rus
2014

Dan Belenky

First Deputy Director General for Investment of JSC ROSSETI

Despite the drastically changed macroeconomic environment in 2014, considering the high social significance of securing a high-quality electricity supply and the importance of modernizing the grid infrastructure for further comprehensive regional development, ROSSETI did its utmost to enable subsidiaries and dependent companies to implement the consolidated capital investment program.

We carried our plans in full last year, with the financing of capital investment totaling 240 billion rubles and the value of commissioned capital assets reaching 305.9 billion rubles, or 19.430 MVA of transformer capacity and 32.819 kilometers of power lines.

In the reporting year, ROSSETI’s investment division was highly successful in enhancing the transparency and efficiency of procurement procedures. The consolidated economic effect totaled 30.6 billion rubles (exclusive of VAT), or 8.8% of the aggregate value of purchases. More than 98% of all purchases were made electronically.

This allowed us to receive several awards and the highest positions in the national procurement transparency ratings.

Another focus of the investment division’s attention was work on building up partner relations with small and medium-sized businesses and increasing their share in the total number of contractors. We developed and put into operation our own electronic trading floor, providing small and medium-sized businesses with easier access to purchases made by both the Company and its subsidiaries and dependent companies.

Purchases from small and medium-sized businesses accounted for 24% at the end of 2014.

Our dependence on foreign-made electrical equipment was of no less importance in the current external environment. In 2014, ROSSETI formulated the import substitution policy. It is planned to approve and begin implementing the policy in 2015.

Procedure for Formulating the Capital Investment Program

The procedure for formulating the consolidated capital investment program is set out in the Schedule of Formulating the Consolidated Investment Program of ROSSETI and Reporting on the Implementation of the Consolidated Investment Program approved by the Board of Directors of the Company (Minutes of the Meeting No. 175 of December 29, 2014).

In accordance with the Schedule, ROSSETI approves the drafts and adjustments of capex programs, reviews reports on the implementation of SDCs’ capex programs, and prepares the Company’s consolidated capital investment program and reports on its implementation.

Consolidated Capital Investment Program of ROSSETI SDCs

The 2014 consolidated capital investment program of ROSSETI’s subsidiaries and dependent companies takes account of SDCs’ current capex programs approved in accordance with a resolution of the Government.

The capex programs of SDCs meet the following principal criteria:

  • remedying the consequences of accidents at electric grid facilities;
  • improving the operating reliability of electric grid facilities to secure an uninterrupted power supply;
  • including the facilities intended for preventing (reducing) long-lasting power outages that affect socially important facilities and vital infrastructure;
  • including the facilities necessary to perform obligations under network connection contracts and under connection contracts for lowend houses (the program of the Federal Agency for Construction. Housing and Utilities) and including the facilities ensuring that generators deliver capacity under capacity supply agreements;
  • including the facilities initiated in the previous years;
  • including the facilities in an unsatisfactory technical condition, whose routine maintenance and repair are economically and technically infeasible.

Furthermore, the capital investment program contains the facilities ensuring the implementation of the following programs:

  • energy conservation and energy efficiency enhancement;
  • creation of automatic emergency control systems and automatic mode control systems;
  • creation of telemetry and telecommunication systems;
  • installation of voltage regulators and reactive power compensators.

SDCs’ capital investment is the capital expenditures that include the following expenses:

  • new construction;
  • rehabilitation, extension, and technical upgrading of production and nonproduction facilities;
  • acquisition of buildings, structures, equipment, land, and facilities intended for the use of natural resources;
  • acquisition and creation of intangible assets and other capital investment expenses;
  • equity investments in electric grid companies.

In 2014, financing was 240.1 billion rubles (inclusive of VAT), while the value of commissioned capital assets totaled 305.9 billion rubles. Commissioned capacity in 2014 totaled 19.430 MVA and 32.819 kilometers

Changes in Financing for 2012–2014, million rubles (inclusive of VAT)

Due to restrictions on the tariff growth rate, the financing of the capex program was decreased to 240.1 billion rubles.

Principal Financing Sources for the Capital Investment Program in 2014, %

In 2014, the principal areas of financing were network connection (34.1%), technical upgrading and rehabilitation (29.4%), and new construction (24.4%).

