ANNUAL REPORT 2010
FEDERAL GRID COMPANY
OF UNIFIED ENERGY SYSTEM
CONTENTS
1
2
3
4
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Operating and Financial Highlights
2010 Key Events
Statement of the Chairman of the Board of Directors
Interview with the Chairman of the Management Board
ABOUT THE COMPANY
1.1 Organizational Structure
1.2 History
1.3 Market Overview
1.4 Geography
1.5 International Operations
1.6 Strategic Priorities
PRODUCTION OVERVIEW
2.1 Electricity Transmission
2.2 Technological Connection
2.3 Reliability Improvement
2.4 Improving Energy Effi ciency and Mitigating Losses
2.5 Maintenance and Repairs
2.6 IT Network Development
2.7 Procurement
INVESTMENTS AND INNOVATIONS
3.1 Investment Activities
3.2 Key Investment Projects
3.3 Innovative Development
ECONOMIC AND FINANCIAL PERFORMANCE
4.1 Tariff Regulation
4.2 Cost Optimization
4.3 Loan Portfolio and Liquidity
4.4 Credit Ratings
6
8
14
16
22
26
28
29
34
35
38
40
42
44
45
54
56
57
62
66
68
78
84
96
104
108
109
111
5
6
CORPORATE GOVERNANCE
5.1 Corporate Governance Principles
5.2 Board of Directors
5.3 Committees of the Board of Directors
5.4 Management Board
5.5 Remuneration to the Management Bodies
5.6 Internal Control System
5.7 Risk Management System
5.8 Share Capital
5.9 Stock Market
5.10 Dividend Policy
5.11 Investor Relations
SOCIAL RESPONSIBILITY
6.1 Social Responsibility Principles
6.2 HR Policy
6.3 Environment
6.4 Production Safety
ATTACHMENTS
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2010 RAS Financial Statements and Audit Report
2009 RAS Financial Statements and Audit Report
2010 Management Discussion and Analysis (MD&A)
Compliance with the Code of Corporate Governance
2010 General Shareholders Meetings
Branches
Subsidiaries
2010 Interested Party and Major Transactions
Implementation of the Assignments of the President
and Government of the Russian Federation
Audit Commission Conclusions on the Veracity
of Information in the Annual Report
2011 Investor Calendar
Glossary
Contacts
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112
114
117
122
128
135
137
141
147
151
154
155
156
158
161
167
170
172
192
208
226
236
238
240
246
250
253
254
255
258
OPERATING AND
FINANCIAL HIGHLIGHTS
KEY OPERATING
HIGHLIGHTS
Number of substations (units)*
Transformer capacity (MVA)*
805
804
800
2010
2009
2008
311,007.93
306,422.35
294,126.84
Total length of electric energy
transmission lines (thousand km)*
121.7
121.1
121.5
Electric energy output through the UNEG
to neighboring countries (mln kWh)
15,716.33
13,628.309
16,704.763
Customer contract demand (MW)
Electric energy output through
the UNEG to distribution companies,
direct consumers on the WECM
and independent
energoes (mln kWh)
470,648.072
452,662.172
471,958.118
Total real electric energy
losses (mln kWh)
22,525.621
22,120.610
21,865.737
2010
2009
2008
2010
2009
2008
90,057
94,636
90,042
2010
2009
2008
2010
2009
2008
2010
2009
2008
2010
2009
2008
* Including leased facilities
6
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
KEY FINANCIAL
HIGHLIGHTS
Revenue from
operating activities
EBITDA*
111,085
85,078
68,485
2010
2009
2008
40,379*
32,718*
68,301*
EBIT*
16,962*
11,869*
35,619*
Profit/ (loss)
before taxation
2010
2009
2008
-54,049
68,319
6,177
2010
2009
2008
2010
2009
2008
Net profit/ (loss)
2010
2009
2008
-59,866
4,465
58,088
Net asset value
Debt and borrowing
2010
2009
2008
13,000
32,980
56,000
2010
2009
2008
2010
2009
2008
764,162
579,746
666,471
Market capitalization
141,882.2
452,717
367,971
*In order to calculate this fi gure, external factors are not taken into consideration in terms
of the responsibilities of the Company’s management (revaluation of fi nancial investments,
creation of provisions for doubtful debts).
7
KEY EVENTS
2010
JANUARY
26.01.2010
MARCH
11.03.2010
Federal Grid Company made public its plans to con-
struct seven objects in the Far East in 2010, including
introducing 50 MVA of additional transformer capac-
ity and 391 kilometers of electric energy transmission
lines in the Far East.
Federal Grid Company completed construction of
the 500-kV Krymskaya substation and the 500-kV
Tikhoretsk – Krymskaya transmission line. In order
to realize this project, the Company invested a total
of RUR8.6 billion.
The Federal Financial Markets Service (FFMS) regi-
stered the Report on the results of the additional
share issue of Federal Grid Company. In total, during
the issue, 54.64% of additional share issue were
placed and RUR40,177,924,543.62 were received as
a payment for these shares.
20.03.2010
Federal Grid Company and Transneſt signed an agree-
ment on cooperation for determining the interaction
between parties during the construction of external
power supply objects for the Eastern Siberia – Pacifi c
Ocean pipeline transportation system (ESPO-1, 2).
APRIL
06.04.2010
Federal Grid Company signed agreements on co-
operation with leading producers and developers of
electro-technical equipment in the Central Region
of Russia with the goal of achieving eff ective and
accident-free operation of local UNEG objects.
27.04.2010
Federal Grid Company and Rostelecom put into
operation the fi ber optic telecommunication line
Chelyabinsk – Khabarovsk. This is the largest Russian
project in the fi eld of constructing principal telecom-
munication lines during the last 10 years. The length
of the new fi ber optic telecommunication line is ap-
proximately 10 thousand kilometers. Investment in
constructing this project exceeded RUR5 billion.
FEBRUARY
04.02.2010
Federal Grid Company put into operation the 500-kV
Peresvet substation (the Khanty-Mansi Autonomous
Region-Yugra), which entailed more than RUR6 billion
in investments. As a result, the Company upgraded
the reliability of the power supply to the Bistrinskoye,
Surgutskoye, Fedorovskoye, Lyantorovskoye, Bitem-
skoye, Nizhne-Sortimskoye and Ay-Pimskoye deposits
of Surgutneſt egaz, as well as the Priobskoye deposit
of Rosneſt Oil Company and for the Surgut Region
in Yugra.
18.02.2010
Federal Grid Company received an award for con-
tributing to the development of a social partnership
from the All-Russian Industrial Union of Power Sector
Employers.
27.02.2010
Management Board adopted an innovative deve-
lopment and modernization policy for the Unifi ed
National Electric Grid (UNEG), including develop-
ment of the next generation electric grid in Russia –
smart grid.
8
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
MAY
19.05.2010
Federal Grid Company and Siemens AG Group con-
cluded an agreement on strategic cooperation in
implementing new technologies at Federal Grid Com-
pany objects and developing the production of Sie-
mens electro-technical equipment in Russia, as well
as servicing and maintaining Siemens equipment
installed at the Company’s power facilities.
JUNE
02.06.2010
Federal Grid Company created the Innovation Com-
mittee. The Committee’s main goal is to implement
the project to develop a smart energy system with
an active adaptive grid.
18.06.2010
Federal Grid Company and RUSAL signed an agree-
ment on developing the production of new types of
wires for transmission lines.
Federal Grid Company and European Bank for Re-
construction and Development (EBRD) signed an
agreement on mutual understanding stipulating the
intention of parties to broaden cooperation in the
fi eld of upgrading the energy eff ectiveness of the
Russian economy by developing the UNEG.
28.06.2010
Board of Directors adopted a resolution to increase
the Company’s charter capital by placing additional
common shares in the amount of 28,288,776,589
with a nominal value of RUR0.50 per share resulting
in an overall sum of RUR14,144,388,294.5. Funds
received as a result of the issue will be directed at
realizing the Company’s investment program.
29.06.2010
Annual General Shareholders Meeting took place. At
this meeting a decision not to pay dividends for 2009
was adopted. The Company’s shareholders adopted
the 2009 annual report and fi nancial reports, elected
the Board of Directors and the Audit Commission and
selected the Company’s Auditor. The new version
of Articles of Association was adopted, as well as
numerous internal documents.
JULY
07.07.2010
Two Federal Grid Company projects – to create a
superconducting cable line and a transformer-type
controlled shunt reactor – were included in the 50
best innovative projects from leading Russian com-
panies, as selected by Expert RA rating agency within
the “Innovative Activity of Large Russian Businesses”
study.
21.06.2010
26.07.2010
Federal Grid Company signed ten agreements with
producers and developers of electro-technical equip-
ment, as well as with numerous Russian and foreign
partners. Agreements are aimed at the common
development and application of new technologies and
the most modern equipment in the electric grid.
Federal Grid Company and the State Electric Grid Cor-
poration of China signed a framework agreement on
cooperation aimed at upgrading the eff ectiveness, reli-
ability and safety of operating the Companies’ electric
grid infrastructure, as well as on implementing new
technologies.
9
KEY EVENTS
2010
AUGUST
12.08.2010
FFMS registered the resolution on the Company’s
additional issue of common shares and the Securi-
ties Prospectus.
17.08.2010
The Complex Program of MES South to prepare
the Sochi Region for the 2014 Winter Olympics
was adopted. Program realization will ensure
the reliable functioning of 66 10-220-kV substa-
tions, as well as 1,000 km of 10-220-kV electricity
transmission lines.
27.08.2010
Federal Grid Company, RusHydro and Transneſt
signed an agreement on cooperation determining
the interaction between parties during the realiza-
tion of investment projects for the external power
supply of the pipeline transportation system Eastern
Siberia – Pacifi c Ocean (ESPO-2) and the Nizhny-
Bureyskaya HPP.
SEPTEMBER
03.09.2010
Federal Grid Company announced the placement of
additional common shares. The cut-off date for the
placement was 4 February, 2011. Funds received
from the issue will be directed at implementing the
Company’s investment program.
recognition from an expert council in the special cate-
gory “For Best Practices in Corporate Governance and
Interactions with the Investment Community in 2010.”
The contest was organized by the Administration of
the Krasnodar Region with participation of Russian
Institute of Directors and FFMS.
28.09.2010
Federal Grid Company completed the public place-
ment of Series 6, 8 and 10 bonds for a total of RUR30
billion, which was the largest public placement of
RUR-denominated corporate bonds in Russia.
OCTOBER
06.10.2010
Federal Grid Company adopted the Program on im-
plementing the Company’s 2011-2013 environmen-
tal policy, providing for the fulfi llment of numerous
measures aimed at decreasing risks and minimizing
pollution of the surrounding environment, introducing
an ecological management system, organizing eco-
logical audits and developing normative and technical
documentation in this sphere.
08.10.2010
Board of Directors adopted Regulations on the Credit
Policy of Federal Grid Company. The need to adopt
this document was connected with the Company’s
plans to conduct an intensive credit policy taking into
account RAB regulation parameters.
29.10.2010
20.09.2010
Federal Grid Company placed series 7, 9 and 11 bonds
for a total of RUR20 billion.
Federal Grid Company won the fi rst place in a con-
test for 2009 annual reports in the category “Sector
Report: Infrastructure.” The Company also received
10
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
NOVEMBER
10.11.2010
Federal Grid Company and Hyundai Heavy Industries
concluded an agreement on scientifi c and techni-
cal cooperation, the aim of which is to upgrade the
eff ectiveness, reliability and safety of electric grid
infrastructure, in particular, developing new technolo-
gies in the electric grid complex and implementing in-
novative equipment and ready solutions in the design,
construction and operation of energy objects.
19.11.2010
Federal Grid Company received a passport of readi-
ness for operating in the 2010-2011 autumn-winter
period.
15.12.2010
Board of Directors appointed STATUS as the Compa-
ny’s registrar. At the same time, the Board of Direc-
tors adopted a resolution on dissolving the contract
for Central Moscow Depository to hold the contract,
based on FFMS annulling the registry holding license
(for Central Moscow Depository).
16.12.2010
Board of Directors adopted the Company’s 2010-2014
investment program. The program’s fi nancing volume
is RUR952.4 billion. The program provides for the
large scale construction and reconstruction of elec-
tric grid objects, removing transmission constraints
for connecting new users and supporting power
output schemes from newly built power plants to the
country’s Unifi ed Energy System.
20.11.2010
16.12.2010
The Company launched the fi rst innovative Grid Con-
trol Center (GCC) in the MES Siberia branch. This
Center was created on the basis of the Kuzbass
Enterprise of main electric grids. Operative and
technological management functions for 10 energy
objects, including 110-220-kV transmission lines
and power equipment for the 220-kV Severny
Maganak substation, were transferred to the GCC.
DECEMBER
14.12.2010
As a part of realization of the Program for develop-
ing electric grids in the Sochi Region for 2010-2014,
the Company put into operation cable and over-
head transmission lines (110 kV), the fi rst order in
the Kгasnopolyansky Settlement District, the Laura
substation (110 kV, 2х40 MVA) and the Roza Khutor
substation (110 kV, 2х40 MVA).
Board of Directors adopted amended Regulations
on the Dividend Policy. The document provides for
the minimal amount of dividends and is based on
a transparent method for calculating dividend pay-
ments, taking into account the Company’s fi nancial
results.
22.12.2010
Federal Grid Company was named “Energy Company
of the Year.” The Company received an award for its
successful work in modernizing Russia’s main electric
grid complex on an innovative basis, as well as on
a tight schedule.
28.12.2010
Federal Grid Company summarized results of exer-
cising the pre-emptive right to acquire additional
shares. A total of 22,386,785,410 shares were placed
at RUR0.50 per share, which represents 79.1%
of the total number of shares, for the total sum
of RUR11,193 million.
11
KEY EVENTS
2010
Federal Grid Company put into operation an experi-
mental next generation digital substation. Its main
purpose is to develop various innovative technologies
prior to their introduction at UNEG energy objects.
30.12.2010
Federal Tariff Service (FTS) adopted Federal Grid
Company’s RAB-based tariff s for 2011-2014. The es-
tablished regulation parameters will allow to fi nance
the 2010-2014 investment program, as well as to
implement the innovative development and UNEG
modernization program.
12
KEY EVENTS AFTER
THE REPORTING DATE
ANNUAL REPORT
2010
JANUARY
26.01.2011
MARCH
23.03.2011
Federal Grid Company started constructing the
220-kV Vladivostokskaya TPP-2 – Zeleny Ugol Volna
transmission line with an overall length of 15.4
kilometers, which will allow encircle the power supply
scheme of Vladivostok. This scheme will signifi cantly
upgrade the reliability of the power supply for the
city’s consumers and will also allow for the connection
of APEC Summit objects to the Energy System of the
Primorsk Region.
FEBRUARY
01.02.2011
An Extraordinary General Shareholders Meeting took
place, at which shareholders adopted the transaction
between Federal Grid Company and INTER RAO UES to
acquire additional shares of INTER RAO UES. According
to the transaction, additional shares of INTER RAO
UES were paid for by Federal Grid Company with
shares of the following energy companies: WGC -1,
RusHydro, OGK-2, WGC-3, OGK-4, OGK-6, TGC-1,
TGC-2, Mosenergo, Quadra, TGC-6, Volga Territorial
Generating Company (TGC-7), TGK-9, Fortum (TGC-10),
TGC-11, Kuzbassenergo (TGC-12), TGK-11 Holding,
Bashkirenergo, Yenisei TGC (TGC-13), TGK-14,
Sangtudinskaya HPP-1 and GruzRosenergo UES.
28.03.2011
STATUS started servicing Federal Grid Company's
register of shareholders.
The trading of Federal Grid Company's depository
receipts began on the Main Market of the London
Stock Exchange under the “FEES” ticker symbol.
04.02.2011
Federal Grid Company completed placing its additional
share issue at a price of RUR0.50 per share. A total of
79.14% of shares from the additional issue – 22.39
billion shares – were placed for the sum of RUR11.193
billion. Funds received from the additional share issue
will be directed at upgrading the reliability of the
functioning of Sochi Region energy objects, due to
preparing for the 2014 Olympics and at implementing
the “Economic and social development of the Russian
Far East and Trans-Baikal for the period to 2013”
Federal Target Program.
13
STATEMENT OF THE CHAIRMAN
OF THE BOARD OF DIRECTORS
based on the principle of returns on invested capital.
The new tariff estimation methodology makes the
Company’s business more understandable and at-
tractive for investors. In autumn 2010 Federal Grid
Company successfully placed bonds with a total value
of RUR50 billion, which tells about the trust that
Russian and foreign investors have in the Company
and the Government’s policy of electric grid complex
development.
Federal Grid Company’s investment program calls for
supporting both existing assets and future corpo-
rate development, including implementing nationally
important large-scale investment projects. These
projects include ensuring stable and reliable power
supply for the Sochi Olympics, the APEC Summit in
Vladivostok and the ESPO. The program also provides
for carrying out modernization of the UNEG on an
innovative technological basis.
Federal Grid Company faces tremendous challenges
responding to which in many respects will determine
the level and dynamics of Russian economic develop-
ment. We truly believe that our Company will be able
to successfully overcome all the diffi culties and will
continue to work eff ectively for the benefi t of both
Russia and our shareholders.
Dear shareholders!
Federal Grid Company was created in 2002 as part
of the reform of RAO UES of Russia. Since its cre-
ation the Company has achieved a lot and today
we are the foundation of Russia’s energy complex
and one of the country’s most important infra-
structure companies. During the reporting year,
the Company recorded signifi cant production re-
sults and strengthened its fi nancial position, which
was possible due to eff ective work of our manage-
ment team, intensive application of new equipment
and technologies, and active cooperation between
the Company and state offi cers.
Continuous improvement of national economy is
directly connected to power industry development,
which remains one of the most challenging branches
in the Russian fuel and energy complex (particularly
in terms of modernization). Energy companies are
focused on removing outdated run-down equipment
from operation and replacing it with new energy
effi cient equipment. In connection with this, the
Government intends to launch a state policy to stimu-
late power industry innovation and undertake mea-
sures to upgrade energy saving and effi ciency.
Another very important objective for development of
the power industry today is increasing the sector’s
attractiveness for investors. In the end of September
2010 the Russian Government allowed electric grid
companies to use a fi ve-year regulation. As part of
this transition, Federal Grid Company developed a
2010-2014 investment program with a total vol-
ume of RUR952.4 billion. On 12 November, 2010,
this investment program was adopted by Russia's
Ministry of Energy. The program calls for large scale
construction and electric grid network rehabilitation
and the removal of connection limitations for new
consumers, ensuring power output schemes from
newly constructed power plants to Russia’s Unifi ed
Energy System (UES).
It should be noted that our investment program will be
primarily fi nanced with the Company’s own funds and
borrowings and to a signifi cantly lesser degree with
federal budget funds. This is the result of transition-
ing to RAB regulation, which calls for tariff formation
14
Sergey Shmatko
Chairman of the
Board of Directors,
Federal Grid
Company,
Minister of Energy
of the Russian
Federation
INTERVIEW WITH THE CHAIRMAN
OF THE MANAGEMENT BOARD
“A crucial year
in the development
of the main grid complex”
We discuss 2010 results
and the Company’s future
development with Oleg Budargin,
Chairman of the Management Board.
- What were the Company’s 2010 results?
- 2010 was a complex, but intense and productive
year for both our Company and the Russian power
sector in general. Taking into account the impact
of post-crisis economic development, Federal Grid
Company continued to adhere to reducing expenses,
as well as on optimizing resources and decreas-
ing production costs. Our priority, with regard to
corporate activities, was to provide for the reliable
operation of the backbone grid complex and the
stable work of Russia's energy system, as well as
steady and uninterrupted electricity supply to our
customers. To achieve this, special attention was
given to implementing investment, repair and target
programs, upgrading the qualifi cations of operating
personnel and providing for increased preparedness
to prevent emergency situations. Measures taken by
the Company allowed it to successfully cope with the
2010-2011 autumn-winter maximum load, to prevent
emergency situations in electric power facilities even
during unusual weather conditions, and to avoid mass
limits on electricity supply to its consumers.
Moreover, 2010 was a year of modernization and
construction of new facilities, as well as adopting
fundamental tariff decisions. In fact, 2010 marked a
transition to a new level of the Unifi ed National Elec-
tric Grid (UNEG) development. This year will surely
go down in the Company’s history as crucial for the
development of main electric grid complex. For the
fi rst time, the Company adopted a fi ve-year invest-
ment program that called for constructing seventy-
three 220-550-kV substations and more than one
hundred and twenty 220-750-kV transmission lines
with a total length of 21 thousand kilometers. We
also took numerous measures related to innovative
projects, achieved agreements with leading interna-
tional electrical equipment producers, with regard to
constructing plants in Russia which will be manufac-
turing the newest equipment for the UNEG. I would
also like to point out one more very important event
for the Company. The event occurred in 2011, but
the foundation was primarily laid in 2010. In March
2011, the Company's Global Depository Receipts
(GDRs) were listed on the London Stock Exchange;
this will certainly improve the Company's investment
attractiveness.
- What were the principal fi nancial and economic
results during the reporting year?
- During the reporting year, the Company imple-
mented a broad range of measures to provide for
the stable operation of the backbone grid complex
and the UNEG development. In 2010 actual electric
supply by Federal Grid Company grids exceeded the
2009 fi gure by 4% and in balanced terms totaled
470.65 billion kWh. In neighboring states’ grids the
Company transmitted 15.72 billion kWh, which is 15%
more than in 2009. The 2010 increase in electric
supply was principally due to increased UNEG grid
consumption by large consumers (including industrial
enterprises).
During the reporting period, tasks aimed at decreas-
ing the UNEG energy losses were fully accomplished.
The total energy saving eff ect in 2010 from optimiz-
16
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
ing operating modes and managing electric grids, de-
creasing electricity consumption for the substations’
own use, as well as measures aimed at developing
electric grids and introducing energy-saving equip-
ment, was 291,640 million kWh.
Net income growth in 2010 confi rmed the Company’s
production success. This indicator stood at RUR58.1
billion, according to Russian Accounting Standards
(RAS). Income growth is due to higher revenues from
electricity transmission, as well as increased profi t
from other activities as a result of the revaluation
of fi nancial investments (based on current market
value). The increase in earnings before interest, taxes,
depreciation and amortization (EBITDA) was 69.1%
year-on-year. The principal factors driving EBITDA
growth were increased operational effi ciency for
corporate activities due to transitioning to the new
tariff regulation system, eff ective cost management
activities and increased amortization payments, due
to introducing new capacity as a result of implement-
ing the corporate investment program, as well as the
revaluation of fi xed assets.
As of the end of the year, the Company’s credit port-
folio stood at RUR56 billion and consists of bond
issues, most of which were successfully attracted in
2010 (RUR50 billion). These bond issues were aimed
at fi nancing the investment program.
On the whole, the Company sees its fi nancial and
economic results under the new tariff regulation
system during the reporting period as positive.
We maintained a high level of liquidity and fi nancial
stability.
- What does modernization mean to Federal
Grid Company? How does it shape corporate
activities?
- Modernization can be very broadly interpreted
and in each company or economic branch it can be
understood and realized in a completely diff erent
manner. Federal Grid Company defi nes modernization
as a concrete set of measures to bring the main
electric grid complex up to a new operating level in
the medium-term, via the use of the latest scientifi c
achievements and technologies. In other words, this
is not a general call for renovation, but a transparent
step-by-step program with certain objectives related
to all directions of the Company's operations:
technical policy, design, HR issues and cooperation
with specialized higher educational institutions, etc.
One of the Company’s long-term development
priorities is to create smart grids, which will be the
foundation of the future electric power industry.
These grids will decrease electricity transmission
losses and industry risks and prevent accidents in
substations and overhead transmission lines. In 2010
the Company started practical work on creating a
smart electric grid in Russia. We carried out work
to create territorial smart grid clusters in the Amur,
Primorsk and Khabarovsk Regions, as well as in
Russia's North-Western Region.
17
INTERVIEW WITH THE CHAIRMAN
OF THE MANAGEMENT BOARD
- What are the basic directions of Federal Grid
Company’s fi ve-year investment program, which
was approved in 2010? How is construction of
electric grid facilities at the most important
construction sites moving forward, including at
major governmental projects such as Sochi-2014,
ESPO and others?
- Core directions of Federal Grid Company's investment
program include developing backbone electric grids in
Russian regions, providing capacity at new power units
of the generation facilities, upgrading the reliability
of regions with the highest power consumption levels
(Moscow, St. Petersburg and the Tyumen Region) and
providing electricity supply to facilities within the
framework of implementing priority State programs:
the Sochi Winter Olympic Games-2014, the APEC
Summit in Vladivostok (which will be held in 2012) and
the Eastern Siberia – Pacific Ocean pipeline (ESPO).
In particular, during new construction, expansion and
reconstruction of energy facilities, we completed and
switched on production capacity at 33 substations
and put more than 3,000 kilometers of transmission
lines into operation. The largest completed projects
included putting into operation new transmission
lines for providing production capacity to the
Volgodonskaya Nuclear Power Plant in the Rostov
Region and completing 220-kV grids for providing
production capacity to the Boguchanskaya Hydro-
Power Plant (HPP).
During the reporting period our preparation for the
Sochi Winter Olympics consisted of completing the
first stage of constructing the 10-kV transformer
and distribution substation in the Sochi Region, as
well as constructing new cable transmission lines to
supply Olympic objects and wrap up the first stage of
constructing the Dagomys and Psou substations. In the
Primorsk Region to supply the APEC Summit objects
with electricity, the Company launched the Aeroport
substation and started building substations and four
transmission lines with a total length of more than 150
kilometers. The Company continued constructing and
reconstructing principal energy objects for electric
grid connections for objects of the Eastern Siberia –
Pacific Ocean pipeline, concluding capital repairs of
the 220/110/35/6-kV auto-connected transformer
18
with a capacity of 125 MVA at the reconstructed
Shirokaya substation in the Primorsk Region and
launching the second Neryungrinskaya GRES-Nizhny
Kuranakh transmission line in Yakutia.
In 2011 we plan to fully complete work to prepare
electric grid facilities for the APEC Summit –
ensuring capacity output of the Kalininskaya NPP
and implementing a significant portion of energy
efficiency measures at the Skolkovo Innovation
Center, the Sochi Olympics and the ESPO.
- What tasks will Federal Grid Company address
in 2011?
- The Company’s main task was and will continue
to be uninterrupted consumer power supply. In the
years to come, in regard to the UNEG development,
the Company faces the priority task of upgrading
operating system reliability and its modernization
and ensuring the economic and rational usage of
fuel and energy resources by upgrading the energy
efficiency of Federal Grid Company’s objects and
equipment. In the sphere of technological connection
services, the Company will significantly increase
the volume of connected capacities. We will also
continue to work on cutting electricity losses in the
UNEG. Furthermore, based on results of the planned
analysis of the main electric grid complex, we will
develop numerous additional measures to improve
the effectiveness and reliability of the UNEG.
As part of the corporate innovative development
program, in 2011, the Company plans to continue
creating smart grid and to increase the share of
domestically produced equipment used by the
Company.
Another important subject for the Company is in-
vestment program fulfillment. This will allow the
Company to increase the reliability of its services
for existing consumers and to connect thousands
of new consumers to the electric grid, as well as to
create necessary economic development conditions
in Russian regions, and the country as a whole, and
to provide power supply to objects constructed under
the auspices of important state projects. In total,
in 2011 the Company plans to put into operation
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
more than three thousand kilometers of electricity
transmission lines and 26.6 thousand MVA of trans-
former capacity. At the same time, the Company
will carry out technical rehabilitation and recon-
struction on one thousand five hundred energy ob-
jects. To ensure stable financing of this large-scale
investment, the Company will attract borrowed funds –
taking into account adopted tariff decisions using a
flexible and diversified approach to debt structure,
which will depend on the market situation as well.
Another major direction is working with personnel.
We fully understand that without highly qualified spe-
cialists capable of working with modern equipment
and technologies all corporate efforts in innovative
development will be completely ineffective. We co-
operate with a wide range of universities to prepare
needed personnel. To enable a clear training system
and permanent career enhancement for employees,
last year we created a specialized personnel training
center. We also declared 2011 the Year of the Young
Specialist.
- And lastly, what would you like to say to the
Company’s shareholders and investors?
- I would like to express gratitude to all of the
Company’s shareholders and investors for investing in
Federal Grid Company and their continuing support.
We also definitely appreciate the significant attention
and support we have received from our major
shareholder – the Russian Federation.
Currently, Federal Grid Company is one of the most
progressive companies in the power industry. We
care about adequately maintaining and developing
our electric grid network, paying significant attention
to renovating existing assets and implementing new
technologies. We actively develop both material
assets and new energy transmission technologies
and consistently work to decrease costs and improve
effectiveness. We continually upgrade corporate
governance in line with international best practice,
increasing share liquidity and attracting experienced
governance managers. All of this is aimed at
increasing the Company’s investor attractiveness
and maximizing shareholder value.
19
MOVING FORWARD
WITH NEW ENERGY
ANNUAL REPORT
2010
ABOUT THE
COMPANY
ONE GRID –
ONE NATION
1.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
FACTS AND FIGURES 2010
121,700 KM
of total transmission
line length
311,000 MVA
of transformer capacity
22,000 EMPLOYEES
13.6 MLN SQ. KM
of area covered
by the Company
98.58 %
of revenues from
electricity
transmission
RUR453.9 BLN
market capitalization
as of 30 December, 2010
RUR1 BLN
investment in 2010 R&D
and pilot projects
RUR952.4 BLN
2010-2014 investment
program
Federal Grid Company is the largest publicly traded
electricity transmission company in the world in terms
of the length of transmission lines and transformer
capacity. Its unique infrastructure is a backbone of
the Russian economy.
Federal Grid Company is the largest energy company
in Russia by market capitalization. Federal Grid’s
shares are included on the MSCI Emerging Markets
and MSCI Russia indices.
The largest part of our revenues is generated via ta-
riffs for electricity transmission, approved by the Rus-
sian Federal Tariff Services (FTS) based on the RAB
tariff regulation. Our major consumers are regional
distribution grid companies, retail electricity supply
companies and large industrial enterprises.
The future of the Company’s significant growth is
based on a large scale investment program, as well
as on our management’s commitment to innovation
and modernization.
22
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
WHY FEDERAL GRID COMPANY?
01
Large scale operations
and stable demand
As a natural monopoly, Federal Grid Company is a
critical part of the Russian economic infrastructure
and the backbone of the national electricity sector.
Russian consumers’ stable demand for the Company’s
services underpins its long-term prospects, whereas
its role as the backbone of the country’s energy in-
frastructure reinforces its exclusive status.
02
State support
Playing a fundamental role in the Russian electricity
sector infrastructure, Federal Grid Company receives
signifi cant support from the Russian Government.
In 2010 RUR11 billion was allocated from the Rus-
sian budget to improve the UNEG effi ciency, to in-
crease the capacity and stability of energy facilities
connected with the upcoming 2014 Olympic and
Paralympic Games in Sochi, and to fi nance “Economic
and Social Development of the Russian Far East and
Trans-Baikal for the Period to 2013” Federal Target
Program.
As the controlling shareholder of 79.48% of the
Company’s shares, the Russian Government actively
participates in our operations both through the Board
of Directors, which is chaired by Sergei Shmatko,
Russian Minister of Energy, and at the level of various
departments and regulatory bodies that coordinate
the deve-lopment programs and the electricity sector
regulatory framework.
03
Advanced Tariff Regulation System
The Company's electricity transmission tariff s are
calculated based on the Regulatory Asset Base
(RAB). It allows the Company to improve operation-
al effi ciency, increase fi nancial transparency and
ensure fair and predictable returns on invested
capital. The 2010 transition to RAB-based
regulation provided a stable cash fl ow and guaran-
teed fi nancing of the Company's investment program.
In 2010 after switching to the RAB-based
regulation method, Federal Grid Company's
tariff s increased 51.1% compared with 2009.
04
Reliability and Control
The UNEG reliability is maintained by the collective
eff orts of our dedicated management team and per-
sonnel. The Company's multi-level internal technical
control system is aimed at maintaining an ample and
continuous electricity supply using organizational,
technical, informational, methodological, regulatory
and preventive measures.
05
Established development program
The Company's 2010-2014 investment program was
approved by the Russian Government on 12 No-
vember, 2010. Federal Grid Company prioritizes the
following program tasks: the UNEG development to
enhance its reliability; the implementation of agree-
ments with regional authorities to ensure stable
electricity supply to consumers; the connection of
power generating units to the UNEG; and the de-
velopment and implementation of technologies and
infrastructure to maintain and enhance a competitive
electricity and capacity market. Under the investment
program, the Company intends to invest more than
RUR952 billion between 2010 and 2014. Implemen-
ting this large-scale investment program is expected
to stimulate a robust expansion in the Company's
business and asset base.
23
1.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Key Activities of Federal Grid Company:
•
•
Managing the UNEG
Providing electricity transmission services
and connecting WECM participants to the
electricity grid
•
•
•
Investment activities in UNEG development
Maintaining the electricity grid system
Engaging in the UNEG technical supervision
of the UNEG grid facilities
Weaknesses:
•
Need to invest in grid asset
renovation given current depreciation
SWOT Analysis
Strengths:
•
•
•
•
•
•
•
Favorable tariff regulation regime (RAB)
Natural monopoly status
High level of state support
Government plans to retain
minimum 75% stake in the Company
Stable fi nancial position
Market situation has little impact
on corporate cash fl ows; the majority
of revenues does not depend on actual
energy consumption
Experienced management team
Opportunities:
Threats:
•
•
•
Asset growth through grid
construction to provide electric energy
to developing regions and new
infrastructure facilities
Considerable potential for upgrading
the business’ operating effi ciency
via RAB regulation
Focus on innovative development
and use of the newest technologies
•
•
Absence of free cash fl ow due
to implementing a large scale
investment program
Regulatory risks connected with
changes in RAB regulation parameters
24
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Revenue by Activity
Revenue Structure
RUR mln
100,000
80,000
60,000
61,385
1,872
68,485
2,356
40,000
20,000
59,513
66,129
111,085
1,575
% from 2010
revenues
85,078
4,905
109,510
80,173
Year
2007
2008
2009
2010
Other operations
Electricity transmission
98.58%
From electricity
transmission services
1.42%
From other operations
25
1.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
1.1
ORGANIZATIONAL
STRUCTURE
The General Shareholders Meeting is the supreme
management body of Federal Grid Company. The
Board of Directors provides strategic direction and
oversees Management Board functions. In turn, the
Management Board is entrusted to operate the Com-
pany.
As of 31 December, 2010, Federal Grid Company
comprises 51 regional branches.
Federal Grid Company’s
Organizational Structure
General Shareholders Meeting
Board of Directors
Management Board
Federal Grid Company's Regional Branches – Backbone Electric Grids (MES)
MES Center
MES North-
West
MES Volga
MES South
MES Urals
MES
West Siberia
MES Siberia
MES East
Valdaiskoye
Bryanskoye
Lower
Volga
Kaspiyskoye
Permskoye
Central
Zabaikalskoye
Amurskoye
Upper Don
Vyborgskoye
Mid-Volga
Kubanskoye
Sverdlovskoye
Southern
West
Siberia
Primorskoye
Volga-Don
Karelskoye
Samarskoye
Rostovskoye
South Urals
Eastern
Krasnoyarskoye
Khabarovskoye
Volga-
Okskoye
Leningradskoye
Stavropolskoye
Vologodskoye
Novgorodskoye
Sochinskoye
MEC Urals
Motor
Transport
Enterprise
Orenburgskoye
Moscow
North
Nizhegorodskoye
Prioksoye
Chernozemnoye
Special purpose
production centre
Bely Past
26
Yamalo-
Nenetskoye
Kuzbasskoye
Omskoye
Tomskoye
Khakasskoye
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Subsidiaries
In addition, as of 31 December, 2009, the Company has 29 subsidiaries
and dependent companies operating in various areas, including opera-
ting electric energy supply units. Two of these subsidiaries are backbone
grid companies: MES Tomsk and MES Kuban.
Subsidiaries and branches performing various types of activities, including the operation
of electric energy supply units of Federal Grid Company (share in the charter capital)
S&T Elektroenergetika (100%)
Nurenergo (77%)
IT Energy Service (39,99%)
Energy Forecasting Agency (APBE) (100%)
MES Tomsk (52,025%)
ENIN (38,24%)
UC Energetika (100%)
GruzRosenergo (50%)
UEUK (33,33%)
Elektrosetservice UNEG (100%)
GVC Energetiki (50%)
Voga Territorial Generation
Company (TGC-7) (29,99%)
MUS Energetika (100%)
SMUEK (49%)
TGC-11 (27,45%)
Glavsetservice UNEG (100%)
Severovostokokenergo (49%)
TGC-6 (23,58%)
ESSK UES (100%)
Energotechkomplekt (49%)
Bashkirenergo (21,27%)
CIUS EES (100%)
MES Kuban (48,99%)
Mobile GTES (100%)
Schekinskie PGU (45,21%)
CSRI NPKenergo (100%)
WGC-1 (40,17%)
Volgaenergosnabkomplekt (100%)
Index of Energy-FGC UES (100%)
Chitatekhenergo (100%)
More information about the Company's participation
in commercial and non-commercial organizations
is available in the Attachment.
27
1.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
1.2 HISTORY
Federal Grid Company was created in the course
of restructuring Russia’s electric energy sector. The Company
integrated under its management electric grid facilities that were
part of the UNEG. The number of Federal Grid Company’s
shareholders exceeded 470,000.
56 regional electricity transmission grid companies
(MSKs) were created. MSK shares owned by RAO UES
of Russia were transferred to pay for the additional
issue of Federal Grid’s shares.
RAO UES of Russia reorganization was completed
1 July, 2008, when RAO UES of Russia and the com-
panies spun off from it (the State Holding Company
and Federal Grid Company Minority Holding Com-
pany, seven inter-regional backbone grid companies
(MMSKs) and 54 MSKs) were integrated as part of
Federal Grid Company. Two MSKs (MES Tomsk and
MES Kuban) remained corporate subsidiaries. Shares
of the re-organized companies were converted into
shares of Federal Grid Company. The number of cor-
porate shareholders exceeded 470,000.
In July 2008 Federal Grid’s shares were admitted
for trading on the Russian stock market. To improve
liquidity and protect the interests of former holders
of RAO UES of Russia's depository receipts (DRs),
in February 2008 the Company launched its own
DR program. Deutsche Bank Trust Company of the
Americas acts as the depository bank.
In November 2010 the Russian Government an-
nounced that it had approved the 2011-2013 privati-
zation program. As part of this privatization program,
the Russian Government announced plans to sell
4.11% minus one share of Federal Grid Company.
Federal Grid Company was founded as per Russian
Government Resolution “On Restructuring the Elec-
tric Power Industry of the Russian Federation” No.
526 dated 11 July, 2001. The reform was aimed at
upgrading the economic effi ciency of the Russian
energy system and creating conditions to attract-
investments.
Federal Grid Company was formed as the organi-
zation responsible for managing, maintaining and
developing the UNEG.
Federal Grid Company was registered by the Russian
Government on 25 June, 2002. RAO UES of Russia,
as the sole founder of the Company, contributed the
backbone electric grid complex (related to the UNEG)
to the Company's charter capital.
Considering Federal Grid Company’s key position in
the sector, the Russian Government’s participation in
the corporate charter capital was legislatively set at
a minimum of 75% plus one voting share.
The Russian Federation, represented by the Russian
Federation Agency for State Property Management
(Rosimushchestvo), became the Company's share-
holder in 2007 as a result of the additional share
issue. From 2007-2010 the Government's share in the
Company's charter capital was continuously growing.
As of 15 March, 2011, it stood at 79.48%.
While restructuring measures in the electric energy
industry were being carried out, electric grid units in
the UNEG under the management of Federal Grid
Company were being consolidated. In 2001 on the
basis of reorganized RAO UES of Russia subsidiaries,
28
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
1.3 MARKET OVERVIEW
The Russian electric power sector is among the world’s largest,
ranking fourth globally in terms of both installed capacity and
electricity generation.
Major Electric Energy Producing Countries
Installed capacity, GW
Electric energy production, Twh
0
5
1
4
,
5
2
7
3
,
5,000
3,750
2,500
5
2
0
1
,
1,250
7
9
7
0
5
1
1
1
,
1
8
2
7
5
9
2
1
2
0
7
8
7
9
5
6
5
1
9
3
1
4
3
6
8
2
1
2
4
5
8
1
1
7
9
4
6
0
1
6
5
4
5
8
USA
China
Japan
Russia
India
Germany
Canada
France
Brazil
UK
Since 1998, electricity demand in Russia has grown.
In 2010 it increased 4.3% to 1,009.2 billion kWh
(according to data from System Operator of the UES).
This is a record fi gure for the last ten years; this rapid
growth was possible due to 2010 weather anomalies
and the post-crisis economic recovery.
In Russia electricity consumption is characterized
by a relatively large share of demand coming from
the market’s industry and transportation segments.
According to Rosstat, in 2008 more than 50 % of elec-
tricity consumed was delivered to industrial consu-
mers; household consumption accounted for only 11.4%
of total consumption.
Restructuring Russia’s Electric Power Industry
As early as the 1980s, it was clear that the country’s
electric power industry was stagnating. Production
capacity was upgraded much more slowly than electric
power demand increased. Moreover, while demand for
electric power decreased substantially in the 1990s,
capacity upgrades ground to a virtual halt. According
to technological indicators, Russian electric companies
lagged behind their peers in developed countries, and
there was a lack of incentives to improve operating
effi ciency and follow an intelligent plan for produc-
tion and electric energy usage. Blackouts became a
regular occurrence in numerous regions, whereas the
absence of payment discipline called the very possibility
of electric companies being able to properly
function into question. The sector was not
transparent from a fi nancial or information point
of view and entry was closed to new market players.
Consequently, it was paramount to electric power in-
dustry restructuring. Sector restructuring provided an
incentive to upgrade the effi ciency of electric companies
and also created conditions for development. Industry
structure has changed: natural monopoly functions,
such as transmission and dispatching, were isolated
from potentially competitive ones, such as produc-
29
1.0
Year
Growth in electric power demand, %
1998
(0.5)
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
3.0
4.0
1.3
0.3
2.9
2.3
1.8
4.5
2.3
1.9
2009
(4.7)
2010
4.3
Sources: Rosstat, System Operator of the UES
tion and sale of electricity. As a result, companies
concentrating on individual types of operation
were created to replace previously vertically
integrated companies that had fulfi lled all these
functions at the same time.
Thus, on the one hand, conditions to develop a
competitive electric power market were formed,
with prices based on supply and demand, while
market participants were interested in improving
effi ciency. On the other hand, prerequisites were
also created in the natural monopoly sphere
for infrastructure development and upgrades
via effective government regulation and
disclosure for outside investors.
Russian Electricity and Capacity Market
Russia currently has a two-tier electricity and capacity
market (wholesale and retail).
30
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
WHOLESALE MARKET. Buyers and sellers in the
wholesale electricity and capacity markets include
generation companies, electricity exporters and im-
porters, guaranteeing suppliers, electricity supply
companies, grid companies (to cover electricity losses
sustained in electricity transmission and distribution)
and large industrial consumers.
The wholesale electricity and capacity market operates
in the territory of regions which are unifi ed in pricing
and non-pricing zones. The fi rst pricing zone includes
the European part of Russia and the Urals, whereas,
the second pricing zone includes Siberia. In the second
pricing zone, the electric power price is lower than
in the fi rst one, as Siberia has a higher share of hydro-
generating capacity with lower production costs
for electric energy.
In areas included in non-pricing zones (the Arkhangelsk
and Kaliningrad Regions, the Komi Republic and regions
of the Russian Far East), where electricity and capacity
market functioning on competitive conditions is not yet
possible, electricity sales are carried out under tariff s
determined by the FTS and special rules set by the
Russian Government.
Eff ective 1 January, 2011, electricity and capacity
are supplied based on unregulated prices, excluding
supplies to individual customers and other similar
customer categories.
RETAIL MARKET. Retail market participants in-
clude electric energy consumers, guaranteeing sup-
pliers, retail suppliers, energy supply organizations,
public utility companies, grid organizations and other
owners of electric grid facilities, as well as produ-
cers (suppliers) of electric energy which is not sold
on thewholesale market.
The retail electric energy market functions, regard-
less of the wholesale market, with electric energy
consumers. Retail market rules establish a price
formation procedure on retail markets, a base for
interactions between all market participants, as well
as rules for receiving the status of guaranteeing
electricity suppliers, working with each consumer
based on a public off er and their selection based on
competitive bidding. Electricity supply to individual
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
s
t
n
a
p
i
c
i
t
r
a
P
t
e
k
r
a
M
y
t
i
c
a
p
a
C
Generation
Transmission
Distribution
Sales
d
n
a
l
y
t
i
c
i
r
t
c
e
E
e
a
s
e
o
h
W
l
l
Federal
Grid
Company
consumers is conducted in full based on regulated
tariff s. As of 1 January, 2001, for all other consumer
categories, electricity is supplied based on unregu-
lated prices within the framework of the maximum
level of regulated prices.
Competitive sphere
•
Generating companies: Energoatom Concern,
RusHydro, wholesale generation companies
(WGCs) and territorial generation companies
(TGCs);
Electricity supply companies;
Guaranteeing suppliers;
Major consumers;
Exporters and importers of electric energy.
•
•
•
•
WECM infrastructure
•
Non-Commercial Partnership Market Council
for Organizing Effi cient System for Wholesale
and Retail Trade in Electric Energy and Capacity
(Market Council);
•
•
•
•
Administrator of Trading System for the Whole-
sale Power Market (ATS);
Federal Grid Company of Unifi ed Energy System
(Federal Grid Company);
System Operator of the Unifi ed Energy System
(SO UES);
Center for Financial Settlements (CFS);
Governmental Regulations
of the Electric Energy Sector
The Russian Government exercises its powers in the
sphere of state regulation and control over electric
energy in accordance with Federal Law No.35-FZ «On
the Electric Energy Industry,» dated 26 March, 2003.
Federal executive bodies which have authority granted
by the Russian Government in regard to the electric
energy sector sector are:
The Russian Ministry of Energy
which is entrusted with developing state policy
31
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
The Unifi ed National (All-Russian)
Electric Grid (UNEG)
comprises a network of electricity grids and
other electric-grid facilities ensuring the
constant supply of electric energy to con-
sumers, a functioning wholesale market, as
well as the simultaneous operation of Rus-
sia’s electric energy system and the electric
energy systems of foreign countries.
The rated nominal voltage class, charac-
teristics of transmission capacity, electric
energy fl ow reversibility and other tech-
nological characteristics of grids included
in the UNEG are approved by the Russian
Government.
Currently, criteria for assigning electric-
ity facilities to the UNEG (approved by
Russian Government Resolution No. 41, as of
26 January, 2006) are in eff ect.
In compliance with the Federal Law “On the Proce-
dure for Implementing Foreign Investments in Com-
mercial Enterprises that Have Strategic Importance
for Providing National Defense and State Security”.
Federal Grid Company has a strategic role with re-
gard to national defense and state security. Further-
more, the Company is included in the Russian
Government’s List of Strategic Organizations
compiled by the Governmental Commission for In-
creasing Russian Economic Stability in 2008 to na-
tional defense and state security.
1.0
and regulations in the fi eld of the fuel and energy
complex, including electric energy issues;
The Federal Tariff Service (FTS)
which provides state regulation of prices (tariff s) for
products and services, including establishing tariff s
for electric energy transmission;
The Federal Antimonopoly Service (FAS)
which provides antimonopoly regulation in the elec-
tric energy industry;
The Federal Service for Environmental,
Technological and Nuclear Supervision
(Rostekhnadzor)
which carries out technical control and surveillance
in the electric energy sector, as well as licensing
certain types of activities and verifying compliance
with Russian legislative requirements in the electric
energy industry.
The Russian energy sector is managed by two or-
ganizations. On the one hand, the Russian Ministry
of Energy acts on behalf of the state as the sector’s
regulator and coordinator. On the other hand, the
Market Council organizes trade in electric energy
and capacity in the wholesale market in accordance
with the Rules of the Wholesale Market, as approved
by the Russian Government resolution, and uses
market self-regulation mechanisms in fi elds estab-
lished by the Rules of the Wholesale Market.
Federal Grid Company manages the UNEG. Federal
Grid Company’s right to provide electricity trans-
mission services is established by law. The rights
of owners of electric energy facilities representing
a part of the UNEG, in particular, the right to provide
electricity transmission services, were delegated
to the Company.
Federal Grid Company has the status of a natural
monopoly. The Company does not have competitors
in the market for electricity transmission via the
UNEG. Federal Grid Company’s market share stands
at 100%.
32
Information on implementation of the assignments of the President and Government of the Russian Federation
you can fi nd at the Attachment.
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
FEDERAL GRID COMPANY’S ELECTRICAL
GRID FACILITIES
Federal Grid Company operates
more than 121,000 kilometers of
transmission lines and 805 substations
with a total transformers capacity
exceeding 311,000 MVA.
Number of substations
as of 31.12.2010
Quantitative Structure of Federal Grid Company’s
Overhead Transmission Lines based on Voltage
Class as of 31.12.2010
99
8
33
3
6
1
64
591
35 kV
220 kV
400 kV
750 kV
110 kV
330 kV
500 kV
1 150 kV
1,200
900
600
300
1,194
1
4
14
7
67
1
137
3
14
1
3
206
kV
0,4
6
10
35
110
150
220
330
400
500
750
800
1 150
Length of Federal Grid Company’s Overhead
Trasmission Lines as of 31.12.2010
Substations’ Capacity
as of 31.12.2010
km
80,000
60,000
40,000
20,000
0
9
8
4
1
.
8
6
0
.
5
3
0
4
7
7
3
1
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0
9
.
0
kV
0,4 6
10 35
110
150
220
330
400
500
750
800
1 150
MVA
150, 000
112, 500
75, 000
37, 500
6
6
.
3
2
35
kV
.
2
9
9
5
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1
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1
,
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.
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,
9
1
3
9
.
6
6
0
1
,
110
220
330
400
500
750
1 150
33
1.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
1.4 GEOGRAPHY
The scale of the UNEG corresponds to Russian territory.
The total length of our electricity transmission lines
is more than 121,000 kilometers.
The grid covers an area of approximately 3,000 ki-
lometers from North to South and more than 9,000
kilometers from West to East.
The Company has 805 substations with a total in-
stalled capacity of 311,000 MVA. The northernmost
substation which is part of the Kolskaya Energy
System is located in Murmansk; the southernmost
substation is situated in Derbent, Dagestan. From
west to east, the grid spans from the Primorye to
Kaliningrad Regions.
The Chukotka, Kamchatka, Taimyr, Yakutia, Magadan
and Sakhalin Territories are not included in the UNEG,
as of yet. At the moment, economic conditions do not
exist to construct the backbone electricity grids and
large substations in these under-populated regions
that lack major consumers. Autonomous electric grids
work in these territories.
The UNEG is connected with 137 inter-state elec-
tricity transmission lines with contiguous countries;
electricity import and export is conducted via these
lines.
Federal Grid Company's electric grid facilities are
located in 73 Russian regions with a total area of
more than 13.6 million square kilometers. The terri-
tory in which the Company operates is divided into
zones; one of the Company's branches - backbone
grid companies (MES, PMES) – is responsible for the
appropriate zone.
34
Regions covered
by Federal Grid Company
(cid:1)
73RUSSIAN REGIONS WITH A TOTAL AREA
OF MORE THAN 13.6 MILLION SQUARE KILOMETERS
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
1.5 INTERNATIONAL OPERATIONS
In compliance with Federal Law No. 35-FZ “On the Electric Energy
Industry,” dated 26 March, 2003, Federal Grid Company is an organi-
zation that manages the UNEG. Starting 1 January, 2004, Federal
Grid Company acts as a transmitter of electric energy through the
Russian customs border.
Federal Grid Company provides electricity trans-
mission services up to the Russian customs bor-
der in compliance with the agreements with
INTER RAO UES via its electric grid facilities that are
a par t of the UNEG and are owned or leg a l l y
operated by Federal Grid Company.
Information about Inter-State Electricity
Transmission Lines (IETL)
In compliance with Russian Government Resolution
No.41, dated 26 January, 2006, electricity transmis-
sion lines that cross the Russian border correspond
with Criteria for Assigning Electricity Facilities in the
UNEG.
Federal Grid Company collects and processes infor-
mation about electricity transmission via 137 inter-
state electricity transmission lines (IETL).
To provide electric energy to Russian consumers in
the Bryansk, Pskov and Kaliningrad Regions, Federal
Grid Company has concluded agreements with ap-
propriate organizations of Latvia, Lithuania, Estonia
and Belarus for paying for electric energy transit via
these states’ electricity grids.
In compliance with the agreement on measures pro-
viding for the simultaneous operations of the UES
of Russia and Kazakhstan concluded by the Russian
Government and the Government of the Republic of
Kazakhstan dated 20 November, 2009, an electric
energy transit agreement was signed. Pursuant to
the signed agreement, Federal Grid Company pays for
electricity transit through the territory of Kazakhstan
beginning in May 2010.
On 15 March, 2011, an agreement on measures pro-
viding for the simultaneous operations of the UES
of Russia and Belarus was signed by the Govern-
ments of the Russian Federation and the Republic
of Belarus.
In accordance with these agreements and an inter-
governmental agreement on provision of access to
natural monopoly services (including price formation
and tariff policy basics) concluded by the Russian
Federation, the Republic of Kazakhstan and the Re-
public of Belarus, it has become possible to conduct
the inter-state transmission of electricity between
countries-members of the common economic area,
including through grids of the Russian UES.
Simultaneously Operating the Russian UES
and the UES of Foreign Countries
Currently, fi ve agreements on simultaneous operat-
ing of the UES of the Russian Federation and elec-
tric energy systems of foreign countries have been
concluded by Federal Grid Company and economic
agents of the following countries: Georgia (an agree-
ment on simultaneous operation of Russia’s and
Georgia’s electric energy systems, dated 16 March,
2011), Mongolia, Kazakhstan, the Baltic States and
the Republic of Belarus, as well as an inter-system
agreement with Finland. Additionally, the Company
signed technical support agreements on simultane-
ous operations with the Ukraine, the Republic of
Belarus and Azerbaijan.
35
1.0
Moreover, Federal Grid Company cooperates with
the State Grid Corporation of China (SGC of China) to
comply with the following documents that were signed
in 2010:
•
•
On 26 July, 2010, Federal Grid Company and the
SGC of China signed a framework cooperation
agreement aimed at jointly examining issues con-
nected with the organization of the Unifi ed Energy
Systems of Russia and China, cooperating in the
electric energy sphere, exchanging information,
experience and knowledge with the organization
of consultations and meetings related to the issue
of utilizing the newest technologies, engineering,
research work, manufacturing and the operation
of electric energy equipment.
On 23 November, 2010, Federal Grid Company,
INTER RAO UES, MRSK Holding and the SGC
of China concluded an agreement to fulfi ll the
Memorandum of Understanding aimed at coop-
eration in the sphere of electric grid sector devel-
opment signed 27 September, 2010 by Russian
Ministry of Energy and the State Energy Director-
ate of China.
In accordance with this document, the parties intend
to strengthen cooperation and experience exchange
in the fi eld of modernizing electric grids, to upgrade
grid reliability and safety and to take part in moder-
nizing and reconstructing the parties’ electric grids.
Federal Grid Company, as the organization that man-
ages the UNEG, including inter-state electricity trans-
mission lines for all voltage classes, carries out the
following activities:
Coordinating and off ering technical support for
INTER RAO UES’s commercial agreements to
export and import electric energy;
Organizing and implementing commercial account-
ing for electric energy transmitted via interstate
electricity transmission lines;
Establishing and carrying out customs clearance
for factual volumes of electric energy transmitted
across the state border in compliance with agree-
ments on organizing the accounting of electric
energy and capacity transmission via inter-state
electricity transmission lines, as concluded with
foreign counterparties.
•
•
•
36
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Federal Grid Company provides
electricity transmission services up
to the Russian customs border in
compliance with the agreements
with INTER RAO UES via its
electric grid facilities that are a
part of the UNEG and are owned
or legally operated by Federal Grid
Company.
Within the framework of an agreement on measures
providing for the simultaneous operation of the UES
of Russia and Kazakhstan, which was concluded by
the Governments of the Russian Federation and the
Republic of Kazakhstan, an agreement providing for the
fulfi llment of commercial agreements to settle devia-
tions from the agreed planned transmission schedules
based on hourly data for commercial accounting signed
by Federal Grid Company and KEGOC is in eff ect.
Federal Grid Company works on developing and upgrad-
ing relationships with foreign energy systems in regard
to issues of harmonizing the countries’ legislation in
the electric energy sphere, forming and synchroniz-
ing electric energy and capacity markets within the
framework of inter-governmental events (UES of the
CIS countries and its commissions (including COTC), the
Committee of Energy Systems of BRELL, the EURASEC
Integration Committee, working groups in the Executive
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Comparison of Federal Grid Company with
Leading Foreign Grid Companies
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60,000
40,000
20,000
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International Peers
Federal Grid Company is the largest publicly traded electricity
transmission company in the world in terms of length
of transmission lines and transformer capacity.
Committee of the UES of CIS countries, with Fingrid
(Finland), KEGOC (Kazakhstan), the State Energy
Concern Belenergo (Belarus), within the framework
of energy conversations between Russia and the
European Union, as well as interactions with Asian
countries (China and South Korea).
37
1.0
1.6 STRATEGIC
PRIORITIES
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Federal Grid Company is a reliable, effi cient and dynamically
developing company. It strives to become an innovative leader
in the Russian electric energy sector and is focused on increasing
the well-being of its shareholders and investors. We stand by the
following strategic priorities for activities and development:
Reliability
Development
and Innovations
Safety
Strategic
Priorities
Operating
Efficiency
Corporate Governance
and Shareholder Value
38
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Reliability
High-voltage electricity transmission lines represent
one of the key infrastructure elements of the Rus-
sian economy. Federal Grid Company’s strategic role
established our core priority: the reliable and stable
transmission of electric energy across the country.
The Company’s upgraded technical policy is aimed at
further increasing equipment reliability via renovat-
ing existing facilities and implementing the newest
technologies.
Development and Innovations
Considering the Russian economy’s transition to an
innovative development path, the Company is actively
working on upgrading the technical characteristics
of electricity grids and infrastructure facilities. Our
fi ve-year investment program is focused on modern-
izing existing facilities and upgrading the electricity
transmission grid to satisfy modern energy sector
requirements. The Company is constantly seeking
an innovative approach and the newest technologi-
cal solutions to be used in production management.
Among our most important initiatives is the develop-
ment and implementation of smart grids – effi cient
and blackout-proof, protected against hazardous
natural phenomena and economically sound to use.
Implementing this project will enhance the UNEG
reliability and effi ciency, resulting in an up to 3.6%
reduction in electricity transmission losses.
Operating Effi ciency
Our business’ immense size and the fact that the
Company is a monopoly in the market give us con-
siderable advantages, including: fi nancial stability,
steady growth and the possibility to effi ciently
manage risks. The Company uses its strengths to
upgrade operating effi ciency. The transition to the
advanced RAB-based regulation, stimulated re-
duction in operating costs, the implementation
of energysaving technologies, the optimization
of operating and management regimes and the use
of cost eff ective equipment to cut electricity trans-
mission losses, as well as improvements in the inter-
nal audit and IT systems contribute to the Company
achieving its goals.
Corporate Governance
and Shareholder Value
The Company adheres to corporate governance
principles based on the Russian Corporate Gover-
nance Code adopted by Russia’s Federal Commission
for Securities Market (FCSM), and corporate gover-
nance requirements which are applicable to Russian
public companies. The Company strives to comply
with best international practices in this sphere. Strict
conformity with corporate governance standards
and investments in human capital development allow
our shareholders to contribute to the Company’s
overall success.
Safety
The life and health of the Company’s personnel, as
well as the industrial and environmental safety of
our facilities, are key priorities for Federal Grid
Company. The Company is constantly upgrading
the industrial and consumer safety level, introduc-
ing new environmental protection technologies
and carefully managing related risks. We closely
collaborate with Russian regulatory authorities to
meet and exceed applicable safety standards.
The strategy aimed at maximizing the Company’s
shareholder value is based on our business’s immense
size, which will expand due to the ambitious invest-
ment program and stable demand. The RAB-based
regulation is a signifi cant incentive that contributes
to upgrading operating effi ciency and guaranteeing
a return on investment. Optimizing the capital struc-
ture and approving a new dividend policy that conforms
to best corporate standards will also enable increases
in shareholder value.
39
MOVING FORWARD
WITH NEW ENERGY
ANNUAL REPORT
2010
PRODUCTION
OVERVIEW
ENERGY
OF INNOVATION
TO A CLEAR GOAL
2.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
2.1 ELECTRICITY TRANSMISSION
Federal Grid Company’s principal operating activity is transmitting
electricity from large generators through backbone grid lines,
which form the Unifi ed National Electric Grid (UNEG), to distribution
grids (which supply power to end consumers).
Power Output,
mln kWh
500,000
471,958
470,648
464,046
452,662
375,000
250,000
125,000
2007
2008
2009
2010
•
•
Major power-consuming enterprises connected
directly to the UNEG
Electricity exporters
In accordance with Russian legislation, this is a mo-
nopoly activity and is subject to state regulation.
Payments for electricity transmission services are the
primary revenue source for the Company’s budget.
In 2010 the share of revenue from the Company’s
electricity transmission services accounted for more
than 98% of the Company’s total revenues.
Federal Grid Company operates 1,652 electricity
transmission lines with a total length of 121,700 km
and 805 substations with a total transformer capac-
ity of more than 311,000 MVA.
Currently, there are fi ve agreements on parallel opera-
tions of the Russian UES with electric power systems
of foreign states, with Federal Grid Company and
business entities of Georgia, Mongolia, Kazakhstan,
the Baltic States and the Republic of Belarus as par-
ties of the agreements. There is also an Inter-System
Agreement with Finland and Agreements on Techni-
cal Support for Parallel Operations were signed with
the Ukraine, the Republic of Belarus and Azerbaijan.
In 2010 consumers of Federal Grid Company’s elec-
tricity transmission services included 150 organiza-
tions connected to the UNEG.
Consumers of the Company’s services
include fi ve types of organizations:
•
•
•
Distribution grid companies (DGCs)
Independent grid companies (GCs)
Energy sales companies (ESCs)
42
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
The Share of Federal Grid Company's Largest Consumers in 2010 Revenues
from the UNEG-Based Electricity Transmission Services
№
Counterparty
1
2
3
4
5
6
7
8
9
Tyumenenergo
Moscow United Electric Grid Company (MOESK)
MRSK Urals – Sverdlovenergo
Lenenergo
MRSK Siberia – Kuzbassenergo
Far East Distribution Company
Kubanenergo
MRSK Urals – Chelyabenergo
MRSK South – Rostovenergo
10
MRSK Siberia – Krasnoyarskenergo
Share, %
10.4
7.8
5.1
4.5
3.6
3.2
3.1
2.6
2.5
2.4
Consumers of Federal
Grid Company’s
Services
1%
16%
20%
42%
21%
DGCs
GCs
ESCs
Large
enterprises
Exporters
Increase in Number of Federal Grid Company’s Consumers
of the UNEG-based Electricity Transmission Services
150
121
105
150
100
50
2008
2009
2010
43
2.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
2.2 TECHNOLOGICAL CONNECTION
Technological connection is one of the most important factors
ensuring growth in the Russian industrial sector. Federal Grid
Company makes every eff ort to provide new consumers with
technological connection to the UNEG.
Technological connection is a set of measures aimed
at connecting the power equipment of legal entities
and individuals to Federal Grid Company’s grid facili-
ties. Technological connection services are available
to new consumers and to existing consumers who
need increased consumption capacity.
The scope of responsibility for Federal Grid Company’s
executive offi ce also includes technological connec-
tion related to increasing transmission capability,
changing the connection schemes of existing trans-
mission lines or constructing new ones including
overhangs of 220 kV and above.
