Mrkp-2008-Eng.Pdf

Preliminarily approved by the decision of the Board of Directors of IDGC of Centre and Volga Region, JSC; Minutes No.38 as of 08 May 2009

Annual Report of “Interregional Distribution Grid Company of Centre and Volga Region”, Joint Stock Company for 2008

General Director of IDGC of Centre and Volga Region, JSC E. V. Ushakov

Chief accountant of IDGC of Centre and Volga Region, JSC I. U. Rodionova 2 Contents

Contents

4 Liability Limitation 10 General Information 12 Service Territory 5 Address to Shareholders 14 General Data 6 Address of Chairman 15 Mission and Strategy of Board of Directors 15 Priority Areas of Activities 8 Address of General Director 16 Basic Results of Activities 18 Short History of Development 20 Calendar of Events 23 Risk Management 26 Quality Policy

28 Corporate Governance 30 Structure and Principles of Corporate Governance 69 Securities and Share Capital

76 Main Indicators of Accounting Statements and Review of Financial Results 78 Main Provisions of Accounting Policy 81 Analysis of Business Results and Financial Position Dynamics 95 Credit Policy 97 Tariff Policy

100 Profit Distribution and Dividend Policy

104 Industrial Activities 106 Key Industrial Indicators 107 Operational Process Management 128 Connection to Power Grids Process Organization 137 Future Development Process Organization

140 Investment Activities 142 Investment Activities Parameters 144 Direction and Pattern of Investments 152 Investment Program Financing Sources 3

160 Technical Re-equipment and Development 241 Appendices 162 Development Dynamics 242 Accounting Reports for 2008 165 Repair Program, Reconstruction and Re-equipment 278 Auditor’s Report of IDGC 169 Realization of Reactive Power Flow of Centre and Volga Region, JSC Management Programs 282 Report of the Audit Commission of IDGC of Centre and Volga Region, JSC 174 Position in the Sector. Market Share 284 Information on IDGC of Centre and Volga Region, JSC, Compliance 182 Industrial Control and Labor Protection with the Corporate Conduct Code 306 Information on Interested-Party Transac- 190 Personnel Policy and Social Partnership tions Recognized as Such in Accordance with the RF Laws, which were Completed 196 Environmental Protection by IDGC of Centre and Volga Region, JSC, in 2008 206 Purchasing Activities 358 Information on Participation 208 Main Provisions of the Policy in the Field of IDGC of Centre and Volga Region, of Purchasing Activities JSC, in Nonprofit Organizations 208 Description of Applied Purchase Ways 362 Amounts of, and Tariffs for Technological and Terms of Their Selection Connection Submitted to Tariff Regulatory 212 Description of Electronic Commerce Application Body in the Reporting Year 2008 212 Procedure of ACPP Formation and Realization and for the Year 2009, and Tariffs 213 The Annual Reporting on Purchasing Activities for Technological Connection Approved Regarding Categories of Activities and Purchase Ways by Regulatory Body 386 Information on Implementation of Annual 214 Information Technologies Comprehensive Program of Purchases 218 Implementation of Automated Information 2008 and Measurement System of Commercial Accounting of Electric Energy 404 Contact Information 219 Telecommunications 219 Automation System 409 Glossary of Control and Process Management 221 The Most Important Results of the Company’s IT Infrastructure Development 222 The Most Important Results of IT Infrastructure Development at Branches of the Company 225 Projects on IT Infrastructure Development Offered for Implementation in 2009

226 Statement of Opinions and Conclusions of the Management

234 Strategic Mission and Outlook 4 Liability Limitation

Liability Limitation

This Annual report of IDGC of Centre and Volga ties as a result of using the projected statements Region, JSC, for 2008 (herein after referred to as of this Annual Report by any reason, directly or in- Annual Report) is prepared using the information directly. available for the Company at the moment of its com- piling. The Company does not undertake obligations concerning the revision and approval of the expecta- This Annual report contains projected statements tions and assessments as well as update publishing which are not based on actual circumstances and change of the Annual Report projected state- and include statements concerning intentions, ments due to the future events or new information. opinions or current expectations of the Company with regard to the results of its activities, financial position, liquidity, growth potential, strategy, as well as development of the industrial sector the Company is engaged in. Due to their origin, such projected statements shall be marked by the presence of risks and uncertainty factors, as far as they pertain to the events and depend on the circumstances which are not necessarily to happen in the future.

Such words as “is going to”, “aims at”, “expects”, “evaluates as”, “plans”, “thinks”, “supposes”, “can”, “should”, “will”, “will continue” and other words similar to this group, as a rule, show the projected nature of the statements.

The Company warns that the projected statements are not a guarantee for the future indices. Actual results of the Company’s activities, its financial position and liquidity as well as the sector development it works in, can sustainably be different form those presented in the projected statements contained in this document. Besides, even if the abovemen- tioned indices will correspond to the forecast statements contained in this document, these results and events are not the marks of the same results and events in the future.

The Company does not give any direct or supposed assurances and guarantees and does not bear any responsibility in case of losses which can be incurred by physical persons or legal enti- Address to Shareholders 6 Address to Shareholders

Chairman of the Board of Directors of IDGC of Centre and Volga Region, JSC P. I. Okley

Dear Shareholders!

The year 2008 has become for IDGC of Centre and panies to complete the process of reorganization Volga Region, JSC a significant period. Last year within the framework of the Russian distribution the power systems of the country went through grid complex restructuring. After IDGC assets con- the global structural changes: on 1 July of the past solidation, the Company became one of the major year the activities of RAO “UES of Russia” were power companies. Due to this, today the Company stopped, at the same moment, a record was made is able to carry out the large scale investment to the Uniform State Register of Legal Entities program and implement the long term development on establishment of IDGC Holding, JSC. strategy of the Company. The priority of the power company Board of Directors’ activities in 2008 Besides, during the year, Russian economy as well was securing of rights and interests of investors as other economic systems of the world experi- and shareholders, improvement of the industrial enced negative changes. Because of this, many long and financial indices of the Company as well term plans of the regional governments, investment as efficiency and reliability of the power gird community, consumers and power companies were complex. subjected to correction. During the year, 24 meetings of IDGC of Centre During the time of its establishment, IDGC of Cen- and Volga Region, JSC Board of Directors were tre and Volga Region, JSC, managed not only carried out. The Board of Directors took the stra- to adequately size its possibilities at power mar- tegically important decisions for the Company: ket, but show its own worth in new conditions. on approval of the business plan and the investment program for 2008, on election of the mem- In February 2008, IDGC of Centre and Volga bers of the Management Board, on rendering Region, JSC was the first of the interregional com- of the beneficent help, on approval of interested 7

party transactions (94 transactions were approved companies’ shares growth planned earlier, will be- for the total amount of RUR 3,224,984,203). gin since the moment when the investment com- All in all, 296 important issues were considered munity acknowledges that the crisis apogee has at the meetings of the Board of Directors. been passed.

To provide the effective control over the joint stock The major result of the Company’s activities company activities, there were established several in 2008 is reaching of all planned financial in- committees under the Board of Directors: strategy dices. Thus, the amount of profit was increased and development, technological connection to power in comparison with 2007 by 20% and accounted girds, audit, personnel and remuneration committee. for RUR 31.7 billion. The Company’s net profit The committees included representatives of IDGC accounted for more than RUR 1.4 billion which of Centre and Volga Region, JSC, and Company’s also meets the planned figures. shareholders representatives. Last year IDGC of Centre and Volga Region, Last year, the Company did a great job helping JSC made serious work directed to reinforce- IDGC of Centre and Volga Region, JSC shares enter ment of its positions at the market and creation the stock market. Since April 2008, the Com- of the strong foundation for a growth and deve- pany’s shares were admitted to trading at MICEX lopment in the future. and RTS stock exchanges. In July, The Federal Fi- nancial Markets Service of Russia combined major I am sure that the activities of IDGC of Centre (first) and additional issues of shares of IDGC and Volga Region, JSC will be as transparent of Centre and Volga Region, JSC. In August, RTS as possible both for shareholders and general pub- stock exchange took a decision to include the Com- lic. Constant information exchange, constructive pany’s shares in the index calculation base “RTS-2” dialogue and active interaction of management and “RTS-Power”. and shareholders are a guarantee for a successful development of the Сompany. I am sure that with At that time the stock turnover of IDGC of Cen- your support, the Company’s personnel will solve tre and Volga Region, JSC for one month at all the tasks assigned to them and fortify the MICEX exceeded RUR 272.8 million. In September, leading positions of IDGC of Centre and Volga the shares of the Company went through the lis- Region, JSC, as one of the most promising electric ting procedure at MICEX Stock Exchange and RTS grid systems in Russian energy market. Stock Exchange and were included in “‘B’ Quota- tion List” section. I wish you all success and prosperity!

From autumn of 2008, when Russian economy faced the influence of the global financial crisis, the shares value of the majority power sector companies began to decrease at stock markets. The sector experts forecast that the power grid 8 Address to Shareholders

General Director of IDGC of Centre and Volga Region, JSC — E. V. Ushakov

Dear Shareholders!

The year 2008 became a kind of a starting point of the certificate proving the readiness to operate for IDGC of Centre and Volga Region, JSC. The re- in the 2008—2009 autumn and winter period. organization was successfully completed at the beginning of the year. It resulted in establishment More than RUR 1.5 billion were assigned of the united operational Company on the basis for the implementation of the power gird ob- of nine regional grid companies. jects repair programs of IDGC of Centre and Volga Region, JSC. They exceed the level of 2007 The major result of the first year of work by almost one third. 188 substations and 5,626 of the united power system of IDGC of Centre km of 35—110 kV power transmission lines were and Volga Region, JSC, is the duly implementa- repaired during the repair campaign. Besides, tion of tasks assigned to the Company concer- 7,834 transformer substations of 0.4—10 kV grids ning the reliable and uninterrupted power supply and more than 25,000 km of power transmission of the consumers. The consumers did not feel any lines were repaired. problems connected with the transition period. It means that our team professionally implemented Owing to qualitative and duly equipment repair the whole set of measures aimed at the power gird of the grid branches of IDGC of Centre and Volga complex reforming. Region, JSC, in 2008 the amount of incidents fell by 4.1% (equipment failure) and power undersup- During the 2007—2008 autumn and winter plies decreased by 13.2%. The productive supply period our power system showed a high level of power to the consumers accounted for 55.4 bil- of reliability. The result of the qualitatively lion kWh. All in all, above 61 billion kWh held maintenance campaign was a duly recep- of power were supplied to the distribution grids tion by IDGC of Centre and Volga Region, JSC, of the power company for the past year. 9

In 2008 the amount of investments to the de- Within the framework of social policy imple- velopment of the grid complex was considerably mentation in 2008 all the staff members got increased. The financing of IDGC of Centre and the additional social guarantees and financial sup- Volga Region investment program during the year port. A collective agreement was signed between exceeded RUR 12.6 billion, RUR 8.1 billion were the personnel and the employer of IDGC of Centre spent. The amount of means spent in 2008 exceeds and Volga Region, JSC, for 2009—2011 in De- the indices of the capital expenditure in 2007 cember. Programs aimed to improvement of skills by 45%. of engineering, technical and management personnel were fully implemented. We strongly believe As a result of the Company investment activities that the professional staff is the major capital implemented during the past year, the construction of the Company and we take all the necessary of several power objects was initiated. Their putting measures to preserve its structure. into operation was planned for 2009. Having completed the financing of these projects we laid the Much attention in the Company’s work was paid foundation for the development of the regional pow- to the rules implementation and interests’ pro- er systems in 2009 despite the difficult financial tection of investors and shareholders, productive situation in the country and the world in general. interaction of all the corporate relations participants. During the whole year due to modernization and new construction, our power company put into Currently, our permanent priority is ensu- operation nearly 1,500 km of power transmission ring the reliable and qualitative power supply lines and 500 MVA of new capacities. of the consumers in all the subordinate territories, power grid complex development stability and The important line of the Company’s activities minimization of the global financial crisis influence in 2008 was the improvement of the management on the activities of IDGC of Centre and Volga Re- system. Following the results of the executive of- gion, JSC. For these purposes, an anti-crisis group fice’s management activities check held by the was created at the end of 2008 as well as a plan independent auditors, in December 2008 the Com- of anti-crisis activities was developed and ap- pany received the certificate proving the compli- proved. ance with the international standards. According to the certificate, the management system of exe- In 2009 we are going to bring to life the in- cutive body of IDGC of Centre and Volga Region, vestment plans optimized and coordinated JSC, was acknowledged as compliant with require- with the government of the Russian Federation, ments of ISO 9001:2000, ISO 14001:2004 and create additional capacities for connection of con- OHSAS 18001:2007 international standards. Going sumers, reach maximum possible financial and through the certification confirmed the efficiency economic, industrial and technical and administra- of the enterprise policy in the field of quality, tive indices ensuring the interests of shareholders, professional health, labor safety and environmen- clients and the Company as a whole. tal protection. Achieving Team Result Achieving Team Result

General Information 12 General Information

Service Territory of IDGC of Centre and Volga Region, JSC

Branch “Ivenergo” Ivanovo Region 21.4 thousand km2 1,079.6 thousand people Structure of the branch: 3 industrial subdivisions Branch 20 power grids districts “Vladimirenergo” Vladimir Region 29.0 thousand km2 1,449.5 thousand people Structure of the branch: 4 industrial subdivisions 19 power grids districts

Branch “Kalugaenergo” Kaluga Region 29.5 thousand km2 1,005.6 thousand people Structure of the branch: 4 industrial subdivisions 26 power grids districts and city grids of the City of Kaluga

Branch Branch “Tulenergo” “Ryazanenergo” Tula Region Ryazan Region 25.7 thousand km2 39.6 thousand km2 1,566.3 thousand people 1,228.0 thousand people Structure of the branch: Structure of the branch: 4 industrial subdivisions 4 industrial subdivisions 29 power grids districts 26 power grids districts 13

Branch “Kirovenergo” Kirov Region 120.4 thousand km2 1,413.2 thousand people Structure of the branch: 5 industrial subdivisions 41 power grids districts

Branch “Udmurtenergo” Udmurt Republic 42.1 thousand km2 1,532.7 thousand people Structure of the branch: 3 industrial subdivisions 27 power grids districts

Branch “Marienergo” Mari El Republic 23.4 thousand km2 703.2 thousand people Structure of the branch: 3 industrial subdivisions Branch 14 power grids districts “Nizhnovenergo” Nizhniy Novgorod Region 74.8 thousand km2 3,359.8 thousand people Structure of the branch: 9 industrial subdivisions 57 power grids districts 14 General Information

General Data

“Interregional Distribution Grid Company of Centre of 6–10 kV; 1,541 substations of 35 kV and more — and Volga Region”, Joint Stock Company (herein with established transformer capacity of 27.92 thou- after referred to as IDGC of Centre and Volga Re- sand MVA are controlled by IDGC of Centre and gion, JSC; the Company) is one of the major interre- Volga Region, JSC. gional grid companies established during the reform of power grid sector of Russia. Having consolidated the assets and the resources of nine regional power systems, IDGC of Centre Nowadays, IDGC of Centre and Volga Region, and Volga Region, JSC, productively implements JSC, is the united operational company consisting the industrial and investment activities in accor- of 9 branches: “Vladimirenergo”, “Ivenergo”, “Kalu- dance with the plans of regions economic develop- gaenergo”, “Kirovenergo”, “Marienergo”, “Nizhnov- ment ensuring the reliable and high-quality power energo”, “Ryazanenergo”, “Tulenergo”, “Udmurt- supplies of consumers and development of all es- energo”. All they are situated in rapidly developing tablished power grid complex development. regions of Central and Volga federal district. Within the framework of technical and ecological IDGC of Centre and Volga Region, JSC, provides policy pursuing, IDGC of Centre and Volga Region, services of electric power transition and techni- JSC, implements brand new technologies, mate- cal connection to power grids in the territories rials and equipment, uses modern systems of power of the Vladimir, Ivanovo, Kaluga, Kirov, Nizh- distribution process management. This helps to con- niy Novgorod, Ryazan and Tula Regions as well siderably decrease the power losses and increase as in the Republic of Mari El and the Udmurt Re- the reliability of power supply and ecological safety public. The grids of IDGC of Centre and Volga of power objects. Region, JSC, transmit 80.5% of all the power consumed in the regions of the Company’s ac- The management system of IDGC of Centre tivities. The Company possesses the large service and Volga Region, JSC, was certified in accor- market: the territory of its services covers nearly dance with the requirements of ISO 9001:2000, ISO 414 thousand km2. The population of this terri- 14001:2004 and OHSAS 18001:2007 international tory is around 14 million people: this is over 10% standards. of the population of the country. The central office of IDGC of Centre and Volga Re- The structure of the services consumers includes oil gion, JSC, is situated in the сity of Nizhniy Novgorod extraction enterprises, machine building, metallurgy which occupies an advantageous geopolitical posi- industry, woodwork and timber industry, chemical tion being the capital of Volga federal district and industry, railway transport, agriculture, construc- Volga-Vyatka economic district having the favora- tion organizations as well as housing and public ble investment climate, well developed infrastruc- utilities, social sphere objects and population. Tariffs ture and industrial production as well as is included for these services are determined by the executive by UNESCO in the list of 100 top world cities pos- authorities of the regions where the Company’s ac- sessing the world’s historic and cultural heritage. tivities are carried out.