Areas and Breakdown of Financing Under ROSSETI SDCs’ Consolidated Investment Program, million rubles (inclusive of VAT)

Areas of Financing

2013

2014*

Network connection

75,739

24.2%

81,887

34.1%

Technical upgrading and rehabilitation

98,714

31.5%

70,525

29.4%

New construction

96,437

30.8%

58,612

24.4%

Other

42,560

13.6%

29,113

12.1%

Total

313,449

100.0%

240,137

100.0%

* In comparability purposes with reports for previous periods information is given without results of subsidiaries and dependent companies of ROSSETI SDCs: JSC Yargorelectroset, CJSC Svet, CJSC TSEC and CJSC Kurortenergo

Priority Projects Under the Capital Investment Program. Planned Completion Dates

517 priority investment projects are scheduled to be carried out in 2014–2019. They meet the criteria for qualifying as priority investment projects of ROSSETI’s subsidiaries and dependent companies and include 165 investment projects for transmission grids and 352 investment projects for distribution grids

Major Priority Projects Scheduled for Completion in 2015

Transmission grids (FGC UES):

  • Delivery of capacity from Leningrad NPP-2, Novovoronezh NPP-2, Nizhne-Bureyskaya HPP, Zelenchukskaya HPP-PSPP, etc.
  • Electricity supply facilities in the Crimean Federal District.

Distribution grids:

  • Network connection for facilities of large and socially important electricity consumers (Rosneft, Gazprom, Oboronenergo, New Moscow, Skolkovo Innovation Center, etc.).
  • Delivery of capacity from Gotsalinskaya HPP, Chelyabinsk TPP, Novovoronezh NPP, etc.
Key Indicators of ROSSETI SDCs’ Consolidated Investment Program in 2014

SDCs

Financing, million rubles (inclusive of VAT)

Commissioned Capital Assets, million rubles (exclusive of VAT)

Commissioned Capital Assets, MVA

Commissioned Capital Assets, kilometers

IDGC of Siberia

7,041

6,681

865

2,197

TDC

556

407

25

91

Tyumenenergo

9,419

4,465

131

258

IDGC of Urals

7,956

7,339

426

2,060

IDGC of Volga

6,271

6,491

435

1,153

IDGC of South

1,897

1,707

111

410

Kubanenergo

8,442

22,084

500

1,567

IDGC of Northern Caucasus

1,810

2,395

160

520

Chechenenergo

545

566

203

245

IDGC of Center and Volga Region

9,428

8,095

364

2,833

IDGC of North-West

5,191

4,985

400

1,636

LENENERGO

25,178

24,314

1,450

2,490

Yantarenergo

863

651

83

149

IDGC of Centre

14,245

12,913

1,107

5,110

MOESK

47,795

45,452

3,440

8,614

Tyvaenergo

105

58

10

40

ENCE

2,539

2,185

198

324

FGC UES*

90,857

155,091

9,522

3,121

Total for ROSSETI SDCs

240,137

305,879

19,430

32,819

Tsarskoselskaya Energy Company

136

116

5

14

Kurortenergo

339

317

24

20

Svet

6

5

0

0

Yargorelektroset

184

135

24

80

Total on JSC ROSSETI including results of subsidiaries
and dependent companies of ROSSETI SDCs

240,801

306,451

19,483

32,933

Changes in Commissioned Capacity Under ROSSETI SDCs’ Consolidated Investment Program for 2012–2014

SDCs

2012

2013

2014*

2014/2013, %

2014/2013, %

MVA

km

MVA

km

MVA

km

MVA

km

IDGC of Siberia

633

1,487

522

1,486

865

2,197

65.7

47.8

TDC

115

793

82

221

25

91

(69.5)

(58.8)

Tyumenenergo

865

716

649

90

131

258

(79.8)

186.7

IDGC of Urals

621

1,242

644

1854

426

2,060

(33.9)

11.1

IDGC of Volga

780

1,753

779

1823

435

1,153

(44.2)

(36.8)

IDGC of South

203

1,316

299

972

111

410

(62.9)

(57.8)

Kubanenergo

666

241

257

357

500

1,567

94.6

338.9

IDGC of Northern Caucasus

241

1,469

277

621

160

520

(42.2)

(16.3)

NURENERGO (until 2013)/ Chechenenergo (from 2014)

31

178

37

386

203

245

448.6

(36.5)

IDGC of Center and Volga Region

693

3,603

694

2,952

364

2,833

(47.6)

(4.0)

IDGC of North-West

469

1,836

357

2,366

400

1,636

12.0

(30.9)

LENENERGO

1,911

1,581

907

1,846

1,450

2,490

59.9

34.9

Yantarenergo

23

105

74

118

83

149

12.2

26.3

IDGC of Centre

1,518

8,026

1,362

5,689

1,107

5,110

(18.7)