Scope of Responsibility for Electric Grid
Companies in Technological Connection
Federal Grid Company provides consumers with tech-
nological connection to electricity grids that accor-
ding to approved criteria are part of the UNEG and
are owned or used by the Company. The responsibility
for technological connection to grids and control
over the procedure falls under the scope of respon-
sibility for either the executive offi ce of Federal Grid
Company or its branches – Backbone Electric Grids
(MES) – provided that a customer’s application meets
the following criteria:
Technological
Connection
Technological connection
is a set of measures aimed
at connecting the power
equipment of legal entities
and individuals to Federal Grid
Company’s grid facilities.
Executive offi ce
of Federal Grid
Company
Branches
of Federal Grid
Company – MES
Technological
connection
voltage
220 kV
and above
below 110 kV
inclusively
44
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Number of agreements signed and maximum
capacity under terminated agreements
№
Branch
2008
2009
2010
Number of
agreements
Maximum
capacity, MW
Number of
agreements
Maximum
capacity, MW
Number of
agreements
Maximum
capacity, MW
1
2
3
4
5
6
7
8
9
MES Center
MES Siberia
MES East
MES Urals
MES South
MES Volga
MES North West
MES West Siberia
The executive offi ce
61
14
27
19
14
0
6
0.2
0.2
0
12
36.225
33
21
67
0
0
169.15
49
44
36
11
18
13
78
35
57
32.87
107
110.38
28.112
29.9
77.16
16.175
76.661
43
606.4
699.9
75
43
22
48
22
47
67
36
64.065
24.51
6.4
99.623
129.62
85.554
59.3
589.15
Total
268
211.78
341
1,610.2
467
1,168.6
2.3 RELIABILITY IMPROVEMENT
Technical Policy
Federal Grid Company's Technical Policy is a system
of goals, methods and forms of infl uence aimed at
achieving a set of new technical solutions that ensure
upgraded effi ciency, reliability, technical development,
industrial safety and the creation and development
of new technologies and electricity transmission me-
thods. The Technical Policy is laid out by a fundamen-
tal document – Regulations on Federal Grid Com-
pany's Technical Policy.
Technical Upgrading
and Reconstruction Outlook
Insuffi cient fi nancing for Russian electric grid facili-
ties, which began in the 1990s, has led to critical wear
on fi xed assets. Analyzing the age structure of equip-
ment installed at the Company’s facilities indicates
that the normative service life (25 years) has expired
for more than 54% of equipment. The above-level
service life (35 years and more) has expired for more
than 22% of Federal Grid Company’s equipment.
Regulations on Technical Policy were approved by
Federal Grid Company's Board of Directors (Minutes
No. 123, as of 8 February, 2011).
The share of equipment with above-level service life
is also expected to demonstrate signifi cant growth
during the next decade.
45
2.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Age Structure of Federal Grid
Company’s Equipment
Age Structure of
Substation Equipment, %
7.50%
4.50%
4.10%
22.20%
9.70%
19.50%
14.60%
17.90%
0-5 years
6-10 years
11-15 years
16-20 years
21-25 years
26-30 years
31-35 years
35 years
The physical and moral depreciation of equipment
can lead to technological disruptions, accidents and
increased maintenance expenses. Worn-out struc-
tural units for transmission lines can be damaged by
external infl uences or cause increased electricity
losses as a result of a larger load.
In 2010, Federal Grid Company draſt ed an activity
plan aimed at modernizing and retro-fi tting electric
grids with several unique focuses based on esti-
mating the current technical state and production
capabilities of the Russian industry and construction
companies.
Fixed Asset Renewal Program
The Company has developed the 2011-2016 Program
for Fixed Asset Renovation – a program which strives
to ensure electric grid facility reliability and effi ciency.
As estimated by the Company, with Renovation Pro-
gram fi nancing of RUR60 billion per year, Federal Grid
Company will be able to break the trend of higher
equipment wear-and-tear.
The Renewal Program involves:
•
The total launch of 69,147 MVA of capacity
(till 2016);
Reconstruction of more than 3,860 km of transmis-
sion lines;
•
46
36%
17%
47%
Age Structure of
Transmission Lines, %
18%
39%
43%
0-24 years
25 years
(normative
service life)
35 years
(above-level
service life)
0-24 years
25 years
(normative
service life)
35 years
(above-level
service life)
•
Installation of 1,416 groups of 110-750-kV disconnect-
ing switches, 4,245 circuit breakers of 110-750-kV
and 1,712 groups of 11-750-kV current and voltage
measuring transformers
Total fi nancing for the 2011-2016 Fixed Asset Reno-
vation Program is RUR355,714 million. Out of this
amount, approximately 55% will be spent on the
comprehensive reconstruction of the Company’s
1,015 facilities, including 198 substations and 61
transmission lines.
In 2011 the Company plans to adjust the fi nancing
plan for its Renovation Program and to modify the
scope of work based on targets met in 2010. In 2011
the total capacity of facilities launched aſt er compre-
hensive reconstruction will exceed 8,901 MVA.
Reliability Improvement Programs at the
UNEG Facilities
The decline in electricity consumption during the late
1980s and early 1990s and the resulting underuse of
grid transfer capacity, which lasted until 2006-2008,
coupled with the physical wear and tear of equip-
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
2011-2016 Renovation Program Financing
Renovation programs
Comprehensive reconstruction
Non-comprehensive reconstruction
Program to replace 330-750-kV air circuit breakers (ACB)
Program to replace 110-220-kV oil circuit breakers (OCB),
isolating switches and short circuiting switches (IS and SCS)
Lightning-surge protection improvement program
under investment operations
Program to procure and construct pre-fabricated
buildings for special machinery
Program to replace 110-750-kV current transformers (CT)
at Federal Grid Company’s facilities
Program to replace 110-750-kV voltage transformers (CT)
at Federal Grid Company’s facilities
Target program for investment operations
Program to develop the diagnostic system
Modernization and technical upgrading program
for electricity transmission lines
Auto-transformer replacement program
Fire safety improvement program
at the Company’s units
Emergency reserve development, purchase of equipment,
materials, special machinery and gear
Reserve program
TOTAL
2011-2016, RUR mln
196,941
46,805
12,055
25,220
7,219
1,748
4,091
2,613
800
402
48,398
2,581
1,141
4,800
900
355,714
ment, contributed to a reduction in the number of
large systemic accidents that resulted in electricity
supply shortages to consumers. However, the UNEG
facilities will face an increasingly larger load as elec-
tricity consumption grows and the share of electricity
and capacity sales in the wholesale market increases.
47
2.0
To upgrade the reliability of its current grid facilities,
the Company has decided to develop and imple-
ment the following Reliability Improvement
Programs:
Program to replace 330-750-kV air and
oil circuit breakers (ACB)
According to corporate data, 30% of the total
number of technological violations at substa-
tions is caused by circuit breaker breakdowns.
Air and oil circuit breakers are also characte-
rized by long idle periods caused by technical
maintenance and repairs (TMR), which forces
substations and grids to operate in the weaker
repair mode. Gas-insulated circuit breakers, hich
the Company plans to install, require mainte-
nance with disconnection only once every 12
years, which improves the reliability of substa-
tions and grids, simplifi es the repair procedure,
contributes to cost reduction and reduces ac-
cident risk. Under the Program, the Compa-
ny will replace 3,802 sets of circuit breakers.
The total Program cost is RUR37.28 billion.
OTL lightning-surge protection impro-
vement program
According to statistics, 30% of the total number
of technological violations at overhead transmis-
sion lines (OTL) is caused by lightning strikes.
Lightning results in damages to isolators, towers
and cables, causes ground faults, arc overvolt-
age and automatic shutdowns. The OTL light-
ning-surge protection improvement program
involves modernizing approximately 2,500 km
of overhead lines, installing 18,500 surge pro-
tection devices and creating the AIMSSLC
(automated information and measurement sys-
tem of sleet load control) at overhead lines of MES
South. The Program will cost RUR7.219 billion.
Programs for replacing the 110-750-kV
current and voltage transformers
Breakdowns of current (CT) and voltage-measur-
ing transformers (VT) are the reason for more
than 5% of the total number of technological dis-
ruptions at substations. CTs and VTs, with a ser-
vice life of 30 years and more, fail to ensure the
accuracy grade needed for automated informa-
1.
2.
3.
48
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
4.
5.
6.
tion and measuring systems of electricity reve-
nue metering and can also damage substation
equipment and result in accidents. The Company
plans to replace 2,534 CT sets and 1,867 VT sets.
The cost of this Program will be RUR6.7 billion.
Modernization and technical upgrading
program for electricity transmission
lines
The share of electricity transmission lines with a
service life exceeding 40 years is 29.2%, with the
share of lines with a service life of more than 50
years accounting for 8.9% of the total length of
Federal Grid Company’s electricity transmission
lines. According to corporate data, the 2011-
2016 renovation program, as applied to electric-
ity transmission lines, will result in the natural
ageing of equipment exceeding comprehen-
sive reconstruction of electricity transmission
lines under the renovation program (3.1% of the
total length of electricity transmission lines). This
highlights the serious need for an additional pro-
gram to modernize electricity transmission lines.
The cost of this program will be RUR48.4 billion.
Autotransformer replacement program
The goal of this program is to upgrade trans-
former equipment with a service life of 40 years
and above, reduce the number of technological
violations related to power transformers, upgrade
the reliability of the UNEG equipment, slow down
transformer ageing and increase their capacity.
The total cost of the program is RUR2.6 billion.
Fire safety improvement program at
the Company’s units
Its aim is to reconstruct and upgrade fi re safety
tools at the Company’s units. The program will
help reduce the number and scale of accidents
at the Company’s units, while also reducing the
possibility of industrial injury incidents. The
total cost of the program is RUR1.14 billion.
7.
Emergency reserve development and
the purchase of equipment, materials,
special machinery and gear
The program’s aim is to upgrade and increase
the Company’s fl eet of special machinery, ma-
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
terials and gear to upgrade the quality and
speed of construction and repair work, sim-
plify repair procedures and reduce costs. The
total cost of the program is RUR4.8 billion.
Improved Electric Grid Maintenance
Improving electric grid maintenance will improve the
UNEG reliability and lower current costs needed to keep
principal UNEG elements operable. Measures taken by
the Company to improve maintenance include:
•
•
Revising existing normative documents and de-
veloping new ones that cover methodological,
informational and administrative support for
the IMS taking into account structural changes
at Federal Grid Company and analyzing results
for the IMS currently in place;
Changing the approach to evaluating effi ciency
at the Company’s branches, subsidiaries and
dependent companies, based on technical audit
results.
Improving service maintenance for equip-
ment, which involves comprehensive equipment
diagnostics at the service centers of producers,
technical maintenance and diagnostics by the
Company’s personnel and emergency response
activities by the Company’s personnel led by the
chief engineers of plants that made the equipment;
In 2010 the Company’s Technical Monitoring and
Audit Department ensured technical monitoring and
audit inspections across all Federal Grid Company
branches. The results formed the basis for planning
and implementing measures to remedy drawbacks
identifi ed by the inspections, in accordance with
deviations from existing requirements.
1.
2.
3.
Developing an intelligent troubleshooting
system that enables the Company to monitor
equipment under operational voltage and intro-
ducing a repair planning system based on inte-
grated results of an intelligent diagnostic system;
Professional training for the Company’s
production personnel via the creation of Pro-
duction Training Centers at the Company to train
employees in accordance with unifi ed standards,
methods and forms, using specialized training
infrastructure, such as grid training grounds.
Technical Surveillance of the Company’s
Electricity Grid Facilities
Federal Grid Company has a multi-level internal moni-
toring system (IMS) which oversees organizational,
technical, informational, procedural, monitoring and
preventative activities at corporate branches and the
UNEG units to upgrade equipment’s operating effi ciency
and personnel training and to reduce the number of
emergency incidents and the probability of fi re and
injury.
To improve IMS reliability, the Company carried out
the following measures in 2010:
Electric Grid Equipment Troubleshooting
In October 2009 Federal Grid Company established
the Division for Monitoring the Grid Technical Status
and Troubleshooting, which formed the foundation
for a new working group in troubleshooting sys-
tem development. The group includes experts in
related areas, the heads of branch troubleshooting
departments and representatives of the Company’s
R&D unit.
Technical troubleshooting of electric grid equipment
is regularly performed, as part of specifi c (targeted)
troubleshooting or as automated (online) trouble-
shooting.
Regular trouble shooting encompasses tests and
measurements in accordance with current regula-
tory documentation. Throughout 2010 the Company
performed the following regular tests and measure-
ments (TM) on its primary high-voltage equipment:
•
•
•
Power transformers and auto-transformers:
12,068 TMs;
Shunt reactors: 1,027 TMs;
High-voltage circuit breakers: 42,096 TMs;
49
2.0
•
•
Current transformers: 9,021 TMs;
Voltage transformers: 4,190 TMs.
Specifi c (targeted) troubleshooting assesses
the technical condition of electric grid equipment
not encompassed in regular troubleshooting and
specifi es the level and nature of defects discovered
during regular troubleshooting. It includes the fol-
lowing programs:
•
An electric grid overhead transmission line
(OTL) special troubleshooting program based
on express troubleshooting techniques.
Inspection results and recommendations help the
Company make timely decisions on exact repairs to
carry out on tower parts or the comprehensive recon-
struction of OTLs based on their actual condition.
In 2010 comprehensive inspections were carried
out on 9,931 towers of OTLs. According to inspec-
tions, 1,418 towers had defects that aff ected the
reliability of OTL usage.
•
The top-priority special troubleshoot-
ing program for the UNEG OTL parts.
In 2010 9,784 towers for OTLs were inspected
under auspices of this program. According to
these inspections, 2,008 towers had defects that
aff ected the reliability of OTL usage.
•
Comprehensive inspection program for
substation grounding
In 2010 comprehensive inspections were carried
out at 271 substations.
Reconstruction of the substations’ grounding sys-
tems, including repairs, replacement and post-repair
measurements and tests, was planned for 2011-2012
based on reports on the technical condition of in-
spected substations.
•
Special troubleshooting program for de-
teriorated equipment or units
In 2010 inspections, as part of the special trouble-
50
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
shooting program, were carried out at 6,482 main
equipment units and 113 towers of OTLs. Lightning-
surge protection troubleshooting was carried out at
97 spans of OTLs.
•
Special troubleshooting program for wa-
ter obstacle crossings
In 2010 63 crossing towers underwent a compre-
hensive inspection to prevent operational disrup-
tions.According to the inspection, 25 crossing towers
had defects that aff ected the UNEG reliability.
To complete technical troubleshooting of electric
units in a quicker and more up-to-date manner, the
Company uses automated troubleshooting systems
(monitoring systems), fi rstly for capital-intensive
power equipment: power (auto) transformers and
shunt reactors. As of 31 December, 2010, the total
amount of constantly monitored power equipment
consists of 314 units with a total capacity of 43,936
MVA (220 units) and 7,234 MVAR (94 units).
In 2010 the Company carried out troubleshooting on
electric grid equipment aff ected by extremely high
air temperatures and wildfi res.
To ensure the UNEG’s reliable performance in areas
aff ected by extremely high air temperatures and
wildfi res in 2010 (MES Center, MES Volga and MES
South), the Company carried out ad hoc trouble-
shooting of its power, communication, measurement
and protective equipment, including: comprehensive
thermal imagery inspection of electric units at 257
substations; testing transformer oil for high volt-
age equipment (using chromatographic analysis of
oil-solved gases and physical and chemical test-
ing) at 846 equipment units; testing excess voltage
suppressors at 10 substations; testing 330-750-kV
measuring transformers (271 phases); unscheduled
inspections, probes and measurements of OTL units
across 51 territories.
Comprehensive inspection of power equip-
ment with manufacturer involvement
To enhance the readiness of capital-intensive power
equipment to deal with maintenance loads in 2010
the Company completed comprehensive maintenance
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
In October 2009 Federal Grid
Company established the Di-
vision for Monitoring the Grid
Technical Status and Trouble-
shooting, which formed the
foundation for a new working
group in troubleshooting sys-
tem development.
of power equipment with manufacturer involvement
(Minutes of the Meeting of the Council of General
and Chief Designers, Leading Scientists and Acade-
micians of High-Tech Industries of the Russian Prime
Minister No. 4 as of 7 December, 2009).
In 2010 Federal Grid Company upgraded and com-
pleted equipment at its machinery and troubleshoot-
ing complexes.
In 2010 to improve troubleshooting quality, Federal
Grid Company provided the following machinery and
troubleshooting supplies to production facilities at
the Company’s branches – MES/PMES:
•
•
•
Equipment for fi xed-site laboratories – 380 units;
Movable electric power laboratories – 34 units
(for testing/measuring substation equipment),
equipped with 330 units of machinery and trou-
bleshooting complexes;
Movable troubleshooting laboratories with
a high-traction box truck – 18 units (for trouble-
shooting measures at high-voltage electricity
transmission lines), equipped with 260 units of
machinery and troubleshooting complexes.
In 2011 Federal Grid Company plan to focus trouble-
shooting eff orts in the following areas:
•
•
•
•
•
•
Developing a methodological and normative
database to apply and use results from trouble-
shooting automated equipment;
Creating and developing an automated sys-
tem to manage the Company’s troubleshooting
activities (Diagnostic Automated Management
System – AMS);
Utilizing ongoing automated troubleshoot-
ing measures for the Company’s electric units
capable of automatically transferring results to
the Diagnostics AMS;
Developing and using modern techniques and
tools for the non-destructive testing of the
Company’s modern electric grid equipment;
Developing a professional training (skills
improvement) system for personnel involved in
troubleshooting;
Organizing ongoing professional training for
personnel at service centers and production
facilities for manufacturers of high-voltage
equipment used at Federal Grid Company units.
•
Effi cient Process Management
The principal goal of Federal Grid Company’s effi cient
process management is to fulfi ll obligations to deliver
electric energy to the market by adhering to deliver
quality and reliability requirements, and to minimize
losses when transmitting electric energy via the
UNEG. The Company’s effi cient process management
is built on a hierarchical approach, with a concise
equipment allotment as per effi cient implementa-
tion levels.
In 2010 the Company successfully achieved the
above-mentioned goals and has demonstrated the
following results:
•
There were 19 technological violations caused
by operational staff errors (compared with 32
violations in 2009 and 16 in 2008);
51
2.0
•
•
•
•
•
Standard violations caused by higher than al-
lowed voltage levels in the UNEG did not exceed
3, as with 2009 (compared to 9 in 2008 and 71
in 2007);
Federal Grid Company’s branch MES Volga deve-
loped and implemented a system for optimizing
the grid mode by voltage and reactive power
based on KOSMOS drive end (DE);
the North-West Grid Control Center is running
a project to implement a modern PSI Control-
based hardware and soſt ware package to com-
plete the entire range of tasks related to the
grid’s effi cient process management;
in accordance with the Effi cient Process Mana-
gement Concept approved in 2010, the Grid-
Control Center of Kuzbasskoye PMES took over
operational management functions;
the Company and System Operator approved
a shared basis of managing switchovers at new
generation substations.
With involvement of effi cient process management
departments, Federal Grid Company designs and
commissions new generation substations (at the
end of 2010, they accounted for 8% of the Com-
pany’s total number of substations), where modern
automated systems of equipment control are being
implemented. With these systems in place, opera-
tional maintenance of substations can become a duty
of grid control centers. The switchover to substations
with operational staff on site permanently on duty
will help reduce maintenance expenses, reduce the
time needed to eliminate technological violations,
andsimultaneously analyze the situation both on the
site and in the grid linked to the substation.
Special Period Results
As a rule, the autumn-winter period results in the maxi-
mum capacity load for Russia’s electric energy system,
and harsh weather conditions during the freshet period,
fi re-hazard period and storm period increase the risk of
damage to grid units. As a result, Federal Grid Company
pays particular attention to electricity transmission dur-
ing special periods.
52
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
In some Russian regions, the 2010 freshet period re-
sulted in precipitation levels signifi cantly above normal
and the danger of snow melt negatively impacted the
UNEG grid units. During the 2010 spring freshet period,
employees of the Company’s regional branches carried
out all planned measures to ensure reliable perfor-
mance. Substations’ equipment, overhead transmission
lines, buildings and facilities were in good working condi-
tion following the freshet.
All measures to prepare the UNEG grid units for storm
and fi re-hazard periods were carried out in full by the
Company’s employees. No breakdowns in electricity
transmission line elements or substation equipment
were reported due to storm-related excess voltage.
Compared to the previous year, there were 99 addi-
tional cases of shutdowns due to storm-related excess
voltage. The increase was reported across grid units
of MES East, MES West Siberia, MES Center and MES
North-West. Compared to the previous year, there was
no increase in the number of emergency equipment
shutdowns at the Company’s substations. To reduce
the volume of storm-related shutdowns, the Company
developed and approved a three-year lightning-surge
protection improvement program for overhead trans-
mission lines.
As a result of ongoing dry weather and extremely
high air temperatures in numerous Russian regions
during the summer of 2010, the Russian President
signed off on a state of emergency decree for the Re-
public of Mari El, the Republic of Mordovia and the Vladi-
mir, Voronezh, Moscow, Nizhny Novgorod and Ryazan
Regions. Federal Grid Company rolled out additional
measures to upgrade fi re safety levels across territories
where the state of emergency was announced – in
particular, those within the scope of responsibility for
MES Center and MES Volga.
During the period of extremely high air temperatures,
the Company carried out signifi cant additional activities
to ensure the UNEG reliability and to avoid major da-
mage to overhead transmission lines. Tower parts, ca-
bles, isolators and line accessories were in good working
condition. However, despite measures taken, the impact
of extremely high temperatures damaged equipment at
several substations.
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Following forest fi res that aff ected overhead transmis-
sion line routes, the Company’s employees removed
burnt trees from the routes and checked the condition
of transmission line elements. This minimized conse-
quences of the wildfi res for substation and transmission
line equipment.
Preparation of the Company’s branches for the
2010-2011 autumn-winter period involved preliminary
examinations of the branches’ readiness and respective
measures to eliminate identifi ed drawbacks. By November
2010, all corporate branches received a passport
of readiness for the 2010-2011 autumnwinter season.
On 16-19 November, 2010, a commission of the Russian
Ministry of Energy, acting in conjunction with Federal
Grid Company personnel and the Federal Service for
Environmental, Technological, and Nuclear Oversight
(Rostekhzadzor), inspected Federal Grid Company’s
readiness for the 2010-2011 autumnwinter season.
On 19 November, 2010, the inspection was deemed
successful and Federal Grid Company received passport
readiness no. 1 for the autumn-winter season.
53
2.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
2.4 IMPROVING ENERGY EFFICIENCY
AND MITIGATING LOSSES
The program to decrease 2010 electric energy losses in the UNEG
is part of Federal Grid Company's 2010-2012 Energy Saving
and Energy Effi ciency Improvement Program, which was approved
by the Company’s Management Board 24 December, 2010.
In 2010 the Program to reduce the UNEG electric
energy loss had three key components:
•
•
•
Optimizing the scheme and parameter modes for
electric grid maintenance and operating manage-
ment;
Lowering power consumption to meet the own
needs of the substations;
Commissioning energy-saving equipment.
As part of the eff orts to optimize operating condi-
tions and manage the electric grids, optimum opera-
tion for reactive power and voltage was maintained,
electric grid equipment (transformers and OTLs)
was shut off during light-load operation and the
period for repair and technical maintenance of the
main grid equipment was shortened. Reductions in
auxiliary power requirement necessitate optimizing
the performance of cooling fans for transformers
and auto-transformers and for heating and lighting
resources at the buildings that manage substations.
The Company also worked to optimize the load on
electric grids by building new substations and lines.
In accordance with the Energy Saving and Energy
Effi ciency Improvement Program, Federal Grid Com-
pany plans to conduct an energy audit.
In the future the Company plans to conduct an equip-
ment performance inspection to identify locations
with the highest losses and to develop additional
measures for the Company to reduce electricity
losses in the UNEG and to amend current planned
targets.
In 2010 the total actual loss of energy was 22,525.621
million kWh, based on power balances in the UNEG.
Annual Energy Losses in 2008-2010
Dimension
million kWh
%
2008
21,866
4.63%
2009
22,121
4.89%
2010
22,526
4.79%
Relative amount of energy losses is defi ned to the volume of the balanced energy output
from the UNEG to Federal Grid’s consumers.
54
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Energy effi ciency measures implemented
since 1 January, 2010
Optimization of the electric grid steady-state conditions
(per reactive power, per voltage))
Switch-off of electric grid equipment during light-load periods
Reductions in the length of time for the repair and technical
maintenance of the main grid equipment (lines and transformers),
including hot-line work
Lowering power consumption for the substations own needs
Installing and commissioning power factor
correction units in electric grids
Replacing overloaded power transformers and commissioning
additional ones at operating substations
Replacing measuring current transformers
Optimizing the electric grid load by constructing
new substations and lines
Quantitative
eff ect as of 31
December, 2010,
MWh
40,645.1
75,794.3
26,852.0
67,050.8
2,880.0
2,181.0
71,522.4
4,714.4
291,640.0
Total
Breakdown of 2010 Energy
Losses in the UNEG, %
2%
2%
1%
24%
5%
8%
58%
Federal Grid Company obtains power independently
on the wholesale market, to compensate for actual
net output loss in the UNEG, minus losses taken
into account and paid for by market participants
at equilibrium prices. The cost of power and capa-
city obtained by Federal Grid Company in 2010 to
compensate for losses was RUR14,183,210,183.61,
excluding VAT: RUR2,630,340,176.34, excluding VAT
for power energy, and RUR11,552,870,007.27, exclu-
ding VAT for capacity.
Loss on shunt reactors 2%
Loss on compensating devices 1%
Loss to corona discharge via overhead transmission lines 24%
Other losses 2%
Load loss 58%
Loss on auxiliary power requirements 5%
Off-load loss on transformers and autotransformers 8%
55
2.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
2.5 MAINTENANCE AND REPAIRS
Via its maintenance and repair activities, Federal Grid Company has the
following goals: to upgrade the reliability of the UNEG, to improve usage
effi ciency for the Company’s equipment, and to eff ectively utilize resources
to develop and maintain the UNEG.
Maintenance and repair activities are based
on the following principles:
•
•
•
•
•
•
•
•
Complying with normative and technical docu-
ments;
Minimizing increases in technological and eco-
nomic risks;
Analyzing technological violations;
Overseeing the results of implementation from
previous periods;
Adhering to legislative requirements and limits
established for applicable electric companies;
Meeting key performance indicators;
Remaining within budget limits;
Complying with regulatory requirements.
Starting in 2011, Federal Grid Company will base its
maintenance and repair program on a rolling sched-
ule with a planned fi ve-year horizon and one-year
steps.
Principal types of maintenance and repair
for Federal Grid Company include:
Grid line clearing;
Replacing insulators;
Repairing and strengthening the foundation
for overhead transmission line support;
Replacing protective earth wires;
Replacing vent fi ngers;
Repairing and strengthening supports
for the overhead transmission lines;
Repairing automatic transformers/transformers;
Repairing reactors;
Repairing bushings;
•
•
•
•
•
•
•
•
•
56
•
•
•
•
•
Repairing disconnecting switches;
Repairing circuit breakers;
Replacing stick-pedestal insulators for circuit
breakers and bus structures;
Repairing compressors;
Repairing storage batteries.
As part of its 2010 repair campaign, the Company
carried out the following activities at its units:
•
•
•
•
•
Clearing more than 29,000 ha of electricity
transmission line routes;
Replacing 52,101 isolates and 172 km of protec-
tive earth wires;
Repairing and strengthening 1,326 supports at
overhead transmission lines;
Working on 302 phases of auto-transformers, 18
phases of shunt reactors, 2,267 disconnecting
switches, 7,332 circuit breaker phases and 235
compressors;
Replacing 129 bushings.
Principal priorities for the 2010 Target
Programs include:
•
•
•
•
•
•
•
A porcelain insulation replacement program for
overhead transmission lines;
A protective earth wires replacement program
for 220-500-kV overhead transmission lines;
Grid-line clearing program;
Chemical cleaning program for grid lines;
High-voltage bushings replacement program;
Reliability improvement program for optical IC;
Program for restoring the reserve phase to nor-
mative conditions.
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
As part of the Target Program, the Company car-
ried out the following activities:
•
Clearing more than 24,370 ha of electricity
transmission line routes;
Logging 1,730 trees that could potentially fall
on electricity transmission line cables;
Replacing 713 high-voltage bushings, 30,367
stick-pedestal insulators, 140,870 porcelain
insulators and 2,002 km of protective earth
wires.
•
•
In 2010 total fi nancing for the Company’s maintenance,
repairs and target programs was RUR12,436 million.
During the reporting period, the Company met 106%
of its technical maintenance and repair plan, which rep-
resents a 6.7% improvement compared with 2009. All
necessary repairs and technical maintenance activities
at the UNEG units during the review period were carried
out in full and on schedule.
2.6 IT NETWORK DEVELOPMENT
ule (General Schedule for the UEPTN Set-up and
Development till 2015), which was approved by Fed-
eral Grid Company’s Management Board and the
Government Commission.
In 2010 total fi nancing for the
Company’s maintenance, repairs and
target programs was RUR12,436
million. During the reporting period,
the Company met 106% of its
technical maintenance and repair
plan, which represents a 6.7%
improvement compared with 2009.
All necessary repairs and technical
maintenance activities at the UNEG
units during the review period were
carried out in full and on schedule.
The Unifi ed Electric Power Technological
Network (UEPTN)
Cutting-edge telecommunications systems and
state-of-the-art IT solutions are integral to Federal
Grid Company’s successful performance. The Com-
pany realizes the importance of this factor and works
to create and develop the Unifi ed Electrical Power
Technological Network (UEPTN).
The UEPTN is based on the widespread use of up-to-
date digital communication lines and is delivered by
creating fi ber optic communication networks, radio
relay links (RRL), modernizing high-frequency com-
munications, expanding the satellite communication
system, digital mobile radio, wavelength-division
multiplexing (WDM), synchronous digital hierarchy
(SDH), time division multiplexing (TDM) and Internet
protocol (IP) communications.
Strategic Telecommunications Planning
In 2009, Federal Grid Company’s Management
Board approved the 2009-2015 Telecommunications
Management Strategy. In line with this strategy,
the key goals for managing telecommunications in-
clude: providing consumers with reliable telecom-
munications services, switching the UEPTN to digital
technologies and optimizing capital expenditures to
develop the telecommunications network, in addition
to operation and modernization expenses.
The set-up and development of the UEPTN will take
place in four stages, as per the applicable sched-
57
2.0
The fi rst stage (2005-2008): setting up a digital
backbone network for Federal Grid Company based
on proprietary telecommunications platforms and
establishing a unifi ed electrical power digital network
(UEPDN) on leased circuits.
The second stage (2009-2010): completing
development of the UEPDN, allowing all corporate
branches to communicate and use digital communi-
cation lines at substations (277 substations).
The third stage (2011-2013): creating a digital
distribution network to fully switch the MES East
electric grid units (69 substations) and the MES
North-West electric grid units (103 substations) to a
digital format. In addition, the Company plans to set
up digital communication lines for electric grid units
in other regions (184 substations).
The fourth stage (2014-2015): completing set-
ting up principal telecommunications platforms for
the electric energy industry, including digitalizing 86
electric grid units.
In 2010 Federal Grid Company’s Management Board
decided to develop the UEPDN in conjunction with
a leading telecommunications operator, due to
Federal Grid Company’s switchover to telecommuni-
cations services provided via the digital transporta-
tion network, which is based on UEPDN resources
and the operators’ telecommunications networks.
As a result, in 2010 the Company outlined the main
cooperation principles and set up a pilot zone at
Federal Grid Company’s branches – MES Volga and
Urals. To implement the telecommunications service
provision model, Federal Grid Company decided to
provide its 100%-owned subsidiary Moscow Commu-
nication Center of the Electric Power Industry (MUS
Energetiki) with the functions of the Trust Operator,
with its principal duty being providing the Company
with a modern high-quality range of telecommu-
nications services, in addition to maintenance and
technical services for telecommunications systems
and means.
In 2010 24-hour shiſt s for the Center for Telecom-
munications Network Control and Monitoring started
operating on the basis of MUS Energetiki at Federal
Grid Company’s branches.
58
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Latest Changes in the UEPDN Structure
Fiber optic lines:
As part of fi ber optic telecommunications network de-
velopment, in 2010 the Company commissioned the
1st, 3rd and 5th launch sites for the Chelyabinsk – No-
vosibirsk – Tayshet – Vladivostok fi ber optic line (with a
total length of 5,285 km and 77 facilities).
By the end of 2010, the total length of the Company’s
backbone and distribution fi ber optic telecommunica-
tions networks stood at 26,564 km.
Radio relay network
The radio relay network is used in the backbone and
distribution networks of the UEPTN, either primarily
in a situation in which it is not economically rational
to install a fi ber optic line or when a telecommunica-
tions network is required urgently.
In 2010 Federal Grid Company was allowed to use
radio frequency or radio frequency channels on 9
radio relay telecommunications lines in coverage
areas for the Bryansky, Stavropolsky, Yuzhno-
Uralsky, Severny, Chernozemny and Verkhne-Donskoy
PMES (MES subsidiaries). The Company also provided
the State Unitary Enterprise “General Radio
Frequency Center” with 28 radio frequency applica-
tions with the source data to receive inspection re-
sults on the possibility of using radio electronic means
and their electromagnetic compatibility with radio
electronic means currently in operation or intended
for future use.
Satellite network
The satellite network enabled Federal Grid Company
to upgrade reliability and observability at its electric
grid units.
In 2010 as part of the fi rst stage of Federal Grid
Company’s Program for Reliability and Observability
Improvement, the Company set up satellite channels
for dispatching and technological management and
the transmission of telemechanics data from 20
substations in the coverage area of Federal Grid Com-
pany’s MES North West branch and 16 substations
in the coverage area of Federal Grid Company’s MES
Center branch to respective Grid Control Centers of
Federal Grid Company’s branches and dispatch cen-
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Murmansk
Severodvinsk
Arkhangelsk
Petrozavodsk
Syktyvkar
Loukhi
Vyborg
St.Petersburg
Vologda
Cherepovets
Novgorod
Galich
Rybinsk
Manturovo
Kirow
Kingisepp
Pskov
Salekhard
Pechora
Nadym
Yamburg
Urengoy
Tarko-Sale
Kholmogory
Noyabrsk
Sosva
Khanty-Mansiysk
Surgut
Nizhnevartovsk
Bologoye
Udomlya
Tver
Rzhev
Moscow
Vyazma
Smolensk
Kaluga
Yaroslavl
Kostroma
Ivanovo
Votkinsk
Izhevsk
Ioshkar Ola
Nizhny Novorod
Kezan
Perm
Nizhny Tagil
Tyumen
Tobolsk
Knyazhevo
Yekaterinburg
Vladimir
Arzamas
Ryazan
Saransk
Naberezhnye Chelny
Cheboksary
Ufa
Ulyanovsk
Chelyabinsk
Kurgan
Omsk
Sterlitamak
Beloretsk
Karasuk
Bryansk
Orel
Tula
Lipetsk
Kursk
Tambov
Penza
Syzran
Samara
Voronezh
Saratov
Orenburg
Stary Oskol
Belgorod
Frolovo
Magnitogorsk
Orsk
Tomsk
Kemerovo
Novosibirsk
Tatarsk
к
Barabinsk
Pazdolinsk
Boguchany
Ust-Ilimsk
Krasnoyarsk
Tayshet
Nizhneudinsk
Bratsk
Tulun
Zima
Severobaikalsk
Novokuznetsk
Abakan
Angarsk
Irkutsk
Barnaul
Minusinsk
Mysovaya
Ulan Ude
Chita
Rubtsovsk
Biysk
Choya
Gorno-Altaisk
Sayanogorsk
Kyzyl
Gusinoozersk
Petrovsk-Zabaikalsky
Volgograd
Volgograd
Elista
Astrakhan
Stavropol
Completed construction
To be put into operation in 2009-2010
To be ouy into operation in 2011-2015
Shakhty
Taganrog
Rostov-on-Don
Tikhoretsk
Krasnodar
Novorossyisk
Sochi
Cherkessk
Wladikawkas
Pyatigorsk
Nazran
Grozny
Yuzhno-Sukhumsk
Makhachkala
Derbent
Planned Scheme for
Federal Grid Company’s
Fiber Optic Line till 2015
Yakutsk
Kuranakh
Neryungri
Tynda
Mogocha
Skovorodino
Kholbon
Magdagachi
Svobodny
Komsomolsk-on-Amur
Belogorsk
Bureya
Blagoveshchensk
Sovetskaya Gavan
Birobidzhan
Khabarovsk
Luchegorsk
Ussuriysk
Artem
Nakhodka
Vladivostok
ters of SO UES. This involved installing 14 small ter-
restrial satellite communication stations (STSCSs).
As part of rolling out the comprehensive automated
system for security management (CASSM) at Federal
Grid Company’s MES South branch, the Company
installed 29 STSCSs at electric grid units of said
branch. The newly installed STSCSs, including those
installed in accordance with the AMIS EPFA UNEG
program, will enable the Company to ensure the
performance of the CASSM and to set up reserve
channels for dispatch and technological management
and transmission of telemechanics data to dispatch
centers.
Mobile radio network
The mobile radio network is intended for operational
service, emergency repair teams and alternate com-
munication lines.
In 2009 Federal Grid Company continued construct-
ing the TETRA-standard networks in the Moscow
and Nizhny Novgorod Regions, which are scheduled
for completion in 2011. By this time, TETRA-standard
networks will be commissioned in Moscow and the
Moscow region, St. Petersburg, Nizhny Novgorod
and the Nizhny Novgorod region, as well as in the
Chuvash Republic.
Due to extremely high air temperatures, in August
2010, personnel from regular and emergency repair
teams of the MES Center and MES Volga received
additional mobile telecommunications means using
diff erent technologies, including: 95 satellite termi-
nals and 463 GSM terminals with SIM cards from
alternative GSM operators.
Carrier communication system (CCS) along
transmission lines
In 2010 in conjunction with Russian Ministry of En-
ergy and the Ministry of Communications and Mass
Media, Federal Grid Company worked to determine
standard procedures for accounting, distributing and
controlling radio frequency ranges used in carrier
communication systems along transmission lines.
59
2.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Telephone network
The power sector telephone network provides
reliable communication lines for the dispatcher
and the administration of electric energy services.
The network has been built on the hub principle
and ensures communication between the System
Operator and other electricity market subjects.
In 2010 Federal Grid Company launched more than 20
digital private automatic branch exchanges (PABXs) at
its branches’ electric grid units – MES. The Company
also introduced a registration scheme for operating
personnel communications, wireless communication
systems based on the DECT standard and public
address and radio paging systems.
GLONASS-based systems
Federal Grid Company is actively involved in eff orts
to adopt GLONASS technologies. In particular, in 2010
the Stavropolsky PMES introduced a pilot zone
for a system to monitor pedestrian staff and
automobiles using the GLONASS/GPS technology
produced by Russian Navigation Technologies.
As part of the program, 12 cars of the line service
teams were equipped with personal trackers. Ten
members of the line service teams received personal
trackers. The Company also introduced fi ve mobile
units ensuring rapid control over vehicles not equipped
with fi xed vehicle tracking units.
In 2011 the Company plans to set up a pilot zone at
the Lower Volga PMES. As part of the pilot zones and
based on GLONASS technologies, the Company will
roll out a control and monitoring system for PMES
vehicles, creating a standard geo-locational system
with navigational and informational support to line
service and emergency repair teams and prompt
control, as well as implementing a control and
monitoring system for pedestrian staff at the
Company’s branches. There will also be a system
to monitor and forecast the condition of towers for
overhead transmission lines crossing over water
obstacles and mountainous areas. Performances at
the pilot zones will enable the Company to identify a
list of GLONASS-based services recommended to be
introduced at Federal Grid Company’s branches.
Data on CCSs commissioned in 2010 is provided in the table below:
Federal Grid
Company's branch
Total number
of CCSs installed
in 2010
Total number
of CCSs as of
1 January, 2010
Total number
of CCSs
commissioned
in 2010
Total number
of CCSs as
of 1 January,
2011
MES Center
MES Volga
MES South
MES Siberia
MES Urals
MES West
Siberia
MES North West
MES East
Total
60
12
-
16
4
-
17
34
-
83
1,168
359
424
911
980
299
906
302
17
-
11
6
-
15
59
-
5,349
108
1,184
333
572
1,212
1,305
335
1,608
806
7,355
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
an AMIS EPFA UNEG at substations with a voltage
of 220 kV and below are in their fi nal stage.
IT Systems Outlook
Developing IT systems, which enables Federal Grid
Company to manage its business more eff ectively,
is of particular importance to the Company. In 2011
the Company plans to launch R&D eff orts to set up
an electricity quality monitoring system in the UNEG.
This will mark the fi rst stage of creating a unifi ed mul-
tilevel information monitoring system to measure
electricity quality compliance with existing norms, which
will later ensure a transition to the electricity param-
eter management system.
An equally important IT area is establishing a com-
prehensive system for equipment management
at Federal Grid Company. In 2011 the Company
plans to consider principal approaches to building
a comprehensive equipment management system.
Enterprise Resource Planning System (ERPS)
The ERPS is an automated business-process and
technological management system. As of the end of
2010, Federal Grid Company has launched commercial
operation of 20 automated business management
system as part of the ERPS project.
Automated Technological Management
System (ATMS)
The ATMS is a single distribution hierarchical system
that integrates the facilities and sub-systems of
existing and independently evolving automatic
and automated management systems. It is based
on the UNEG center for information management
(CIM) and the integrated information exchange model
(IEM), which uses ATMS hardware and soſt ware
package (H&SP).
In 2010 Federal Grid Company began a pilot test
of the H&SP (ADTMS) project at the Grid Control
Center (GCC) of the Kuzbassky PMES, at the 2nd
launch site of the GCC of North West (ADTMS),
H&SP of SCADA for the first stage of MES
Siberia and MES East. As part of the Program
for Reliability and Observability Improvement
(PROI), the Company introduced data acquisition
systems at 26 substations, developed projects
for tele-mechanics and upgraded the data transfer
system at 152 substations, completed tenders and
signed agreements to implement the telemechanics
and data transfer system at 161 substations, and
started developing projects at 172 substations.
Automated Measuring and Information
System for Electric Energy Fiscal
Accounting (AMIS EPFA)
Federal Grid Company’s AMIS EPFA is a multi-
level territorial distribution system for data and
measurements with centralized management and a
unifi ed center for collecting, processing, storing and
transferring electricity measurements, as well as a
distribution function for electricity measurements.
The Company reacted and launched an automated
information and measurement system for electric
energy fi scal accounting that covers substations
with voltage of 330 kV and above. Eff orts to create
61
2.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
2.7 PROCUREMENT
Procurement Management
During the fi rst eight months of 2010 Federal Grid
Company conducted all procurements in accordance
with the Company’s Provision on the Regulated
Procurement of Goods, Products and Services for
Federal Grid Company Needs, as approved by the
Company’s Board of Directors in July 2009. Since
September 2010 all procurement activities have been
carried out in accordance with the Provision approved
by the Company’s Board of Directors in August 2010.
The Provision sets out a uniform procedure for
procuring goods, work and services based on
modern competitive sourcing forms, predominantly
in an open competitive format. The procedure
complies with requirements specified in the
Russian Government’s Regulations No. 1158 dated
13.10.1999 “On the Enforcement of Economically
Sound Principles for Product (Services) Pricing by
Natural Monopolies.”
The uniform procurement procedure helps ensure
that funds are spent effi ciently as intended and to
secure economically sound and competitive prices
from suppliers. This procedure ensured the realization
of the following basic procurement management
principles:
•
Transparency.
Procurement procedure rules
are set out on the corporate web site. Information
about any procedural violations can be sent to
the Company’s Central Tender Committee (CTC),
which includes representatives from the Russian
Ministry of Energy and the Federal Antimonopoly
Service. The annual procurement program is pub-
lished on the corporate web site and on the TZS-
Elektra electronic trading site. A signifi cant share
of contracts is awarded via open tenders and
other open competition formats. Bids for these
contracts are solicited via the corporate web site,
the electronic trading site and via mass media.
•
The procurement system is de-
Competition.
signed to give a preference to open bidding, en-
suring that the best off er wins. Any competitive
62
Import replacement
Import replacement is
an economic strategy
and state
industrial
policy aimed at replacing
imports that are in high
demand on the domestic
market with domestically
produced goods. The social
and economic goal of this
strategy is to create jobs
and keep added value in
Russia, as well as to foster
innovation.
process restrictions require serious substantia-
tion and the approval of the Company’s regulatory
bodies. Only the Company’s CTC can make deci-
sions to use only one a single supplier for sourcing.
•
Substantiation.
The procurement procedure
rules require every decision to be substantiated
and delivered in writing, which makes the process
more effi cient and prevents corruption.
Federal Grid Company’s Central Tender Commission
approved TZS-Elektra, a system designed to set
up and manage competitive and regulated non-
competitive procurement based on Internet technolo-
gies, as the electronic trading site (ETS) recommend-
ed for use by Federal Grid Company and its SDCs
(Minutes No. 2007/51/5 as of 2 March, 2007).
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Competitive Procurement
Competitive procurement amount (RUR mln)
234,475.3
49,550.8
259,302.98
% of total procurement
90.3
59.6
72.5
2008
2009
2010
The Annual Comprehensive Procurement Program
(ACPP) is draſt ed by various departments of the Com-
pany’s administrative offi ce and its branches.
In 2010 competitive procurement carried out by the
Company stood at RUR259,302.98 million, which
represents 72.5% of the year’s total procurement.
The Company’s 2011 procurement
tasks include:
•
•
•
•
Cost reduction by saving funds when sourcing
products (goods, work and services);
Providing Federal Grid Company and other elec-
tric grid companies with products of the re-
quired quality at the lowest price possible and
on schedule;
Optimizing the procurement management sys-
tem using best practices;
Aligning the Company’s Regulations on Pro-
curement in accordance with the law “On the
Procurement of Goods, Work and Services by
State-Run Corporations (Companies), Natural
Monopolies and Public Utilities Companies,” aſt er
it passes Russian State Duma.
Import Replacement Policy
Import replacement is an economic strategy and
state industrial policy aimed at replacing imports that
are in high demand on the domestic market with do-
mestically produced goods. The social and economic
goal of this strategy is to create jobs and keep added
value in Russia, as well as to foster innovation.
The primary principles of Federal Grid Company’s import
replacement policy include:
•
•
•
•
•
•
•
•
•
Upgrading existing electric grid production
assets;
Instituting innovations in the UNEG;
Improving energy effi ciency (including reducing
electricity losses in the Russian UNEG (~5%) to
the level of the UNEG losses typical in developed
economies (~3.7%), which enables potential sav-
ings of up to 3 billion kWh per year);
Having strong industrial safety;
Developing production and scientifi c potential;
Engaging in technological improvement in pro-
duction;
Improving the payment balance structure;
Optimizing internal demand;
Creating jobs.
Federal Grid Company is developing an Import Re-
placement Program that aims to boost Russia’s
electric equipment industry and increase the share
of Russian suppliers in the Company’s major invest-
ment program. The Program is planned till 2020 and
includes three sub-programs:
•
•
•
Short-term
(till 2014) will see an increase in
the share of Russian-made equipment in the
Company’s procurement to 40%. The sub-
program also relies on making greater use of
Russianmade equipment, which is already
mass-produced and has received industrial
certification. Companies that produce
equipment look to receive expanded services,
including maintenance support for equipment;
I Mid-term
(till 2015). In accordance with it the
share of Russian-made equipment purchased by
the Company is to reach 50%. This stage aims
63
2.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
•
to upgrade equipment properties to world best
levels. One way to achieve this aim is to create
joint or licensed production facilities;
Long-term
(till 2020) will see the share of Rus-
sian-made equipment increase to at least 60%,
driven by the development and launch of mass
production for innovative equipment previously
not made in Russia, and by exceeding best prac-
tice standards.
In 2010 as part of the Import
Replacement Program, the Com-
pany signed agreements with
35 Russian power equipment
producers. In value terms, the
share of imported equipment
purchased by the Company
stood at 70%.
64
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Primary equipment:
100
80
60
40
20
0
s
r
e
m
r
o
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C
Russian-made equipment, %
Foreign equipment, %
Secondary equipment:
100
80
60
40
20
0
f
o
m
e
t
s
y
s
d
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a
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Russian-made equipment, %
Foreign equipment, %
A
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(
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65
MOVING FORWARD
WITH NEW ENERGY
ANNUAL REPORT
2010
INVESTMENTS
AND INNOVATIONS
THINK AHEAD –
ACT NOW
3.0
3.1 INVESTMENT
ACTIVITIES
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Federal Grid Company’s investment activities are carried out in
accordance with the investment program developed and adopted
according to the requirements of the Russian Government's
Resolution No. 977 “On Investment Programs for Power Sector
Entities” (dated 1 December, 2009) for the fi ve-year period.
Key Objectives and Tasks
of Investment Activities:
•
•
•
•
•
•
•
•
Ensuring power output for power generating
units of NPPs, HPPs and TPPs put into opera-
tion;
Ensuring the reliability of the UNEG operation;
Removing transmission constraints and creating
possibilities for connecting additional consumer
loads;
Maintaining the main electric grids in operating
condition;
Realizing agreements concluded with regional
authorities;
Creating technological infrastructure objects for
the competitive market functioning of electricity
and capacity;
Developing and introducing innovative tech-
nologies, materials, construction and power
grid equipment, ensuring a higher quality of the
UNEG operation;
Developing a technological management and
communication system, IT technologies for up-
grading the quality and operational effi ciency of
managing operations and creating conditions for
the gradual transition to the Smart Grid.
The UNEG Development
The UNEG development is one of Federal Grid
Company’s priority tasks. Main directions of the
UNEG development are determined by:
•
The general scheme of power industry object
allocation till 2020 with an outlook till 2030;
68
•
Scheme and development program for the UES
for the 2010-2016 period.
Electric grid development up to 2016 is aimed at
ensuring the reliable and stable functioning of the
UES of Russia and the competitive WECM , as well as
a reliable power supply for consumers and ensuring
capacity output for power plants.
The new technological platform for the UES of Rus-
sia, which is currently being developed – the smart
energy system with active adaptive grid (SES AAG) –
will ensure the leading role of the electric grid in
providing reliable connections for generation and
consumers and increase the quality of services.
Active adaptive grid realization will occur via:
•
•
•
•
Systematically installing active technical equip-
ment in the grid, providing an eff ect during the
development of the energy system as a whole;
Implementing new information technology sys-
tems;
Using quick response programs to evaluate con-
dition and management in online and offl ine
regimes, including with electricity consumption;
Utilizing the adaptive system of centralized and
local management in normal and emergency
modes.
The UNEG Development Trends:
•
The development of 750-kV grids is foreseen in the
European part of the UES of Russia;
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
•
•
500-kV electricity transmission lines will be de-
veloped for capacity output at large power plants,
including nuclear ones and strengthening the main
grid in energy zones of the Center, South and mid-
Volga Regions, as well as in the Urals, Siberia and
the East, as well as for the development of inter-
system communication;
330-kV grid will continue to perform system-form-
ing functions and ensure capacity output at large
stations in the Western part of the Center energy
zone, as well as in energy zones of the North-West
and the South;
•
Main trends in 220-kV grid development will include
strengthening distribution functions and ensuring
power plants’ capacity output. 220-kV grids in the
energy systems of Eastern Siberia, as well as in
the energy systems of Arkhangelsk and Komi, will
be system forming.
The principal forecast indicators for commissioning electric grid facilities based on the
Scheme and program for developing the UES of Russia for the 2010-2016 period, in the
context of the Interconnected Energy Systems (IES) and the UES of Russia
IES of the East
220 kV
500 kV
IES of Siberia
220 kV
500 kV
IES of the North-West
220 kV
330 kV
750 kV
IES of the mid-Volga
220 kV
500 kV
IES of the South
220 kV
330 kV
500 kV
IES of the Urals
220 kV
500 kV
IES of the Center
220 kV
330 kV
500 kV
750 kV
Total, including
220 kV
330 kV
500 kV
750 kV
km
7,747.1
1,097.3
2,626.5
2,401.9
1,576.8
2,367.2
558.0
1,394.5
1,945.6
1,090.2
939.0
2,480.6
5,264.0
1,522.0
1,660.9
—
896.8
285.0
35,883.4
21,360.0
3,306.2
10,344.2
873.0
MVA
4,814
668
9,787
11,387
1,266
7,380
3,000
1,425
5,959
7,490
2,132
5,076
9,584
10,277
32,751
600
16,012
3,753
133,361
67,117
10,112
49,379
6,753
MVAR
200
900
3,784
4,560
—
180
1,320
—
2,160
488
384
2,520
—
1,130
—
—
540
660
18,826
4,472
564
11,810
1,980
69
3.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
The 2008-2010 Volume of Planned
and Actual Capital Investment Financing
177,478
170,505 167,031
124,000
121,746
106,044
200,000
150,000
100,000
50,000
0
2008
2009
2010
Planned, RUR mln
Actual, RUR mln
2010 Investment
In 2010 the actual volume of investment performed
by the Company totaled RUR 167,031 million.
In 2010 the Company activated production capacities
at 52 objects.
Key Objects Launched in 2010:
East Region:
Within the Federal Target Program for Economic
and Social Development of the Russian Far East and
Trans-Baikal up to 2013 the following facilities were
launched:
•
•
•
Neryungrinskaya GRES – Nizhniy Kuranakh
220-kV high voltage line with a length of 275 km;
Artemovskaya TPP – Vladivostok 220-kV high
voltage line with a length of 2х20 km;
220-kV Aeroport substation with 220-kV high
voltage approach lines with a transformer capacity
of 2х25 MVA, approach line length is 2х11 km;
Introducing these objects upgraded the reliability of
power supply to consumers in the South Yakutia and
Primorsk Regions, including Yakutia’s large gold mines
and the oil pumping station of the ESPO pipeline
system, as well as providing energy to APEC summit
objects.
70
Siberia Region:
Power supply reliability for industrial enterprises,
including the Sayansky Aluminium Smelter and the
Khakassky Aluminium Smelter, as well as for other
electricity consumers in Sayanogorsk, the southern
regions of Buryatia and North-West Mongolia, signifi -
cantly increased aſt er the following corporate objects
were put into operation:
•
•
•
Installation of the capacitor bank at the 500-kV
Oznachennoye substation with introduced ca-
pacity of 2x104 MVAR;
Installation of the capacitor bank at the 500-kV
Aluminiyevaya substation with introduced
capacity of 3х104 MVAR;
The 220-kV Selenduma substation. Installed reactive
power compensation means (RPCM) 2х20 MVAR.
Urals Region:
To ensure the capacity output schemes of the
Chelyabinskaya TPP-3 and the Sredneuralskaya
GRES, the Company put the following objects into
operation:
•
•
Double circuit 220-kV TPP-3 – Novometallur-
gicheskaya high voltage line and reconstruc-
tion of the 220-kV Novometallurgicheskaya –
Kozyrevo high voltage line with launching
under voltage of 6.4 kilometers;
Reconstructed 220-kV Sredneuralskaya TPP –
Peschanaya 1 high voltage line and 220-kV
Sredneuralskaya GRES – Peschanaya 1 high volt-
age line and 220-kV Srendeuralskaya GRES –
Kalininskaya high voltage line with launching
under voltage of 20 kilometers.
Volga Region:
Introducing the 500/220/35-kV Krasnoarmeyskaya
substation with 500, 220-kV high voltage line ap-
proaches ensured upgraded power supply reliability
for consumers in the Samara Generation System,
provided opportunities to connect new consumers
in the Novokuibishevsky and Chapaevsky Districts
of the Samara Region and lessened the load of the
500-kV Kuibishevskaya substation.
South Region:
In 2010 the Company completed construction of the
110-kV Laura and Rosa Khutor substations, 110-kV
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
substations in the Krasnopoliansky Village District,
10-kV substations and distribution lines for the Rosa
Khutor ski resort in the Sochi Region. New objects
will supply power to numerous Olympic objects under
construction in Krasnaya Polyana – the ski complex,
freestyle center, mountain liſt s, the Psehako moun-
tain tourism center and telecommunication and en-
gineering infrastructure objects designed to service
the 2014 Winter Olympics.
For the capacity output of the second power gen-
eration unit of the Volgodonskaya NPP (launched 17
March, 2010) were built and put into operation the
500-kV Nevinnomyssk substation with a capacity
of 1002 MVA and the 500-kV Volgodonskaya NPP –
Nevinnomyssk transmission line with a length of 440
kilometers. New energy objects will allow for the
distribution of new capacity of the Volgodonskaya
NPP to the energy systems of Districts of the North
Caucasus Federal Region.
North-West Region:
In 2010 the Company put into operation the
220-kV Prospekt Ispytatelei substation, which will
liquidate the acute energy defi cit in the Primorsky
and Vyborgsky districts of St. Petersburg and will
In 2010 the actual volume
of investment performed
by the Company totaled
RUR 167,031 million.
decrease the load on the 220-kV Primorskaya and Po-
luprovodniki substations. The Company also launched
the new 330-kV Tsentralnaya substation in St. Peters-
burg, which will become the main power feed center
for new 110-kV energy objects. Commissioning this
object successfully resolved the energy defi cit in
the historic part of St. Petersburg – the Central and
Admiralteisky Districts.
Central Region:
The Company concluded reconstruction work at
the 500-kV Lipetskaya substation with the goal of
upgrading the reliability of power supply to Li-
petsk Region consumers. In addition to this, within
the broadening of the 500-kV Nizhegorodskaya
substation, the Company put into operation a
second autoconnected transformer with a capacity
of 501 MVA, which increased the substation capacity
to 1,002 MVA, thus increasing power supply reliability
for consumers in Nizhny Novgorod. This also allowed
for the connection of new consumers in the region
to electric grids.
Western Siberia Region:
•
Within the framework of the agreement on the
technological connection of Rosneſt Oil Company
objects, the Company concluded construction
and put under operating voltage lines of ap-
proach for the 220-kV Magistralnaya – Yuzhno-
Balykskaya GPKh high voltage line to the 220-kV
Sredny Balyk substation located in the Tyumen
Region;
Within the framework of fulfi lling the program to
decrease electricity losses, the Company put into
operation the operative 500-kV shunt reactor at
the 500-kV Nelym substation. The reactor with
a capacity of 180 MVAR regulates voltage levels
of the 500-kV grid in the southern part of the
Tyumen Energy System;
In the Tyumen Region, the Company put into
operation the 220-kV Tobolskaya TPP – Irtysh
transmission line to ensure capacity output of
the Tobolskaya NPP in a volume of 110 mW into
the Tyumen Energy System;
As part of the construction of the 220-kV De-
myanskaya – Snezhnaya transmission line was
put into operation an autoconnected transformer
with a 125 MVA capacity at the 220-kV Snezh-
naya substation.
71
•
•
•
VOLUMES OF NEW CAPACITY
INTRODUCTION DURING
2010-2014
2
(cid:23)(cid:19)
(cid:17)(cid:18)(cid:19)
1
4
220-500 KV SUBSTATIONS
WITH CAPACITY OF OVER 89,000 MVA
3
5
6
220-750 KV TRANSMISSION LINES,
WITH LENGTH OF OVER 21,000 KM
7
1. MES SOUTH
2. MES CENTER
3. MES VOLGA
4. MES NORTH-WEST
-
5. MES URAL
Substation 500 kV 6
Substation 330 kV 5
Substation 220 kV 8
TL 500 kV 12 (2 396 km)
TL 330 kV 5 (696 km)
TL 220 kV 10 (699 km)
RUR70.5 bln
Substation 500 kV 2
Substation 220 kV 2
TL 750 kV 1 (285 km)
TL 500 kV 7 (1 130 km)
TL 220 kV 16 (609 km)
RUR70.4 bln
Substation 500 kV 1
TL 500 kV 2 (546 km)
TL 220 kV 1 (129 km)
RUR13.6 bln
Substation 330 kV 11
Substation 220 kV 1
TL 330 kV 8 (909 km)
TL 220 kV 1 (253 km)
RUR42.8 bln
Substation 220
TL 500 kV 4 (1
k
TL 220 kV 9 (6
k
RUR32.8 b
72
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
8
7
-WEST
5. MES URALS
6. MES WEST SIBERIA
7. MES SIBERIA
8. MES EAST
11
1
km)
km)
Substation 220 kV 1
TL 500 kV 4 (1,021 km)
TL 220 kV 9 (651 km)
Substation 220 kV 7
TL 500 kV 2 (298 km)
TL 220 kV 14 (1,881 km)
RUR32.8 bln
RUR36.4 bln
Substation 500 kV 3
Substation 220 kV 8
TL 500 kV 6 (1,726 km)
TL 220 kV 8 (1,956 km)
Substation 500 kV 1
Substation 220 kV 18
TL 500 kV 2 (946 km)
TL 220 kV 15 (3,446 km)
RUR75.4 bln
RUR93.1 bln
73
3.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Federal Grid Company’s 2010-2014 Investment
Program
The basic principles of investment planning activities
are forming a fi ve-year development program for the
Company, with subsequent annual corrections with
a one-year shiſt in the planning horizon. Corrections
are performed taking into account actual fi nancing
and the utilization of capital investment for realized
projects and adjusting the UNEG development
scheme.
On 12 November, 2010, our investment program
received a fi nal approval from the Russian Ministry of
Energy. The Company transitioned from a three-year
to fi ve-year investment program, which is the result of
a fi ve-year tariff period for electricity transmission.
The Company’s investment program is aimed
at developing the UNEG and ensuring its stable
operation, as well as upgrading the quality of power
supply to consumers.
Investment Program Implementation
Indicator
Characteristics
Result
Developing the electric
capacity market and ensuring
competition
Merger of free
power transfer zones
Ensuring capacity
output for power plants
Providing technological
connection opportunities
to consumers
Energy effi ciency
Withdrawing
transmission constraints
Decreasing
energy losses
Reliability
Increasing the
reliability of power supply
to consumers
Withdrawing transmission
constraints between
29 established free power
ransfer zones (Construction
of 25 electric grid objects)
Ensuring capacity output
in the amount of 32 GW
for generating capacities
of 37 power plants
(Construction of 5,440
kilometers of transmission
lines and substations with
a capacity of 9,936 MVA)
Two-fold decrease in “closed
power supply centers”
(from 251 to 127)
A relative decrease in energy
losses (from 4.89% as
of the end of 2009 to 4.79%
as of end of 2010)
The actual amount
of consumer constraints
relative to power supply
from the grid in 2010
totaled 0.0013%
For 2010-2014 fi nancing the investment program will total more than RUR952 billion. According
to corporate estimates, as a result of this realization, the Company will construct 21,078
kilometers of electricity transmission lines and will put into operation 89,180 MVA of transformer
capacity.
74
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Plan to Launch Electric Grid Capacities in 2010-2014
30,000
20,000
10,000
0
Year
26,557
22,474
19,000
11,922
2,758
3,520
5,435
5,893
8,102
2,936
2010
2011
2012
2013
2014
Transmission lines, km
Transmission capacity, MVA
Investment Program Structure
RUR bln
90.37 (9.5%)
212.77 (22.3%)
127.4 (13.4%)
28.41 (3%)
216.262 (22.7%)
137.93 (14.5%)
14.7
(1.5%)
65.8
(6.9%)
58.71
(6.2%)
952.4
952,4
RUR bln
RUR, bln 2010-2014 investment program
2010-2014 Investment program
Development of backbone grids,
not included in agreements with
regions 5,366.6 km; 10,890 MVA
Increase in reliability of power
supply of Moscow, St. Petersburg
and Tyumen 980.1 km; 17,531 MVA
State programs (ESPO, Far East
and Trans-Baikal, Sochi, APEC)
4808.4 km; 4181.3 MVA
Capacity output of NPPs, HPPs,
TPPs over 32 GW 5,180.4 km;
10,936 MVA
Agreements with regional administrations
(except Moscow, St. Petersburg
and Tyumen) 3663.3 km; 5,199 MVA
Innovations, energy efficiency, development
of technological management
Technological connection
33 km 2577 MVA
Fixed asset renewal
10,468 km; 37,866 MVA
Others
75
150
100
50
0
3.0
Investment Volume and Directions:
RUR bln
200
5.2
62.2
4.2
69.7
3.5
57.1
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
1.8
0
65.5
59.1
109.9
122.1
120.7
130.5
140.8
2010
2011
2012
2013
2014
Technological connection, RUR bln
Support of assets, RUR bln
Development of assets, RUR bln
The investment program will be fi nanced out of the
Company’s own funds, federal budget funds (including
funds directed at the Federal Target Program for
Economic and Social Development of the Russian Far
East and Trans-Baikal up to 2013 and the Program
for Electric Grid Development in the Sochi Region),
as well as out of borrowed funds.