More than 262,000 km of overhead and cable power transmission lines, 58,155 transformer substations of 6–35/0.4 kV; 557 distribution substations 15

Mission and Strategy

The activities of IDGC of Centre and Volga Region, Strategic aim of the Company is the Company’s JSC are aimed to improvement of the people’s life value maximizing due to the intensive develop- quality and the level of social and economic regions ment of the power transmission market, increase development. The Company ensures the reliable of the activities productivity and reliability of the con- and high quality power supply of the consumers, sumers power supply. technological connection of power facilities the grid complex in accordance with the needs of the re- General trends of the Company’s strategy imple- gion’s economy and world’s market requirements. mentation: • Business productivity increase; IDGC of Centre and Volga Region, JSC, bears • Power service market expansion; the responsibility for the economic and technical • Ensuring of power grid complex functioning consi- safety of the industrial activities and for the comp- dering the guarantee of reliability and security; liance with the shareholders, investors and clients’ • Market capitalization increase; interests balance. The Company builds the partner- • Optimization and development of assets; ship relations with all the interested parties and con- • Forming of the effective management system stantly proves the status of the socially responsible and high skilled professional team. company. Taking into consideration the present economic situa- The strategy of IDGC of Centre and Volga Region, tion in the country and the world, IDGC of Centre and JSC, power grid complex development presupposes Volga Region, JSC, considers that its main aim is to the establishment of a well equipped, investment- fulfill all the social benefits and guaranties in relation attractive, economically powerful and stable Com- to the staff of the Company as well as ensuring the pany, comparable by market capital value, operating stability of work of the power grid complex, increase productivity, stable profitability with power grid com- of the reliability of power supply due to the increase panies of the world’s developed countries. This pre- of the number of projects aimed at reconstruction, supposes the increase by the year 2015 of the long maintenance and technical re-equipment of power term borrowed capital share up to 50% of the capital objects. employed.

Priority Areas of Activities

Strategic management of the Company is based • Achievement of high financial and economic, indus- on the following key lines of IDGC of Centre and Vol- trial and technological and administrative indices; ga Region, JSC: • Increase of the Company’s investment attractive- • Reliable and high quality power supply of the con- ness, capitalization and performance increase; sumers of nine regions of the company presence – • Ensuring the transition to the system of tariff regula- constituent entities of the Russian Federation; tion based on the methods of return on investment 16 General Information

(RAB), aiming at the increase of the investments • Implementation of the power safety policy, quality amount; policy, professional health, labor safety and labor • Modernization (technical re-equipment and recon- protection policy; struction) of power objects; • Implementation of the guaranteed standards of quali- • Decrease of the power grid complex depreciation ty and reliability of the clients service; to the normal level; • Use and implementation of leading global experi- • Creation of the power grids capacities reserve ence, modern developments and high technologies in the amount necessary for connection of consu- for the development of power gird complex; mers to power grids; • Implementation of open and transparent information • Creation of the effective mechanism of losses de- policy; crease in the sphere of transmission and distribution of • Compliance with all the rights and legal interests power, reasonable use of own and borrowed means; of the Company’s shareholders and its’ services • Meeting the interests of the staff members, providing consumers; social guarantees and benefits, creation of possibili- • Contribution to the stable social and economic de- ties for the development of their professional level; velopment of the regions of the Company’s pre- • Improvement of the corporate governance princi- sence, effective interaction with the administrations ples; and business communities of the regions.

Basic Results of Activities

Financial ratios and market indicators (as of December 31, 2008)

Indicator name 2008

Earnings, total (RUR million) including that 31,686 From power transmission (RUR million) 29,529 From connection to power grids (RUR million) 1,811

Profit on sales (RUR million) 3,222 Net profit (RUR million) 1,429

Net assets (RUR million) 39,969

continuation 17

Financial ratios and market indicators (as of December 31, 2008)

Indicator name 2008

beginning

Short term obligations (RUR million) 7,109 Long term obligations (RUR million) 12,264 Amount of capital investments (spending, VAT excluded) (RUR million) 8,137 Number of shares (thousand pieces) 112,697,817 Net assets per 1 share (RUR) 0.3547 Base profit per 1 share (RUR) 0.0152 Dividends for 1 share (RUR) 0.00 Share price for the end of the year (RUR) 0.0889

Profitability: % Return on equity (ROE) 3.67 Return on assets 2.41 Return on sales 10.17

Liquidity: Absolute liquidity ratio 0.35 Quick assets ratio 1.61 Working capital ratio 1.86

Financial stability: Solvency ratio (financial independence) 0.67 Debt-equity ratio 2.06

Market indicators: Market capitalization (RUR million)* 10,019

* — on the basis of MICEX data 18 General Information

Production figures (as of December 31, 2008)

Indicator name 2008

Number of personnel employed in power grid industry (persons) 19,446

Number of 35 kV substations and above (pieces) 1,541

Total transformer capacity of 35 kV substations and above (thousand, MVA) 27.9

Number of 6–35/0.4kV transformer substations (pieces) 58,155

Amount of 6–10/0.4 kV distribution substations (pieces) 557

Power transmission lines length (km) 262,187

Capacity of power grids, total (thousand, c.u.) 963.2

Capacity of power grids, not taking into consideration the power selling units, 924.5 boiler houses, heating system and etc. (thousand, c.u.)

Supply to the grid (million kWh) 61,122.16

Productive supply (million kWh) 55,431.42

Total losses (million kWh) 5,690.74

Amount of connections to power grids for 2008 under 516.26 the technological connection agreements (MW)

Short History of Development

The creation of IDGC of Centre and Volga Region, IDGC of Centre and Volga Region, JSC, in- JSC is an integral part of Russian electric power cluded the following distribution grid companies: reform plan. New profile of interregional distribution JSC “Vladimirenergo”, JSC ”Ivenergo”, JSC “Kalu- grid companies (IDGCs) was approved by the Board gaenergo”, JSC “Kirovenergo”, JSC “Mariener- of Directors of RAO “UES of Russia” on April 27, go”, JSC “Nizhnovenergo”, JSC “Ryazanenergo”, 2007. The basis for its formation included the princi- JSC “Tulenergo”, JSC “Udmurtenergo”. ples of territorial contingence and compatibility of the balance sheet assets of the distribution grid compa- IDGC of Centre and Volga Region, JSC, was re- nies (DGCs) being a part of the respective IDGCs. gistered by the Inspection of the Nizhegorodskiy 19

District Federal Tax Service of Nizhniy Novgorod proved the Contract Merger with JSC “Vladimir- as of June 28, 2007 on the basis of the decision of energo”, JSC “Ivenergo”, JSC “Kalugaenergo”, JSC the sole founder — RAO “UES of Russia” (Order of “Kirovenergo”, JSC “Marienergo”, JSC “Nizhnov- RAO “UES of Russia” as of June 22, 2007 No.193r). energo”, JSC “Ryazanenergo’, JSC “Tulenergo”, The authorized capital of IDGC of Centre and Volga JSC “Udmurtenergo”. Region, JSC, during its establishment accounted for RUR 10 million and was divided into 100 million Also a decision was taken on increase of the Compa- of ordinary registered shares of the 10 kopeks equal ny authorized capital Company by means of the ad- par value each. ditional shares placement in the amount of 112.6 billion pieces of the 10 kopeks par value for a total The third quarter of 2007 witnessed the agreements amount of 11.26 billion rubles placed by means conclusion concerning the transfer of the authority of conversion of shares of the merged companies of the sole executive bodies of JSC “Vladimirenergo”, into the additional ordinary shares of IDGC of Centre JSC “Ivenergo”, JSC “Kalugaenergo”, JSC “Kirov- and Volga Region, JSC, in accordance with the pro- energo”, JSC “Marienergo”, JSC “Nizhnovenergo”, cedure determined by the Contract for Merger. JSC “Ryazanenergo”, JSC “Tulenergo”, JSC ‘Ud- murtenergo’ to IDGC of Centre and Volga Region, The Company’s reorganization was completed JSC. by means of making the records in the Uniform State Register of Legal Entities on 29 February 2008 On December 19, 2007 the Head of the Russian on the merging of the respective DGCs with IDGC Government signed the Regulation No.1857-r, of Centre and Volga Region, JSC; and the records stipulating the possibility of IDGCs forming on the on termination of activities of the merged companies. basis of the DGCs shares belonging to RAO “UES DGCs shares were converted into shares of IDGC of Russia”, JSC in accordance with new configura- of Centre and Volga Region, JSC, and DGCs share- tion of IDGCs. holders became shareholders of IDGC of Centre and Volga Region, JSC. The decision on DGCs reorganization in the form of merging with IDGC of Centre and Volga Region, On the basis of the property complex and person- JSC, as well as approval of the Contract for Merger nel of the merged DGCs, nine branches of IDGC together with Transfer and Acceptance Statements of Centre and Volga Region, JSC, were established. was approved by DGCs shareholders at the ex- After the shares conversion and making of the res- traordinary General Shareholders Meeting of IDGC pective amendments to the Charter, the autho- of Centre and Volga Region, JSC, which took place rized capital of the Company accounted for RUR on December 11 and 14, 2007. 11,269,781,704.30. The amount of ordinary shares placed by the Company with the 10 kop. par value In December 2007, the extraordinary General Share- each accounted for 112,697,817,043 pieces. holders Meeting of IDGC of Centre and Volga Region, JSC, the functions of which were exercised by the On July 1, 2008, as a result of RAO “UES of Russia” Board of Directors of RAO “UES of Russia” (Minutes reorganization, the holding of IDGC of Centre and as of December 25, 2007 No.1795pr/4) approved Volga Region, JSC, shares (50.4% of the authorized the decision on reorganization of IDGC of Centre capital) belonging to it, was transited to IDGC Hold- and Volga Region, JSC, in the form of merging with ing, JSC, in accordance with the legal succession JSC “Vladimirenergo”, JSC “Ivenergo”, JSC “Kalu- procedure. gaenergo”, JSC “Kirovenergo”, JSC “Marienergo”, JSC “Nizhnovenergo”, JSC “Ryazanenergo”, JSC “Tulenergo”, JSC “Udmurtenergo” as well as ap- 20 General Information

Calendar of Events

niy Novgorod region”. The cost of works under January the project accounted for more than RUR 1 billion. • Project called the “Program of child traumatism prevention at power objects” presented by Nizhnov- energo branch of IDGC of Centre and Volga Region, April JSC, took the third place at “Social Energy” contest • On April 1, IDGC of Centre and Volga Region, JSC, held among the power companies in “Energy of Co- became the first interregional distribution grid com- operation” nomination. pany, the shares of which were admitted to trading at Russian stock exchanges. • On April 7, IDGC of Centre and Volga Re- February gion shares trading began at the leading stock • From February 26 to March 1 in the city of Vladimir floors — Open Joint Stock Company “Stock Ex- the 1st Olympics of IDGC of Centre and Volga Re- change ‘Russian Trading System’” and Closed gion, JSC, took place; Joint Stock Company “Moscow Interbank Cur- • On February 29, the reorganization of IDGC of Centre rency Exchange”. and Volga Region, JSC — “pilot” project of distribution grid assets consolidation was completed. As a result the united operational company was established with May the responsibility center located in the city of Nizhniy • On May 26, IDGC of Centre and Volga Region, JSC Novgorod governing nine regional branches. took part in the investment conference “IDGC — • On February 29 the conversion of the merged com- new “blue chips” of the stock market”. panies’ shares into ordinary shares of IDGC of Cen- • On May 29, the ceremony of opening of Zavod- tre and Volga Region, JSC, took place. skaya 110/6 kV substation took place. Its main purpose is to provide the electric power to the northern part of the city of Kirov as well as to the Blood Pro- March duct Plant under construction which is of federal • On March 6, the press conference of Evgeny Usha- importance. The capacity of Zavodskaya substa- kov, General Director of IDGC of Centre and Volga tion is 32 MVA. Region, JSC, took place. It was devoted to the com- • On May 30, the first annual General meeting of pletion of the “pilot” interregional distribution com- IDGC of Centre and Volga Region, JSC, sharehol- pany forming. ders took place. • On March 18, the Board of Directors of IDGC of Cen- tre and Volga Region, JSC, approved the Program of Events Aimed to Ensuring the Industrial Safety June and Personnel Health Protection for 2008. • Completion of the work aimed to creation of the re- • On March 25, the Federal Financial Markets Service gional Headquarters in order to provide the security registered the reports on the results of the additional of the power supply of IDGC of Centre and Volga issues of shares of IDGC of Centre and Volga Re- Region, JSC, together with the administrations gion, JSC, of the 10 kop. par value each, of the total of the Company’s presence regions. amount accounting for 112,597,817,043 pieces. • On June 25, the first meeting of the Board of Directors • Completion of the first stage of the bearing construc- of IDGC of Centre and Volga Region, JSC, took place; tions modernization at the tower of V. G. Shukhov • On June 28, one year passed since the moment tower on the Oka river in the city of the Nizhniy of IDGC of Centre and Volga Region, JSC, estab- Novgorod region, on the project “Reconstruction lishment. of the 1st level of the power line bearing construction • On June 30, the reorganization of RAO “UES of (V.G. Shukhov tower) in Dzerzhinsk city of the Nizh- Russia” was completed. 21

• On August 7, the opening of Chizhi 110/35/10 kV July substation took place in the city of Kirov. The sub- • On July 1 IDGC Holding, JSC was created. It pos- station will supply power to the central and south- sesses 50.4% in the authorized capital of IDGC eastern parts of the city, of Chistyie Prudy, Yuzhny-2 of Centre and Volga Region, JSC. and Yuzhny-3 micro districts. • On July 9, Evgeny Ushakov — Company’s General • On August 26, the Agreement was signed on inter- Director, delivered the report at the meeting in Rya- action between the Administration of the Vladimir re- zan city devoted to the complex development of the gion and IDGC of Centre and Volga Region, JSC. Ryazan Region power sector chaired by Oleg Kova- • On August 28, in Nizhniy Novgorod Kremlin, the first lev, the Governor of the Region. meeting of the headquarters took place. It was de- • Placed shares of IDGC of Centre and Volga Region, voted to the power supply security provision in the JSC, acquired unified state registration number territory of the Nizhniy Novgorod Region. of the issue — 1-01-12665 –Е. • On July 15, IDGC of Centre and Volga Region, JSC, shares were included in the waiting list of the sec- September tor power index (MICEX PWR) and MICEX SC index • The Consortium of the Russian Institute of Direc- accounting base. tors and Expert RA rating agency assigned to IDGC • On July 29, IDGC of Centre and Volga Region, JSC, of Centre and Volga Region, JSC, the national cor- held a press conference of Evgeny Ushakov, Ge- porate governance rating “+6” “Developed Corpo- neral Director, who announced the Company’s in- rate Governance Practice”. tentions with regard to health facilities’ power supply • On September 3, the Investment Council under reliability increase. the Governor of the Nizhniy Novgorod region ap- • On July 31, General Director of IDGC of Centre and proved the project aimed to the construction of two Volga Region, JSC, Evgeny Ushakov and the Re- distribution centers with the capacity of 10 kV public of Korea companies’ representatives within from the substation of Strelka 110 kV situated in the Kanavinsky district of the city of Nizhniy the framework of their visit to the Nizhniy Novgorod Novgorod. Region signed the document on cooperation deve- • Completion of works aimed to 10 kV cable line lopment intentions during the implementation of the installation, which connected Chistyie Prudy resi- joint investment projects. dential district in the city of Kirov with the new sub- • On July 31, by the decision of IDGC of Centre station Chizhy. and Volga Region, JSC, the Audit, Personnel, • Reconstruction of Galkino substation (110 kV) and Remuneration, Strategy and Development com- was completed in the Kaluga region. The works in- mittees under the Board of Directors were estab- cluded replacement of 10 MVA power transformer lished. by 25 MVA one. • On September 18, the shares of IDGC of Centre and Volga Region, JSC, were included in “”B” Quo- August tation list”. • Since August 5, IDGC of Centre and Volga Region, • On September 22–27 the Company took place in the JSC, shares are traded at MICEX with the unified All-Russian Competitions of the Professional Skills trade code MRKP. of Operative and Maintenance Personnel of power • On August 6, a set of the target Programs was signed grids devoted to operative management, service aimed to increase power supply reliability of the Rya- and installation of the equipment at 35–110 kV sub- zan region consumers for 2009–2012 between IDGC stations. The contest was held among IDGCs and of Centre and Volga Region, JSC, and the Ryazan DGCs, and IDGC Holding, JSC. region Administration. 22 General Information

• On November 19, the annual report of IDGC of Cen- October tre and Volga Region, JSC, became the winner of the • Construction of Strelka 110 kV substation 11th Annual Federal Contest of the Annual Reports was launched in the Nizhniy Novgorod region. and Websites in nomination “Best Debut”. • On October 6, ordinary shares of IDGC of Centre • On November 25, the Company created an anti-cri- and Volga Region, JSC, were included in MICEX in- sis group for the purpose of minimization of negative dex accounting base (MICEX PWR). consequences for the companies and consumers • On October 10, the contest among the female em- caused by global financial crisis. ployees of IDGC of Centre and Volga Region, JSC, and its branches took place. The name of the contest was “Miss Energy 2008”. December • On October 13, within the framework of the third • On December 1, the Anti-crisis Action Plan for 2008– Tula Economic Forum, the investment agreement 2010 was approved by the Company’s Management on cooperation of IDGC of Centre and Volga Region, Board and put into force under Order of Evgeny JSC, and the Tula region administration was signed Ushakov, General Director of IDGC of Centre and during the realization of the medium term investment Volga Region, JSC. program of Tulenergo branch of IDGC of Centre and • On December 15, in accordance with the Order Volga Region, JSC. • On October 28, by the order of Ministry of Energy, of Evgeny Ushakov, the General Director of IDGC Evgeny Ushakov, General Director of IDGC of Cen- of Centre and Volga Region, JSC, the implementa- tre and Volga Region, JSC, acquired the title “Hono- tion of the Company’s policy in the sphere of quality, red Power Engineer”. professional health, labor safety and environmental • Vladimirenergo branch completed the reconstruc- protection was launched. tion of overhead line of 35 kV Kineshma 220-Gorod- • On December 17, the meeting of the Federal skaya. Tariff Service of Russia took place. The decision was taken to implement the tariff regulation system of the return on investment (RAB) basis in November Tulenergo branch of IDGC of Centre and Volga • “Kirovenergo” branch of IDGC of Centre and Volga Region, JSC. Region, JSC, connected power to Sozim 35 kV sub- • On December 18, IDGC of Centre and Volga Re- station in Verkhnekamski district. gion, JSC, and the Board of representatives of • Construction of Orbita-Volksvagen 110 kV overhead the primary trade union organization of IDGC of line was completed in the Kaluga region. Centre and Volga Region, JSC signed the Collec- • On November 5, all the branches of IDGC of Centre tive Agreement between the employees and em- and Volga Region, JSC, acquired the readiness cer- ployer of IDGC of Centre and Volga Region, JSC tificates allowing them to operate during the 2008– for 2009–2011. 2009 autumn and winter period. • On December 22, IDGC of Centre and Volga Region • On November 6, IDGC of Centre and Volga Region, management system was recognized compliant JSC, was awarded the title “Recognition of the Re- with ISO 9001:2000, ISO 14001:2004, and OHSAS public” as an organization which made a great con- 18001:2007 international standards. tribution to the social and economic development • On December 24, the Management Board of the Fe- of the Udmurt Republic. deral Tariff Service took the decision of Ryazan- • On November 7, IDGC of Centre and Volga Region, energo branch of IDGC of Centre and Volga Region JSC, acquired the readiness certificate authori- transition to the new system of the tariff regulation zing them to work during the 2008–2009 autumn based on the return on investment (RAB) method. and winter period. 23

