ANNUAL REPORT 2011JSC IDGC OF CENTER AND VOLGA REGIONINNOVATIONS IN OPERATION
Preliminary approved                                by the decision of the Board of Directors                             ...
CONTENTS                                                         Liability Limitation                                4   5...
LIABILITY LIMITATION                                                                                                      ...
FINANCIAL PERFORMANCE                                                                                                     ...
Share of the Company’s productive supply, %            Consumption volume, million kWh                                    ...
ADDRESS TO SHAREHOLDERS.                                                                            DEAR SHAREHOLDERS!    ...
ADDRESS TO SHAREHOLDERS.                                                                     DEAR SHAREHOLDERS!           ...
Ivenergo branch                                                     Project aims and objectives:                          ...
Automated information system of energy metering and control (AISEMC) with SmartGrid elements, implemented in the village o...
01 BUSINESS OVERVIEW1.1      HISTORY OF INDUSTRY AND THE COMPANY      KEY STAGES OF INDUSTRY DEVELOPMENT                  ...
01 BUSINESS OVERVIEW      HIS TO RY O F T H E CO M PA NY      The establishment of JSC      IDGC of Center and Volga      ...
01 BUSINESS OVERVIEW   JSC IDGC of Center and Volga Region is a natural monopo-       energy industry, regulated and contr...
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
Annnual report JSC IDGC of Center and Volga Region 2011
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Annnual report JSC IDGC of Center and Volga Region 2011

  1. 1. ANNUAL REPORT 2011JSC IDGC OF CENTER AND VOLGA REGIONINNOVATIONS IN OPERATION
  2. 2. Preliminary approved by the decision of the Board of Directors of JSC IDGC of Center and Volga Region Minutes № 101 as of May 10, 2012ANNUAL REPORT OF JOINT STOCK COMPANYINTERREGIONAL DISTRIBUTING GRID COMPANY OF CENTER AND VOLGA REGION FOR 2011 General Director of JSC IDGC of Center and Volga Region E.V. Ushakov Chief accountant – The Head of Accounting and Tax Reporting Department of JSC IDGC of Center and Volga Region I.Yu. Rodionova NIZHNY NOVGOROD, 2012 JSC IDGC of Center and Volga Region management is performed in conformity with the requirements of ISO 9001, OHSAS 18001 and ISO 14001.
  3. 3. CONTENTS Liability Limitation 4 5 INVESTMENT ACTIVITIES 127 11 HUMAN RESOURCES POLICY 219 Information on the Company Parameters of Investment Activities 128 AND SOCIAL RESPONSIBILITY 5 Human Resources Policy 220 Address to Shareholders 10 Direction and Structure 130 THE ELECTRONIC Map of New Innovative Capacity, 2011 14 of Capital Investments Social Policy and Charity 230 VER­SION Long-Term Investment Program 145 Labor Protection 235 Prevention and Liquidation of Emergency Situations 240 1 BUSINESS OVERVIEW 17 at Distribution Power Grid Complex Facilities 6 SHAREHOLDERS’ CAPITAL 147 History of Industry and the Company 18 Environmental Protection 243 Securities 149 Position in the Industry and Operations 20 Taxation 248 Shareholders 151 Company Structure 24 Non-Financial Reporting 249 Shares of the Company on the Stock Market 152 Strategic Priorities and Development 32 Dividend Policy 158 Prospects Dividend Payout 159 12 PUBLIC RELATIONS, GOVERNMENT 251 Board of Directors Report on Priority Areas 36 AUTHORITIES, INTERNATIONAL COOPERATION, CONGRESS AND EXHIBITION ACTIVITIES 7 INTERACTION WITH STAKEHOLDERS 161 2 ANALYSIS OF THE FINANCIAL CONDITION 39 Stakeholders 162 GLOSSARY 259 AND PERFORMANCE RESULTS Interaction with Shareholders and Investors 166 Accounting Policy 40 Disclosure of Information 166 REFERENCE INFORMATION 264 Analysis of Financial Performance 42 Distribution of Profit 47 8 CORPORATE GOVERNANCE 169 Credit Policy 48 Structure and Principles of Corporate Governance 170 Tariff Policy 51 Management Bodies 174 Non-Current Assets 61 General Shareholder Meeting 174 Board of Directors 176 SUPPLEMENTS 3 BUSINESS ACTIVITIES REVIEW 67 Remuneration to the Members 182 General Information 68 of the Board of Directors Supplements are placed at USB data stick, Key Performance Indicators 72 Committees of the Board of Directors 184 attached to the Annual Report. Energy Transmission 72 Management Board 186 1. Conclusion of the Internal Audit Commission Technological Connection to Grids 78 Remuneration to the Members 191 Reliability Provision 85 of the Management Board 2. RAS Accounting (Financial) Reporting for 2011, including