The Company plans to invest RUR624.1 billion or
65.5% of the total fi nancing sum in developing
corporate assets; the Company intends to direct
RUR313.6 billion or 32.9% of the total investment
volume at maintaining assets; the volume of fi nancing
for technological connections will be RUR14.7 billion
or 1.6 of the total investment sum.
76
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
2010 Investment
Program Fulfi llment
2010 Structure of Actual Investments Fulfillment
1% 1% 1%
7,50%
13%
22,20%
4,50%
4,10%
30%
14,60%
5%
4%
9,70%
21%
19,50%
10%
17,90%
14%
Financing Sources for the 2010
Investment Program, RUR mln
1,864
7,50%
43,000
22,20%
4,50%
48,833
4,10%
9,70%
19,50%
16,611
14,60%
25,951
17,90%
3,401
27,321
Capacity output objects
Programs for Moscow, St. Petersburg
and Western Siberia
Objects of agreements with administrations
Grid development (except agreements)
Far East Federal Target Program
Sochi Federal Target Program
Fixed assets renewal
Acquired facilities
Other
Technological connection
Payment for tehnological connecction
Tariff sources total
(amortization (32,268) + profit (16,615)
VAT
Funds of RAO UES of Russia
Additional share issue
Opening balance
Borrowed funds
77
3.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
3.2 KEY INVESTMENT
PROJECTS
1. Sochi 2014
Federal Grid Company participates in constructing,
modernizing and reconstructing electric grid objects
in the Krasnodar Region to ensure the reliable power
supply of the Sochi 2014 Winter Olympics facilities.
Till 2014 the Company within its own investment
program and the Federal Target Program for
Developing Sochi as a Mountain Climate Resort
(2006-2014), adopted by the Russian Government,
will construct, modernize and reconstruct 21 objects
(with a total capacity of 1,774 MVA and line length
of 200 km) of the backbone electric grid complex in
the Sochi Region.
In 2010 the Company concluded the fi rst stage of
constructing the 10-kV transformer and distribution
substations in the Sochi Region. As part of work
in the Rosa Khutor mountain cluster, the Company
constructed 16 10-kV transformer substations and
two 10-kV distribution substations representing
closed objects, which fully excludes the impact of
equipment on the unique nature of the Sochi National
Park. The Company also constructed new 100-kV
Laura – Rosa Khutor and Poselkovaya – Rosa Khutor
cable transmission lines designed to supply power to
the Olympic objects. The fi rst stage of reconstruction
of the 220-kV Dagomys substation was wrapped up,
as a result of which substation capacity increased by
70%. The Company also concluded the fi rst stage
of reconstructing the 220-kV Psou substation and
capacity increased from 125 MVA to 400 MVA.
78
2010-2014 Financing Volume for Sochi
Olympic Facilities in Sochi, RUR mln
6,457.2 (31%)
2,182.4 (11%)
12,138 (58%)
2010
2011
2012
20,777.6
RUR mln
Within the Company’s investment program,
total fi nancing for Sochi Olympic objects will
stand at RUR 20,777.6 million.
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
2. APEC Summit
As part of the Federal Target Program for Economic
and Social Development of the Russian Far East and
Trans-Baikal up to 2013 adopted by the Resolution
of the Russian Government, Federal Grid Company
constructs and reconstructs backbone energy objects
in the Primorsk Region to insure the uninterrupted
power supply for objects for the summit of Asian
Pacifi c Economic Cooperation (APEC), which will
take place in Vladivostok in 2012. To achieve these
goals, during the 2010-2012 period, the Company will
construct eight backbone electric grid objects:
1.
2.
3.
4.
5.
6.
7.
8.
220-kV Zeleny Ugol substation with 220-kV electric
transmission line approaches
220-kV Vladivostok - Zeleny Ugol high voltage line
(220-kV section Artemovskaya TPP – Zeleny Ugol)
220-kV Vladivostokskaya TPP-2 – Zeleny Ugol –
Volna transmission line
220-kV Artemovskaya TPP – Vladivostok high
voltage line
220-kV Russkaya (Pospelovo) substation
220-kV Zeleny Ugol – Russkaya (Pospelovo)
transmission line with a crossing over the East
Bosporus Channel
220-kV Patroclus substation with high voltage line
approaches
220-kV Aeroport substation with 220-kV electric
transmission line approaches
9,025.9
RUR mln
For the 2010-2014 period the total volume
of the Company investment program fi nancing
for the Federal Target Program Objects will
stand at RUR70,391.7 million, including
RUR9,025.9 million for APEC Summit objects.
2010-2014 Financing for Federal
Target Program Objects, RUR mln
8,591.2 (12%)
8,190.4 (12%)
12,140.6 (17%)
26,319.5 (37%)
15,150 (22%)
2010
2011
2012
2013
2014
79
3.0
3. ESPO
The construction of the Eastern Siberia –
Pacifi c Ocean (ESPO) oil transport pipeline
is the largest project in the last several de-
cades to be realized by Transneſt Company for
transporting Russian oil to promising Asian
and Pacifi c markets.
Within the framework of technological connection
agreements and its own investment program, Federal
Grid Company constructs and reconstructs backbone
energy objects for connection to the electric grids of
ESPO pipeline objects on the territory of the Republic
of Sakha (Yakutia), the Jewish Autonomous Region
and the Amur, Khabarovsk and Primorsk Regions. In
2009-2012, for these purposes, Federal Grid Company
will construct and reconstruct 24 backbone electric
grid objects.
All aspects of constructing the ESPO energy
object are under the special control of the Russian
Ministry of Energy. When forming the 2011 federal
budget and for the planned 2012-2013 period, the
Russian Government will consider the opportunity of
increasing fi nancing for the Federal Target Program
for 2010-2014 Financing for Federal Target Program
Objects, RUR mln Economic and Social Development
of the Russian Far East and Trans-Baikal up to 2013
in the part of constructing the objects of ESPO-1 and
expanding and constructing ESPO-2.
On 22 March, 2010, Federal Grid Company and
Transneft Company concluded an agreement
on coordinating the main principles and forms of
mutual relationships between parties during the
organization of fi nancing, projecting, constructing
and reconstructing objects of the external power
supply with the aim of ensuring the timely connection
of grid infrastructure objects to power receiver
devices of Transneſt Company. This ensures their
stable functioning.
On 27 August, 2010, Federal Grid Company, RusHydro
and Transneſt signed a cooperation agreement,
according to which the Company will construct energy
grid objects for the capacity output of the Niznhe-
80
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Bureyskaya HPP and by the end of 2012, objects of
the external power supply of ESPO-2 will be put into
operation.
In 2010 the Company completed capital repair of the
220/110/35/6-kV auto-connected transformer with
a capacity of 125 MVA at the reconstructed 220-kV
Shirokaya substation in the Primorsk Region and put
into operation the second 220-kV Neryungrinskaya
GRES – Nizhniy Kuranakh transmission line in Yakutia.
This increased the reliability of power supply for
consumers in these regions and created conditions
for connecting new consumers to the backbone grids,
including objects of the ESPO oil pipeline system.
Financing for ESPO Power Supply Objects
in Federal Grid Company's
2010-2014 Investment Program
RUR mln
1,086.8
6,464.9
15,566
13,086.9
2010
2011
2012
2013
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
4. Kalininskaya NPP
The Company actively takes part in resolving
the energy defi cit problem in the North-West of
Moscow Region by constructing a 750-kV electric
transmission line for capacity output of the fourth
power generation unit of the Kalininskaya NPP
to the Moscow Energy System with the creation
of next generation 750-kV Gribovo and 500-kV
Dorokhovo substations. In 2010-2012, the Company
will construct 742 kilometers of transmission lines
and put into operation 6,658 MVA of transformer
capacity. Total investment in this project will exceed
RUR38.3 billion.
The realization of the Company’s investment project
will create a reliable electrical energy base for
economic development of the Moscow Region, will
remove constraints on new user connections and will
signifi cantly upgrade the reliability and stability of the
Central Region’s Power Supply System.
5. Boguchanskaya HPP
The Boguchanskaya HPP is the largest ob-
ject under construction in the Russian hydro-
power sphere with a capacity of 3 thousand
MW, and is part of the Angarsk Cascade of
HPPs. Utilization of the fi rst hydropower units
at the Boguchanskaya HPP is scheduled for
April 2012.
Ensuring stable power supply for Siberian
consumers during rehabilitation of the
Sayano-Shushenskaya HPP is one of Federal
Grid Company’s priority tasks. To achieve
capacity output of the Boguchanskaya HPP, the
Company conducts large scale work on constructing
220-kV facilities in the Krasnoyarsk Region and also
acts as a technical agent during 500-kV facility
construction.
Objects constructed from the Company investment program funds
Object
Full object cost based on the 2010-2014
investment plan, RUR mln
220-kV Boguchanskaya HPP –
Priangarskaya substation high voltage line
220-kV Priangarskaya substation
220-kV Priangarskaya substation –
Razdolinskaya substation high voltage line
220-kV Razdolinskaya substation
220-kV secondary distribution switchgear
of the Boguchanskaya HPP
Reconstruction of the 220/110/10-kV main
step-down substation (Kodinskaya GPP-220)
Construction of 500-kV Boguchanskaya
HPP – Ozernaya high voltage line
8,818.6
985.0
1,708.6
10,000.0
81
3.0
In 2010, as part of its investment program, the Com-
pany launched under voltage two circuit 220-kV high
voltage line Priangarskaya substation – Razdolinskaya
substation that crosses the Angara River, two circuit
220-kV Boguchanskaya HPP – Priangarskaya substa-
tion high voltage line, put the 220-kV Priangarskaya
substation into operation and expanded and recon-
structed the 220-kV Razdolinskaya substation.
6. Skolkovo
Skolkovo Innovation Center is a large scale
project to create the fi rst Russian ultra-
modern scientifi c and technological complex
focused on developing and commercializing
new technologies.
In the 2011-2012 period, Federal Grid Company, in
the process of fulfi lling the Russian government's
resolution and within the framework of its own
investment program, will reconstruct seven
110-500-kV transmission lines and will construct
two 220-kV substations, Skolkovo and Smirnovo,
with a total capacity of 252 MVA. These substations
aimed at power supply for the innovation center
will become the Company’s fi rst power facilities to
be fully constructed underground. Within Federal
Grid Company's 2010-2014 investment program,
the total sum for fi nancing power facility objects
constructed for the Skolkovo Innovation Center will
stand at RUR17.7 billion.
7. Creating a Ringed Electric Grid
Confi guration for Reliable Power Supply
for St. Petersburg and the North-West
Part of the Leningrad Region
Transitioning to 330 kV voltage for the Volkhov-
Severnaya and Zavod Ilyich substations, with the
newly constructed 330-kV Vostochnaya – Volkhov-
Severnaya – Zavod Ilyich cable lines, as well as
construction of the 330-kV Vasileostrovskaya
substation with 330-kV Vasileostrovskaya –
Severnaya and Vasileostrovskaya – Zavod Ilyich cable
lines, form an electric energy ring for St. Petersburg.
In addition to the above-mentioned substations, the
reconstructed 330-kV Vostochnaya and Severnaya
substations, as well as the new 330-kV Parnas
82
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
substation, will be included. Work on the project
has been conducted since 2008 and is scheduled
to be completed in 2012.
In addition, the Company plans to construct a 330-kV
Leningrad NPP-2 – Vyborg overhead cable direct
current line; commissioning this is scheduled for 2014.
Transmitting direct current will ensure the capacity
output of the Leningrad NPP-2 in the direction
of the Vyborg District, lessening the load on the
St. Petersburg electric grids, including the 330-kV
Vostochnaya substation from the transit fl ow of
capacity toward the Vyborg Region and decreasing
electric grid losses. Taking into account the
construction of an electric connection between the
Leningrad NPP and the Leningrad NPP-2, the high
voltage Leningrad NPP-2 – Vyborg cable line will close
the Big Ring, which consists of electric transmission
lines connecting the Leningrad NPP, the Leningrad
NPP-2, the 750-kV Leningrad substation and the
330-kV Vostochnaya and Vyborg substations.
8. Novovoronezhskaya NPP-2
Further development of the Novovoronezhskaya
NPP (NVNPP) is associated with the construction
of two new power generation units and modern
energy facilities, corresponding with international
safety requirements. The Company plans to put into
commercial operation power generation unit No.1 of
the NVNPP-2 in 2013. Within its investment program,
Federal Grid Company works to construct facilities
of the capacity output scheme for the fi rst power
generation unit of the NVNPP-2, including rearranging
220-500-kV transmission lines.
9. Line construction – Zeyskaya HPP –
Russia-China border
In 2010 Federal Grid Company and the government of
the Amur Region signed an agreement to cooperate
on constructing the 500-kV Amurskaya – the State
border trans-national line, which will be a key to
implementing the project to export electricity from
Russia to China. To increase the capacity output of
the Zeyskaya HPP, Federal Grid Company will also
construct a second 500-kV transmission line Zeyskaya
HPP – Amurskaya. In addition to the possibility of
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
A number of the Company pilot
projects will be implemented at new
objects. As a result, the Company
foresees the introduction and
development of Digital Substation
elements, including using the
optical instrument transformer.
expanding electricity exports to China, the high
voltage line will ensure the capacity output of the
Zeyskaya HPP and will increase the transfer capacity
of the grid in the eastern direction – upgrading the
reliability of the power supply to consumers in the
Amur Energy System. The overall length of the 500-kV
Zeyskaya HPP – Amurskaya – the State border high
voltage line will be 510.6 kilometers.
10. Power supply for
the Elginskoye Deposit
The Elginskoye Coal Deposit is Russia’s largest miner-
al coal deposit. It is located in the south-eastern part
of Yakutia (415 kilometers to the east of Neryungri
and 300 km from the Baikal Amur mainline). Balance
(proved) coal reserves stand at 2.7 billion tons.
In 2011, the Company will begin constructing
electric grid objects for external power supply to
the complex, which will be completed in two stages.
Within the fi rst stage, by 2012 in the Amur Region, the
Company will reconstruct the 220-kV Prizeyskaya
substation, will construct three new 220-kV
substations and the 220-kV Prizeyskaya – Elgaugol
transmission line with a length of 270 km, including
a special crossing over the Zeyskoye Reservoir. In
2013, work will be completed on expanding the
220-kV distributing device at the Prizeyskaya
substation. A second 220-kV Prizeyskaya – Elgaugol
electric transmission line will be constructed,
and a second auto-connected transformer with
a capacity of 125 MVA will be installed at the
220-kV Elgaugol substation. An additional part of
the project will be reconstructing the operating
220-kV Prizeyskaya substation. A number of the
Company pilot projects will be implemented at
new objects. As a result, the Company foresees the
introduction and development of Digital Substation
elements, including using the optical instrument
transformer. The Company also plans to implement
“smart sphere” technology, which will allow it to
control the main parameters of electricity transit
in real time.
83
3.0
3.3 INNOVATIVE
DEVELOPMENT
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
As the infrastructural foundation of the Russian power sector,
Federal Grid Company understands the importance of innovative
development in the industry aimed at improving the manageability,
reliability, effi ciency and safety of power industry object functioning.
Aspiring to technological leadership in the industry, the Company
utilizes the newest technologies, materials and equipment,
incorporating advanced experience from international companies,
enhancing control and monitoring systems, as well as increasing the
educational level and qualifi cations of our specialists.
The Company’s Innovative Development
and Modernization Policy
In 2010 the Company developed its Innovative Devel-
opment and Modernization Policy. The Policy adopted
by the Company is aimed at ensuring reliability, ener-
gy safety and stable increases in the eff ectiveness
of using the Russian energy potential, as well as
full-scale integration into the global energy market,
strengthening corporate positions and obtaining the
maximum benefi t for the Russian economy by creat-
ing an active adaptive grid as the basis of Russia’s
smart electric energy system.
The Company’s main directions of innovative
development include:
Developing and utilizing new types of power
equipment;
Introducing new means of relay protection and
emergency control automatics, equipment diag-
nostics and energy resource accountability on a
micro-processing basis;
Introducing the newest monitoring systems, ma-
naging grid modes and equipment;
Creating systems and equipment that protect
•
•
•
•
84
•
•
the grids from the impact of external weather
conditions;
Introducing equipment and systems with high
power effi ciency characteristics;
Consolidating the domestic scientifi c base by in-
tegrating educational, as well as scientifi c and
research organizations, in the innovative process.
The Company’s innovative development policy is real-
ized via a complex list of instruments:
1.
2.
Of a scientifi c nature (including the eff ective usage
of the applicable scientifi c base, interacting with
educational institutions, using research and funda-
mental science, studying international experiences
and organizing conferences, seminars and career
enhancement courses that touch upon the Com-
pany’s innovative activity);
Normative and legal regulations on the state and
corporate levels (including laws, standards, instruc-
tions, regulations, rules and technical policy), as well
as with production and organizational methods.
Based on the Innovative Development and Moder-
nization Policy, the Company developed the Concept
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
(main provisions) for the innovative development
program, which was adopted in 2010 by the Board
of Directors. The documents evaluate the tech-
nological level and development prospects of the
power industry considering corporate scenarios of
innovative development. On the basis of the Con-
cept, the Company has formed an Innovative Deve-
lopment Program with a planning horizon till 2020.
The principal goal of the Company’s Innovative Devel-
opment Program is to upgrade the reliability, quality
and effi ciency of consumer power supply by modern-
izing the electric grids of the UES of Russia based on
innovative technologies with their transformation into
an active adaptive (smart) center of technological in-
frastructure for the power industry. Priority tasks for
the Innovative Development Program include form-
ing a target vision for the smart energy system and
preparing and realizing the complex pilot project of
creating a smart grid – energy clusters in the IES of
the North-West and the IES of the East.
In addition, one of the Program’s main directions will
be the development, testing and introduction at the
UNEG objects of “breakthrough” and “ameliorative”
innovative technologies. These include technologies
for accumulating electric energy, technologies for
“high-temperature superconductivity” and technolo-
gies for direct current electric transmission, among
others.
An important part of the Program will be developing a
system for Federal Grid Company’s innovative activity,
in particular broadening the Company’s Russian sci-
entifi c and engineering base, including via attracting
foreign partners and cooperating with Russian higher
educational institutions. The expected eff ects from
realizing the Program will be a decrease in electricity
transmission losses (with an accompanying ecological
eff ect – a decrease in the volume of burnt fuel and
СО2 atmospheric emissions), increasing the carrying
capacity of overhead transmission lines (also resolv-
ing the tasks of power plants’ capacity output and
ensuring full scale electricity transmission), decreas-
ing growth in the installed capacity of power plants
(by cutting the needed capacity reserve), increasing
the reliability of power supply to consumers, fl atten-
ing the load curve through the usage of high capac-
ity electricity storage, based on various principles
(superconductivity, inductive energy storage and high
capacity electric batteries), decreasing the space oc-
cupied by electric grid objects (the compact design of
power plants and overhead transmission lines due to
using new innovative materials and technologies).
Federal Grid Company’s Innovative Development
Program will increase the eff ectiveness of uti-
lizing Russia’s energy potential, ensuring the
full-fl edged integration of the UES of Russia
into the world energy market, contributing to
the development of innovative new technolo-
gies, including mastering the mass production
of new devices and materials, ensuring the de-
velopment of the country’s industry, related
branches and the introduction of new technical
devices with qualitatively new characteristics,
decreasing the share of imported equipment
and creating conditions that will lead to the
maximum benefi t for the Russian economy.
Coordinative Scientifi c and Technical Board
The Company carefully studies innovative solutions,
which can be introduced into the UNEG in the future.
To govern the innovative, technical and exploitation
policy, coordinate work on developing and organizing
modern equipment and technology for new con-
struction projects and to reconstruct and technically
rehabilitate various corporate objects, the Company
has a Coordinative Scientifi c and Technical Board
(CSTB). The Board comprises the leading specialists
from scientifi c research and project institutes of the
Russian Academy of Sciences (RAS), directors of the
executive bodies, branches and subsidiaries of the
Company, representatives of the System Operator,
MRSK Holding and domestic producers of electric
energy equipment.
The Board’s main functions include considering and
evaluating prospective directions and programs for
corporate innovation, progressive solutions for tech-
nical rehabilitation, reconstruction and new con-
struction of the UNEG objects, the effi ciency of con-
ducted fundamental scientifi c research, exploratory
and applied work, suggestions for using scientifi c
and technical achievements, as well as advanced
experience for foreign countries and suggestions
85
3.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
2009-2014 Financing of the Company’s R&D and Pilot Projects
RUR bln
5.0
2.5
3
0.388
1
5
5
5
Year
2009
2010
2011
2012
2013
2014
investment program, with R&D financing in the
amount of RUR 19,000 million. As of 1 January, 2011,
there are no exterior fi nancing investments for R&D
and the source of R&D fi nancing is centralized.
to enhance resource provisions for the Company’s
innovative activity.
To organize the eff ective usage of corporate re-
sources for ensuring stable and intensive innovative
development of the UNEG, to form the Program
of scientifi c and technical, design and experimen-
tal and technological work (R&D) and to eff ectively
implement R&D results in the Company’s production
activity, the Innovation Committee was created by
an Order.
Primary Objectives for the Innovation Committee:
•
•
•
•
•
•
•
Considering and approving the Company’s
innovative development policy and program;
Coordinating the main R&D directions for
the approval of the Company’s Scientifi c and
Technical Coordination Council;
Determining priority R&D projects;
Considering and adopting the R&D Program;
Elaborating on suggestions for competent
contractors (organizations) to fulfi ll R&D work;
Considering results on fulfi lled R&D work;
Elaborating on recommendations for the rational
usage and introduction of pilot projects for the
UNEG and the UES objects;
Assessing modern innovative technologies
to implement at the UNEG objects.
As of now, the fi nancing source for the Company’s
innovative activity is the Company 2010-2014
86
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Within the framework of its modernization program,
the Company introduces the following types of in-
novative equipment at its objects:
•
•
is designed
Static VAR compensator (SVC)
to compensate for reactive capacity, managing
reactive capacity fl ow, stabilizing the voltage
level in the grid and restraining the commutation
of voltages and the compensation of asymmetric
grid modes. The composition of the device in-
cludes capacitor banks, thyristor reactor groups
and fi lters. SVC increases the carrying capac-
ity of electric transmission lines and decrease
electricity losses in the grid. Compared with the
previous generation of compensators (synchro-
nous compensators), the SVC is more compact
and has a greater response rate and an improved
level of reliability, with reduced electricity losses
in the devices compared with the synchronous
compensator and has lower operation costs.
Currently, SVCs are installed in the Trans-Baikal
Transforming Complex at the 220-kV Mogocha
substation, the 500-kV Novo-Anzherskaya
substation, the 220-kV Kirillovskaya substation,
the 220kV Aphipskaya substation, the 220-kV
Krymskaya substation and the 220-kV Slavyan-
skaya substation;
35-500-kV –
Controlled shunt reactor (CSR)
electro-magnetic reactors, the inductivity of
which may be gradually regulated with the as-
sistance of the automatic control system, which
stabilizes the voltage of overhead lines with
huge charge capacity. Combined with condenser
batteries, connected in parallel, CSRs are analogs
of SVCs, allowing grid voltage to be maintained
under both light and heavy loads. The advan-
tages of the CSR compared with ordinary shunt
reactors are 50% decreases in seasonal and daily
fl uctuations, a 5-15% drop in high voltage line
capacity losses, an increase in the carrying capac-
ity by 0.1-0.4 MW/MVAR of reactor capacity and
upping the reliability of the load center. The CSR
also takes away resource limitations of the
•
•
switch during the daily change in transferred
capacity. The average annual losses in CSRs are
10% lower than for uncontrolled shunt reactors.
CSRs are used at the 500-kV Nelym, the 220-kV
Urengoy and the 220-kV Nadym substations;
High-voltage cable with cross-linked poly-
ethylene insulation is a hi-tech and ecologi-
cally clean product for the power industry. Using
cables instead of traditional electric transmission
lines with uninsulated wires decreases losses
to 0.01-0.05%, increases carrying capacity and
cuts the size of safety exclusion areas during
high voltage line construction under conditions
of urban fabric;
are used by the Com-
Optical transformers
pany to measure current and voltage in pilot
projects and to upgrade the precision of measur-
ing energy resources, as well as to increase the
operating reliability of relay protection and emer-
gency controls (RPEC). As a result, not only is
the reliability of substation metering equipment
improved, but also exploitation of the grid is up-
graded. Compared with the previous generation
of metering transformers, this equipment is ex-
plosion proof, is protected from interference and
has a high level of ecological safety. Currently,
the optical metering transformers for current
and voltage are used at the Digital Substation
training ground, which was created at Scientifi c
and Technical Center of the Power Industry.
During the fulfi llment of the modernization program,
the Company broadens the use of three-phase two
winding auto-connected transformers with a voltage
of 330-500 kV with the goal of cutting capital expen-
ses on transformer equipment to 30%, gas-insulated
switchgears for secondary distribution systems and
replaces oil switches and air switches with modern
sulfur hexafl uoride switches, which upgrade the reli-
ability of substations and the grid. At the Company’s
objects, new excess-voltage suppressors, disconnec-
ting devices and absorbing vent fi ngers are installed.
87
3.0
Smart Grid
Owing to the transition to long-term tariff regula-
tion and investment planning, Federal Grid Company
was able to start realizing the long-term program of
modernizing Russia’s backbone electric grids. A part
of this program is creation of smart grid.
Smart grid unites electric grids, consumers and elec-
tric energy producers in a united automated system,
which allows for the real time monitoring and con-
trol of operating modes for all participants in the
production, transmission and consumption process
for electric energy. Smart grid automatically reacts
to changes in various parameters of the energy sys-
tem and allows for uninterrupted power supply with
maximum economic effi ciency (while decreasing the
impact of human factors).
Smart grids allows for:
•
•
•
•
•
Integrating all types of generation (including
small generators) and all types of consumers
(from households to large industries) for the
situational management of demand for their
services and active participation in energy sys-
tem operation;
Changing real time parameters and grid topo-
logy, in accordance with current mode conditions,
excluding the origination and development of
emergencies;
Ensuring the broadening of market opportunities
for the infrastructure through the mutual provi-
sion of a broad range of services for market and
infrastructure subjects;
Minimizing losses, developing self-diagnosis and
self-recovery systems by observing reliability
conditions and electric energy quality;
Integrating the electric grid and information in-
frastructure to create an all-mode management
system with full-scale information support.
By creating an active adaptive (smart) grid, the fol-
lowing results will be achieved: regulating favorable
loads for consumers and ensuring the adaptive reac-
tion of generation and grids in real time to various
deviations from constrained parameters, as well as
forecasting and preventing the origination of dam-
aged sections and critical situations.
88
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
To test smart grid technology, energy clusters (seg-
ments of the energy system) were selected. Aſt er
acquiring experience, it will be possible to discuss
expanding smart grid to a wider geographical area.
The fi rst energy clusters are designated in the IES
of the East (the Amur, Primorye and Khabarovsk
Regions). The total economic eff ect from realizing
the pilot project to create smart grid on the terri-
tory of the IES of the East may be RUR10 billion per
annum.
The Company is the initiator and main coordinator of
the smart grid project. Partners and participants in
the project will be the System Operator, RusHydro,
RAO UES of the East, the Scientifi c and Technical
Center of the Power Industry, Dalenergostroyproekt,
Elektrozavod, ZETO (the electro-technical equipment
plant), Hyundai, ENER1 and other large scientifi c and
technical, as well as project organizations and power
equipment producers.
Smart grid development is performed by scientists
and specialists in many countries with a developed
energy sector, including: the United States, China
and India. European Union member states are jointly
working on the European Electric Grid of the Future
concept.
Creating smart grid calls for using various innovative
technologies and equipment:
•
Static control devices with changeable charac-
teristics;
Short circuit discharge devices (commutation,
super-conducting and semi-conducting);
Electricity storage of various types and reasons
(high capacity accumulators, fl y-wheel devices,
storage units and others);
Devices based on high temperature supercon-
ductivity (generators, transformers, direct and
alternate current cable lines, reactive power
compensators, short-circuit discharge devices
and others);
Semi-conductor devices (high capacity transis-
tors, including silicon carbide transistors) and
second generation high temperature supercon-
ductors;
Equipment self-diagnostics in an online mode;
•
•
•
•
•
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
•
•
Optical systems for electric parameter metering.
Soſt ware complexes and information management
systems.
The Company has already introduced individual com-
ponents of smart grid at its power facilities.
STATCOM
DIRECT CURRENT TRANSMISSION LINES
STATCOM
GRID ENERGY STORAGE SYSTEMS (GESS)
In August 2010, the Company concluded testing a unique
domestic solution – a new generation reactive power
compensator of the STATCOM type, which was installed
at the 400-kV Vyborg substation in December 2010.
Unlike foreign analogues, it uses only transistor vents,
which allows for more fl exible management and additional
decreases in losses.
STATCOM is designed to support the required level and
quality of voltage, the regulation of capacity fl ows in
electric grids, the increase in transmission capacity for
lines and a decrease in electric energy losses. Compared
with SVCs with the same nominal capacity, STATCOM has
a lower capacity for the capacitor bank, fi lters and reactors
and has a higher response speed. The fi rst STATCOM, with
a capacity of 50 MVAR, was put into operation at the
400-kV Vyborg substation, which increased the reliability
of electricity exports to Finland, decreased electric
energy losses and increased the capacity transmitted in
maintenance mode.
GAS-INSULATED SWITCHGEAR (GIS)
Gas-insulated switchgears signifi cantly decrease the fl oor
space for substations and make their work noiseless.
The compact closed space, in which these devices are
installed, minimizes the impact of equipment on the
surrounding environment. Compared with the traditional
fi tting of substations, the GIS has numerous advantages.
It has small dimensions, a long working life (50 years)
and strong protection from the impact of the external
environment, as well as high reliability, environmental
friendliness and safety. The GIS is already installed at
several Company’s power facilities, including the 220-kV
Volkhov-Severnaya, the 220-kV Zavod Ilyich and the
110-kV Rosa Khutor substations.
One of the elements of smart grid is the system of
grid energy storage. The GESS allow for the storing
of surplus electric energy generated by power plants
during minimum load hours and to later transmit it
during peak grid hours. This indicates a more evenly
distributed load for generating objects during the day
and the opportunity to avoid putting part of power
plants out of operation during the night. In addition,
owing to grid energy storage systems, optimal usage
conditions for the grid infrastructure are created:
they ensure capacity reserve needed in the event of
emergency situations in the energy system. These
systems are widely used in the United States and in
numerous European countries. The Company works on
implementing GESS on the basis of the 220-kV Psou
substation (Sochi) and the 330-kV Volkhov Severnaya
substation (St. Petersburg).
DIRECT CURRENT TRANSMISSION LINES
Direct current transmission lines are another element
of smart grid. Worldwide, there are already 60 such
lines and 40 that are in the design stage. It is planned
that such a line will be introduced at the 220-kV
Mogocha substation in the Trans-Baikal Territory. As a
result, the energy systems of Siberia and the Far East
will work in parallel, which, apart from the eff ect that
power plants’ reserves will signifi cantly upgrade power
supply reliability for the Trans-Siberian Railway.
89
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Scientifi c and Research, Design and
Experimental and Technological Work (R&D)
The comprehensive renewal of the Company’s
electric grid facilities is carried out in close
cooperation with scientifi c specialists.
In 2010 the Company developed and adopted the
2010-2014 R&D Program.
The Company also prepared the Concept for the
Russian Ministry of Economic Development to create
the Russia’s Smart Energy System Technological Plat-
form, in which the Company is both an initiator and
participant. Within the framework of the technologi-
cal platform, the Company will broaden cooperation
with leading research and development, as well as
project, institutions for creating both separate ele-
ments and complex projects for the smart grid.
3.0
DIGITAL SUBSTATION
Digital Substation is one of the elements of the active
adaptive grid. The idea behind these substations is creating
new generation, control, protection and management
systems, in which all information is originated, processed
and managed by equipment in digital format. Modern digital
equipment functions to protect and control opportunities
for rapid information exchange between devices, which
ultimately provides opportunities for decreasing the
number of copper wiring connections and decreasing the
number of devices and locating them in a more compact
manner. This makes digital technologies more economic
at all implementation stages: their design, assembly,
adjustment and operation.
Pilot projects to create smart electric energy systems with
active adaptive grids, as realized by the Company, provide
for the development and introduction of digital metering
transformers and next generation digital equipment
complexes at the substations.
AUTOMATED TECHNOLOGICAL
MANAGEMENT SYSTEM (ATMS)
As one stage of constructing smart grid, the Company
realizes the project for creating ATMS. This system is
aimed at upgrading grid observability, preventing the
origination of abnormal modes and creating a system of
online monitoring and the smart diagnosis of equipment
condition. On the whole, using this system will increase
management eff ectiveness and the carrying capacity of
grids, both in normal and emergency regimes (as well
as in post-accident regimes). This will ensure the reliable
reception and transportation of energy and will operatively
provide WECM participants with high quality information
about operating regimes and the UNEG condition. ATMS will
be introduced in the MES North-West as a pilot project.
90
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
2010 volume of R&D fi nancing broken down by directions:
1. Upon investment activities
Project
Developing the concept and theoretical basis
for creating the smart energy system with
the active adaptive grid (SES AAG)
New types of power equipment for substations
and transmission lines for the SES AAG
New types of facilities for control, automatics,
protection and metering systems for the SES AAG
Management system of the SES AAG
System of monitoring and protecting against
the external impact on electric grids
Ensuring the safe and reliable
functioning of the UNEG and
the quality of provided electricity
transmission services
Upgrade in the energy eff ectiveness
of electric grids
TOTAL:
2. Upon core activity
Project
Program for creating the fl exible alternate
current transmission systems (FACTS)
Program for ensuring the explosion safety
of the electric grid objects
Program for protecting high voltage lines
and substation equipment against lightning
Development of multi-chamber insulator arrester
(MCIA) for 220-kV high voltage lines
TOTAL:
2010 fi nancing volume
(RUR, VAT included)
114,044,876.00
231,173,938.15
5,900,000.00
187,230,600.00
435,394,800.00
16,000,000.00
10,000,000.00
999,744,214.15
2010 fi nancing volume
(RUR, VAT included)
12,907,479,50
17,010,000,00
4,130,000,00
2,909,200,91
36,956,680,41
91
3.0
2010 Results
As a result of implementing 2010-2014 R&D pro-
gram, the list of high priority R&D work for 2010
and priority innovative development projects in
2010, the Company achieved the following results:
Within the Program “New Types of Power Equip-
ment for Substations and Transmission Lines
for the Smart Energy System with the Active
Adaptive Grid (SES AAG):”
Developed technical requirements for a 20-kV
high temperature super-conductive (HTS) direct
current cable line with a current rate of 2,500 A
and a length of 1,500 meters, with the goal of
limiting short circuit currents and upgrading the
reliability of electricity transmission in Moscow
and St. Petersburg;
Developed technical proposals for the short cir-
cuit current limiter based on the quick operat-
ing circuit breaker of explosive type which will
increase power supply reliability to urban areas
and large load centers;
Conducted work on enhancing design methodo-
logy for lightning protection for 110-750-kV high
voltage lines and substations;
Developed and tested mock-up models for digital
current transformers and voltage transformers
for 220-kV secondary distribution switchgear of
the digital substation;
Analyzed the eff ectiveness of installing com-
pensating devices in the Kuban Energy System
to create a central automatic voltage regulation
system;
Conducted bench tests of the high temperature
super-conductor high voltage cable line with
a nominal voltage of 20 kV for the 110-kV
Belorusskaya substation at the testing ground
of Scientifi c and Technical center of the Power
Industry;
Developed a general scheme for the LNPP-2 –
Vyborg substation direct current transmission
line taking into account reconstruction of the
330/400-kV Vyborg substation and the technical
requirements for primary equipment;
Developed the framework and technologi-
cal maps for the double circuit single-legged
multisided end pylons for the 220-kV Zeleny
Ugol Russkaya high voltage line crossing into
1.
•
•
•
•
•
•
•
•
92
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
In 2010 the Company actively participated in
events dedicated to innovative development of
the Russian economy, including the St. Petersburg
International Economic Forum, the Innovation
Forum, the 2010 International Exhibition and
Conference on Innovative Projects in Network
and Electricity Supply (IPNES), the International
Forum “Energy of the Future” and the International
Power Industry Conference “Technological Basis
for Forming the New Russian Power Industry.”
•
2.
3.
•
•
cable line and basements for them;
Developed the framework and technological
maps for the single circuit double-column tran-
sitory multi-sided pylons for the 500-kV Krasno-
armeyskaya – Gazovaya high voltage line.
Within the Program “New Types of Facilities
for the Control, Automatics, Protection and
Metering Systems for SES AAG,” the Company
prepared the project of technical requirements
and technical proposals to create the Phasor
measurement units (PMU) during the introduc-
tion of WACS/WAPS technologies in the SES AAG.
Within the Program “Management System of
the SES AAG”:
Determined requirements and principles for cre-
ating the digital substation as an element of the
SES AAG;
Put into experimental industrial operation at
Scientifi c and Technical Center of the Power
Industry the fi rst order of the Digital Substation
training ground.
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
4.
•
•
•
•
•
•
5.
•
•
Within the Program “System of Monitoring and
Protecting against External Impact on the Elec-
tric Grids:”
Developed the multi-chamber insulator arrester (MCIA)
for lightning protection of the 220-kV high voltage
lines;
Developed the project for preparing the 220-kV
high voltage line CHPP – SH30 branch of Federal
Grid Company – MES South to conduct experi-
mental industrial exploitation of the MCIA-220
string with a system of complex monitoring;
Developed technical requirements for line discharges
with the external spark gap for increasing the light-
ning-surge-protection of the 220-330-kV high volt-
age lines in regions with low-conductivity ground;
Developed albums of regional maps for the climatic
zonation of Federal Grid Company branch – MES
Center – by the Belgorod, Voronezh, Kursk, Orel
and Tambov Regions with a maximum wind speed,
ice wall thickness, wind load during glazing storms
and the average annual length of storms in hours;
Developed maps of contamination levels at the
locations of high voltage lines and open switch-
gears of the Company branches – MES Center
and MES North-West;
Developed technical requirements for the
system of monitoring
icing on over-
head lines with the location method.
Within the Program “Ensuring the Safe and Reli-
able Functioning of the UNEG and the Quality of
Electricity Transmission Services Provided”:
Developed suggestions for planned energy sys-
tem development, mechanisms for ensuring and
managing the reliability of Russia’s UES and the
UNEG under power sector reform conditions;
РDeveloped the Concept of ensuring power sec-
tor reliability, determining the forms and condi-
tions for all subjects participating in the power
sector in ensuring its reliability at all develop-
ment stages and functioning with the use of
complex means and measures to guarantee the
reliability and mechanisms for their realization.
6.
•
Within the Program “Increasing Energy Saving
and Effi ciency in Electric Grids:”
РDeveloped technical requirements for a proto-
type of the active harmonic fi lter for standard
high voltage converter installation at the 400-kV
Vyborg substation;
The Company developed and adopted the Pro-
gram for Increasing Energy Saving and Effi ciency
for 2010-2012 period (Minutes No. 843 dated
03.06.2010);
The Company’s 2010-2012 Energy Saving and
Effi ciency Program was adjusted in accordance
with an Order by the Russian Federal Tariff Ser-
vice and submitted for consideration by Federal
Grid Company’s Management Board (Meeting
date: 24.12.2010);
Prepared proposals for the utilization of the
heat from auto-connected transformers (ATP)
at the UNEG substations.
Within the Program “Developing the Concept and
Theoretical Basis for Creating Smart Russian
Energy System with an Active Adaptive Grid:”
Fulfi lled the fi rst stage of developing Russia’s
concept of a smart electric energy system with
an active adaptive grid, which is aimed at con-
sideration by interested electric energy organi-
zations;
Developed technical requirements and contractual
documentation. Signed 34 agreements to fulfi ll
R&D work;
Received 5 certifi cates of registration for computer
soſt ware and 15 useful model patents.
Within the framework of the Company 2010-2014
investment program:
Put under voltage SVCs with a capacity of 50
MVAR at the 220-kV Aphipskaya, the 220-kV
Krymskaya and the 220-kV Slavyanskaya sub-
stations;
Conducted tests for the controlled CSR (UN-
ShRTD - 180000/500) at the 500-kV Nelym
substation;
Put into experimental-industrial operation the
pilot model of the 50 MVAR STATCOM device at
the 400-kV Vyborg substation;
Put into operation new type CSR (UShRT
110000/25000) at the 220-kV Kogalymskaya
substation and the 220-kV Progress substation;
Put into operation the CSR (UShR 110000/25000)
at the 220-kV Selenduma substation;
•
•
•
7.
•
•
•
8.
•
•
•
•
•
93
3.0
•
Conducted preparatory work to put the switch-
disconnector cell into experimental-industrial
operation at the 220-kV Dmitrov substation.
In 2010 the Company actively participated in events
dedicated to innovative development of the Russian
economy, including: the St. Petersburg International
Economic Forum, the Innovation Forum, the 2010
International Exhibition and Conference on Inno-
vative Projects in Network and Electricity Supply
(IPNES), the International Forum “Energy of the
Future” and the International Power Industry Con-
ference “Technological Basis for Forming the New
Russian Power Industry.” At the end of Novem-
ber 2010 the Company organized and conducted
a specialized international exhibition “Russian
Electric Grids – 2010” and a scientifi c and techni-
cal seminar on “Progress in Designing, Constructing
and Exploiting Electric Grids.”
In 2010 Federal Grid Company concluded 44 agree-
ments on R&D cooperation with project and educa-
tional institutes, as well as with domestic producers
and foreign companies. Partners included Research
and Development Institute of Protective Devices
and Insulators, Sevkabel, Positron, Energomechan-
icheskiy Zavod, the Scientifi c-production Association
“Streamer,” Elektroapparat, Elektronmash, Novaya
Era, NIIEFA-ENERGO, Hyundai Heavy Industries and
Alstom Grid.
Attestation of Equipment,
Technologies and Materials
Within the framework of the testing system created
by Federal Grid Company, an assessment is carried
out regarding the possibility and expediency of using
new types of equipment, technologies and mate-
rials from diff erent producers at the Company’s
facilities. The attestation procedure is performed
based on verifying production conditions, their
correspondence with standard requirements and
industrial and corporate documentation that takes
into account the experience of using such equip-
ment. In addition, attention is paid to servicing the
equipment (the availability of a “hot” reserve and
dynamic responses from corporate specialists). This
procedure allows the Company to avoid supplying
94
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
unsatisfactory or obsolete equipment to the UNEG
objects.
The Company’s subsidiary Scientifi c and Technical
Center of the Power Industry is the leading orga-
nization that attests equipment for Federal Grid
Company.
•
•
In 2010 the Company had the following results from
testing out equipment, technologies and materials:
In 2010 the volume of accumulated applica-
•
tions decreased signifi cantly (from 500 applica-
tions as of 01.01.2010 to 164 applications as of
01.01.2011);
Improved total realization indicators based on
the volume of applications received in 2009 and
2010;
Import substitution indicators were upgraded
and a competitive environment for selecting
equipment when organizing tender procedures
was created;
the list of producers of standard gas-insulated
switchgears for secondary distribution systems
with voltage class of 110-500 kV was broadened
(recommended for usage with more than 20
build types);
the list of auto-connected transformers with a
capacity of 167 MVA allowed for usage at the
Company’s facilities was expanded;
the nomenclature of attested 110-500-kV cable
production was broadened;
the list of producers of overhead-line hardware
for high voltage lines increased;
•
•
•
•
For the fi rst time, the following items were tested out
and recommended for usage:
•
Controlled shunt reactors of types: UShR-
25000/110, UShR -180000/500, UShRT-
25000/110;
An automated controlled ice melting system;
Domestically produced modern gas-insulated
tank circuit breakers for 110 and 220 kV;
•
•
Due to attestation, a broad range of equipment design
was enhanced (power transformer, factoryassembled
switchgears with a voltage class of 6-20 kV, supporting
insulators with polymeric insulation with voltage class
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
of 110-220 kV, UNShRTD-180000/500 type reactor,
phase diff erential protection L60 and P547, telemetry
complex SELTA STCE/RTU and others).
As a result of procedures conducted prior to 1
January, 2011, the number of applications transferred
to 2011 dropped to 164, whereas the total number
of applications considered for attestation and the
prolongation of expired certifi cates for attestation
commissions totaled 714 during the year.
In 2010 Federal Grid Company
concluded 44 agreements on
R&D cooperation with project
and educational institutes, as well
as with domestic producers and
foreign companies.
95
MOVING FORWARD
WITH NEW ENERGY
ANNUAL REPORT
2010
ECONOMIC
AND FINANCIAL
PERFORMANCE
STABILITY
IS A GUARANTEE
FOR GROWTH
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
A cash fl ow control system has been established;
A management accounting system has been
developed and implemented;
The budget management system was introduced
via eff orts of the Company and its branches to
draſt , review, approve and execute budgets, con-
trol budget execution, maintain budget records,
and complain, review and approve budget re-
ports.
The performance analysis system is based on com-
paring set targets with actual performance.
The Company’s cash fl ow management is grounded
in a mechanism that utilizes the centralized accumu-
lation of cash as proceeds from operations, fi nanc-
ing and investing it so that it can be used later to
fi nance operations and capital expenditures. Opera-
tions are fi nanced by distributing funds to corporate
branches. Throughout 2010 the Company’s fi nancial
management bodies focused on ensuring fi nancial
stability while working within the Company’s es-
tablished leverage limits. One of the Company’s top
priorities in fi nancial policy was to reduce operat-
ing costs per unit of equipment without sacrifi cing
grid servicing effi ciency or reliability.
During 2008-2010 there was an increase in corpo-
rate revenues. In 2010 revenues from Federal Grid
Company’s usual activities grew by RUR26,007
million, or 30.6% year-on-year, driven by higher
revenues from electricity transmission services by
RUR29,337 million, or 36.6%. Compared to 2009,
the principal drivers of higher revenues from elec-
tricity transmission services were expanded corpo-
rate production capacities and a larger investment
program approved by Order No. 547 of the Russian
Ministry of Energy, as of 12 November, 2010.
4.0
Economic and Financial Performance
The main fi nancial management tool used by Federal
Grid Company is a hierarchical budgeting structure.
The Company’s fi nancial and economic planning cov-
ers the following levels:
•
•
•
•
•
•
Long-term planning
involves a fi ve-year fi nan-
cial plan broken down into one-year steps. This
involves establishing guidelines to implement
a government-mandated policy concerning the
UNEG management, as well as the Company’s
own strategic plans, subject to acceptable risk
levels and focused on fi nancial sustainability;
Mid-term planning
is built around a three-year
business plan, which is also divided into one-
year steps. The goal is to set mid-term fi nancial
and production targets, to develop a production
program and to identify necessary resources
while balancing the economic interests of the
Company, its investors, customers, shareholders
and creditors;
Short-term or current planning
focuses
on the Company’s annual budget with quarterly
interim steps. Budgeting helps the management
team align day-to-day activities with mid-term
targets outlined above.
•
With the goal of building a fi nancial management
system that meets modern corporate governance
standards, Federal Grid Company has introduced the
following measures:
•
•
To implement a process-based manage-
ment model, the Company has described and
regulated business processes and singled out
Business Planning and Budgeting processes.
The processbased management model is
currently being rolled out;
To form a fi nancial structure, fi nancial responsibility
centers have been formed;
98
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Financial Performance
Indicator (RUR, mln)
2008
2009
2010
Revenues
COGS
Sales profi t (loss)
Other incomes
Other expenses
Profi t (loss) before tax
Deferred tax assets
Deferred tax liabilities
Current income tax
68,485
85,078
111,085
58,977
64,080
5,156
15,870
75,518
29,357
38,377
113,770
148,393
37,356
183,688
109,431
6,177
-54,049
68,319
7
-217
-180
-722
-3,225
-4,876
-39
-33
-1,181
-9,264
249
Other similar compulsory payments
Net profi t (loss) for the reporting period
1,724
4,465
-59,866
58,088
In 2010 the Company’s COGS (excluding administrative
expenses) increased RUR11,438 million (17.8%)
year-on-year, as a result of an increase in equipment
units, the launch of new facilities, infl ation growth
and greater depreciation charges resulting from
PP&E revaluation.
In 2010 Federal Grid Company posted a net profi t
of RUR58,088 million:
•
•
•
Additional profi t generated by mark-to-market
fi nancial investments;
Re-stored and accrued bad loan provisions that
were reduced by an amount equal to the provi-
sion for inventory depreciation;
Profi t allocation to the Company’s investment
program.
99
4.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
2010 Key Asset, Equity and Liability Figures in Accordance
with Corporate Accounting Reports, RUR mln
Indicator
Indicator
Non-current assets
Current assets
Total equity and liabilities
Equity
Long-term liabilities
Short-term liabilities
Revenue and Expense
Performance
As of 31.12.2008
As of 31.12.2009
As of 31.12.2010
723,940
660,517
871,546
511,588
212,353
723,940
437,915
640,787
222,602
660,517
230,759
871,546
666,177
579,467
763,884
18,622
39,141
7,440
73,609
52,668
54,994
111,085
The above balance sheet data indicates no clear
trend. There were declines in 2009, compared to
2008, and growth in 2010, compared with 2009.
120,000
100,000
80,000
60,000
40,000
20,000
0
-20,000
-40,000
-60,000
85,078
64,080
68,485
58,977
75,518
58,088
4,465
2008
2009
2010
-59,886
Revenue
COGS
Net profi t (loss) for
the reporting period
100
In 2009 non-current assets declined in value. The
principal reason was a revaluation of long-term fi -
nancial investment, due to lower market value for
securities in the Company’s portfolio and that a por-
tion of the Company’s long-term investments were
re-classifi ed as short-term ones.
In 2010 Federal Grid Company’s total assets grew,
driven primarily by a higher non-current assets value.
The following factors aff ected the 2010 increase in
non-current assets:
•
•
•
Higher construction-in-progress value as the Com-
pany implemented its investment program;
Increased long-term fi nancial investments primarily
due to mark-to-market fi nancial investments and
the reclassifi cation of Energo-Finans promissory
notes from long-term receivables to long-term
fi nancial investments under novation contract;
Increased PP&E, which was revalued 1 January,
2010, with the revaluation netting a total of RUR
86 billion.
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
The increase in Federal Grid Company’s current assets
was driven by the following factors:
•
•
•
•
Increased inventories, including materials, due to
larger material procurement for repair activities
using the Company’s own resources;
Reduced long-term accounts receivable, partly as
a result of reclassifying Energo-Finans promis-
sory notes from long-term receivables to long-
term fi nancial investments under novation con-
tract and redeeming promissory notes of Mobile
GTES;
Increased short-term accounts receivable as
advance payments required for the investment
program grew and bad-loan provisions for the
promissory notes of Energy Index – Federal Grid
Company were re-created;
Reduced short-term fi nancial investments driven
by a reduction in Federal Grid Company’s cash
deposits at banks.
In 2010 the Company’s equity grew at a higher rate,
driven by an increase in Federal Grid Company’s share
capital following the registration of a RUR40,178
million equity issue in 2009, an increase in surplus
capital driven by PP&E revaluation and a RUR58,088
million net profi t reported in 2010.
In 2010 the increase in the Company’s short-term
receivables was driven by series 7, 8, 9, 10 and 11 bond
issues aimed at fi nancing the corporate investment
program.
As with the previous year, during the 2010 report-
ing period, the Company increased its share capital.
This resulted in payables to participants in contribu-
tions to share capital being reported as short-term
liabilities. Following the FFMS registration of the
Report on results of the additional share issue, this
amount became part of share capital. In the 2010
reporting, this was equal to RUR11,194 million, where-
as in the 2009 report, it totaled RUR40,178 million.
2010 liquidity ratios indicate that Federal Grid Company
is capable of meeting its short-term obligations.
The cash, current, and quick ratios are all high, which
is considered a positive factor given that the current
ratio is within the normal range of 1 and 2, whereas,
the quick ratio is between 0.7 and 0.8. The reported
values illustrate that the Company has reasonably
high levels of both liquidity and solvency.
In 2010 the year-on-year decline in liquidity ratios was
caused by a reduction in short-term fi nancial invest-
ments following a decline in Federal Grid Company's
deposited cash at banks, the redemption of promis-
sory notes of VTB Bank and Glavsetservis UNEG and
the purchase of short-term promissory notes from
Alfa Bank and Bank Rossiya.
Assets Structure
Performance
296,644
236,193
222,602
230,759
212,353
216,530
150,374
150,245
151,604
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
2008
2009
2010
PP&E
Construction in progress
Current assets
101
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Federal Grid Company’s aſt er-tax profi t (net profi t), as
per accounting statements, is the source for accruals
of the corporate reserve fund and for paying dividends.
In FY 2010 Federal Grid Company reported a net profi t
of RUR58,088 million.
4.0
The ratio of equity to total assets demonstrates the
degree of fi nancial independence from creditors.
In 2010 the change in this ratio was driven by an
increase in total assets and is currently at a fairly
high level, pointing to Federal Grid Company's strong
fi nancial stability.
Profi tability ratios continued to increase during the
reporting period. The main growth factor is higher
profi t before tax (without taking external factors into
consideration).
Net Profi t Distribution
2008-2010 Corporate Financial Ratios
Indicator
Liquidity*
Cash ratio
Quick ratio
Current liquidity
Capital structure**
Equity to total assets
Leverage
Profi tability
EBITDA margin***, %
Operating margin***, %
Return on assets***, %
Assets turnover
31.12.2008
31.12.2009
31.12.2010
1.41
5.01
5.43
0.92
0.09
47.8
6.5
0.62
0.09
2.41
5.91
6.66
0.94
0.07
47.5
11.1
1.4
0.13
1.3
4.9
5.3
0.89
0.12
61.5
23.2
3.0
0.13
* For 2009-2010, payables were reduced by amounts owed to shareholders for shares contributions.
** For 2009-2010, charter capital was increased by amounts owed to shareholders for shares contributions.
*** For 2009-2010, the impact of factors outside Company management competencies was not taken into
account when calculating EBITDA (net profi t).
102
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
2008-2010 Net Profi t Allocation, RUR mln
Retained profi t (loss) for the
reporting period:
Net profi t, adjusted
Distribution:
Reserve fund
Development
Compensation for previous year losses,
remuneration to members of the
Company’s Board of Directors
Dividends
The profi t primarily consists of:
•
•
•
Positive fi nancial results from mark-to-market of
shares (not secured by monetary funds);
Positive financial results from re-storing and
accruals of bad-debt provisions, reduced by an
amount equal to the provision for inventory depre-
ciation (not secured by monetary funds);
Profi t from corporate operations.
The Company plans to distribute posted net profi t in
the following way:
1.
2.
In accordance with Article 35 of Russian Federal
Law No. 208-FZ dated 26 December, 1995 “On
Joint Stock Companies,” the Company plans to
allocate 5.0% of net profi t, or RUR2,904,419,000,
to its reserve fund;
The profi t of RUR18,578,192,000 will be allocated
to development, including RUR16,614,772,000
to be allocated to fi nance the Company’s approved
2010 Investment Program, RUR1,277,414,000
for fi nancing capitalized interests accrued on
loans raised for the Company’s Investment
Program and RUR686,006,000 for purchasing
PP&E.
31.12.2008
31.12.2009
31.12.2010
4,465
-59,866
58,088
–
223
4,242
–
–
–
–
–
–
–
–
25,777
2,904
18,578
34,028
2,577.7
3.
4.
In accordance with Clause 4.3 of Federal Grid
Company’s Regulations on Dividend Policy, the
Company plans to pay dividends based on net
profi t secured by monetary funds and excluding
fi nancial results from security revaluations and
provision accruals. Dividends totaling 10% of net
profi t are backed by monetary funds and equal
RUR2,577,664,000.
RUR34,028,113,000 of net profi t are allocated
to cover losses posted in 2009, as a result of
losses from asset revaluation and the provi-
sion accruals, and as remuneration to be paid to
members of the Board of Directors in accordance
with Clause 4.3 of the Federal Grid Company’s
Regulations on Compensation and Remuneration
to Members of Board of Directors, as approved
by the Resolution of the General Shareholders
Meeting dated 26 June, 2010 (Minutes No. 9 as
of 2 July, 2010).
103
4.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
4.1 TARIFF REGULATION
Electricity transmission via the UNEG is Federal Grid Company’s
principal activity. These services are considered to be a natural
monopoly in the electric energy sector, with prices (tariff s)
subject to state regulation.
Prior to 2010 tariff s for Federal Grid Company's elec-
tricity transmission services via the UNEG were based
on the economically sound pricing method of regula-
tion and were equal to:
Year
Tariff for electricity transmission,
RUR MW/month
Tariff growth, %
2009
58,159.01
20.7
Since 2010 the tariff regulation method transitioned
to the return on invested capital (Regulatory Asset
Base or RAB regulation).
Year
Tariff for electricity transmission, RUR MW/month
Tariff growth, %
2010
87,868.77
51.1
Newly invested capital, i.e. capital value
which is used to create new assets following
implementation of the Company’s approved
investment program.
Gross revenues needed for tariff calculations for each
year of the reviewed regulatory period are the sum
of recovery and the return on invested capital and
expenses needed to carry out operations subject to
regulation.
Within the RAB method, the basis for tariff calculation
is invested capital, which consists of:
•
•
Initially invested capital, which is valued by an
independent appraiser. This includes the cost of
assets replacement by the Company needed to
carry out operations subject to regulations and
the physical, moral and external wear and tear
of assets;
104
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
The following main tariff regulation parameters for
the Company have been outlined for 2010-2012:
Value of invested capital
as of 01.01.2010, RUR bln
Return on existing capital
as of 01.01.2010, %
Return on newly
invested capital, %
Return period on invested
capital, years
2010
647.6
3.9
11
35
2011
2012
–
5.2
11
35
–
6.5
11
35
Throughout 2010 Federal Grid Company's eff orts
were aimed at fostering sustainable development
in investing. The Russian Ministry of Energy ap-
proved the corporate investment program for a fi ve
year period – from 2010 till 2014 – in the amount of
RUR952.4 billion. At the same time, conversations
with the Russian Government resulted in a decision
in 2H 2010 to extend the fi rst long-term regulatory
period from three to fi ve years.
Tariff regulation parameters meeting the Company’s
long-term plans have been approved for 2013 and 2014:
Return on existing capital
as of 01.01.2013, %
Return on newly
invested capital, %
Period of return on invested
capital, years
2013
7.8
10
35
2014
9.1
10
35
105
4.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Order No. 486-e/3 from the FTS, dated 28
December, 2010, for Federal Grid Company:
Stipulated tariff s for electricity transmission services
via the UNEG for the long-term regulation period
(2011-2014) based on the RAB regulation method.
Tariff s were amended in line with Russian Govern-
ment's Resolution No. 1172 dated 27 December,
2010:
Tariff for electricity
transmission
Tariff s for 71 Russian
Federal subjects
Diff erentiated tariff s for 7
Russian Federal subjects*
Tariff for electricity
transmission
Tariff s for 71 Russian
Federal subjects
Diff erentiated tariff s for 7
Russian Federal subjects*
2011
Growth, %
2012
Growth, %
111,083.35
26.4
140,416.32
26.4
43,783.55
15.7
55,345.15
26.4
2013
Growth, %
2014
Growth, %
177,310.69
26.3
223,918.60
26.3
69,887.09
26.3
88,257.61
26.3
* In accordance with Resolution No. 109 “On Pricing for Electric and Heat Energy” by the Government of the Russian Federation dated
26 February, 2004, the Stavropol Region, the Chechen Republic, the Republic of Ingushetia, the Republic of Dagestan, the Republic of
North Ossetia-Alania, the Kabardino- Balkarian Republic and the Karachayevo-Cherkessian Republic were classifi ed as Russian Federal
subjects with diff erentiated electricity transmission services tariff s via the UNEG.
106
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
In accordance with the tariff regulation based on
long-term tariff s subject to the return on invested
capital, Federal Grid Company is obliged to meet reli-
ability and quality criteria for its services as outlined
by the Russian Ministry of Energy.
Russian Ministry of Energy Order No. 296 dated
26 June, 2010 outlined Guidelines for Product and
Service Reliability and Quality Criteria for the Com-
pany Managing the UNEG and for Territorial Grid
Enterprises.
Criteria include indicators of electricity transmission
reliability, which help identify technological disrup-
tions and consumer consequences and quality of
consumer services, which for Federal Grid Company
principally involve enabling consumers’ technological
connection.
The FTS by its Order No. 254-e/1 dated 26 October,
2010 approved the Guidelines for the Calculation and
Use of +/- Adjustments Ensuring That Tariff Levels
for Companies Involved in Operations Subject to
Regulation Meet Reliability and Quality Criteria for
Goods And Services. In line with these guidelines, the
Company’s revenues will be adjusted in the +/- 3%
range.
The FTS decision on 2011-2014 tariff s stipulated
target indicators for the reliability and quality of
services provided by the Company managing the
UNEG during the 2011-2014 period.
Indicator
Regulation period
Service reliability
Service quality
2011
2012
2013
2014
0.0490
0.0483
0.0475
0.0468
1.2599
1.2410
1.2224
1.2040
Federal Grid Company’s transition to RAB regula-
tion ensured suffi cient fi nancial potential to tackle
major investment tasks. Implementing the ap-
proved investment program will help upgrade the
reliability of electricity supplies to consumers, en-
sure the provision of capacity to power stations,
upgrade electric grids and implement numerous
important government-mandated projects.
RAB regulation also involves a fundamentally new ap-
proach to cost management and operational expense
effi ciency: the new level is 2% per annum. The Com-
pany faces the serious task of working out a balanced
expense management policy that weighs reducing
expenses with meeting existing reliability and quality
criteria, which is heavily dependent on the level and
effi ciency of repairs and maintenance.
107
4.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
4.2 COST OPTIMIZATION
The Company has implemented the 2010 Cost Man-
agement Program aimed at upgrading operational
effi ciency, reducing operational and administrative
overhead and implementing anti-crisis measures.
Principal focuses of the 2010 Cost Management
Program included:
Reducing the Company’s administrative and
operational costs.
Following the 2010 transition to tariff regulation
based on the return on invested capital, effi ciency
improvement is one of the Company’s top priorities.
Under the 2010 Cost Management Program, the
Company experienced a cumulative eff ect from re-
ductions in production costs and product (or service)
sales worth a total of RUR2,613 million, which is in
line with the target level.
In 2010 the Company fully implemented measures to
reduce the UNEG grid losses. The cumulative energy
saving eff ect from measures carried out in 2010
totaled 291.640 million kWh. In 2010 the economic
eff ect from Federal Grid Company’s Energy Saving
and Energy Effi ciency Improvement Program totaled
RUR143.2 million in value.
Optimizing the procurement program.
The Company implemented a procurement program
to source products and services on a transparent
competitive basis from suppliers that off er the best
value for money.
All procurement procedures now involve compulsory
activities aimed at reducing prices off ered by par-
ticipants (re-auction). The resulting economic eff ect
can be an additional 1-2% of the cost of purchased
products and services.
The compulsory re-auction (voluntary increases in
pricing off ers by auction participants) threshold was
also reduced from a total procurement amount of
RUR100 million to RUR50 million.
Reducing the Company’s
investment expenses.
The Company is implementing steps to cut invest-
ment project expenses with a focus on specifi cs in the
service market and material resources in electric grid
construction. These measures are carried out across
all stages of the investment program and involve
expense-cutting steps.
The Company’s investment program involves a series
of procurement measures to save investment without
compromising the number and quality of investment
projects implemented by the Company.
In 2010 the Company carried out nearly 2,500
procurement procedures worth approximately
RUR400 billion. From this amount, RUR360 billion
was investment-related procurement. Procurement
procedures resulted in an economic eff ect of RUR41.6
billion from the initial ceiling price, with RUR37.3
billion of this amount saved on investment-related
procurement.