Risk Management

Risk Management System The work on improvement of the management quality is held, in particular, the Integrated management Despite the stability and steadiness of opera- system is implemented which includes the quality tion of the electric grid complex of IDGC of Centre management system, health protection and labor and Volga Region, JSC, as a whole it is impossible safety system, and ecological management system. to exclude completely the probability of particular The Company creates certain reserves — stocks external events. IDGC of Centre and Volga Region, of materials, reserves of money resources, and per- JSC, manages risks on a system basis. These sonnel reserve. activities are aimed to prevent risks and improve the Company corporate governance and internal Decisions on risk management which are adopted control. This is a continuous process consisting by the Company management are in compliance of determining the events that may potentially in- with the current laws, provide a reasonable cor- fluence any of aspects of the Company activities, relation of the positive effect and the expenses estimation of and control over probable nega- connected with them. During the decisions imple- tive consequences or arising opportunities, taking mentation, the analysis of their practical efficiency of a complex of effectual measures on minimization is continued. of hazard, realization of opportunities and correction of the results of strategy chosen. Improvement of risk management skills among the Company management is held continuously that The goal of the risk management system is an in- helps IDGC of Centre and Volga Region, JSC, to es- crease of a probability of achievement of the Com- timate risks at the proper time and to manage them pany purposes and a decrease in a probability efficiently. of potential damages and losses, maintenance of its long-term stable work and observance of balance of interests of all interested persons. Review of Macroeconomic Factors, Country and Regional Risks The main methods of risk management in the Com- IDGC of Centre and Volga Region, JSC, carries out pany: refusal to work with unreliable counterparts, its activities on the territory of the Russian Federation refusal to take risky investment projects; insurance that causes dependence of its results from the social of property, industrial objects and vehicles, civil li- and economic situation in the country. The risks con- ability, medical insurance and other insurance lines; nected with social, economic and political processes diversification of purchases of raw material, other in the Russian Federation are beyond the Company materials, services for decrease in dependence control. of the Company from separate counterparts; diversification of the market for the purpose of distribu- Economic development of the Russian Federation tion of consumers’ shares in the total amount of ser- in 2008 was uneven. Up to the middle of 2008, owing vices. to the unprecedented export incomes and intensive expansion of the bank crediting, the national eco- In order to prevent potential risks, the Company nomy developed dynamically. From the beginning holds regular monitoring of the social, economic of the second half of the year, the developing world and normative regulatory environment; the external crisis strengthened a negative influence on the eco- economic conditions are projected and the respec- nomic development of Russia: a significant reduc- tive scripts of development are worked out; strate- tion of industrial production, decrease in investment gic planning and activities control are carried out. activities and recession of the consumer demand 24 General Information

led to a 2.5% decrease in growth rates of the gross in the regions of the Russian Federation where national product in 2008 in comparison with the pre- the Company carries out activities. The teams vious year. As for the year 2009, the projected chan- of branches of IDGC of Centre and Volga Region, ges of the gross national product worsened to minus JSC, have a long-term experience of successful 7.8% of the year 2008 level. quick liquidation of consequences of influence of acts of nature on equipment and electric grid Falling of export incomes, a growth of uncertainty, infrastructure. Thus, no essential influence of re- deterioration of conditions of crediting in combina- gional factors on results of the Company activities tion with an increase in payments per the external is expected now. debt in the second half of the year 2008 led to braking, and then to a direct reduction of invest- Legal Risks ments. The recession of industrial production and Taking into account that the Company does not construction which followed this reduction caused export products to the foreign markets, change a decrease in consumption of power resources. of the currency and customs laws does not render Thus, in December 2008, the generation of the material influence on the Company activities, and, electric power in the country was 95.9% to the level accordingly, does not create legal risks for it. of December 2007. Considering the developed situation, the further reduction of the electric energy Change of the tax laws regarding a revision consumption is expected in the nearest year in the of the procedure and time of calculation and pay- country. This factor may lower the volume of ren- ment of taxes, including change of the procedure dered services and probable incomes of IDGC of of calculation of expenses and income for the pur- Centre and Volga Region, JSC. poses of taxation may lead to a reduction of the Company net profit. However in the near future In order to relieve the country economy from such normative changes, and, hence, the related the crisis, the Government of the Russian Federa- risks are improbable, as now the State pursues tion takes measures aimed to improve legislative the policy on the tax load reduction in relation and institutional bases, to increase competitiveness to the Russian tax bearers (for example, the profit of the economy as a whole, and carries out the mo- tax of organizations has been reduced). In case netary policy aimed to preserve still considerable li- of changes in the tax laws, the Company is going quid assets. to plan its financial and economic activities taking into account these changes. Despite the deterioration of economic parameters in the Russian Federation, the political situation Change of requirements to licensing may is characterized as stable. The overwhelming majority lead to an increase in the time for preparation of the population puts trust in President and the Go- of the documents that are necessary for prolonga- vernment. Therefore, the risk of deterioration of the tion of license validity. However, as a whole, this results of the Company activities as a result of inter- risk is insignificant, except for those cases when nal political instability in the country is estimated as for prolongation of the license or for realization minimal. of the activities which are subject to licensing, certain requirements will be stipulated that could There are no potential centers of development not be met by the Company or meeting which of military conflicts and terroristic attacking will be connected with excessive expenses. Oc- 25

currence of significant risks in this area is highly • Recognition by regulating authorities, while calcula- improbable for the Company. In case of change ting tariffs, of only a technological component of of license requirements, the Company will take all electric power losses at its transportation through necessary measures for reception of the respec- grids and refusal to recognize a commercial compo- tive licenses and permits. nent of electric power losses; • Increase of accident rate owing to deterioration The possibility of change of judiciary law on the is- of fixed production assets. sues connected with the Company activities is in significant. The consequences of such changes In order to decrease the negative impact of factors are considered insignificant for the Company finan- and conditions influencing the Company perfor- cial and economic performance. mance, in 2008 a number of contracts with independent energy selling companies in the responsibi- In 2008, no suit was brought against the Com- lity zone of IDGC of Centre and Volga Region, JSC, pany, the adjustment of which could entail risks were signed. The signing of such contracts allows for the Company existence, and considerably be re- to diversify a risk of non-payment since works are flected in its performance. held with several parties to contract, rather than with one large party to contract. In connection with the As a whole, the Company legal risks management fact that there is a tendency of entering of large is based on improvement of the process of legal of- consumers into the wholesale electric power market ficial registration of papers and support of the Com- through independent power selling companies, the pany activities. In order to minimize legal risks, any work on signing “direct” contracts will be continued. business processes of the Company subject to these risks pass obligatory legal examination. Financial Risks During its activities, IDGC of Centre and Volga Re- Sector Risks and Risks Connected gion, JSC, cooperates with various credit organi- with the Company Activities zations. As a consequence, there is a probability Risks of this category substantially depend on a di- of running the following financial risks: rection of structural shifts in the economy of the Rus- sian Federation constituent entities which are located 1. Risk of interest rates change in the zone of the responsibility of IDGC of Centre and Recently the rate of refinancing of the Central Bank Volga Region, JSC, according to the approved IDGC of the Russian Federation has tended to an insignifi- configuration. The risks that may render a material in- cant increase, despite the crisis situation in the Rus- fluence on the Company activities are as follows: sian financial markets. • Reduction in actual consumption of electric energy in comparison with the planned values at calculation In conditions of instability of the financial markets, of tariffs for electric energy transmission; IDGC of Centre and Volga Region, JSC, has a credit • Approval by the Federal Energy Commission portfolio, the partner banks on which are the largest of Russia of the tariff limits for the electric energy credit and financial organizations of Russia. This al- transmission that not in full take into consideration lows to smooth an intensive growth of potential in- the Company financial expenses that are necessary terest rates per the received credits and as a confor realization of reliable and uninterrupted current sequence to reduce a probability of early return of activities, and its further development; credit resources. 26 General Information

However, in conditions of the financial crisis the fur- • The risk connected with losses in the real value ther attraction of credit resources for realization the of debt receivable at an essential delay or postpone- Company investment program is complicated in con- ment in payment; nection with a rise in extra means price. • Risk of increase in the value of services of contract organizations that may lead to an increase 2. Risk of foreign currencies rate change in the Company expenses; The Company financial standing (its liquidity, fi- • Risk of a considerable growth of interest rates and, nancing sources, performance, etc.) are not sub- as a consequence, growth of expenses for servicing ject to risks of change of foreign currencies ex- the Company debts (the probability of their occur- change rates since the Company sells services on rence is estimated as high); with a growth of interest electric energy transmission in the home market rates, payments on interests for using credits of com- of the Russian Federation and settles accounts mercial banks (operational charges) increase. in rubles. The result of influence of the above described risks It should be also noted that the Company credit port- may be a certain reduction in the Company profit. folio does not contain credits and loans in the foreign currency, or obligations, the amount of which is at- In order to minimize the specified financial risks, tached to the foreign currency. the Company holds permanent work on their revealing and estimation, pursues a weighed credit 3. Risk caused by inflation policy according to the Regulations for Credit Po- According to the State Statistics Committee, the in- licy approved by the Board of Directors of IDGC flation rate following the results of the year 2008 of Centre and Volga Region, JSC, and holds was 13.3%. Thus, the inflation in Russia in 2008 an active work with enforcement authorities was the highest since the year 2002, when this indi- of the Russian Federation constituent entities cator was 15.1%. Under the projections of the Minis- in the field of tariff state regulation in order to es- try of Economic Development and Trade of Russia, tablish economically proved tariffs for services the inflation in Russia in 2009 may reach 13–14%. A on electric energy transmission and technological negative influence of inflation on the Company finan- connection,and in order to compensate the short- cial and economic activities may be connected with fall in incomes. the following risks:

Quality Policy

In order to provide a success and productivity of ferred to as IMS) which consists of: the management system of IDGC of Centre and • Quality management system (QMS); Volga Region, JSC, in 2008 the Company rea- • Health protection and labor safety management sys- lized the Plan of Integrated Management System tem (HPLSMS); Development and Implementation (hereinafter re- • Ecological management system (EMS). 27

According to the plan, the IMS development and im- • Rational use and preservation of natural resources, plementation were held according to the require- reduction of negative influence of the Company in- ments of the international standards of the Compa- dustrial activities on the environment. ny administrative activities. The official recognition by the independent international authorities for certi- In order to follow this Policy the management fication of compliance of IDGC of Centre and Volga of IDGC of Centre and Volga Region, JSC, under- Region activates with requirements of the interna- took obligations and responsibilities: tional standards was received in December 2008 • To comply with requirements of the Russian on production process management. These interna- Federation enactments and other requirements tional standards are as follows: on maintenance of qualitative electric power sup- • ISO 9001:2000; plies to consumers, preservation of professional • OHSAS 18001:2007; health, organization of safe work and preservation • ISO 14001:2004. of the environment; • To make decisions taking into account the re- The management principles containing in them quirements of consumers, safety of life and health and the criteria of quality include the main experience of the personnel and other persons at energy ob- of the international community on creation of a com- jects, minimization of damage and environmental petitive business. The further expansion of the IMS contamination; certification area in IDGC of Centre and Volga Re- • To reduce risks and to prevent a hazard connected gion, JSC, will be held by means of inclusion in it with emergency situations, traumatism, negative of industrial activities of the Company branches. influence on health of the Company employees, environment and safety of third parties at energy The main system forming document of the deve- objects, in view of a priority of taking precautionary loped and implemented IMS is the Policy of Top measures over measures on liquidation of negative Management of IDGC of Centre and Volga Region, influences; JSC, in the field of quality, professional health, labor • To carry on an open dialogue and cooperation safety and environment preservation (hereinafter re- with the public and all parties interested in the Com- ferred to as the Policy). pany activities concerning the quality of services ren- According to the level of responsibility for the quality dered, professional health, safety of work and pre- of the services rendered, health, safety of personnel servation of the environment; and persons at energy objects, and for the condition • To observe requirements and to raise effectiveness of the environment that is expected from the Com- of systems of quality management, professional pany, the Policy includes the following main princi- health, safety of work and preservation of the en- ples of management, general intentions and lines vironment. of the Company activities in these areas: • Goals and tasks of the Company may be realized The Policy which has been documented, approved only on the assumption of compliance with all de- by General Director, and is available to the inte- termined specifications on reliability and quality rested parties is aimed to improve the Company of power supplies to consumers; performance, improve its indicators, increase the • Recognition and provision of the priority of life level of consumers’ satisfaction, due to improvement and health of employees and other persons at ener- of the management on the basis of requirements gy facilities, in relation to the results of industrial ac- of international standards ISO 9001:2000, OHSAS tivities; 18001:2007 and ISO 14001:2004. Attaining Well-defined Interaction Attaining Well-defined Interaction

Corporate Governance 30 Corporate Governance

Structure and Principles of Corporate Governance

Corporate Governance Principles. 3. Transparency Documents The Company provides duly disclosing of trustworthy information about all material facts concerning Corporate governance is referred to internal means of support of, and control over, the Company activi- its activities, including about its financial position, ties, and renders direct influence on its economic ef- social and ecological parameters, results of acti- ficiency. vities, structure of the Company property and management, and provides an easy access to such in- Now effective corporate governance in any joint- formation of all interested persons. stock company is a crucial factor of its successful work, and as a result it determines its reputation and 4. Responsibility investment appeal. Successful development of cor- The Company recognizes the rights of all interested porate governance contributes to an increase of the persons stipulated by the current legislation of the Company business processes efficiency and to their Russian Federation, and aspires to cooperation with transition to a qualitatively new and higher level. such persons in order to develop and maintain its financial stability. Major principles of appropriate corporate governance in the Company are: The responsibility of the Company Board of Direc- tors and Management Board members is fixed in 1. Accountability item 71 of FL “On Joint-stock Companies”; in Re- The accountability of the Company Board of Direc- gulations for the Procedure of Convocation and Car- tors to all shareholders according to the current le- rying out of the Board of Directors Meetings of IDGC gislation of the Russian Federation is a guide for the of Centre and Volga Region, JSC; Regulations for Board of Directors when developing a strategy and the Management Board of IDGC of Centre and Vol- realization of management of, and control over, the ga Region, JSC; Regulations for Insider Information Company executive bodies’ activities. of IDGC of Centre and Volga Region, JSC.

2. Equity The Company observes the requirements of the Rus- The Company undertakes to protect the rights of sian legislation in the field of corporate governance. shareholders and to provide an equal treatment IDGC of Centre and Volga Region, JSC, aspires to of all shareholders. The Board of Directors gives follow recommendations of the Russian Corporate to all shareholders an opportunity of obtaining an Conduct Code (it is recommended for application by effective protection in case of their rights infringe- the Federal Commission for the Securities Market ments. of Russia by Order No.421/r as of 4 April 2002) and the principles of corporate governance recognized The Company provides protection of the rights and in the advanced international practice (Principles of legitimate interests of the Company shareholders Corporate Governance of the Economic Coopera- by: tion and Development Organization). Information on • Ensuring of a reliable way of registration of the pro- observance by the Company of the Corporate Con- perty rights to shares, and opportunities of free and duct Code is presented in Appendix No.4 to this An- fast alienation of the shares belonging to them; nual Report. • Providing shareholders with an opportunity of exercising of the right to participate in the management On 18 February 2008 the Board of Directors of by the joint-stock company by means of decision- the Company approved Corporate Governance making on the most important issues of the Compa- Code of IDGC of Centre and Volga Region, JSC, ny activities at the General Shareholders Meeting; and Regulations for Insider Information of IDGC • Granting of an opportunity to participate in the Com- of Centre and Volga Region, JSC (Minutes No.8 pany profit. of 18 February 2008). 31

On 27 September 2008, The Consortium of the 9. Regulations for the Committee for Audit under Russian Institute of Directors and “Expert-RA” ra- the Board of Directors of IDGC of Centre and Volga ting agency gave IDGC of Centre and Volga Region, Region, JSC. JSC, a national corporate governance scoring “6+” “Developed Corporate Governance Practice”. 10. Regulations for the Management Board of IDGC of Centre and Volga Region, JSC. Awarding IDGC of Centre and Volga Region, JSC, this rating proves that the Company runs low risks 11. Corporate Governance Code of IDGC of Centre and of corporate governance, observes requirements of Volga Region, JSC. the Russian legislation in the field of corporate governance, and follows a greater part of recommen- 12. Regulations for the Corporate Secretary of IDGC dations of the Russian Corporate Conduct Code of Centre and Volga Region, JSC. and separate recommendations of the international advanced practice in this area. 13. Regulations for the Internal Control Procedures of IDGC of Centre and Volga Region, JSC. The Company accepted and applies the following normative documents: 14. Regulations for the Insider Information of IDGC of Centre and Volga Region, JSC. 1. Regulations for the Procedure of Preparation and Carrying out of the General Shareholders Meeting 15. Regulations for the Information Policy of IDGC of IDGC of Centre and Volga Region, JSC. of Centre and Volga Region, JSC.