Independent Auditor’s Opinion Energy Saving and Improvement 86 General Director 193 of Energy Efficiency Remuneration to the General Director 194 3. IFRS Consolidated Financial Statements for 2011, including Independent Auditor’s Report Power Consumption for Production 88 Information on the Transactions Made by the Company 195 and Economic Needs in 2011 in 2011 which are Recognized by the Legislation 4. Detailed data on members of the Board of Directors, of the Russian Federation as Transactions in which Committees of the Board of Directors, Management Customer Policy 90 there is Interest, and Major Transactions Board and Audit Commission Quality Policy 95 Participation in Non-Commercial Organizations 195QR- CODE 5. Information on the Company’s Compliance with the Corporate Conduct CodeQR-code (from English Quick Response) – electronic 4 TECHNICAL POLICY 97 9 AUDIT COMMISSION AND THE AUDITOR 197 AND INNOVATIVE DEVELOPMENT 6. Interested Party Transactions Completed in 2011«barcode». Audit Commission 198 Technical Policy 98 Auditor 201 7. Information on Participation in Commercial OrganizationsDigital version of Annual Report or its separate sec- Development and Innovations 100 with the share of less than 50%tion is available after scanning of QR-code by mo- Repair and Operational Activities 106 10 INTERNAL CONTROL 205bile phone using programs QR Reader for iPhone, QR AND RISK MANAGEMENT SYSTEM 8. Information on the Structure of the Property Perspective Development 110 and its ChangesDroid (for ANDROID), QuickMark (for Windows Mo- Internal Control System 206 Operative and Technological Process Control 117bile) , KAY WA (for any telephone) and others. Risk Management 210 9. Information on Land Plots Development of IT Infrastructure 122 and Information Technologies Risk overview 210 10. Key Rights of the Shareholders2 JSC IDGC OF CENTER AND VOLGA REGION ANNUAL REPORT 2011 3
  4. 4. LIABILITY LIMITATION COMPANY OVERVIEWThe present Annual Report of JSC IDGC of Center and The Company does not give any direct or supposed as-Volga Region for 2011 (hereinafter referred to as the An- surances and guarantees and does not bear any respon-nual Report) has been prepared on the basis of information sibility in case of losses which can be incurred by natural CHARTER CAPITAL OF THE COMPANY IS: RUB 11.3 billionavailable to the Company at the moment of preparation of persons or legal entities as a result of using the forward-the Annual Report. looking statements of this Annual Report by any reason, directly or indirectly. The specified persons should notThe Annual Report contains information on the results rely on the forward-looking statements, containing in theof  2011, as well as forward-looking statements and Annual report, as they are not the unique possible suc-declarations concerning intentions, opinions and cur- cession of events.rent expectations of the Company in regard of the re-sults of  the Company activities, its financial condition, Except in cases stipulated by the law, the Company shall Joint Stock Company Interregional Distribution Grid Com- The company operates:liquidity, growth prospects, strategy and the develop- not be obliged to re-consider or confirm its expectations pany of Center and Volga Region (JSC IDGC of Center and • 1,548 high-voltage feeding centers 35/110/220 kVment of  the industry the Company is engaged in. Due or assessments, or to publish updates and changes of the Volga Region) is a subsidiary company of JSC IDGC Holding, with the total capacity of 29,354 MVAto their nature, such forward-looking statements are forward-looking statements contained in the Annual Re- the largest Russian energy company. JSC IDGC of Center • 44,205 km of power transmission lines 35 - 220 kVcharacterized by the presence of risks and uncertainty port in connection with subsequent events or the receipt and Volga Region is the key supplier of power distribu- • 26.63 km of high-voltage of cable lines with the volt-factors, as far as they pertain to the events and depend of new data. tion and technological connection services in nine regions age of 35 - 110 kVon the circumstances which are not necessarily to hap- of  the Russian Federation – Vladimir, Ivanovo, Kaluga, • 263,391 km of distribution power gridspen in the future. Kirov, Nizhny Novgorod, Ryazan, Tula Regions, Mariy El • 59,053 of transformer substations 6-35/0.4 kV and Udmurtia Republics. Consumers of the Company are: over 300 thousand enti-The words “intends”, “strives”, “expects”, “assesses”, ties in oil recovery, engineering, metal, woodworking and“plans”, “considers”, “assumes”, “can”, “should”, “would”, JSC IDGC of Center and Volga Region includes branch- chemical industries, railway transport, agriculture, con-“will continue” and the like are used, as a rule, to indicate es – Vladimirenergo, Ivenergo, Kalugaenergo, Kiroven- struction businesses, housing, utilities and social infra-the forward-looking nature of statements and may sug- ergo, Marienergo, Nizhnovenergo, Ryazanenergo, Tule- structure companies; and over 13 million of private con-gest the risk of non-occurrence of events or actions speci- nergo, and Udmurtenergo. They supply power to over sumers (population).fied, depending on a variety of factors. 