Over the next several years, cost reduction is a cor-
porate priority in line with its main strategic goal –
ensuring the reliability and up-to-date expansion of
the UNEG in line with economic growth and maxi-
mizing cost containment. To improve effi ciency,
reduce and optimize operational and administrative
overheads and cut production costs, the Company
developed a series of cost-cutting measures for the
2011-2014 period.
The Company plans that economic eff ects from
the 2011-2014 cost reduction program will reach
RUR4,600.2 million, driven by the improved effi -
ciency of procurement procedures, reduced auxiliary
power requirements and lower prices for repairs car-
ried out by external contractors without sacrifi cing
the actual amount of carried out work.
108
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
4.3 CREDIT PORTFOLIO
AND LIQUIDITY
Primary Principles of Temporarily Free Cash Allocation Cash
position management aims to achieve the maximum return
on investment, while maintaining a reasonable risk/return ratio.
The Company earned returns on fi nancial investments
by depositing temporarily available cash with
Russia’s largest and most reliable fi nancial and credit
institutions which off er the highest interest rates
possible.
Banks were selected based on the valuation of
their fi nancial and operating performance and their
reputation. Principal cash placement tools included
placing cash in deposits, maintaining it in current
accounts and keeping it in bank promissory notes,
based on maturity.
A balanced approach to liquidity management,
optimizing the placement structure in terms of returns
and maturities, and risk minimization measures ensured
signifi cant additional income for the Company.
Safeguarding the Company’s and its shareholders’
interests, as well as setting limits on counterparty
banks, are carried out in accordance with Regulations
on the Procedure for Placing Temporarily Available
Cash, as approved by the Company’s Management
Board on 28 April, 2008 (Minutes No. 528).
2008-2010 Credit Portfolio
Performance, RUR mln
60,000
50,000
40,000
30,000
20,000
10,000
0
56,000
10,000
5,000
17,980
13,000
31.12.2008
31.12.2009
31.12.2010
Credits under
Alfa Bank credit line
EBRD loan
Bond issues
As of 31 December, 2010, the Company’s credit portfolio
consists entirely of bonds and is worth RUR56 billion.
109
4.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Bonds issues, outstanding
Bonds
Series
Issue amount,
RUR bln
Coupon rate, %
Non-convertible interest-bearing documentary bonds with mandatory safekeeping at a centralized depository
Облигации
04
6
7.3
06
10
7.15
07
5
7.50
08
10
7.15
09
5
7.99
10
10
7.75
11
10
7.99
Placement date
12.10.2006
28.09.2010
29.09.2010
28.09.2010
29.10.2010
28.09.2010
29.10.2010
Put option date
06.10.2011
24.09.2013
24.09.2015
24.09.2013
24.10.2017
22.09.2015
24.10.2017
Maturity period,
years
Coupon period, days
Placement price,
RUR
Placement method
5
182
10
182
10
182
10
182
10
182
10
182
10
182
1,000
1,000
1,000
1,000
1,000
1,000
1,000
Open
subscription
Open
subscription
Open
subscription
Open
subscription
Open
subscription
Open
subscription
Open
subscription
Loans and Credits
In 2010 the Company’s credit portfolio grew 4.3-fold,
with the Company placing public bonds worth RUR
50 billion. On 22 June the Company redeemed a
Series 2 bond issue worth RUR7 billion.
The bonds were placed to an unlimited number of
investors via open subscription on the MICEX Stock
Exchange. Proceeds from the bond placement
were used to fi nance the Company’s investment
program.
2010 Bond Issues
The FFMS registered Federal Grid Company’s
bond issue with a total volume of RUR50 billion on
5 November, 2009. The decision to place the bonds
was made by the Company’s Board of Directors
on 21 September, 2009 (Minutes No. 89 dated
24 September, 2009).
On 28 September, 2010, the Company placed Series
06, 08 and 10 bonds worth a total of RUR30 billion.
On 29 October it completed placing Series 07, 09 and
11 bonds worth a total of RUR20 billion.
In case of liquidity shortfalls, Federal Grid Company can
also use, in addition to fi nancing sources mentioned
above, borrowed funds provided via revolving lines of
credit from Sberbank of Russia, Gazprombank and
Alfa Bank – each worth RUR 15 billion.
Oversight of the Company’s debt position and
valuation of its credit potential is based on a credit
policy approved by the Company’s Board of Directors
29 September, 2010 (Minutes No. 116).
110
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
4.4 CREDIT RATINGS
Federal Grid Company’s solid creditworthiness
and fi nancial stability have been confi rmed by credit
ratings from leading international ratings agencies.
The Company’s current credit ratings are all invest-
ment-grade, indicating that its key performance
indicators are at the level required to meet fi nancial
obligations in full as they become due.
Credit ratings as of 31 December, 2010:
Ratings
agency
Rating
International
scale
National
scale
Standard & Poor's
BBB/outlook stable
ruAAA
Moody's
Baa2/outlook stable
Aаа.ru
Credit Rating History
During the Past 3 Years:
30 December, 2010
Moody`s confi rmed its rating as part of
its annual rating revision.
18 June, 2010
S&P confi rmed Federal Grid Company’s
credit ratings.
30 December, 2009
Moody’s confi rmed its rating as part of its annual
rating revision
22 December, 2009
S&P upgraded the outlook for Federal Grid Company
from negative to stable. The long-term credit rating
was confi rmed at BBB and the rating on the national
scale at ruAAA.
14 April, 2009
S&P confi rmed its long-term credit rating at BBB
and its rating on the national scale at ruAAA, outlook
negative.
08 December, 2008
S&P downgraded its outlook for Federal Grid Compa-
ny from stable to negative, to refl ect the sovereign
rating outlook. The long-term credit rating was con-
fi rmed at BBB.
28 October, 2008
S&P removed Federal Grid Company’s long-term
ratings, for both foreign and national currency ob-
ligations, from the CreditWatch list, with a positive
outlook. At the same time, S&P confi rmed Federal
Grid Company’s long-term ratings for its foreign and
national currency obligations at ВВВ and at ruAAА on
the national scale, with a stable outlook.
23 July, 2008
Moody’s confi rmed its credit rating at Baa2 (stable
outlook), as well as at Aaa.ru on the national scale.
04 April, 2008
Federal Grid Company’s rating from S&P was upgrad-
ed to BBB on the international scale, with a positive
outlook, and it remained on the CreditWatch list. On
the national scale, Federal Grid Company’s rating was
upgraded to ruAAA as a result of a ratings revision.
111
MOVING FORWARD
WITH NEW ENERGY
ANNUAL REPORT
2010
CORPORATE
GOVERNANCE
INCREASED EFFICIENCY
THROUGH COOPERATION
5.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
5.1 CORPORATE
GOVERNANCE PRINCIPLES
The Company is committed to upgrading its corporate
governance system, aiming to enhance our investment appeal
and to reduce the risk of crisis situations. The integrated corporate
governance system encompasses relationships with stakeholders
and subsidiary and dependent companies (SDCs), internal control,
risk management and internal audit.
The cornerstone of the Company’s corporate
governance system is its corporate governance
principles, which were outlined by the Corporate
Governance Code of the Federal Commission for
Securities Market, the Company's Code of Corpo-
rate Governance, as well as acclaimed global best
practices, such as the Principles of Corporate Gover-
nance of the Organization for Economic Co-operation
and Development (OECD).
Accountability. The Board of Directors is ac-
countable to all shareholders for full compliance
with all applicable legislation.
Fairness. The Company is committed to defending
shareholders’ rights and to treating all sharehold-
ers equally. The Board of Directors eff ectively de-
fends all shareholders in case any of these rights
are violated.
Corporate Governance Principles
Responsibility
Accountability
Transparency
Fairness
Transparency. The Company promptly discloses
all signifi cant facts related to our operations, includ-
ing our fi nancial standing, social and environmental
performance, operational results, ownership structure
and corporate management. The Company makes
this information accessible to anyone who might be
interested.
114
Responsibility. The Company recognizes the rights
of all stakeholders, as provided for by applicable
legislation, and aims to cooperate with them, help-
ing to grow the Company and ensure its fi nancial
sustainability.
The Company is liable for its obligations to the full
extent of property it owns.
The Company and the Company’s registrar STATUS
are jointly liable for losses incurred by shareholders
as a result of a loss of shares or the inability to
exercise rights documented by shares as a result
of improper compliance with the Company’s share-
holder registry maintenance and development
procedures unless due compliance is deemed im-
possible as a result of force majeure or actions
(lack of actions) on the part of shareholder that re-
quires compensation for losses, including as a result
of the shareholder failing to take reasonable mea-
sures to reduce such losses.
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Responsibilities of the Company’s
management bodies:
In exercising their rights and carrying out their
duties, members of the Board of Directors, the
Chairman of the Management Board and members of
the Management Board act in the best interests of the
Company, display integrity and wisdom in exercising
their rights and performing their duties with
respect to the Company and will be held liable to the
Company if it incurs losses due to their wrongdoing
(or inaction).
Members of the Board of Directors, the Chairman
of the Management Board and members of the
Management Board will be held liable to the
Company and/or its shareholders for losses incurred
by their wrongdoing (or inaction) which violate
the Company’s share acquisition procedure. Mem-
bers of the Company’s Board of Directors and the
Management Board who voted against the deci-
sion that incurred losses for the Company and/or
its shareholders or who did not take part in the
voting are not held liable.
The Company implements the above-mentioned
principles by doing the following:
•
•
Generating profi t and increasing share value;
Complying with existing legislative norms and
meeting best international practices in corporate
governance;
Ensuring that shareholders and other stakeholders
have access to information about the Company’s
outlook, the objectives it pursues, the timeline and
its methods of achieving them and possible risks and
infl uences from the outside environment;
Maintaining a long-term focus in its operations;
Making major decisions about the Company’s
operations with the involvement of shareholders
who vote at shareholders meetings;
Providing shareholders with the opportunity
to vote at a meeting either in person or by proxy;
Providing shareholders with the information
they need to exercise their voting right at the
Company’s shareholders meetings;
Off ering equal rights on the same type of shares;
Providing shareholders with the opportunity to
exercise their voting right at the Company’s
shareholders meetings based on the “one share,
one vote” principle;
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Ensuring the Company’s transparency: functions and
competencies of each management body must be
clearly defi ned and outlined in writing;
Disclosing signifi cant information about its
operations;
Providing precise, unbiased, timely and
accessible information that is suffi cient to make
a balanced decision;
Maintaining ongoing close relationships with
shareholders and providing them will all neces-
sar y information and documents;
Carrying out audit inspections and examinations
by the Audit Commission;
Stipulating that members of the Board of Directors
display integrity, wisdom, fairness and loyalty;
Ensuring environmental protection, labor safety
and social guarantees for its employees.
Internal Documents
Corporate governance structures, procedures
and practices are regulated by the following
internal documents:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Articles of Association;
Regulations on the Procedure for Preparing and
Holding the General Shareholders Meeting;
Regulations on the Management Board;
Regulations on the Audit Commission;
Regulations on Compensation and Remuneration
to Members of the Audit Commission;
Regulations on the Board of Directors;
Regulations on Compensation and Remuneration
to Members of the Board of Directors;
Regulations on Remuneration to Members of
the Committees of Board of Directors;
Code of Corporate Governance;
Regulations on the Information Policy;
Regulations on the Dividend Policy;
Regulations on the Insider Information;
Regulations on the Audit Committee of the Board
of Directors;
Regulations on the HR and Remuneration Commit-
tee of the Board of Directors;
Regulations on the Investment Committee;
Regulations on the Strategy Committee;
To access the full texts of the above-mentioned documents,
please visit our corporate web site: http://www.fsk-ees.ru/eng/
investors/corporate_governance/corporate_documents/.
115
5.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
The new version of the Company’s Articles of Asso-
ciation was approved in 2010, to align the text with
changes in legislative requirements, to adjust the
competencies of the Company’s management bodies
and to include corporate changes that had taken place
earlier (for example, changes in the share capital and
the Company’s placed and authorized shares).
Changes in legislative requirements were refl ected in
the new Regulations on the Procedure for Preparing and
Holding the General Shareholders Meeting.
The supreme management authority of Federal Grid
Company is the General Shareholders Meeting. The
Board of Directors outlines the general focus for the
Company’s development and supervises operations
of the Company’s Management Board, which is re-
sponsible for managing the Company on a day-to-
day basis. The Management Board is elected by the
Company’s Board of Directors. The sole executive
body is the Chairman of the Management Board, who
is elected by the General Shareholders Meeting.
Managing SDCs is based on Regulations on Subsid-
iary and Dependent Companies’ Management. The
Regulations outline the way that the Company im-
plements the rights of shareholders (participants)
to ensure the eff ective performance of corporate
representatives at General Shareholders (partici-
pants) Meetings, on the Board of Directors and the
Audit Commissions of SDCs, and sets the general
framework for corporate interaction between the
Company and its SDCs related to corporate planning,
organization and the control of corporate activities in
the decision-making of SDCs bodies with respect to
issues that under the Articles of Association require
that Federal Grid Company state its position.
Organizational Structure of Management Bodies
Audit Commission
election
General Shareholders
Meeting
Internal
Audit
appointment
and control
reports
recommendations
control
election
reports
recommendations
Board of Directors
(11)
control
election
preparation
of materials
Chairman
Management Board
performance
monitoring
reports
Branches
(51)
election
n
o
i
t
c
e
e
l
election
reports
recommendations
Independent
External Auditor
Committees:
Audit Committee
HR and Remuneration
Committee
Strategy Committee
Investment
Committee
116
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
5.2 BOARD OF DIRECTORS
The Board of Directors outlines the Company’s strategy and key
development focuses and oversees the performance of executive
bodies to ensure that the interests of the Company and
its shareholders are served.
The Board of Directors acts in accordance with
Russian Federal Law No. 208-FZ dated 26 December,
1995, Russian legislation and the Company’s inter-
nal documents: Articles of Association, the Code of
Corporate Governance and Regulations on the
Board of Directors.
The Board of Directors is elected by cumulative voting
at the General Shareholders Meeting for a oneyear
period and consists of 11 members. In accordance
with the Company’s Articles of Association, six direc-
tors must represent the State. An obligatory require-
ment of the Company’s Articles of Association is that
the Board of Directors includes members represent-
ing the Market Council – a not-for-profi t partnership
that unites companies in the power sector and large
electricity and heat power consumers.
To ensure unbiased decision-making by the Board
of Directors and balanced interests for diff erent
shareholder groups, the Company strives to have
at least three independent directors on its Board
of Directors.
In 2010 Federal Grid Company had two diff erent
compositions of its Board of Directors. Until 29
June, 2010, the Board of Directors was composed of
members elected by the Company’s Annual General
Shareholders Meeting (which was held 30 June,
2009).
№
Name
1
2
3
4
5
6
7
8
9
Boris Ayuyev
Evgeny Dod
Mikhail Kurbatov
Alexey Makarov
Andrey Malyshev
Sergey Maslov
Dmitry Ponomarev
Vladimir Tatsiy
Ernesto Ferlenghi
10
11
Rashid Sharipov
Sergey Shmatko
Position
member
member
member
member
Deputy Chairman
member
member
member
member
member
Chairman
117
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Andrey Malyshev
Deputy Chairman
Born: 1958
Education: He graduated from the Moscow Power
Engineering University with a degree in Heat Power
Automation, as a heat power engineer. He holds a
PhD in Science, Sociology and Technical Sciences.
Holds the following positions:
•
Deputy CEO, Member of the Management
Board of the Russian State Nanotechnologies
Corporation.
* Member of the Board of Directors since 2008.
* Holds no shares in the Company.
Boris Ayuyev
Born: 1957
Education: He graduated from the Ural Polytechnic
Institute with a degree in Electric Power Plants in
1979 and holds a PhD in Technical Sciences.
Holds the following positions:
•
Chairman of the Management Board, Member
of the Board of Directors of System Operator –
Central Dispatch Control of the Unifi ed Energy
System;
Member of the Board of Directors of Energy
Forecasting Agency;
Member of the Board of Directors of Adminis-
trator of the Trading System of the Wholesale
Electricity Market;
Member of the Board of Directors of Financial
Payment Center;
Chairman of the Not-for-Profi t Partnership Rus-
sian National Committee of the International
Council on Large Electric Systems.
•
•
•
•
* Member of the Board of Directors since 2004.
* Share of participation in the Company’s share
capital: 0.0072209534%.
* Share of the Company’s ordinary stock:
0.0072209534%.
5.0
Composition of the Board of Directors,
as of 29 June, 2010
(The positions of the Board of Directors members are
those that they held at the time they were elected
to the Board)
Sergey Shmatko
Chairman
Born: 1966
Education: From 1983-1990 he studied in the Po-
litical Economics Department and the Mathematics
and Mechanics Department of Ural State University
(Sverdlovsk). From 1990-1992, he studied in the Eco-
nomics Department of the University of Marburg
(Germany). In 2004, he attended the Graduate School
of the Military Academy of the General Staff of
Russia’s Armed Forces and received a degree in
Defense and Maintaining Russia’s National Security.
Holds the following positions:
•
•
Minister of Energy of the Russian Federation;
Chairman of the Board of Directors of
Zarubezhneſt ;
Chairman of the Board of Directors of Federal
Hydro-Generating Company;
Member of the Board of Directors of INTER RAO
UES;
Member of the Board of Directors of Holding of
the Inter-Regional Distribution Grid Companies;
Member of the Board of Directors of Gazprom;
Chairman of the Board of Directors of Transneſt
Oil Transporting Company;
Member of the Board of Directors of System
Operator of Unifi ed Energy System.
•
•
•
•
•
•
* Member of the Board of Directors since 2008.
* Holds no shares in the Company.
118
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Oleg Budargin
Born: 1960
Education: He graduated from the Lvov Polytechnic
Institute in 1961 with a degree in Electrical Engineer-
ing and has a PhD in Technical Sciences. He is also a
professor, with a PhD in Economics and is an honored
power industry worker of Russia.
Holds the following positions:
•
Advisor on the Power Sector to the President of
United Metallurgical Company;
Member of the Board of Directors of Energy
Forecasting Agency
•
* Member of the Board of Directors since 2010.
* Share of participation in the Company’s share
capital: 0.0000226124%.
* Share of the Company’s ordinary stock:
0.0000226124%.
•
•
Alexey Makarov
Born: 1937
Education: He graduated from the Leningrad Poly-
technic Institute and holds a PhD in Economics (1970)
and became a professor (1974); he is an expert on
system research for the power industry, the develop-
ment of power sector policy and forecasts in the fuel
and power energy sector. He is also a member of the
Russian Academy of Sciences (RAS).
Holds the following positions:
•
Member of the RAS, Power Sector, Engineer-
ing, Mechanics and Management Processes
Department;
Director of the Energy Research Institute
of the RAS;
Independent Director of the Energy Forecast-
ing Agency.
Georgy Kutovoy
Born: 1937
Education: He graduated from the Lvov Polytechnic
Institute in 1961 with a degree in Electrical Engineer-
ing and has a PhD in Technical Sciences. He is also
a professor, with a PhD in Economics and is an hon-
ored power industry worker of Russia.
Holds the following positions:
•
Advisor on the Power Sector to the President
of United Metallurgical Company;
Professor of the Department for State Regula-
tion of Natural Monopolies at the IPK Gossluzhbi
State Educational Institution;
Member of the Board of Directors of Holding
of Inter-Regional Distribution Grid Companies.
•
•
* Member of the Board of Directors since 2010.
* Holds no shares in the Company.
* Member of the Board of Directors since 2008.
* Holds no shares in the Company.
Dmitry Ponomarev
Born: 1967
Education: He graduated from the International
Law Department of the Moscow State Institute
of Foreign Affairs of the Ministry of Internal
Aff airs and the Economic Department of the C.E.P. Paris
Institute for Political Science.
Holds the following posts:
•
Chairman of the Management Board of the
Non-Commercial Partnership "Market Council"
Chairman of the Management Board of Admin-
istrator of the Trading System of the Wholesale
Electricity Market;
Member of the Board of Directors of System
Operator of the Unifi ed Energy System;
Member of the Board of Directors of Energy
Forecasting Agency;
Member of the Board of Directors of Lenenergo;
Member of the Board of Directors of Financial
Payment Center;
Chairman of the Board of Directors of Energorynok.
•
•
•
•
•
•
* Member of the Board of Directors since 2008.
* Holds no shares in the Company.
119
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ABOUT THE COMPANY
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INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Yuri Soloviev
independent director
Born: 1970
Education: He graduated from the Plekhanov Russian
Academy of Economics in 1994. In 2002, he received
an MBA from the London Business School.
Holds the following positions:
•
President of VTB Capital, Head of the Investment
Business of the VTB Group;
Chairman of the Board of Directors of VTB Asset
Management;
Member of the Board of Directors of RAO Energy
Systems of the East;
Director General, Chairman of the Management
Board, Member of the Board of Directors of VTB
Capital IB Holding;
Director General, Chairman of the Management
Board, Member of the Board of Directors of VTB
Capital Holding;
Member of the Board of Directors of VTB Capital
Investment Management Holding AG.
•
•
•
•
•
* Member of the Board of Directors since 2010.
* Holds no shares in the Company.
Ernesto Ferlenghi
independent director
Born: 1968
Education: He graduated from the Tor Vergata Univer-
sity of Rome (the Department of Mathematics, Phys-
ics and Natural Sciences) with a degree in Physics.
Holds the following positions:
•
Head of the Representative Offi ce of Eni Russia
and the CIS;
Director General of Eni Energy, the Russian
Federation
•
Igor Khvalin
independent director
Born: 1974
Education: He graduated from the Moscow
Aviation Institute (the State Technical University)
and the Moscow State Pedagogical University,
with PhD in Sciences and History.
Holds the following positions:
•
•
General Director of Volga Engineering Group;
Member of the energy effi ciency working group
of the Commission for the Modernization and
Technological Development of the Economy
attached to the Russian President;
Member of the Board of Directors of Holding
of Inter-Regional Distribution Grid Companies.
•
* Member of the Board of Directors since 2010.
* Holds no shares in the Company.
Rashid Sharipov
independent director
Born: 1968
Education: He graduated from the Moscow State
University of Foreign Aff airs in 1991, with a degree
in International Aff airs and International Law. He also
holds an LL.M. degree from the California Western
- School of Law (1993).
Holds the following positions:
•
•
Deputy Director General of KFK-Consult;
Member of the Board of Directors of System
Operator of the Unifi ed Energy System;
Member of the Supervisory Board of Russian
Regional Development Bank;
Member of the Board of Directors of Center for
Engineering and Construction Management of
the Unifi ed Energy System.
•
•
* Member of the Board of Directors since 2008.
* Holds no shares in the Company.
* Member of the Board of Directors since 2008.
* Holds no shares in the Company.
120
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Deals Involving the Company’s Shares
Deals with the Company’s shares in 2010
Agenda Structure of 2010
Board of Directors Meetings
•
Oleg Budargin
Deal date: 24 June, 2010
Shareholding in the Company’s share
capital prior to the acquisition: 0%
Shareholding in the Company’s share
capital aſt er the acquisition: 0.0000226124 %.
Board of Directors’ Activities
In 2010 the Board of Directors held 27 meetings.
Of this number, two were held in the presence of
shareholders. The Board of Directors made a total
of 182 decisions, including approving the Company’s
long-term programs, such as energy savings and
the energy effi ciency improvement program, the
2010-2014 investment program, the innovative de-
velopment program, the insurance coverage program
and decisions that outline the main areas of the
Company’s operations:
•
•
•
•
•
•
On approving the list of measures necessary to
ensure the security of the Company’s sites in the
North Caucasus Region;
On acquiring a diesel power plant with equip-
ment in the Republic of Karelia, Sortavala,
Valaam Island;
On discontinuing the Company’s participation
in: Tsentr Energetiki, Sibenergoholding, Interge-
neration, and SOVASATOM;
On approving the new version of the Regulations
on the Procedure for the Regulated Procurement
of Products, Work and Services for Federal Grid
Company Needs;
On approving Regulations on the Dividend Policy;
On approving the new version of the Regulations
on Remuneration for Members of the Commit-
tees of Board of Directors.
30/182
24/182
35/182
4/182
4/182
85/182
Defining the are as in the Company’s
operations
Related party transactions
Reports by the Management Board
Human Resources
Сurrent operations
Defining roles and positions
of the Company’s representative sin
managing bodies of SDCs
The Company publishes decisions of the Board of Directors
with Minutes' numbers and dates on its corporate web site:
http://www.fsk-ees.ru/shareholders_and_investors/corporate_
governance/decisions_of_the_board/.
121
5.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
5.3 COMMITTEES OF THE BOARD OF DIRECTORS
The Committees aim to improve the effi ciency of the Board of Directors via
preliminary discussions of the most important questions that fall within the
competency of the Board of Directors, and by developing recommendations
on these questions.
In 2010 there were four committees attached
to the Board of Directors:
•
•
•
•
Strategy Committee;
Investment Committee;
Audit Committee;
HR and Remuneration Committee.
Operations for all these committees are governed
by respective Regulations on the Committees
outlining the composition, competencies, work
procedure and rights and responsibilities of the
Committees’ members.
Strategy Committee
The Committee’s functions include considering
and developing recommendations for the Board
of Directors on questions related to t he
development of the UES of Russia.
The Committee’s composition, as approved by a decision of the Company's Board of Directors,
as of 22 September, 2010 (positions held at the time of election):
Alexey Makarov
Nikolay Shulginov
Roman Berdnikov
Alexander Bobrov
Anatoly Dyakov
Chairman , Member of the Board of Directors of Federal Grid
Company, Director of RAS’ Energy Research Institute
First Deputy Chairman of the Management Board of SO UES
Deputy Chairman of the Company’s Management Board
First Deputy Chairman of the Company’s Management Board
President of the Not-for-Profi t Partnership Scientifi c and Technical Council of UES
Igor Kozhukhovsky
Director General of APBE
Victor Kudryavy
Yuri Lipatov
Valentin Mezhevich
Vladimir Sitnikov
Vladimir Fortov
Oleg Dunin
122
Advisor to the President of Eurocement Group
Chairman of the Power Energy Committee
of the State Duma of the Russian Federation
First Deputy Chairman of the Commission on Natural Monopolies
for the Federation Council of the Russian Federal Duma
General Director of Institute Energosetproekt
Member of the Presidium of the RAS
Deputy Director of the Department of Electric Power Industry
Development at the Russian Ministry of Energy
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
The Committee’s 2010 operations
In 2010 the Committee held fi ve meetings, of these
three were conducted in the presence of sharehold-
ers. The meetings approved the following recom-
mendations of the Board of Directors:
•
On the creation of the Committee on Implement-
ing Current and Promising Innovative Projects,
attached to the Chairman of the Management
Board;
On the implementation of the project entitled
The Development of Russia’s Smart Energy Sys-
tem Based on Active Adaptive Network Prin-
ciples, which involves IDGC Holding
On the approval of the organizational structure
for the executive offi ce of the Company;
On the approval of the Company Innovative De-
velopment Program.
•
•
•
Investment Committee
The Committee’s functions include considering and
developing recommendations for the Board of Direc-
tors on questions related to the corporate investment
policy and informing the Board of Directors about
risks associated with investment activities.
The Committee’s 2010 operations
In 2010 the Committee held ten meetings, of this
number four were held in the presence of sharehold-
ers. The meetings approved the following recom-
mendations for the Board of Directors:
•
On the approval of the Company 2010-2014
Investment Program;
On the approval of the Company 2010 business
plan;
On the consideration of target figures for
2011-2012 business plan;
•
•
The Committee’s composition, as approved by a decision of the Company's Board of Directors,
as of 22 September, 2010 (positions held at the time of election):
Andrey Malyshev
Alexander Ilyenko
Roman Berdnikov
Alexander Bobrov
Vladimir Mayorov
Victor Lebedev
Alexey Makarov
Vasily Nikonov
Vladimir Fortov
Yuri Soloviev
Igor Khvalin
Sergey Serebryannikov
Maria Tikhonova
Chairman, Member of the Company's Board
of Directors, Deputy CEO of the Russian State
Nanotechnologies Corporation
Director of the UES Asset Management for SO UES
Deputy Chairman of the Company’s Management Board
First Deputy Chairman of the Company’s Management Board
General Director of ECMC UES
Deputy Department Head at the Russian Ministry of Economic Development
Member of the Company’s Board of Directors,
Director of the Energy Research Institute of the RAS
Director of the Department of Electric Power Industry
Development for the Russian Ministry of Energy
Member of the Presidium of the Russian Academy of Sciences
Member of the Company’s Board of Directors, President of VTB Capital
Member of the Company’s Board of Directors,
General Director of Volga Engineering Group
Rector of the State Educational Institute
of Higher Professional Education MPEI (TU)
Director of the Department of Economic Regulation and Property
Relations in the Fuel and Energy Complex of the Russian Ministry of Energy
123
5.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
•
•
On the approval of the new version of Regulations
on the Dividend Policy;
On the approval of the new version of Regulations
on the Dividend Policy;
Audit Committee
The Committee’s functions include developing recom-
mendations for the Board of Directors on selecting
an independent audit company and on improving the
Company’s reporting systems and internal control.
The Committee’s 2010 operations
In 2010 the Committee held six meetings, of this
number two were held in the presence of shareholders.
Among other decisions, the meetings approved 2011
Insurance Coverage Program and the Regulations
The Committee’s composition, as approved by a decision of the Company's Board of Directors,
as of 22 September, 2010 (positions held at the time of election):
Rashid Sharipov
Igor Khvalin
Ernesto Ferlenghi
Chairman, Member of the Company's Board of Directors,
Deputy General Director of KFK-Consult
Member of the Company's Board of Directors,
General Director of Volga Engineering Group
Member of the Company's Board of Directors,
Head of the Representative Offi ce of Eni Russia and the CIS
on Liability Insurance for members of the Board of
Directors, members of the Management Board, the
Chief Accountant and offi cers.
HR and Remuneration Committee
The Committee’s functions include developing rec-
ommendations for the Board of Directors on aspects
of the remuneration system and cash incentives
for top corporate executives and the Internal Audit
Commission, and defi ning candidate selection criteria
for the Company’s management bodies.
The Committee’s 2010 operations
In 2010 the HR and Remuneration Committee held
four meetings, of this number three were held in the
presence of shareholders and one was held in ab-
sentia. The following decisions were made at these
meetings:
The Committee’s composition, as approved by a decision of the Company's Board of Directors,
as of 22 September, 2010 (positions held at the time of election):
Dmitry Ponomarev
Chairman, Member of the Company's Board of Directors,
Chairman of the Management Board of the Market Council
Yuri Soloviev
Rashid Sharipov
Member of the Company's Board of Directors,
President of VTB Capital
Member of the Company's Board of Directors,
Deputy General Director of KFK-Consult
•
To provide recommendations on upgrading
Regulations on the Stock Option, considering
comments made during the Committee’s meeting.
•
•
To approve principles and criteria for remunera-
tion and cash rewards to members of the Com-
pany’s Management Board and the Chairman of
the Management Board;
To approve the Methods of Calculating and
Evaluating Key Performance Indicators (KPIs)
Achieved by the Company’s Managers;
124
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Participation of Directors in 2010 Meetings
of the Board of Directors and Its Committees
Board of Directors
Name
Boris Ayuyev
Oleg Budargin
Evgeny Dod²
Mikhail Kurbatov²
Georgy Kutovoy
Alexey Makarov
Andrey Malyshev
Sergey Maslov²
Dmitry Ponomarev
Yuri Solovyev
Vladimir Tatsiy²
Rashid Sharipov
Sergey Shmatko
Igor Khvalin
Ernesto Ferlenghi
Committees
Audit
Commit-
tee
Strategy
Commit-
tee
HR and
Remune-
ration
Commit-
tee
Executive
Indepen-
dent *
Participa-
tion in
meetings **
No
Yes
No
No
No
No
No
No
No
No
No
No
No
No
No
X
Х
Х
Х
Х
Х
27/27
13/13
10/14
5/14
9/13
20/27
26/27
14/14
25/27
-
-
-
-
-
-
-
-
-
13/13
0/2
14/14
3/6
20/27
6/6
27/27
-
13/13
1/1
25/27
4/6
2/5
-
-
-
-
5/5
1/5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4/4
2/2
2/2
4/4
-
-
-
Invest
ment
Commit-
tee
5/5
-
-
-
-
4/5
10/10
5/5
2/5
4/5
5/5
-
-
4/5
-
1 Was not a member of the Board of Directors prior to the AGM
2 Was a member of the Board of Directors only prior to the AGM
* It is advised that members of the Board of Directors meet the following requirements to be deemed independent:
(1) During the last three years were not and are not offi cers (managers) or employees of the Company or offi cers or employees of the Company’s
management organization;
(2) Are not offi cers of another company in which any of the Company’s offi cers are a member of the HR and Remuneration Committee;
(3) Are not affi liated persons to an offi cer (manager) of the Company (or an offi cer of the Company’s management organization);
(4) Are not affi liated persons of the Company or affi liated persons of said affi liated persons;
(5) Are not involved in obligations with the Company that enable them to acquire property (obtain monetary funds), the cost of which is equal to 10 and
more percent of the total annual income of said persons, other than for director compensation;
(6) Are not a large contractor for the Company (a contractor that has the total number of deals with the Company throughout the year exceeding 10 and
more percent of the balance sheet value of the Company’s assets);
(7) Are not representatives of the state.
An independent director who has served on the Company’s Management Board for a period of seven years can no longer be viewed as independent (Russian
FCSM's Resolution “On Recommendations on the Use of the Corporate Governance Code” No. 421/r dated 04.04.2002 (together with the Corporate
Governance Code dated 05.04.2002)
** The fi rst fi gure shows the number of meetings that the member of the Board of Directors participated in and the second one shows the number of
meetings which he/she could potentially have participated in (likewise for Committees).
125
5.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
MANAGEMENT BOARD
1 Oleg Budargin
Chairman of the Management Board,
member of the Board of Directors
[ 1]
126
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
2 Alexander Bobrov
3 Dmitry Troshenkov
4 Valery Chistyakov
5 Roman Berdnikov
6 Dmitry Gvozdev
First Deputy Chairman
of the Management Board
First Deputy Chairman
of the Management Board
First Deputy Chairman
of the Management Board
Deputy Chairman
of the Management Board
Deputy Chairman
of the Management Board,
Chief Engineer
7 Andrey Kazachenkov
8 Yuri Mangarov
9 Dmitry Gurevich
10 Evgeny Zhuikov
11 Pavel Romanov
Deputy Chairman
of the Management Board
Deputy Chairman
of the Management Board
Member of the Management Board,
Telecommunications and IT Director
Member of the Management Board,
General Director of MES Volga
Member of the Management Board
127
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ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
5.4 MANAGEMENT BOARD
Management of Federal Grid Company’s day-to-day operations
is performed by the Chairman of the Management Board and
the Management Board, which are accountable to the General
Shareholders Meeting and the Company’s Board of Directors.
•
The decision of the Board of Directors, dated
7 September, 2010, appointed Andrey
Ka zachenkov, Yuri Mangarov, Alexander
Bobrov and Evgeny Zhuykov members of
the Company’s Management Board.
The Chairman of the Management
Board is the sole executive management
body and is responsible for developing
the Company’s strategies and targets in
economic and fi nancial aspects, accounting
and reporting, production and commercial
operations, human resources, R&D and
investment and corporate policy; to ensure
security, legal and administrative support
for operations.
The Management Board acts in accordance with the
Russian Federal Law No. 208-FZ dated 26 December,
1995, Russian legislation and the Company’s internal
documents: the Articles of Association, the Code of
Corporate Governance and Regulations on the Man-
agement Board.
The Chairman of the Management Board is the sole
executive management body and is responsible for
developing the Company’s strategies and targets
in economic and fi nancial aspects, accounting and
reporting, production and commercial operations,
human resources, R&D and investment and corporate
policy; to ensure security, legal and administrative
support for operations.
In 2010 the following changes were made in the
composition of the Management Board:
•
•
•
•
On 12 May, 2010, the Board of Directors made a
decision to terminate the powers of the follow-
ing members of the Management Board: Alexey
Maslov and Mikhail Tuzov, and elected Pavel
Romanov and Dmitry Gvozdev to be members
of the Board;
Starting 4 April, 2010, the powers of Manage-
ment Board member Andrey Demin were ter-
minated, due to the expiration of his fi xed-term
employment agreement;
Due to his death, a member of the Management
Board, Victor Vasilyev, was removed from the
Board 7 March, 2010;
The decision of the Board of Directors, dated
7 September, 2010, terminated the powers of the
following members of the Management Board:
Sergey Ivanov and Misrikhan Misrikhanov;
128
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Chairman of the Management Board
Oleg Budargin
Responsibilities:
The Chairman of the Management Board is respon-
sible for developing the Company’s strategies and
targets in economic and fi nancial aspects, accounting
and reporting, production and commercial opera-
tions, human resources, R&D and investment and
corporate policy; thus ensuring security, legal and
administrative support for operations. Elected at
the Company’s Extraordinary General Shareholders
Meeting on 27 October, 2009.
Background:
Mr. Budargin was born 16 November, 1960 and
graduated from the Norilsk Industrial Institute
(cum laude) in 1982 with a degree in Industrial and
Civil Engineering. From 1984-1995 he worked at
Norilskstroi PSMO (Production Construction and
Assembly Association), in Promstroi Trust of the
Norilsk Mining and Metallurgical Work (NGMK), in
the Capital Construction Department of NGMK and
served as Deputy CEO of NGMK. Mr. Budargin
was Mayor of Norilsk from 2000–2002 and
Governor of the Taimyr (Dolgano-Nenetsky)
Autonomous Dist ric t
from 20 03 –20 0 6 .
In 2007 he was appointed Assistant to the
Plenipotentiary Representative of the Russian
President in the Siberian Federal District. On 11 July,
2009, Federal Grid Company’s Board of Directors
appointed Mr. Budargin Acting Chairman of the
Management Board, and on 27 October, 2009,
he was elected Chairman of Federal Grid Company’s
Management Board by an Extraordinary General
Shareholders Meeting.
Holds the following positions:
* Share of participation in the Company’s share
capital: 0.0000226124%.
* Share of the Company’s ordinary stock:
0.0000226124%.
The Composition of the Management Board,
valid since 7 September, 2010
Alexander Bobrov
Responsibilities:
Managing Federal Grid Company’s investment ope-
rations and property and providing logistics and pro-
curement support for the Company.
Background:
Mr. Bobrov was born 16 June, 1968. In 1998, he
graduated from the North-West Public Service
Academy with a degree in Public and Municipal
Management. He holds a PhD in Economics.
From 1997-2003, Mr. Bobrov was Head of the
External Economic Relations and Investment
Policy Department at Lentransgaz and Deputy
General Director of Petersburgregiongaz. From
2003-2008 he served as the Chairman of the
Saint-Petersburg Energy and Engineering Support
Committee. He was Head of Inzhspetsstroy, a
Noncommercial Partnership for Promoting
Construction Work Quality and Safety, which
unites major Saint Petersburg-based companies
involved in infrastructural engineering and
redevelopment. 2010, Mr. Bobrov was appointed
Chief Advisor to the Chairman of the Company’s
Management Board, and st 2010, he was appoint-
ed First Deputy Chairman of the Management
Board. In September 2010, Mr. Bobrov was
elected a member of the Company’s Management
Board.
Holds the following positions:
•
•
Chairman of the Management Board, Member
of the Board of Directors of Federal Grid
Company;
Member of the Board of Directors of Energy
Forecasting Agency.
•
•
First Deputy Chairman of the Management
Board, Member of the Management Board
of Federal Grid Company;
President of the Non-Commercial Partner-
129
5.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
ship for Quality and Safety Improvement in
Construction “The Self-Regulation Organization
Inzhspetsstroy-Elektroset.”
* Mr. Bobrov holds no shares in the Company.
Dmitry Troshenkov
Responsibilities:
Managing the Company’s economic and fi nancial
operation and fi nancial effi ciency measures, imple-
menting the corporate policy and legal framework
and human resources management.
Background:
Mr. Troshenkov was born 7 January, 1966. He
graduated from the Economics Department of the
St. Petersburg State University with a degree
in Financial Accounting and Auditing. He also
holds a degree in bank financial accounting and
auditing from the Saint Petersburg Banking Institute.
From 2000–2001 he served as Deputy CEO (for
economics and finance) at Petroelektrosbyt. From
2001–2005 he as Deputy CEO (for economics
later was
and finance) at Lenenergo and
the Deputy CEO (for economics and finance)
at WGC-1 (2005–2006). Between 2006 and
September 2009 he was the Vice President for
Finance at TNK-BP. In September 2009, he was
appointed First Deputy Chairman of Federal
Grid Company. Mr. Troshenkov has been a Member
of the Company’s Management Board since
October 2009.
Mr. Troshenkov holds the following positions:
•
•
•
First Deputy Chairman of the Management
Board, Member of the Management Board
of Federal Grid Company;
Member of the Board of Directors of First Power
Generating Company of the Wholesale Electric-
ity Market;
Member of the Board of Directors of Sixth Power
Generating Company of the Wholesale Electric-
ity Market;
•
•
•
•
•
Member of the Board of Directors of the Bashkir
Joint Stock Company of the Power Industry and
Electrifi cation Bashkirenergo;
Member of the Board of Directors of Territorial
Generating Company No. 6 (TGC-6);
Member of the Board of Directors of Territorial
Generating Company No. 11 (TGK-11);
Member of the Board of Directors of Volga
Territorial Generating Company;
Member of the Board of Directors of Index
of Energy – Federal Grid Company.
* Mr. Troshenkov holds no shares in the Company.
Valery Chistyakov
Responsibilities:
Management of the Company’s R&D activities
and technologies, customer development and
relations, telecommunications and IT management,
organization of technical maintenance and repairs
for the Unifi ed Energy System.
Background:
Mr. Chistyakov was born 18 May, 1955. In 1977 he
graduated from the Vladimir Polytechnic Institute
with a degree in Mechanical Engineering, and from
the Financial Academy of the Russian Government in
1996 with an Economics degree. In 2003 he took an
MBA course in Business Management at the State
Management University. Mr. Chistyakov holds a PhD
in Economics. From 1999–2009 he held various
positions in the power sector, including Deputy CEO
for Sales at Vladimirenergo, CEO of Udmurtenergo,
Director of the Upper Volga Branch of IDGC Center
and North Caucasus, CEO of Lenenergo and First
Deputy CEO of UES Engineering Center. In Septem-
ber 2009, he was appointed Deputy Chairman of
the Company’s Management Board and was elected
as a member of the Company’s Management Board
in October 2009. Mr. Chistyakov has served as
First Deputy Chairman of Management Board since
November 2009.
130
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Holds the following positions:
Holds the following positions:
•
•
First Deputy Chairman of the Management
Board, Member of the Management Board of
Federal Grid Company;
Member of the Board of Directors of the Bashkir
Joint Stock Company of the Power Industry and
Electrifi cation Bashkirenergo.
* Mr. Chistyakov holds no shares in the Company.
Roman Berdnikov
Responsibilities:
Customer relations and development, R&D develop-
ment and management of the Company’s technolo-
gies and the corporate R&D policy.
Background:
Mr. Berdnikov was born 14 August, 1973 and gradu-
ated from the Moscow Power Engineering Institute
(1998) with a degree in Electric Power Plants. From
1997 to 1998 he worked as the chief electrician
at Mosenergo. From 1998 to 1999 he worked in
the Tariff s and Technical and Economic Indicators
Department of SO CDU UES of Russia. From 1999 to
2002 Mr. Berdnikov worked with RAO UES of Russia,
where he began as a specialist in the Department of
the SDC Federal National Wholesale Electric Power
Market and was eventually promoted to the post of
leading specialist in the Department of Electric Power
Market Development. In October 2002, he joined the
Company as the chief specialist in the Strategic Plan-
ning Department. In 2003 he was appointed Deputy
Head of the Strategic Planning Department; in 2005
he took over the position of Head of the Depart-
ment of Service and Grid Reliability Improvement,
which was later restructured as the Department of
Customer and Market Relations. In 2009 he took up
the post of Development and Customer Relations
Director. Mr. Berdnikov was elected a Member of the
Company’s Management Board in October 2009.
Since February 2010 he has been Deputy Chairman
of the Management Board.
•
•
•
Deputy Chairman of the Management Board,
Member of the Management Board of Federal
Grid Company;
Member of the Board of Directors of Unifi ed
Energy System GruzRosenergo;
Member of the Board of Directors of Energy
Institute named aſt er Krzhizhanovsky.
* Share of participation in the Company’s share-
capital: 0.0000001975%.
* Share of the Company’s ordinary stock:
0.0000001975%.
Dmitry Gvozdev
Responsibilities:
Organizing maintenance and repair activities, imple-
menting the Company’s technical policy, organizing
site maintenance for the UNEG, organizing workplace
safety management systems at the UNEG sites and
managing labor safety eff orts.
Background:
Mr. Gvozdev was born 13 August, 1974 and graduated
from Kuzbass State Technical University with a
cum laude degree in Electrical Engineering. In 2000
he received a Ph.D. in Technical Sciences from the
same university. He started his career at Kemerovs-
kaya GRES (State District Power Plant) – a branch of
Kuzbassenergo. Upon completing his post-grad-
uate studies, he worked with ODU of Siberia, a SO
UES branch, where he was promoted from engineer
to Deputy Chief Dispatcher. Following this, he was
Director for Dispatch Control Technology Develop-
ment at the SO UES branch – ODU of the Center.
In March 2009, he was appointed the Company’s
Asset Management Director. Since September 2009
he has been Chief Engineer for the Company and
since May 2010 he has been a Member of the Manage-
ment Board.
131
5.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Holds the following positions:
•
Member of the Board of Directors of Index of
Energy – Federal Grid Company.
•
Deputy Chairman of the Management Board –
Chief Engineer, Member of Federal Grid
Company’s Management Board.
* Mr. Gvozdev holds no shares in the Company.
* Share of participation in the Company’s share
capital: 0.0000191091%.
* Share of the Company’s ordinary stock:
0.0000191091%.
Andrey Kazachenkov
Yuri Mangarov
Responsibilities:
Management of the Company’s financial and
economic activities, organization of the Company’s
economic, fi nancial and accounting processes.
Background:
Mr. Kazachenkov was born 24 April, 1980. He grad-
uated cum laude from the St Petersburg State En-
gineering and Economic University with a degree in
Engineering Plant Economics and Governance and
in Management. He obtained an MBA from the
University of Wisconsin (Madison, USA) and was
trained at IMD (Switzerland) and INSEAD (France)
Business Schools under the auspices of special
programs in Economics and Finance. He started
his career in 2004 with Lenenergo as an Advisor
to the Finance Director, and was later appointed Dep-
uty Finance Director. In 2005 Mr. Kazachenkov joined
WGC-1 as Head of the Corporate Finance Depart-
ment. Since October 2009 he has been an Advisor to
the Chairman of the Company’s Management Board.
Since November 2009 Mr. Kazachenkov has been
Deputy Chairman of the Company’s Management
Board. Mr. Kazachenkov was elected a Member of
Management Board in September 2010.
Holds the following positions:
•
•
Deputy Chairman of the Management Board,
Member of the Management Board of Federal
Grid Company;
Member of the Board of Directors of Volga
Territorial Generating Company;
Responsibilities:
Control and audit operations management, corpo-
rate economic security, supervision over the Company
and its SDCs’ fi nancial, production and administra-
tive operations.
Background:
Mr. Mangarov was born 6 November, 1956 and
graduated from the Plekhanov Moscow Institute
of the National Economy with a degree in
Economic Cybernetics. For 23 ears, from 1980
to 2003, he worked in the mining and metals
industry. He started his career as an engineer
with the Norilsk Mining and Metallurgical
Work and became Director of Norilsk Integrated
Plant. In 2003 Mr. Mangarov was appointed
Deputy Human Resources and Social Policy
Director with Mining and Metallurgical Company
Norilsk Nickel; and later held the offices of
Deput y Employee Relations and Salar y
Director and the Head of the Director Division.
In August 2009, he joined the Company as
the Deputy Head of the Financial Control
and Internal Audit Division. In October 2009,
Mr. Mangarov was appointed Director for
Control and Audit Operations. Since March
2010 he has been Deputy Chairman of the
Management Board.
In September 2010,
Mr. Mangarov was elected as a Member of the
Management Board.
132
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Holds the following positions:
•
•
•
Chairman of the Management Board,
Member of the Management Board of Federal
Grid Company;
Member of the Board of Directors of
Energostroysnabkomplekt of the UES;
Member of the Board of Directors of Center
for Engineering and Construction Management
of the Unifi ed Energy System.
* Mr. Mangarov holds no shares in the Company.
Dmitry Gurevich
Responsibilities:
Telecommunications and IT, development and im-
plementation of the UEP TN of the Electricity Grid
and coordination of fi ber optic line construction.
Background:
Mr. Gurevich was born 22 July, 1971 and graduated
from the Leningrad Electro-Technical Institute
named aſt er Bonch-Bruyevitch in 1993 with a degree
in Radio Engineering. In 1997 he obtained an MBA
from the St Petersburg International Institute of
Management (IMISP) and a Masters Certifi cate from
D. Washington University in Project Management.
Aſt er graduating from the Institute, he jointed
AT&T (Lucent Technologies). In 1997 Mr. Gurevich was
appointed Project Director of Lucent Technologies.
In 2003 he joined Rostelecom, where he became
Project Management Director and Deputy General
Director and a Member of the Management Board.
In Febr uar y 20 0 8 , he wa s appointed
Telecommunications Director of the Company;
in October 2009, Mr. Gurevich was appointed
Telecommunications and IT Director. In October
2009, Mr. Gurevich was elected a Member of the
Company’s Management Board.
Holds the following positions:
•
Telecommunications and IT Director, Member
of the Management Board.
* Mr. Gurevich holds no shares in the Company.
Evgeny Zhuikov
Responsibilities:
General Director of the Company MES of Volga
branch.
Background:
Mr. Zhuykov was born 13 May, 1961. In 1990 he
graduated from the Sverdlovsk Institute of the
National Economy as an economist, with a degree in
Economics and Logistics Planning. He is a graduate
of the Presidential Program for Executive Staff
Training for National Economy Enterprises special-
izing in Finance and Lending (2000). Mr. Zhuykov
holds a PhD in Economics. For 13 years he
worked for Western Electric Grids POEiE Sverdlo-
venergo: from 1987 to 1990 he was Head of the
Procurements Department and in 1990-2000 he
served as the Deputy Director. From 2001-2002
he was Head of Logistics at Uralplastic (Yeka-
terinburg). In 2002 he was appointed Deputy
General Director for Economics and Finance and
acting General Director of MES of Ural. In August
2010, Mr. Zhuykov was appointed General Direc-
tor of MES of Volga. Since September 2010 he has
served as a Member of the Company’s Management
Board.
133
5.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Holds the following positions:
Holds the following positions:
•
•
•
Member of the Management Board of Federal
Grid Company;
Member of the Management Board of Volga
Territorial Generating Company;
Member of the Board of Directors of the Unifi ed
Energy System GruzRosenergo.
* Mr. Romanov holds no shares in the Company.
Deals involving the Company’s shares
Deals with the Company’s shares in 2010:
•
A. Kazachenkov
Deal date: 20 September, 2010
Shareholding in the Company’s share capital
prior to the acquisition: 0%
Shareholding in Company’s share capital aſt er
the acquisition: 0.0000191091%.
•
General Director of MES of Volga branch, Mem-
ber of the Management Board of Federal Grid
Company.
* Share of participation in the Company’s share
capital: 0.0000001609%.
* Share of the Company’s ordinary stock:
0.0000001609%.
Pavel Romanov
Responsibilities:
Managing the Company’s property, fi nancial risks,
invested capital and procurement. Organizing the
management process for subsidiary and dependent
companies.
Background:
Mr. Romanov was born 7 July, 1964 and graduated
from the Moscow State University in 1986, with
a cum laude degree in Economics. From 1986 to
1993 he worked at Moscow State University as the
Secretary of the Komsomol Committee, as an assis-
tant to the Chair of Production Management in the
Economics Department at Moscow State University.
From 1993 to 1994 Mr. Romanov was the Economic
and Finance Director of Vityaz Precision Engineering
Concern. From 1994 to 2002 he was General Director
of FNDS, a professional stock market operator. From
2002 to 2007 he worked as Finance Director of the
Rosenergoatom Corporation. From 2007 to 2008
he was First Deputy General Director of Atomener-
goproekt. From 2008 to 2009 he was the General
Director of Engineering Center ‘Russian Gas Centri-
fuge’. Between December 2009 and January 2011
he served as the Deputy Chairman of the Company’s
Management Board. Since May 2010 he has been a
Member of the Company’s Management Board.
134
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
5.5 REMUNERATION TO THE MANAGEMENT BODIES
Remuneration to the Board of Directors
Remuneration to members of the Board of Directors
is based on the Regulations on Compensation and Re-
muneration to Members of the Board of Directors.
place for serving as the Chairman and taking part in
Committees of the Board of Directors. Total remu-
neration, including benefi ts, cannot exceed RUR
900,000.
Remuneration paid to each member of the Board of
Directors is based on the total number of meetings
of the Board of Directors during the past corpo-
rate year, the number of meetings that the member
of the Board of Directors participated in and the
Company’s revenues for the fi nancial year. In addi-
tion to remuneration, the Company has benefi ts in
Remuneration is not paid to members of the Board
of Directors who are subject to any legislative limita-
tions or prohibitions on receiving any payments from
commercial organizations, or to members of the
Board of Directors who at the same time serve as
either the Chairman or members of the Company’s
Management Board.
Remuneration for participating
in a Board of Directors’ meeting, RUR
Other personal compensation, insu-
rance premium under the VPLI *, RUR
Name
Sergey Shmatko
Mikhail Kurbatov
Oleg Budargin
Georgy Kutovoy
Yuri Soloviev
Igor Khvalin
Andrey Malyshev
Alexey Makarov
Sergey Maslov
Ernesto Ferlenghi
Vladimir Tatsiy
Rashid Sharipov
Boris Ayuyev
Evgeny Dod
Dmitry Ponomarev
Total
0
38,822.72
0
0
0
0
165,687.00
141,369.00
177,288.00
153,342.00
105,450.00
154,086.00
177,288.00
129,768.00
165,315.00
Total, RUR
0
38,822.72
0
0
0
0
0
0
0
0
0
0
123,215.93
288,902.93
123,215.93
264,584.93
123,215.93
300,503.93
123,215.93
276,557.93
101,863.43
300,503.93
123,215.93
277,301.83
123,215.93
300,503.93
162,038.65
291,806.65
123,215.93
288,530.93
*Voluntary personal individual liability
135
1,408.415.72
1,126,413.59
2,628,019.71
5.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Remuneration to the Management Board
Federal Grid Company has a unifi ed well-balanced
employee remuneration and motivation system which
diff erentiates between employee position categories
and the performance of the Company, its structural
departments and employees. The motivation system
directly depends on the performance achieved by the
Company and its employees (in accordance with key
performance indicators (KPIs)) and is based on the
Company’s long-term objectives.
Remuneration paid to the Chairman and members of
the Management Board are based on the Company
achieving key performance indicators. Respective
key performance indicators, their calculation meth-
ods and target levels are approved by the Board of
Directors.
In 2010 the following KPIs for top executives were
used:
2010 total compensation paid to members
of the Management Board (RUR)
175 756.541
including:
Salary (RUR)
Bonuses (RUR)
Commission (RUR)
Benefi ts (RUR)
109,375.902
63,797.110
none
none
Other personal compensation (RUR)
(Voluntary personal liability insurance)
2,583.529
Information on Remuneration, Benefi ts and Expenses
Paid to Members of Federal Grid Company’s Manage-
ment Board:
Half-year indicators:
2010 total compensation paid to members
of the Management Board (RUR)
19,434.570
•
•
•
Relative share of restrictions and limitations on
electricity transmission services, %;
No workplace incidents with fatalities and no
incidents that injured several people, with at
least one of them gravely injured;
Meeting the target current liquidity limit.
Annual indicators:
•
•
•
•
•
EBITDA;
No major accidents;
Losses in electricity transmission in the grid used
by Federal Grid Company for providing electricity
transmission services, %;
Ratio of new production capacity launch, %;
Ratio of capital investment utilization, %.
The Company met approved KPIs for 1H, 2H
and FY 2010.
including:
Salary (RUR)
Bonuses (RUR)
Commission (RUR)
Benefi ts (RUR)
Other personal compensation (RUR)
(Voluntary personal liability insurance)
11,083.467
7,781.653
none
none
569.450
Information on remuneration paid to members of the
Company’s Board of Directors and the Management
Board, as of the end of the fi nancial reporting year, is
disclosed in the Company's 1Q report. The Company’s
quarterly reports are also disclosed on the offi cial web
site of Federal Grid Company.
136
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
5.6 INTERNAL CONTROL SYSTEM
The Company’s existing internal control system over its fi nancial
and administrative activities is aimed at ensuring investors trust
in the Company and its management bodies.
Objective: to identify and reduce the risk of situations
that negatively impact the Company’s ability to
achieve its aims and results in losses, to ensure
protection for the Company’s assets, to eff ectively
utilize available resources and to ensure compliance
with Russian legislation and decisions made by
management bodies and the Company’s internal
documents.
Participants in the Internal Control System
The internal control system is based on the
Regulations on the Internal Control System of Federal
Grid Company, approved by a decision of the Board
of Directors, which was made 28 February, 2008
(Minutes No. 55).
Audit Commission
Board of Directors
Audit Committee of
the Board of Directors
Chairman of the
Management Board
The Company’s
internal subdivisions
The Control and Audit
Department;
The Technical Oversight
and Audit Department;
The Internal Control
Division
The Audit Commission
The Audit Commission is elected annually by the
General Shareholders Meeting and consists of fi ve
members. Its scope of responsibility includes:
•
•
•
Ensuring the reliability of data contained in the
Company’s annual report, accounting balance
sheet and profi t and loss statement;
Analyzing the Company’s fi nancial state, iden-
tifying opportunities for fi nancial upgrades and
developing recommendations for management
bodies;
Organizing and conducting probes (audits)
for the Company’s fi nancial and administrative-
activities.
The Audit Commission acts in accordance with
the Federal Law “On Joint Stock Companies,”
Russian legislation and the Company’s inter-
nal documents: the Articles of Association, Code
of Corporate Governance and Regulations on the
Audit Commission.
In 2010 the Company had two diff erent convoca-
tions of the Audit Commissions (one in 2009 and one
in 2010).
137
5.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
The Audit Commission elected by the Annual General Shareholders
Meeting on 30 June, 2009, was dissolved 29 June, 2010.
Name
Primary position held
Tatiana Zlydareva
Victor Lebedev
Dmitry Kozlov
Evgeny Krylov
Maria Tikhonova
Consultant, Federal Agency for State Property
Management
Head of the State Tariff Regulation and Infrastructure
Reform Department of the Ministry of Economic
Development
Deputy Department Head, Ministry of Energy
Head of the Management Department, Federal Agency
for State Property Management
Chief of the Department of Economic Regulation and
Property Relations in the Fuel and Energy Complex of
the Russian Ministry of Energy
On 29 June, 2010, the Annual General Shareholders
Meeting elected new members of the Company’s
Audit Commission, including (positions held at the
time of election):
Name
Primary position held
Vladimir Raspopov
Anna Drokova
Maria Tikhonova
Dmitry Gorevoy
Andrey Kolyada
138
Chairman
Head of IT, Department for Financial andmLogistical
Support and Government Contracts at the Federal
Agency for State Property Management
Secretary
Chief Specialist, Expert on Fuel, Power Energy and
Coal Industry in the Department for Infrastructural
Industries and Military Industry of the Federal
Agency for State Property Management
Director of the Department of Economic Regulation
and Property Relations in the Fuel and Energy
Complex of the Russian Ministry of Energy
Leading Specialist, Expert in the Department for Electricity
Sector Development of the Ministry of Economic Development
Head Specialist, Expert of the Management Department,
Federal Agency for State Property Management
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Members of the Audit Commission hold no shares in
the Company.
The Company’s internal control depart-
ments:
Internal Control Sub-Divisions
Remuneration to members of the Audit Commission
is paid based on the Regulations on Compensation
and Remuneration to Members of the Audit Commis-
sion, as approved by Federal Grid Company’s General
Shareholders Meeting (dated 30 June, 2008). In 2010
no remuneration was paid to members of the Audit
Commission due to the fact that all members of the
Audit Commission are public servants.
Board of Directors
The Board of Director’s areas of competency within
the internal control system involve:
•
Initiating audits into the Company’s performance
via the Chairman of the Company’s Management
Board;
Considering and making decisions on internal
control procedure reports submitted by the
Chairman of the Company’s Management Board
or the Audit Committee;
Considering conclusions made by the Audit
Commission;
Effi ciently evaluating the internal control system.
•
•
•
Audit Committee of the Board of Directors
The Audit Committee’s areas of competency within
the internal control system involve:
•
Overseeing the internal control system with
respect to accounting and fi nances;
Overseeing preparation of the Company’s Re-
ports by its executive bodies and ensuring that
the Reports are unbiased.
•
Chairman of the Management Board
The Chairman of the Management Board ensures
the enforcement of internal control procedures
through internal control departments within the
Company and makes decisions based on internal
investigations.
Control and Audit Department
Key responsibilities:
•
•
•
Organizing control procedures over the Com-
pany’s fi nancial, production and administrative
activities, as well as for its subsidiary and de-
pendent companies (SDCs), aimed at preventing,
revealing and eliminating violations in monetary
resources and funds management and at reme-
dying consequences of said violations; organizing
investigations into cases of abuse (fraud);
Interacting with external control bodies;
Administratively supporting the Company’s Audit
Commission and controlling the enforcement of
its recommendations and decisions.
Technical Oversight and Audit Department:
Key responsibilities:
•
•
•
•
•
Engaging in selective effi ciency control of the
production and technical performance of struc-
tural departments of the Company’s executive
bodies, branches and SDCs, including the in-
ternal technical control system, and evaluating
their compliance with existing requirements;
Identifying problem areas, analyzing and fore-
casting existing and potential risks, reasons and
possible consequences of negative trends, and
developing remedy measures related to the Com-
pany’s production and technical performance;
The establishment and technical oversight over
existing power facilities and quality control
over technical maintenance and repairs;
Selective technical oversight at facilities under-
going reconstruction, technical upgrades or new
construction (including new-generation facili-
ties), aimed at checking their compliance with
existing requirements;
Controlling and evaluating production safety
compliance with existing requirements.
139
5.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Internal Control Division
Key responsibilities:
•
•
•
Developing and upgrading the methodology, or-
ganization and performance principles of Fed-
eral Grid Company’s internal control system,
effi ciently analyzing the internal control system
across all areas of operations and developing
recommendations on effi ciently improving the
internal control system;
Establishing ongoing internal control procedures
for Federal Grid Company’s accounting, regular
internal inspections for accounting and opera-
tional information, establishing prompt control
procedures for information about the planned
and actual performance fi gures for Federal Grid
Company’s departments and SDCs;
Identifying and analyzing Federal Grid Com-
pany’s risks, developing and updating the Risk
Matrix and developing recommendations to re-
duce and prevent risks;
•
•
•
Promptly controlling and effi ciently analyzing the
accounting processes for Federal Grid Company
and its SDCs;
Effi ciently analyzing a system for authority dis-
tribution across management levels of Federal
Grid Company;
Developing and updating the Authority Delega-
tion Matrix and overseeing authority distribution
principles.
In 2010 as part of internal control procedures, the
internal control departments of Federal Grid Com-
pany carried out probes in accordance with approved
annual targets in respective responsibility areas.
2011 plans include developing and approving the
Financial Control Policy and the Authority Delegation
Policy. In 2011 Federal Grid Company will also update
egulations on the Internal Control System.
140
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
5.7 RISK MANAGEMENT SYSTEM
Federal Grid Company has a risk management system
that is regulated by organizational and administrative
documents on two levels:
The risk management system involves the
following procedures:
•
•
(outlines require-
Risk management policy
ments, principles and approaches to the risk
management system);
Usage procedure for the risk management
policy (stipulates procedures on risk manage-
ment system functioning, risk identifi cation and
evaluation methods, risk reporting and risk re-
sponse procedures).