2. Regulations for the Procedure of Convocation and 16. Business Planning Standard of IDGC of Centre Carrying out of the Board of Directors Meetings and Volga Region, JSC. of IDGC of Centre and Volga Region, JSC. 17. Regulations for the Provision of Insurance Coverage 3. Regulations for the Audit Commission of IDGC of IDGC of Centre and Volga Region, JSC, for the of Centre and Volga Region, JSC. period up to 1 January 2010.

4. Regulations for Payment of Remuneration and Com- 18. Regulations for the Central Tender Commission pensation to the Board of Directors Members of IDGC of Centre and Volga Region, JSC. of IDGC of Centre and Volga Region, JSC. 19. Regulations for the Procedure of Carrying out of Re- 5. Regulations for Payment of Remuneration and gulated Purchases of Goods, Works and Services for Compensation to the Audit Commission Members Needs of IDGC of Centre and Volga Region, JSC. of IDGC of Centre and Volga Region, JSC. 20. Regulations for the Credit Policy of IDGC of Centre 6. Regulations for the Reliability Committee under and Volga Region, JSC. the Board of Directors of IDGC of Centre and Volga Region, JSC. 21. Regulations for the Cash Flow Management.

7. Regulations for the Strategy and Development Com- 22. Regulations for the Option Program. mittee under the Board of Directors of IDGC of Cen- tre and Volga Region, JSC. 23. Corporate Ethics Code of IDGC of Centre and Volga Region, JSC. 8. Regulations for the Personnel and Remuneration Committee under the Board of Directors of IDGC 24. Collective Agreement of IDGC of Centre and Volga of Centre and Volga Region, JSC. Region, JSC, for 2009–2011. 32 Corporate Governance

All the listed documents are placed on the Company of the Company, called two extraordinary General corporate website www.mrsk-cp.ru in “Internal Docu- Shareholders Meetings: ments” subsection of “About the Company” section. On 27 February 2008 (Minutes of the Manage- Information on completion by the Company of ment Board of RAO “UES of Russia” No.1827pr/1), the transactions recognized according to the the Company auditor was approved. legislation of the Russian Federation to be interested-party transactions, large transactions, On 28 February 2008 (Minutes of the Manage- and other transactions recognized by the Com- ment Board of RAO “UES of Russia” No.1829pr/8), pany to be material. the documents regulating the Company activities were approved. They are: Charter of IDGC of Centre During the year 2008, the Company did not com- and Volga Region, JSC, in a new version; Regula- plete the transactions recognized large according tions for the Procedure of Preparation and Carrying to the legislation of the Russian Federation, and re- out of the General Shareholders Meeting of IDGC of cognized large by the Company. Centre and Volga Region, JSC; Regulations for the Management Board of IDGC of Centre and Volga In the reporting year the Company completed Region, JSC; Regulations for the Procedure of Con- 96 transactions recognized according to the le- vocation and Carrying out of the Board of Directors gislation of the Russian Federation to be inter- Meetings of IDGC of Centre and Volga Region, JSC, ested-party transactions, for a total amount of in a new version. RUR 3,224,984,203 (the full information on interested-party transactions is specified in Appendix On 30 May 2008, the annual General Sharehol- No.5 to this Annual Report). ders Meeting took place (Minutes No.1 as of 30 May 2008), at which the following decisions were made: Data on Members of Management and Control Bodies 1. The annual report, the annual accounting reports, According to the Charter of IDGC of Centre and Volga including the profit and loss statement of the Com- Region, JSC, the Company management bodies are: pany for 2007 were approved. • General Shareholders Meeting; • Board of Directors; 2. Distribution of the Company profit and loss following • Management Board; the results of 2007 was approved. • General Director. Body of control over the Company financial and eco- 3. Members of the Company Board of Directors were nomic activities is the Company Audit Commission. elected.

General Shareholders Meeting 4. Members of the Company Audit Commission were General Shareholders Meeting is the Company su- elected. preme management body, the competence of which includes major issues of the Company activities ac- 5. The Company auditor was approved. cording to the current legislation of the Russian Fe- deration and item 10 of the Company Charter. 6. The Regulations for Payment of Remuneration and Compensation to the Company Board of Directors In 2008 three General Shareholders Meetings were Members in a new version were approved. held: 7. The Regulations for Payment of Remuneration and In the beginning of 2008, RAO “UES of Russia”, Compensation to the Company Audit Commission which was for that moment the sole shareholder Members in a new version were approved. 33

Board of Directors 24.11.2008, Minutes No.28 as of 10.12.2008, Mi- General provisions on the Board of Directors nutes No.30 as of 25.12.2008). In conformity with Article 15 of the Company Char- • Approval of business plan and investment program ter, the Board of Directors carries out the general for 2008 (Minutes No.19 as of 31.07.2008, Minutes management of the Company activities, except for No.30 as of 25.12.2008). approaching the issues which fall within the compe- • Definition of the position of IDGC of Centre and tence of the General Shareholders Meeting. Volga Region, JSC (representatives of IDGC of Centre and Volga Region, JSC) on the item of the Twenty four meetings of the Board of Directors of agenda of the General Shareholders Meetings and IDGC of Centre and Volga Region, JSC, were held in Boards of Directors meetings of subsidiaries and the reporting year (one of them was held in the form dependent companies of IDGC of Centre and Volga of a joint presence). A total of items considered at Region, JSC. (Minutes No.15 as of 19.05.2008, Min- the meeting of the Board of Directors equaled 296. utes No.17 as of 25.06.2008, Minutes No.18 as of The material items of them are: 18.07.2008, Minutes No.19 as of 31.07.2008, Min- • Approval of decisions on additional share issues utes No.22 as of 09.10.2008, Minutes No.27 as of of IDGC of Centre and Volga Region, JSC (Mi- 28.11.2008, Minutes No.28 as of 10.12.2008, Min- nutes No.7 as of 15.01.2008). utes No.30 as of 25.12.2008). • Approval of the prospectus for securities of IDGC • Establishment of the committees under the Board of of Centre and Volga Region, JSC (Minutes No.7 Directors of IDGC of Centre and Volga Region, JSC as of 15.01.2008). (Minutes No.19 as of 31.07.2008). • Approval of reports on results of additional is- • Approval of the Company Collective Agreement for sues of the Company securities (Minutes No.9 2009-2011 (Minutes No.29 as of 18.12.2008). as of 05.03.2008). • Decision-making on participation of the Company in • Election of the Management Board members (Mi- other organizations (Minutes No.17 as of 25.06.2008, nutes No.9 as of 05.03.2008, Minutes No.10 as of Minutes No.23 as of 15.10.2008, Minutes No.25 as 24.03.2008, Minutes No.17 as of 25.06.2008 и Mi- of 12.11.2008, Minutes No.28 as of 10.12.2008). nutes No.21 as of 24.09.2008). • Approval of interested-party transactions (96 trans- Criteria of definition of compensation to mem- actions for the total amount of 3,224,984,203 rubles bers of the Company Board of Directors for 2008 (the full information on interested-party transactions are fixed in the Regulations for Payment of Remu- is presented in Appendix No.5 to this Annual Report) neration and Compensation of the Board of Direc- (Minutes No.9 as of 05.03.2008, Minutes No.12 as tors Members of IDGC of Centre and Volga Region, of 18.04.2008, Minutes No.13 as of 25.04.2008, JSC (Minutes No.1751pr/2 of the Management Minutes No.14 as of 12.05.2008, Minutes No.16 Board of RAO “UES of Russia” as of 5 October as of 28.05.2008, Minutes No.17 as of 25.06.2008, 2007) and Regulations for Payment of Remunera- Minutes No.18 as of 18.07.2008, Minutes No.19 tion and Compensation to Members of the Board as of 31.07.2008, Minutes No.21 as of 22.09.2008, of Directors of IDGC of Centre and Volga Region, Minutes No.22 as of 09.10.2008, Minutes No.24 as JSC (Minutes of the Annual General Shareholders of 24.10.2008, Minutes No.25 as of 12.11.2008, Meeting No.1 as of 30 May 2008). Texts of these Minutes No.27 as of 28.11.2008, Minutes No.28 Regulations are available on the Company website as of 10.12.2008, Minutes No.29 as of 18.12.2008, in Internal Documents section. Minutes No.30 as of 25.12.2008). • Rendering of charitable help (Minutes No.15 as of According to the specified documents, the to- 19.05.2008, Minutes No.18 as of 18.07.2008, Mi- tal amount of remuneration paid to mem- nutes No.20 as of 22.08.2008, Minutes No.21 as of bers of the Board of Directors in 2008 equaled 22.09.2008, Minutes No.24 as of 24.10.2008, Mi- RUR 5,439,752.50. nutes No.25 as of 12.11.2008, Minutes No.26 as of 34 Corporate Governance

Structure of Board of Directors The first structure of the Board of Directors of IDGC of Centre and Volga Region, JSC, was elected on 22 June 2007 under Order No.193r of RAO “UES of Russia” (positions are specified as of the moment of election):

Pavel Ivanovich Okley Anton Sergeevich Kolesnikov Chairman of the Board of Directors, Head of IDGC Deputy Head of IDGC Management Center of JSC Management Center of JSC “UES FGC”. “UES FGC”.

Alexey Valerievich Kurochkin Leonid Evgenievich Spitsyn Deputy Chairman of the Board of Directors of IDGC Deputy Head of the Management Center of Inter- of Centre and Volga Region, JSC; Deputy Head regional Distribution Grid Complexes of JSC “UES of IDGC Management Center of JSC “UES FGC”. FGC”

Evgeny Viktorovich Ushakov Julia Lvovna Shamis General Director of IDGC of Centre and Volga Re- Principal Expert of the Normative Support Depart- gion, JSC. ment of the Reform Management Centre of RAO “UES of Russia”. Misrikhan Shapievich Misrikhanov General Director of “TEG of Centre” branch of JSC Vasily Petrovich Andreev “UES FGC”. Deputy Chief of the Client Relations and Infrastruc- ture Department of JSC “UES FGC”. Vyacheslav Mikhailovich Kravchenko Director of the Department of Structural and Tariff Po- Seppo Uha Remes licy in Natural Monopolies of Minpromenergo of Rus- President of Kiuru Partners LLC consulting compa- sia. ny, Senior Adviser of JSC “FIM Financial Services”.

Wolfgang Skribot Managing Director of the Corporate Financing De- partment of JSB “Gazprombank” (CJSC). 35

The current Board of Directors The current Board of Directors of IDGC of Centre Pavel Ivanovich and Volga Region, JSC, was elected by the annual Okley General Shareholders Meeting on 30 May 2008 Chairman of the Board of Directors (Minutes No.1 as of 30 May 2008). Its structure includes:

Alexey Valerievich Evgeny Viktorovich Kurochkin Ushakov Deputy Chairman General Director and Chairman of the Board of Directors of the Management Board

Iskander Dzhangirovich Alexander Markovich Ametov Branis

Maxim Nikolaevich Andrey Vladimirovich Bunyakin Gabov

Vladimir Vyacheslavovich Vyacheslav Mikhailovich Inozemtsev Kravchenko

Misrikhan Shapievich Skribot Misrikhanov Wolfgang 36 Corporate Governance

Pavel Ivanovich Okley Alexey Valerievich Kurochkin Chairman of the Board of Directors Deputy Chairman of the Board of Directors

Year of birth: 1970 Year of birth: 1973

Education: Education: higher, Omsk Institute of Railway Transport Engi- higher, Ural State Law Academy, Ekaterinburg; neers; qualification: railway engineer — electrician qualification: jurisprudence

Positions for the past 5 years: Positions for the past 5 years: • 2004–2005 • 2003–2005 Deputy Chief Engineer of “Electric Grid Enterprise” Adviser to General Director, Deputy Chief of the Ad- branch of JSC JSF “Omskenergo” ministration of JSC “Ural Power Management Com- • 2005–2005 pany” Director for Electric Power Transport of JSC JSF • 2005–2008 “Omskenergo” Deputy Head of the Management Center of Inter- • 2005–2007 regional Distribution Grid Complexes of JSC “UES Deputy Head of the Management Center of Inter- FGC” regional Distribution Grid Complexes of JSC “UES • 02.07.2008–current FGC” Director for Corporate Policy of JSC “IDGC • 2007–2008 Holding” Head of the Management Center of Interregional Distribution Grid Complexes of JSC “UES FGC” Stake in the issuer’s authorized capital: none • 02.07.2008–current Deputy General Director — Technical Director of Participation in management bodies JSC “IDGC Holding” of other legal entities: Member of the Board of Directors: JSC “Tiumen- Stake in the issuer’s authorized capital: none energo”; IDGC of North-West, JSC; IDGC of Volga, JSC; IDGC of Siberia, JSC; Lenenergo, JSC; JSC Participation in management bodies “Ekaterinburg Electric Grid Company” of other legal entities: Chairman of the Board of Directors: JSC “Tiumen- energo”; IDGC of Siberia, JSC Member of the Board of Directors: IDGC of Cen- tre, JSC; IDGC of Urals, JSC; IDGC of South, JSC; Lenenergo, JSC 37

Evgeny Viktorovich Ushakov Iskander Dzhangirovich Ametov General Director and Chairman of the Manage- ment Board of IDGC of Centre and Volga Region, Year of birth: 1950 JSC Education: Year of birth: 1964 higher, Tashkent Polytechnical Institute; qualification: power plants, engineer-electrician Education: higher, Chelyabinsk Polytechnical Institute named Positions for the past 5 years: after Lenin Komsomol; qualification: engineer — • 2003—current electrician General Director of branch of JSC “SO UPS” United Dispatching Management of Middle Volga Positions for the past 5 years: • 2002–2005 Stake in the issuer’s authorized capital: none Acting Chief Engineer, Chief Engineer, Chief Engi- neer — First Deputy General Director, First Deputy Participation in management bodies General Director — Executive Director of JSC “Ural of other legal entities: Power Management Company” Member of the Board of Directors of IDGC of Volga, • 2005–2007 JSC First Deputy General Director of IDGC of Urals and Volga, JSC • 28.06.2007–current General Director of IDGC of Centre and Volga Re- gion, JSC

Stake in the issuer’s authorized capital as of 31.12.2008: 0.0827%

Participation in management bodies of other legal entities: none 38 Corporate Governance

Alexander Markovich Branis Maxim Nikolaevich Bunyakin

Year of birth: 1977 Year of birth: 1980

Education: Education: Academy of National Economy under the Govern- higher, Moscow State Law Academy; qualification: ment of the Russian Federation. The bachelor of jurisprudence management. CFA Positions for the past 5 years: Positions for the past 5 years: • 2003–2005 • 1998–2006 Principal Legal Adviser of JSC “CTC-Region” Director of the Moscow Representative Office • 2005–2007 of “Prosperity Capital Management Ltd.” company Principal Expert of the Strategy Department • 2006–current of the Reform Management Center of RAO “UES of Director of the Representative Office of “Prosperity Russia” Capital Management Ltd.” company • 2008–current Chief of Drafting and Reform Monitoring of the Stra- Stake in the issuer’s authorized capital: none tegy Department of the Reform Management Center of RAO “UES of Russia” Participation in management bodies of other legal entities: Stake in the issuer’s authorized capital: none Chairman of the Board of Directors of JSC “TGC-6”; Member of the Board of Directors: JSC “TGC-2”; Participation in management bodies JSC “TGC-4”; JSC “Bashkirenergo”; IDGC of Cen- of other legal entities: tre, JSC; JSC “Novgorod Power Selling Company”; Member of the Board of Directors of JSC “Yenisei JSC “Prokatmontazh” TGC (TGC-13)” 39

Andrey Vladimirovich Gabov

Year of birth: 1973

Education: Stake in the issuer’s authorized capital higher as of 31.12.2008: 0.0017% • Law faculty of Syktyvkar State University (Syktyv- kar, Republic of Komi). Graduated from the univer- Participation in management bodies sity cum laude of other legal entities: • Northwest Academy of Public Service (Saint Peters- Chairman of the Board of Directors of JSC “Corpo- burg). Qualification: “State and Municipal Manage- rate Governance Institute” ment”; specialization: “Economic Regulation and Member of the Board of Directors: IDGC of North- Finance” West; JSC “CNII NPKenergo”, IT Energy Service • All-Russia Academy of Foreign Trade (Moscow). Ltd. Qualification: “World Economy” • Diplomatic Academy of the Ministry for Foreign Af- fairs of the Russian Federation (Moscow). Qualifica- tion: “International Relations” • Defence of the master’s thesis in Institute of Legisla- tion and Comparative Jurisprudence under the Go- vernment of the Russian Federation on the theme “Bill of Exchange in the System of Russian Securi- ties”

Positions for the past 5 years: • 11.09.2000–31.05.2004 Chief of the Corporate Policy Department of JSC RAO “UES of Russia” • 31.05.2004–11.07.2005 Chief of the Corporate Governance Department of the Corporate Center of RAO “UES of Russia” • 11.07.2005–30.06.2008 Chief of the Corporate Governance and Sharehol- der Relations Department of the Corporate Center of RAO “UES of Russia” • 01.07.2008–31.12.2008 Head of Project Group for observance of shareholders’ right during the Company reorganization of the Project Center of JSC “IDGC Holding” 40 Corporate Governance