(10.2)

MOESK

4,792

4,320

4,453

6,195

3,440

8,614

(22.7)

39.0

Tyvaenergo

5

34

7

42

10

40

42.9

(4.8)

ENCE

553

90

154

133

198

324

28.6

143.6

FGC UES**

17,827

3,643

10,793

3,690

9,522

3,121

(11.8)

(15.4)

Total for ROSSETI SDCs

31,946

32,433

22,346

30,843

19,430

32,819

(13.0)

6.4

* Information on commissioned production facilities is according to Appendix 6.3 “Report on FGC UES Commissioned/Decommissioned Facilities for 2014” sent by FGC UES to the Ministry of Energy of the Russian Federation with Letter No. GV-1922 dated April 1, 2015, under Resolution of the Government of the Russian Federation No. 977 of December 1, 2009.
** Information on commissioned production facilities is according to Appendices 6.3 “Report on FGC UES Commissioned/Decommissioned Facilities” sent by FGC UES to the Ministry of Energy of the Russian Federation under Resolution of the Government of the Russian Federation No. 977 of December 1, 2009.

Capital Investment Projects Financed from the Federal Budget. Planned Completion Dates

Major Priority Projects Completed by the ROSSETI Group in 2014

SDCs

Project

IDGC of Centre

Completed construction of SS 110 kV Kreyda with 50 MVA commissioned, retaining an electricity supply for existing customers in Belgorod during the rehabilitation of SS 330 kV Belgorod, building a new main substation, increasing electricity consumption, and securing a more reliable electricity supply. The value of commissioned capital assets is 280.44 million rubles

Kubanenergo

Completed construction of OL 110 kV from Kirillovskaya to Vostochnaya with a branch line to SS Penayskaya and OL 110 kV from Vostochnaya to Proletariy with a branch line to SS Penayskaya, securing an uninterrupted electricity supply for facilities of Ministry of Defense of the Russian Federation

IDGC of Northern Caucasus

Completed rehabilitation of more than 120 kilometers of 110-kV overhead lines, reducing the risks of the 2014/15 heat deficit period and taking measures to reduce the risk of power outages in high-risk areas as approved by the Ministry of Energy of the Russian Federation

MOESK

Completed rehabilitation of SS 110/10 kV Avtozavodskaya (MOESK), securing an uninterrupted electricity supply for industrial producers and households in Moscow’s districts Nagatino-Sadovniki, Pechatniki, and Nagatinsky Zaton

Completed rehabilitation of SS 110/10 kV Odintsovo, increasing capacity to 326 MVA to secure an electricity supply for new residential areas in Odintsovo

IDGC of Volga

Completed construction of SS 110/10 kV Aeroport, providing network connection for airport facilities in Saratov

IDGC of Center and Volga Region Completed construction of SS 110 kV Strelka with main PL 110 kV, solving the electricity shortage and securing a more reliable electricity supply for Nizhni Novgorod, including by enabling new customers to obtain electricity connections under the Housing national project and providing an electricity supply for a 45,000-seat stadium
Completed construction of PL 110 kV from Novogorkovskaya CHPP to Kudma-2.3, aimed at delivery of capacity from Novogorkovskaya CHPP
IDGC of Siberia Completed construction of SS 110/10 kV Solnechnaya Polyana, securing a reliable electricity supply for customers in the Lenisky District and the Industrialny District of Barnaul
Completed construction of OL 110 kV from Zabaykalsk to Priargunsky Industrial Mining and Chemical Union CHPP, providing network connection for electric grid facilities of Russian Railways under the project to electrify the Zabaykalsk Railway’s section from Karymskaya Station of the Trans-Siberian Railroad to the Chinese border (Zabaykalsk Station)
FGC UES Completed construction of external electricity supply facilities for the Eastern Siberia-Pacific Ocean oil pipeline of Transneft (Pump Stations 11, 15, and 19) in the Far Eastern Federal District
Completed construction of SS 500 kV Svyatogor (Phase 1) with branch lines of OL 500 kV and 220 kV, providing network connection for electrical installations of Transneft and Gazprom in the Yamalo-Nenets Autonomous District
Completed construction of facilities, aimed at delivery of capacity from Beloyarsk NPP-2 and Rostov NPP (Power Unit 3)
Completed construction of an important intersystem facility (OL 500 kV from Krasnoarmeyskaya to Gazovaya with the extension of SS 500 kV Krasnoarmeyskaya and SS 500 kV Gazovaya), securing the reliability of the Unified National (All-Russian) Electric Grid
Completed construction of OL 220 kV from Urengoyskaya TPP to Mangazeya 1, 2, performed under a contract with Transneft
Completed construction of OL 220 kV from Nyagan TPP to Kartopya, aimed at delivery of capacity from Nyagan TPP