The aim of the risk management system:
to ensure the Company’s sustainable undisrupted
performance and growth through early identifi ca-
tion, evaluation and eff ective management of risks
that can compromise the effi ciency of the Company’s
business operations and reputation, employee health,
the environment and the property interests of share-
holders and investors.
Participants of the risk management system:
•
•
•
•
•
Management Board
Deputy Chairmen of the Management Board
Heads of structural sub-divisions
Branch heads
Internal Control Division
1.
2.
3.
4.
Risk identifi cation methods
Risk identification involves methods based
on the ISO/IES 31010 and COSO stan-
dards (analysis, evaluation of threats, ex-
pert evaluation and an event tree).
Risk evaluation criteria
Risk evaluation criteria include: the possibility
of the risk being realized; the risk’s fi nancial
impact; risk manageability. Risk possibility and
fi nancial impact defi ne its importance. The risk
importance estimate can be increased if the
Company is intolerant to the risk or if a number
of departments of the Company’s Executive Bod-
ies, branches or SDCs are subject to this risk.
Risk response methods
Risk response methods are carried out as one
of the following strategies: risk acceptance;
minimization of consequences; risk assign-
ment to a third party; risk avoidance; com-
bined measures. The strategy selection is
discussed with the Internal Control Division
and is approved by the Management Board.
Risk reporting procedures and timeframes
Risk owners submit their risk reports to the In-
ternal Control Division on a quarterly basis. If
necessary, the Internal Control Division amends
the reports and approves changes with the risk
owners. The amended submitted reports are
used as the basis for the Risk Matrix and the
Set of Risk Minimization Measures, which are
submitted to Federal Grid Company’s Manage-
ment Board for approval.
141
5.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Risk Owners
(Heads of Divisions,
Directors)
3
1
2
5
Management Board
Internal
Control Division
1a
2a
Structural Departments
of the EO (Executive Office)
6
4
5
1
1а
2
2a
3
4
5
6
Risk identifi cation and evaluation, reporting on risks and providing information about realized risks
Analysis of risk reports, amendments to risk reports, the discussion and approval of changes with risk owners
Discussion and approval of reports with corresponding heads of the EO Departments and directors
Amendments to reports following discussion and approval with Heads of the EO Departments and directors
Preparation of the Risk Matrix and the Set of Risks and Minimization Measures, their submission for
Management Board approval, including control over the implementation of already approved risk-infl uencing
measures and risk evaluation of performance analysis
Approval of the Risk Matrix and the Set of Risks and Minimization Measures
Distribution of approved risk minimization measures
Implementation of approved risk minimization measures
Main Risks and Measures Aimed
at Minimizing Them
Global (Strategic) Risks
Considering the special importance of undisrupt-
ed performance and the UNEG development, risks
deemed to be global (strategic) are the risk of ac-
cidents and performance disruptions for the UNEG,
which involves the risk of incorrect performances of
RPA and ECA and poorer quality and/or disruptions
in electricity supplies. Detailed information on these
risks is available in the Production Risks section.
Country-Specifi c Risks
Federal Grid Company does not view country-specifi c
and regional risks as important in its operations.
Industry-Specifi c Risks
Considering the specifi cs of Federal Grid Company
as a natural monopoly, the main industry-specifi c
risks are tariff risks, for example, risks that aff ect
the cost of services provided. Tariff risks include,
above all, the risk related to the state regulation of
tariff s, the risk of the non-implementation of the
investment program fi nancing plan and the risk of
the non-implementation of plans for an increased
number of assets.
Risks Associated with the State
Regulation of Tariff s
As a result of the growth containment policy for tar-
iff s on products and services of natural monopolies,
which is currently being implemented by the Russian
Government, there are risks that regulatory bodies
will introduce tariff s far below economically-jus-
tifi ed levels.
142
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
On 28 December, 2010, Resolution No. 486-e/3
of the FTS approved tariff s for the UNEG electric-
ity transmission services provided by Federal Grid
Company for 2010-2014. Under the resolution, the
increase in the average tariff for the UNEG electric-
ity transmission services provided by Federal Grid
Company (over the long-term regulatory period) will
be 32.8% in 2011, 27.0% in 2012, 21.1% in 2013 and
15.2% in 2014. Tariff growth rates for 2011 will re-
main unchanged. Previously, the Russian Ministry of
Economic Development had said that tariff growth
rates already approved for 2011 can be revised down-
wards. This was due to the Government’s decision to
limit the growth in electricity tariff s for consumers
in 2011 to 15% and below. In particular, the tariff for
Federal Grid Company was planned to be reduced by
smoothing the tariff in the transition to the fi ve-year
regulatory period.
Managing risks associated with tariff regulation in-
volves eff ective interaction between Federal Grid
Company and power industry regulatory bodies to
develop economically-grounded tariff s, and for in-
teractions with electricity market players within the
membership of the Market Council.
Non-Implementation of Investment Program
Financing Plans
The risk of the non-implementation of the investment
program fi nancing plan is caused by the possibility
of service tariff s being set (or amended for future
periods) at a level that is insuffi cient to cover the
Company’s actual expenses.
These risks may be realized if the investment pro-
gram is not implemented, as a result of not meet-
ing planned timeframes for providing fi nancing to
facilities additionally included in the investment pro-
gram and facilities previously not planned for in the
investment program, and also if the actual cost of
investment program facilities exceeds the target level
when raising funds in the amount needed to imple-
ment Federal Grid Company’s investment program
is impossible.
Considering that the investment program fi nancing
amount is used in calculations of Federal Grid Com-
pany’s electricity transmission tariff , non-implemen-
tation of the investment program, for any reason,
can result in a commensurate reduction in the tariff
in later periods.
To ensure fi nancing for the investment program by
improving operational effi ciency, the Company ap-
proved the Comprehensive Cost-Cutting Program
with the following principal aims:
•
•
•
•
•
•
Reducing informational service costs;
Optimizing site maintenance expenses, including
utility expenses;
Reducing offi ce rent expenses;
Cutting business trip expenses;
Decreasing insurance expenses by tender
procedures;
Reducing production program costs by using inter-
nal resources for part of the work targets, reducing
the price of work and material acquired by the
Company, without reducing actual work amounts,
and by partially dropping target repair programs.
To reduce the risks of higher actual project costs,
compared to those planned for and included in the
tariff , the Company developed a system to discuss,
approve and control changes in agreements with
suppliers and contractors and introduced regular
reporting on results of the capital expenditure fi -
nancing plan and the planned work schedules. The
risk of the inability to raise monetary funding in the
amount needed to fi nance the investment program
is minimized by diversifying fi nancing sources: the
Company signed agreements with several lending
organizations to open up credit lines and successfully
completed a bond issue.
Non-implementation of the Plan for
an Increased Number of Assets
A factor that contributes to the non-implementation
of the plan for an increased number of assets is the
late inclusion of facilities in the investment program
(due to incorrectly identifying facilities that limit the
grid’s output amid a strong increase in electricity
consumption). Consequences of realizing this risk is
a possible reduction in the tariff for later periods in
accordance with amounts not used as a result of late
facility commissioning. There is also the possibility
of damages represented by lost profi ts due to the
143
5.0
inability to provide electricity transmission services
and a reputation loss due to the non-implementation
of important projects.
To minimize the risk realization possibility Federal
Grid Company works to include new facilities in the
investment program (on schedule) and to amend the
investment program when possible.
Legal Risks
Federal Grid Company believes that there is a signifi -
cant risk of lawsuits and claims fi led by third parties
over disputable situations, as well as for lawsuits
and claims fi led by Federal Grid Company against
third parties.
To minimize the consequences of legal risks the Com-
pany uses diff erent mechanisms aimed at reach-
ing agreement with contractors and defending its
views (through pre-court settlement procedures and
amicable agreements during court litigation) and at
defending the Company’s interests in court actions.
Information about ongoing lawsuits in 2010:
•
•
The Company faced court claims worth a total of
RUR10,540 – in debt claims;
The Company faced court claims worth
a total of RUR3,303,822,347.24 (includ-
ing RUR3,132,956,842.24 in debt claims and
RUR170,865,505.50 in sanctions).
Production Risks
Risk of Accidents and Disruptions in the UNEG
Federal Grid Company believes that the most impor-
tant production risk is the risk of the UNEG accidents
and disruptions. The risk is aff ected by numerous
factors, including all errors (failure to act) of the
operational staff , the incorrect performance of relay
protection and automatic equipment and emergency
control automatics (hereinaſt er, the RPA and ECA)
and poorer quality of and disruptions in electricity
supplies.
Corporate eff orts to reduce the possibility and con-
sequences of the risk of accidents and disruptions in
the UNEG are aimed at fi ghting risk factors.
144
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Incorrect RPA and ECA Performance
To reduce this risk Federal Grid Company upgrades
algorithms for its ECA hardware and soſt ware com-
plexes and replaces morally outdated and depreci-
ated RPA sets. Additionally, the Company works to
upgrade its employees’ skills, monitors RPA and ECA
performance and regularly analyzes technological
violations to identify reasons and develop measures
to eliminate them.
Poorer Electricity Quality
To reduce the risk implementation possibility the
Company develops respective regulations on quality
control, adjusts and expands agreements on electric-
ity transmission services and implements technical
measures aimed at electricity quality control.
Disruptions in Electricity Supplies
Disruptions in electricity supplies, which are caused
by outdated equipment, can be minimized by imple-
menting the Company’s investment program and
meeting technical maintenance targets. To minimize
natural factors the most eff ective measure is to ap-
ply the approved Procedure for Normative Mainte-
nance of Overhead Transmission Line Routes, which,
among other things, stipulates the procedure for
removing trees and bushes from routes. Special at-
tention is paid to enhanced control over sub-con-
tractors.
Risks Related to Innovative Development
and Improving Energy Effi ciency
Federal Grid Company views implementing innovative
development and energy effi ciency improvement pro-
grams as highly important. Implementation violations
may be the result of changes in requirements set by
regulatory bodies and by the insuffi cient effi ciency
of third parties involved in program implementation.
Realization of these risks can lead to penalties be-
ing imposed on Federal Grid Company and negative
reputational consequences, which in turn can lead to
higher funding costs.
To reduce the possibility or consequences of risks
related to upgrading energy effi ciency Federal Grid
Company has developed and introduced regulations
on interactions between structural departments
about program implementation and has also intro-
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
duced a data retrieval and analysis system to char-
acterize program implementation.
The Innovative Development Program was discussed
by the Company’s Board of Directors and the Strategy
Committee of the Board of Directors. There are plans
to complete a technical and technological audit of
program results, which will later be considered by the
Russian Ministry of Energy.
The funding needed to implement the programs in
a timely manner has been included in the budget of
Federal Grid Company.
Environmental Risks
Environmental safety and the rational use of natural
resources are prominent on the agenda of Federal
Grid Company. For legislative violations the Company
can face high fi nes (based on Russian legislation).
The possibility of these risks is evaluated as insig-
nifi cant with insignifi cant consequences for Federal
Grid Company’s operations.
Of special importance are risks related to Federal
Grid Company’s equipment that contains trichlorodi-
phenyl. A contributor to realizing this risk is strong
equipment wear and tear.
Consequences of this risk include potential environ-
mental pollution and trichlorodiphenyl -poisoning for
the Company’s personnel and/or general population.
Additionally, if there are violations in maintaining,
storing or utilizing procedures for trichlorodiphenyl-
containing equipment, Federal Grid Company can
face sanctions from state regulatory bodies.
The tool to reduce environmental risks is the Com-
pany’s Environmental Policy (as approved by the Com-
pany's Board of Directors). The Company implements
it E in accordance with the Environmental Doctrine
of the Russian Federation, its own Environmental
Policy and the opinions of leading environmental
protection groups. When new facilities are de-
signed, the environmental aspect is developed as
a stand-alone part of the project and takes into
account all requirements of Russian environmen-
tal legislation. All construction and reconstruction
projects of the electric grid facilities are subject to
state environmental examination.
In 2H 2010 the Company approved the 2011-2013
Environmental Policy Implementation Program, which
outlines numerous organizational and technical mea-
sures aimed at risk reduction, minimization of envi-
ronmental pollution, introduction of an environmental
management system, environmental auditing and
development of normative and technical documents
related to the environment.
In order to reduce the risk of damages from using
and storing potentially hazardous equipment, the
Company developed and approved the target pro-
gram for decommissioning equipment that contains
trichlorodiphenyl, introduced eff orts to collect and
update information about equipment that contains
trichlorodiphenyl and exerts ongoing control over
decommissioned equipment.
Financial Risks
Currency Risks
Federal Grid Company’s revenues from electricity
transmission services are calculated in the Russian
national currency – the Russian rubles (RUR). The
Company’s current loan and debt obligations are
also ruble-denominated. Thus, risks are negligibly
low. In terms of exchange rate fl uctuations for for-
eign currencies, these fl uctuations aff ect the Russian
economy as a whole and can therefore indirectly
infl uence corporate operations.
Liquidity Risks
Considering the current liquidity level, the Company
runs a negligibly low risk of failing to fulfi ll its obliga-
tions in full within the set timeframe. The Company
services its previously raised loans in strict accor-
dance with approved schedules.
In order to reduce potential consequences of this risk,
the Company controls its debt burden and creditwor-
thiness. The Company’s creditworthiness criteria and
their target levels are stipulated by Regulations on the
Credit Policy and are approved by the Board of Direc-
tors (Minutes No. 116, as of 29 September, 2010).
Interest Rate Risk
The risk of higher interest rates on loans can prove
to be signifi cant for the Company if its debt burden
shows strong growth. As a result, the risk of higher
145
5.0
interest rates can aff ect the Company’s expenses on
debt re-payment. To ensure borrowed fi nancing and
minimize the risk of changes in interest rates the
Company aims to diversify its borrowing portfolio
tools.
Infl ation Risks
The current infl ation rate has no signifi cant eff ect
on the Company’s fi nancial standing. A critical infl a-
tion rate is a level exceeding 30%.
Risks Related to a Possible Increase in Accounts Receivable
Federal Grid Company’s economic risk factor is the
increase in accounts receivable, which can be trig-
gered by the poorer performance of the Company's
contractors and their inability to pay for the Com-
pany’s services within a set timeframe. The possibility
of these risks arising can be linked to a downturn in
Russia’s economic situation as a whole.
The impact of these factors is minimized by intro-
ducing a program to optimize expenses, monitor the
market and enact tougher payment discipline for
consumers, among other measures.
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Risks Related to the Company’s Investment, Which Has an
Anticipated Yield of More than 10 Percent Per Annum
ВIn 2010 as a result of the completed restructuring
of promissory note debt of FC Otkrytie and Otkrytie-
Finans (which began in 2009 due to the companies’
inability to fulfi ll their obligations), the Company’s bal-
ance sheet received six promissory notes of ENERGO-
Finans worth a total of RUR12 billion, with a yield of
13% per annum. The restructuring was in line with
the Russian Ministry of Energy’s instructions.
In order to upgrade the liquidity of securities and
minimize the risk of non-redemption, promissory
notes were secured by a guarantee of a bill by the
Rusenergo Limited Fund.
The Company made no other investment with a yield of
more than 10% in 2010.
146
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
5.8 SHARE CAPITAL
In accordance with the Articles of Association, as of 31 December, 2010,
the share capital of Federal Grid Company stood at RUR 616,780,666,776,
divided into 1,233,561,333,552 ordinary registered non-documentary
shares with a nominal value of RUR 0.50 per share.
The number of authorized shares is 113,244,490,279
ordinary registered shares with a nominal value
of RUR0.50 per share worth a total of
RUR56,622,245,139.50 (nominal value). Authorized
shares have the same rights as issued ordinary
shares.
No preferred shares were placed.
On 4 February the Company completed placing an
additional issue of ordinary shares with a price of
RUR0.5 per share. A total of 22,386,794,841 shares
were placed via the additional issue, representing
79.14% of available shares. The placement generated
RUR11.193 billion for the Company.
The main participant in the additional share issue
was the Russian Federation, which acquired shares
worth RUR11.189 billion. The remaining part of placed
shares, worth RUR4.147 billion, was purchased by
minority shareholders.
5.78%
14.74%
79.48%
Russian minority shareholders
Russian minority shareholders
Russian Federation Agency
for State Property Management
Proceeds from the additional share issue will be used
to upgrade the reliability of power sector facilities
in the Sochi Region ahead of 2014 Olympic Games
preparation and to implement “Economic and social
development of the Russian Far East and Trans-Baikal
for the period to 2013” Federal Target Program.
On 25 March, 2011, the Company registered amend-
ments to its Articles of Association under which share
capital totals RUR627,974,064,196.50 (six hundred
twenty-seven billion nine hundred seventy-four mil-
lion sixty-four thousand one hundred and ninety-six)
and 50 kopecks.
147
5.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
State
registration
number for
the issue
State
registration
date and
issue
Placement
price
Placement
method
Number of
issued shares
Total number of
shares (following
the additional
share issue)
Registration
date for
reporting on
the issue
results
1-01-65018-D
10.09.2002
RUR0.5
1-01-65018-D-001D
21.03.2006
RUR0.5
1-01-65018-D-002D
23.08.2007
RUR0.59
1-01-65097-D-097D
03.06.2008
1-01-65098-D-098D 03.06.2008
–
–
Distribution
among company
founders
Closed
subscription
placement to
RAO UES of
Russia
Closed
subscription
placement to
RAO UES of
Russia and
Federal Agency
for State Property
Management
Conversion
upon merger
Conversion
upon merger
243,214,483,559
243,214,483,559
10.09.2002
118,167,724,361
361,382,207,920
15.05.2007
114,965,254,235
476,347,462,155
18.04.2008
737,588,491,911
1,153,514,196,362
12.08.2008
34,154,626,385
1,153,514,196,362*
12.08.2008
1-01-65018-D-101D
25.12.2008
RUR0.51
for open subscription
Open
subscription
80,047,137,190
1,233,561,333,552
26.01.2010
RUR0.5 for
entities with
pre-emptive rights
1-01-65018-D-102D
12.08.2010
RUR0.5 for open
subscription
Open
subscription
22,386,794,841
1,255,948,128,393
01.03.2011
RUR0.5 for entities
with pre-emptive
rights
* 94,576,384,089 shares were redeemed (annulled)
148
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Number of the Company’s Shareholders as of 31 December, 2010
Number of
holders
Number of
shares
% of the total
number of shares
Number of individuals registered in the shareholder register
412,775
10,549,483,174
0.8400
Number of legal entities registered in the shareholder register
(including nominee holders, trust managers
and the Issuer’s issuer account)
nominee holders
trust managers
Issuer’s issuer account
Number of separate accounts for accounting for
securities in joint shared ownership
1,458
1,251,239,357,525
99.6251
65
246,236,484,889
19.6056
6
1
5,101,036
5,901,991,179
1 711
61,265,519
0.0004
0.4699
0.0049
0
100
Number of separate accounts for accounting for securities of undisclosed entities
1
3,922
Total number of entities registered in the shareholder register
415 945
1,261,850,110,141
List of Registered Entities That Hold More Than 2%
of Accountable Shares in Their Individual Accounts as of 31 December, 2010
№
Registered entity type
Name
Owner
The Russian Federation, represented
by the Russian Federation Agency
for State Property Management
Number of shares
Share of share
capital, %
998,216,115,886
79.48
Nominee holder
Depository Clearing Company
79,451,549,039
Nominee holder
Depository and Corporate Technologies
67,916,184,242
Nominee holder
Non-banking Credit Organization
“National Settlement Depository”
59,513,606,178
Nominee holder
ING BANK (EURASIA)
27,076,780,253
6.33
5.41
4.74
2.16
1
2
3
4
5
Information about the Registrar
В In December 2010, due to a decision by the
Russian Federal Financial Markets Service to cancel
the register-maintaining license of Central Moscow
Depository, the Company decided to cancel its
agreement with Central Moscow Depository (CMD)
on keeping and storing the Register of Owners
of Nominal Securities. Since February 2011 the
Company’s Registrar has been STATUS Registrar
Company, which was selected via an open tender.
Location: 32 Novorogozhskaya Street, bld 1,
Moscow, Russia, 109544
Mailing address: 32 Novorogozhskaya
Street, Bld 1, Moscow, Russia, 109544
Telephone: +7 495 974 8350
Fax: +7 495 678 7110
Email: info@rostatus.ru
License No.: 10-000-1-00304
Issue date: 12.03.2004
Valid through: Unlimited
Issuing authority: The Federal Financial
Markets Service (FFMS)
149
5.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Geographical breakdown of foreign investors
Foreign investors by investing style
6%
2%
8%
8%
11%
18%
USA
UK
Sweden
Germany
47%
28.8%
26.7%
0.33%
44.0%
Norway
Netherlands
Other
Growth, Core Growth,
GARP
Index
Core Value
Equity Hedge
Source: ThomsonOne
Source: ThomsonOne, shareholder register data
The share of foreign investors in Federal Grid
Company’s share capital stood at 5.78% as of
31 December, 2010.
Most of the foreign buy-side investors continue to
view the Company’s shares as promising, with the
growth rates for the Company’s profi t and/or share
value exceeding average levels for other companies
in the same industry. One-third of the investment
is so-called “index investors” (29%), another 27%
comes from investors who believe the Company’s
shares are currently heavily undervalued. Hedge
funds account for only 0.33%, aſt er seeing a
marked decline (16.87%), which is generally seen
as a positive.
150
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
5.9 STOCK MARKET
The Company’s shares trade on the B quotation
list for MICEX and RTS and on the Main Market
of the London Stock Exchange.
The fundamental appeal of the Company’s stock
is evidenced by its inclusion in Russian and foreign
indices. As of 30 December, 2010, the Company’s
weighted share in the MICEX Power Index stood at
14.33%, making it one of the largest participants
among power sector companies included in the in-
dex. In the RTS Power Index Federal Grid Company
traditionally trails only RusHydro.
Federal Grid Company’s Share Weighting in Key
Stock Indices, % (Data as of the end of the year)
Index
MSCI Russia
MSCI Emerging Markets
(as of the inclusion date)
ММВБ
Micex PWR
Micex LC
RTSI
RTSeu
RTS STD
2009
2010
1.43
1.48
0.045
0.045
1.69
1.51
13.94
14.33
2.01
1.97
1.67
1.66
Company’s depository receipts started trading on the
Main Market of the London Stock Exchange under the
FEES ticker symbol.
Additional information about our GDR program
is available on the corporate web site at
http://www.fskees.ru/eng/investors/share_information/gdr_program/.
GDR Program Highlights
Regulation S
Rule 144A
Ratio
1 GDR: 500 shares
1 GDR: 500 shares
International code
Market price
as of 31.12.2010
Amount of GDRs
as of 31.12.2010
ISIN:
US3133542015
Common Code:
036273577
ISIN:
US3133541025
Common Code:
0362733372
USD 6.10
USD 6.10
3,203,411
78,518
22.06
18.99
Company’s Shares Highlights
2.01
2.11
Share category
ordinary registered
non-documentary shares
Global Depository Receipt (GDR) Program
On 30 June, 2008, the Company launched a Global
Depository Receipts (GDR) Program, which was not
listed in accordance with Regulation S and Rule 144A.
One depository receipt represents 500 shares. The
Program’s depository bank is Deutsche Bank.
Nominal value
RUR0.5 per share
MICEX ticker symbol
FEES
RTS ticker symbol
FEES
FEESSG
ISIN
RU000A0JPNN9
As of 31 December, 2010, the Program was equal to
0.133% of the Company’s share capital.
In March 2011, the Company successfully completed
the technical listing procedure for depository receipts
on the London Stock Exchange. On 28 March the
Bloomberg code
Thomson Reuters code
FEES RM
FEES RX
FEESS RU
FEESG RU
FEES-MZ
FEESS.RTS
FEES.RTS
FEESG.RTS
151
5.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Stock Price Performance and Trading Volume on MICEX
Date
Notes
04.02.10
Release of the 1H 2009 IFRS statements
24.03.10
Meeting between the Company’s managers and analysts
20.04.10
Meeting with analysts to discuss 2009 results and 2010-2012 plans
12.05.10
0.08% increase in the Company’s share in the MSCI Russia index to 1.75%
17.05.10
Release of 1Q 2010 RAS statements
04.06.10
The Ministry of Economic Development’s proposal to limit the Company’s tariff to 15% in 2011
17.06.10
Announcement of fi ve-year investment program highlights
29.06.10
AGM
21.07.10
Release of the 2009 IFRS statements, meeting with analysts
1
2
3
4
5
6
7
8
9
10
02.08.10
Release of 2Q 2010 RAS statements
11
10.08.10
Meeting with analysts to discuss 1H 2010 results
12
25.08.10
Release of the Federal Tariff Service’s draſt Resolution on the rates of return for invested
capital within the RAB framework
13
29.09.10
Completion of the Company’s Series 6, 8 and 10 bond issues placement worth RUR30 billion
14
04.10.10
The Federal Tariff Service’s approval of corporate rates of return
15
21.10.10
The Russian Government’s announcement of plans to privatize Russia’s largest companies
with State participation, Federal Grid Company is one of these companies
16
02.11.10
Release of 3Q 2010 RAS statements
17
11.11.10
Release of 1H 2010 IFRS statements
18
16.11.10
Meeting with analysts following the release of 3Q 2010 RAS statements and the 1H 2010
IFRS statements
19
07.12.10
The Ministry of Economic Development’s proposal to limit the Company’s tariff to 25% in 2011
20
20.12.10
Approval of investment program and dividend policy
21
28.12.10
The Federal Tariff Service’s approval of the RAB tariff for a fi ve-year period for the Company
152
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Trading volume,
mln items
8,000.00
6,000.00
1
2
5
4
8
9
10
11
12
13
19
20
3
14
15
16
6
7
17
18
21
4,000.00
2,000.00
0.00
RUR
0.48
0.44
0.4
0.36
0.32
0.28
0.24
0.2
.
0
1
1
0
1
1
.
.
0
1
1
0
5
2
.
.
0
1
2
0
8
0
.
.
0
1
2
0
4
2
.
.
0
1
3
0
0
1
.
.
0
1
3
0
4
2
.
.
0
1
4
0
7
0
.
.
0
1
4
0
1
2
.
.
0
1
5
0
6
0
.
.
0
1
5
0
1
2
.
.
0
1
6
0
4
0
.
.
0
1
6
0
1
2
.
.
0
1
7
0
5
0
.
.
0
1
7
0
9
1
.
.
0
1
8
0
2
0
.
.
0
1
8
0
6
1
.
.
0
1
8
0
0
3
.
.
0
1
9
0
3
1
.
.
0
1
9
0
7
2
.
.
0
1
0
1
1
1
.
.
0
1
0
1
5
2
.
.
0
1
1
1
0
1
.
.
0
1
1
1
3
2
.
.
0
1
2
1
7
0
.
.
0
1
2
1
1
2
.
.
0
1
2
1
0
3
.
2010 Share Prices
In 2010 Federal Grid Company’s share price on MICEX
grew 15.3% and reached RUR0.369 on 30 December,
2010, which is 13% below the consensus forecast
from analysts and indicates further upside potential
in the Company’s stock price.
MICEX is the main trading platform for the Company’s
shares and accounts for more than 90% of market deal
volume.
Summary of Federal Grid Company’s share
performance on MICEX
Volume
units
452,899,905,600
307,017,566,700
2009
2010
RUR
114,494,378,142.9
105,717,431,921
Number
of deals
units
1,171,618
1,137,379
Source: MICEX web site
Key parameters of MICEX trading
Low
High
Period-end
RUR
RUR
RUR
2009
0.074
0.409
0.320
2010
0.282
0.389
0.369
Number of shares
mln shares
1,153,514
1,233,561
Capitalization
at year end
RUR, mln.
367,971.04
452,717.01
Additional trading information is available
in the respective section of our corporate web site at
http://www.fskees.ru/investors_tools_graph.html.
153
5.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Dividend History
Total dividend
accruals, RUR
thousand.
Per ordinary
share, RUR
587,847.4
0.001626664
380,000
0.0007977370096
0
0
0
0
2006
2007
2008
2009
on ordinary shares for 2009.
2010
For FY 2010 the Company posted a net profi t of
RUR58,088,388,000.
The net profi t for dividend calculations, excluding
fi nancial results from securities revaluation and the
creation of provisions not backed by monetary funds,
was RUR25,776,639,000.
The decision on 2010 dividend payments will be
made by the Company’s Annual General Shareholders
Meeting in 2011.
Dividends, RUR thousand
Number of shares, units
Dividend per share, RUR
2,577,664
1,255,948,128,393
0.0020523650155
5.10 DIVIDEND POLICY
Federal Grid Company’s dividend policy is based on
Regulations on the Dividend Policy approved by the
Board of Directors on 16 December, 2010. According
to this document, the minimum dividend payout is
10% of RAS net profi t aſt er mandatory contributions
to the reserve fund adjusted (reduced) for paper prof-
its from assets revaluation, the reserve for recovering
bad debts and non-recurring income from the sale of
securities and other property planned to fi nance the
Company’s investment program.
The General Shareholders Meeting makes dividend
payout decisions in accordance with the dividend size
recommended by the Board of Directors, based on the
Company’s posted fi nancial results, while balancing
the interests of the Company and its shareholders.
2008
To maintain the Company’s fi nancial stability amidst
the ongoing fi nancial crisis, the Board of Directors
recommended that the General Shareholders
Meeting channel the Company's 2008 net profi t to
corporate development. The resolution of the General
Shareholders Meeting (30.06.2009) approved the
allocation of RUR4,242,201,000 (95% of 2008 net
profi t) to development and RUR223,201,000 (5% of
2008 net profi t) to the corporate reserve fund. The
money allocated to corporate development was used
to fi nance specifi c projects to the extent determined
by a separate Board of Directors’ resolution as part
of the Company’s priority activities.
2009
For FY 2009 the Company posted a loss of RUR59.866
million. The principal reason for the 2009 operating
loss was the eff ect of the global fi nancial crisis. The
loss resulted from writing off negative diff erences
from the market-price-based revaluation of assets
on the Company’s balance sheet. The source for
reserve fund allocations and dividend payments is
the Company’s net profi t aſt er tax (net profi t), based
on accounting reports. In 2009 the Company had no
base (source) to pay dividends. The Annual General
Meeting of Shareholders decided not to pay dividends
154
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
5.11 INVESTOR RELATIONS
In 2010 the Company continued developing its investor relations
and enhancing information transparency to position Federal Grid
Company as one of the leading power sector companies.
The Company aims to provide full and reliable
information about its operations by holding personal
meetings with analysts and investors, participating
in conferences and regularly updating its corporate
web site.
For the second consecutive year the Company has
won an award in the category “For the Best Corporate
Governance Practices and Investor Relations” at
the contest organized by the Administration of the
Krasnoyarsk Region with the participation of the
Russian Institute of Directors and the Federal Service
for Financial Markets.
Last year S&P recognized Federal Grid Company as
one of the companies that has demonstrated the
greatest progress in information disclosure.
In 2010 the number of banks that provide analytical
coverage for the Company increased from 15 to 20,
including UBS, Unicredit and the Otkrytie Financial
Corporation.
The Company’s latest fi nancial news, reports and presentations
are available on the corporate web site http://www.fskees.ru/eng/
investors/company_overview/.
Additionally, the Company’s investor relations specialists
are available at any time at +7 495 710 9064
or by email ir@fsk-ees.ru.
Liquidity
Capital Markets
Company Value
Financial
Communications
Marketing
Disclosure
and Information
Transparency
IR
155
MOVING FORWARD
WITH NEW ENERGY
ANNUAL REPORT
2010
SOCIAL
RESPONSIBILITY
TO BE SUCCESSFUL
IS TO BE BENEFICIAL
TO YOUR COUNTRY
6.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
6.1 SOCIAL RESPONSIBILITY
PRINCIPLES
Federal Grid Company’s corporate social responsibility (CSR) represents
the Company’s complex responsibilities toward interested parties
in the sphere of managing the Company’s impact on the surrounding
environment, society and economy. The Company voluntarily undertakes
these responsibilities and fulfi lls them publicly when interacting with
interested parties. These principles are oriented on ensuring sustainable
development and implementation of the Company’s strategy.
Our responsibility toward the state and con-
sumers consists of ensuring the reliable and uninter-
rupted power supply of the UNEG objects, modern-
izing all objects in the UNEG power supply network in
a timely manner; developing and introducing innova-
tive technologies, contributing to an increase in the
energy eff ectiveness of the UNEG, preventing and
promptly fi xing technological breakdowns; utilizing
funds invested in the Company by the Government
in a transparent and eff ective manner.
Other important aspects of the Company’s CSR
include:
•
•
•
–
Responsibility toward environment
for minimizing negative environmental impact;
Responsibility toward suppliers and con-
tractors – creating a transparent competi-
tive environment and market mechanism for
pricing,
– for cre-
Responsibility toward personnel
ating appropriate labor conditions and oppor-
tunities for professional and personal growth.
Strengthening Corporate Culture
Federal Grid Company’s corporate culture, including
values as well as standards of behavior and work,
forms the corporate perception for its employees,
stimulates feelings of responsibility, prompts the
realization of succession and helps build correct reac-
tions to events taking place in the Company. It also
creates a feeling of safety. We consistently work
to develop corporate culture and our eff ort is also
aimed at creating a feeling of affi nity with our team
of employees and the acceptance of our development
philosophy, methods of work, form and subject matter
of relationships inside the Company.
In 2010, Federal Grid Company actively worked to
develop a new Corporate Ethics Code. Signifi -
cant changes in the Russian power sector and in the
Company itself, as well as the Company’s goal to
conform with global best corporate governance prac-
tices, made replacing the previous document neces-
sary. The new Code project contains an ideological
(mission, goals and values) and normative (ge-
neral rules of conduct; prohibited conduct; chapters,
descriptions of separate risks) parts. It is expected
that the new Corporate Ethics Code will be adopted
by the Company’s Board of Directors in 2011.
To preserve professional traditions educate the youth
and recognize longstanding conscientious labor in
the beginning of 2010 the Company launched the
Dynasty of Federal Grid Company program.
During the year, contests for the title of best dynasty
were held in the branches of Federal Grid Company –
MES. The contest counted not only production
indicators of dynasty members, but also their
overall length of corporate service.
In terms of organizing corporate events, the most
popular and accessible events are traditionally sports
competitions. In 2010 the Third Summer Olympics
158
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Federal Grid Company’s corporate culture,
including values as well as standards of
behavior and work, forms the corporate
perception for its employees, stimulates
feelings of responsibility, prompts the
realization of succession and helps build
correct reactions to events taking place
in the Company. It also creates a feeling
of safety.
of Federal Grid Company was held. Preliminary
rounds were organized at the corporate branch level
and fi nal contests took place in Moscow from 28
to 30 June. More than 2,500 Company’s employees
participated in the Olympics.
Cooperation with universities training special-
ists in the power industry continued. In 2010, the
Company cooperated with 45 profi led educational
institutions. Days of Federal Grid Company were
held for students, during which corporate managers
spoke about primary development directions for the
UNEG, promising the implementation of innovative
corporate projects and the Company’s need for highly
qualifi ed specialists.
In summer 2010 the Company re-launched organizing
work for summer student groups. At sites of Federal Grid
Company’s MES Center branch, 50 students from the
Moscow Power Engineering Institute working line bri-
gades carried out swath clearing and assembled metal
•
•
•
•
constructions for power line columns in the Ivanovo,
Vladimir and Moscow Regions.
Social Responsibility and Corporate Sustain-
ability Reports
Since 2008 the Company has published an annual
Social Responsibility and Corporate Sustainability
Report; these Reports present separate corporate
mechanisms, ensuring the quality of corporate work
and the absence of economic, environmental and
social impact in the regions in which the Company is
present. Reports are prepared in accordance with GRI
sustainability reporting framework guidelines (version
G3). Interactions with interested parties during prepa-
ration of the Reports are based on the principles of
the Stakeholder Engagement Standard AA 1000 SES.
As part of the process of preparing the Annual Report,
the Company conducts conversations with interested
parties, during which key issues of the Report are dis-
cussed and disclosure requests are gathered. Prior to
publication, the prepared text of the Report undergoes
public discussion in one or another form (in person or
in absentia publicly held hearings).
Federal Grid Company reports are included in the
National Registry of Corporate Non-Financial Re-
ports, which was formed by the Russian Union of
Industrialists and Entrepreneurs (RUIE).
The full text of Federal Grid Company’s social responsibility and
corporate sustainability reports can be found on our web site
http://www.fsk-ees.ru/about/corporate_social_responsibility/.
Interactions with Stakeholders
CSR implementation is performed through regular
interactions and dialogues with external interested
parties (stakeholders).
List of key stakeholders:
•
•
•
•
Government;
minority shareholders;
consumers;
local state authorities in Russian
Federation subjects;
environmental community;
contractors and suppliers;
corporate employees;
other energy companies (generation companies,
System Operator, IDGCs).
159
6.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
As part of 2010 CSR management, the Company
carried out the following interactions:
Key 2010 Measures Important for Sustainable
Development and Social Responsibility
•
•
•
•
with shareholders and investors (annual ge-
neral meetings of shareholders; meetings of the
Company’s managers with investment bank and
investment fund analysts; consultative meetings
with minority shareholders – physical persons;
online seminars for investors; the participation
of top management in conferences organized by
investment banks);
with local authorities of Russian Federation
subjects and energy companies (concluding
cooperation agreements in the fi eld of UNEG
development and the coordination of develop-
ment plans);
with personnel (implementation of the Dynasty
Program, the Open Doors Day, conducting the
Third Summer Olympics, organizing summer
student groups, etc.);
with suppliers and contractors (Concluding
agreements on cooperation with companies in-
cluding Alstom Grid, Siemens AG, Elektrozavod,
Ener 1 and others).
In 2010 the Company participated in the St. Pe-
tersburg International Economic Forum and the
Sochi-2010 International Investment Forum, at which
they signed more than 10 agreements with Russian
and foreign producers and developers of electro-
technical equipment.
One of the most important tasks in interacting with
external interested parties is participation by the
Company’s employees in rule-making activity. In
2010, our experts participated in forming more than
10 ministerial decrees and/or governmental regula-
tions, related to the order of land utilization, utilization
and protection of forests, ensuring a reliable and high
quality power supply, organizing the power supply for
the XXII Olympics in Sochi and other issues.
•
•
•
•
•
•
•
•
•
Elaboration on and adoption of a Policy for the
innovative development and modernization of
the UNEG, including creating a new generation
electric grid in Russia – smart grid;
Adoption of the Program on implementing the
Company’s 2011-2013 environmental policy;
Development of Federal Grid Company’s Import
Replacement Program aimed at use of locally
produced equipment, technologies, materials
and systems;
Extension of the period for long term RAB-based
tariff regulation on the provision of services for
Federal Grid Company to 5 years;
Adoption of the program to create training cen-
ters for Federal Grid Company’s production per-
sonnel, with realization from 2010 till 2012;
Adoption of the Program to address corruption
and settle confl icts of interests in the Company
for 2010-2011;
Development of the Long-term Program for Cor-
porate Assistance to Improve Housing Conditions
for Federal Grid Company’s Employees (sub-
mitted for adoption to Federal Grid Company’s
Management Board).
Development of a new Corporate Ethics
Code (submitted for adoption to Federal Grid
Company’s Management Board);
Conducting dialogues with external interest-
ed parties “Information disclosure on Feder-
al Grid Company’s activities in the sphere of
ensuring and managing operational safety of
the UNEG.”
Charitable Aid
Federal Grid Company is a socially-oriented Company
that off ers a program of charitable aid to physical
persons. In addition, in 2010, the Company spon-
sored numerous sports, cultural, scientifi c and chari-
table organizations in the amount of approximately
RUR83 million.
160
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
6.2 HR POLICY
Federal Grid Company’s HR policy is an integrated system
of interacting with personnel to achieve corporate strategic goals,
developing and sustaining the technical condition of the electric
grids and substations, upgrading the functional reliability of the UNEG
objects and realizing the Company’s investment program.
HR policy is aimed at balancing the economic and social
eff ectiveness of personnel usage, obtaining qualifi ed
personnel in a timely manner for the Company’s divi-
sions, creating conditions for eff ectively developing
and utilizing human resources, satisfying social and
economic expectations and meeting the needs and
addressing the interests of employees.
Primary principles of the Company’s
HR policy:
•
•
•
•
•
Ensuring eff ective organizational design and plan-
ning personnel requirements. Managing personnel
taking into account external and internal factors;
Selecting optimal methods for working with per-
sonnel, driven by the Company’s current devel-
opment stage based on forecasts and strategic
production goal accountability, social and demo-
graphic, political, economic, legal and other external
environmental changes, as well as the impact that
they have on the Company’s personnel;
Improving the eff ectiveness of personnel utilization.
Engaging in qualitative and quantitative analysis
of expenses versus results, including employees’
training and career enhancement;
Observing current Russian legislative require-
ments;
Creating and operating a human resources man-
agement system that ensures eff ective and fl exible
management of corporate human resources;
•
•
•
Ensuring that employees across all levels observe
(obligatory) human resources policy principles,
as well as human resources management system
as stipulated by internal normative documents;
Designating long-term key corporate principles of
human resources management, adhering to these
principles occurs under dynamic organizational and
economic changes, as well as changes in external
conditions;
Continually enhancing human resources man
gement methods based on modern concepts,
taking into account the Company’s characteris-
tics and standards.
Key elements of the Company’s HR policy:
•
•
•
•
•
•
•
•
Upgrading the organizational and managerial
structure and personnel planning;
Training and developing personnel;
Motivating and remunerating the corporate
workforce;
Providing social assistance;
Managing activity performance;
Engaging in labor relations;
Providing administrative support;
Developing corporate culture and internal
communications.
161
6.0
Policy elements may be changed and obtain new
signifi cance under the infl uence of corporate devel-
opment dynamics or changes in external conditions
without interfering with the principle of policy suc-
cession.
Headcount and Qualitative Personnel
Composition
Federal Grid Company’s total number of personnel
stood at 22,623, as of 31 December, 2010.
A signifi cant (89.6%) increase in corporate person-
nel in 2010 year-on-year is due to transferring the
functions for technical servicing and maintenance
of electro-technical equipment from Glavsetservis
UNEG to Federal Grid Company and the fact that
most employees of Glavsetservis UNEG joined Fed-
eral Grid Company branches. In 2009, Federal Grid
Company personnel increased 6.7% compared with
the previous year due to the fulfi llment of a program
of measures to commission and launch new UNEG
objects and staff electro-technical objects received
from inter-regional distribution grid companies.
Employees Educational and Age Structure
As a high-technology economic branch, the power
sector places high demands on the knowledge and
qualifi cation of employees. The Company’s personnel
are characterized by a high level of employee educa-
tion. As of 31 December, 2010, more than 53% of
our employees have completed higher education, in
addition 23% have a vocational higher education.
The largest percentage of personnel are employees
of the most active productive age – up to 40 years
old (approximately 54% of personnel). In recent years
there has been a trend toward a decline in employees’
age. As of 31 December, 2010, the average age was
39.8 years. Therefore, the Company’s HR structure
is characterized by an optimal combination of young
employees with initiative and skilled highly profes-
sional employees actively sharing their knowledge
and skills with the younger generation.
To actively attract younger specialists, the Company
conducts a separate program. Within the framework
162
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
of this program, it actively works with senior high
school students and students from profi led universi-
ties and founds additional scholarship programs in
specialist fi elds, which are the most highly sought
aſt er by the Company, including to attract employ-
ees in geographically remote regions. The Company
organizes internships and Open Door Days in Federal
Grid Company branches, with the aim of ensuring that
specialists quickly adapt to the Company’s conditions
and work specifi cs.
More than half of our employees have higher educa-
tion. The average employee age is 40 years. The
Company’s HR composition is characterized by an
optimal combination of young employees with skilled
professionals.
Personnel Movement
The Company places signifi cant weight on retaining
the most skilled and highly professional employees.
Within this framework the Company evaluates the
employee satisfaction level with labor conditions
and analyzes the dynamics and structure of staff
turnover.
In 2010, the Company organized a sociological sur-
vey of employees, during which personnel loyalty
was evaluated and professional and social factors,
which were the most important for employees, were
outlined. Based on the results of the survey, the
Company’s branches developed measures to upgrade
employee loyalty.
During recent years, staff turnover indicators have
declined steadily, which demonstrates the eff ective-
ness of the implemented HR policy.
Material Incentives for Personnel
An important element of the Company’s HR policy is
the system of material incentives for personnel, which
ensures that the Company achieves its strategic
goals based on establishing connections between
the results of corporate operations and the individual
input of each employee.
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Headcount Dynamics, persons
6,000
5,000
4,000
3,000
2,000
1,000
0
s
u
t
a
r
a
p
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i
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as of 31.12.2008
as of 31.12.2009
as of 31.12.2010
t
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a
i
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b
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S
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M
Qualitative composition of the Company’s personnel, persons
Personnel category
Reporting period
Total
Including
2008
2009
2010
11,181
11,933
22,623
Administrative and managerial personnel
3,815
4,640
5,359
Personnel breakdown by activity type, persons
Operating personnel
10,613
11,418
15,602
Including production and industrial personnel
6,242
6,900
Maintenance personnel
Mechanization and transportation employees
44
524
2
513
9,312
7,021
0
163
6.0
In respect to motivation and remuneration, the Com-
pany’s main principles are:
•
•
Ensuring a unifi ed approach toward remunera-
tion for all corporate employees;
Motivating employees to achieve corporate goals
Staff Turnover
7.5
%
8
6
4
2
4.4
3.4
Year
2008
2009
2010
and aims by improving the eff ectiveness of indi-
vidual activities, as well as activities of structural
divisions and the Company as a whole;
Putting in place competitive compensation pack-
ages in the labor market taking into account
regional peculiarities and specifi cs of the busi-
ness spheres;
Considering in an obligatory manner material
and non-material needs and interests of the em-
ployees when elaborating the labor remuneration
and compensation system;
Strengthening the Company’s image as a re-
sponsible and reliable employer.
•
•
•
The Company utilizes approaches that are unifi ed
across all branches for labor remuneration and com-
pensation. Compensation is determined based on
evaluating the position of the complexity of activities,
qualifi cations and the impact on the fundamental
results of the Company’s operation. A correlation be-
tween the fi xed and variable portion of compensation
is estimated depending on the character of activities
and the degree of impact on the result.
164
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
More than half of our employees
have higher education. The
average employee age is 40
years. The Company’s HR
composition is characterized
by an optimal combination of
young employees with skilled
professionals.
Sustaining the deserved level of material well-being
for the Company’s personnel contributes to attracting
and retaining particularly valuable and highly profes-
sional employees, thus forming a solid basis for the
Company’s economic eff ectiveness as a whole.
Awards Policy
With the goal of off ering moral and material incentives
for employees to achieve strong labor results,
Federal Grid Company has implemented a Program
to encourage employees with state, departmental,
industry and corporate awards.
The awards system in eff ect decorates employees
with State awards, awards from the Russian Govern-
ment, awards from the Russian Ministry of Energy,
from the Industrial Union of Power Industry Employers,
as well as with corporate awards – the title of the
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Honorary Employee of Federal Grid Company of the
fi rst and second degree, the award “For Professional
Skill,” the award “For the Construction and Recon-
struction of Electric Grid Objects,” the Honors Board,
the Honorary Certifi cate and Honorable Mention.
Employees from the branches of Federal Grid Com-
pany, which demonstrated the greatest equipment
reliability, achieved better production indicators and
the strongest results in implementing and introducing
new equipment and technology as of end of the year
receive the title of the Best Branch of Federal Grid
Company – MES and the Best Enterprise of Federal
Grid Company – PMES.
•
•
•
•
•
•
•
In 2010 for services to the State, Vladimir Taskin,
Director of Federal Grid Company’s Khakassia
PMES branch received the title “Honorary power
engineer of the Russian Federation.”
25 Federal Grid Company employees received
awards from the Russian Government;
For services to the power industry 331 employ-
ees received awards from the Russian Ministry
of Energy;
52 individuals received awards from the All-
Russian Industrial Union of Power Industry Em-
ployers;
In 2010 for merit and input into the development
of Federal Grid Company 12 collectives of con-
tracting organizations received corporate awards
from Federal Grid Company;
1,148 employees received corporate awards;
For professionalism demonstrated when address-
ing the accident at the Sayano-Shushenskaya
HPP, 16 employees received commendations
from RusHydro.
Personnel Training and Development
Each of the Company’s employees is involved in the
corporate training system with the aim of upgrading
the level of professionalism and the development of
employees’ internal potential.
Types of training in 2010:
•
Mandatory training, which is conducted once ev-
ery three years and provides for employee train-
ing in the fi eld of labor protection and industrial
safety, as well as other training for production
personnel in accordance with requirements and
work conditions;
Career enhancement, including intensive man-
agement training in accordance with innovative
programs, conducted based on specialized edu-
cational centers;
Foreign placement.
•
•
In 2010 10,511 persons were involved
in various types of training, which
is 47.85% of the overall average head
count of the Company’s personnel.
During 2010 new training programs were devel-
oped and introduced for the following personnel
categories:
1.
2.
3.
4.
Training of industrial and production personnel
accounts for the largest portion of implemented
programs, has a mandatory character and is
regulated by the Guidance on working with per-
sonnel in power sector organizations. In 2010
8,277 diff erent categories of production per-
sonnel from MES branches underwent training,
of this number, 1,898 represent dispatch per-
sonnel and 3,702 maintenance personnel;
Training under the auspices of the program
“Ensuring Environmental Safety by Managers
and Specialists of General Economic Manage-
ment Systems.” The program was implemented
in the shortest time possible due to a new train-
ing format – the video-conference seminar, which
allowed the Company to reach the most distant
MES branches. 325 persons participated in
video-conference seminars;
Foreign placement in England, Spain, Germany,
Denmark and Norway with the goal of fa-
miliarizing employees with experience from
the operation of power industry complex;
Young Engineer School, a program of educational
and practical seminars organized by MES Center
together with lecturers of the Moscow Power
Engineering Institute, for fi nal-year students of
the Moscow Power Engineering Institute and the
Ivanovo State Energy Institute;
165
6.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
Training substation directors in accordance
with the unifi ed system of personnel training
and development;
Intensive management training in accordance
with innovative programs in 2010 included train-
ing all categories of the Company’s executive
personnel. The course for junior management,
in which 112 employees took part, was aimed at
developing basic managerial competencies and
skills. Training the Company’s mid-level man-
agers was aimed at upgrading the knowledge
level in the subject of “Economy and manage-
ment of the energy company.” As part of train-
ing measures for top executive managers, 89
corporate managers received training in the fol-
lowing areas: Strategic Leadership: Managing
Personnel and Teams, Strategic Changes Based
on the Skolkovo Moscow Management School;
Creation of a distance educational system for
production and managerial personnel organized
as part of the implementation of a program of
training and career enhancement in a rapidly
changing business environment for a geographi-
cally spread out company. Distance educational
courses were developed in the following areas:.
Training users in the corporate information
management system: working in an auto-
mated system of managerial document fl ow;
Liquidating technological breaches at Federal
Grid Company’s objects.
5.
6.
•
•
7.
Project to create training centers for production
personnel in MES branches.
In 2010 in all corporate branches the Company
started creating training centers. Federal Grid Com-
pany developed its own system of training special-
ists including training classes and training simulator
classes. The Company also conducts seminars and
lectures, which are led either by invited specialists or
the Company’s in-house experts.
Non-Governmental Pension Provision
With the aim of ensuring an appropriate standard
of living for the Company’s employees at pension
age, as well as to increase employees’ motivation
to work eff ectively and to attract and retain highly
qualifi ed personnel, Federal Grid Company has ad-
opted a Program for the non-governmental pension
provision to employees. Its main principles include a
unifi ed approach to setting the amount of the non-
governmental pension and stimulating employees for
the merits of the Company and the power industry, as
well as for longstanding and conscientious work.
During the period of activity, the Program of
non-governmental pension was granted to 2,760
employees from Federal Grid Company funds.
On the whole, in accordance with the norms of the
Regulation on non-governmental pension provi-
sion to Federal Grid Company employees in 2010,
RUR261,626,611 was transferred to the non-govern-
mental pension fund of the power industry.
166
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
6.3 ENVIRONMENT
Environmental safety holds an important place in Federal Grid Company’s
activity. The Company implements its environmental strategy based
on the environmental doctrine of the Russian Federation, Federal Grid
Company's environmental policy and taking into account opinions
of the leading environmental protection organizations.
Electricity transmission – the main type of our activ-
ity – has a signifi cantly smaller environmental impact
compared with other power industry branches. Elec-
trical grid specifi cs in respect to impact on the sur-
rounding environment is that emissions, discharges
and waste products are not the result of techno-
logical processes, but appear as a result of economic
activity and are characterized by very low level values
relative to maximum permissible values. Thus, at-
mospheric emissions for all types of contaminating
materials are 2-3 times lower than the maximum al-
lowable contamination level, and discharges are only
rainfl ow overfl ow. Contamination volume is also very
insignifi cant. Thus, in 2010 the released volume for
all substations totaled 75.5 tons and the volume of
waste products for I-V classes of hazardous material
is less than 10 thousand tons.
Despite these low indicators for negative environ-
mental impact Federal Grid Company pays signifi cant
attention to environmental issues. While designing
new objects, the Company elaborates on special envi-
ronmental protection sections taking into account all
requirements of Russian environmental regulations.
Construction and re-construction projects for electric
grid objects undergo state expert review and public
consultations are held to evaluate environmental
impact. Particular attention is paid by the Company
to informing the public on ensuring the environmen-
tal safety of socially important projects, such as the
construction of electric grid objects as part of the
preparation for the 2014 Sochi Winter Olympics and
the 2012 APEC Summit in Vladivostok.
Trichlorodiphenyl
In the previous century, trichlorodiphenyl
was widely used as a liquid dielectric during
the production of power transformers and
condensers due to its exceptional thermo-
physical and dielectric characteristics,
fi re-resistance and explosion safety. At the
same time, trichlorodiphenyl is a persistent
organic pollutant and belongs to the fi rst
class of hazards.
in 2008. It aims to improve environmental safety, en-
suring the reliable and ecologically safe transmission
and distribution of energy. Within this program, the
Company undertakes technical and organizational
measures to minimize the negative impact of produc-
tion on the surrounding environment.
Technical measures include replacing equipment
containing hazardous and toxic substances, repairing
systems and oil container devices, organizing tempo-
rary landfi ll sites and constructing and reconstructing
of canalization and disposal facilities, as well as other
measures.
The Company pays particular attention to manag-
ing especially hazardous waste. The Company has
a license to collect, use, deactivate, transport and
emplace hazardous waste.
The Company acts in accordance with the Environ-
mental Policy adopted by the Board of Directors
In 2008 the Company began to implement a tar-
get program on replacing and utilizing equipment
167
6.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
containing trichlorodiphenyl. In the previous century,
trichlorodiphenyl was widely used as a liquid dielectric
during the production of power transformers and
condensers due to its exceptional thermo-physical
and dielectric characteristics, fi re-resistance and
explosion safety. At the same time, trichlorodiphenyl
is a persistent organic pollutant and belongs to the
fi rst class of hazards.
.
The program to realize Federal Grid Company’s
environmental policy calls for replacing and utilizing
equipment containing trichlorodiphenyl. In the process
of the reconstruction and technical rehabilitation of
objects of the UNEG, this equipment is replaced on a
mandatory basis. One-fourth of equipment containing
trichlorodiphenyl has been already dismantled and
utilized.
Within the framework of the Technical policy, we
replace condensers containing trichlorodiphenyl
with condensers permeated with environmentally
safe dielectric liquid. The dismantled condensers
are transferred for utilization to specialized
organizations.
In 2010 Federal Grid Company utilized 4,036 static
condenser jars with a total weight of 167 tons. For
2011 the Company plans to utilize approximately
10,000 static condenser units.
In 2002 the Russian Government rati-
fi ed the Stockholm Convention. So it
must fully cease using equipment con-
taining trichlorodiphenyl on its territory
by 2025. In accordance with obligations
undertaken by the country, the Company
plans to fully withdraw equipment con-
taining trichlorodiphenyl from operation
by 2025.
Organizational measures include implementing an
environmental management system that corresponds
with requirements of international standard ISO
14001, introducing a system of environmental
production control and conducting environmental
audits and environmental training of personnel, as well
as upgrading documentary support of environmental
protection activities.
In 2010 all corporate branches conducted internal
environmental audits. The audit controlled: the
observance of environmental protection legislation,
the completeness and condition of environmental
documentation and the technical condition of
environmental facilities. The Company analyzed
problems arising in the process of the branches’
environmental protection activities. Based on audit
results, the Company developed a programs of
measures to upgrade the effi ciency of the Company
and its branches’ environmental protection activities.
In 2010, the Company conducted environmental
training of its personnel:
•
•
•
Appropriate handling of I-IV class hazardous
waste (134 corporate employees participated
in training);
Environmental protection and safety training
for executives and specialists (128 corporate
employees participated in training).
In 2010 Federal Grid Company developed and
adopted the Instruction on the Procedure of
Inventory of Production and Consumption Waste
in Federal Grid Company’s MES and PMES
Branches, setting a unifi ed order for inventory-
ing production and consumption waste and fi ling
documents on inventory results for all corporate
branches. Also, the Company developed and in-
troduced new annual forms for environmental
protection measures and quarterly reports on
quantitative and qualitative indicators for nega-
tive environmental impact.
168
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Electricity transmission – the
main type of our activity –
has a significantly smaller
e n v ir o n m e n t a l
i m p ac t
compared with other power
industry branches.
•
Since 2008 the Company has conducted envi-
ronmental monitoring in the zone of passing of
the 500 kV high voltage line on the territory of
Smolny National Park (the Republic of Mordovia),
which is located in the zone of activity of the
Nizhegorodsky PMES. The goal of monitoring is
to evaluate the degree of impact of the 500 kV
high voltage line on animals and to develop
recommendations to prevent their deaths, as
well as rehabilitation and long-term development
of ornithological complexes in the zone of high
voltage lines. Based on data gathered in 2010,
the monitoring program will be updated.
In 2011 the principal objectives of Federal
Grid Company in the environmental protec-
tion sphere include:
•
•
•
•
Fulfi lling technical measures in a timely and quali-
tative manner to minimize negative environmental
impact;
Implementing Federal Grid Company’s envi-
ronmental management system in accordance
with the ISO 14001 standard;
Conducting internal environmental audits in the
Company’s branches;
Developing quantitative target values in environ-
mental protection and enacting measures for their
achievement.
169
6.0
ABOUT THE COMPANY
PRODUCTION OVERVIEW
INVESTMENTS AND INNOVATIONS
ECONOMIC AND FINANCIAL PERFORMANCE
CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
6.4 PRODUCTION SAFETY
Labor Protection
We aim to provide safe working conditions for our
employees. The Company’s goals in this sphere in-
clude nullifying production accidents and professional
illnesses, ensuring accident-free operation via the
introduction of highly eff ective technologies and
modern equipment, upgrading the quality of labor
conditions at work sites and ensuring a high produc-
tion culture.
In 2010 work in the labor protection sphere was
conducted in accordance with a series of tasks, deter-
mined by resolutions of the Labor Protection Council,
as well as the Company’s organizational and manage-
ment documents.
The Company developed and introduced the order of
organizing heightened danger work and a risk ma-
nagement system in the labor protection sphere to
prevent and avoid injuries and professional illnesses
at production, to create favorable working conditions
and to ensure the high reliability and eff ectiveness of
personnel’s work.
The Company continued work to conduct psycho-
physiological testing to select operative and technical
personnel, as well as to create psychological release
rooms for substation employees.
The Company created a Pilot Project to conduct pre-
shiſt medical examinations using remote equipment
to detect employees’ health issues and to adopt mea-
sures to decrease the impact of the human factor on
the reliability of electric grid operation.
The Company held a review contest for the best
organization of labor protection work among
corporate branches.
The Company conducted semi-monthly labor
protection events prior to the start of the 2010
maintenance campaign, during which Federal Grid
Company performed demonstrative admissions of
brigades to work at power facilities, conducted a
unifi ed labor protection day with the subject “Risk
management and injury prevention during the
organization of work at high voltage lines” and
introduced a system to prevent the breach of labor
safety rules during power facility work.
As a result of injury prevention work
carried out by the Company in 2010, the
number of accidents during work at high
voltage lines decreased 67% year-on-
year. The number of injuries for contractor
organization specialists working at the
UNEG objects dropped 62%.
Industrial Safety
In 2010 Federal Grid Company had 297 hazardous
industrial facilities (HIFs) in operation. To secure
the industrial safety of these objects, the Company
undertook measures aimed at preventing HIF
accidents and ensuring the readiness for localizing
and liquidating the consequences of these indicated
accidents, including:
•
•
Insuring Federal Grid Company’s liability for caus-
ing harm to life, health and/or property of other
parties and the surrounding environment in the
case of an HIF accident;
Receiving a positive appraisal from the industrial
safety commission of experts on objects’ compli-
ance with industrial safety requirements of the
Federal Environmental Industrial and Nuclear
Supervision Service of Russia;
170
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
•
•
•
Receiving license No.VP-00-012123(K), dated 11
November, 2010, on activities to exploit explo-
sion-hazardous production facilities;
Organizing production control of the observance
of industrial safety requirements at the Com-
pany’s HIFs;
Conducting training and the certifi cation of per-
sonnel in the industrial safety fi eld;
In 2010 no accidents and incidents were
registered at the Company’s HIFs. There
was no damage from accidents and
incidents at the Company’s HIFs.
Fire Safety
During 2010 at Federal Grid Company facilities there
were 12 technological breaches accompanied with
fi re in substation equipment.
On a semi-annual basis, Federal Grid Company person-
nel participated in fi re-fi ghting training and exercises
conducted by the Company together with divisions of
fi re protection services of the Russian Civil Defense
Ministry. Company employees learn fi re safety basics in
a timely manner and undergo fi re protection instruction
and complete fi re safety knowledge tests.
In 2010 the Company received license from the Russian
Civil Defense Ministry on activities for installing, repair-
ing and servicing fi re safety means for buildings and
constructions No.8-2/02172 dated 15 October, 2010.
171
ATTACHMENTS
MOVING FORWARD
WITH NEW ENERGY
ANNUAL REPORT
2010
2010 RAS FINANCIAL
STATEMENTS
AND AUDIT REPORT
AUDIT REPORT
FOR 2010
Federal Grid Company of the
Unified Energy System (FGC UES)
Audit Report for 2010
174
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Audit Report
To shareholders of Federal Grid Company of the Unified Energy System (FGC UES)
Information about the Audited Entity
Name:
Open Joint Stock Company “Federal Grid Company”
State Registration:
State registration certificate No. 21081 series LO-002 issued by the Leningrad Region Registration Chamber on 25
June, 2002, registered and included into a register under No. 00/03124.
Certificate of inclusion in the Unified State Register of Legal Entities, regarding the legal entity registered prior to
1 July, 2002 under basic State registration No. 1024701893336, as issued by the Inspectorate of the Russian
Ministry of Taxes and Duties of the Tosnensky District of the Leningrad Region on 20 August, 2002.
Registered Office:
5а Akademika Tchelomeya Street, Moscow, Russia, 117630
Information about the Audit Company
Name:
Closed Joint Stock Company “PricewaterhouseCoopers Audit“ (ZAO “PwC Audit”)
Registered Office:
10 Butyrsky Val Street, Moscow, Russia, 125407
State Registration:
State registration certificate No. 008.890 issued by Moscow Registration Bureau on 28 February, 1992.
Certificate of inclusion in the Unified State Register of Legal Entities, regarding the legal entity registered prior to
1 July, 2002 No. 1027700148431, as issued by the Inter-regional Inspectorate of the Russian Ministry of Taxes and
Duties No. 39 for Moscow City on 22 August, 2002.
Information on the auditor’s membership in self-regulated organizations:
Member of the Not-for-Profit Partnership Audit Chamber of Russia (ACR), a self-regulated association of auditors,
registration No. 870 in the ACR Register of members.
Basic registration No. 10201003683 in the State Register of Auditors and Audit Organizations.