Vladimir Vyacheslavovich Inozemtsev Vyacheslav Mikhailovich Kravchenko

Year of birth: 1977 Year of birth: 1967

Education: Education: higher, Omsk State Technical University (OmGTU) higher, Moscow State University named after Lo- monosov; qualification: lawyer Positions for the past 5 years: • 2004–2005 Positions for the past 5 years: Chief of the Electric Power Transport Division • 2004–2006 of the Electric Power Transport Department of “Om- Deputy Director of the Department for Structural and skenergosbit” branch of JSC JSF “Omskenergo” Investment Policy in the Industry and Power Sec- • 2005–2006 tor of the Ministry of the Industry and Power Sector Chief of the Electric Power Transport Department of the Russian Federation of JSC JSF “Omskenergo” • 2006–2007 • 2006–2008 Director of the Department for Structural and Tariff Head of the Management for Transport and Reduc- Policy in Natural Monopolies of the Ministry of the In- tion in Losses of the Electric Power of the Manage- dustry and Power Sector of the Russian Federation ment Centre of Interregional Distribution Grid Com- • 2007–2008 plexes of JSC “UES FGC” Director of the Electric Power Industry Depart- • 02.07.2008–current ment of the Ministry of Industry and Power Sector Chief of Electric Power Transport and Client Rela- of the Russian Federation tions Department of JSC “IDGC Holding” • 09.2008–current General Director of “RN-energo” Ltd Stake in the issuer’s authorized capital: none Stake in the issuer’s authorized capital: none Participation in management bodies of other legal entities: none Participation in management bodies of other legal entities: Member of the Board of Directors: JSC “Automatic Trade System”; “CFR” Ltd.; JSC “Energosetrpoekt Institute”; JSC “Tiumenenergo”; JSC “Rosgazifika- tsiya”; JSC “Irkutskenergo”; IDGC of North Cau- casus, JSC; IDGC of Urals, JSC; IDGC of Siberia, JSC; IDGC of North-West; IDGC of Centre, JSC 41

Misrikhan Shapievich Misrikhanov Skribot Wolfgang

Year of birth: 1951 Year of birth: 1966

Education: Education: higher, Candidate of Technical Sciences higher

Positions for the past 5 years: Positions for the past 5 years: • 2004–2007 • 2004–current General Director of JSC “ITGC of Centre” Managing Director of the Corporate Financing De- • 2002–current partment of JSB “Gazprombank” (CJSC) General Director of TEG of Centre branch of JSC “UES FGC” Stake in the issuer’s authorized capital: none

Stake in the issuer’s authorized capital: none Participation in management bodies of other legal entities: Participation in management bodies Member of the Board of Directors: JSC “MCEGC”; of other legal entities: JSC “MUEGC”; JSC “TGC”; JSC “Mosenergosbit”; Member of the Board of Directors of JSC “MUEGC”; JSC “ESC of the Moscow Region” IDGC of Centre, JSC 42 Corporate Governance

Committees under the Board of Directors of energy facilities, organization of operational and The Committees under the Company Board of Di- dispatching maintenance; rectors are advisory and consultative bodies. • estimation of a technical condition, level of operation and repair of energy facilities; The Committees under the Board of Directors are es- • planning and analysis of activities on renovation tablished under the decision of the Company Board of the Company energy facilities; of Directors on the basis of item 19 of the Company • estimation of activities of the Company technical Charter in order to elaborate the items included in the services and their heads. sphere of the competence of the Board of Directors or studied by the Board of Directors for the purpose of According to the Regulations, the Reliability Commit- control over activities of the executive body, and deve- tee consists of six members. Acting personal struc- lopment of necessary recommendations to the Com- ture of the Committee was approved by the Deci- pany Board of Directors and its executive bodies. sion of the Board of Directors of IDGC of Centre and Volga Region, JSC (Minutes No.19 of 31 July 2008). As of 31 December 2008, there are four committees Positions of members of the Committee are speci- under Board of Directors in the Company: fied as of election: • Pavel Ivanovich Okley — Deputy General Direc- 1. The Reliability Committee was established by the tor — Technical Director of JSC “IDGC Holding” — decision of the Board of Directors of IDGC of Centre Chairman of the Committee; and Volga Region, JSC (Minutes No.4 as of 12 Oc- • Sergey Timofeevich Andrus — Deputy General Di- tober 2007). rector for Technical Issues — Senior Engineer of IDGC of Centre and Volga Region, JSC — Deputy The procedure of activities and carrying out of mee- Chairman of the Committee; tings of the Reliability Committee under the Board • Olga Vladimirovna Tikhomirova — Deputy General of Directors of IDGC of Centre and Volga Region, Director for Economy and Finance of IDGC of Cen- JSC, is covered by the Regulations for the Reliability tre and Volga Region, JSC; Committee approved by the decision of the Com- • Sergey Glebovich Kosterin — Director for Technical pany Board of Directors (Minutes No.4 as of 12 Oc- Development and Operation of IDGC of Centre and tober 2007). Volga Region, JSC; • Yuriy Anatolievich Ignatenko — Head of the Depart- The Committee’s Competence includes preliminary ment for Technical Supervision of IDGC of Centre consideration, analysis and development of recom- and Volga Region, JSC; mendations (conclusions) on the following issues of • Yuliya Vladimirovna Dobakhyants — Senior Expert the Company Board of Directors about the priority of the General Specifications Division of the depart- activity lines: ment for Operational and Process Management of • analysis of industrial activities regarding an estima- JSC “IDGC Holding”; tion of: readiness of the Company for the autumn and winter period, organization of a labor safety Nine meetings of the Committee took place in 2008 system, organization of a system of control over which included consideration of the following major industrial safety, level of operational maintenance issues: 43

• on consideration of report of the Company’s General rectors of IDGC of Centre and Volga Region, JSC. Director on preparation of the Company for opera- Acting personal structure of the Committee was ap- tion in 2008–2009 autumn-winter period; proved by the Decision of the Board of Directors of • on consideration of information from the Reliability IDGC of Centre and Volga Region, JSC (Minutes Committee about state of the Company’s energy ob- No.19 of 31 July 2008). Positions of members of the jects fixed assets as of I, II and III quarters of 2008; Committee are specified as of election: • on consideration of the report on compliance of ac- • Alexey Valerievich Kurochkin — Director for Corpo- ting infrastructure of the Company with requirements rate Policy of JSC “IDGC Holding” (Deputy Chair- of the Company’s technical policy general state- man of the Board of Directors of IDGC of Centre and ments; Volga Region, JSC) — Chairman of the Committee; • on approval of the Company’s investment program • Vladimir Vyacheslavovich Inozemtsev — Head of in 2008 and reports on its implementation. the Department for Electric Power Transport and Consumers Relations of JSC “IDGC Holding” — 2. The Committee for Audit was established by Deputy Chairman of the Committee; the decision of the Board of Directors of IDGC of • Alexander Markovich Branis — Director of Prospe- Centre and Volga Region, JSC (Minutes No.19 as rity Capital Management Moscow Office. of 31 July 2008). The basis for establishment of the Committee for Audit was the Regulations for Ac- Two meetings of the Committee took place in 2008 tivities on Organization of Trade on the Securities which included consideration of the following is- Market approved by order of FFMS of Russia as of sues: 9 October 2007 No.07-102/pz. The Committee was • on approval of working plan of the Committee on the established in order to include the Company shares Company’s Board of Directors audit in 2008; in quotation lists of the Russian stock exchanges. • on approval of Regulations for Internal Control Proceedings of IDGC of Centre and Volga Region, The order of activity and carrying out of meetings JSC; of the Committee for Audit under the Board of Di- • on approval of amended Regulations for Internal rectors of IDGC of Centre and Volga Region, JSC, Control Proceedings of IDGC of Centre and Volga is regulated by the Regulations for the Committee Region, JSC. for Audit approved by the decision of the Com- pany Board of Directors (Minutes No.19 as of 31 July 2008). 3. The Personnel and Remuneration Committee was established by the decision of the Board of Di- The key role of work of the Committee for Audit rectors of IDGC of Centre and Volga Region, JSC consists in support of the process of selection of the (Minutes No.19 as of 31 July 2008). auditor, check of reliability of the Company financial reporting, and establishment of an effective system The order of activities and carrying out of meetings of internal control. of the Personnel and Remuneration Committee under the Board of Directors IDGC of Centre and Volga According to the Regulations, the Committee for Region, JSC, is regulated by the Regulations for the Audit consists of three members of the Board of Di- Personnel and Remuneration Committee approved 44 Corporate Governance

by the decision of the Company Board of Directors • Olga Vladimirovna Tikhomirova — Deputy General (Minutes No.19 as of 31 July 2008). Director for Economy and Finance of IDGC of Cen- tre and Volga Region, JSC; The task of the Personnel and Remuneration Com- • Alexander Vladimirovich Zemskov — Head of the mittee is development and representation of recom- Department for Economic Development of CJSC “E- mendations (conclusions) to the Board of Directors Union Investment Holding”. in the following activity lines: • development of principles and criteria of definition Five meetings of the Committee took place in 2008 of compensation to the members of the Company which included consideration of the following is- Board of Directors, members of the collegial execu- sues: tive body and the person who carries out functions • on Bonus Payment to Top Managers of the Com- of the Company sole executive body, including the pany for implementation of a task of special impor- management organization or the managing director; tance; • definition of material conditions of contracts • on determination of amount structure of the Ma- with members of the collegial executive body and nagement Board of the Company and election of the the person who carries out functions of the Com- Management Board; pany sole executive body; • on introduction of amendments to Regulations • definition of criteria of selection of candidates for Material Encouragement of the General Director to members of the Company Board of Directors, of the Company; members of the Company collegial executive body, • on coordination of combination of positions at ma- to the position of the Company sole executive body; naging bodies of other organizations by members • estimation of activities of the person who carries out of the Management Board of the Company; functions of the sole executive body (management • on remuneration of General Director of IDGC of Cen- organization, managing director) and members tre and Volga Region, JSC E.V. Ushakov. of the Company collegial executive body.

According to the Regulations, The Personnel and 4. The Strategy and Development Committee was Remuneration Committee consists of 4 members. established by the decision of the Board of Directors of IDGC of Centre and Volga Region, JSC (Minutes Acting personal structure of the Committee was ap- No.19 as of 31 July 2008). proved by the Decision of the Board of Directors of IDGC of Centre and Volga Region, JSC (Minutes The procedure of activities and carrying out of mee- No.19 of 31 July 2008). Positions of members of the tings of the Strategy and Development Committee Committee are specified as of election: are covered by the Regulations for the Strategy and • Vladimir Nikolaevich Kalugin — Head of the Depart- Development Committee approved by the decision ment for Human Resources of JSC “IDGC Hold- of the Company Board of Directors (Minutes No.19 ing” — Chairman of the Committee; as of 31 July 2008). • Lada Alexandrovna Podolskaya — Deputy Ge- neral Director for Corporate Management of IDGC The Strategy and Development Committee was of Centre and Volga Region, JSC — Deputy Chair- formed for the purposes of a preliminary study of stra- man of the Company; 45

tegic issues and the most important issues of the • on decision-making on holding by the Company Company financial and economic activities (approval of other organizations’ stakes; of business plans, investment programs, etc.). • on approval of corrected Company key performance indicators figures in 2008; According to the Regulations, The Strategy and De- • on attraction of credit resources with excess of cost velopment Committee consists of 7 members. borrowing parameters limit; • on approval of the Company’s corrected business Acting personal structure of the Committee was ap- plan in 2008; proved by the Decision of the Board of Directors • on approval of the Company’s corrected investment of IDGC of Centre and Volga Region, JSC (Minutes program in 2008; No.19 of 31 July 2008). Positions of members of the • on consideration of the report on implementation Committee are pointed as of election: of business plan of IDGC of Centre and Volga Re- • Alexey Viktorovich Lisitsyn — Deputy General Direc- gion, JSC and DGC affiliated as a result of reorgani- tor for Economy and Finance of JSC “IDGC Hold- zation of IDGC of Centre and Volga Region, JSC ing” — Chairman of the Committee; in I quarter 2008. • Lada Alexandrovna Podolskaya — Deputy Gene- ral Director for Corporate Management of IDGC of Centre and Volga Region, JSC — Deputy Chairman of the Committee; • Evgeny Viktorovich Ushakov — General Director of IDGC of Centre and Volga Region, JSC; • Olga Vladimirovna Tikhomirova — Deputy General Director for Economy and Finance of IDGC of Cen- tre and Volga Region, JSC; • Alexander Vladimirovich Zemskov — Head of the Department for Economic Development CJSC “E- Union Investment Holding”; • Roman Alexandrovich Filkin — Deputy Director of Prosperity Capital Management Office; • Arman Mushegovich Ayrapetyan — Director of the Strategy and Development Center of JSC “IDGC Holding”.

Eight meetings of the Committee took place in 2008 which included consideration of the following major issues: • on attraction of credit resources with excess of cost borrowing parameters limit; • on termination of holding a stake by IDGC of Centre and Volga Region, JSC, in JSC “TGC-4”; 46 Corporate Governance

Management Board • decision-making on the issues which fall within the General provisions on the Management Board competence of the supreme management bodies of A collegial approach is necessary to approach the economic entities, one hundred percent of the challenges during the Company management. share capital of which belong to the Company; In this connection the Company formed the Ma- • decision-making on the conclusion of transactions, nagement Board headed by Chairman of the the subject of which is the property, works and ser- Management Board represented by General Di- vices, the value of which is from 1 up to 25 percent of rector. The Management Board supervises over the Company total balance sheet assets determined the Company current activities and implements for the date of decision-making on the conclusion of the strategy defined by the Company Board of the transaction. Directors and shareholders. In order to ensure effective performance of the Com- The Company Management Board acts on the ba- pany Board of Directors and take weighed and sis of the Company Charter and the Regulations grounded decisions, the Company Management for the Management Board of IDGC of Centre and Board preliminary considered the recommendations Volga Region, JSC, approved by the Manage- and provided them to the Board of Directors, on the ment Board of RAO “UES of Russia” (Minutes following issues which fall within its competence: No.1829pr/8 as of 28 February 2008), which de- • approval of target values (corrected values) of the termines target dates and order of convocation and Company key performance indicators (KPI) and re- carrying out of its meetings, and order of decision- ports on their execution; making. • preliminary approval of the transactions connected with gratuitous transfer of the Company property The decision of the Company Board of Directors or property rights (demands) to itself or to the third (Minutes No.21 as of 24 September 2008) made party. changes to the quantitative structure of the Manage- ment Board of IDGC of Centre and Volga Region, Structure of the Management Board JSC, approved by the decision of the Board of Direc- The current structure of the Management Board of tors as of 5 March 2008 (Minutes No.9 as of 5 March IDGC of Centre and Volga Region, JSC, was elected 2008). The new structure was defined in the number by the Board of Directors IDGC of Centre and Volga of 9 (nine) people. Region, JSC (Minutes No.9 as of 5 March 2008, Minutes No.10 as of 24 March 2008, Minutes No.17 In 2008, 35 meetings of the Company Management as of 25 June 2008 and Minutes No.21 as of 24 Sep- Board were held (including 2 meetings in the form tember 2008). of joint presence) within the limits of which the issues which fall within the competence of the Ma- For 2008, the Company Management Board, except nagement Board in conformity with article 22 of the General Director, received a total of remuneration Company Charter were considered. In total, 166 de- equal to RUR 1,003,366.77, according to the ad- cisions were made, including: ditional agreements to labor contracts about exer- • preparation of annual (quarter) business plan, in- cising of functions of the Member of the Company cluding the investment program and the report on Management Board. results of their performance, and approval (updating) of the Company cash (budget) flow; 47

The structure of the Management Board includes:

Evgeny Viktorovich Sergey Ushakov Timofeevich Andrus

Chairman Deputy Chairman of the Management Board of the Management Board

Lada Alexandrovna Irina Viktorovna Podolskaya Yashanina

Olga Vladimirovna Alexey Tikhomirova Rudolfovich Slovtsov

Alexander Vladimir Viktorovich Vasilievich Prepodobny Shitts

Evgeny Vladimirovich Nikitushkin 48 Corporate Governance

Evgeny Viktorovich Ushakov Sergey Timofeevich Andrus Chairman of the Management Board, General Di- Deputy Chairman of the Management Board, rector and a member of the Board of Directors of Deputy General Director for Technical Issues — IDGC of Centre and Volga Region, JSC Chief Engineer of IDGC of Centre and Volga Re- gion, JSC Year of birth: 1964 Year of birth: 1962 Education: higher, Chelyabinsk Polytechnical Institute named Education: after Lenin Komsomol; qualification: engineer — higher vocational; Kishinev Polytechnical Institute; electrician qualification: engineer-electrician

Positions for the past 5 years: Positions for the past 5 years: • 2002–2005 • 2002–2003 Acting Chief Engineer, Chief Engineer, Chief Engi- Deputy Chief of Operational Dispatching Ser- neer — First Deputy General Director, First Deputy vice “Kogalym Electric Grids” branch of JSC General Director — Executive Director of JSC “Ural “Tiumenenergo” Power Management Company” • 2003–2004 • 2005–2007 Deputy Chief Engineer, Chief Engineer of Northern First Deputy General Director of IDGC of Urals Electric Grids of the branch of JSC “Tiumenenergo” and Volga, JSC • 2004–2005 • 28.06.2007–current Director of Northern Electric Grids of the branch General Director of IDGC of Centre and Volga Re- of JSC “Tiumenenergo” gion, JSC • 2005–2006 Chief Engineer of JSC “Tiumenenergo” Stake in the issuer’s authorized capital • 2006–2007 as of 31.12.2008: 0.0827% Technical Director of JSC “Tiumenenergo” • 07.2007–current Participation in management bodies Deputy General Director for Technical Issues - Tech- of other legal entities: none nical Director of IDGC of Centre and Volga Region, JSC