13 million residents of the Central and Volga Federal Districts, covering over 408 thousand sq. km.The Company warns that the forward-looking statementsdo not guarantee future results. Actual results of the ac-tivity of the Company, its financial condition and liquid-ity, as well as the development of the industry of which Transformer substations 6-35/0.4 kV: Distribution power grids:the Company is a member, may differ considerably from 59,053 pcs. 263,391 kmthose presented in the forward-looking statements herein.Besides, even if said values correspond to the pro-formastatements contained in this Annual Report, they are notindicative of similar results and events in the future. Includes: JSC IDGC of Ceter amd Volga Region provides electricy: 9 branches >13 mln residents >408 thousand km24 JSC IDGC OF CENTER AND VOLGA REGION ANNUAL REPORT 2011 5
  5. 5. FINANCIAL PERFORMANCE PRODUCTION PERFORMANCER E V E N U E, RUB mln N E T P RO F I T, RUB mln N E T A S S E T S, RUB mln O U T P U T TO G R I D, mln kWh POW E R LO S S E S, % 64,404 4,232 45,297 59,653 59,492 9.41 54,395 47,191 9.06 1,269 41,176 56,175 8.97 39,920 244 2009 2010 2011 2009 2010 2011 2009 2010 2011 2009 2010 2011 2009 2010 2011Indicator Unit 2009 * 2010 * 2011 2011/2010 2011/2010 Indicator Unit 2009 2010 2011 2011/2010 2011/2010 (absolute (relative (absolute (relative increase) increase), % increase) increase), %Total revenue, incl. RUB million 47,191 54,395 64,404 10,009 18 Number of 35 kV and higher SS units 1,542 1,541 1,548 7 +0.45 Power transmission RUB million 45,689 53,106 63,249 10,143 19 Capacity of 35 kV and higher SS thousand MVA 28.49 28.61 29.35 1 +2.59 Technological connection RUB million 1,175 954 816 -139 -15 Number of TSS (DSS) of 6-35/0.4 kV units 58,639 58,845 59,621 776 1.32 Other sources RUB million 328 335 339 4 1 Length of power transmission km 261,972 262,320 263,391 1,071 +0.41 line circuits, networksCapitalization RUB million 20,455 34,181 16,581 -17,195 -51 Length of power transmission km 251,581 251,930 253,106 1,176 +0.47EBITDA RUB million 4,855 6,613 10,958 4,346 66 line circuits, routesNet profit RUB million 244 1,269 4,232 2,963 234 Output to grid million kWh 56,175 59,492 59,653 161 +0.27Net assets RUB million 39,920 41,176 45,297 4,121 10 Productive supply million kWh 50,889 54,100 54,299 199 +0.37Profit per share RUB 0.0022 0.0113 0.0376 0.0263 234 Total losses million kWh 5,286 5,392 5,354 -38 -0.71Dividend per share RUB 0 0.00125 0.00280 0.0015 124 Total losses % 9.41 9.06 8.97 -53 -0.09Share price at year end RUB/share 0.1815 0.3033 0.1471 -0.1562 -51 Power connected per technological MW 362.06 331.01 364.09 33.08 +10 connection agreements* Since January 01, 2011, company accounting and reporting were amended (Orders of the Russian Ministry of Finance №66n of July 02, 2010 and №186n Number of electric grids employees persons 21,559 22,074 22,269 195 +0.01of December 24, 2010). To align the data, we presented 2009-2010 indicators in accordance with the adjusted reporting for 2009-2010. (payroll)E B I T DA, RUB mln SHAREHOLDERS’ CAPITAL 10,958 1,139 S H A R E CA P I TA L S T R U CT U R E as of May, 14 2012 4,056 16.82% 6,613 GENHOLD LIMITED 20.64% 4,855 988 1,531 Other 800 5.4% Interest to be paid 3,480 Energosouz 3,184 4,232 Holdings Limited Depreciation 50.4% Profits tax 876 6.74% JSC IDGC Holding 627 Net profit 1,269 ENERG YO SOLUTIONS 244 RUSSIA ( C Y PRUS ) LIMITED 2009 2010 20116 JSC IDGC OF CENTER AND VOLGA REGION ANNUAL REPORT 2011 7
