+7(41646) 2-15-85 

ul. Zeyskaya, 240 +7(4162) 59-50-14 

North Head Office of Sberbank 150028 Yaroslavl Region Yaroslavl prospekt Oktyabrya, 8 +7(4852) 40-77-44 

Izobilny Branch of Sberbank No.1858 356140 Stavropol Kray Izobilny ul. Proletarskaya, 51 +7(86545) 2-48-53 

Ipatovo Branch of Sberbank No.1856 356630 Stavropol Kray Ipatovo ul. Gagarina, 67a +7(865-42) 2-43-26 

Nevinnomyssk Branch of Sberbank 

No.1583 

Novoaleksandrovsk Branch of Sberbank 

No.1587 

Neftekumsk Branch of Sberbank 

No.7908 

357100 Stavropol Kray 

356000 Stavropol Kray 

Nevinnomyssk 

Novoaleksandrovsk 

356880 Stavropol Kray Neftekumsk 

ul. Gagarina, 55 +7(86554) 3-91-69 

Per. Shevchenko, 1 +7(86544) 3-10-08 

prospekt 

Neftyanikov, 5 

+7(86558) 3-64-57 

Arkhangelsk Branch of Sberbank 

No.8637 

163061 

Nyandoma Branch of Sberbank No.1552 164200 

Onega Branch of Sberbank No.4059 164840 


Region 


Region 


Region 

Arkhangelsk 

prospekt 

Lomonosova, 137 

+7(8182) 65-66-51 

Nyandoma ul. Vokzalnaya, 11 +7(81838) 6-24-92 

Onega 

ul. Arkhangelskaya, 

10 

+7(81839) 7-59-79 

Petrovskoe Branch of Sberbank No.1859 356530 Stavropol Kray Svetlograd ul. Pushkina, 8 +7(86552) 3-49-66 

Pyatigorskoe Branch of Sberbank 

No.0030 

357500 Stavropol Kray Pyatigorsk prospekt Kirova, 59 +7(87933) 2-12-35 

Sovetskoe Branch of Sberbank No.1872 357910 Stavropol Kray Zelenokumsk Pl. Lenina, 3 +7(86552) 6-46-69 

Shpakovskoe Branch of Sberbank No.5230 356240 Stavropol Kray Mikhaylovsk ul. Lenina, 121 +7(86553) 6-09-91 

Onega Branch of Sberbank No.4059/066 164260 


Region 

Plesetsk ul. Lenina, 27 +7(81832) 7-10-81 

Dagestan Branch of Sberbank No.8590 367000 

Dagestan 

Republic 

Makhachkala ul. Korkmasova, 11A +7(8722) 67-60-86 

Onega Branch of Sberbank No.4059/075 164170 


Region 

Mirny ul. Lenina, 33 +7(81834) 5-04-46 

Ingush Branch of Sberbank No.8633 366720 Ingush Republic Nazran ul. Moskovskaya, 27 +7(8732) 22-92-69

194 APPENDIX 10 

BRANCH NAME 

POSTAL 

CODE 

CONSTITUENT 

ENTITY 


CITY/TOWN 

ADDRESS 

STREET NAME 


Kabardino-Balkar Branch of Sberbank 

No.1861 

360000 

Kabardino- 

Balkar Republic 

Nalchik ul. Khuranova, 9 +7(8662) 40-47-95 

Karachai-Cherkessk Branch of Sberbank 

No.8585 

369000 

Karachai-Cherkess 

Republic 

Cherkessk 

ul. Krasnoarmeyskaya, 

66 

+7(87822) 5-32-94 

Kalmyk Branch of Sberbank No.8579 358000 

Kalmyk 

Republic 

Elista 

ul. Bratyev 

Alekhinykh, 29 

+7(84722) 2-78-54 

Severo-Osetinskoe Branch of Sberbank 

No.8632 

362003 

North-Ossetian 

Alania Republic 

Vladikavkaz ul. Kotsoeva, 68 +7(8672) 53-25-54 

Omsk Branch of Sberbank No.8634 644024 Omsk Region Omsk 

ul. Marshala 

Zhukova, 4/1 

+7(3812) 39-07-85 

Tyumen City Branch No.29 625048 Tyumen Region Tyumen ul. Melnikayte, 54 +7(3452) 36-12-13 

Ishim Branch of Sberbank No.577 627750 Tyumen Region Ishim ul. Rokossovskogo, 15 +7(34551) 7-14-74 

Zavodoukovsk Branch of Sberbank 

No.7917 

627140 Tyumen Region 

Zavodoukovsk 

ul. Glazunovskaya, 1 +7(34542) 6-02-26 

West-Siberian Bank of Sberbank 625023 Tyumen Region Tyumen ul. Rizhskaya, 61 +7(3452) 41-98-77 

Tobolsk Branch No.58 626150 Tyumen Region Tobolsk ul. Remezova, 124 +7(34511) 4-15-83 

Tyumen Branch of Sberbank No.5772 625008 Tyumen Region Tyumen 

ul. Moskovsky 

Trakt, 14A 

+7(3452) 24-18-14 

Khanty-Mansiysk Branch of Sberbank 

No.1791 

628011 KhMAO 

Khanty-Mansysk 

ul. Dzerzhinskogo, 16 +7(34671) 2-90-02 

Surgut Branch of Sberbank No.5940 628400 KhMAO Surgut ul. Dzerzhinskogo, 5 +7(3462) 23-03-47 

Uray Branch No.7961 628285 KhMAO Uray ul. Lenina, 90 +7(34676) 2-63-72 

Nefteyugansk Branch of Sberbank 

No.7962 

628300 KhMAO Nefteyugansk Mikrorayon 1, 25 +7(3461) 22-65-82 

Nizhnevartovsk Branch No.5939 628615 KhMAO 

Nizhnevartovsk 

ul. Internatsionalnaya, 

10 

+7(3466) 44-65-78 

Sovetsky Branch of Sberbank No.7892 628240 KhMAO Sovetsky ul. Sovetskaya, 12A +7(34675) 3-39-65 

Megion Branch of Sberbank No.8564 628680 KhMAO Megion ul. Neftyanikov, 33 +7(34663) 3-90-32 

Kogalym Branch of Sberbank No.8413 628481 KhMAO Kogalym ul. Molodezhnaya, 18 +7(34667) 2-85-18 

Nyagan Branch of Sberbank No.8448 628181 KhMAO Nyagan mkr 1, 33, blok 1 +7(34672) 5-45-58 

Beloyarsky Branch of Sberbank No.8540 628162 KhMAO Beloyarsky mkr 3, 31 +7(34670) 2-21-92 

Salekhard Branch of Sberbank No.1790 629008 KhMAO Salekhard ul. Respubliki, 41 +7(34922) 3-27-45 

Nadym Branch of Sberbank No.8028 629730 YaNAO Nadym 

prospekt 

Leningradsky, 11 

+7(34995) 3-73-18 

Labytnangi Branch No.8291 629400 YaNAO Labytnangi ul. Pervomayskaya, 27 +7(34992) 5-77-02 

Novy Urengoy Branch of Sberbank 

No.8369 

629300 YaNAO Novy Urengoy mkr Mirny , 6 +7(34949) 7-37-62 

Noyabrsk OSB 629810 YaNAO Noyabrsk ul. Mira, 76 +7(3496) 35-43-57 

Gubkinsky Branch of Sberbank No.8495 629830 YaNAO Gubkinsky mkr 9, 11 +7(34936) 3-37-38

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