Stake in the issuer’s authorized capital as of 31.12.2008: 0.0175%

Participation in management bodies of other legal entities: none 49

Lada Alexandrovna Podolskaya Irina Viktorovna Yashanina Deputy General Director for Corporate Gover- Deputy General Director for Controlling and Ex- nance of IDGC of Centre and Volga Region, JSC ternal Communications of IDGC of Centre and Volga Region, JSC Year of birth: 1974 Year of birth: 1962 Education: higher vocational, Ural State Legal Academy; qualifi- Education: cation: jurisprudence, special qualification: lawyer higher, Moscow Management Institute named after S.Ordzhonikidze; qualification: organization of ma- Positions for the past 5 years: nagement in power sector; special qualification: • 2003–2005 engineer economist for organization of production Chief of the Legal Department, Chief of the Legal management Management of JSC “Ural Power Management Company” Positions for the past 5 years: • 2005–2007 • 2001–2004 Chief of Legal Department of IDGC of Urals and Vol- General Director of JSC “Kalugaenergo” ga, JSC • 2004–2005 • 2007–current General Director of JSC “Kaluga Power Manage- Deputy General Director for Corporate Governance ment Company” of IDGC of Centre and Volga Region, JSC • 2005–2007 Director of the Western branch of IDGC of Centre Stake in the issuer’s authorized capital and North Caucasus, JSC as of 31.12.2008: 0.0044% • 2007–current Deputy General Director for Controlling and Exter- Participation in management bodies nal Relations of IDGC of Centre and Volga Region, of other legal entities: JSC Chairman of the Board of Directors of Svet, JSC; Be- rendeyevskoe, JSC, Luchinskoe Subsidiary Farm, Stake in the issuer’s authorized capital: none JSC; “Energetik” Sanatorium Preventorium Deputy Chairman of the Board of Directors of Tul- Participation in management bodies energokomplekt, JSC of other legal entities: Chairman of the Board of Guardians of NANOO UC Chairman of the Board of Directors of JSC “Kaluga “Energetik” City Power Company” Member of the Board of Directors of JSC “Kaluga State District Power Station” 50 Corporate Governance

Olga Vladimirovna Tikhomirova Alexey Rudolfovich Slovtsov Deputy General Director for Economy and Fi- Deputy General Director for Development and nance of IDGC of Centre and Volga Region, JSC Services Selling of IDGC of Centre and Volga Region, JSC Year of birth: 1964 Year of birth: 1974 Education: higher vocational, Moscow Power Institute awarded Education: by Order of Lenin and October Revolution; qualifica- higher vocational, Ural State Technical University; tion: industrial electronics; special qualification: en- qualification: organization and management in fuel gineer-technician; qualification: finance and credit; and energy sectors, special qualification: engineer special qualification: economist, Candidate of Eco- economist nomic Sciences Positions for the past 5 years: Positions for the past 5 years: • 2003–2004 • 1993–2008 Main Expert for Analysis of Economic Activities, Economist for planning, economist of the 2nd ca- Lead Expert of the Department of Current (Opera- tegory for planning, economist of the 1st category, tional) Monitoring of Energy Selling Activities of JSC Chief of the Economical Department, Deputy Ge- “Sverdlovenergo” neral Director for Economy and Finance, Director • 2004–2005 for Economy and Finance, Deputy General Director Deputy Director for Development and Marketing for Economy and Finance of JSC “Smolenskener- of “Billing Center” go” • 2005–2007 • 03.2008–05.2008 Chief of the Power Selling Division of the Invest- Deputy General Director for Economy and Finance ments and Tariff Formation Department, Chief of Open Join Stock Company “‘NK Rosneft’— Smo- for Selling of Services on Electric Power Transmis- lensknefteproduct” sion of the Investments and Tariff Formation Depart- • 2008–current ment, Chief of Electric Power Transport Department Deputy General Director for Economy and Finance of IDGC of Urals and Volga, JSC of IDGC of Centre and Volga Region, JSC • 2007–current Deputy General Director for Development and Ser- Stake in the issuer’s authorized capital: none vices Selling of IDGC of Centre and Volga Region, JSC Participation in management bodies of other legal entities: none Stake in the issuer’s authorized capital: none

Participation in management bodies of other legal entities: Member of the Board of Directors of Svet, JSC; “Energobalance-Center” Ltd. 51

Alexander Vasilievich Prepodobny Vladimir Viktorovich Shitts Deputy General Director for safety IDGC of Cen- Deputy General Director for Capital Construc- tre and Volga Region, JSC tion of IDGC of Centre and Volga Region, JSC

Year of birth: 1954 Year of birth: 1972

Education: Education: higher vocational, Gorki Higher School of the Minis- higher vocational, Omsk State Technical University; try of Internal Affairs of the USSR; qualification: ju- qualification: electric power supply, special qualifica- risprudence; special qualification: lawyer, candidate tion: engineer — electrician of law sciences (jurisprudence) Positions for the past 5 years: Positions for the past 5 years: • 1998–05.2007 • 2003–2004 foreman of the first group, Lead Engineer, Chief of Acting First Deputy Chief of Central Administrative Industrial and Technical Department, Chief of Indus- Board of Gosnarkokontrol (State Drug Enforcement trial and Technical Service, Deputy Director for Fu- Authorities) of Russia in Volga region Federal dis- ture Development of Surgut Electric Grids branch trict of JSC “Tiumenenergo” • 01.2004–09.2004 • 06.2007–08.2007 First Deputy Chief of Central Administrative Board Deputy Director for Investments and Capital Con- of Gosnarkokontrol (State Drug Enforcement struction of JSC “Tiumenenergo” Authorities) of Russia in Volga region Federal district • 08.2007–current • 2004–2008 Deputy General Director for Capital Construction Deputy Chief of Administrative Board in Volga region of IDGC of Centre and Volga Region, JSC Federal district No.1 of SDEA Department of Rus- sia Stake in the issuer’s authorized capital: none • 02.2008–current Deputy General Director for Safety of IDGC of Cen- Participation in management bodies tre and Volga Region, JSC of other legal entities: none

Stake in the issuer’s authorized capital: none

Participation in management bodies of other legal entities: none 52 Corporate Governance

Evgeny Vladimirovich Nikitushkin Chief of Exchequer of IDGC of Centre and Volga Region, JSC

Year of birth: 1977

Education: higher vocational, St. Petersburg State Technical University; qualification: finance and credit, special qualification: economist

Positions for the past 5 years: • 2003–2005 Chief of the Sector of Charges, Chief of the Division for the Budgetary Control of the Exchequer, Chief of the Exchequer of JSC “Ural Power Management Company” • 2005–2008 Chief of the Exchequer of JSC “Tiumenenergo” • 03.2008—current Chief of the Exchequer IDGC of Centre and Volga Region, JSC

Stake in the issuer’s authorized capital: none

Participation in management bodies of other legal entities: none 53

General Director

Evgeny Viktorovich Ushakov The criteria of determining and amount of remunera- Chairman of the Management Board, General Di- tion of General Director are fixed in the labor contract rector of IDGC of Centre and Volga Region, JSC signed according to the Charter and the Regulations for Financial Stimulation of General Director of IDGC Year of birth: 1964 of Centre and Volga Region, JSC.

Education: Awarding of General Director is carried out follo- higher, Chelyabinsk Polytechnical Institute named wing the results of execution for the reporting peri- after Lenin Komsomol; qualification: engineer — ods (quarter and year) of key performance indica- electrician tors determined by the Board of Directors.

Positions for the past 5 years: Within 2008 the Board of Directors took a number • 2002–2005 Acting Chief Engineer, Chief Engineer, Chief Engi- of decisions on stimulation of the Company Ge- neer — First Deputy General Director, First Deputy neral Director according to subitem 33 of item 15.1 General Director — Executive Director of JSC “Ural of article 15 of the Company Charter. In particular, Power Management Company” the decisions on awarding General Director for exe- • 2005–2007 cution of the action plan on the Company reorgani- First Deputy General Director of IDGC of Urals zation, and for successful preparation and passing and Volga, JSC of the 2007/2008 autumn and winter period were • 28.06.2007–current taken. Besides General Director was officially General Director of IDGC of Centre and Volga Re- thanked for the excellent organization of sports gion, JSC work.

Stake in the issuer’s authorized capital as of 31.12.2008: 0.0827%

Participation in management bodies of other legal entities: none

For his achievements in development of the power industry, E. V. Ushakov was awarded the honorary title “Deserved Employee of UES of Russia”; he was awarded the Certificate of Honor of the Ministry of Industry and Power Sector of the Russian Federa- tion. On 28 October 2008 under the Order of Ministry of Industry and Power Sector of the Russian Federa- tion, E. V. Ushakov was awarded the title “Honorary Energy Specialist”. 54 Corporate Governance

Audit Commission Structure of the Audit Commission The general data on the Audit Commission Up to 30 May 2008, the following structure The Audit Commission is a constantly operating con- of the Audit Commission of IDGC of Centre and trol body of the Company which carries out a regular Volga Region, JSC, operated, which was ap- control over the Company financial and economic proved by Order of RAO “UES of Russia” No.193r activities, its separate divisions, officials of con- as of 22 June 2007 (positions as of the moment trols and structural divisions of the executive body of appointment): for their compliance with the legislation of the Rus- sian Federation, the Company Charter and its in- Irina Vasilievna Mikhno Deputy Chief of the Internal Audit Department — ternal documents. The Audit Commission operates Chief of the Division of RAO “UES of Russia” in interests of the Company shareholders and in its activities is accountable to the Company General Sergey Olegovich Erdenko Shareholders Meeting. Project Manager of the Group for Provision of Share- holders Rights in the Process of the Company Re- The main tasks of the Company Audit Commission organization of the Project Center of RAO “UES are: of Russia”

1. Control over the Company financial and economic Anatoly Valerievich Baitov activities; Head of the Financial Control and Internal Audit Di- rectorate of JSC “UES FGC” 2. Ensuring of supervision over conformity of financial and economic operations performed by the Com- Marina Alekseevna Lelekova pany with the legislation of the Russian Federation Chief Specialist of the Financial Control and Internal and the Company Charter; Audit Directorate of JSC “UES FGC”

3. Realization of an independent estimation of the in- Elena Alexandrovna Kabizskina formation on the financial standing of the Company. Chief Specialist of the Financial Control and Internal Audit Directorate of JSC “UES FGC” For the reporting period, the work of the Audit Com- mission was carried out by two structures.

According to the Company Charter, the quantitative structure of the Company Audit Commission is five people. 55

The current structure of the Audit Commission elected at the annual General Shareholders Meeting on 30 May 2008:

Irina Vasilievna Mikhno Anatoly Valerievich Baitov Chairperson of the Audit Commission Year of birth: 1977 Year of birth: 1957 Education: Higher vocational Education: Higher vocational Positions for the past 5 years: Positions for the past 5 years: 2004–current • 2004–2008 Head of the Financial Control and Internal Audit Di- Deputy Chief of the Internal Audit Department – rectorate of JSC “UES FGC” Chief of the Division of RAO “UES of Russia” • 07.2008–current Denis Stanislavovich Kolyago Deputy Chief of the Internal Audit Department of JSC “IDGC Holding” Year of birth: 1980 Education: Higher Positions for the past 5 years: Sergey Olegovich Erdenko • 2003–2008 Year of birth: 1972 Head of the Financial Management of the Interre- Education: Higher vocational gional Distribution Grid Complexes Management Positions for the past 5 years: Center of JSC “UES FGC” • 2001–2008 • 07.2008–current Chief Expert of the Corporate Governance and Deputy Chief of the Financial Department — Chief Shareholder Relations Department of the Corporate of the Division of JSC “IDGC Holding” Center of RAO “UES of Russia” • 07.2008–10.2008 Olga Arkadievna Viktorova Project Manager of the Group for Provision of Share- holders Rights in the Process of the Company Re- Year of birth: 1957 organization, the Project Center of JSC “IDGC Hold- Education: Higher vocational ing” Positions for the past 5 years: • 2004–2005 Deputy General Director for Economy Issues of JSC “Kaluga Energy Management Company” • 2005–2007 Deputy Director of the Western branch of IDGC of Centre and North Caucasus, JSC • 2007–current Chief of the Internal Control and Audit Department of IDGC of Centre and Volga Region, JSC 56 Corporate Governance

According to the Regulations “Payment of Remu- of achievement of goals of effective and productive neration and Compensation to Audit Commission use of the Company resources, safety of assets, ob- Members of IDGC of Centre and Volga Region, servance of legislative requirements and represen- JSC” approved by the annual General Shareholders tation of the authentic reports. Meeting (Minutes No.1 as of 30 May 2008), a lump- sum remuneration is paid to a member of the Audit The system of the internal control represents a set Commission for participation in a check (audit) of the of subjects of the internal control, functions and Company financial and economic activities in the procedures of the internal control fixed by the le- amount equivalent to twenty five minimal monthly gislation of the Russian Federation, the Charter wage rates of a worker of the first category deter- and other internal documents of the Company, and mined by the branch tariff agreement in the electric providing achievement of the purposes of the in- power complex of the Russian Federation (herein- ternal control, and is considered as a component after referred to as the Agreement) for the period of of the Company control system allowing the Com- carrying out of the check (audit), taking into account pany governance bodies to make the most effec- the indexation fixed by the Agreement. The amount tive decisions. of the compensations paid to Chairman of the Com- pany Audit Commission increases by 50%. The subjects of the Company internal control are: • Board of Directors; Payment of remuneration and compensation • Committee for Audit under the Board of Directors; to the involved specialists (experts) who are not • General Director; members of the Company Audit Commission • Structural divisions and other bodies of the Com- is made by the Company on the basis of contracts pany, which are authorized to carry out the internal signed with them. The terms of such contracts are control. approved by the Company Board of Directors. The Board of Directors determines the policy of the In 2008, a total of RUR 484,398 of remuneration and internal control and carries out an estimation of ef- compensation were paid to the members of the Au- ficiency of its procedures. dit Commission under approved Order of RAO “UES of Russia” No.193-r as of 22 June 2007. The Committee for Audit under the Board of Direc- tors carries out the general estimation of efficiency A total of RUR 399,668 of remuneration were paid to of procedures of the internal control in the Company members of the Audit Commission elected at the an- (including on the basis of statements and reports nual General Shareholders Meeting on 30 May 2008. of the Company division which is authorized to carry out the internal control/audit). Payment of compensations was carried out by money resources. The General Director bears the responsibility for functioning of procedures of the Company internal No transactions were completed between the control. Company and the persons who are a part of the Audit Commission of IDGC of Centre and Volga Differentiation of the competences of the above-sta- Region, JSC, during the reporting period; no legal ted bodies with regard to the internal control is car- proceedings were instituted as well. ried out by the Company internal documents.

Systems of the Internal Control The Company Internal Control and Audit Depart- The Company internal control is understood as the ment operates to ensure a guarantee of achieve- process aimed to maintain a reasonable guarantee ment of productivity and efficiency of financial 57

and economic activities, safety of assets, reliabi- Committee for Audit under the Board of Directors lity and truthfulness of all kinds of reports, obser- of IDGC of Centre and Volga Region, JSC (Minutes vance of laws in effect, norms, rules and stan- No.19 as of 31 July 2008) were approved. dards. The competence of Committee for Audit includes: • control over carrying out of yearly independent audit The Company internal document determining the of the consolidated financial reports and the Com- purposes and procedure of carrying out of the inter- pany accounting (financial) reports; nal control, as well as bodies and persons respon- • selection of nominees of the Company external au- sible for its realization, is the Regulations for the ditors, estimation of their skills, quality of work and procedures of internal control of IDGC of Centre observance of requirements of independence by and Volga Region, JSC, approved by the decision them and their submitting approval by the Board of of the Board of Directors of IDGC of Centre and Vol- Directors, drawing up of the reports about nominees ga Region, JSC, as of 25 December 2008 (Minutes of the auditors presented by the third parties; No.30). • control over systems of the internal control of the Company in the field of book keeping and finance According to Regulations for The Company Internal and over activity of the Company internal audit ser- Control and Audit Department, the major functions vice; of the Department are the following: • consideration of reports of independent apprai- • control over accounting and financial informa- sers about carrying out of an estimation of pro- tion provided by departments of executive body, perty and obligations of the Company at fulfillment branches and offices of the Company including by the Company of large transactions and other expertise of means methods used for identifica- transactions, the decision on which fulfillment is tion, estimation, classification of such information taken by the Board of Directors, at transfer of the and made on the base of its reporting, and special rights to property of the Copmany in accordance examination of separate articles of the reporting in- with another way; cluding detailed control of operations and account • other issues on instructions of the Company Board balance; of Directors. • control over observation of law and internal documents of the Company and implementation of ma- The Committee for Audit coordinates an annual nagement bodies decisions and orders of adminis- (quarter) action plan of checks developed by the In- tration of the Company; ternal Control and Audit Department. • check of availability, state, provision of safety and use of the Company’s property; The Internal Control and Audit Department annually • special investigation of separate cases such as sus- informs the Committee for Audit under the Company picion in abuse; Board of Directors on the infringements revealed • development and submitting of conclusions on as a result of checks in financial and economic ac- examinations, suggestions on elimination of disco- tivities, including on the facts of non-compliance, vered violations and disadvantages and recommen- inadequate (inefficient) compliance with the internal dations on management effectiveness rise to ma- documents approved in the Company. nagement bodies of the Company in fixed order; • implementation of other functions provided for by internal documents of the Company.