  6. 6. Share of the Company’s productive supply, % Consumption volume, million kWh JSC Kirovo-ChepetskLARGEST INDUSTRIAL ~7% 3,710 01 JSC RZD (Russian Railways) ~3% 1,571 03 JSC Transneft ~2% 1,145 05 JSC Udmurtneft ~2% 863 07 JSC SIBUR-Neftekhim ~1% 697 09 Chemical PlantCONSUMERS ~7% 3,708 02 Gazprom Transgaz ~2% 1,328 04 JSC Volga ~2% 908 06 JSC LUKOIL- ~1% 767 08 JSC Belkamneft ~1% 529 10 JSC Schekinoazot Nizhny Novgorod Ltd. Nizhegorodnefteorgsintez KALUGAENERGO VLADIMIRENERGO IVENERGO 27,061 km 6,319 units 21,967 km 4,713 units 15,283 km 3,806 units 152 units 2.92 ths. MVA 139 units 3.30 ths. MVA 141 units 2.62 ths. MVA Kirov 03 01 01 01 03 01 06 03 Izhevsk UDMURTENERGO KIROVENERGO TULENERGO RYAZANENERGO Yoshkar-Ola Ivanovo 25,296 km 5,673 units 38,584 km 8,717 units 32,047 km 7,155 units 31,211 km 6,014 units 219 units 3.68 ths. MVA 224 units 2.94 ths. MVA 172 units 4.10 ths. MVA 154 units 3.45 ths. MVA Nizhny Novgorod Vladimir 02 01 03 05 08 02 01 03 09 03 04 01 10 03 05 07 01 03 NIZHNOVENERGO MARIENERGO TOTAL 59,530 km 14,255 units 12,412 km 2,969 units 263,391 km 59,621 units 259 units 5.20 ths. MVA 88 units 1.13 ths. MVA Ryazan 1,548 units 29.35 ths. MVA Kaluga 01 08 01 02 03 02 02 03 Tula 09 04 06 07 Generating Name Installed Location Generating Name Installed Location LEGEND / / company of Plants capacity company of Plants capacityLARGEST GENERATING 01 JSC TGC-6 Ivanovskaya CHPP-3 / 330.0 MW Ivanovo 04 JSC WGC-3 Cherepetskaya SDPP / 1,285 MW Suvorov, Tula Region Length of powerCOMPANIES OF THE Vladimirskaya CHPP-2 / 400.5 MW Vladimir transmission line Novogorkovskaya CHPP / 305.0 MW Kstovo, Nizhny Novgorod Region circuits, kmCOMPANY’S FOOT- 05 JSC WGC-2 Ryazanskaya SDPP / 2,650 MW Novomichurinsk, Ryazan Region Sormovskaya CHPP / 340.0 MW Nizhny NovgorodPRINT, PROVIDING Dzerzhinskaya CHPP / 580.0 MW Dzerzhinsk, Nizhny Novgorod Region Number of TSSCAPACITY TO GRIDS Ivanovskiye CCGTs branch Ivanovskiye CCGTs branch Komsomolsk, Ivanovo Region (DSS) of 6-35/0.4 kV, 06 of JSC INTER RAO UES units 02 JSC TGC-5 Kirovskaya CHPP-3 / 160.0 MW Kirovo-Chepetsk, Kirov Region of JSC INTER RAO UES / 650 MWOF THE COMPANY Kirovskaya CHPP-4 / 320.0 MW Kirov Yoshkar-Olinskaya CHPP-1 / 195.0 MW Yoshkar-Ola, Mariy El Republic Number of 35 kV Ryazan branch Novoryazanskaya CHPP / 425 MW Ryazan and higher SS, Izhevskaya CHPP-1 / 78.0 MW Izhevsk 07 of Novoryazanskaya CHPP Ltd. units Izhevskaya CHPP-2 / 390.0 MW Izhevsk 08 JSC RusHydro Nizhegorodskaya HPP / 520 MW Zavolzhye, Nizhny Novgorod Region Capacity of 35 kV 03 JSC Kvadra Dyagilevskaya CHPP / 110 MW Ryazan and higher SS, Novomoskovskaya SDPP / 261 MW Novomoskovsk, Tula Region thousand MVA Kaluzhskaya CHPP-1 / 48.9 MW Kaluga 09 JSC GAZ CHPP GAZ / 580 MW Nizhny Novgorod 8 9
  7. 7. ADDRESS TO SHAREHOLDERS. DEAR SHAREHOLDERS! In 2011, JSC IDGC of Center and Volga Region made a sig- industry-related science in order to enhance competitive- nificant step towards an innovative and efficient distribu- ness of the national economy and meet the targets of the tion grid infrastructure in the operations area. socio-economic development of the Russian Federation. The Company’s successful performance in the report- I would like to thank the Company’s management ing period has had a positive effect on the year-end fi- and employees, shareholders and members of the Board nancial results. In 2011, the Company’s revenue totaled of  Directors for their valuable contribution to main- RUB 64.4  billion, with gross profits amounting to RUB taining the Company’s goodwill and upholding high 7.3 billion. standards of corporate culture, ensuring sustainable development and financial stability. I am convinced In 2011, the Company’s Board of Directors convened that JSC IDGC of Center and Volga Region will achieve 25 meetings, bringing up for discussion more than 320 is- all its goals and its contribution to the strengthening sues vital for the strategic development of the distribution of the distribution power grid complex of Russia will re- grids. Approval of the programs of innovative develop- main notable. ment and consolidation of the Company’s power grid as- sets is literally a milestone in the modernization of the Russian power industry. While growth rates of the world and Russian economy were declining, the Company took efforts to maintain li- quidity of its shares and fuel investor’s interest. In June Sincerely, Chairman of the Board of Directors 2011, the profits were distributed among the Company’s of JSC IDGC of Center and Volga Region shareholders for the first time. At the year-end 2010, the Aleksey Perepelkin dividends paid totaled RUB 141 million. In 2011, the Com- pany published its first social report for 2009-2010. IN 2011, JSC IDGC OF CENTER AND VOLGA REGION The measures taken to improve investment attractive- MADE A SIGNIFICANT STEP TOWARDS AN INNOVATIVE ness produced a positive effect on the Company’s securi- AND EFFICIENT DISTRIBUTION GRID INFRASTRUC- ties. At the beginning of 2012, the Company’s shares were TURE IN THE OPERATIONS AREA. transferred to the MICEX quotation list A Level 1, the capi- talization totaling RUB 16.6 billion at the year-end 2011. In 2012, the Company will keep on researching and im- plementing knowledge and expertise gained by the IDGC holding power distribution grids and its strategic partners, as well as advancements of the fundamental, applied and10 JSC IDGC OF CENTER AND VOLGA REGION ANNUAL REPORT 2011 11