 

Completed Program of the Construction of Olympic Games Sites and Proposals for the Future Use of Federal Budget Funds Under the Program of the Construction of Olympic Games Sites, 21 sites were built and put into operation, including:

  • 747 kilometers of cable and overhead lines;
  • 412 transformer substations and distribution substations;
  • 5 substation facilities with total capacity of 290 MVA;
  • commissioning permits granted by the Ministry of Regional Development of the Russian Federation.

Distribution of saved federal budget funds:

  • In 2009–2012, federal budget funds totaling 26,329 million rubles were contributed to the share capital of the Company and Kubanenergo, of which 22,351 million rubles were spent. The completed construction resulted in 3,978 million rubles of saved funds;
  • ROSSETI submitted to the Ministry of Energy of the Russian Federation a proposal to redistribute these funds by amending the Federal Law on the Budget for 2015 and sent the relevant draft law;
  • Proposals to finance Kubanenergo’s long-term capital investment projects from the saved funds were submitted for consideration by the Ministry of Energy of the Russian Federation.

Program to Renew Cable Lines of 6–110 kV in Saint Petersburg

In 2014, ROSSETI successfully completed all facilities under the Program in accordance with the agreements with the Ministry of Energy of the Russian Federation to allocate federal budget funds for the implementation of the Program.

The total length of lines built with federal budget funds is 74 kilometers. Expenses totaled 5,754 million rubles, including 4,472 million rubles allocated from the federal budget.

The completed construction of facilities under the Program resulted in 528 million rubles of saved federal budget funds (with 5 billion rubles allocated).

The mechanism for redistributing the saved federal budget funds was prepared in collaboration with and agreed upon by the Ministry of Energy of the Russian Federation for the Program’s facilities that were initially constructed in Kronshtadt by LENENERGO using its own resources. The Board of Directors of LENENERGO approved the supplementary agreement to supervise the implementation of the Program, taking into account the redistribution of the saved budgetary investments.

In 2015, after LENENERGO completes control measures to assess the completeness, reliability, and quality of the design, construction, and installation of the Program’s facilities in Kronshtadt, the remaining funds will be redistributed under the Program in accordance with the purpose of federal budget funds.

Comprehensive Program of Measures to Reduce Abovestandard Electricity Losses in Distribution Networks in the North Caucasus

With the aim of reducing commercial electricity losses in networks of IDGC of Northern Caucasus in the regions of its operations, the Company carries out the Comprehensive Program of Measures to Reduce Above-standard Electricity Losses. Budgetary investments of 4,950 million rubles were allocated for its implementation. The Program specifies measures to build and modernize electricity metering systems.

Detailed information about spent federal budget funds by Program entity is shown in the table below:

Region (Program Entity)

Received
(million rubles)

Balance
(million rubles)

Chechen Republic

1,675

428

Republic of Ingushetia

580

46

Republic of Dagestan

2,695

635

Total

4,950

1,110

The Ministry of Energy of the Russian Federation approved the capital investment program of IDGC of Northern Caucasus for 2015–2019, providing for the completion of facilities under the Comprehensive Program in the following order:
– 1st quarter of 2015 in the Republic of Ingushetia;
– 4th quarter of 2015 in the Chechen Republic;
– 1st quarter of 2016 in the Republic of Dagestan.

The program implementation in the Republic of Ingushetia is currently nearing completion, namely: construction and installation were 100% completed; all costs under the project were calculated and entered into the books; a full package of as-built documentation was prepared; the taking of meter readings reached the design level in the 1st quarter of 2015 (95%); the test operation of the system was completed; nonconformities found by the Working Commissions were corrected.

Work is underway to put the system into commercial operation. Equipment at facilities in the Chechen Republic was installed in full; the precommissioning of the system is underway; work is underway to prepare and approve as-built documentation. In the Republic of Dagestan, work is underway on construction and installation.

Detailed information as of January 1, 2015, by Program entity is shown in the table below:

Region (Program Entity)

Planned Electricity Meter Installation Under Design and Estimate Documents (pcs.)

Actually Installed Electricity Meters (pcs.)