On 31 July 2008, according to the decision of the Company Board of Directors, the Committee for Audit was established and the Regulations for the 58 Corporate Governance

Information on the Company’s Stake in the Share Capitals of Commercial Organizations and the Amount of Voting Shares of Joint-Stock Companies Owned by the Company

Subsidiary economic entities of IDGC of Centre and Volga Region, JSC (as of December 31, 2008)

No. Full and short name of the company Major activities Share capital, Sole executive Factual address RUR body Date of the company’s registration

1. Svet, closed joint-stock company (Svet, JSC) Electricity transmission 2,402,883 Director — Valery 16, Pobedy St, Sharanga village, Nizhniy Alexandrovich Novgorod Region, Russian Federation Smirnov

6 March,1998

2. Berendeyevskoye, open joint-stock company Production, processing and 54,670,600 General Director — (Berendeyevskoye, JSC) sale of agricultural products Alexander Viktorovich Berendeyevka village, Lyskovo district, Nizhniy Rodionov Novgorod Region, Russian Federation

6 February, 2004

3. Luchinskoye Agricultural Enterprise, open Production, processing and 58,630,410 General Director — joint-stock company (Luchinskoye Agricultural sale of agricultural products Nadezhda Enterprise, JSC) Leonidovna Artemieva Luchinskoye village, Sobinka district, Vladimir Region, Russian Federation

27 June, 2003

4. Motor Vehicle Plant, Joint-Stock Company Provision of transport and 205,063,407 General Director — (MVP, JSC) warehouse services, service Dmitry of vehicles, intermediary serv- Vassilievich 50, Yuzhnaya St, Orichi village, Orichi district, ices, repair and maintenance Katynov Kirov Region, Russian Federation of vehicles, reequipment and evaluation of vehicles 14 October, 2003

continuation 59

Subsidiary economic entities of IDGC of Centre and Volga Region, JSC (as of December 31, 2008)

No. Full and short name of the company Major activities Share capital, Sole executive Factual address RUR body Date of the company’s registration

beginning

5. Energetik Sanatorium-Preventorium open Provision to the population of 46,953,097 General Director — joint-stock company (Energetik Sanatorium- medical treatment and rec- Nataliya Preventorium, JSC) reational services, boarding Ivanovna services Popkova 10, Aviatsionnaya St, Izhevsk, the Udmurtian Republic, Russian Federation

10 January, 2003

Stake of IDGC of Centre and Volga Region, JSC, in the share capital of all subsidiary economic entities — 100%

Dependent economic entity of IDGC of Centre and Volga Region, JSC (as of December 31, 2008)

No. Full and short name of the company Major activities Share capital, Sole executive RUR body Factual address Date of the company’s registration

1. Tulenergokomplekt, open joint-stock company Inventories provision, mainte- 83,333,000 Director — (Tulenergokomplekt, JSC) nance of vehicles, transport Valery services Alexeyevich 101A, Timiryazeva St, Tula, Russian Federation Abramov

19 June, 2002

Stake of IDGC of Centre and Volga Region, JSC, in the share capital of dependent economic entity is 50% and equals the stake of voting shares of IDGC of Centre and Volga Region, JSC 60 Corporate Governance

Information on the stake of IDGC of Centre and Volga Region, JSC (to 50%) in authorized capitals of joint-stock companies (as of December 31, 2008)

No. Full and short name of the company Major activities Stake of IDGC of Amount of voting Centre and Volga shares of joint- Factual address Region, JSC, in stock company Date of the company’s registration the share capital owned by IDGC of of joint-stock Centre and Volga company Region, JSC

1. Mordovian Hydro Power Station Concern, Planning and surveying, 13.95% 13.95% open joint-stock company (JSC “Mordovian production and commercial Hydro Power Station Concern”) activities under the project of Mordovian Hydro Power Sta- 64, Nevsky St, Saransk, Mordovian Repub- tion construction lic, Russian Federation

27 August 1998

2. Myza Nizhniy Novgorod Regional Trade Provision of work of the 9.55% 9.55% Centre, open joint-stock company (JSC regional trading centre on a “Myza Nizhniy Novgorod Regional Trade commercial basis Centre”)

48-9, Iliinskaya St, Nizhniy Novgorod, Rus- sian Federation

31 October 1996

3. Ivanovo Hydro Power Station Test Bench, Execution of presentation 1.38% 1.38% open joint-stock company (JSC “Stend”) and acceptance tests of trial industrial and serial gas turbine 1, Komsomolskaya St, Komsomolsk, engines GTD-110 and their Ivanovo Region, Russian Federation modifications, production and sale of electric energy, execu- 4 November 2004 tion of installation, starting-up and adjustment works of GTD- 110 gas turbine engines and their modifications

4. TGKС-11 Holding, open joint-stock com- Supply (sale) of electric and 0.0149% 0.0166% pany (JSC “TGC-11”) thermal energy, acceptance (purchase) of electric and ther- 101, bldg 3, Vernadsky avenue, Moscow, mal energy from the wholesale Russian Federation electricity (capacity) market, production of electric and 1 July 2008 thermal energy

continuation 61

Information on the stake of IDGC of Centre and Volga Region, JSC (to 50%) in authorized capitals of joint-stock companies (as of December 31, 2008)

beginning

5. RAO Eastern Energy Systems, open joint- Supply (sale) of electric and 0.0048% 0.0051% stock company (JSC “RAO Eastern Energy thermal energy, acceptance Systems”) (purchase) of electric and thermal energy from the wholesale 28, Shevchenko St, Blagoveschensk, Amur electricity (capacity) market, Region, Russian Federation production of electric and thermal energy 1 July 2008

6. IDGC Holding, open joint-stock company Execution of the powers of 0.0048% 0.0051% (JSC “IDGC Holding”) the sole executive body in joint-stock and other compa- 5A, Akademika Chelomeya St, Moscow, nies in the order stipulated in Russian Federation the legislation and concluded contracts 1 July 2008

7. First Power Generation Company of the Production of electric and 0.004% 0.004% Wholesale Electricity Market, open joint- thermal energy, supply (sale) stock company (JSC “WGC-1”) of electric and thermal energy, acceptance (purchase) of 1, bldg 1, Odesskaya St, Tyumen, Tyumen electric and thermal energy Region, Russian Federation from the wholesale electricity (capacity) market 23 March 2005

8. Sixth Power Generation Company of the Production of electric and 0.004% 0.004% Wholesale Electricity Market, open joint- thermal energy, supply (sale) stock company (JSC “WGC-6”) of electric and thermal energy, acceptance (purchase) of 49, Bolshaya Sadovaya St, Rostov-on-Don, electric and thermal energy Russian Federation from the wholesale electricity (capacity) market 17 March 2005

continuation 62 Corporate Governance

Information on the stake of IDGC of Centre and Volga Region, JSC (to 50%) in authorized capitals of joint-stock companies (as of December 31, 2008)

beginning 9. INTER RAO UES, open joint-stock (JSC Production of electric and 0.0038% 0.0038% “INTER RAO UES”) thermal energy, provision of working capacity of thermal 12, entrance 7, Krasnopresnenskaya em- networks, supply (sale) of bankment, Moscow, Russian Federation electric and thermal energy

1 November 2002

10. RusHydro, open joint-stock company (JSC Creation of conditions for 0.003% 0.003% “RusHydro”) effective functioning of the wholesale electricity market, 51, Respubliki St, Krasnoyarsk, Krasnoyarsk efficient exploitation and cen- Territory, Russian Federation tralised management of hydro energy facilities 26 December 2004

11. Second Power Generation Company of the Production of electric and 0.003% 0.003% Wholesale Electricity Market, open joint- thermal energy, supply (sale) stock company (JSC “WGC-2”) of electric and thermal energy, acceptance (purchase) of Solnechnodolsk village, Izobilny district, electric and thermal energy Stavropol Territory, Russian Federation from the wholesale electricity (capacity) market 9 March 2005

12. Fourth Power Generation Company of the Production of electric and 0.003% 0.003% Wholesale Electricity Market, open joint- thermal energy, supply (sale) stock company (JSC “WGC-4”) of electric energy, in particular, on the wholesale electricity (ca- 23, bldg 34, Energostroitelei St, Surgut, pacity) market, supply (sale) of Khanty-Mansiisk autonomous district — thermal energy and infrastruc- Yurga, Russian Federation tural resources

4 March 2005

13. Fifth Power Generation Company of the Production of electric and 0.0024% 0.0024% Wholesale Electricity Market, open joint- thermal energy, supply (sale) stock company (JSC “WGC-5”) of electric and thermal energy,

continuation 63

Information on the stake of IDGC of Centre and Volga Region, JSC (to 50%) in authorized capitals of joint-stock companies (as of December 31, 2008)

beginning

38, Lenin passage, Sverdlov Region, Rus- supply (sale) of electric energy, sian Federation in particular, on the wholesale electricity (capacity) market 27 October 2004

14. Territorial Generation Company No.5, open Supply (sale) of electric and 0.0023% 0.0023% joint-stock company (JSC “TGC-5”) thermal energy, acceptance (purchase) of electric and ther- 4/4, Yakovlev avenue, Cheboxary, Chuvash mal energy from the wholesale Republic electricity (capacity) market, production of electric and 22 March 2005 thermal energy

15. Territorial Generation Company No.1 Supply (sale) of electric and 0.002% 0.002% (JSC “TGC-1”) thermal energy, acceptance (purchase) of electric and ther- 1, Marsovo Pole St, St. Petersburg, Russian mal energy from the wholesale Federation electricity (capacity) market, production of electric and 25 March 2005 thermal energy

16. Mosenergo, open joint-stock company of Production of electric and 0.002% 0.002% energy industry and electrification (JSC thermal energy, supply (sale) “Mosenergo”) of electric and thermal energy

8, Raushskaya embankment, Moscow, Rus- sian Federation

11 October 2002

17. Territorial Generation Company No.6, open Supply (sale) of electric and 0.002% 0.002% joint-stock company (JSC “TGC-6”) thermal energy, acceptance (purchase) of electric and ther- 117, Maxim Gorky St, Niznhy Novgorod, mal energy from the wholesale GSP-62, Russian Federation electricity (capacity) market, production of electric and 27 April 2005 thermal energy continuation 64 Corporate Governance

Information on the stake of IDGC of Centre and Volga Region, JSC (to 50%) in authorized capitals of joint-stock companies (as of December 31, 2008)

beginning 18. Volga Territorial Generating Company, open Production of electric and 0.002% 0.002% joint-stock company (JSC “Volga TGC”) thermal energy, supply (sale) of electric and thermal energy 15, Mayakovsky St, Samara, Russian Federation

1 August 2005

19. TGC-8 Southern Generation Company, Production of electric and 0.002% 0.002% open joint-stock company (JSC “TGC-8 thermal energy, supply (sale) SGC”) of electric and thermal energy, acceptance (purchase) of 32, Krasnaya embankment, Astrakhan, electric and thermal energy Russian Federation from the wholesale electricity (capacity) market 22 March 2005

20. Territorial Generation Company No.9, open Supply (sale) of electric and 0.002% 0.002% joint-stock company (JSC “TGC-9”) thermal energy, acceptance (purchase) of electric and ther- 48, Komsomolsky avenue, Russian Federa- mal energy from the wholesale tion electricity (capacity) market, production of electric and 9 December 2004 thermal energy

21. Territorial Generation Company No.10, Production of electric and 0.002% 0.002% open joint-stock company (JSC “TGC-10”) thermal energy, supply (sale) of electric and thermal energy, 6, Brodokalmak highway, Chelyabinsk, Rus- acceptance (purchase) of sian Federation electric and thermal energy from the wholesale electricity For the moment of approval of the present (capacity) market Annual Report by the General Sharehol- ders Meeting, IDGC of Centre and Volga Region, JSC did not own the shares of JSC “TGC-10”

1 July 2005

continuation 65

Information on the stake of IDGC of Centre and Volga Region, JSC (to 50%) in authorized capitals of joint-stock companies (as of December 31, 2008)

beginning

22. Kuzbass open joint-stock company of Supply (sale) of electric ener- 0.002% 0.002% energy industry and electrification (JSC gy, steam and hot water (ther- “Kuzbassenergo”) mal energy) under set tariffs according to dispatch schedules 2, Brilliantovaya St, Barnaul, Altai Territory, of electric and thermal loadings; Russian Federation production of electric energy; production of steam and hot 30 December 1993 water (thermal energy)

23. Yenisei Territorial Generation Company, Supply (sale) of electric 0.002% 0.002% open joint-stock company (TGC-13) energy, steam and hot water (JSC “Yenisei TGC (TGC-13)”) (thermal energy) under set tariffs according to dispatch 144A, Bograda, Krasnoyarsk, Krasnoyarsk schedules of electric and Territory, Russian Federation thermal loadings; production of electric energy; production of 1 July 2005 thermal energy

24. Third Power Generation Company of the Production of electric and 0.002% 0.002% Wholesale Electricity Market, open joint- thermal energy, supply (sale) stock company (JSC “WGC-3”) of electric and thermal energy, acceptance (purchase) of 28, Pyatidesyatiletiya Oktyabrya passage, electric and thermal energy Ulan-Ude, Russian Federation from the wholesale electricity (capacity) market 23 November 2004

25. Territorial Power Generation Company Supply (sale) of electric and 0.00183% 0.00185% No.2, open joint-stock company (JSC thermal energy, acceptance “TGC-2”) (purchase) of electric and thermal energy from the wholesale 42, Oktyabrya passage, Yaroslavl, Yaroslavl electricity (capacity) market, Region, Russian Federation production of electric and thermal energy 19 April 2005

continuation 66 Corporate Governance

Information on the stake of IDGC of Centre and Volga Region, JSC (to 50%) in authorized capitals of joint-stock companies (as of December 31, 2008)

beginning

26. United Energy System Federal Grid Com- Transmission and distribution 0.0018% 0.0018% pany, open joint-stock company (JSC “UES of electric energy, connection FGC”) to electric networks

5A, Akademika Chelomeya St, Moscow, Russian Federation

20 August 2002

27. Territorial Power Generation Company Production of electric and 0.00166% 0.00172% No 4, open joint-stock company (JSC thermal energy, supply (sale) “TGC-4”) of electric and thermal energy, acceptance (purchase) of 99, Timiryazev St, Tula, Tula Region, Rus- electric and thermal energy sian Federation from the wholesale electricity (capacity) market 20 April 2005

28. Territorial Power Generation Company Supply (sale) of electric and 0.0015% 0.0015% No.14, open joint-stock company (JSC thermal energy, acceptance “TGC-14”) (purchase) of electric and thermal energy from the wholesale 1, Lazo St, Chita, Russian Federation electricity (capacity) market, production of electric and 7 December 2004 thermal energy 67

Information on the stake of IDGC of Centre and Volga Region, JSC in the limited liability company (as of December 31, 2008)

1. Eurasian Insurance Company, limited Insurance activities 18.68% 18.68% liability company (“Eurasian Insurance Company” ltd)

46, Klubnaya St, Izhevsk, Udmurtian Re- public, Russian Federation

28 February 1996

Information on Participation • “Association of Business Managers” Kirov Region in Non-commercial Organizations Employers Association – Non-Commercial Organi- zation; IDGC of Centre and Volga Region, JSC, became an • Vyatka Chamber of Trade; owner of shares of the following non-commercial or- • non-commercial education organizations. ganizations in 2008: • “Innovation in Electric Power Industry” Non-com- More detailed information on owing of non-commer- mercial Partnership; cial companies shares by IDGC of Centre and Volga • non-state Electric Industry Pension Fund; Region, JSC is provided in Appendix No.6 to this • All Russian Industry Association of Electric Power Annual Report. Employers; • “United Energy System Scientific and Technical Council” Non-commercial Partnership; • “Council of Electric Power Veterans” Non-commer- Information Disclosure cial Partnership; The Company discloses the information according • “Vladimir Region Association of Employers and to the requirements of the legislation of the Russian Manufacturers” Regional Employer Association; Federation: FL “On Joint-stock Companies” No.208- 68 Corporate Governance

FL as of 26 December 1995; FL “About the Securi- kets Service of the Russian Federation, publishes ties Market” No.39-FL as of 22 April 1996; Regu- the information on the information resource — news lations for Information Disclosure by the Issuers of feed (Interfax), on the Company Internet website Equity Securities approved by Order of FFMS of the and in Izvestiya newspaper, in the cases stipulated Russian Federation as of 10 October 2006 No.06- by the Company Charter. 117/pz-n (hereinafter referred to as the Re-gulations for Information Disclosure) (in current versions) and other normative legal enactments of the Russian Besides the information subject to obligatory disclo- Federation. sure, the Company discloses additional information on the corporate website on a voluntary basis. In Main principles of information disclosure on the order to increase a level of openness and trust to Company and its activities are: the Company, protection of the rights and legitimate • regularity and efficiency; interests of its shareholders, providing of an access • availability of the information; to full and trustworthy information about the Com- • completeness and reliability of the disclosed infor- pany activities, on 18 February 2008 the Company mation; Board of Directors approved the following internal • observance of a reasonable balance between the documents regulating the procedure of disclosing Company openness and observance of its commer- and use of the information: Corporate Governance cial interests. Code, Regulations for Information Policy, Regula- tions for Insider Information. The texts of the Com- The information which is subject to obligatory dis- pany internal documents are available on the Com- closing is disclosed by the Company on the corpo- pany website. rate Internet website at http://www.mrsk-cp.ru: the annual report, the annual accounting reports, the Internal documents fix the list of the information charter and internal documents of the Company, opened by the Company on a voluntary basis: the information on affiliates and other information stipu- website, including, presents key events around and lated by the Regulations for Information Disclosure. inside the Company, data on stages of reorganization and main corporate events, Company main In connection with the fact that on 21 February 2008 industrial, financial and economic indicators, key the Company registered the prospectus for securities, events of realization of the investment program, full beginning with the 1st quarter 2008 the Company dis- information for the Company clients on the services closes the information in the form of quarterly reports of the electric power transmission and technological of the issuer of securities, in the form of statements on connection, and other information. material facts, information on facts which may render a material influence on the value of securities of the The Company website provides an opportunity joint-stock company according to the requirements of of feedback on all the issues interesting for share- the current legislation of the Russian Federation. holders, investors and clients.