Closed Joint Stock Company “PricewaterhouseCoopers Audit“ (ZAO “PwC Audit”)
10 Butyrsky Val Street, Moscow, Russia, 125407
Tel: +7 (495) 967-6000, Fax:+7 (495) 967-6001, www.pwc.ru
2 /4
175
Audit Report
To shareholders of Federal Grid Company of the Unified Energy System (FGC UES):
We have audited the attached financial (accounting) reports of Open Joint Stock Company “Federal Grid Company
of the Unified Energy System” (hereinafter referred to as “the Company”) consisting of the Accounting Balance
Sheet as of 31 December, 2010, Profit and Loss Statement, Statement of Changes in Stockholder’s Equity, Cash
Flow Statement, Notes to the Accounting Balance and Explanatory Notes (hereinafter, all the reports together are
called “Financial (accounting) reports”).
The Company's responsibility for Financial (accounting) reports
The Company’s executive body is responsible for the preparation and accuracy of the Financial (accounting)
reports in compliance with accounting procedures established in the Russian Federation, accounting requirements
and the internal control system necessary for the preparation of the Financial (accounting) reports free of material
misstatements resulting from malpractice or errors.
Audit Company responsibility
Our responsibility is to express an opinion on the fairness of the financial statements on the basis of our audit. We
conducted our audit in accordance with the Federal Standards on Auditing and International Auditing Standards.
These standards require complying with applicable ethical norms, as well as planning and conducting the audit in
a manner that allows us to obtain reasonable assurance about whether the Financial (accounting) reports are free
of material misstatements.
The audit includes conducting audit procedures aimed at receiving audit evidence supporting the amounts and
disclosures in the Financial (accounting) reports. The selection of audit procedures is a subject of our assessment
based on the estimated risk of material misstatements resulting from malpractice or errors. During the process of
this risk assessment, we considered the internal control system providing preparation and accuracy of the
Financial (accounting) reports for the purpose of selecting the appropriate audit procedures, but not for expressing
an opinion on the efficiency of the internal control system. The audit also includes an assessment of compliance
with accounting principles, an evaluation of significant estimates made by the management of the Company and
the overall Financial (accounting) reports presentation. We believe that our audit provides a reasonable basis for
our opinion on the fairness of the Financial (accounting) reports.
Closed Joint Stock Company “PricewaterhouseCoopers Audit“ (ZAO “PwC Audit”)
10 Butyrsky Val Street, Moscow, Russia, 125407
Tel: +7 (495) 967-6000, Fax:+7 (495) 967-6001, www.pwc.ru
3 /4
176
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Opinion
In our opinion, the financial (accounting) reports of the Company attached to this report have been properly
prepared to present, in all material respects, the financial position of the Company as of 31 December, 2010, its
financial and operating results and cash flow in accordance with Russian Accounting Standards.
Director, PricewaterhouseCoopers Audit
29 March, 2011
Vyacheslav Sokolov
Closed Joint Stock Company “PricewaterhouseCoopers Audit“ (ZAO “PwC Audit”)
10 Butyrsky Val Street, Moscow, Russia, 125407
Tel: +7 (495) 967-6000, Fax:+7 (495) 967-6001, www.pwc.ru
4/4
177
BALANCE
SHEET
FOR 2010
BALANCE SHEET
as of
December 31
2010
Form No. 1 according to the All-Russian
Classifier of Management Documentation
Date (year, month, day)
Open Joint Stock Company
Federal Grid Company of Unified Energy System
according to the All-Russian National Classifier
of Businesses and Organizations
to the Order
of Ministry
of Finance of the
Russian Federation
dated 22.07.2003
No. 67(cid:615)
CODES
0710001
2010 12
31
56947007
Organization
Taxpayer identification number
Type of activity
Economic Activity
Form of incorporation / Form of ownership
Open Joint Stock Company / mixed ownership with federal state share
Power transmission according to the All-Russian Classifier of Types of
according to All-Russian Classifier of Forms of Ownership /
All-
Russian Classifier of Forms of Incorporation
Measurement unit
ths. rub. according to the All Russian Classifier of Measurement Units
Location (address)
5A, Akademika Chelomeya st., Moscow, 117630
TIN
4716016979
40.10.2
47
41
384/38
ASSET
1
I. FIXED ASSETS
Intangible asset including:
rights to patents, programs, logotypes and other similar
other kinds of intangible assets
Capital assets
including:
Land plots and nature management facilities
Buildings, machine and equipment, structures
Other types of capital assets
Construction in progress (uncompleted construction)
including:
Equipment to be installed
Investments in fixed assets
Income-bearing investments in material valuables
Long-term financial investments
Deferred tax assets
Other fixed assets
TOTAL for Section I
II. CURRENT ASSETS
Inventory including:
raw stocks, materials and other similar values
investments in production in process (uncompleted)
finished goods and goods for resale
deferred expenses
other inventories and investments
Value-added tax for acquired values
Accounts receivable (payments expected in more than
12 months period from the reporting date)
including:
buyers and customers
Advance payments paid
other debtors
Accounts receivable (payments expected within 12 months
period from the reporting date) including:
buyers and customers
Contributions to the authorized capital unpaid by
participants (incorporators)
Advance payments paid
other debtors
Short-term financial investments
Cash in banks and on
hand
cash on hand
Bank accounts
Foreign currency accounts
Monetary instruments:
Other cash
Other current assets
TOTAL for Section II
BALANCE
Date of approval
Send/acceptance date
21.03.2011
Index
Code
2
As of the beginning of
reporting period
3
As of the end
of reporting period
4
110
111
112
120
121
122
123
130
131
132
135
140
145
150
190
210
211
213
214
216
217
220
230
231
234
235
240
241
242
243
244
250
260
261
262
263
264
265
270
290
300
1 396 257
977 021
419 236
237 753 751
156 495
235 778 695
1 818 561
216 529 585
18 484 815
198 044 770
–
66 970 387
–
1 415 088
524 065 068
2 427 514
2 262 155
–
29 993
135 366
–
2 070 794
20 492 819
185 910
36
20 306 873
117 170 891
8 949 413
–
67 036 337
41 185 141
69 120 125
11 312 141
2 439
11 305 731
–
3 962
917 625
696 044
221 581
236 193 167
827 221
232 958 699
2 407 247
298 644 138
17 905 969
280 738 169
–
104 137 547
–
894 579
640 787 056
4 632 226
4 407 467
–
30 011
194 748
–
2 295 467
8 696 249
68 106
–
8 628 143
157 647 614
8 669 641
–
97 636 854
51 341 119
46 244 024
11 243 302
3 664
11 233 055
–
1
6 582
222 601 884
746 666 952
230 758 882
871 545 938
178
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
LIABILITIES
1
III. CAPITAL AND RESERVES
Registered capital
Own shares acquired from shareholders
Added capital
Reserve capital
Previous years' uncovered loss
Unappropriated profit of previous years
Unappropriated profit of reporting year
Unappropriated losses of reporting year
TOTAL for Section III
IV. LONG-TERM LIABILITIES
Borrowings and credits
Deferred tax liabilities
Other long-term liabilities
TOTAL for Section IV
V. SHORT-TERM LIABILITIES
Borrowings and credits
Accounts payable including:
suppliers and contractors
organization personnel liabilities
state non-budgetary funds liabilities
taxes payable
Advance payments received
other creditors
Income payments payable to members (incorporators)
Deferred revenue
Reserves for costs to be incurred
Other short-term liabilities
TOTAL for Section V
BALANCE
REFERENCE to the values, registered in off balance
sheet accounts
Leased fixed assets
Including those under lease
Material assets accepted for safe custody
Consigned goods
Written off debts of insolvent debtors
Received liabilities and payments securities
Given liabilities and payments securities
Housing funds depreciation
Depreciation of external public facilities and other
similar facilities
Intangible assets received
Work clothes
Registered high-security forms
Index
Code
2
As of the beginning
of reporting year
3
Form 0710001 p. 2
As of the end
of reporting period
4
410
411
420
430
460
465
470
475
490
510
515
520
590
610
620
621
622
623
624
627
625
630
640
650
660
690
700
910
911
920
930
940
950
960
970
980
990
991
1000
576 757 098
–
147 596 367
10 134 044
(68 870 025)
–
–
–
665 617 484
6 000 000
1 435 064
5 098
7 440 162
7 481 469
65 802 620
11 018 708
134 473
18 906
653 884
7 114 653
46 861 996
46 898
278 319
–
–
73 609 306
746 666 952
6 189 371
–
633 348
–
414 819
70 943 984
30 815
–
–
–
–
11
616 780 667
–
147 465 640
10 134 044
(68 584 944)
–
58 088 388
–
763 883 795
50 000 000
2 649 711
18 179
52 667 890
6 941 422
47 727 617
14 017 237
193 318
36 486
865 113
11 476 694
21 138 769
46 898
278 316
–
–
54 994 253
871 545 938
13 693 765
–
638 163
–
557 510
115 203 743
30 815
63
–
–
–
19
Managing Director
D.A. Troshenkov
Chief accountant
signature
21st of March 2011
signature
V.V. Schukin
(name)
Auditor _____
179
PROFIT AND LOSS
STATEMENT
FOR 2010
PROFIT AND LOSS STATEMENT
For 2010
Form No. 2 according to All-Russian Classifier
of Management Documentation
Date (year, month, day)
Open Joint Stock Company
Organization
Federal Grid Company of Unified Energy System
according to the All-Russian National Classifier of Businesses and Organizations
Taxpayer identification number
Type of activity
Economic Activity
Form of incorporation / Form of ownership
TIN
Power transmission according to the All-Russian Classifier of Types of
Appendix to the Order
of Ministry of Finance
of the Russian
Federation dated
22.07.2003 No. 67(cid:615)
CODES
0710002
2010
12
31
56947007
4716016979
40.10.2
47
41
Open Joint Stock Company / mixed ownership with federal state share
according to All-Russian Classifier of Forms of Ownership /
All-Russian Classifier of Forms of Incorporation
Measurement unit: ths. rub according to the All Russian Classifier of Measurement Units
384/385
Item
description
1
Code
2
For reporting period For the same period
of the preceding year
4
3
Income and expenditures as per common activities
Sales (net) revenues as per goods, production, works, services
(ex VAT, excise taxes and similar compulsory payments)
including
Power transmission services
other activity
Cost value of sold goods, production, works and services
including:
Power transmission services
other activity
Gross margin (010 + 020)
Business expenses
Administrative expenses
Sales profit (losses) (029 + 030 + 040)
Other income and expenditures
Interest to receive
Interest to pay
Income from shareholding in other organizations
Other revenues
Other expenditures
Profit (losses) prior to taxation
(050 + 060 + 070 + 080 + 090 + 100)
Conventional cost of profit tax (140 × 20 %)
Constant tax liabilities
Deferred tax assets
Deferred tax liabilities
Current profit tax (143+200-141-142)
Other similar mandatory payments
Adjustment of profit tax in previous tax periods
Net profit (losses) for the reporting period (140 + 143 + 200 +
151 + 152) or (140 + 141 + 142 + 150 + 151 + 152)
FOR REFERENCE ONLY:
Basic earnings (losses) per share
Diluted earnings (losses) per 100 000 000 shares
010
011
012
020
021
022
029
030
040
050
060
070
080
090
100
140
143
200
141
142
150
151
152
190
201
202
111 084 675
85 077 809
109 510 275
1 574 400
80 173 317
4 904 492
(75 518 397)
(64 079 927)
(74 694 570)
(823 827)
35 566 278
–
(6 209 146)
29 357 132
(62 732 093)
(1 347 834)
20 997 882
–
(5 128 305)
15 869 577
5 436 238
7 291952
(273 751)
422 310
142 534 195
(109 157 601)
(1 717 506)
717 256
105 760 531
(181 970 591)
68 318 523
(54 048 781)
(13 663 705)
3 184 752
(33 442)
(1 181 205)
(9 264 306)
43 226
205 592
10 809 756
(16 588 331)
(180 217)
(722 009)
(4 876 349)
(4 642)
(33 996)
58 088 388
(69 865 994)
4 760
–
–5 190
180
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
INTERPRETATION OF CERTAIN PROFITS AND LOSSES
Index
For reporting period
For the same period of the preceding year
Description
1
Confirmed fines, penalties
and forfeits, and those upon
which a decision of
(arbitration) court has been
taken to be collected
Previous years' profit (loss)
Indemnity for losses caused
by non-fulfillment or
inadequate fulfillment of
obligations
Exchange difference with
foreign currency operations
Allocations to assessed
reserves
Receivables and payables
writing off for which the
period of limitation has
expired
Code
2
profit
3
loss
4
profit
5
loss
6
230
495 902
31 922
397 323
40 390
240
250
260
270
320 195
229 331
412 431
521 681
–
–
–
–
10 970
10 017
26 455
15 949
×
18 611 054
×
9 404 732
280
185
142 486
6 556
9 122
Managing Director
D.A. Troshenkov
Chief accountant
signature
21st of March 2011
signature
V.V. Schukin
(name)
Stamp:
Annex to the audit review executed by ZAO PricewaterhouseCoopers Audit
21st of March 2011
Auditor__________________
181
STATEMENT OF CHANGES
IN STOCKHOLDER’S EQUITY
FOR 2010
STATEMENT OF CHANGES IN
STOCKHOLDER’S EQUITY
Supplement
to Order of the Ministry of Finance
of the Russian Federation
dated 22.07.2003 No. 67n
CODES
“Federal Grid Company
of Unified Energy System”,
JOINT-STOCK COMPANY
Power transmission
Open Joint Stock Company/mixed ownership
with federal state share
ths. rub.
Form No. 3 according to the All-
Russian Classifier of Management
Documentation
Date (year, month, day) 2010
0710003
12
31
according to the All-Russian National
Classifier of Businesses and
Organizations
TIN
All-Russian Classifier of Types of
Economic Activity
according to All-Russian Classifier of
Forms of Ownership/All-Russian
Classifier of Forms of Incorporation
56947007
4716016979
40.10.2
47
41
384/385
Index
Description
1. Changes in Capital
Added capital
Registered
capital
Code
Reserve
capital
Unappropriated
balance
(uncovered
losses)
6
Total
7
2
3
4
5
010
576 757 098
52 597 360
9 910 770
26 912 201
166 177 429
011
012
013
020
023
025
026
030
040
041
042
043
044
050
051
052
053
054
055
X
X
X
X
6 905 053
(cid:237)
X
X
X
(33 836 387)
(33 836 387)
(20 914)
103 572
6 925 967
103 572
576 757 098
59 502 413
9 910 770
(6 841 528)
639 328 753
X
X
X
X
0
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
X
X
X
0
X
X
(cid:237)
(115 761)
X
X
X
(115 761)
(cid:237)
X
X
X
223 274
(cid:237)
X
X
(cid:237)
(59 865 994)
(cid:237)
(223 274)
4 644
X
(59 865 994)
(cid:237)
(cid:237)
4 644
(cid:237)
X
(cid:237)
(cid:237)
X
X
X
(cid:237)
(cid:237)
X
(cid:237)
4 644
115 761
X
X
(cid:237)
115 761
(cid:237)
(cid:237)
(cid:237)
4 644
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
060
576 757 098
59 386 652
10 134 044
(66 810 391)
579 467 403
061
062
063
100
103
105
106
X
X
X
X
88 209 715
(cid:237)
X
X
X
(cid:237)
(cid:237)
(2 059 634)
86 150 081
(cid:237)
576 757 098
147 596 367
10 134 044
68 870 025
665 617 484
X
X
X
(cid:237)
X
X
X
X
X
X
58 088 388
58 088 388
1
Balance as of December 31 of the
year preceding the previous one
2009
(previous year)
changes in accounting
policy
Result from reassessment of fixed
asset items
Changes in accounting rules
Balance as of January 1
of the preceding year
Result from recalculation of foreign
currencies
Net profit
Dividends
Allocations to reserve fund
Increase of capital amount due to:
additional emission of shares
increase of nominal
share value
reorganization of legal entity
miscellaneous
Reduction of capital amount due to:
decrease of nominal share value
decrease of shares quantity
reorganization of legal entity
miscellaneous
own shares acquired from
shareholders
Balance as of December 31
of the preceding year
2010
(reporting year)
Changes in accounting policy
Result from reassessment of fixed
asset items
Changes in accounting rules
Demand balance as of January 1
of the reporting year
Result from recalculation of foreign
currencies
Net profit
Dividends
182
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
1
Allocations to reserve fund
Increase of capital amount due to:
additional emission of shares
Increase of nominal share
value
reorganization of legal entity
miscellaneous
own shares acquired from
shareholders
Reduction of capital amount due to:
decrease of nominal share value
decrease of share quantity
reorganization of legal entity
miscellaneous
Balance as of December 31
of the reporting year
2
110
120
121
122
123
124
125
130
131
132
133
134
3
X
40 023 569
40 023 569
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
4
X
154 354
X
X
X
154 354
(cid:237)
(285 081)
X
X
X
(285 081)
5
Form 0710003 p. 2
7
6
(cid:237)
(cid:237)
X
X
X
(cid:237)
(cid:237)
285 081
X
X
(cid:237)
285 081
(cid:237)
40 177 923
40 023 569
(cid:237)
(cid:237)
154 354
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
X
X
X
X
(cid:237)
(cid:237)
X
X
X
X
(cid:237)
140
616 780 667
147 465 640
10 134 044
(10 496 556)
763 883 795
II. Reserves
Balance
Received
Allocated
Balance
3
4
9 910 770
223 274
10 134 044
(cid:237)
(cid:237)
(cid:237)
(cid:237)
5
(cid:237)
(cid:237)
6
10 134 044
10 134 044
(cid:237)
35 422 113
21 306 841
5 902 136
14 036 443
(20 017 408)
(20 897 766)
21 306 841
14 445 518
5 164 814
8 667 335
3 502 596
3 913 434
(75)
(499)
8 667 335
12 580 270
(cid:237)
(cid:237)
References
(cid:237)
(cid:237)
(cid:237)
(661 177)
661 177
Balance as of the
beginning of
reporting year
3
665 895 803
Balance as of the end
of reporting year
4
764 162 111
From budget
From non-budget funds
For the reporting
year
For the
preceding year
3
(cid:237)
(cid:237)
(cid:237)
(cid:237)
4
(cid:237)
(cid:237)
(cid:237)
(cid:237)
For
the reporting
year
5
90
(cid:237)
(cid:237)
90
For the preceding year
6
119
(cid:237)
(cid:237)
119
Code
2
150
151
152
153
160
161
162
163
164
165
Code
2
200
210
211
220
230
Index
Description
1
Reserves accumulated in accordance with
the legislation:
Data on the reporting year
stock, accumulated in accordance
with the constitutive documents
Data on the reporting year
Assessed reserves:
Reserve for doubtful debts
(reserve description)
Data on the reporting year
Reserve for devaluation of financial investments
(reserve description)
Data on the reporting year
Reserve for decline in material values
(reserve description)
Data on the reporting year
Index
Description
1
1) Net assets
2) Received for:
common activity costs – total
including:
payments to Chernobyl liquidators
capital investments in non-current assets
miscellaneous
"29" _______ March,_____ 20
11
183
CASH FLOW
STATEMENT
FOR 2010
CASH FLOW STATEMENT
for 2010
“Federal Grid Company
of Unified Energy System”,
JOINT-STOCK COMPANY
Organization
Taxpayer identification number
Type of activity
Form of incorporation/Form of ownership
Power transmission
Unit of measurement
Open Joint Stock Company/mixed
ownership with federal state share
ths. rub.
Index
Description
1
Cash funds balance as of the beginning of reporting year
Cash flow as per current activity
Cash receipts from buyers and/or customers
Receipts of acquired foreign currency
Receipts from insured accidents
Other revenues
Cash paid for:
purchased goods, works, services, raw stock and other current
assets
labor compensation
for payment of dividends, interest
taxes and receipts payments
for insured accidents
for other expenses
Net cash generated from current activity
Cash flow as per investment activity
Sales revenue as per items of fixed assets and other capital assets
Sales revenues as per securities and other financial assets
Dividends received
Interest received
Revenues from repayment of loans, made to other
organizations
Other revenues
Cash paid for:
acquisition of associated companies
acquisition of fixed assets items, income-bearing placements in
material values and intangible assets
acquisition of securities and other financial assets
loans, made to other organizations
for other expenses
Net cash per investment activity
184
Supplement to Order of the Ministry
of Finance of the Russian
Federation
dated 22.07.2003 No. 67n
Form No. 4 according to the All-
Russian Classifier of Management
Documentation
Date (year, month, day)
according to the All-Russian National
Classifier of Businesses and
Organizations
TIN
All-Russian Classifier of Types of
Economic Activity
according to All-Russian Classifier of
Forms of Ownership/All-Russian
Classifier of Forms of Incorporation
CODES
0710003
2010
12
31
56947007
4716016979
40.10.2
47
41
384/385
Code
2
010
020
030
040
05\0
For the reporting
period
3
11 312 132
133 188 863
649 385
–
12 347 308
For the same period
of the preceding
year
4
5 640 051
94 010 235
290 642
–
13 414 676
150
160
170
180
181
190
200
210
220
230
240
250
260
280
290
300
310
320
340
(38 168 553)
(43 950 985)
(11 749 439)
(724 760)
(13 727 359)
–
(5 907 128)
75 908 317
1 111 437
179 538 445
528 599
1 796 274
–
492 432
(5 589 044)
(2 122 038)
(6 142 236)
–
(2 185 427)
47 725 823
307 731
276 911 503
860 603
3 118 353
–
–
(8 499 011)
(167 831 053)
(99 466 324)
(145 192 282)
(59 804)
(129 615 952)
(235 405 935
(6 653)
(7 611)
(62 187 3441
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
1
Cash flow as per financial activity
Revenues from emission of shares and other equity securities
Revenues from loans and borrowings, made by other
organizations
Revenues from target financing
Other revenues
Cash paid for:
repayment of loans and borrowings (ex interest)
for other expenses
Net cash as per financial activity
Net increase (decrease) of cash funds and their equivalents
Demand balance as of the end of the reporting period
Effect of currency rate fluctuation in relation to ruble
2
350
360
370
380
390
405
410
420
430
440
3
4
11 193 854
40 180 434
49 990 500
4 000 000
100
2
(7 366 440)
(179 212)
53 638 804
(68 831)
and 243 301
–
–
–
(23 980 000)
(66 832)
20 133 602
5 672 081
11 312 132
–
"29" _______ March _____ 2011
185
NOTES TO
THE BALANCE SHEET
FOR 2010
MF FTX RF KN No. 4
RECEIVED
March 30 2011
NOTES TO THE BALANCE SHEET
for 2010
Supplement to Order of the Ministry
of Finance of the Russian
Federation
dated 22.07.2003 No. 67n
CODES
Form No. 5 according to the All-
Russian Classifier of Management
Documentation
Date (year, month, day) 2010
0710005
12
31
Organization
Taxpayer identification
number
Type of activity
Form of incorporation/Form
of ownership
“Federal Grid Company
of Unified Energy System”,
JOINT-STOCK COMPANY
Power transmission
Open Joint Stock Company/mixed
ownership with federal state share
ths. rub.
according to the All-Russian National
Classifier of Businesses and
Organizations
TIN
All-Russian Classifier of Types of
Economic Activity
according to All-Russian Classifier of
Forms of Ownership/All-Russian
Classifier of Forms of Incorporation
56947007
4716016979
40.10.2
47
41
384/385
Received
Withdrawn
Index
Description
1
Intangible assets
Availability as
of the beginning
of reporting year
3
Code
2
4
Intellectual properties
(exclusive rights for the results
of intellectual property)
including:
patent holder for invention,
industrial prototype, useful
model
right holder for PC
software, data bases
right holder for lay-out
of integrated circuits
owner of trade mark
and service mark, place
description of goods origin
patent holder for selection
achievements
Organizational costs
Business reputation
Other
Total
010
1 288 243
46 046
011
9 715
30 775
012
1 278 282
15 271
013
014
015
020
030
040
045
(cid:237)
246
(cid:237)
(cid:237)
(cid:237)
1 054 619
2 342 862
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
21 407
67 453
5
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
Availability as of
the end of reporting
period
6
1 334 289
40 490
1 293 553
(cid:237)
246
(cid:237)
(cid:237)
(cid:237)
1 076 026
2 410 315
As of the end of
reporting period
4
1 492 690
636 258
Index
Description
1
Depreciation of intangible assets (cid:237) total
including:
Item of intellectual property
Code
2
050
As of the beginning
of reporting year
3
946 605
310 648
186
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Index
Description
Code
1
Buildings
Structures and transfer gears
Machines and equipment
Transport vehicles
Production and auxiliary
equipment
Draught livestock
Productive livestock
Perennial plantings
Other types of fixed assets
Land plots and nature
management facilities
Capital investment
in land reclamation
Total
Fixed Capital Assets
Availability as of
the beginning of
reporting year
3
15 741 565
296 796 975
92 238 177
2 065 864
1 133 307
(cid:237)
(cid:237)
(cid:237)
291 813
156 495
Received
Withdrawn
4
2 468 613
7 354 863
19 634 426
967 877
222 246
(cid:237)
(cid:237)
(cid:237)
107 252
676 567
5
(366 067)
(372 626)
(1 052 239)
(112 132)
(27 252)
(cid:237)
(cid:237)
(cid:237)
(54 153)
5 841
Form 0710005 p. 2
Availability as of
the end of reporting
period
6
17 844 111
303 779 212
110 820 364
2 921 609
1 328 301
(cid:237)
(cid:237)
–
344 912
827 221
(cid:237)
(cid:237)
(cid:237)
2
110
111
112
113
114
115
116
117
118
119
120
130
408 424 196
31 431 844
(1 990 310)
437 865 730
Index
Description
1
Deprecation of fixed assets – total
including:
buildings and
structures
machines, equipment, transport means
others
Leased out fixed asset items – total
including:
buildings
and structures
machines, equipment, transport means
others
Preserved fixed asset items
Rented fixed asset items – total
including: buildings
and structures
machines, equipment, transport means
others
Immovable property items put into operation which
documents were not handed over to the state
For reference:
Result from reevaluation of fixed asset items:
initial (replacement) cost
depreciation
Change in the cost of fixed asset items due to completion,
further fitting-out, reconstruction, partial liquidation
As of the beginning
of reporting year
As of the end of
reporting period
3
170 670 445
135 451 256
4
201 672 563
156 804 949
Code
2
140
141
142
143
150
151
152
153
155
160
161
162
163
165
34 379 931
839 258
6 197 246
5 472 116
703 610
21 520
8 354
6 189 371
2 437 885
1 521 222
2 230 264
5 241 196
43 797 564
1 070 050
5 594 610
4 966 807
573 827
53 976
62
13 693 765
2 582 992
1 818 263
9 292 510
9 306 220
Code
As of the beginning
of reporting year
2
170
171
172
Code As of the beginning
3
86 150 081
135 092 840
48 942 759
of reporting year
2
180
3
1 303 037
As of the beginning
of preceding
year
4
6 884 139
10 350 330
3 466 191
As of the end of
reporting year
4
4 798 581
187
ATTACHMENTS
Income-bearing investments into material valuables
Index
Description
1
Property to be leased out
Property received
under lease
agreement
Other
Total
1
Depreciation of income-
bearing investments into
material values
Availability as of
the beginning of
reporting year
3
(cid:237)
(cid:237)
(cid:237)
(cid:237)
As of the
beginning of
reporting year
3
(cid:237)
Code
2
210
220
230
240
Code
2
250
Received
Withdrawn
5
(cid:237)
(cid:237)
(cid:237)
(cid:237)
4
(cid:237)
(cid:237)
(cid:237)
(cid:237)
As of the end of
reporting period
4
(cid:237)
Form 0710005 p. 3
Availability as of
the end of reporting
period
6
(cid:237)
(cid:237)
(cid:237)
(cid:237)
Costs for research and scientific as well as for design and development works
Received
Written off Availability as of
Type of work
Description
Code
Availability
as of the beginning
of reporting year
1
Total
including:
Works on creation of power for distribution
networks based on high temperature
superconducting technologies
miscellaneous
2
310
311
312
313
3
751 001
(cid:237)
133 208
617 793
4
1619 420
(cid:237)
5
(1 158 460)
(cid:237)
(cid:237)
(5 791)
1 619 420
For reference :
Total cost of uncompleted research and research and scientific as well
as for design and development works
The sum of costs for research and scientific as well as for design
and development and technologic works that did not bring in
positive results and are referred to extraordinary charges
Code
2
320
Code
2
330
(1152 669)
As of the
beginning of
reporting year
3
677 196
For the
reporting
period
3
–
the end of reporting
period
6
1 211 961
(cid:237)
127417
1 084 544
As of the end of
reporting year
4
956 714
For the same period
of the preceding
year
4
–
Costs for natural resources development
Index
Description
Code
Balance as of the
beginning of
reporting period
1
Cost for natural resources
development (cid:237) total
including:
2
410
411
412
413
3
(cid:237)
(cid:237)
(cid:237)
(cid:237)
For reference:
The sum of costs for subsurface portions, uncompleted
exploration, surveys and (or) hydrogeological surveys and
other similar works
The sum of costs for resource development in the
reporting period allocated to extraordinary charges as
ineffective
Received
Written off Balance as of the
end of reporting
year
5
(cid:237)
(cid:237)
(cid:237)
(cid:237)
As of the
beginning of
reporting year
3
6
(cid:237)
(cid:237)
(cid:237)
(cid:237)
As of the end of
reporting period
4
4
(cid:237)
(cid:237)
(cid:237)
(cid:237)
Code
2
420
430
188
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Index
Description
1
Investments in registered
and reserve capitals of other
organizations (cid:237) total
including those of
associated and dependent
economic organizations
State and municipal
securities
Securities of other
organizations-total
including debt
securities (debentures,
promissory notes)
Made loans
Deposits
Other
Total
Financial investments from
the total sum having
current market value:
Investments in registered
(reserve) capitals of other
organizations (cid:237) total
Including those of daughter
and dependent economic
organizations
State and municipal
securities
Securities of other
organizations (cid:237) total
Including debt
securities (debentures,
promissory notes)
Other
Total
For reference:
Change in value due to
correction of evaluation for
financial investments having
current market
For debt securities the
difference between initial
values and nominal value is
allocated to the financial result
of reporting period
Financial investments
Long-term
As of the
beginning of
reporting year
3
Code
2
As of the end of
reporting period
4
510
66 194 804
94 896 533
511
58 903 317
85 835 487
(cid:237)
(cid:237)
Form 0710005 p. 4
Short-term
As of the
beginning of
reporting year
As of the end of
reporting period
5
(cid:237)
(cid:237)
(cid:237)
6
(cid:237)
(cid:237)
(cid:237)
515
520
521
525
530
535
540
469 301
8 935 682
44 190 554
42 356 353
469 301
8 935 682
44 190 554
42 356 353
303 113
(cid:237)
3 169
66 970 387
302 163
(cid:237)
3 169
104 137 547
887 671
24 049 500
887 671
3 000 000
(cid:237)
69 127 725
46 244 024
550
47 075 372
67 368 001
(cid:237)
(cid:237)
551
40 338 195
21 851 019
555
560
561
565
570
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
47 075 372
(cid:237)
67 368 001
580
(79 905 889)
29 915 526
590
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
(cid:237)
189
ATTACHMENTS
Accounts payable and receivable
Form 0710005 p. 5
Index
Description
1
Accounts payable:
Short term (cid:237) total
including:
transactions with buyers and customers
advance payments paid
other
Long term (cid:237) total
including:
transactions with buyers and customers
advance payments paid
other
Total
Accounts receivable:
Short term (cid:237) total
including:
transactions with suppliers and subcontractors
advance payments received
tax and levy payments
credits
loans
other
Long term -total
including:
credits
loans
other
Total
Balance as of the
beginning of
reporting year
Balance as of the
beginning of
reporting year
3
4
117 170 891
157 647 614
8 949 413
67 036 337
41 185 141
20 492 819
185 910
36
20 306 873
137 663 710
73 284 089
8 669 641
97 636 854
51 341 119
8 696 249
68 106
8 628 143
166 343 863
54 669 039
11 018 708
14 017 237
7 114 653
672 790
7 481 469
46 996 469
6 005 098
6 000 000
5 098
79 289 187
11 476 694
901 599
–
6 941 422
21 332 087
50 018 179
–
50 000 000
18 179
104 687 218
Code
2
610
611
612
613
620
621
622
623
630
640
641
642
643
644
645
646
650
651
652
653
660
Costs for common activities (by cost categories)
Index
Description
For the reporting
period
Code
2
710
720
730
740
750
760
765
3
24 309 909
13 331 116
2 249 899
32 681 907
9 154 712
81 727 543
766
767
18 608
For the preceding
year
4
30 035 110
6 758 157
1 084 984
23 417 508
7 912 473
69 208 232
(1 656 251)
–
–
–
–
1
Materials costs
Labor costs
Social cost allocations
Depreciation
Other costs
Total by cost category
Change in balances (increase [+], decrease [(cid:237)]):
Uncompleted production
unexpired costs
reserves for costs to be incurred
190
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Form 0710005 p. 6
Balance as
of the end of
reporting year
4
115 203 743
Balance as of the
beginning of
reporting year
3
70 943 984
1 231 579
–
–
–
–
30 815
–
–
–
–
–
–
–
–
30 815
–
–
–
–
–
Reporting period
3
–
–
For the same period
of the preceding
year
4
–
–
As of the
beginning
of
reporting
year
–
–
Received
for the
reporting
period
Returned
for the
reporting
period
As of the
end of
reporting
period
–
–
–
–
–
–
Received liabilities
Index
Code
2
810
811
820
821
822
823
830
831
840
841
842
843
Code
2
910
911
912
920
921
922
Description
1
Received total
including:
promissory
notes
Property being in pawn
from it:
fixed asset items
securities and other financial investments
miscellaneous
Given – total
including:
promissory
notes
Property in prawn
from it:
fixed asset items
securities and other financial investments
miscellaneous
State support
Index
Description
1
Budget funds received in the reporting period – total
including:
miscellaneous
Budget credits – total
including:
miscellaneous
"29 " ______ March,_____ 2011
191
ATTACHMENTS
MOVING FORWARD
WITH NEW ENERGY
ANNUAL REPORT
2010
2009 RAS FINANCIAL
STATEMENTS
AND AUDIT REPORT
AUDIT REPORT
FOR 2009
PricewaterhouseCoopers Audit
White Square Office Center
10 Butyrsky Val,
Moscow, Russia, 125047
Telephone: +7 (495) 967-6000
Fax: +7 (495) 967-6001
www.pwc.ru
AUDITOR REPORT ON STATUTORY FINANCIAL
(ACCOUNTING) STATEMENTS 2009
[Translation from the original Russian]
To the shareholders of Federal Grid Company:
Auditor
PricewaterhouseCoopers Audit
State registration certificate No. 008.890, issued by Moscow Registration Bureau
on 28.02.1992.
Certificate of inclusion in the Unified State Register of Legal Entities regarding
a legal entity registered before 01.07.2002, No. 1027700148431, issued by the
Interregional Inspectorate of the Russian Ministry of Taxes and Levies, No. 39 for
the Moscow City, on 22.08.2002.
Member of non-profit partnership Audit Chamber of Russia (NP ACR) being a self-
regulatory organisation of auditors, registration number 870, in the register of NP
ACR members.
Major registration record number (ORNZ) in the register of auditors and audit
organisations: 10201003683
Client
Federal Grid Company
5a Akademika Chelomeya Street, Moscow, 117630
State registration certificate No. 21081, series LO-002, issued by Leningrad Region
Registration Bureau on 25.06.2002, number in the Unified State Register of Legal
Entities No. 00/03124.
Certificate of inclusion in the Unified State Register of Legal Entities regarding a legal
entity registered prior to 01.07.2002, No. 1024701893336, issued by the Inspectorate
of the Russian Ministry of Taxes and Levies for the Tosno District of Leningrad Region
on 20.08.2002.
194
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
PricewaterhouseCoopers Audit
White Square Office Center
10 Butyrsky Val,
Moscow, Russia, 125047
Telephone: +7 (495) 967-6000
Fax: +7 (495) 967-6001
www.pwc.ru
AUDITOR’S REPORT
on Statutory Financial (Accounting)
Statements of Federal Grid Company
To the Shareholders of Federal Grid Company:
1
2
3
We have audited the attached Statutory Financial (Accounting) Statements
of Federal Grid Company (hereinafter – the Company) for the period from
01.01.2009 up to 31.12.2009, inclusive. Statutory Financial (Accounting)
Statements of the Company consist of the Balance Sheet, Profit and Loss
Account, Statement of Changes in Equity, Cash Flow Statement, Supplement
to the Balance Sheet, Explanatory Notes (hereinafter, the statements as a
whole are called Statutory Financial (Accounting) Statements). The Statutory
Financial (Accounting) Statements were prepared by the management
of the Company in accordance with the legislation of Russian Federation
applicable to Statutory accounting reports. The Statutory Financial
(Accounting) Statements differ to a significant degree from those prepared
in accordance with International Financial Reporting Standards (IFRS).
Preparation of the Statutory Financial (Accounting) Statements is the
responsibility of management of the Company. Our responsibility as auditors
is to express our opinion on the fair presentation, in all material respects, of
the Statutory Financial (Accounting) Statements based on our audit.
We conducted our audit in accordance with The Federal Law titled On
Auditing Activity, Federal Auditing Standards, and International Standards
on Auditing and Company internal standards.
Our audit was planned and performed to obtain reasonable assurance
about whether the Statutory Financial (Accounting) Statements are free
of material misstatement. The audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the Statutory Financial
(Accounting) Statements, assessing compliance with accounting principles,
techniques and rules of the Statutory Financial (Accounting) Statements
preparation, evaluating significant estimates made by the management of
the Company and the overall Statutory Financial (Accounting) Statements
presentation. We believe that our audit provides a reasonable basis
for our opinion on the Statutory Financial (Accounting) Statements.
195
PricewaterhouseCoopers Audit
White Square Office Center
10 Butyrsky Val,
Moscow, Russia, 125047
Telephone: +7 (495) 967-6000
Fax: +7 (495) 967-6001
www.pwc.ru
AUDITOR’S REPORT
4
In our opinion, the Statutory Financial (Accounting) Statements of the
Company attached to this report have been properly prepared to present
fairly, in all material respects, the financial position of the Company as at
31.12.2009 and financial results of its operations for the period from 1
January up to 31.12.2009 in accordance with the legislation of Russian
Federation applicable for Statutory Financial (Accounting) Statements
preparation.
01.04.2010
ATTACHMENTS
196
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
197
BALANCE
SHEET
FOR 2009
BALANCE SHEET
as at 31 December 2009
Company Company Open Joint-Stock Company 'Federal Grid Company of Unified Energy System'
Taxpayer identification number
Field of activity Electric power transmission
Legal form/property form
Open Joint-Stock Company/ Russian mixed ownership with state share
Unit of measurement: thousands of RR
Form N1 on OKUD
Date (year, month, day)
OKPO
INN
OKVED
OKOPF/OKFS
OKEI
Codes
710001
2009/12/31
56947007
4716016979
40.10.2
47/41
384/385
Address 117630, Moscow, Ak. Chelomeya st., 5A
Assets
1
I. NON-CURRENT ASSETS
Intangible assets .......................................................................................................................
including:
patent rights, software, trademarks and other similar assets .............................................
other intangible assets .....................................................................................................
Fixed assets .............................................................................................................................
including:
plots of land and natural resources ..................................................................................
buildings, machinery and equipment, constructions .........................................................
other fixed assets ............................................................................................................
Construction in progress ..........................................................................................................
including:
equipment for installation ................................................................................................
investments in fixed assets ..............................................................................................
Income-bearing investments in tangible assets ..........................................................................
Long-term financial investments ...............................................................................................
Deferred tax asset ....................................................................................................................
Other non-current assets ..........................................................................................................
T o t a l Section I ....................................................................................................
II. CURRENT ASSETS
Inventories ...............................................................................................................................
including:
Raw, materials and other inventories ...............................................................................
Work in progress ............................................................................................................
Finished goods and goods for resale ................................................................................
Expenses related to future periods ...................................................................................
Other inventories and expenses .......................................................................................
Value Added Tax on goods purchased .....................................................................................
Accounts receivable (payment expected beyond
12 months of the reporting date) ...............................................................................................
including:
buyers and customers ......................................................................................................
advances issued ..............................................................................................................
other debtors ...................................................................................................................
Accounts receivable (payment expected within
12 months of the reporting date) ...............................................................................................
including:
buyers and customers .....................................................................................................
shareholders indebtness to Charter Capital .....................................................................
advances issued ..............................................................................................................
other debtors ...................................................................................................................
Short-term investments ............................................................................................................
Cash ........................................................................................................................................
including:
cash on hand ...................................................................................................................
cash at bank ....................................................................................................................
foreign currency accounts ...............................................................................................
financial documents ........................................................................................................
other cash .......................................................................................................................
Other current assets .................................................................................................................
T o t a l Section II ...................................................................................................
TOTAL SECTIONS I and II ....................................................................................
Equity and liabilities
1
III. EQUITY AND RESERVES
Charter capital .........................................................................................................................
Own shares buy-back ..............................................................................................................
Additional capital .....................................................................................................................
Legal reserve ...........................................................................................................................
Retained earnings (loss) ...........................................................................................................
Current year loss ......................................................................................................................
Date of approval
Date of dispatch (acceptance)
30.03.2010
Line
code
2
At beginning of
reporting year
3
At end of reporting
period
4
110
1 535 909
1 396 257
111
112
120
121
122
123
130
131
132
135
140
145
150
190
899 364
636 545
157 129 616
977 021
419 236
151 603 670
39 273
155 676 946
1 413 397
150 373 965
156 495
149 628 614
1 818 561
216 529 585
13 418 743
136 955 222
-
207 778 567
-
1 653 608
518 471 665
18 484 815
198 044 770
-
66 970 387
-
1 415 088
437 914 987
210
3 305 661
2 427 514
211
213
214
216
217
220
230
231
234
235
240
241
242
243
244
250
260
261
262
263
264
265
270
290
300
Line
code
2
410
411
420
430
460
475
1 728 321
-
84 863
1 492 477
-
1 961 283
2 262 155
-
29 993
135 366
-
2 070 794
10 871 826
20 492 819
-
14 413
10 857 413
185 910
36
20 306 873
107 347 626
117 170 891
5 053 894
-
68 970 457
33 323 275
49 390 019
5 640 064
8 949 413
-
67 036 337
41 185 141
69 127 725
11 312 141
2 617
5 635 181
-
13
2 253
-
178 516 479
696 988 144
2 439
11 305 731
-
9
3 962
-
222 601 884
660 516 871
At beginning of
reporting year
At end of reporting year
3
4
576 757 098
-
59 502 413
9 910 770
(6 841 528)
-
576 757 098
-
59 386 652
10 134 044
(6 944 397)
(59 865 994)
1
198
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
T o t a l Section III ..................................................................................................
IV. NON-CURRENT LIABILITIES
Borrowings and bank loans ......................................................................................................
Deferred tax liabilities ..............................................................................................................
Other non-current liabilities ......................................................................................................
T o t a l Section IV .................................................................................................
V. CURRENT LIABILITIES
Borrowings and bank loans ......................................................................................................
Accounts payable .....................................................................................................................
including:
Payable to suppliers and contractors ...........................................................................
Payable to staff ...........................................................................................................
Payable to state non-budget funds ...............................................................................
Taxes payable .............................................................................................................
Advances received ......................................................................................................
Other creditors ............................................................................................................
Payable to participants (shareholders) ......................................................................................
Income of future periods ..........................................................................................................
Reserves for future expenses and payments ..............................................................................
Other current liabilities .............................................................................................................
T o t a l Section V ...................................................................................................
TOTAL SECTIONS III, IV, V .................................................................................
490
639 328 753
579 467 403
510
515
520
590
610
620
621
622
623
624
627
625
630
640
650
660
690
700
18 000 000
517 859
130
18 517 989
6 000 000
1 435 064
5 098
7 440 162
16 161 487
22 601 947
7 481 469
65 802 620
10 175 866
76 713
15 102
295 113
7 096 192
4 942 961
84 474
293 494
-
-
39 141 402
696 988 144
11 018 708
134 473
18 906
653 884
7 114 653
46 861 996
46 898
278 319
-
-
73 609 306
660 516 871
REFERENCE ON ITEMS ACCOUNTED ON OFF-BALANCE SHEET ACCOUNTS
Narrative
1
Line
code
2
At beginning of
reporting year
At end of reporting year
3
4
910
Rented fixed assets ..................................................................................................................
911
thereof by leasing .................................................................................................................
920
Working and fixed assets received for storing ..........................................................................
930
Goods on commission ..............................................................................................................
940
Bad debts of insolvent debtors written off to losses ..................................................................
950
Securities of liabilities and payments received ..........................................................................
960
Securities of liabilities and payments issued .............................................................................
Housing stock depreciation ......................................................................................................
970
Depreciation of auxiliary engineering facilities and other similar items ..................................... 980
990
Intangible assets obtained for usage .........................................................................................
1000
Registered high-security forms .................................................................................................
3 272 196
6 189 371
-
812 468
-
-
58 437 451
1 175 189
-
-
-
7
-
633 348
-
414 819
70 943 984
30 815
-
-
-
11
2
199
PROFIT AND LOSS
STATEMENT
FOR 2009
PROFIT AND LOSS ACCOUNT
for 2009
Form N2 on OKUD
Date (year, month, day)
Company Company Open Joint-Stock Company 'Federal Grid Company of Unified Energy System' OKPO
INN
Taxpayer identification number
Field of activity Electric power transmission OKVED
Legal form/property form
Open Joint-Stock Company/ Russian mixed ownership with state share OKOPF/OKFS
OKEI
Unit of measurement: thousands of RR
Codes
710002
2009/12/31
56947007
4716016979
40.10.2
47/41
384/385
Narrative
1
Income from and expenses on ordinary activities
Sales of goods, products, work, services (less VAT, excise duty
and other similar compulsory payments) ....................................................................................
including:
electric power transmission services ................................................................................
other sales ........................................................................................................................
Cost of goods, products, work, services sold ..............................................................................
including:
electric power transmission services ................................................................................
other sales ........................................................................................................................
Total revenue (loss) ...................................................................................................................
Sales expenses ...........................................................................................................................
General business expenses .........................................................................................................
Gross profit (loss) from sales .....................................................................................................
Other income and expenses
Interest receivable ......................................................................................................................
Interest payable ..........................................................................................................................
Participation in other companies ................................................................................................
Other income .............................................................................................................................
Other expenses ..........................................................................................................................
Income (loss) from operations ....................................................................................................
Teoretical income tax gain/(charge) (140 (cid:623) 24% 2008, (cid:623) 20% 2009) .........................................
Permanent tax liabilities (assets) ................................................................................................
Deferred tax assets .....................................................................................................................
Deferred tax liabilities ...............................................................................................................
Current income tax ....................................................................................................................
Other similar compulsory payments ...........................................................................................
Income tax adjustment for previous periods ...............................................................................
Net profit (loss) for the reporting year .......................................................................................
REFERENCE
Basic earnings (loss) per share ...................................................................................................
Diluted earnings (loss) per share ................................................................................................
BREAKDOWN OF SPECIFIC INCOMES AND EXPENSES
Narrative
1
Fines and penalties recognized by court or those on which there are
judgments of a court (or arbitrage court) on their recovery .........................................................
Profit (loss) of previous years ....................................................................................................
Compensation for damages caused by default on obligations or
by improper fulfillment of obligations .......................................................................................
Exchange rate differences ..........................................................................................................
Revaluation reserve ...................................................................................................................
Write-off of debtor and creditor indebtedness
on which the period of limitation has expired ............................................................................
Line
code
2
For reporting
period
3
For the same period
of the previous year
4
010
85 077 809
68 485 030
011
012
020
021
022
029
030
040
050
060
070
080
090
100
140
143
200
141
142
150
151
152
190
201
202
Line
code
2
230
240
250
260
270
280
66 128 765
80 173 317
4 904 492
2 356 265
(64 079 927) (58 977 340)
(62 732 093) (57 107 753)
(1 347 834) (1 869 587)
9 507 690
20 997 882
-
-
(5 128 305) (4 351 940)
5 155 750
15 869 577
7 291 952
6 806 385
(1 717 506) (2 385 645)
223 272
717 256
105 760 531
31 347 105
(181 970 591) (34 970 048)
(54 048 781)
6 176 819
10 809 756 (1 482 437)
(16 588 331) (1 952 589)
(180 217)
6 767
(722 009) (216 856)
(4 876 349) (3 224 937)
461 546
(4 642)
1 262 136
(33 996)
4 465 475
(59 865 994)
(5 190)
-
575
-
For reporting period
income
3
expense
4
For the similar period
of the previous year
income
5
expense
6
397 323
412 431
40 390
521 681
152 738
115 403
1 861
288 008
-
26 455
(cid:591)
-
15 949
9 404 732
-
8 065
(cid:591)
-
15 619
5 028 828
6 556
-
9 122
-
25 169
-
17 230
-
200
1
STATEMENT OF CHANGES
IN STOCKHOLDER’S EQUITY
FOR 2009
ANNUAL REPORT
2010
FLOW OF EQUITY AND FUNDS
for 2009
Company Company Open Joint-Stock Company 'Federal Grid Company of Unified Energy System'
Taxpayer identification number
Field of activity Electric power transmission
Legal form/property form
Open Joint-Stock Company/ Russian mixed ownership with state share
Unit of measurement: thousands of RR
Form N3 on OKUD
Date (year, month, day)
OKPO
INN
OKVED
Codes
710003
2009/12/31
56947007
4716016979
40.10.2
OKOPF/OKFS
OKEI
47/41
384/385
I. Changes in equity
Narrative
1
Line
code
2
Charter
capital
3
Additional
capital
4
Reserve
capital
5
Accumulated
profit/loss
6
Total
7
180 691 104
16 994 046
4 657 605 2 442 736
204 785 491
x
x
x
-
1 601
-
4 657 605 2 444 337
x
x
x
x
1 916 167 (1 916 167)
3 336 998 22 138 655
3 336 998 22 138 655
-
159 901
-
-
x
-
4 101 556
-
208 887 047
-
4 465 475
4 465 475
380 000 (380 000)
-
453 204 907
57 482 627
-
385 375 429
10 346 851
-
-
-
-
-
666 177 429
x
x
x
x
Balance as of 31 December
of the year antecedent to the previous year ............................. 010
2008
previous year
Changes in accounting policy ...................................................... 011
Revaluation of fixed assets .......................................................... 012
Changes in accounting rules ........................................................ 013
Balance as of 1 January of the previous year .......................... 020
Exchange rate difference ............................................................. 023
Net profit (loss) ............................................................................ 025
Dividends ....................................................................................
026
Allocations to reserves ................................................................. 030
040
Increase of capital due to
additional shares issue ............................................................ 041
increase of share par value ...................................................... 042
reorganization of legal entity ................................................... 043
044
other .......................................................................................
Decrease of capital due to
050
decrease in value of shares ..................................................... 051
052
reduction in number of shares ................................................
053
reorganization of legal entity
other .......................................................................................
054
Balance as of 31 December of the previous year .................... 060
2009
current year
Changes in accounting policy ...................................................... 061
Results of property evaluation ..................................................... 062
Changes in accounting rules ........................................................ 063
Balance as of 1 January of the current year ............................ 100
Exchange rate differences ............................................................ 103
105
Net profit .....................................................................................
Dividends ....................................................................................
106
Contributions to legal reserves ..................................................... 110
Increase of capital due to ............................................................. 120
additional shares issue ............................................................ 121
increase of share par value ...................................................... 122
reorganization of legal entity ................................................... 123
other .......................................................................................
124
Decrease of capital due to ........................................................... 130
decrease in value of shares ..................................................... 131
reduction in number of shares ................................................
132
reorganization of legal entity ................................................... 133
other .......................................................................................
134
Balance as of 31 December of the current year ...................... 140
x
x
x
180 691 104
x
x
x
x
396 065 994
57 482 627
-
338 583 367
-
-
-
-
-
-
576 757 098
x
x
x
576 757 098
x
x
x
x
-
-
-
-
-
-
-
-
-
-
576 757 098
x
4 099 955
-
21 094 001
-
x
x
x
31 663 260
21 316 409
10 346 851
(159 901)
x
x
x
(159 901)
52 597 360
x
6 905 053
-
59 502 413
-
x
x
x
x
x
x
-
-
(115 761)
x
x
x
(115 761)
59 386 652
x
x
x
x
x
x
x
x
x
x
x
x
x
x
-
159 901
9 910 770 26 912 201
-
x
x
x
(33 836 387)
(20 914)
103 572
9 910 770 (6 841 528)
x
x
x
x
(59 865 994)
-
223 274 (223 274)
4 644
x
x
x
-
4 644
115 761
x
x
-
115 761
10 134 044 (66 810 391)
-
(33 836 387)
6 884 139
103 572
639 328 753
-
(59 865 994)
-
-
4 644
-
-
-
4 644
-
-
-
-
-
579 467 403
1
201
ATTACHMENTS
II. Reserves
Narrative
1
Legal reserves
formed in accordance with legislation
Line
code
2
Balance b/f
Additions
Disposals
Balance
3
4
5
6
reserve
previous year ............................................................................
150
current year ............................................................................... 151
4 657 605
9 910 770
5 253 165
223 274
Legal reserves formed in accordance
with foundation documents
reserve
previous year ............................................................................
152
current year ................................................................................ 153
Provisions
Doubtful debt provision
160
previous year .............................................................................
changes in accounting policy ..................................................... 160a
current year ................................................................................ 161
Provision for impairment of financial investments
previous year .............................................................................
162
current year ................................................................................ 163
-
-
-
-
9 910 770
10 134 044
-
-
-
-
-
-
883 464
1 585 726
35 422 113
2 424 875 (1 722 613)
33 836 387
5 902 136 (20 017 408)
-
1 585 726
35 422 113
21 306 841
2 474 081
5 164 814
2 690 733
-
3 502 596 (75)
5 164 814
8 667 335
REFERENCES
Narrative
1
1) Net assets ................................................................................
Line
code
2
200
Line
code
2
At beginning
of reporting year
3
639 622 247
At the end
of reporting period
4
579 745 722
From budget
From non-budget funds
For reporting
year
For previous year For reporting year For previous year
3
4
5
6
2) Received for:
ordinary activity expenses - total ............................................ 210
220
capital investments .................................................................
230
other .......................................................................................
-
-
-
322
-
322
119 144
-
119 144
-
202
2
CASH FLOW
STATEMENT
FOR 2009
ANNUAL REPORT
2010
CASH FLOW STATEMENT
for 2009
Form N4 on OKUD
Date (year, month, day)
OKPO
Company Company Open Joint-Stock Company 'Federal Grid Company of Unified Energy
INN
Taxpayer identification number
Field of activity Electric power transmission
OKVED
Legal form/property form
Open Joint-Stock Company/ Russian mixed ownership with state share
OKOPF/OKFS
OKEI
Unit of measurement: thousands of RR
Codes
710004
2009/12/31
56947007
4716016979
40.10.2
47/41
384/385
Narrative
1
Cash at the beginning of the reporting year .........................................................
Cash movement - operating activity
Total cash received from customers and clients ........................................................
Foreign currnecy purchase ........................................................................................
Insurance compensation ............................................................................................
Other income .............................................................................................................
Total cash used for:
payments for purchased goods, work, services, materials
and other current assets .....................................................................................
wages and salaries payments .............................................................................
dividend paid, interest paid ...............................................................................
settlements of taxes and duties ..........................................................................
insurance payments ...........................................................................................
other payments ..................................................................................................
Net cash from operating activity ...............................................................................
Cash movement - investing activity
Sales of fixed assets
and other non-current assets ......................................................................................
Sales of securities and other financial investments ...................................................
Dividend received .....................................................................................................
Interest received ........................................................................................................
Redemption of loans provided to other entities ........................................................
Other income
Cash assets used for:
subsidiaries acquisition ........................................................................................
acquisition of fixed assets, income-bearing investments .....................................
and intangible assets ............................................................................................
acquisition of securities and other financial investments .....................................
loans granted to entities ........................................................................................
other expense .......................................................................................................
Net cash from investing activity ...............................................................................
Cash movement - financing activity
Proceeds from issue of shares and other equity instruments .....................................
Loans and credits
received .....................................................................................................................
Other income
Cash assets used for:
repayment of loans and credits (without interest) ................................................
other expense .......................................................................................................
Net cash from financing activity ...............................................................................
Net increase (decrease) in cash and cash equivalents ...............................................
Cash at the end of the reporting year ....................................................................
Ruble exchange
rate difference ...........................................................................................................
Line
code
2
010
For the current year For the same period
of the previous year
4
3
5 640 051 12 991 358
020
030
040
050
150
160
170
180
181
190
200
210
220
230
240
250
260
94 010 235 80 973 311
290 642 200 661
-
13 414 676 59 958 954
-
(43 950 985) (62 654 338)
(5 589 044) (5 857 276)
(2 122 038) (2 427 161)
(6 142 236) (26 927 880)
-
-
(2 185 427) (4 756 891)
47 725 823 38 509 380
307 731 500 929
276 911 503 15 019 375
860 603 489 968
3 118 353 3 805 783
-
-
-
-
280
(8 499 011) (2 195 420)
290
300
310
320
340
350
360
380
390
405
410
420
430
440
(99 466 324) (116 779 671)
(235 405 935) (15 783 362)
(6 653) (780)
(7 611) (56 126)
(62 187 344) (114 999 304)
40 180 434 20 424 586
4 000 000 56 107 063
-
-
(23 980 000) (7 331 770)
(66 832) (61 262)
20 133 602 69 138 617
5 672 081 (7 351 307)
11 312 132 5 640 051
-
-
1
203
NOTES TO
THE BALANCE SHEET
FOR 2009
SUPPLEMENT TO THE BALANCE SHEET
Company Company Open Joint-Stock Company 'Federal Grid Company of Unified Energy System'
Taxpayer identification number
Field of activity Electric power transmission
Legal form/property form
Open Joint-Stock Company/ Russian mixed ownership with state share
Unit of measurement: thousands of RR
for 2009
Form N 5 on OKUD
Date (year, month, day)
OKPO
INN
OKVED
Codes
710005
2009/12/31
56947007
4716016979
40.10.2
OKOPF/OKFS
OKEI
47/41
384/385
INTANGIBLE ASSETS
Narrative
1
Line
code
2
At beginning of
reporting year
3
Additions
Disposals
4
Intellectual property
(exclusive rights to intellectual property) ..................................................... 010
including the rights:
of the patent holder on invention
industrial design, utility model ................................................................... 011
of software, database owner ....................................................................... 012
of the integrated circuit layout owner ........................................................ 013
of the trademark, servicemark owner,
names of origin of goods owner ................................................................. 014
of plant patent holder .................................................................................. 015
Administration expenses ............................................................................... 020
Goodwill ........................................................................................................ 030
Other
040
Total .............................................................................................................. 045
Line
code
2
Amortization of intangible assets - total ....................................................... 050
Narrative
1
including:
924 746
363 497
924 500
-
9 715
353 782
-
246
-
-
-
1 054 619
1 979 365
-
-
-
-
-
-
363 497
At beginning of
reporting year
3
At end of reporting
period
4
443 456
946 605
5
-
At end of reporting
period
6
1 288 243
9 715
1 278 282
-
246
-
-
-
1 054 619
2 342 862
-
-
-
-
-
-
-
-
-
intellectual property
051
24 946
310 648
FIXED ASSETS
Narrative
1
Line
code
2
At beginning of
reporting year
3
Additions
Disposals
4
5
Buildings ....................................................................................................... 110
Constructions and transfer mechanisms ........................................................ 111
Machinery and equipment ............................................................................. 112
Means of transportation ................................................................................. 113
Production and work appliances ................................................................... 114
Working livestock ......................................................................................... 115
Productive livestock ...................................................................................... 116
Perennial plants .............................................................................................. 117
Other types of fixed assets ............................................................................ 118
Plots of land and natural resources ............................................................... 119
Investments in reclamation ............................................................................ 120
Total .............................................................................................................. 130
14 958 688
164 374 412
74 852 470
1 453 723
974 537
-
-
-
223 570
39 273
256 876 673
-
1 642 214 (57 588)
1 944 212 (409 707)
13 469 164 (1 089 988)
664 044 (51 903)
194 973 (36 203)
-
-
-
87 172 (18 929)
-
117 222
-
18 119 001 (1 664 318)
-
-
-
-
At end of reporting
period
6
16 543 314
165 908 917
87 231 646
2 065 864
1 133 307
-
-
-
291 813
156 495
-
273 331 356
Line
code
2
Depreciation of fixed assets - total .............................................................. 140
Narrative
1
including:
buildings and constructions ................................................................... 141
machinery, equipment, means of transportation ................................... 142
other ...................................................................................................... 143
Fixed assets leased out - total ........................................................................ 150
including:
buildings and constructions ................................................................... 151
machinery, equipment, means of transportation ................................... 152
other ...................................................................................................... 153
Fixed assets transferred to conservation ........................................................ 155
Fixed assets leased in - total .......................................................................... 160
including:
buildings and constructions ................................................................... 161
machinery, equipment, means of transportation ................................... 162
other ...................................................................................................... 163
Fixed assets received
and being in the process of state registration ................................................ 165
Line
code
2
170
historical (recovered) value ...................................................................... 171
depreciation ............................................................................................... 172
REFERENCE.
Result of fixed assets revaluation:
At beginning of
reporting year
3
At end of reporting
period
4
99 747 057
121 727 686
74 208 142
24 918 279
620 636
8 581 605
88 232 724
32 655 704
839 258
4 896 221
6 103 352
2 301 452
176 801
2 237
3 272 196
4 069 233
797 993
28 995
8 354
6 189 371
2 026 725
1 229 600
15 871
2 437 885
1 521 222
2 230 264
2 674 939
At beginning of
reporting year
3
5 241 196
At beginning of
previous year
4
4 101 556
6 884 139
10 350 330
6 363 381
3 466 191 2 261 825
Changes in fixed assets value as a result of
Line At beginning of
2
3
At end of reporting
4
fitting-out, rigging up, reconstruction,
partial liquidation ........................................................................................... 180
1 465 469
1 873 833
INCOME-BEARING PROPERTY
Narrative
1
Line
code
2
At beginning of
reporting year
3
Additions
Disposals
4
5
At end of reporting
period
6
Property for lease-out .................................................................................... 210
Property for hiring ......................................................................................... 220
Other .............................................................................................................. 230
Total .............................................................................................................. 240
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
204
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Line
code
2
Depreciation of income-bearing property ...................................................... 250
At beginning of
reporting year
3
At end of reporting
period
4
-
-
RESEARCH AND DEVELOPMENT COSTS
Narrative
1
Line
code
2
At beginning of
reporting year
Additions
Disposals
At end of reporting
period
3
4
5
6
Total Research and Development costs ........................................................ 310
including:
research of FACTS systems
other
REFERENCE.
Costs related to Research and Development
in progress ..................................................................................................... 320
Line
code
2
311
312
313
Line
code
2
499 747
357 354 (106 100)
751 001
-
4 000
495 747
At beginning of
reporting year
3
-
-
-
(2 000)
357 354 (104 100)
At end of reporting
period
4
-
2 000
749 001
486 564
677 196
For reporting period
3
For the same period
of the previous year
4
Costs related to Research and Development
without positive outcome which were charged to
non-operating expenses ................................................................................. 330
-
NATURAL RESOURCES DEVELOPMENT COSTS
Narrative
1
Line
code
2
Balance at beginning
of reporting year
3
Additions
4
Total natural resources development costs .................................................... 410
including:
411
412
413
Line
code
2
REFERENCE
Expenses attributable to those areas of subsoil where prospecting and
evaluation of deposits, exploration and/or hydrological survey
and other similar works have not been finalized ........................................... 420
Line
code
2
REFERENCE
Expenses attributable to natural resources development
without positive outcome, which were charged to
non-operating expenses of the current period ............................................... 430
At beginning of
reporting year
3
-
-
-
-
-
For reporting period
3
-
-
-
At end of reporting
period
4
-
For the same period
of the previous year
4
-
-
-
-
Disposals
5
Balance at end of
reporting period
6
-
-
-
-
FINANCIAL INVESTMENTS
Narrative
1
Long-term
Short-term
Line
2
at beginning of
3
at end of reporting
4
at beginning of
5
at end of reporting
6
Investments in share capital
of other entities - total .................................................................................... 510
including subsidiaries ............................................................................. 511
State and municipal securities ....................................................................... 515
Securities of other entities ............................................................................. 520
including debt securities (debentures, promissory notes) ...................... 521
Loans granted ................................................................................................ 525
Deposits ......................................................................................................... 530
Other .............................................................................................................. 535
Total ......................................................................................................... 540
Financial investments at current market value from total
Investments in share capital
of other entities - total ................................................................................... 550
including subsidiaries ..............................................................................