  8. 8. ADDRESS TO SHAREHOLDERS. DEAR SHAREHOLDERS! In 2011, the Company set its top priority on forming a new The Company attaches great importance to the profes- grid infrastructure of the innovative distribution power sional training, enhancement of the talent pool, social complex. responsibility towards its consumers and society on the whole, integrated communications and international co- Last year the Company made a significant step towards operation. smart power industry. Full transition of all its branches to  the RAB method created a steady platform for the In 2011, the Company received a Diploma from the Gov- latter as the Company’s investment program for the re- ernment of the Russian Federation for its outstanding porting period increased 1.6 times amounting to RUB achievements in terms of quality of the power transmis- 13.6 billion. The Company managed to carry out proj- sion and distribution services. The fact that the Company’s ects of large scale and vital importance for the region. performance is marked by the Government second year Launching of the first start-up facility of the SS Sozvezdie in a row proves that the Company moves in the right devel- 220/110/10 kV in the Kaluga region increased reliability opment direction which is aimed at increasing reliability of the power supply in the whole Obninsk energy cluster. of the power supply. In the Udmurtia Republic, the first line of the grid with the Smart Grid elements was constructed. In the Vladimir I believe that the Company’s achievements in 2011 are region, the Company launched SS Pokrov 110/35/10 kV, largely due to honest management and success-driven where, along with the capacitor bank, controlled shunt employees. Undoubtedly, with such an asset as a coordi- operator was installed, which has so far been the only nated and goal-motivated team the Company will reach all one in power systems of 110 kV in the Central Russia. the objectives necessary to create an integral innovative state-of-the-art power grid infrastructure. The Company’s program of innovative development for 2011-2016 provides for increasing power efficiency and ecological safety of the power transmission and distribu- tion as well as introduction of the new generation grid – Smart Grid. LAST YEAR THE COMPANY MADE A SIGNIFI- In 2011, the Company put into operation new power fa- cilities which were required for the development of the CANT STEP TOWARDS SMART POWER INDUSTRY. regions. New power capacities totaled 1,263.9 MVA. Sincerely, General Director FULL TRANSITION OF ALL ITS BRANCHES On the whole, over the last year the Company connected of JSC IDGC of Center and Volga Region more than 19 thousand consumers. Evgeny Ushakov TO THE RAB METHOD CREATED A STEADY PLATFORM FOR THAT. In the reporting year, the Company fulfilled its repair program entirely. Facilities repaired included 225 substa- tions with voltage ranging from 35 to 110 kV, 36 thou- sand kilometers of 0.4-110 kV overhead electric lines and more than 8 thousand distribution points and 6-10/0.4 kV transformer substations. Actual repair costs totaled RUB 2.8 billion.12 JSC IDGC OF CENTER AND VOLGA REGION ANNUAL REPORT 2011 13
  9. 9. Ivenergo branch Project aims and objectives: Implementation of the project will eliminate capacity deficit in Construction of SS 110/6 kV the central part of the city and create an opportunity to connect Ivanovskaya-15 (1st launch phase) new power consimers to grids of Ivenergo branch, as well as (Ivanovo, Ivanovo Region) enable even distribution of load among the existing substations SS capacity: 40 MVA to enhance reliability of comsumer power supply and reduction Launched December 27, 2011 of technical losses. Innovative component: Innovative portion financing amounts to RUB 15,104 thousand. Kirov Construction employed innovative materials: SF6 circuit breakers LTB-145 D1/В, dry-type transformers TSZ-630/6 U1 with the capacity of 630 kVА for the system of own needsVladimirenergo branch with the voltage of 6/0.4 kV, polymer-shelled overvoltage limiters, motor disconnecting Renovation of SS 110/35/10 kV switches RGPZ. Izhevsk Pokrov (Volginsky, Petushki District, Vladimir Region) Capacity of capacitor bank - Yoshkar-Ola controlled shunt reactor: 25 Mvar Ivanovo Launched October 25, 2011 Udmurtenergo branchProject aims and objectives: Nizhny NovgorodIntroduction of the controlled shunt reactor led to establishment Vladimir Construction