Entered into the Books Under Certificates of Work Completion and Certificates of the Value of Work Completed and Costs Incurred

%

Entered into the Database
of the System

%

Integrated into the System

%

Chechen Republic

137,992

133,308

97

137,992

100

104,422

76

Republic of Ingushetia

45,408

45,408

100

45,408

100

41,111

91

Republic of Dagestan

452,816

322,090

71

403,029

89

270,556

60

Total

636,216

500,806

79

587,132

92

416,089

65

In 2014, ROSSETI collaborated with the Ministry of Energy of the Russian Federation in deciding on the possibility of forming 100% of electricity balances. The integrated metering system has the necessary functionality, including the possibility of integrating with electricity meters not covered by the Comprehensive Program from IDGC of Northern Caucasus’s 1C accounting system, using the required security level, and the possibility of generating virtual balancing meters.

The completion of facilities under the Comprehensive Program in the Republic of Ingushetia and the Chechen Republic is scheduled for 2015.

Information on Long-Range Activities of the Special Projects Division
At present, the Special Projects Division is active in preparing longrange projects and obtain approval for them from executive authorities. It is planned that these projects as described below will be fully or partly financed from the federal budget.

Construction and Rehabilitation of the Power Supply Infrastructure for Facilities of the 2018 FIFA World Cup and the 2017 FIFA Confederations Cup

As decided in 2014 by the operation headquarters for the preparation of electric power facilities used for the 2018 FIFA World Cup, ROSSETI received from the Ministry of Energy of the Russian Federation the external electricity supply scheme for World Cup sites updated by Energosetproekt Institute.

The external electricity supply scheme provided the basis for drawing up a list of 20 measures related to the construction and rehabilitation of electric grid facilities in 7 cities within the responsibility of 5 ROSSETI SDCs. These measures should be carried out before the end of 2017.

The Program of Preparations for the 2018 FIFA World Cup in Russia provides for 11 measures to be implemented in 6 cities, using federal budget funds of 6.8 billion rubles.

In 2014, ROSSETI SDCs used their own funds to put into operation 3 facilities:

  • IDGC of Center and Volga Region in Nizhni Novgorod: construction of 110-kV Strelka Substation with a 110-kV main power line.
  • IDGC of Volga: rehabilitation of 110/6-kV Tsentralnaya Substation (replacement of 110-kV outdoor switchgear and 6-kV factory-assembled outdoor switchgear; replacement of supply transformers by 2x25 MVA).
  • IDGC of South in Volgograd: 110/6-kV Tsentralnaya Substation (replacement of 6-kV module at Pravoberezhnye Electricity Networks of Volgogradenergo, a branch of IDGC of South). It is planned to implement a package of measures in 2015 to obtain approval for design documents, perform construction and installation work, and receive federal budget funds of 1.5 billion rubles.

Comprehensive Development Programs for Electricity Networks in the North Caucasian Federal District

The programs were approved by the Management Board of ROSSETI. Facilities are located in all 7 constituent entities of the North Caucasian Federal District.

The estimated value is 82.83 billion rubles, including 38.8 billion rubles of IDGC of Northern Caucasus’s and FGC UES’s own funds and 44.03 billion rubles of federal budget funds.

The programs received approval from all constituent entities of the North Caucasian Federal District. The Company approached the Ministry of North Caucasus Affairs of the Russian Federation and the Ministry of Energy of the Russian Federation about supporting the programs from the federal budget and/or regional budgets.

After the technical feasibility of the Comprehensive Development Programs in the North Caucasian Federal District is confirmed in 2015, the Special Projects Division of ROSSETI plans to prepare and submit to federal executive authorities an application for the allocation of federal budget funds for the implementation of the Comprehensive Development Programs in the North Caucasian Federal District in accordance with the Rules for Examining the Efficiency of Using Federal Budget Funds for Capital Investment Projects approved by Resolution of the Government of the Russian Federation No. 590 of August 12, 2008.

Comprehensive Modernization and Development Program for Electricity Networks in the Kaliningrad Region (hereinafter, the “Kaliningrad Region Comprehensive Program”)

The formulation of the Kaliningrad Region Comprehensive Program takes account of the need to carry out the Action Plan (Road Map) “On Securing the Power Supply for the Kaliningrad Region and the Russian Northwest Integrated Power System.”

Jointly with Yantarenergo, ROSSETI developed the Comprehensive Development Program for Electricity Networks in the Kaliningrad Region for 2014–2022. Yantarenergo is currently preparing an application and supporting documents for the allocation of federal budget funds for the implementation of the Kaliningrad Region Comprehensive Program.