State and municipal securities ....................................................................... 555
Securities of other entities ............................................................................. 560
including debt securities (debentures, promissory notes) ...................... 561
Other .............................................................................................................. 565
Total ......................................................................................................... 570
REFERENCE
551
150 897 718 66 194 804
-
120 868 894
-
56 574 551
56 574 551
296 461
-
9 837
207 778 567
-
-
-
58 903 317
-
-
469 301 48 482 663 44 190 554
469 301 48 482 663 44 190 554
303 113 887 671 887 671
24 049 500
3 169 19 685
-
66 970 387 49 390 019 69 127 725
-
-
136 404 713
47 075 372
109 406 501 40 338 195
-
-
-
-
-
-
-
-
-
Line For reporting period For the same period For reporting period For the same period
136 404 713
47 075 372
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Change in value due to measurement adjustments of financial
investments at current market value ..............................................................
Difference between acquisition cost and par value of
debt securities is charged to financial results
of the current period ...................................................................................... 590
580
-
(79 905 889)
-
-
-
-
-
-
2
3
4
5
6
ACCOUNT RECEIVABLE AND ACCOUNTS PAYABLE
Narrative
1
Line
code
2
At beginning of
reporting year
3
At end of reporting
year
4
Accounts receivable:
Short-Term ............................................................................................ 610
including:
receivables from customers and clients .................................................. 611
advances given ........................................................................................ 612
other ........................................................................................................ 613
Long-Term ............................................................................................ 620
including:
receivables from customers and clients .................................................. 621
advances given ........................................................................................ 622
107 347 626
117 170 891
5 053 894
68 970 457
33 323 275
10 871 826
8 949 413
67 036 337
41 185 141
20 492 819
14 413
-
185 910
36
2
205
ATTACHMENTS
206
other ........................................................................................................ 623
Total .............................................................................................................. 630
Accounts payable
Short-Term ............................................................................................ 640
including:
payables to suppliers and contractors ...................................................... 641
advances received .................................................................................... 642
tax and duties payments .......................................................................... 643
credits ...................................................................................................... 644
loans ........................................................................................................ 645
other ........................................................................................................ 646
Long-Term ............................................................................................ 650
including:
credits ...................................................................................................... 651
loans ........................................................................................................ 652
other
653
Total .............................................................................................................. 660
10 857 413
118 219 452
20 306 873
137 663 710
38 763 434
73 284 089
10 175 866
7 096 192
295 113
10 156 891
6 004 596
5 034 776
18 000 130
11 018 708
7 114 653
653 884
-
7 481 469
47 015 375
6 005 098
5 000 000
13 000 000
130
56 763 564
-
6 000 000
5 098
79 289 187
EXPENSES INCURRED IN ORDINARY
Narrative
1
Line
code
2
For reporting year
For previous year
3
4
710
Materials .........................................................................................................
Wages and salaries expenses ........................................................................ 720
Obligatory social payments ........................................................................... 730
Fixed assets depreciation .............................................................................. 740
Other expenses ............................................................................................... 750
Total by expense type .................................................................................... 760
Changes in the balance (increase [+], decrease,[-]):
Work in progress ........................................................................................ 765
Expenses of future periods ......................................................................... 766
Reserves of future expenses ....................................................................... 767
30 035 110 24 481 538
6 758 157
1 084 984
23 417 508
7 912 473
69 208 232
6 723 873
1 216 059
20 849 262
10 058 548
63 329 280
-
(1 656 251)
-
-
1 358 444
-
COLLATERAL
Narrative
1
Line
code
2
At beginning of
reporting year
3
At end of reporting
year
4
Received ........................................................................................................ 810
including:
promissory notes ..................................................................................... 811
Property in pledge .......................................................................................... 820
including:
fixed assets ............................................................................................... 821
securities and other financial investments ................................................ 822
other ......................................................................................................... 823
Issued ............................................................................................................ 830
including:
promissory notes ........................................................................................... 831
Property given for pledge .............................................................................. 840
including:
fixed assets ............................................................................................... 841
securities and other financial investments ................................................ 842
other ......................................................................................................... 843
58 437 451
70 943 984
-
-
-
-
-
1 231 579
-
-
-
-
1 175 189
30 815
1 144 374
-
-
-
-
-
GOVERNMENT GRANTS
Narrative
1
Line
code
2
For reporting period
3
Budgeting funds received - total ................................................................... 910
including:
911
other
912
Line
code
2
Credits from budget - total ............................................................................ 920
including:
Other
921
922
At beginning of
reporting year
3
Received in
reporting period
4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
For the same period of the previous year
4
322
-
322
-
-
-
Returned in
reporting period
5
At end of reporting
period
6
-
-
-
-
-
-
3
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
207
ATTACHMENTS
MOVING FORWARD
WITH NEW ENERGY
ANNUAL REPORT
2010
2010 MANAGEMENT DISCUSSION
AND ANALYSIS MD&A
COMPLIANCE WITH THE CODE
OF CORPORATE GOVERNANCE
2010 GENERAL
SHAREHOLDERS MEETINGS
BRANCHES
SUBSIDIARIES
2010 INTERESTED PARTY
AND MAJOR TRANSACTIONS
IMPLEMENTATION
OF THE ASSIGNMENTS
OF THE PRESIDENT
AND GOVERNMENT
OF THE RUSSIAN FEDERATION
AUDIT COMMISSION CONCLUSIONS
ON THE VERACITY OF INFORMATION
IN THE ANNUAL REPORT
2011 INVESTOR CALENDAR
GLOSSARY
CONTACTS
ATTACHMENTS
MANAGEMENT DISCUSSION
AND ANALYSIS (MD&A)
OVERVIEW OF FEDERAL GRID
COMPANY'S FINANCIAL PERFORMANCE
AS OF 31 DECEMBER, 2010 AND 2010
OPERATING RESULTS
The Report represents a review of the fi nancial
position and performance of Federal Grid Company
(hereinaſt er referred to as the Company) and should
be regarded together with the Company’s 2010
accounting reports, as prepared in accordance with
Russian Accounting Standards (RAS), including an
explanatory note hereto.
Overview of Corporate Activities
The Company’s main activity is providing electric
power transmission services to consumers via
the Unifi ed National (All-Russian) Electrical Grid
(UNEG). In accordance with Russian Federation laws,
electricity transmission services via the UNEG are
the prerogative of Federal Grid Company, constitute
monopolistic activities and are regulated by the State.
The cost of the Company’s electricity transmission
services are determined by tariff s established by the
Federal Tariff Service (FTS).
As of 31 December, 2010, the Company has 51
branches and is headquartered in Moscow. In 2010,
the Company’s average head count was 21,965
people (in 2009 – 11,303 people). The signifi cant
(94.3%) growth in 2010, compared with the previous
period, is associated with transferring electrical
equipment maintenance and repair functions from
Glavsetservis UNEG to Federal Grid Company and
relocating most of the employees of Glavsetservis
UNEG to the Company’s branches.
The Company's shares are traded on the Russian
Trading System (RTS) and have been listed on the
Moscow Interbank Currency Exchange (MICEX)
since July 2008. On 28 March, 2011, the Company’s
depository receipts (DRs) began trading on the Main
Market of the London Stock Exchange (LSE).
•
•
•
via active work to technologically connect new
consumers to the UNEG. During 2010, corporate
consumers numbered about 150 companies that were
technologically connected to the UNEG, including
distribution grid companies (DGCs); independent grid
companies (GCs); energy sales companies (ESCs); and
major electricity-consuming companies.
The Company makes substantial investments in fi xed
assets for the development and reliable operation
of the UNEG. In 2010, the volume of construction,
renovation and modernization of fixed assets
amounted to RUR167,031 mln (compared with
RUR106,044 mln in 2009).
In 2010, the Company financed investment
activities via:
•
•
•
•
•
Funds provided for by the tariff for electricity
transmission - 29%;
Funds received from placing the Company
shares - 18%;
Raised funds - 26%;
RAO UES of Russia funds from selling assets
as a result of reorganization - 16%;
Other sources – 11%.
Together with electricity transmission services, the
Company renders services for the technological
connection of new consumers to the UNEG. In 2010,
the Company’s revenues from providing said services
amounted to RUR609 mln (2009: RUR3,053 mln).
Major Factors That Impacted Federal Grid
Company’s Results
Major factors that impacted the Company’s 2010
•
The revaluation of investments received by the
Company as the result of the reorganization of
RAO UES of Russia;
Positive fi nancial results from reversal and ac-
crual of bad debt provision;
Increased equipment being serviced as a result
of the Company’s investment program;
Increase in the Company's investment pro-
gram.
Each year, the number of consumers of the Company’s
electricity transmission services grows, including
State Relations
As of 31.12.2010, 79.48% of the Company’s ordinary
210
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
voting shares were owned by the State (as of
31.12.2009 – 79.11%), represented by the Federal
Agency for State Property Management. The Russian
Federation has a direct impact on the Company’s
activities by regulating its tariffs through the
Federal Tariff Service (FTS). Federal Grid Company's
investment program is subject to approval by the
Russian Government.
Regulating and Reorganizing the Electric
Power Industry
As a result of RAO UES of Russia reorganization in
July 2008, assets, including cash, promissory notes,
as well as non-core assets, including shares in power
generating companies, were transferred to Federal
Grid Company ownership. A part of received assets
were planned for sale. The Company plans to use
funds received from the sale of the above-mentioned
assets as a fi nancing source for its investment
program.
Within the framework of the project to consolidate
electric power assets on the foundation of Inter
RAO UES (the Russian President’s Order No.
1190 as of 30.09.1910), the following shares were
transferred to the trust management of Inter RAO
UES, in addition to an equity stake in WGC-1 (Trust
Management Contract No. 82531 as of 11.03.2009):
Bashkirenergo, Volga TGC, TGC-11, TGC-6, Mosenergo,
TGK-14, Quadra, TGC-2, TGK-9, RusHydro, TGK-3,
Fortum, TGC-1, OGK-2, OGK-4, OGK-6, Yenisei TGK,
Kuzbassenergo, TGC-11 Holding and WGC-3, owned
by the Company.
The above-mentioned investments are booked on the
Company's balance at market value as of 31.12.2010.
In 2010, the profi t from changes in the current market
value stood at RUR29,915,526 thousand.
Events aſt er the reporting date: On 23 March, 2011,
there was an Extraordinary General Shareholders
Meeting of Federal Grid Company, at which the deal
between Federal Grid Company and Inter RAO UES
to purchase additional shares of Inter RAO UES
placed via closed subscription was approved. To pay
for the above-mentioned shares, the shares of gen-
erating companies owned by Federal Grid Company
were transferred.
211
ATTACHMENTS
The Company’s Financial Results
2010
2009
Diff erence,
RUR mln
Change, %
Income and expenses from ordinary activities
Revenues from operating activities
including:
Power transmission services
Other activities
Operating expenses
including:
Power transmission services
Other activities
111,084.67
85,077.80
26,006.87
109,510.28
1,574.40
80,173.30
4,904.50
29,336.98
-3,330.10
-75,518.40
-64,079,90
11,438.50
-74,694.57
-823.83
-62,732.10
-1 347.80
11,962.47
-523.97
Administrative expenses
-6,209.15
-5,128.30
1,080.85
Operating profi t
29,357.13
15,869.60
13,487.53
30.57%
36.59%
-67.90%
17.85%
19.07%
-38.88%
21.08%
84.99%
Other income and expenses
Interest received
Interest paid
5,436.24
7,292.00
-1,855.76
-25.45%
-273.75
-1,717.50
-1,443.75
-84.06%
Proceeds from investments in associated companies
422.31
717.3
-294.99
-41.13%
34.77%
Other income
Other expenses
142,534.20
105,760.50
36,773.70
-109,157.60
-181,970.60
-72,813.00
-40.01%
Profi t/(loss) before profi t tax
68,318.52
-54,048.80
122,367.32
2,2-fold
increase
Deferred profi t tax assets
Deferred profi t tax liabilities
-33.44
-1181.21
-1802
-722
146.758
81.44%
-459.205
-63.60%
Current profi t tax
-9264.31
-4,876.30
4,388.01
89.99%
Other similar mandatory payments
Adj. profi t tax for past periods
43.226
205.592
-4.6
-34
47.826
239.59
Net profi t/(loss) for the period
58,088.38
-59,866.00
117,954.38
10-fold
increase
7-fold
increase
2-fold
increase
Revenues from Electricity Transmission Services
t Филиал
Revenues from transmission services,
including:
Payment for maintaining electric facilities included in the UNEG
Payment for standard process electricity losses in the UNEG
2010
2009
109,510.3
80,173.3
94,949.4
14,560.8
66,682.1
13,491.2
2009-2010 analyzed period illustrated revenue
growth from providing transmission services.
2010 revenues increased by RUR29,337 million
(36.6%) year-to-year. In 2010, key drivers of revenue
growth from electricity transmission services regarding
the maintenance of electric facilities were an increase
in the volume of grids being served and implementation
of the corporate investment program.
212
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Based on 2010 results, revenues from services
related to the principal regulated activities
(excluding revenues from technological connections)
accounts for 98.58 % of total revenues.
Operating Expenses
Components
2010 %, from total
2009
%, from total
Change, %
Depreciation of property, plant and equipment (PPE)
31,727
42%
22,562
Electricity and capacity purchased
14,183
Employee benefi t expenses and payroll taxes
13,926
Repair and maintenance
Raw materials, work clothing and fuel
Property insurance expenses
Rental expenses
Property security expenses
Other expenses
5,984
2,207
1,304
929
1,105
4,154
19%
18%
8%
3%
2%
1%
1%
6%
13,433
7,028
14,127
410
1,094
772
766
3,888
35%
21%
11%
22%
1%
2%
1%
1%
6%
Total operating expenses
75,518
100%
64,080
100%
40.6%
5.6%
98.2%
-57.6%
438.3%
19.2%
20.3%
44.3%
6.8%
17.8%
PPE Depreciation
Increased 2010 PPE depreciation is caused by depre-
ciation of new facilities commissioned in late 2009
and 2010 and PPE revaluation.
Employee Benefi t Expenses and Payroll Taxes
Increased employee benefi t expenses and payroll
taxes are due to technical factors. In 2010, person-
nel from the Company’s service subsidiary, Glav-
setservis which performs equipment maintenance
and repair, were employed, which increased said
expenses by 98.2% and a corresponding reduction
in costs for repairs that are carried out and con-
tracted.
Electricity and Capacity Purchased
In 2010, expenses for electricity and capacity pur-
chases rose 5.6% year-on-year. This growth is due to
an 2010 increase in the liberalized share of the WECM
(in 1H 2010, it reached 60%, in 2H 2010 – 80%) and
tariff growth for electricity and capacity purchased
on the WECM.
Repair and Maintenance
Maintenance and repair expenses performed by
contractors declined 57.6% in 2010 y-o-y due to
employing personnel from the service subsidiary,
Glavsetservis, carrying out equipment maintenance
and repair and the relevant redistribution of repair
costs to other items (labor remuneration, insurance
premiums, travel expenses, raw materials and other
materials).
Rental Expenses
These expenses include the cost of renting produc-
tion property (UNEG facilities), as well as land lease
costs. Rental expenses have increased more than 20%
in 2010 compared with 2009 due to higher land lease
rates in certain regions.
Raw Materials Expenses
Expenses for raw materials and fuel have increased
due to employing personnel from the service subsid-
iary, Glavsetservis, and carrying out maintenance and
equipment repair in a non-contracted method.
213
ATTACHMENTS
Property Security Expenses
In 2010, the 44.3% growth in security expenses was
associated with increased physical protection of
facilities, an increase in the number of facilities to be
protected and implementation of a counter-terrorism
security program at UNEG facilities.
Other Expenses
Increased spending on other items is due to chnical
factors, for example, redistributing costs from the ex-
pense item repair by a contracted method to expense
items transportation costs and travel expenses for
production personnel due to transferring to the service
subsidiary, Glavsetservis, and performing maintenance
and equipment repair in a non-contracted method.
Administrative Expenses
Components
2010
% from total
2009 % from total
Change, %
Employee benefi t expenses
and payroll taxes
Information services
and soſt ware expenses
Depreciation of PPE
and intangible assets (IA)
Production services
Material expenses
Rental expenses
Property insurance expenses
Property security expenses
Communication services
Advisory services
R&D expenses
Other expenses
Total expenses
1,656.9
27%
989.1
19%
67.5%
1,026.4
17%
937.6
18%
9.5%
955.3
15%
855.1
17%
11.7%
455.8
491.6
350.9
6.9
25.4
259.6
186.1
171.9
622.3
7%
8%
6%
0%
0%
4%
3%
3%
10%
561.9
469.4
415.4
5.8
30.4
201.1
163.1
27.4
472
11%
-18.9%
9%
8%
0%
1%
4%
3%
1%
9%
4.7%
-15.5%
19.0%
-16.4%
29.1%
14.1%
527.4%
31.8%
21.1%
6,209.1
100%
5,128.3
100%
Depreciation of PPE and IA
The main reason for 2010 depreciation growth was
the commissioning of soſt ware products and the re-
valuation of PPE, which resulted in an 11.7% increase
compared with 2009.
Employee Benefi t Expenses and Payroll Taxes
In 2010, the growth in said expenses was 67.5%
compared to 2009 due to structural changes and the
relocation of subsidiary service personnel.
Material Expenses
The growth in expenses in this category is due to
infl ation growth.
Rental Expenses
Rental expenses include costs for renting offi ce build-
ings and communication systems. In 2010 rental
costs decreased 15.5% compared with 2009 due to
the Costs Reduction Program implemented by the
Company during the reporting period.
214
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Advisory and Legal Services
The 14% increase in consulting services is due to an
increase in consulting services for accounting and
reporting, as well as for forming the system of quality
and reliability indicators.
Other Production Services
The reduction in costs for this item is due to the Com-
pany’s production needs and accounts for one-time
work performed in 2009 within the framework of tar-
geted programs to assess property, work out UNEG
development schemes and form budgeted electric
energy and capacity balance sheets. In 2010, ex-
penditures for these programs decreased due to the
lack of need.
Operating Profi t
In 2010 operating profi t increased 85% compared
with 2009 due to revenue growth exceeding ex-
penses increases, as the Company's revenue grew by
30.57%, whereas cost grew by only 17.85%.
Signifi cant impact on this growth has increased the
investment program and, accordingly, formed a base
for fi nancing the Company’s investment program.
Interest Received/Paid
Interest received represents revenues from debt fi -
nancial investments and income from placing free
funds in bank accounts and deposits. A signifi cant
portion of profi table investments were received by
the Company as a result of RAO UES of Russia re-
structuring on 1 July, 2008.
Interest received in 2010 decreased 25.4% compared
with 2009, as a result of reducing residual free cash
funds due to actively implementing the investment
program and its related fi nancing.
Due to changes in the Company’s accounting policies
since 2010, interest costs are capitalized and included
in the cost of construction. In this regard, accounts
refl ect the 2010 decrease in interest expense by
84.1% compared with 2009.
In 2010 the Company increased total debt from
RUR13,000 million as of 1 January, 2010 to
RUR56,000 million as of 31 December, 2010. This
change was due to issuing Series 6, 7, 8, 9, 10 and
11 bonds totaling RUR50,000 million to fi nance the
Company’s investment program. In addition, in 2010
the Company redeemed a Series 2 bond issue worth
RUR7,000 million. The Series 4 bond issue matures
in November 2011. In corporate accounts, it is booked
as short-term borrowings.
In accordance with changes in accounting policies,
the interest on promissory notes and bonds shall be
apportioned to the value of the investment assets. In
2010 the sum of all accrued interest is included in the
cost of construction-in-progress and totals RUR1,277
million. In 2009 the total amount of accrued interest
was RUR1,939 million. Of this, RUR1,714 million was
included in other expenses, whereas RUR221,957 mil-
lion was included in the price of investment assets.
215
ATTACHMENTS
Other Incomes, RUR mln
Description
Redemption of promissory notes
Income from revaluing shares at fair market value
Incomes from provision reversal for bad debt
Income from disposal of investments
Extraordinary gains on insured events
Other incomes
Total other incomes
Other Expenses, RUR mln
Description
Redemption of promissory notes
Provision for bad debt
Provision for investment impairment
Loss from disposal of investments
Book value of written-off PPE and construction-in-progress
and writing off expenses
Provision for the impairment of material assets
Property tax
Loss from revaluing shares at fair market value
Others
Total other expenses
2010
2009
87,286.8
81,068.35
30,024.9
0
20,897.8
20,017.4
1,841.2
2,729.3
731.7
456.7
1,751.8
1,488.8
142,534.2
105,760.5
2010
2009
85,940.592
79,281.635
14,036.443
5,902.136
3,913.434
3,502.596
985
654
661
611
109
9,793.452
635
0
605
79,905.889
2.247
2.345
109,157.6
181,970.6
Income/Expenses from Disposal
of Investments
In 2010, the Company received a profi t of RUR1,346.2
million (2009: RUR1,786.7 million) from redemption
of third-party promissory notes.
In 2010, the Company received a profi t of RUR856.2
million from disposal of the Company’s other invest-
ments, mainly from selling TGC-7 shares (2009: a
loss of RUR7,064 million, including a loss from selling
TGK-12 shares in the amount of RUR7,017 million).
Revaluation of Investments
As of 31 December, 2010, the Company recorded
a gain on the revaluation of shares based on market
value amounting to RUR30,025 million. Profi t from
changes in the current market value of shares in 2010
amounted to RUR29,916 million and was recorded as
other income. Furthermore, in 2010, a provision for
investment impairment, for which current market
value cannot be determined, was created which totals
RUR3,913 million.
216
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
In 2009, the Company recorded a negative diff erence
on the revaluation of shares at market value totaling
RUR79,906 million in other expenses and in 2009
also created a provision for the impairment of invest-
ments, for which the current market value cannot be
determined, amounting to RUR3,502 million.
Provision for Bad Debts (for Impairment
of Accounts Receivable and Prepayments)
In 2010 as a result of the evaluation of accounts
receivable and prospects for their return, the Company
accrued a provision for bad debts amounting to
RUR14,036 million, and also made a provision reversal
of RUR20,898 million created in 2009. Gain on
reversal and accrual provisions for bad debts totaled
RUR6,862 million.
In 2009 as a result of the evaluation of accounts
receivable and prospects for their return, the Company
accrued a provision on bad debts amounting to
RUR5,902 million, and made a provision of RUR2,734
million for prepayments issued due to changes in the
accounting policy for accruing provisions, as well as
provision reversal of RUR20,017 million for bad
debts.
Current Profi t Tax
In 2010 current profi t tax increased 90% compared
with 2009 and stood at RUR9,264 million. The said
change in profi t tax is due to an increase in profi t be-
fore profi t tax. According to tax accounting records,
2010 taxable profi t amounted to RUR46,321 million
(2009: RUR24,382 million).
Net Profi t (Loss) for the Reporting Year
In 2010, the Company's net profi t equaled RUR58,088
million (2009: a loss of RUR59,866 million). As noted
above, the main reasons for increased profi t y-o-y
were profi ts on other activities, as a result of the re-
valuation of investments, taking into account current
market value, as well as revenue growth from electric
power transmission. The main reason for 2009 losses
was that the Company’s losses refl ected changes in
the current market value of investments in shares
that have market prices.
The Company’s Net Assets, RUR mln
Indicator
2009 ***
Nominal*
2010
Nominal**
Incl.
contributions
to charter
capital*
Incl.
contributions
to charter
capital**
Net assets value
579,745.7
619,923.6
764,162.1
775,357.9
In 2010 the value of the Company’s net assets increased RUR184,416.4 million, according to accounting
statements, compared with the same period in 2009, and by RUR155,434.3 million based on evaluation,
taking into account assumptions.
* In 2009 a procedure was carried out to increase Federal Grid Company's charter capital by issuing additional shares. As a result, in the
2009 fi nancial statements, accounts payable (other current liabilities) refl ect a current debt to shareholders related to charter capital
contributions in the amount of RUR40.2 billion. In Q1 2010, aſt er the Federal Service for Financial Markets registered a Report on the
additional share issue, this debt was converted into Federal Grid Company's charter capital.
** In 2010 a procedure was carried out to increase Federal Grid Company's charter capital by issuing additional shares. As a result, in the
2010 fi nancial statements, accounts payable (other current liabilities) refl ect a current debt to shareholders related to charter capital
contributions in the amount of RUR11.2 billion. In 2011 aſt er registering a Report on the additional share issue with the Russian Federal
Service for Financial Markets, this debt will be converted into the Company’s charter capital.
*** Taking into account fi xed asset revaluation as of 01.01.2010, the (nominal) value of net assets was RUR665,895.8, considering
contributions to charter capital – 706,073.6
217
ATTACHMENTS
The Company’s Investment Performance
During 2010 the Company commissioned the following PPE facilities:
Name of the PPE facility
commissioned in 2010*
Power input
Useful life
(years)
Value (RUR mln)
excluding VAT
Complete technical modernization and reconstruction
of the 500-kV Chagino substation (1st stage of the 1st
start-up complex)
Double circuit 220-kV Nizhegorodskaya – Borskaya
overhead transmission line with one circuit connected
to the 220-kV Nagornaya substation. Contract
No.339/TP, as of 07.02.2008, with MRSK of the Center
and Volga Regions
Expansion of the 500-kV Nizhegorodskaya substation
(installation of the second auto-transformer)
500-kV Lipetskaya substation (modernization
of the auto-transformer)
Construction of the 330-kV Tsentralnaya
St. Petersburg substation
The 220-kV Prospect Ispytateley substation
with line entries
330-kV Yugo-Zapadnaya – Novgorodskaya
OTL entry (due to unavailable 330-kV OS
at Novgorodskaya TPP, the overhead transmission
line was placed under security voltage)
The 220-kV Primorskaya substation
The 400/330-kV Vyborg substation (STATCOM)
The 330-kV Tikhvin – Liteynaya substation
(replacement of AT-1 125 MVA)
500-kV Volgodonskaya NPP – Nevinnomyssk OTL with
the 500-kV Nevinnomyssk substation with 500-kV
Nevinnomysskaya GRES – Vladikavkaz
OTL entry and 330-kV Stavropol – HPP-4 OTL entry
The 220-kV Cheryomushki substation
with 220-kV OTL entries
Cable and overhead transmission lines (110 kV), 1st
stage, Krasnopolyansky Village Districts (design and
survey work, construction)
The Laura substation (110 kV) with power transmission
lines entries (design and survey work, construction)
The substation (10 kV) and power distribution
networks of the Roza Khutor ski resort
(design and survey work, construction)
The Roza Khutor substation (110 kV) with power transmission
line entries (design and survey work, construction)
Replacement of SC with SVС at the 220-kV Afi pskaya
substation (equipping 220-kV substations of the Kuban
Power Grid with the Reactive Power Source)
The 500-kV Tikhoretsk substation. Replacement
of AT-1 (125 MVA) (power three-phase three-winding
auto-transformer)-125000/220/110/6, anufactured
in 1964, with a new AT
Replacement of SC with SVC at the 220-kV Sla-
vyanskaya substation (equipping 220-kV substa-tions
of the MES Kuban with Reactive Power Source)
The 220-kV Vitaminkombinat substation
The 220-kV Vostochnaya substation
(installation of AT-2)
500 МVА
30 km
501 МVА
1503 МVА
25 km, 400 МVА
160 МVА
14 km
80 МVА
50 МVАR
125 МVА
440 km,
1002 МVА,
360 МVАR
34 km, 250 МVА
13,4 km
80 МVА
16 km, 22 МVА
80 МVА
100 МVАR
125 МVА
50 МVАR
400 МVА
125 МVА
500-kV Tikhoretskaya – Krymskaya OTL with the 500-kV
Krymskaya substation
297 km, 501 МVА,
180 МVАR
218
35
45
35
35
35
45
45
35
35
35
45
35
45
35
45
35
35
35
35
35
35
45
9,947.8
935.5
644.4
1,779.9
5,266.9
1,233.1
317.7
1,277.4
250
76.3
11,712.5
866.4
866.1
538.6
2,126.1
502.9
519.4
121.2
259.7
2,312.6
211.9
7,348.3
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Name of the PPE facility
commissioned in 2010*
220-kV Slavyansk – Krymskaya-II OTL
220-kV Krymskaya – Vyshesteblievskaya OTL
Power input
40 km
120 km
220-kV Slavyansk – Vyshesteblievskaya OTL with
the 220-kV Vyshesteblievskaya substation
110 km, 250 МVА
The Psou substation (220 kV) (design and survey work,
reconstruction) (complete) reconstruction)
Reconstruction of the 220-kV Dagomys substation
The 330-kV Chir-Yurt substation (replacement
of AT-2 125 MVA with 200 MVA) ПС 500 кВ
The 500-kV Krasnoarmeyskaya substation
with 500, 220-kV OTL entries
Reconstruction of 220-kV Sredneuralskaya
GRES – Peschanaya 1 OTL and 220-kV Sredneuralskaya
GRES - Kalininskaya OTL
Double circuit 220-kV Chelyabinskaya TPP-3 –
Novometallurgicheskaya OTL and reconstruction
of 220-kV Novometallurgicheskaya – Kozyrevo OTL
220-kV Novometallurgicheskaya substation
220-kV Demyanskaya – Snezhnaya OTL
with installation of AT 125 MVA
at the 220-kV Snezhnaya substation220-kV
Magistralnaya – YUBGPZ OTL entries
at the Sredny Balyk substation
of Tyumenenergo (113/TP-M8 dated 24.09.07)
Double circuit 220-kV Tobolskaya TPP – Irtysh OTL, the
reconstruction of 220-kV switchgear at the 500-kV Irtysh
substation with installation of 3 new switches
500-kV Kholmogorskya – Muravlenkovskoye – Tarko-Sale
OTL with 500-kV Muravlenkovskaya substation
Expansion of the 500-kV Nelym substation (installation of
the 500-kV controlled shunt reactor)
Expansion of the 500-kV Lugovaya substation (installation
of the second autotransformer group)
Complete reconstruction of the 220-kV
Surgut substation
Constructing two circuits of the 220-kV OTL
Boguchanskaya HPP – Razdolinskaya substation with
the 220-kV Priangarskaya substation and expansion
and renovation of the 220/110/6-kV substation (due to
the nonavailability of Boguchanskaya HPP, the overhead
transmission line was placed under security voltage)
Installation of the capacitor bank at the 500-kV
Alyuminievaya substation
Installation of the capacitor bank at the 500-kV
Oznachennoye substation
220-kV Selenduma substation. Installation
of the Static Reactive Power Compensator
for 35 kV. 2x20 M VAR
220-kV Chesnokovskaya substation
220-kV Artemovskaya TPP – Vladivostok OTL
220-kV Neryungrinskaya GRES –
Nizhniy Kuranakh OTL
200 МVА
400 МVА
200 МVА
1 km, 1,068 МVА
20 km
6,4 km
400 МVА
125 МVА
48 km
20 km
668 МVА,
180 МVАR
180 МVАR
501 МVА
11,4 km
604 km, 500 МVА
312 МVАR
208 МVАR
40 МVАR
200 МVА
40 km
275 km
220-kV Airport substation with 220-kV power
transmission line entries
22 km, 50 МVА
*These facilities are in the process of acceptance and state registration; aſt er this,
they will be included in PPE for accounting purposes.
Useful life
(years)
Value (RUR mln)
excluding VAT
45
45
45
35
35
35
35
45
45
35
35
45
45
35
35
35
45
45
35
35
35
35
45
45
35
627.4
1,594.2
3,115.5
1,847.5
2,122.1
186.4
3,637.4
483.1
295.9
1,796.7
1,398.3
353.8
622
6,225.2
434.9
646
1,089.1
7,473.4
336.9
352.7
186.4
1,494.8
423.7
7,627.1
805.1
219
ATTACHMENTS
Investments in Subsidiaries:
Company name
Company name
31 december 2010
Share in
charter
capital, %
Book value
(including
reserves)
2010
revenue
Net assets
under RAS
as of 31
December,
2010
S&T Elektroenergetika
R&D
100.00
3,895.8
683.9
1,187.4
R&D
Volgaenergosnabkomplekt
Glavsetservis UNPG
Mobile GTES
MUS Energetiki
UC Energetika
CIUS EES
CSRI NPKenergo
Eleкtrosetservis UNEG
ESSK UES
System-wide forecasting
and analytical work in the
electric energy industry
Delivery of materials
and equipment
Services for the
maintenance and repair
of power grid facilities
Electricity production
Communication services
Distribution of encryption
(cryptographic) means
(cryptographic protection
devices)
Customer-development
in the fi eld of capital
construction, renovation
and modernization of
electricity supply facilities
Management company
services
Services for maintaining
and repairing power
grid facilities
Procurement agent
Index of Energy-FGC UES
Securities sales
Chitatekhenergo
Power Generation Center
Nurenergo
MES Tomsk
Communication services,
reconstructing UNEG
facilities, designing
and operating
communication lines
Operating and
maintaining buildings,
structures and premises
Transmission, distribution
and sale of electricity
Electric energy
distribution and
transmission services
GVC Energetiki
Leaseholder
SMUEK
DESP
Energy company
management
Concurrent engineering
in the power industry
Total investments in subsidiaries
100.00
100.00
100.00
100.00
100.00
3.5
0.0
355.4
173.2
– (1)
– (1)
1.0
218.8
-541.7
10,594.3
1,806.8
9,819.2
20.0
1,392.2
167.9
100.00
55.1
3.8
40.5
100.00
833.0
2,432.3
956.6
100.00
0.0
– (1)
– (1)
100.00
100.00
100.00
95.38
133.9
0.0
3,822.2
1,090.3
258.1
193.6
42.6
-2,435.4
100.00
4.1
298.5
31.4
– (2)
77.00
520.25
50% plus
1 share
– (3)
1 share (4)
– (2)
– (2)
– (2)
0,0
2,122.5
-3,684.0
114.3
37.4
1,194.6
310.0
– (3)
– (3)
866.4
0.2
– (3)
0.0
17,361.0
1) Does not conduct business activity.
2) Shares were sold on 22 November, 2010.
3) The Company was liquidated 15 February, 2010.
4) Remaining corporate shares are owned by S&T Elektroenergetika, a 100%-owned subsidiary of Federal Grid Company.
Index of Energy – FGC UES owns a minority stake in electricity companies.
220
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Investments in Dependent Companies:
Company name
Sphere of activity
31 December, 2010
Share in
chaarter
capital, %
Book value
(incl.
reserves)
2010
revenue
Net assets
under RAS
as of 31
December,
2010
GruzRosenergo IPS
MES Kuban
Severovostokenergo
Energotekhkomplekt
Schekinskie PGU
WGC-1
IT Energy Service
ENIN
UEUK
TGC-7
TGC-11
TGC-6
Electricity transmission
services
Electric energy
transmission and
distribution services
Production and sale
of electric
and heat energy
Intermediary services to
enterprises and
organizations involved
in operating and
constructing facilities in
the Russian power industry
Services for the construction
and technical reconstruction
of power industry facilities
Production of electric
and heat energy
Information technology
services
R&D
Electrical supply
company management
Production of electric
and heat energy
Production of electric
and heat energy
Production of electric
and heat energy
50.00
763.2
254.1 (1)
7,130.3 (1)
48.99
134.1
102.6
391.3
49.00
9.8
– (2)
– (2)
49.00
0.1
3.5
0.4
45.21
0.0
– (3)
– (3)
40.17
21,851.2
56,466.8
32,828.1
39.99
38.24
19.84
170.1
223.5
1.0
240.5
93.9
33.33
0.1
0
115.0
29.99
20,066.6
27.45
2,702.9
23.58
7,291.2
– (2)
– (2)
– (2)
– (2)
– (2)
– (2)
Bashkirenergo
Production, transmission and
sale of electric
and heat energy
21.27
15,456.2
– (2)
– (2)
Total investments in associates
68,474.5
1) At the exchange rate RUR100 = 5.81 lari.
2) As of the summary date, the Company’s statements have not been presented.
3) Does not conduct business activity.
221
ATTACHMENTS
Investments in the Shares of Other Companies
Company name
31 December, 2010
Share in Charter
Capital, %
Book value
(incl. reserves)
Sangtudinskaya HPP-1
OGK-6
Energorynok
Trest SVES
SOVASATOM
Mosenergo
Natsnenergo
Stand
Sibenergoholding
TGC-11 Holding
Tsentrenergoholding
OGK -4
OGK-2
RusHydro
TGC-1
Fortum
Kuzbassenergo
TGK-13
WGC-3
Quadrа
TGC-2
ТGК-9
ТGК-14
ТGК-14
14.48
9.60
8.50
– (1)
3.38
3.37
– (1)
1.90
0.83
– (2)
0.0043
0.0013
0.0009
0.0009
0.0008
0.0006
0.0006
0.0006
0.0006
0.0005
0.0005
0.0005
0.0004
0.0004
0.0004
316.475
4,422.283
0.001
– (1)
0.001
4,311.255
– (1)
3.000
– (2)
0.054
0.006
1.736
0.514
3.859
0.47
0.238
0.16
0.129
0.402
0.147
0.063
0.186
0.022
0.006
Total investments in other company’s shares
9,061.007
1) The Company has been liquidated.
2) The block of shares has been sold.
The principal part of investments in shares of the companies listed in the table above was obtained by the Company
due to RAO UES of Russia reorganization. In the long-term, the Company is considering selling these investments.
222
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Debt Securities
As of 31.12.2010 and 01.01.2010, promissory notes of the following entities
are included in debt securities, RUR thousand:
Issuer’s name
31.12.2010
01.01.2010
Maturity date
Annual interest rate,%
SO-CDA UES
Energofi nans (*)
469,300
469,300
December 2012
7%
8,466,381
–
December 2014
Discounted
and interest-bearing
Total debt securities
8,935,681
469,300
(*) Novation of non-interest bearing promissory notes. Previously, the amount was included in receivables. In 2010, a provision
totaling RUR3,618,652 thousand was accrued.
Loans and Other Long-Term Financial Investments
As of 31.12.2010 and 01.01.2010, loans granted included a loan given to Dagenergo in the amount of
RUR296,461 thousand, and a loan to corporate employee in the amount of RUR5,702 thousand as of
31.12.2010 (RUR6,652 thousand as of 01.01.2010). The Company intends to hold all long-term debt invest-
ments to their maturity date..
Short-Term Investments
Short-term investments included the following assets, RUR thousand:
Assets
31.12.2010
01.01.2010
Short-term promissory notes
Loans granted
Other short-term investments
Total short-term investments
42,356,353
887,671
3,000,000
46,244,024
44,190,554
887,671
24,049,500
69,127,725
Short-Term Promissory Notes
As of 31.12.2010 and 01.01.2010, short-term promissory notes
include notes from the following companies, RUR thousand:
31.12.2010
01.01.2010
Annual interest rate, %
Issuer name
BANK VTB
Alfa-Bank
AB Rossiya
Promsvyazbank
Bank International
Finance Club
Glavsetservis UNEG
Kaustik
GVTs Energetiki (*)
19,232,142
14,122,562
4,000,000
3,001,649
2,000,00
–
–
–
43,925,294
–
–
–
–
150,000
55,260
60,000
Discounted
Discounted
7%
Discounted
6.25%
14%
15%
17%
223
Total short-term notes
42,356,353
44,190,554
(*) In 2010, a provision totaling RUR60,000 thousand was accrued.
ATTACHMENTS
Loans Granted and Other Long-Term
Financial Investments
As of 31.12.2010 and 01.01.2010, loans granted
included a loan given to Kuban Backbone Network
in the amount of RUR887,671 thousand, as well
as a loan issued to Nurenergo in the amount of
RUR501,300 thousand.
The loan granted to Nurenergo is overdue as of the
reporting date. The Company has no agreements
to prolong this contract. The impairment
provision created in 2006, as of 31.12.2010, totals
RUR501,300.
Other investments as of 31.12.2010 included a bank
deposit in Nomos-Bank, with a maturity of 16.05.2011
in the amount of RUR3,000,000 thousand. As of
01.01.2010, bank deposits in Gazprombank in the
amount of RUR24,049,500 thousand are included.
In 2010, the evaluation of fi nancial investments at
their disposal was made at the initial cost of each
investment.
The Company intends to hold all short-term debt
investments to their maturity date.
Cash Flows
As of 31 December, 2010, the Company’s cash
equaled RUR11,243 million (as of 31 December, 2009:
RUR11,312 million).
The below cash infl ow and disbursement analysis
is made based on the management reporting of
the Company’s cash fl ows subject to exceptions for
mutually exclusive deposit turnover.
2010 cash infl ow was RUR303,785 million, which
is RUR76,800 million higher the 2009 level. Actual
disbursements increased RUR108,186 million year-
on-year and stood at RUR303,854 million.
In 2010, the Company fi nanced investing activities
primarily through cash received from operating activi-
ties, repaying bills and selling investments resulting
from the re-organization of RAO UES of Russia, as
well as placing additional shares and raising debt
capital (bond issues).
The Table below provides information on corporate
cash fl ows from operating, investing and fi nancing
activities during the respective periods.
Indicators
Total
Types of activity
Operating
Investing
Financing
2010
2009
2010
2009
2010
2009
2010
2009
Revenues
303,785
226,985
147,228
116,471
72,131
66,343
84,426
44,171
Payments
303,854
195,668
68,805
60,675
228,049
111,013
7,000
23,980
Balance
-69
31,317
78,423
55,796
-155,918
-44,670
77,426
20,191
224
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Net Cash Generated from Financing Activities
In 2010, cash from fi nancing activities increased
more than 1.9 times and totaled RUR84,426 million,
including cash fl ow for placing temporarily free funds
(RUR23,240 million), revenues from the Company’s
additional share issue amounted to RUR11,194
(2009: RUR40,171 million) and placement of the
bond issues in the amount of RUR50,000 million to
fi nance the investment program. In 2010, the Com-
pany redeemed the Series 2 bond issue amounting
to RUR7,000 million.
Net Cash Generated from Operating Activities
During full year 2010, net cash generated from
operating activities increased RUR30,757 million
(26%) compared with the previous year. This growth
is due to increased earnings from operating activi-
ties, including from corporate consumers as a result
of factors addressed in the section “Revenue from
Electricity Transmission Services.” In this case, in
2010, money used for operating activity costs in-
creased by RUR8,130 million (13%) compared with
the previous year due to an increase in profi t tax
payment. Without taking into account this factor,
payments from operating activities increased 4%,
which corresponds increased costs due to the im-
pact of factors discussed in the section "Cost."
Net Cash Used in Investing Activities
In 2010, cash used in investing activities increased
RUR117,036 million compared to the previous year,
including RUR60,987 million for investment rogram
fi nancing. In 2010, net cash outfl ows used in the
Company’s investing activities increased compared
with 2009, as a result of a more than 1.5 times
increase in the investment program and recording
transactions for the purchase and sales of securities
to fi nance the investment program in the future.
225
ATTACHMENTS
COMPLIANCE WITH THE CODE OF
CORPORATE GOVERNANCE
№
CGC Article
General Shareholders Meeting
Compliant
/ Non-compliant
Note
Notifying shareholders about
the General Shareholders Meeting
at least 30 days prior to the meeting
date irrespective of items included
on the agenda, unless a longer
notice is stipulated by legislation.
Shareholders' opportunity to examine
the list of persons authorized
to participate in the General Shareholders
Meeting, starting from the notifi cation date
for the General Shareholders Meeting
through to closing the internal General
Shareholders Meeting, and in case
of a meeting held in absentia till the date
for receiving voting ballots expires.
Shareholders' opportunity
to examine information (materials)
which are to be submitted during
preparation for the General Shareholders
Meeting, via electronic communication,
including the Internet.
Shareholders’ opportunity to submit an item
for the agenda of the General Shareholders
Meeting or to demand calling a General
Shareholders Meeting without giving
an extract from the register of shareholders
if their rights to shares are registered
in the register of shareholders, and the suffi ciency
of an extract from the deposit account for
executing the abovementioned rights if their rights
to shares are registered on the deposit account.
Provision in the Charter or internal documents
of the joint stock company to require the
obligatory presence of the General Director,
members of the Management Board,
members of the Board of Directors, members of the
Audit Commission and the auditor of the joint stock
company at the GeneralShareholders Meeting.The
obligatory presence of candidates during the
consideration of items related to electing members
of the Company’s Board of Directors, the General
Director, members of the Management Board,
members of the Audit Commission, as well as the
item on approving the auditor of the joint stock
company at the General Shareholders Meeting.
A registration procedure for participants
in the General Shareholders Meeting in the
internal documents of the joint stock company.
Provision in the Charter of the joint stock
company for the Board of Directors’ authority
to approve on an annual basis the fi nancial
and economic plan of the joint stock company.
1
2
3
4
5
6
7
226
Compliant
Item 11.4 of Article 11 of the Articles
of Association
Compliant
Compliant
Partially
compliant
Partially
compliant
Any person holding at least
1 percent of votes is entitled to this.
Document data and postal addresses
for individuals included on this list
are provided only at the consent
of these individuals.
Conforms with Article 52 of the Federal Law
“On Joint Stock Companies,” Federal Grid
Company's shareholders are entitled to within
20 days prior to the General Meeting, and within
30 days prior to the General Meeting in case
the General Shareholders Meeting includes
an agenda item on reorganizing the Company,
to examine materials for the General
Shareholders Meeting on the Internet.
The information is published on the Company’s
web site at http://www.fsk-ees.ru/eng/ ,
in the Shareholders and Investors section.
In accordance with Item 4.7 of the Regulations
on the Procedure for Preparing and Holding
the General Shareholders Meeting, when
an item is submitted to the agenda or when
an Extraordinary General Shareholders
Meeting is called, a shareholder’s possession
of shares, the rights to which are considered
according to the deposit account in the
depository, is confi rmed by providing
an extract from the deposit account.
Item 7.2 of the Regulations on the Procedure
for Preparing and Holding the General
Shareholders Meeting requires that
the Chairman of the Board of Directors
or members of the Board of Directors be present.
Non-compliant
This requirement is not provided for by any
corporate internal documents
Compliant
Item 5.1 of the Article of the Regulations
on the Procedure for Preparing and Holding
the General Shareholders Meeting
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
№
CGC Article
Board of Directors
Compliant
/ Non-compliant
Note
A risk management procedure for
the joint stock company approved
by the Board of Directors
Compliant
In accordance with Item 33 Item 15.1 of Article
15 of the Company’s Articles of Association, the
areas of competency for the Board of Directors
includes approving the business plan and targets
for the Company’s key performance indicators.
Non-compliant
This procedure, or any other regulatory
document, was not approved by the Company’s
Board of Directors as separate documents.
8
9
10
Provision in the Charter of the joint
stock company regarding the right
of the Board of Directors to make
a decision on suspending the authority
of the General Director appointed
by the General Shareholders Meeting
Provision in the Charter of the joint stock
company of the right of the Board of Directors
to establish requirements for professional
skills and remuneration for the General
Director, members of the Management
Board and heads of the primary structural
divisions of the joint stock company
Non-compliant
11
Provision in the Charter of the joint stock
company of the right of the Board of Directors
to approve contract terms with the General
Director and members of the Management Board
Partially
compliant
Functions of the Company’s sole executive
body are performed by the Chairman of the
Company’s Management Board. In accordance
with Sub-item 10 of Item 10.1 of Article 10 of
the Company’s Articles of Association, the
Chairman’s election and early termination is
an area that falls under the competency of the
Company’s General Shareholders Meeting.
In accordance with Sub-items 10 and 37 of Item
15.1 of Article 15 of the Company’s Articles
of Association, areas of competency that fall
under the Company’s Board of Directors include
establishing remuneration and compensation for
members of the Company’s Management Board
and prematurely terminating their authority,
including decisions on the early termination
of their employment contracts.
12
13
14
15
Provision in the Charter or internal documents
of the joint stock company for the requirement
stating that votes of members of the Board
of Directors who are either the General
Director or members of the Management
Board are not taken into account when voting
to approve contract terms with General
Director (a management organization
or the managing director) and members
of the Management Board
Compliant
Sub-item 37 of Item 15.1 of Article 15
of the Company’s Articles of Association.
Non-compliant
This requirement is not provided for
by the Company’s Articles of Association
or any other documents.
Presence on the Board of Directors of the joint
stock company of at least three independent
directors that meet requirements of the
Corporate Conduct Code
Compliant
In accordance with a decision of Federal Grid
Company's Annual General Shareholders Meeting
on 29 June, 2010, the following directors meeting
independence requirements were included on the
Company’s Board of Directors: Rashid Sharipov,
Igor Khvalin, Ernesto Ferlenghi, and Yuri Soloviev.
Compliant
There are no such persons in the composition
of the Company’s Boards of Directors valid
throughout 2010.
Absence in the composition of the Board
of Directors of the joint stock company
of persons who were found guilty of committing
crimes in the sphere of economic activities
or crimes against the government, interests
of public service and service to local government
institutions or who had administrative
punishments applied to them for violations
of the law in the area of entrepreneurial activity
or in the area of fi nance, tax and tax collection
and securities market
16
Absence in the composition of the Board
of Directors of the joint stock company
of persons who are participants, the General
Director (managing director), member
Compliant
There are no such persons in the composition
of the Company’s Boards of Directors valid
throughout 2010.
227
ATTACHMENTS
№ CGC Article
Compliant
/ Non-compliant
Note
17
18
19
20
of a regulatory body or employee
of a legal entity that competes with the
joint stock company
Requirement in the Charter of the joint stock
company to elect the Board of Directors
via cumulative voting
Provision in the internal documents of the joint
stock company of the obligation of members
of the Board of Directors to withdraw from
actions that lead or potentially lead to a confl ict
between their interests and the interests
of the joint stock company; obligation
to disclose information on this confl ict
to the Board of Directors in case it occurs
Provision in the internal documents of the joint
stock company of members of the Board
of Directors duty to notify the Board of Directors
in writing of their intention to make transactions
with securities of the joint stock company, if they
are members of the Board of Directors of this
joint stock company or its subsidiaries or
dependent companies, as well as to disclose
information about the transactions with such
securities made by them Provision in the internal
documents of the joint stock company of the
requirement to hold at least one meeting of the
Board of Directors every six weeks
21
Meetings of the Board of Directors
of the joint stock company during the year
which is the subject of the annual report
of the joint stock company are carried out
regularly, at least one meeting every six weeks
Compliant
Sub-item 10.9 of Article 10 of the Company’s
Articles of Association.
Compliant
Sub-item 4.1.6 of Item 4.1 of Section 4 of the
Company’s Code of Corporate Governance.
Compliant
Item 16.9 of Article 16 of the Company’s
Articles of Association;
Section 3 of the Regulations on the Board
of Directors;
Item 4 of the Regulations on the Insider
Information, Subitem
This requirement is not provided for by the
Company’s Articles of Association or by any
other documents.
Non-compliant
On average in 2010, meetings of the Company’s
Board of Directors were held at least once per
month or more.
Compliant
The Regulations on the Board of Directors.
22
Provision in the internal documents of the
joint stock company of a procedure for holding
meetings of the Board of Directors
Compliant
23
24
Provision in the internal documents of the joint
stock company of regulations on the necessity
of the Company’s Board of Directors approving
transactions in an amount of 10 percent and
more of the cost of the Company’s assets,
except for transactions made as part of the
Company’s dayto- day economic activity
Provision in the internal documents
of the joint stock company of the right
of members of the Board of Directors
to receive information required to perform
their functions from executive bodies
and heads of the Company’s main structural
divisions, as well as responsibility for
the failure to provide such information
Partially
compliant
Compliant
Sub-item 27 (a) of Item 15.1 of Article 15 of the
Company’s Articles of Association stipulates
that the Board of Director grants preliminary
approval for corporate transactions that
have the non-current assets worth more than
10 percent of the balance sheet value as the
object of the transactions.
In accordance with Section 3
of the Regulations on the Board of Directors,
members of the Company’s Board of Directors
are entitled to receive information about the
Company’s operations, including commercial
secrets, and access all constituent, normative,
reporting, accounting, contractual and other
corporate documents.
Establishing the Strategy Committee was
approved by a decision of the Company’s Board
of Directors as of 15 May, 2008 (Minutes No. 62).
Operation procedures are laid out by the
Regulations on the Strategy Committee
of Federal Grid Company.
25
The existence of a Strategic Planning Committee
of the Board of Directors or another committee
assigned with said functions (except for the Audit
Committee and the Human Resources
and Remuneration Committee)
Compliant
Establishing the Audit Committee was
approved by a decision of the Company’s
Board of Directors as of 15 February,
2008 (Minutes No. 54).
228
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
№ CGC Article
Compliant
/ Non-compliant
Note
26
27
28
29
30
31
32
33
34
35
36
37
38
The existence of a committee of the Board
of Directors (the Audit Committee) which
recommends the auditor for the joint stock
company to the Board of Directors
and cooperates with the auditor and the Audit
Commission of the joint stock company.
Compliant
Operation procedures are laid out by the
Regulations on the Audit Committee of the Board
of Directors of Federal Grid Company.
Presence of only independent and non-executive
directors on the Audit Committee
Compliant
The Audit Committee consists only of
independent and nonexecutive directors.
The Audit Committee is managed by an
independent director
Provision in internal documents of the joint
stock company of the right of all members of the
Audit Committee to access any documents and
information of the joint stock company provided
that they do not disclose confi dential information
Establishing a committee of the Board
of Directors (the Human Resources and
Remuneration Committee) with the function
of defi ning recruitment criteria for candidates
applying for positions of members of the
Board of Directors and developing the joint
stock company’s remuneration policy
The Human Resources and Remuneration
Committee is managed by an independent
director
The absence of offi cials of the joint stock
company on the Human Resources
and Remuneration Committee
Establishing the Risk Committee under
the Board of Directors or assigning these
functions to another committee (except
for the Audit Committee and the Human
Resources and Remuneration Committee)
Establishing the Corporate Confl icts Settlement
Committee of the Board of Directors or assigning
these functions to another committee (except
for the Audit Committee and the Human
Resources and Remuneration Committee)
The absence of joint stock company offi cials on
the Corporate Confl icts Settlement Committee
The Corporate Confl icts Settlement Committee
is managed by an independent director
Compliant
Compliant
Compliant
Compliant
Compliant
The Audit Committee of the Company’s
Board of Directors is managed by independent
director Rashid Sharipov.
Section 3 and 4 of the Regulations on the Audit
Committee of the Board of Directors of Federal
Grid Company.
The HR and Remuneration Committee was
established by a decision of the Company’s
Board of Directors as of 15 February, 2008
(Minutes No. 54).
The procedure for the Committee’s operations
is laid out by the Regulations on the HR and
Remuneration Committee of the Board of
Directors of Federal Grid Company.
Item 5.2 of the Regulations on the HR
and Remuneration Committee of the Board
of Directors of Federal Grid Company.
Item 5.2 of the Regulations on the HR
and Remuneration Committee of the Board
of Directors of Federal Grid Company.
Non-compliant
The Committee was not established.
Non-compliant
The Committee was not established.
Non-compliant
The Committee was not established.
Non-compliant
The Committee was not established.
Provisions in internal documents of the joint
stock company of procedures for establishing
and operating Board of Directors’ Committees,
approved by the Board of Directors
Compliant
Regulations: On the Audit Committee, On the
HR and Remuneration Committee, On the
Reliability Committee of the Board of Directors,
On the Strategy Committee, On the Investment
Committee.
Provision in the Charter of the joint stock
company on the process for defi ning the quorum
for the Board of Directors, allowed to provide
for the obligatory participation of independent
directors in Board of Directors’ meetings
Non-compliant
This requirement is not provided
for by the Company’s
Articles of Association.
229
ATTACHMENTS
№ CGC Article
Compliant
/ Non-compliant
Note
39
40
Provision of the collegial executive
body (Management Board) of the joint
stock company
Provision in the Charter or internal documents
of the joint stock company on regulations
on the necessity of the Management Board’s
approval of transactions with real estate and
loans taken out by the joint stock company
provided that said transactions are not deemed
major transactions and are not part of day-to-day
economic activities of the joint stock company
Compliant
Partially
compliant
The Company’s Management Board was
formed in accordance with Article 21
of the Articles of Association.
This requirement is not provided for by the
Company’sArticles of Association. In accordance
with the Company’s Articles of Association, it is an
area of competency under the Board of Directors.
At the same time, however, in accordance with
Item 6.1 of the Regulations on the Preparation
of Materials for the anagement Board’s Meetings,
all questions submitted for consideration to the
Company’s Board of Directors are subject to
mandatory preliminary considerations by the
Company’s Management Board.
41
Provision in the internal documents of the
joint stock company of the procedure for
approving operations beyond the fi nancial
and economic plan of the joint stock company
Partially
compliant
This requirement is not provided for by the
Company’s Articles of Association or any other
documents.
In part, these questions are outlined by the
Regulations on the Procedure for Placing
Temporarily Disposable Free Funds of Federal
Grid Company (approved by the Management
Board of Federal Grid Company, Minutes
No. 528 as of 24 April, 2008) and by the
Regulations on Debt Management Procedure
(approved by the Company’s Board of Directors,
Minutes No. 44 as of 29 May, 2007).
Compliant
There are no such persons in the executive body.
Compliant
There are no such persons in the executive body.
Non-compliant
This prohibition is not provided for by
the Company’s the Articles of Association
or by any other documents.
Compliant
Item 4.1.6 of the Company’s Code of Corporate
Governance.
42
43
44
45
Absence in the composition of executive
bodies of persons who are either participants,
the General Director (managing director),
members of the management body or
employees of a legal entity that competes
with the joint stock company
Absence in the structure of the executive bodies
of the joint stock company of persons who were
found guilty of committing crimes in the area
of economic activities or crimes against the
government, interests of public service and service
in local government institutions, or of persons who
experienced administrative punishments for
violations in the area of business activity or in the
area of fi nance, taxes, fi scal charges and the
securities market. If functions of the sole executive
body are carried out by a management organization
or a managing director, the General Director
and members of the Management Board of the
management organization or the managing director
must meet the requirements of theу General
Director and members of the Management
Board of the joint stock company
Provision in the Charter or internal documents
of the joint stock company to prohibit the
management organization (managing director)
from carrying out similar functions in a competing
company, as well as to be in any other material
relationship with the joint stock company, besides
rendering services of the management organization
(managing director)
Provision in internal documents of the joint stock
company of the duties of executive bodies to
withdraw from actions leading or potentially
leading to a confl ict of interest and the interests
of the joint stock company, and duties to inform
the Board of Directors if such a confl ict occurs
230
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
№ CGC Article
Compliant
/ Non-compliant
Note
46
Provision in the Charter or internal documents
of the joint stock company of criteria for
electing the management organization
(managing director)
Non-compliant
The Company’s the Articles of Association or any
other documents do not lay out any selection
criteria for management organizations.
47
The joint stock company’s executive bodies
present monthly performance reports
to the Board of Directors
Non-compliant
48
Liability for infringing on provisions for using
confi dential and proprietary information stated
in contracts concluded by the joint stock
company with the General Director (management
organization, managing director) and members
of the Management Board
Compliant
Reports by the executive body are provided
on a quarterly basis (Sub-item 14 of Item 22.1
of Article 22 of the Company's Articles of
Association).
Contracts signed by the Company with
the Chairman of the Management Board
and members of the Management Board outline
the liability for violations of provisions on the
use of confi dential and proprietary information.
Executive Bodies
49
50
51
Presence in the joint stock company of
a special offi cial (the Company Secretary)
whose task is to ensure the compliance
of bodies and offi cials of the joint stock company
with procedural requirements guaranteeing
the execution of rights and legitimate interests
of the Company’s shareholders
The process of appointing (electing)
the Company Secretary and his/her duties
are stipulated by the Charter or internal
documents of the joint stock company
Provision in the Charter of the joint stock
company for requirements for candidates
for the Company Secretary position
Company Secretary
Compliant
The function is performed by the Secretary
of theCompany’s Board of Directors.
Compliant
Article 4 of the Regulations on the Board
of Directors
Non-compliant
Compliant
There are no such requirements.
52
53
54
Requirement in the Charter or internal documents
of the joint stock company to approve a major
transaction prior to its fulfi llment
Compliant
Sub-item 16 of Item 10.2 of Article 10
and Sub-item 20 of Item 15.1 of Article 15
of the Company's Articles of Association.
Non-compliant
Said deals involve the services
of an independent appraiser.
Non-compliant
This prohibition is not provided for by the
Company's Articles of Association.
Obligatory involvement of an independent
appraiser in evaluating the market value
of property which is the subject of
a major transaction
Presence in the Charter of the joint stock
company a prohibition to undertake any action
when acquiring (taking over) a large stake
of shares of the joint stock company (takeover)
aimed at protecting the interests of executive
bodies (members of these bodies) and members
of the Board of Directors of the joint stock
company, as well as actions worsening the
shareholders’ position compared to their existing
position (in particular, a prohibition against
the Board of Directors on making decisions
on the issue of additional shares, the issue
of securities that are convertible into shares
or securities enabling a person to purchase
shares of the Company before the termination
of the Prospectus even if the right to make
these decisions is granted by the Charter)
55
Requirement in the Charter of the joint stock
company of the obligatory involvement of an
independent appraiser to estimate the current
market share price and possible changes in the
share price as the result of a takeover
Compliant
This requirement is not provided for by the
Company's Articles of Association.
231
ATTACHMENTS
№ CGC Article
Compliant
/ Non-compliant
Note
56
57
Absence in the Charter of the joint stock company
of the release of a purchaser from their duty
to make an off er to shareholders to sell their
ordinary shares (securities issue that is convertible
into ordinary shares) during a takeover
Presence in the Charter or internal documents
of the joint stock company of the requirement
for the obligatory involvement of an
independent appraiser in defi ning the share
conversion ratio during reorganization
Material Corporate Actions
Non-compliant
This norm is not provided for by the Company's
Articles of Association.
Compliant
This requirement is not provided for
by the Company's Articles of Association
or any other documents.
An internal document approved by the Board
of Directors that outlines rules and approaches
of the joint stock company to information
disclosure (Regulations on the Information Policy)
Existence of internal documents of the joint stock
company that require the disclosure of information
about the purpose of the share issue, about persons
intending to purchase shares to be issued, including
a large shareholding and about whether executives
of the joint stock company participate in purchases
of the Company’s shares to be issued
Non-compliant
The Regulations on the Information Policy was
approved by the Company’s Board of Directors
on 28 February, 2008 (Minutes No. 55).
Compliant
This requirement is not provided for
by the Company's Articles of Association
or any other documents.
Existence of a list of information, documents
and data in internal documents of the joint stock
company which should be given to shareholders
for making decisions on items submitted
to the General Shareholders Meeting
Compliant
Article 11 and Article 12 of the Company's
Articles of Association;
Section 7 of the Regulations
on the Information Policy.
A web site of the joint stock company on the Internet
that regularly discloses information on the joint
stock company (on the web site)
Presence in internal documents of the joint stock
company of the requirement to disclose information
about transactions of the joint stock company made
with persons who according to the Charter
are among executives of the joint stock company,
as well as about transactions of the joint stock
company made with organizations in which
executives of the joint stock company hold, directly
or indirectly, 20 percent of the authorized capital
of the joint stock company and above or which
can be essentially infl uenced by said persons
Presence in internal documents of the joint stock
company the requirement to disclose information
about all transactions which can infl uence the
market price of the Company’s shares
An internal document approved by the Board
of Directors on using essential information
on the operations of the joint stock company,
shares and other corporate securities and
transactions with them which are not public
and the disclosure of which could materially
infl uence the market price of shares and
other securities of the joint stock company
Compliant
http://www.fsk-ees.ru/
In accordance with Sub-item 5.2.8
of the Company’s Regulations
on the Information Policy.