of SS 110/10kVof capacitor bank - controlled shunt reactor system for the volt- Soyuznaya with overhead access lines MAP OF NEWage of 110 kV with the capacity of 25 Mvar with sliding control 110 kV (Ustinovsky district, Izhevsk,of reactive power to increase the transmission capacity of power Udmurtia Republic)grids, maintain normal voltage level and reduce power losses. SS capacity: 80 MVAInnovative component:Innovative portion financing amounts to RUB INNOVATIVE Project aims and objectives: Launched November 03, 2011 CAPACITY,39,230.9 thousand. Renovation included instal- National programs on housing and plans for comprehensive de-lation of the first controlled shunt reactor RTDU Ryazan velopment of Izhevsk vacant areas stipulate construction of new25000/110-UHL-1 at JSC IDGC of Center and Volga microdistricts Aeroport and Vostochny, including new residential Kaluga 2011Region with the capacity of 25 Mvar. The planned areas, office buildings, retail and entertainment centers, utilities,ecomonic effect jointly with the capacitor bank Tula social facilities and infrastructure. Project implementation will110 kV is RUB 1,802 thousand. provide power to newly built districts of the city, increase the number of feeding centers with the secondary voltage of 10 kV, ensure reservation for the current grids of 10 kV. Ryazanenergo branch Innovative component: Innovative portion financing amounts to RUB 27,000 thousand. Renovation of SS 110/10 kV Construction employed innovative equipment: SF6 circuit break-Kalugaenergo branch ers 110 kV VEB-110, microporcessor relay protection and auto- Esenino (Fedyakino, Rybnoe District, Ryazan Region) mation devices Sirius, vacuum circuit breakers 10 kV BB/TEL-10, Construction of SS 220/110/10 kV Innovative component: SS capacity: 20 MVA advanced systems of teleautomation and automation. Sozvezdie (1st launch phase) Innovative portion financing amounts to RUB 26,401.4 thousand. Launched November 22, 2011 (Borovsk district, Kaluga Region, near Construction included installation of ATDTsTN-250000/220У1 Dobrino) autotype transformer with the capacity of 250 MVA produced SS capacity: 250 MVA by OAO ZTR. Advanced SF6 circuit breakers 220 kV HPL 245B1 Project aims and objectives: Innovative component: Launched November 08, 2011 and 110 kV VEB-110-II-40/2500 UHL1 were used, as well as mea- Increased power supply reliability. Decision on renovation was Innovative portion financing amounts to RUB 29,043.7 thousand. suring current transformers 220 and 110 kV TG, voltage trans- made on the basis of joint draft Agreement № 34-1/4 «On in- Renovation included the following innovative equipment: SF6Project aims and objectives: formers 220 kV and 110 kV SRV, state-of-the-art disconnecting teraction of the Ryazan Region Government and JSC RAO UES dead-tank circuit breakers VEB-110-40/2500 UHL1, relay protec-Power supply to Industrial Park Vorsino – a cluster of plants switches 220 kV RG and 110 kV RGP. Fiberglass was used for the of Russia for development of Ryazan Region power system and tion and automation boxes ShE produced by CJSC Radius Avtoma-to produce various goods – and increased reliability of power main communications channel and transmission of TM, TU, TS assurance of reliable supply to consumers» dated February 18, tika, SF6 current transformers TGFM-110 U1, SF6 voltage trans-aupply to consumers at 110 kV grid. and TI signals. 2008. The project was implemented within the time set by the formers ZNG-110 U1, vacuum circuit breakers BB/TEL-10. Agreement.14 JSC IDGC OF CENTER AND VOLGA REGION ANNUAL REPORT 2011 15
  10. 10. Automated information system of energy metering and control (AISEMC) with SmartGrid elements, implemented in the village of Karakulino, the Udmurt Republic, en-ables implementation of control over consumption of energy resources, and obtain-ing of authentic data from metering tools, which serve as a basis for developmentof energy saving actions 01 BUSINESS OVERVIEW
  11. 11. 01 BUSINESS OVERVIEW1.1 HISTORY OF INDUSTRY AND THE COMPANY KEY STAGES OF INDUSTRY DEVELOPMENT 20TH CENTURY 21TH CENTURY Formation of Russian Electric Power Industry Early 20th century A country-wide unified energy infrastructure was established. Early 21st century The reform of the industry was launched. Aims and objectives of the reform are defined by Order № 526 of the Government of the Russian Federation “On the Reform of Electric Power Industry 1920s–1930s Large-scale electrification of the country according to the Plan adopted by the State Com- of the Russian Federation” dated July 11, 2001. The reform involved changes in the structure of mission on the Electrification of Russia was performed accompanied by the construction of the power industry, which included the separation of naturally monopolistic (electrical energy regional heat power and hydro-electric stations. transmission and operative dispatch control) and potentially competitive (production and sale 1930s Major steps were taken to develop heavy and energy industry, including the electricity of energy, repair and service) functions. The vertically integrated companies which performed distribution sector. these functions were replaced by organizations specializing in selected activities. The com- panies were integrated by their activities and operations areas. The reorganization took place 1940s Post-war restoration of the destroyed electric power grid complex of the country was performed. from 2001 to 2008, RAO UES of Russia was dismissed on July 01, 2008. 1960s Unified Energy System was established, accompanied by implementation of major state-support- ed energy projects, including the developments in the field of atomic energy and the construction As a result of reorganization of JSC RAO UES of Russia, JSC IDGC Holding was spun off of nuclear power stations. www.holding-mrsk.ru. It owns 50.4% of shares of JSC IDGC of Center and Volga Region and the controlling interest in more than ten interregional distribution grid companies and other subsidiary and dependent companies. Privatization and Reform The data on new target structure of the industry after the reform are shown at the web site Late 1980s The signs of slowdown in the development of the industry began to show in, with the upgrade of JSC RAO UES of Russia www.rao-ees.ru under Power Industry Reform. of production facilities lagging behind the electric power consumption growth. 1990s The power industry was privatized, followed by the establishment of the territorial power com- Details of power industry reforms are also available at the Company’s web site www.mrsk-cp.ru panies. JSC RAO UES of Russia was established to control 118 subsidiary and dependent com- under “About the Company / Power Industry Reform” and the official site of the Russian Ministry panies, or practically all electrical energy assets of the country. of Energy www.minenergo.gov.ru under “Activities / Power Industry / State of the Industry”. Late 1990s The necessity for urgent large-scale transformations contributing to the upgrade of basic ca- pacities, the increase in industry efficiency and the improvement of reliability and safety of consumer power supply became evident. 18 JSC IDGC OF CENTER AND VOLGA REGION ANNUAL REPORT 2011 19
  12. 12. 01 BUSINESS OVERVIEW HIS TO RY O F T H E CO M PA NY The establishment of JSC IDGC of Center and Volga JUNE 28, Q3 FEBRUARY 19, DECEMBER FEBRUARY 29, 2007 2007 2007 2007 2008 Region is an integral part of the reform of the Russian electric power industry. JSC IDGC of Center Agreements concluded with nine The new configuration of IDGC E������������������������������� xtraordinary General Sharehold- Completion of reorganization and Volga Region is registered DGCs on the transfer of functions approved by the Government of ers Meetings of nine DGC and JSC as affiliation Charter capital RUB 10 million of the sole executive body (CEO) Russia IDGC of Center and Volga Region on affiliation CEO Details of the Company his- tory are shown at the Compa- ny’s web site www.mrsk-cp.ru JSC Vladimirenergo JSC Kirovenergo JSC Ryazanenergo JSC IDGC of Center and Volga Region / Charter capital RUB 11.3 billion under “About the Company / JSC Ivenergo JSC Marienergo JSC Tulenergo Branches: Vladimirenergo, Ivenergo, Kalugaenergo, Kirovenergo, Marienergo, History of the Company” JSC Kalugaenergo JSC Nizhnovenergo JSC Udmurtenergo Nizhnovenergo, Ryazanenergo, Tulenergo, Udmurtenergo1.2 POSITION IN THE INDUSTRY AND OPERATIONS Today JSC IDGC of Center and Volga Region is the largest grid organization in the areas of its presence. Its core W H O L E S A L E E L E CT R I C POW E R M A R K E T business is transmission of power. Allied power Consumers of the JSC FGC UES TGC, WGC Purchase of systems wholesale market elecrtic power Elecrtic power Elecrtic power R E V E N U E B R E A K D OW N B Y TY P E O F ACT I V I TY I N 2011  transmission transmission Purchase of power losses Power retail companies JSC IDGC of Center and Volga Region Elecrtic power transmission Elecrtic power transmission Elecrtic power 1.27% transmission Territorial grid companies Technological 98.21% Purchase of connection to grids power losses Elecrtic power transmission Transmission of power Comsumer of the power supply Purchase of elecrtic power 0.53% Ower activities R E TA I L E L E CT RO N I C POW E R M A R K E T Electric power flows Direction of financial payments 20 JSC IDGC OF CENTER AND VOLGA REGION ANNUAL REPORT 2011 21