Compliant
Compliant
In accordance with Items 5.1 and 5.2.10
of the Company’s Regulations
on the Information Policy.
In 2010, the Regulations on the Insider
Information which was approved
by the Company’s Board of Directors
on 28 February, 2008 (Minutes No. 55),
was in eff ect.
The new Regulations on the Insider Information
was approved by a decision of the Company’s
Board of Directors dated 15 March, 2011
(Minutes No. 125).
58
59
60
61
62
63
64
232
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
№ CGC Article
Information Disclosure
Compliant
/ Non-compliant
Note
65
66
Internal control procedures over the fi nancial
and economic activity of the joint
stock company are approved by the Company’s
Board of Directors]
A special division of the joint stock company
which enforces the execution of internal
control procedures (supervision
and auditing service)
Compliant
Compliant
Control norms are laid out by the Company's
Regulations approved by the Board of Directors:
Regulations on the Audit Commission
and Regulations on the Internal Control System.
Control and Audit Department – responsible for:
•
Organizing control procedures for the fi nancial,
production and economic activities of Federal
Grid Company and its subsidiaries or dependent
companies, aimed at preventing, revealing,
terminating and eliminating consequences of
violations in managing monetary and material
resources;
Organizing selective control procedures to
check the compliance of fi nancial and economic
transactions carried out by structural divisions
of the executive bodies and branches of the
Company with Russian legislation;
Investigating abuse (fraud) incidents;
Interacting with external control bodies;
Providing informational support to the Audit
Commission of Federal Grid Company and
ensuring the enforcement of its guidelines and
decisions.
•
•
•
•
•
Internal Control Department – responsible for:
•
Developing and upgrading the methodology
and organizational principles of the internal
control system of Federal Grid Company,
effi ciently analyzing the internal control
system across all operational areas,
developing guidelines aimed at improving the
effi ciency of the internal control system;
Organizing current internal control procedures
for accounting at Federal Grid Company,
organizing current internal inspections
for accounting and operating information,
organizing operating control procedures
for information about planned and actual
performance results for Federal Grid Company
branches, its subsidiaries and dependent
companies;
Identifying and analyzing risks for Federal
Grid Company, developing and updating the
Risk Matrix, developing recommendations
aimed at risk reduction and prevention;
Analyzing operating control and effi ciency for
accounting processes at Federal Grid
company and its subsidiaries and dependent
companies;
Conducting an effi ciency analysis for the
authority allocation system and limits of
fi nancial responsibility across management
levels at Federal Grid Company;
ФDeveloping and upgrading the Delegation
of Authority Matrix, controlling compliance
with principles of authority allocation and
fi nancial responsibility limits.
•
•
•
•
•
Technical Surveillance and Auditing Department
–responsible for:
•
Carrying out audit inspections of production
and technical operations at the Company’s
subsidiaries and branches in accordance
with plans (and on an unscheduled basis if
requested by corporate management) and
with technical audit programs;
233
ATTACHMENTS
№ CGC Article
Compliant
/ Non-compliant
Note
•
•
•
•
•
•
•
•
Conducting inspections and effi ciency
evaluations of the existing internal technical
control system at the Company’s branches
(structures of technical inspection, internal
technical and production control and self-
control), analyzing the performance of these
structures as compared to risks emerging
during production operations;
Engaging in sample estimates of the
completeness and reliability of regular
technical reports on production processes,
achieving target fi gures across key effi ciency
indicators;
When requested by the Company’s
management, organizing and participating
in investigating accidents and socially
important technological violations in electric
grid performance;
Forecasting (based on the integrated analysis
of investigation results and accident data,
production injuries and fi re incidents) possible
consequences of negative trends and risks
of reduced systemic reliability and equipment
safety and personnel performance;
Preparing and enforcing control over the
implementation of managerial decisions
aimed at upgrading the correctness and
completeness of the use of technical
standards and corporate regulations based
on analyzing investigations of production and
technical operations;
Developing and presenting recommendations
and proposals on improving and optimizing
production business processes at the
Company’s branches based on technical
audit results;
Preparing conclusions and materials for
meetings of the Company’s Management
Board, the Board of Directors and General
Meetings of Shareholders following the
technical audit;
Developing proposals aimed at improving
the Company’s operations in identifying
and managing environmental risks.
The Company's Regulations on the Internal
Control System outlines participants in the
internal control system, structural divisions
of the Company responsible for controlling
and auditing the Company’s fi nancial, economic
and investment activities.
Compliant
Compliant
There are no such persons in the Company’s
supervision and auditing services.
Compliant
There are no such persons in the Company’s
supervisory and auditing services.
67
68
69
The presence in internal documents of
a requirement by the Board of Directors
of the joint stock company about defi ning
the structure and composition of
the supervisory and auditing services
of the joint stock company
Absence in the supervisory and auditing services
of persons who were found guilty of committing
crimes in the area of economic activities or crimes
against the government, interests of public service
and service of local government institutions, or
persons who had administrative punishments
applied to them for violations in the area of
business activity or in the areas of fi nance, taxes,
fi scal charges and the securities market
Absence in the composition of the supervisory
and auditing services of persons who are
members of any executive body of the joint stock
company, and persons who are participants, the
General Director (managing director), members of
management bodies or employees of a legal entity
that competes with the joint stock company.
234
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
№ CGC Article
Compliant
/ Non-compliant
Note
70
71
72
73
74
75
Presence in internal documents of the joint
stock company of a timeframe for presenting
documents and data to the supervisory
and auditing services for estimating the
fi nancial and economic operations carried out,
and the responsibility of offi cials and employees
of the joint stock company for their failure
to present documents and data within the
specifi ed timeframe
Presence in the internal documents of the joint
stock company of the supervisory and auditing
services’ duty to inform the Audit Committee
about revealed infringements, and in case
of the latter’s absence, presence of a duty
to inform the Board of Directors of the joint
stock company of said infringements
Presence in the Charter of the joint stock
company of the requirement for a preliminary
estimation by the supervisory and auditing
services of the feasibility of operations
not included in the fi nancial and economic plan
of the joint stock company (non-standard
operations)
Presence in the internal documents
of the joint stock company a coordinated
procedure for non-standard operations
with the Board of Directors
Compliant
Item 7 of the Regulations on the Audit
Commission.
Compliant
Item 4 of the Regulations on the Audit
Commission.
Non-compliant
This requirement is not provided for by the
Company's Articles of Association.
Non-compliant
This procedure is not laid out by internal
documents.
An internal document approved by the Board
of Directors that defi nes the Audit Commission ’s
inspection procedure for the joint stock company’s
fi nancial and economic activity
Compliant
The Regulations on the Audit Commission
and the Regulations on the Internal Control.
The Audit Committee’s evaluation of the Auditor’s
Report prior to its presentation to shareholders
at the General Shareholders Meeting
Compliant
Item 2.1.4 of Section 2 of the Regulations
on the Audit Committee of the Board
of Directors of Federal Grid Company.
Control over Financial and Economic Activity
76
77
78
An internal document approved by the Board
of Directors and used by the Board of Directors
as guidelines for approving recommendations
on dividend amount (Dividend Policy Regulations)
Compliant
The Company’s Regulations on the Dividend
Policy approved by a decision of Federal
Grid Company's Board of Directors
as of 16 December, 2010 (Minutes No. 120).
Presence in the Dividend Policy Regulations
on rules defi ning the minimum share of the joint
stock company’s net profi t allocated to dividend
payments, and conditions for the non-payment
or partial payment of dividends on preferred
shares, which have dividend size outlined
in the Charter of the joint stock company.
Publication on information about the joint
stock company’s dividend policy and
amendments to it in the periodic publication
outlined by the Charter of the joint stock company
for publishing information about the General
Shareholders Meeting, and publication of said
data on the joint stock company’s web site
on the Internet.
Compliant
Item 4.3 in the Regulations on the Dividend
Policy.
Compliant
The Company’s Regulations on the Dividend
Policy is published on the Company’s offi cial
web site at: http://www.fskees.ru/eng/investors/
corporate_governance/corporate_docu ments/
media/File/Internal%20documents/Regulations_
Divid end_Policy.pdf
235
ATTACHMENTS
2010 GENERAL SHAREHOLDERS MEETINGS
The General Shareholders Meeting
held 29 June, 2010:
3.
The following agenda for the General Shareholders
Meeting was approved by a resolution of Federal Grid
Company’s Board of Directors (14 May, 2010):
1.
Approving the Company’s Annual Report;
Approving the Company Annual Financial State-
2.
ments, including the profi t and loss statement
(profi t and loss accounts);
Approving the Company’s 2009 earnings dis-
tribution;
Determining dividends, dates and the form of
2009 dividend payments;
Paying remuneration to non-state members
of the Company’s Board of Directors (the
Supervisory Board) for work as Directors in an
amount determined by the Company’s internal
documents;
5.
4.
6.
7.
8.
9.
10.
Electing members of the Company’s Board
of Directors (the Supervisory Board);
Electing members of the Company’s Audit Com-
mission (the examiner);
Approving the Company’s Auditor;
Approving the new version of the Company’s
Articles of Association;
Approving the new versions of the Company’s
internal documents.
The Annual General Shareholders Meeting held 29
June, 2010 (Minutes No.9 as of 29.06.2010), carried
out the following resolutions:
1.
2.
Approved the Company’s 2009 Annual Report;
Approved the Company’s Annual Financial State-
ments, including the profi t and loss statements
(profi t and loss accounts);
Approve the Company’s 2009 profi ts and losses
to be distributed as follows:
3.
Undistributed profi t (loss) for the reporting period:
To be distributed to the Reserve Fund
Development
Dividends
(RUR thousand)
-59,865.994
4.
5.
6.
7.
8.
9.
10.
Decided not to pay dividends on ordinary shares in 2009;
Approved the new version of the Regulations on Compensation and Remuneration to Members
of the Board of Directors;
Elected the Board of Directors made up of the following members:
No Full Name Position
Approved PricewaterhouseCoopers Audit as the Company’s Auditor;
Approved a new version of the Company’s Articles of Association;
Approved a new version of the Regulations on the Procedure for Preparing and Holding the General
Shareholders Meeting.
№
Full Name
Position
1
2
3
4
Boris Ayuyev
Oleg Budargin
Georgy Kutovoy
Alexey Makarov
236
Chairman of the Management Board of SO UES
Chairman of the Management Board of Federal Grid Company
Director of the Energy Research Institute of the Russian Academy of Sciences
Deputy Director General of Rosnanotech State Corporation
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
№
Full Name
Full Name
5
6
7
8
9
Andrei Malyshev
Deputy Director General of Rosnanotech State Corporation
Dmitry Ponomarev
Chairman of the Management Board of Non-Commercial Partnership
"Market Council" (the Market Council)
Yuri Soloviev
President of VTB Capital
Ernesto Ferlenghi
Head of the Representative Offi ce of Eni Russia and the CIS
Igor Khvalin
General Director of Volga Engineering Group
10
Rashid Sharipov
Deputy General Director of KFK-Consult
11
Sergei Shmatko
Sergei Shmatko
№
Full Name
Position
1
2
3
4
5
Dmitry Gorevoi
Anna Drokova
Andrei Kolyada
Leading expert in a Department of the Russian
Ministry for Economic Development
Leading expert in a Department of the Federal Agency for State
Property Management of the Russian Federation
Leading expert in a Department of the Federal Agency for State
Property Management of the Russian Federation
Vladimir Raspopov
Head of a Department of the Federal Agency for State
Property Management of the Russian Federation
Maria Tikhonova
Director of a Department of the Russian Ministry of Energy
237
ATTACHMENTS
BRANCHES
Information on Federal Grid Company's branches
1
2
3
4
5
6
7
8
9
MES Center
MES North-West
MES Volga
MES South
MES Urals
MES Siberia
MES East
Nizhegorodskoe PMES
Chernozemnoe PMES
10
Volga-Okskoe PMES
11
12
13
14
15
16
17
Volga-Don PMES
Vologodskoe PMES
Priokskoe PMES
Moscow PMES
Upper Don PMES
Valdaiskoe PMES
Amurskoe PMES
18
Khabarovskoe PMES
19
Primorskoe PMES
20
Krasnoyarskoe PMES
21
Zabaikalskoe PMES
22
Kuzbasskoe PMES
23
Omskoe PMES
24
West-Siberia PMES
25
Khakassia PMES
26
Sverdlovskoe PMES
27
28
South Urals PMES
Permskoe PMES
238
1 Tkatskaya Street, Moscow, Russia,105318
1 Kurchatov Street, Saint Petersburg, Russia, 194223
226 Molodogvardeiskaya Street, Samara, Russia, 443100
2 Darnitsky LA, Inozemtsevo Settlement,
Zheleznovodsk, Russia
10 Tolmachov Street, Yekaterinburg, Russia, 620219
117 Ada Lebedeva Street, Krasnoyarsk, Russia, 660099
47 Dzerzhinsky Street, Khabarovsk, Russia,
630030630030, г. Хабаровск, ул. Дзержинского, 47
29 Schlisselburgskaya Street, Nizhny
Novgorod, Russia, 603600
Sh-5 Passage, Building 1, the Stroitelnaya Site,
the Kotel Station Industrial Zone, Stary
Oskol, the Belgorod Region, Russia, 309540
31 Energetikov Street, the Energetik
Settlement, Vladimir, Russia, 600902
221a Lenin Ave., Volgograd, Russia, 400006
18 Planernaya Street, Vologda, Russia, 160023
101A Timiryazev Street, Tula, Russia, 300012
The 750-kV substation, the Bely Rast Production Facility,
the Dmitrovsky District, the Moscow Region, Russia, 141870
Komsomolets Settlement, the Tambov Region, Russia, 392543
Tver, 55 Kalinin Ave., Tver, Russia, 170001
101 Shatkovskogo Street, Svobodny,
the Amur Region, Russia, 676400
3 Tselinnaya Street, Khabarovsk,
the Khabarovsk Region, Russia, 680032
3 Mordovtsev Street, Vladivostok,
the Primorsk Region, Russia, 690000
3A Vesny Street, Krasnoyarsk,
the Krasnoyarsk Region, Russia, 660135
35B Botanicheskaya Street, Ulan-Ude,
the Republic of Buryatia, Russia, 670045
25a Kirchanov Street, Kemerovo, Russia, 650004
4 Gubkin Ave., Omsk, Russia, 644035
17 Kalinin Ave., Barnaul, Russia, 656002
39 Industrialnaya Street, Sayanogorsk,
the Republic of Khakassia, Russia, 662793
3 Malakhitovy Lane, Yekaterinburg,
the Sverdlovsk Region, Russia, 620085
6a 2nd Zapadny Proezd Street, Chelyabinsk, Russia, 454008
34 Visherskaya Street, Perm, the Perm Region, Russia, 614058
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Information on Federal Grid Company's branches
29
Mid-Volga PMES
30
Lower Volga PMES
31
Stavropolskoe PMES
32
Kuban PMES
33
Rostovskoe PMES
34
Bryanskoe PMES
35
Vyborgskoe PMES
36
Novgorodskoe PMES
37
Karelskoe PMES
83 Federatsii Street, Ulyanovsk, Russia, 432071
40 Sokolovaya Gora, Saratov, Russia, 410038
The Industrial Zone for Food Facilities,
Zheleznovodsk, the Stavropol Region, 357400
5 Tramvainaya Street, Krasnodar, Russia, 350021
54/1 Dnepropetrovskaya Street, the Pervomaisky District,
Rostov-on-Don, Russia, 344093
The Vygonichy settlement, the Bryansk Region, Russia, 243360
The Perovo settlement, the Vyborg District,
the Leningrad Region, Russia, 188932
10 Velikaya Street, Veliky Novgorod, Russia, 173001
11 Veterinarny Lane, Petrozavodsk, the Republic
of Karelia, Russia, 185013
38
Bely Rast Specialized Production Base PMES
39
West Siberia PMES
The 750-kV substation, the Bely Rast Production Facility, the
Dmitrovsky District, the Moscow Region, Russia, 141870
14 Geologicheskaya Street, the Khanty-Mansiysk Autonomous
Region, the Tyumen Region, Russia, 628405
40
Leningradskoe PMES
1 Kurchatov Street, Saint Petersburg, Russia, 194223
41
42
Tomsk PMES
Kaspiyskoe PMES
43
Auto-transport PMES of Urals
44
North PMES
45
Orenburgskoye PMES
46
Sochinskoye PMES
47
Samarskoye PMES
48
Central PMES
49
Southern PMES
50
Eastern PMES
1 Energeticheskaya Street, Tomsk, Russia, 634062
73a Dakhadaeva Street, Makhachkala, the Republic
of Dagestan, Russia, 367012
5 Tolmachova Street, Yekaterinburg, Russia, 620041 The 220kV
Syktyvkar substation, 1121st
Promyshlennaya Street, the Chovsk Industrial Zone, Syktyvkar,
the Republic of Komi, Russia, 167000
15 Automatiky Passage, Orenburg,
the Orenburg Region, Russia, 460048
93 Armavirskaya Street, the Dagomys settlement, the
Lazorevsky District, the Krasnodar Region, Russia, 354207
130 Zubchaninovskoye Shausse, Samara, Russia, 443109
The Administrative Building of the Engineering
Consolidation Base, Passage 1 PR, the Vostochny Industrial
Zone, Surgut, the Khanty-Mansi Autonomous District,
the Tyumen Region, Russia, 628400
The 500kV Tyumen substation, the 5th kilometer
of the Velizhan Highway, the Central District,
the Tyumen Region, Russia, 625000
20 Industrialnaya Street, Panel 20, the Zapadny
Industrial Zone, Yugra Nizhnevartovsk,
the Khanty-Mansiysk Autonomous Region,
the Tyumen Region, Russia, 628600
51
Yamalo-Nenetskoye PMES
10 Entuziastov Street, Noyabrsk, the Yamalo-Nenets
Autonomous District, the Tyumen Region, Russia, 629806
239
SUBSIDIARIES
Details on Federal Grid Company's Participation in Subsidiary, Dependent and Other Companies
Ite
m
Abbreviated company name
Federal Grid Company's
share in the charter capital
of Company
Book value of shares and
interest in the Company, RUR
thousand
Dividend
amount, RUR
thousand*
Financial performance in
2010
1 S&T Elektroenergetika
01.01.2010
100,00%
01.01.2011
100.00%
01.01.2010
01.01.2011
3,895,820
100.00%
100.00% 3,895,820
Revenue, Net profit, Net assets,
1,187,357
3,895,820
2 Mobile GTES
100.00%
100.00%
10,594,255
2,018,405
-
1,806,807
-334
9,819,217
3 Elektrosetservice UNEG
100.00%
100.00%
4 CIUS EES
100.00%
100.00%
5 ESSK UES
100.00%
100.00%
954
833
134
954
70
3,822,204 34
1,090,256
833
93 562
2 432 282
113 635
956 588
-
258 056
75 513
193 585
6 MUS Energetika
100,00%
100,00%
19 997
19 997
9 436
1 392 239
57 536
167 860
7 Verificatory Center of Electronic Digital
100,00%
100,00%
55 071
55 071
Signatures for Energy
8 Index of Energy-FGC UES
100,00%
100,00%
0
0
-
-
3 808
-7 274
40 522
42 553
8 602 275 -2 435 381
9 Chitatekhenergo
100,00%
100,00%
4 092
4 092
1 259
298 484
6 473
31 404
10 Energy Forecasting Agency (ABPE)
100,00%
100,00%
3 500
3 500
11 Glavsetservice UNEG
100,00%
100,00%
1 000
1 000
12 CSRI NPKenergo
100,00%
100,00%
13 Volgaenergosnabkomplekt
100,00%
100,00%
14 Nurenergo
77,00%
77,00%
1
0
0
1
0
0
15 MES Tomsk
52,025%
52,025%
866 424
866 424
16 GVC Energetiki
50% plus 1
share
50% plus 1
share
163
163
17 GruzRosenergo IPS
50,00%
50,00%
763 227
763 227
18 MES Kuban
48,99%
48,99%
134 139
134 139
-
-
-
-
-
-
-
-
-
355 360
791
173 179
218 790
-198 404
-541 718
The decision on liquidation has been
made
No business operations
2,122,500
-2
-4
114 307
-30 358
1 194 572
37 430
-9 082
310 049
254 076
23 251
7 130 284
102 612
-67 929
391 284
240
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Type of business under the Charter
Purpose of participation
Information on modified interest in the Company
in 2010 or any concluded agreements to buy and
sell shares or interest
R&D
Electric energy generation
Technical maintenance and repairs of
electric grid facilities
Operating as construction manager of
capital construction projects, renovation
and technical re-equipment of electric
grid facilities
Agency purchase operations
Communication services
Distribution of encryption
(cryptographic) tools (cryptographic
protection of information)
Securities trading
Communication services, UNEG
projects renovation, design and
operation of communication lines
General system forecast and analysis
in electric power sector
Maintenance and repairs of electric grid
facilities
Management company services
Supply of materials and equipment
Transfer, distribution and sale of energy
Services to transmit and distribute
electric energy
Leasing own real estate
Power transmission services
Electric power transmission and
distribution services
The purchase of Company's shares is approved by the
decision of the Board of Directors of Federal Grid
Company of 29 June, 2007 (Minutes No. 46)
Shares are received in accordance with the spin-off
balance sheet of RAO UES Russia in merging RAO
UES with Federal Grid Company during Companies'
reorganization on 1 July, 2008
The Company's establishment was approved by the
decision of the Board of Directors of Federal Grid
Company of 13 November, 2007 (Minutes No. 50)
The Company's establishment was approved by the
decision of the Board of Directors of Federal Grid
Company of 13 November, 2007 (Minutes No. 50)
The shares were received under the spin-off balance
sheet RAO UES Russia in merging RAO UES with
Federal Grid Company during Companies'
reorganization on 1 July, 2008
The controlling stake was transferred to Federal Grid
Company under the decision of the Board of Directors of
15 April, 2005 (Minutes No. 183 of 24 December, 2004).
The agreement to purchase and sell shares was
approved by the Board of Directors of Federal Grid
Company (Minutes No. 22 of 22 March, 2005)
The shares were received under the spin-off balance
sheet RAO UES Russia in merging RAO UES with
Federal Grid Company during Companies'
reorganization on 1 July, 2008
The shares were received under the spin-off balance
sheet RAO UES Russia in merging RAO UES with
Federal Grid Company during Companies'
reorganization on 1 July, 2008
Reorganization of Chita Backbone Grids, the owner of
100% of shares in the Company, by merger with
Federal Grid Company on 1 July, 2008
The shares were received under the spin-off balance
sheet RAO UES Russia in merging RAO UES with
Federal Grid Company during Companies'
reorganization on 30 June, 2006
The Company's establishment was approved by the
decision of the Board of Directors of Federal Grid
Company of 13 November, 2007 (Minutes No. 50)
Reorganization of Chita Transmission Networks, the
owner of 100% of shares in the Company, by merger
with Federal Grid Company on 1 July, 2008
Reorganization of Chita Transmission Networks, the
owner of 100% of shares in the Company, by merger
with Federal Grid Company on July 1, 2008
The additional issue shares are received for the
repayment of loans granted to the Company earlier. The
decision of the Board of Directors of Federal Grid
Company of 20 May, 2004 (Minutes No. 15)
Subject to the consolidation plan of UNEG -Energo
facilities approved by the Board of Directors of RAO
UES Russia (Minutes No. 188 of 25 February, 2005),
shares of RAO UES Russia are deposited for payment
of the additional issue of Federal Grid Company
ordinary shares.
The shares were received under the spin-off balance
sheet RAO UES Russia in merging RAO UES with
Federal Grid Company during Companies'
reorganization on 1 July, 2008
The Company's shares acquisition was approved by the
decision of the Board of Directors of Federal Grid
Company of 29 June, 2007 (No. 46)
Subject to the consolidation plan of UNEG Energo
facilities approved by the Board of Directors of RAO
UES Russia (Minutes No. 188 of 25 February, 2005),
shares of RAO UES Russia are deposited for payment
of the additional issue of Federal Grid Company
ordinary shares.
241
ATTACHMENTS
Ite
m
Abbreviated company name
Federal Grid Company's
share in the charter capital
of Company
Book value of shares and
interest in the Company, RUR
thousand
Dividend
amount, RUR
thousand*
Financial performance in
2010
19 Energotechkomplekt
01.01.2010
49,00%
01.01.2011
49,00%
01.01.2010
01.01.2011
101
101
20 Severovostokenergo
49,00%
49,00%
9 800
9 800
21 Schekinskie PGU
45,21%
45,21%
0
0
-
-
-
Revenue, Net profit, Net assets,
440
3 517
25
No business operations
22 WGC-1
40,17%
40,17%
13 164 371
21,851,019
- 56,466,806
2,757,135 32,828,139
23 IT Energy Service
24 ENIN
25 UEUK
26 Volga Territorial Generating Company
39,99%
38,24%
33,33%
32,14%
39,99%
38,24%
33,33%
29,99%
198 360
1 023
50
13 262 806
198 360
1 023
50
20,066,560
(TGC-7)
27 TGC-11
28 TGC-6
27,45%
27,45%
2 463 551
2,702,921
23,58%
23,58%
4 304 329
7,291,153
-
-
-
-
-
-
29 Bashkirenergo
21,27%
21,27%
7 143 138
15,456,189
232 446
170 134
240 504
0
27 652
4 299
-49 441
223 507
93 934
115
30 Sangtudinskaya HPP-1
14,48%
14,48%
551 256
316
31 OGK-6
9,60%
9,60%
2 317 319
4 422 283
32 Energorynok
8,50%
8,50%
33 SOVASATOM
3,38%
3,38%
1
1
1
1
-
-
-
-
34 Mosenergo
3,37%
3,37%
4 419 858
4 311 255
15 625
35 Stand
0,83%
0,83%
3 000
3 000
36 Centerenergoholding
0,0013%
0,0013%
37 OGK-4
38 OGK-2
39 RusHydro
40 TGC-1
41 Fortum
42 Kuzbassenergo
43 TGK-13
44 WGC-3
45 Quadra
46 TGC-2
47 TGK-9
48 TGK-14
49 Intergeneratsiya
242
-
-
-
-
-
-
-
-
-
-
-
-
-
0,0009%
0,0009%
0,0008%
0,0006%
0,0006%
0,0006%
0,0006%
0,0005%
0,0005%
0,0005%
0,0004%
0,0004%
0,0004%
6
-
-
-
-
-
-
-
-
-
-
-
-
-
6
1 736
514
3 859
470
238
160
129
402
147
63
186
22
6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Type of business under the Charter
Purpose of participation
Information on modified interest in the Company
in 2010 or any concluded agreements to buy and
sell shares or interest
Agency services to companies and
organizations involved in the
construction and operation of Russia's
power facilities
Generation and sales of electric and
thermal energy
Services related to construction and
renovation of electric power facilities
Generation of electric and thermal
power
IT services
R&D
Energy companies management
Generation of electric and thermal
power
Generation of electric and thermal
power
Generation on electric and thermal
power
Generation, transmission and sale of
electric and thermal power
Generation, transmission and sale of
electric and thermal power
Generation, transmission and sale of
electric and thermal power
Publishing and printing services
Construction and commissioning works
related to energy facilities
The shares were received under the spin-off balance
sheet RAO UES Russia in merging RAO UES with
Federal Grid Company during Companies'
reorganization on 1 July, 2008
"
"
"
"
"
"
"
"
"
"
Subject to the Treaty between the Russian Federation
Government and Tajikistan Government on a joint
decision to issue shares of the Company dated 6
December, 2005
The shares were received under the spin-off balance
sheet RAO UES Russia in merging RAO UES with
Federal Grid Company during Companies'
reorganization on 1 July, 2008
Shares are purchased in accordance with the decision
of the Federal Grid Company Board of Directors of 28
December, 2004 (Minutes No. 20)
The shares were received under the spin-off balance
sheet RAO UES Russia in merging RAO UES with
Federal Grid Company during Companies'
reorganization on 1 July, 2008
Generation, transmission and sale of
electric power
The shares were received under the spin-off balance
sheet RAO UES Russia in merging RAO UES with
Federal Grid Company during Companies'
reorganization on 1 July, 2008
Installation and commissioning of GTE-
110 gas turbine engines and their
models and generation and sales of
electric energy
Property trust management and agency
operations
Generation of electric and thermal
power
Generation of electric and thermal
power
Generation of electric and thermal
power
Generation of electric and thermal
power
Generation of electric and thermal
power
Generation of electric and thermal
power
Generation of electric and thermal
power
Generation of electric and thermal
power
Generation of electric and thermal
power
Generation of electric and thermal
power
Generation of electric and thermal
power
Generation of electric and thermal
power
Asset management
The agreement for purchase and sale of 700 ordinary
registered uncertified shares of C SOVASATOM was
concluded by Federal Grid Company (Seller) and
AVAN (Buyer) to perform the decision of the Board of
Directors of Federal Grid Company (Minutes No. 121
of 29 December, 2010). The price of Agreement is
RUR21,000. The shares are transferred on 2
February, 2011 (Custody Transaction Report No.
001288-001 of February 2, 2011.)
243
ATTACHMENTS
Ite
m
Abbreviated company name
Federal Grid Company's
share in the charter capital
of Company
Book value of shares and
interest in the Company, RUR
thousand
Dividend
amount, RUR
thousand*
Financial performance in
2010
Revenue, Net profit, Net assets,
212 198
1 131 317
72 495
50 Dalenergosetproyekt
01.01.2010
1 share **
01.01.2011
1 share **
51 Tsentr Energetiki
98,56%
52 SMUEK
53 Trest SVES
54 Natsenergo
50,00%
6,14%
1,90%
55 Sibenergoholding
0,0014%
-
-
-
-
-
01.01.2010
01.01.2011
0
97 423
0
0
39
6
0
-
-
-
-
-
1
-
-
-
-
-
Total:
50 751 876
0
352 399
* - received in 2010 following the 2009 results minus dividend tax
** - other shares are owned by S&T Elektroenergetika, a 100% subsidiary of Federal Grid Company
244
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Type of business under the Charter
Purpose of participation
Information on modified interest in the Company
in 2010 or any concluded agreements to buy and
sell shares or interest
Integrated design in energy sector
Technical and operational maintenance
of buildings, structures and premises
Company's shares purchase and sale agreement was
approved by the Board of Directors of Federal Grid
Company on 25 May, 2008 (Minutes No. 63)
The shares were received under the spin-off balance
sheet RAO UES Russia in merging RAO UES with
Federal Grid Company during Companies'
reorganization on 1 July, 2008
The shares were received under the spin-off balance
sheet RAO UES Russia in merging RAO UES with
Federal Grid Company during Companies'
reorganization on 1 July, 2008
The shares were received under the spin-off balance
sheet RAO UES Russia in merging RAO UES with
Federal Grid Company during Companies'
reorganization on 1 July, 2008
Energy companies management
Design and construction of industrial
and technical projects
Energy equipment supply
Property trust management and agency
operations
The agreement to purchase and sell 5,628 ordinary
registered shares of Energy Industry Sector was
concluded by Federal Grid Company (Seller) and Oil
House (Buyer) to perform the decision of the Board of
Directors of Federal Grid Company. Price of
Agreement is RUR1,940,000. On 22 November,
2010, the shares were credited to Buyer's current
account (Custody Transaction Report No. 011363-
001 of November 22, 2010).)
Liquidated (Certificate of Entry into the Unified State
Register of Legal Entities of 15 February, 2010)
Liquidated (Certificate of Entry into the Unified State
Register of Legal Entities of 29 September, 2009)
Liquidated (extract from the Unified State Register of
Legal Entities No. 4035412 of December 17, 2010)
Federal Grid Company and SUEK-Krasnoyarsk
have concluded the purchase and sale agreement on
300,000 ordinary shares and 300,000 preferred
shares of Sibenergoholding. Price of Agreement is
RUR45,409.01
245
ATTACHMENTS
2010 Interested Party and Major Transactions
Below is information on interested party trans-
actions carried out by Federal Grid Company in
2010, which comply with Russian laws and re-
quire the approval of the Company’s authorized
management body:
1.
2.
3.
An agreement to purchase movable property
concluded between Federal Grid Company and
Energy Forecasting Agency. The total value of
property in question stands at RUR495,348
(four hundred and ninety-fi ve thousand three
hundred and forty-eight) and 65 kopecks, includ-
ing VAT in the amount of RUR89,162 (eighty-
nine thousand one hundred and sixty-two) and
76 kopecks (Minutes No. 95 as of 18.01.2010);
Additional agreement No. 5 to the agree-
ment No. C/01 for performing functions of the
owner/developer, concluded on 01.04.2008
between Federal Grid Company and CIUS
UES. The value of the additional agreement
is RUR398,668,000 (three hundred and nine-
ty-eight million, six hundred and sixty-eight
thousand), including Russian VAT (18%) in the
amount of RUR71,760,240 (seventy-one million,
seven hundred and sixty thousand two hundred
and forty) (Minutes No. 95 as of 18.01.2010);
Additional agreement No. 6 to the agree-
ment No. C/01 for performing functions of the
owner/developer, concluded on 01.04.2008
between Federal Grid Company and CIUS
UES. The value of the additional agreement
is RUR1,695,350,000 (one billion, six hundred
and ninety-fi ve million three hundred and fi ſt y
thousand), including Russian VAT (18%) in the
amount of RUR305,163,000 (three hundred
and fi ve million one hundred and sixty-three
thousand) (Minutes No. 95 as of 18.01.2010);
4.
A service agreement for the safekeeping of
state secrets concluded between Federal Grid
Company and MOESK. The value of the Ser-
vice agreement is RUR450,000 (four hundred
and fifty thousand), including Russian VAT
(18%) in the amount of RUR68,644 (sixty-
246
5.
6.
7.
8.
eight thousand, six hundred and forty-four) and
7 kopecks (Minutes No. 98 as of 10.03.2010);
An agreement for the use of electrical grid
facilities concluded between Federal Grid
Company and MRSK North-West. The value
of the agreement is RUR4,071,130 (four mil-
lion, seventy-one thousand one hundred and
thirty), including Russian VAT in the amount
of RUR732,803 (seven hundred and thirty-two
thousand eight hundred and three) and 40
kopecks (Minutes No. 98 as of 10.03.2010);
An agreement for the repair and operation of the
500-kV outdoor switch-gear of the Iriklinskaya
HPP, a branch of WGC-1, concluded between
Federal Grid Company and WGC-1. The value
of the agreement is RUR9,675,530 (nine mil-
lion, six hundred and seventy-fi ve thousand fi ve
hundred and thirty) and 36 kopecks, including
Russian VAT in the amount of RUR1,475,928
(one million, four hundred and seventy-fi ve thou-
sand nine hundred and twenty-eight) and 36
kopecks (Minutes No. 100 as of 28.04.2010);
Additional agreement No. 5 to the agreement
No. 209 as of 01.03.2009 for servicing the dis-
patch and engineering control and the auto-
mated control equipment of UNEG facilities, con-
cluded between Federal Grid Company and MUS
Energetiki (Minutes No. 100 as of 28.04.2010);
An agreement on training services concluded
between Federal Grid Company and MRSK Ural.
The value of the agreement is RUR2,699,073
(two million, six hundred ninety-nine thousand
and seventythree) and 20 kopecks, including
Russian VAT (18%) in the amount of RUR411,723
(four hundred and eleven thousand, seven hun-
dred and twenty-three) and 3 kopecks for 177
employees (Minutes No. 101 as of 12.05.2010).
The trust agreement concluded between Federal
Grid Company and INTER RAO UES (Minutes No.
103 as of 15.06.2010);
9.
Additional agreement No. 7 to the agree-
ment No. C/01 for the performance of owner/
developer functions concluded on 01.04.2008
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
between Federal Grid Company and CIUS
UES. The value of the Additional agreement
is RUR1,986,582,000 (one billion, nine hun-
dred and eighty-six million, fi ve hundred and
eighty-two thousand), including Russian VAT
(18%) in the amount of RUR357,584,760 (three
hundred and fi ſt y-seven million, fi ve hundred
and eighty-four thousand and seven hundred
and sixty) (Minutes No. 104 as of 16.06.2010);
10.
11.
12.
An agreement for the performance of a special ex-
pert assessment concluded between Federal Grid
Company and SO UES. The price of the agreement
is RUR100,000 (one hundred thousand), including
Russian VAT (18%) in the amount of RUR15,254
(fi ſt een thousand two hundred and fi ſt yfour) and
24 kopecks (Minutes No. 107 as of 22.06.2010);
An agreement for the repair and maintenance of
power grid facilities concluded between Federal
Grid Company and MRSK Volga. The value of
the agreement is RUR12,937,000 (twelve mil-
lion, nine hundred and thirty-seven thousand)
and 21 kopecks, including Russian VAT in the
amount of RUR1,973,440 (one million, nine hun-
dred and seventy-three thousand four hundred
and forty) and 71 kopecks (Minutes No. 107 as
of 22.06.2010);
Additional agreement No1 to the General Con-
tractor agreement No822 for the construc-
tion of communication facilities for the mobile
radio communication network, concluded on
21.01.2009 between Federal Grid Company and
MUS Energetiki. The value of the agreement is
RUR375,564,621 (three hundred and seventy-
fi ve million fi ve hundred and sixty-four thousand
six hundred and twenty-one) and 21 kopecks,
including VAT (Minutes No. 107 as of 22.06.2010);
13.
Additional agreement No. 2 to the Investment
agreement No. 771 as of 08.08.2008 for the
construction of line and cable installations for
the fi ber-optic communications line along the
route which includes the 500-kV Zarya substa-
tion, the 500-kV Riga substation, the 500-kV
Novo-Anzherskaya substation and the 1,150-kV
Itatskaya substation. The agreement was con-
14.
15.
16.
17.
cluded between Federal Grid Company and MUS
Energetiki (Minutes No. 107 as of 22.06.2010);
An Agency agreement concluded between
Federal Grid Company and INTER RAO UES.
The value of the agreement is 2% of the price
of work or RUR61,650 (sixty-one thousand, six
hundred and fi ſt y) and 60 kopecks, including VAT
(18%) in the amount of RUR9,404 (nine thousand
four hundred and four) and 32 kopecks (Minutes
No. 107 as of 22.06.2010);
An agreement for the performance of tests of
transformer fl uid for substation equipment oper-
ated by the PMES Caspian, concluded between
Federal Grid Company and MRSK North Cauca-
sus. The value of the agreement is RUR413,847
(four hundred and thirteen thousand, eight hun-
dred and fortyseven) and 48 kopecks, including
Russian VAT (Minutes No. 111 as of 09.08.2010);
An Agency agreement concluded between
Federal Grid Company and the Index of Energy
Federal Grid Company. Compensation for the
Agent is RUR42,000 (forty-two thousand), in-
cluding Russian VAT in the amount of RUR7,560
(seven thousand fi ve hundred and sixty). Apart
from compensation, the Principal shall reimburse
the Agent for the cost of work performed. Total
costs borne by the Agent are RUR6,051,000 (six
million and fi ſt y-one thousand) rubles, including
Russian VAT in an amount of up to RUR923,034
(nine hundred and twenty-three thousand and
thirty-four) (Minutes No. 114 as of 14.09.2010);
An assessment agreement concluded between
Federal Grid Company, INTER RAO UES and
RusHydro, on the one hand, and The Institute for
Problems of Enterprise Ltd, Deloitte and Touché
CIS and Nexia Pacholi Consulting, co-contractors
(the Consortium), on the other hand. The price of
services is distributed among co-customers as
follows: Customer 1 (INTER RAO UES) – up to
RUR29,618,000 (twenty-nine million, six hundred
and eighteen thousand), including Russian VAT
(18%), Customer 2 (Federal Grid Company) – up
to RUR29,618,000 (twenty-nine million, six hun-
dred and eighteen thousand), including Russian
247
ATTACHMENTS
VAT (18%) and Customer 3 (RusHydro) – up to
RUR29,618,000 (twenty-nine million, six hun-
dred and eighteen thousand), including Russian
VAT (18%) (Minutes No. 114 as of 14.09.2010);
23.
18.
19.
An agreement on the termination of agreement
No. U/2007-69 concluded between Federal Grid
Company and INTER RAO UES on 27.08.2007.
The value of the agreement is RUR82,600
(eightytwo thousand and six hundred) per
month, including Russian VAT (18%) in the
amount of RUR12,600 (twelve thousand and six
hundred) (Minutes No. 114 as of 14.09.2010);
An agreement for the services of the listing
agent’s investment bank concluded between
Federal Grid Company and VTB Capital. The
value of the agreement (remuneration due to
the bank) is RUR7,788,000.00 (seven million,
seven hundred and eighty-eight thousand)
rubles, including the bank’s overhead costs,
and VAT (Minutes No. 120 as of 16.12.2010);
20.
An agreement with the members of the Board
of Directors. The value of the agreement
is determined by the General Shareholders
Meeting (Minutes No. 120 as of 16.12.2010);
21.
An agreement concluded between Federal Grid
Company and SO UES with the purpose of re-
structuring liabilities of SO UES. The value of the
agreement is RUR1,113,718,755 (one billion, one
hundred and thirteen million, seven hundred and
eighteen thousand, seven hundred and fi ſt y-fi ve)
and 64 kopecks (Minutes No. 121 as of 29.12.2010);
22.
Service agreement for the development and
continuous updating of the tariff and balance
model of the electrical energy industry for the
purpose of developing the 2010 sliding forecast
and the mediumterm forecast for the 2011-2013
period, and suggestions on tariff s for products
and services in the electrical energy industry. The
agreement is concluded between Federal Grid
Company and APBE. The value of the agreement
is RUR11,800,000 (eleven million, eight hundred
thousand) (Minutes No. 121 as of 29.12.2010);
248
Service agreement for the periodic provision of
forecast data on electric power consumption in
Russian Federation subjects in the medium-term
(seven years) and long-term (fi ſt een years) for the
purpose of the development and adjustment of the
UNEG Development Scheme. The agreement was
concluded by Federal Grid Company and APBE.
The value of the agreement is RUR28,674,000
(twenty-eight million six hundred and seventy-
four thousand) (Minutes No. 121 as of 29.12.2010);
24.
Service agreement for the periodic acquisition,
processing and analysis of reporting information
on the condition and functioning of the UNEG,
supplied by electric energy companies. The agree-
ment is concluded between Federal Grid Com-
pany and APBE. The value of the agreement is
RUR17,700,000 (seventeen million, seven hundred
thousand) (Minutes No. 121 as of 29.12.2010);
25.
Service agreement on the performance of a spe-
cial assessment, concluded between Federal Grid
Company and INTER RAO UES. The value of the
agreement is RUR50,000 (fi ſt y thousand), includ-
ing VAT (18%) in the amount of RUR7,627 (seven
thousand, six hundred and twenty-seven) and
12 kopecks (Minutes No. 121 as of 29.12.2010);
26.
27.
Service agreement on the formation of guide-
lines for the development, agreement and
monitoring of Investment Program implemen-
tation. The agreement is concluded between
Federal Grid Company and APBE. The value
of the agreement is RUR28,320,000 (twenty-
eight million, three hundred and twenty thou-
sand) (Minutes No. 121 as of 29.12.2010);
Service agreement for the development of
the system of monitoring and forecasting
volumes, prices and production costs, and
electrical energy distribution. The agreement
is concluded between Federal Grid Company
and APBE. The value of the agreement is
RUR8,850,000 (eight million, eight hundred and
fi ſt y thousand) (Minutes No. 121 as of 29.12.2010);
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
During 2010, the Company carried out no
transactions (related party transactions), the value
of which stands at 5% or more of the book value
of the Company’s assets, as determined by
the Company’s fi nancial statements as dated on
the last reporting date before the transaction is
performed.
During 2010, the Company and its dependent
companies carried out no transactions with
shareholders who owned at least 5% of the
voting shares.
28.
29.
30.
Service agreement for the development
of information and analytical materials
on the functioning and development of
Russia’s electrical energy industry based on
2009 data (express report) and 2010 data
(monthly and quar terly repor ts). The
agreement is concluded between Federal
Grid Company and APBE. The value of the
agreement is RUR17,700,000 (seventeen
million, seven hundred and seventy thou-
sand) (Minutes No. 121 as of 29.12.2010);
Service agreement on drawing the fore-
cast balance of the electrical energy industry
for the period from 2020 till 2030 (monitor-
ing the general layout of electrical energy
facilities). The agreement was concluded be-
tween Federal Grid Company and APBE. The
value of the agreement is RUR18,880,000
(eighteen million, eight hundred and eighty-
thousand) (Minutes No. 121 as of 29.12.2010);
Agreement No. 1 on the reimbursement of
the cost of permanent improvements per
Property Lease agreement No. SSH-349-
2009 concluded between Federal Grid Com-
pany and RusHydro on 09.10.2009. The value of
the agreement is RUR18,186,255 (eighteen
million, one hundred and eighty-six thousand,
two hundred and fi ſt y-fi ve) and 33 kopecks,
including VAT (18%) in the amount of
RUR3,273,525 (thee million, two hundred and
seventy-three thousand, fi ve hundred and twen-
tyfi ve) and 97 kopecks (Minutes No. 121 as of
29.12.2010).
249
ATTACHMENTS
IMPLEMENTATION OF THE ASSIGNMENTS
OF THE PRESIDENT AND GOVERNMENT
OF THE RUSSIAN FEDERATION
Registration Details
Assignment
Issued By
5-732
as of 26 January,
2010
Igor Sechin,
Russian Government
Assignment Summary
Performance Status
Performance Date
Joint project with Power
Machines and Federal Grid
Company to manufacture
high voltage electric power
installations
8 February, 2010
Performed.
Andrey Kazachenkov and Andrey
Sveshnikov were responsible for
maintaining cooperation with
Power Machines. Necessary
materials have been prepared.
The meeting with Power
Machines representatives
was held on 8 February, 2010.
Reply letter No. TD-549 as of 4
February, 2010 was forwarded to
Andrey Shishkin, Russian Deputy
Minister of Energy
5-1474
as of 12 February,
2010
Igor Shuvalov,
Russian Government
Engineering utilities connection
to the cement production line
under construction at the
Verkhneabakansky Cement
Plant (Elena Baturina)
Performed.
Reply letter No. BR-1155 as of
5 March, 2010 is forwarded to
Andrey Shishkin, Russian Deputy
Minister of Energy
4 March, 2010
5-1748
as of 18 February,
2010
Igor Sechin,
Russian Government
5-1751
as of 18 February,
2010
Dmitry Kozak,
Russian Government
5-1884
as of 24 February,
2010
Igor Sechin,
Russian Government
5-4006
as of 12 April,
2010
Vladimir Putin,
Russian Government
Providing information on
the implementation of
investment programs by
companies operating in the
Russian Federation (including
government-sponsored
enterprises) and their plans to
commission production facilities
in 2009-2010
Selecting sites to locate the
Veseloye and Vremennaya
(Reserve) substations (Oleg
Budargin)
Coordinating the design and
construction of industrial and
social infrastructure facilities
under the project to develop
the Gremyachinsky potash salt
deposit
Instruction by Russian Prime
Minister Vladimir Putin following
the the State Atomic Energy
Corporation ROSATOM report
on nuclear power industry
performance in 2009 and NPP
construction using Russian
technologies in Russia and
abroad
Performed. Reply letter No.
TD-950 as of 26 February, 2010
is forwarded to Andrey Shishkin,
Russian Deputy Minister of
Energy
10 March, 2010
Performed. The meeting to
addresubstation the location of
the Veseloye substation was held
in Sochi on 4 March, 2010. The
meeting with the Krasnodarsky
Regional Administration was held
11 March, 2010
Performed. Reply letter No.
RP-1492 as of 18 March, 2010
is forwarded to Andrey Shishkin,
Russian Deputy Minister of
Energy
4 March, 2010
24 March, 2010
Performed. Reply letter No.
BR-2233 as of 16 April, 2010 is
forwarded to Andrey Shishkin,
Russian Deputy Minister of
Energy
27 April, 2010
250
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Registration Details Assignment
Assignment Summary
Performance Status
Performance Date
Issued By
Vladimir Putin,
Russian Government
5-4255
as of 16 April,
2010
5-5362
as of 17 May, 2010
Igor Shuvalov, Russian
Government
5-8947
as of 13 August,
2010
Igor Sechin,
Russian Government
Giving the list of Mandates
of RF President No. Pr-839
as of 29 March, 2010,
following the meeting of the
Presidential Commission
for the Modernization and
Technical Development of the
Russian Economy, as of March
23rd, 2010
Submitting materials on the
dividend policy and proposals
on upgrading the fi nancial
and economic performance
of Federal Grid Company
for review at the Russian
Government meeting
Making a decision on
replacing the registrar of
state-sponsored enterprises
whose shares are pledged
with state-owned credit
organizations
Performed. The following reply
letters are forwarded to the
Ministry of Energy: No. DG-
6856 as of 21 October, 2010;
No. ON-3273 as of 8 June,
2010; No. AL-4469 as of 28 July,
2010; No. BR-4895 as of 11
August, 2010; No. RP-6012 as
of 21 September, 2010; and No.
DG-6075 as of 23 September,
2010. All items of the Minutes
referring to the competency of
FGC have been performed
Performed. Reply letter No.
TD-3076 as of 28 May, 2010 is
forwarded to Maria Tikhonova,
Russian Ministry of Energy
29 April, 2010
28 May, 2010
Performed. Reply letter No.
TD-5180 as of 19 August,
2010 is forwarded to Stanislav
Svetlitsky, Russian Ministry of
Energy
20 August, 2010
Igor Sechin,
Russian Government
Submitting draſt legal
regulations on anti-terrorism
security at fuel and energy
sector facilities
Performed. Reply letter No.
MU-5191 as of 19 August, 2010
to Andrey Shishkin, Russian
Deputy Minister of Energy
19 August, 2010
5-9112
as of 18 August,
2010
5-9470
as of 27 August,
2010
Igor Sechin,
Russian Government
Follow-up revisions of legal
regulations and submitting
the fi nal approved version
prior to 20 September, 2010
5-9521
as of 30 August,
2010
Igor Shuvalov,
Russian Government
Carrying out agreements
reached at the 14th Meeting
of the Russian-Mongolian
Inter-governmental
Commission for Trade,
Economic, Scientifi c and
Technical Cooperation held
20 July, 2010 in Ulan-Bator
(Mongolia)
Performed. Reply letter No.
MU-5869 as of 15 September,
2010 is forwarded to Andrey
Shishkin, Russian Deputy
Minister of Energy
Performed. Reply letter No.
126/242 as of 13 September,
2010 is forwarded to Mikhail
Pleshkin at the Russian Ministry
of Energy
15 September, 2010
13 September, 2010
5-9715
as of 2 September,
2010
Vladimir Ampilogov,
Industry and
Infrastructure
Department of the
Russian Government
Including eff orts to develop
electric grids for power supply
to new production lines for
the Unifi ed Metallurgical
Company in Federal Grid
Company's investment
program
Performed. Reply letter No.
BA-6326 as of 1 October,
2010 is forwarded to Vladimir
Ampilogov, Director of the
Industry and Infrastructure
Department of the Russian
Government
30 September, 2010
5-10423
as of 21 September,
2010
Igor Sechin,
Russian Government
5-10608
as of 24 September,
2010
Dmitry Kozak,
Russian Government
Addressing the issue of giving
pre-qualifi cation assistance
to GlobalElectroService for
the tender and providing
information to the Russian
Government
Carrying out the Russian
Federation Government
Mandate No. DK-P9-4292 as
of 25 June, 2010
Performed, Reply letter No.
BA-6211 as of 28 September,
2010 is forwarded to Andrey
Shishkin, Russian Deputy
Minister of Energy
Performed. Reply letter No. DG-
6390 as of 5 October, 2010 is
forwarded to Andrey Shishkin,
Russian Deputy Minister of
Energy
24 September, 2010
4 October, 2010
251
ATTACHMENTS
Registration Details Assignment
Assignment Summary
Performance Status
Performance Date
Issued By
3-11613
as of 19 October,
2010
Valentin Letunovsky,
Control Directorate in
the Administration of
the President of the
Russian Federation
Providing information on the
development and approval
of innovative development
programs for government-
sponsored enterprises
5-11616
as of 19 October,
2010
Igor Shuvalov,
Russian Government
5-11845
as of 22 October,
2010
Igor Shuvalov,
Russian Government
Submitting the List of
Instructions given by Igor
Shuvalov, First Deputy Prime
Minister of Russia, during his
business trip to Vladivostok on
8 October, 2010
Improving the effi ciency of
electric and heat power
engineering management
and implementation of pilot
projects to raise investments
in the infrastructure sector
15 November, 2010
16 November, 2010
28 October, 2010
Performed. Reply letter No.
BO-7698 as of 19 November,
2010 is forwarded to Valentin
Letunovsky, Deputy Chief of
the Control Directorate in the
Administration of the President
of the Russian Federation
Performed. Letter No. BO-
6872 as of 21 October, 2010
is forwarded to Sergei Darkin,
Primorsky Krai Governor ; and
reply letter No. BA-7263 as of
3 November, 2010 to Andrey
Shishkin, Russian Deputy
Minister of Energy
Performed. Federal Grid
Company issued Order No. 856
as of 8 November, 2010; and
forwarded reply letter No. TD-
7514 as of 12 November, 2010
to Stanislav Voskresensky,
Russian Deputy Minister
of Economic Development;
letter No. TD-7515 to Elena
Pomchalova, Deputy Head
of the Federal Tariff Service;
letter No. TD-7516 to Andrey
Shishkin, Russian Deputy
Minister of Energy; and
letter No. TD-569 as of 31
January, 2011 to Stanislav
Voskresensky, Russian
Deputy Minister of Economic
Development
5-12490
as of 8 November,
2010
Igor Shuvalov,
Russian Government
Results of the 10th Meeting
of the Russian-Korean Joint
Commission for Economic,
Scientifi c and Technical
Cooperation
Pending. Quarterly reports
are submitted to the
Russian Ministry of Regional
Development, letter No. BR-36
as of 12 January, 2011
12 April, 2011
5-14385
as of 14 December,
2010
Igor Shuvalov,
Russian Government
Submitting for revision the
draſt Order of the Russian
Government on approving
the rules of agreement on
transferring power grid
facilities included in the Unifi ed
National Electric Grid (UNEG)
for lease
Performed. Reply letter No.
TD-8756 as of 22 December,
2010 is forwarded to Andrey
Shishkin, Russian Deputy
Minister of Energy
17 December, 2010
5-14872
as of 23 December,
2010
Igor Sechin,
Russian Government
Submitting report on
investment program
performance
Performed. Reply letter No.
SS-8960 as of 29 December,
2010 is forwarded to Andrey
Shishkin, Russian Deputy
Minister of Energy
17 December, 2010
252
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
AUDIT COMMISSION CONCLUSIONS ON THE VERACITY
OF INFORMATION IN THE ANNUAL REPORT
Audit Commission Conclusions
on the Veracity of Information in the Annual Report
Federal Grid Company Audit Commission's Repo
Moscow
11 May, 2011
In compliance with Federal Law No.208-FZ (dated 24 November, 2011) entitled
"On Joint Stock Companies," the Articles of Association of Federal Grid Company, and
the Plan of Work for the Audit Commission of Federal Grid Company (Minutes of Meet-
ing No.1 dated 20 October, 2010 and Minutes of Meeting No.2 dated 27 December,
2010), an audit has been conducted of the 2010 annual reporting by the Company.
Based on this audit, and taking into account the findings of the audit of Federal
Grid Company’s financial (bookkeeping) accounts by PricewaterhouseCoopers Audit
(unnumbered, dated 23 March, 2011) for 2010, the following conclusions were reached:
Based on selective checks of documents submitted to the Audit Commission, the
information contained in the Federal Grid Company's Annual Report and annual
financial accounts for 2010 can be considered accurate in every significant
respect;
No evidence has been found of any violations of accounting procedures or finan-
cial reporting regulations, as stipulated by Russian laws.
The Annual Report of Federal Grid Company, submitted for approval to the
Annual General Shareholders Meeting, contains information specified in Paragraph 3.6
of the Provision on Additional Requirements on the procedure for preparing, convening
and holding the Annual General Shareholders Meeting, as approved by Resolution
No.17/ps (as of 31 May, 2002) of the Russian Federal Comission for the Securities
Market (FCSM) updated in FCSM Resolution No.03-6 p/s (as of 7 February, 2003).
Considering the above, the Audit Commission of Federal Grid Company has suf-
ficient grounds to confirm the veracity, in every significant respect, of data contained in
the Annual Report of Federal Grid Company and the Company's 2010 annual significant
accounts.
Chariman of the Audit Commission of Federal Grid Company
V. Raspopov
Secretary of the Audit Commission of Federal Grid Company
A. Drokova
Members of the Audit Commission
A. Colyada
D. Gorevoy
253
ATTACHMENTS
2011 INVESTOR CALENDAR
Dates are subject to change
Date
Event
January 13-14
6th CIB Global Utilities Conference Societe Generale (Paris)
February 2-4
Forum Russia 2011, Troika Dialog (Moscow)
March 28
Listing on the London Stock Exchange
March 29
Extraordinary General Meeting
March 31
2010 Annual Results (RAS)
April 11-14
Morgan Stanley EMEA Conference (London, New York)
May 3
May 11
May 12
May 16
2010 Annual Financial Report (IFRS)
Capital Markets Day
Interim Report IQ 2011 (RAS)
Record Date (AGM)
June 29
Annual General Shareholders Meeting
August
Interim Report 2Q 2011 (RAS)
November
Interim report 3Q 2011 (RAS)
254
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
GLOSSARY
Diff erent names for Federal Grid Company and its branches
Federal Grid Company
Событие
Open Joint Stock Company “Federal Grid Company of the Unifi ed Energy
System” (Federal Grid Company)
The Company
Branches
Federal Grid Company
The branches of Federal Grid Company – Backbone Electric Grid (MES),
Enterprise of Backbone Electric Grid (PMES)
Executive body (EB)
The executive body of Federal Grid Company
Abbreviations
Abbreviation
Full name
ACB
ACPP
AGM
Air Circuit Breaker
Annual Comprehensive Procurement Program
Annual General Shareholders Meeting
AIMS CMEE
Automated Information and Measurement System for the Commercial Metering of Electrical Energy
AMIS EPFA
Automated Measuring and Information System for Electric Energy Fiscal Accounting
AMS
ASTPM
AT
ATMS
CCS
CEO
CIM
COGS
CSR
CSR
CSTB
CT
CTC
DR
EBIT
Automated Management System
Automated System of Technological Process Management
Automatic Transformer
Automated Technological Management System
Carrier Communication System
Chief Executive Offi cer
Center for Information Management
Cost of Goods Sold
Controlled Shunt Reactor
Corporate Social Responsibility
Coordinative Scientifi c and Technical Board
Current Transformers
Central Tender Committee
Depository Receipt
Earnings Before Interest and Taxes
EBITDA
Earnings Before Interest, Taxes, Depreciation and Amortization
ECA
ERPS
ESPO
ETS
FACTS
FAS
FFMS
Emergency Control Automatics
Enterprise Resource Planning System
Eastern Siberia-Pacifi c Ocean Pipeline
Electronic Trading Site
Flexible Alternate Current Transmission Systems
The Federal Antimonopoly Service
The Federal Financial Markets Service
255
ATTACHMENTS
Abbreviation
Full name
The Federal Tariff Service
Grid Control Center
Global Depository Receipt
Grid Energy Storage Systems
Gas-Insulated Distributor System
Gas-Insulated Switchgear
Gas Processing Plant
State District Power Plant
Hardware and Soſt ware Package
Hydro Power Plant
Human Resources
Intangible Assets
Information Exchange Model
Interconnected Energy System
Inter-State Electricity Transmission Line
Internet Protocol
Key Performance Indicator
Key Performance Indicator
Leningrad Nuclear Power Plant
London Stock Exchange
Multi-Chamber Insulator Arrester
Moscow Interbank Currency Exchange
Inter-Regional Backbone Grid Company
Nuclear Power Plant
Novovoronezhskaya NPP
Organization for Economic Co-operation and Development
Outdoor Switchgear
Overhead Transmission Line
Property, Plant and Equipment
Program for Reliability and Observability Improvement
Research and Development
Regulatory Asset Base
Russian Academy of Sciences
Russian Accounting Standards
Relay Protection and Automatics
Radio Relay Links
Russian Trading System
Russian Union of Industrialists and Entrepreneurs
Russian rubles
Standard & Poor's
FTS
GCC
GDR
GESS
GIDS
GIS
GPP
GRES
H&SP
HPP
HR
IA
IEM
IES
IETL
IP
KPI
KPI
LNPP
LSE
MCIA
MICEX
MMSK
NPP
NVNPP
OECD
OS
OTL
PPE
PROI
R&D
RAB
RAS
RAS
RPA
RRL
RTS
RUIE
RUR
S&P
256
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
Abbreviation
Full name
SC
SDCs
SDH
SES AAG
STSCS
SVC
TCSC
TDM
TM
TPP
UEPTN
UES
Synchronous Compensator
Subsidiaries and Dependent Companies
Synchronous Digital Hierarchy
Smart Energy System with Active Adaptive Grid
Small Terrestrial Satellite Communication Station
Static VAR Compensator
Thyristor Controlled Series Capacitor
Time Division Multiplexing
Tests and Measurements
Thermal Power Plant
The Unifi ed Electrical Power Technological Network
Unifi ed Energy System
UES of Russia
Unifi ed Electrical System of Russia
UNEG
VT
WDM
WECM
Unifi ed National (All-Russian) Electrical Grid
Voltage-Measuring Transformer
Wavelength-Division Multiplexing
Wholesale Electricity and Capacity Market
257
ATTACHMENTS
CONTACTS
Information on the Auditor(s)
Closed Joint Stock Company PricewaterhouseCoopers
Audit (PwC Audit)
Information on the Depository
National Settlement Depository non-banking credit
organization (NSD)
Location: 1/13, bld 4 Sredny Kislovsky Lane,
Moscow, Russia
License number: 177-12042-000100
Date of issue: 19.02.2009
Expiration date: unlimited
Issuing authority: Russian Federal Financial Markets
Service
Information on the Custodian
Limited Liability Company Deutsche Bank
Location: 2 bld.82, Sadovnicheskaya Street, Moscow,
Russia, 115035
Telephone : +7 (495) 797-52-09
Fax: +7 (495) 797-50-99
General License number: 3328
Date of issue: 9.10.2003
Location: 10 Butyrsky Val Street,
Moscow, Russia, 125407
INN: 7705051192
OGRN: 1027700148431
Telephone: +7 (495) 967-6000
Fax: +7 (495) 967-6001
E-mail: hotline@ru.pwc.com
License number: Е000376
Date of issue: 20.05.2007
Expiration date: 20.05.2012
Issuing authority: Russian Ministry of Finance
Information on the auditor’s membership in self-
regulated organizations:
Organization’s full name: Not-for-Profi t Partnership
Audit Chamber of Russia
Location; Building 9, Block 2 3rd
Syromyatnichesky Lane, Moscow, Russia, 105120
Information on the Registrar
Closed Joint Stock Company STATUS Registrar
Company (STATUS)
Location: 32, Block 1 Novorogozhskaya Street,
Moscow, Russia, 109544
Postal address: 32, Block 1 Novorogozhskaya Street,
Moscow, Russia, 109544
Telephone: +7 (495) 974-8350
Fax: +7 (495) 678-7110
E-mail: info@rostatus.ru.
License number: 10-000-1-00304
Date of issue: 12.03.2004
License term: indefi nite
Issuing authority: Russian Federal Financial Markets
Service
258
FEDERAL GRID COMPANY
ANNUAL REPORT
2010
WE INVITE YOU TO ENTER INTO A DIALOG WITH US
Federal Grid Company
of Unifi ed Energy System
Actual and postal address: 5A Akademika Chelomeya
Street, Moscow, Russia, 117630
Telephone: +7 (495) 710-9000
Fax: +7 (495) 710-9655
E-mail: info@fsk-ees.ru
Internet address: http://fsk-ees.ru/
Contact information for institutional investors
and analysts:
Shareholders, Investors and Liquidity Support
Investor Relations Department
Telephone: +7 (495) 710-9064
e-mail: ir@fsk-ees.ru
Telephone line for shareholders:
+7-800-200-1881
259