  13. 13. 01 BUSINESS OVERVIEW JSC IDGC of Center and Volga Region is a natural monopo- energy industry, regulated and controlled by the state. POW E R T RA N S M I S S I O N M A R K E T I N 2011 ( VO L U M E O F P RO D U CT I V S U P P LY TO CO N S U M E R S ) list. Subject to Order № 263-e of the Federal Tariff Ser- The  tariffs (prices) for the services of the Company are vice dated June 27, 2008, the Company is included into the set by the regulatory bodies of the corresponding regions registry of subjects of natural monopoly in the fuel and of the Russian Federation. 60% 40% 21,246 млн кВтч 31,335 млн кВтч INDUSTRY OVERVIEW Other territorial grid JSC IDGC of Center and Volga Region organizations (TGO) The key trend of the power industry in the recent two years has been increased power supply to consumers due to post-crisis restoration of the country’s economy YEAR ON YEAR GROWTH OF KEY and improved macroeconomic indicators. In the previous PRODUCTION INDICATORS IN 2011 year, GDP growth was estimated by Rosstat as 4.3%, and Note: Productive supply of the Company is stated in relation to the consumers, connected directly to the grids of the industrial production growth as 4.7% year on year. Power Company’s branches. consumption grew by 1% to 1,030.5 billion kWh in 2011. TECHNOLOGICAL CONNECTIONS The major companies engaged in similar activities in • Regional Grid Company Ltd, Kirov; +21.1% Performance of JSC IDGC of Center and Volga Region large- the Company’s operations areas include the following • Gazpromenergo Ltd, Nizhny Novgorod; ly corresponds to the general trends in industry develop- NUMBER territorial grid organizations: • JSC GAZ, Nizhny Novgorod; ment. In the reporting year, productive supply of power • JSC Vladimir Region Electric Power Company, Vladimir; • Municipal Unitary Enterprise Ryazan Municipal +10.0% by the Company increased by 0.4% against 2010, and the • Municipal Unitary Enterprise Gorelektroset, Murom, Power Grids; the Vladimir Region; • JSC Russian Railways - in all operations areas; number of technological connections grew by 21.1%, their CAPACITY • Municipal Unitary Enterprise Gorelektroset, Kirov; • JSC Tula Municipal Power Grids; capacity increasing by 10%. More detailed description of • Municipal Enterprise Gorseti, Obninsk, the Kaluga • Udmurtenergoneft, Izhevsk. macroeconomic factors influencing JSC IDGC of Center Region; +0.4% and Volga Region performance is available at the Com- pany’s web site www.mrsk-cp.ru under “For Shareholders PRODUCTIVE and Investors / Information about the Company’s finan- POWER SUPPLY CONSUMERS OF SERVICES cial-economical activity / Review of macroeconomic Services of JSC IDGC of Center and Volga Region are in- 92% of the technological connection customers factors and risks”. tended for direct consumers on the wholesale and retail is  made by preferential customers connected to the markets – organizations and individuals, as well as re- grids of up to 15 kW. tail companies (major consumers), supplying power to end users. The Company works with the following large Since 2009, the number of applications from preferen- retail companies: tial consumers grew more than twice. • JSC Vladimirenergosbyt; MARKET SHARE OF THE COMPANY • JSC Ivenergosbyt; The year 2011 saw a considerable increase in the de- • JSC Kaluga Retail Company; mand for technological connection from large consum- JSC IDGC of Center and Volga Region holds a domineering As estimated by JSC IDGC of Center and Volga Region, the • JSC Kirovenergosbyt; ers (over 750 kVA). In a number of regions, the  tech- position on the market in the regions of its footprint, both overall volume of the power transmission market of 2011 • JSC Marienergosbyt; nological connection tariff was adopted without in power transmission and in technological connection comprised 52,581 million kWh in natural terms, the share • JSC Nizhny Novgorod Retail Company; the  investment component; as a result, the number of consumers’ power receivers to grids. The major share of JSC IDGC of Center and Volga Region being 60%. • JSC Ryazan Retail Company; of applications and the total contracted capacity of this of power supplied to consumers passes along the grids • JSC Tula Retail Company; category increased twice against the previous year. owned by the Company. • JSC Udmurtia Retail Company; • Rusenergosbyt Ltd in six operations areas. 22 JSC IDGC OF CENTER AND VOLGA REGION ANNUAL REPORT 2011 23

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