The Company in due time provides the reporting and information materials to the Federal Financial Mar- 69

Securities and Share Capital

Share Capital The purpose of the issue was converting of the shares of JSC “Vladimirenergo”, JSC “Iv- During the first issue in 2007, the Company issued energo”, JSC “Kalugaenergo”, JSC Kirovenergo”, 100,000,000 (one hundred million) pieces of ordi- JSC “Marienergo”, JSC “Nizhnovenergo”, JSC nary shares, the par value of RUR 0.10 (ten ko- “Ryazanenergo”, JSC “Tulenergo”, JSC “Udmur- pecks). The issue of securities received the state tenergo” into additional ordinary registered shares registration number 1-01-12665-Е as of 20 August of IDGC of Centre and Volga Region, JSC, for re- 2007. alization of reorganization of the specified companies in the form of connection to IDGC of Centre In 2008 the Company placed 14 additional issues and Volga Region, JSC. of ordinary nominal uncertificated shares of IDGC of Centre and Volga Region, JSC, for a total of 112,597,817,043 pieces, the par value of 10 kopecks.

Information on additional issues of ordinary nominal uncertificated shares of IDGC of Centre and Volga Region, JSC

Shares to be converted Number of additional issue Number of shares, (merged company) pcs

JSC “Vladimirenergo” ordinary shares 1-01-12665-E-001D 9,933,178,038

JSC “Ivenergo” ordinary shares 1-01-12665-E-002D 5,238,075,351 preferred shares 1-01-12665-Е-010D 665,242,563

JSС “Kalugaenergo” ordinary shares 1-01-12665-E-003D 10,154,553,057

JSC “Kirovenergo” ordinary shares 1-01-12665-E-004D 8,579,998,539 preferred shares 1-01-12665-Е-011D 2,574,822,120

JSC “Marienergo” ordinary shares 1-01-12665-Е-005D 4,095,509,962 preferred shares 1-01-12665-Е-012D 327,892,112

continuation 70 Corporate Governance

Information on additional issues of ordinary nominal uncertificated shares of IDGC of Centre and Volga Region, JSC

Shares to be converted Number of additional issue Number of shares, (merged company) pcs

beginning JSC “Nizhnovenergo” ordinary shares 1-01-12665-Е-006D 31,184,103,348 preferred shares 1-01-12665-Е-013D 7,749,197,134

JSC “Ryazanenergo” ordinary shares 1-01-12665-Е-007D 13,343,991,837

JSC “Tulenergo” ordinary shares 1-01-12665-Е-008D 7,567,715,086

JSC “Udmurtenergo” ordinary shares 1-01-12665-Е-009D 9,990,288,421 preferred shares 1-01-12665-Е-014D 1,193,249,475

On 1 July 2008, FFMS of Russia cancelled the in- thousand, forty three) pieces of ordinary shares dividual numbers assigned to additional share is- of RUR 0.10 (ten kopecks) par value. sues of IDGC of Centre and Volga Region, JSC. As a result of cancellation of individual numbers The Company did not place preferred shares. (codes), the shares of the Company additional issues are united with the main issue (state registration number — 1-01-12665-E).

On 31 December 2008 the share capital of IDGC of Centre and Volga Region, JSC, equals RUR 11,269,781,704.30 (eleven billion, two hundred and sixty nine million, seven hundred and eighty one thousand, seven hundred and four point three naught) and is divided into 112,697,817,043 (one hundred and twelve billion, six hundred and ninety seven million, eight hundred and seventeen 71

Structure of the share capital of IDGC of Centre and Volga Region, JSC (as of December 31, 2008)

Type of shareholder Number of holders % of the total number of shares

Owners – physical persons 20,011 (including 26 non-residents) 4.9

Owners – legal entities 174 (including 14 non-residents) 1.6

Nominal holders 17 93.5

Trustees 1 < 0.001

Total 20,203 100.0

Largest owners of shares of IDGC of Centre and Volga Region, JSC (as of December 31, 2008)

No. Type Full (shortened) firm name Location % of the total number of shares

1. O Joint-Stock Company “IDGC Holding” 5a Akademika Chelomeya Street, 50.4 Moscow, Russian Federation 117630

2. NH Closed Joint-Stock Company “Depository 31 B, Shablovka street, Moscow, 24.6 Clearing Company” (DCC) Russian Federation 115162

3. NH Deutsche Bank Limited Liability Company 82, bld.2, Sadovnicheskaya street, 10.8 (Deutsche Bank Ltd.) Moscow, Russian Federation 115035

4. NH Non-for-Profit Partnership “National 1/13, bld.4, Sredny Kislovsky Lane, 5.5 Depository Center” (NP NDC) Moscow, Russian Federation 125009

* O - owner, NH- nominal holder 72 Corporate Governance

History of Floatation of Shares of • 18 September IDGC of Centre and Volga Region, Procedure of listing on MICEX and RTS stock ex- JSC, on the Stock Exchange changes, and inclusion of shares in “B” quotation list. • 29 February • 27 October Merging of 9 regional grid companies. Shares of the Company are included in MICEX PWR index calculation. • 27 March State registration of reports on results of additional As a result of the reform of IDGC of Centre and Vol- share issues. ga Region, JSC, by merging of the regional grid companies, the share market received the share • 7 April with the features meeting the level of the best rep- Start of trading in shares of IDGC of Centre resentatives of electric power grid sector of the Rus- and Volga Region, JSC, on MICEX and RTS sian securities market. stock exchanges (their inclusion in the “non-listed securities”/”securities admitted to floatation In the first 6 months of trading in shares of IDGC but not included in Quotation Lists”). of Centre and Volga Region, JSC, in order to increase the Company liquidity, market makers • 30 April were involved: Turnover of shares of IDGC of Centre and Volga • On JSC “MICEX Stock Exchange” — Brokerage Region, JSC, for the first month on MICEX stock ex- House “Otkrytie”; change was RUR 17.3 million. • On JSC “Russia Trading System Stock Exchange”— JSC “Investment Company “Troika Dialog”. • 1 July Uniting of the main (first) and additional issues In 2008, against the background of universal finan- of shares of IDGC of Centre and Volga Region, cial crisis, the market capitalization of IDGC of Cen- JSC. tre and Volga Region, JSC, following the general tendency of the share market, showed negative dy- • 15 July namics. The value of the share of IDGC of Centre and Shares of the Company were included in calculation Volga Region, JSC, in 2008 decreased by 73%. of the “MICEX SC” index calculation.

• 31 August Turnover of shares of IDGC of Centre and Volga Re- gion, JSC, exceeded RUR 272.8 million for August on MICEX stock exchange.

• 15 September Shares of the Company are included in the calculation of “RTS-2” и “RTS-electric power industry” indices. 73

Capitalization in 2008

RUR billion

0 April May June July August September October November December

In 2008 the turnover of the shares of IDGC of Centre pieces for a total amount of RUR 827,448.20 thou- and Volga Region, JSC, at the stock exchange of the sand, the ceiling price is RUR 0.4; the floor price MICEX Stock Exchange equaled 4,773,129,200 is RUR 0.049.

Dynamics of the turnover of the trading in shares at the MICEX stock exchange in 2008 million pieces 1,547.0 1,600 1,194.0

1,200 941.0

800 481.0 214.0 135.6 130.7 400 73.6 57.5

April May June July August September October November December 74 Corporate Governance

In 2008 a large-scale work was done which will be • The V Federal Investment Forum “Analysis of Con- a basis for a growth of the Company market capitali- sequences of the Crisis and Measures on Resto- zation in the future: ration of the Market”, 18–19 November 2008, Mos- The “Institute of Professional Directors” Non-for cow (Russia); organizers: Council of Federation Profit Organization in August-September held of the Federal Assembly of the Russian Federation, an estimation of quality of the corporate governance “Securities Market” magazine with the assistance of: practice of IDGC of Centre and Volga Region, JSC, the Ministry of Economic Development of the Rus- and on 27 September 2008 awarded a national cor- sian Federation, the Ministry of Finance of the Rus- porate governance rating “6 +” “Developed Corpo- sian Federation, FFMS of Russia. rate Governance Practice” to the Company. The Company makes it aim to create the liquid On 25 June 2008, the Company Board of Directors share market of IDGC of Centre and Volga Re- approved the option program in the amount of 2% gion, JSC. Simultaneously the Company sets of the Company share capital which will be a power- a course for the maximal transparency and open- ful stimulus for effective motivation of the manage- ness for investors and professional participants ment on increase of the Company capitalization. of the securities market that will allow to raise an interest of potential investors in the Company During the year 2008, the Company took part in con- securities and in the further to involve additional ferences and forums within the limits of which mee- investments. tings with shareholders, portfolio investors and representatives of the share community were held: The Rights of Shareholders — • Investment Conference “Day of the Russian Power Owners of Ordinary Registered Industry on LSE”, 14 March 2008, London (Great Shares of the Company Britain); organizers: London Stock Exchange, Shareholders shall be entitled to: “Otkrytie” Financial Corporation. • Investment Conference “IDGC — new “blue chips”, 1. participate personally or through representatives 26 May 2008, Moscow (Russia); organizers: “Otkry- in the Company General Shareholders Meeting tie” Financial Corporation, Raiffeisenbank, Metropol with a vote on all items of his/her competence; Investment Company, under the support of JSC “‘MICEX’ Stock Exchange”. 2. make proposals in the agenda of the General • 18th International Business Conference “Russia and Meeting in accordance with the procedure stipu- Developing Markets: How to Avoid Financial Crisis”, lated by the legislation of the Russian Federation on 2–6 July 2008, Limassol (Cyprus); organizers: and the Company Charter; “Otkrytie” Financial Corporation, RIA “RosBusiness- Consulting”. • Conference “Opportunities of the Share Market for 3. receive the information on the Company activities a Growth of the Gross National Product of Russia”, and to examine the Company documents in confor- 12 September 2008 within the limits of the scientific mity with article 91 of the Federal Law “On Joint- and industrial forum “United Russia”, 10–12 Sep- stock Companies”, other normative legal enact- tember 2008, Nizhniy Novgorod (Russia); organizers ments and the Company Charter; of the conference: JSC RSEC “MICEX-Volga Region”, Regional Division of FFMS in Volga Federal District. 4. receive the dividends declared by the Company; 75

5. primary purchase of additional shares placed 7. exercise other rights stipulated by the legislation of the by means of subscription of additional shares and is- Russian Federation and the Company Charter. sue of equity securities convertible into shares, in the number which is proportional to the number of ordi- Information on the Declared Shares nary shares belonging to them, in the cases stipu- Number of the declared shares: RUR 2,182,957 pie- lated by the legislation of the Russian Federation; ces of ordinary registered shares at the par value of RUR 0.10 (ten kop.) each that is 0.0019% of the 6. in case of liquidation of the Company to receive number of shares in circulation. a part of its property;

Information on the Company shares in crossholding

Company name Number of shares, pcs Par value Par value of de- Share of share, RUR posit, RUR in AC, % ordinary preferred

Information on holding by “IDGC Holding”, JSC of shares of IDGC of Centre and Volga Region, JSC

“IDGC Holding”, JSC 56,799,338,107 — 0.1 5,679,933,810.7 50.4

Information on holding by IDGC of Centre and Volga Region, JSC, of shares of “IDGC Holding”, JSC

IDGC of Centre 2,080,389 — 1.0 2,080,389.0 0.0048 and Volga Region, JSC Revealing Itself to Everyone Revealing Itself to Everyone

Main Indicators of Accounting Statements and Review of Financial Results 78 Main Indicators of Accounting Statements and Review of Financial Results

Main Provisions of Accounting Policy

Methods and policy of book keeping applied by 1998 No.60n, Regulations on book keeping and the Company in 2008 are fixed in the Regulations for accounting in the Russian Federation approved Accounting Policy of the Company for 2008 approved by Order of the Ministry of Finance of the Russian by Order No.62/1 of General Director of IDGC of Cen- Federation of 29 July 1998 No.34n, Accounting tre and Volga Region, JSC, as of 29 February 2009. Regulations “Accounting reports of organization” AR 4/99 approved by Order of the Ministry of Fi- The book keeping in the Company is held according nance of the Russian Federation of 6 July 1999 to the uniform methodological principles and rules, No.43n and Order of the Ministry of Finance of on the basis of the unified methods of the registra- the Russian Federation of 22 July 2003 No.67n tion of all economic operations. “On forms of accounting reporting of organizations”, Plan of book keeping accounts of financial Book keeping of the Company represents an or- and economic activities and the instruction on its dered system of gathering, registration and gene- application approved by Order of the Ministry ralization of the information in money terms about of Finance of the Russian Federation of 31 Octo- property, obligations of the Company, their flow ber 2000 No.94n (in the current version). by a continuous, solid and documentary accounting of all economic operations according to the re- The Company assets and liabilities are estimated quirements and on the basis of the current Russian in the reports on actual expenses for their pur- Federation laws. chase.

For the purposes of book keeping, sales of products (works, services) and assets to the foreign Fixed Assets Registration organizations are reflected in sales accounts The structure of fixed assets represents land plots, in the process of products shipment (performance buildings, constructions, machines, equipment, ve- of works, rendering of services, transfer of as- hicles and other objects, the service life of which sets) and presentation of settlement documents is more than 12 months and the initial value of which to buyers. exceeds RUR 20 thousand per unit.

The procedure of recognition of incomes and The assets, in relation to which the conditions of item expenses under the accrual method is applied 4 AR 6/01 “Registration of fixed assets” are complied for the purposes of taxation. with, and the value of which does not exceed RUR 20 thousand per unit are registered in the structure of inventory. Basis of the Accounting Reports Drawing up The fixed assets are registered at their initial va- The accounting reports of the Company are ge- lue which includes the amount of actual expenses nerated proceeding from rules of book keeping for their purchase, construction and manufacture. and accounting applicable in the Russian Fede- The change of the initial value of fixed assets, ration, in particular Federal Law of 21 November at which they are registered in the bookkeeping 1996 No.129-FL “On book keeping”, Accounting reports, is admitted in cases of completion of con- Regulations “Accounting policy of organization” struction, completion of equipping, reconstruction, AR 1/98 approved by order of the Ministry of Fi- partial liquidation and re-assessment of the fixed as- nance of the Russian Federation of 9 December set objects. 79

The fixed assets are shown in the reports at their of the financial year at the current market value initial value net of the depreciation which has been by correcting of the respective registration value up saved up for all time of the operation. to the market value.

The value of the fixed capital of the enterprise is re- The difference between the estimation of financial paid by monthly accrual of depreciation by a linear investments at the current market value as of the re- way, proceeding from the time of the beneficial use porting date and the previous estimation of financial of these objects. investments is recognized by the Company as other income and expenses. Registration of Inventory The inventories are accepted to book keeping re- Registration of Short-term gistration at the actual cost price of their purchase. and Long-term Assets and Liabilities The tool, stock, economic accessories with the ser- In the accounting balance, the financial invest- vice life of less than a year are registered in the struc- ments, debt receivable and accounts pay- ture of inventories. The value of tools maintenance able are referred to short-term debt, if the term accessories is in full written off to costs at their of their outstanding (repayment) does not exceed putting in operation. 12 months after the reporting date.

The special equipment and special clothes, irre- Registration of Production Expenses spective of the value and term of use, are registered The registration of the expenses is held according in the structure of the working capital. to applicable normative documents. Expenses are included in the products cost price of the period they The inventories which are written off to manufacture, are related to, irrespective of the time of their pay- sold outside, retire on other bases, are estimated ment with a division by activity lines. When it be- at the average cost price. came known about the expenses made much after Registration of Financial Investments the reporting period (bookkeeping vouchers are presented with a significant delay), charges are ac- The structure of financial investments includes in- cepted to expenses in that reporting period, when it vestments into securities, shares, bonds, authorized became known that they took place. (joint-stock) capitals of other organizations, loans granted to other organizations, depositary contri- Registration of Prepaid Expenses butions to the credit organizations, debt receivable The expenses made by the Company in the repor- obtained on the basis of assignment of receivables, ting period, but relating to the following reporting pe- and bills in case of their purchase under contracts riods, are reflected as prepaid expenses. of sale and purchase.

All financial investments are accepted to registra- These expenses are subject to write-off for their in- tion in the amount of actual expenses for their pur- tended purpose in regular intervals during the pe- chase. riods they are related to.

Financial investments, the current market value Registration of Incomes of which can be defined in accordance with the The earnings are accepted to book keeping established procedure, are reflected as of the end in the amount estimated in money terms, equal 80 Main Indicators of Accounting Statements and Review of Financial Results

to the amount of receipt of money resources and Accruing of depreciation on the fixed assets and in- other property and (or) amount of debt receivable. tangible assets is made by a linear method.

Incomes of the Joint-stock company on the accrual For the purposes of taxation, a distribution of objects basis are recognized in the reporting period when of depreciated property by depreciation groups is they took place, irrespective of actual time of receipt carried out proceeding from the time of the benefi- of money resources. cial use determined according to the specifications and recommendations of the manufacturing organi- The earnings are reflected in the Profit and Loss zations, on the basis of the classification of the fixed Statement net of the value added tax. assets approved by Governmental Order of the Rus- sian Federation No.1 of 1 January 2002 “On clas- Registration of Debts Receivable sification of fixed assets included in depreciation and Accounts Payable groups”. Settlement of accounts with debtors are reflected in the accounting and reporting proceeding from Tax Accounting the prices stipulated by contracts between the Com- of Expenses Connected pany and buyers (customers) taking into account all with Manufacture and Selling provided discounts and VAT. The expenses which meet the requirements stipulated in item No.1 of Article 252 of the Tax Code The Company creates a reserve for doubtful debts of the Russian Federation are accepted for the pur- following the results of the inventorying of the debts poses of taxation. The expenses are the grounded receivable. and documentary confirmed costs made for carrying out of activities aimed to income acquisition. The uncollectable debts are subject to a write-off from the balance sheet in the process of its recogni- Tax Accounting of Income from Sales tion as such. Incomes from sales of goods (works, services) are recognized at the date of a transition of the pro- The accounts payable to suppliers and other credi- perty right to the goods — to buyers, of the re- tors is registered in the amount of the accounts ac- sults of works execution — to customers, rende- cepted for payment and at the amount of the added ring of services for a fee determined according obligations according to the settlement documents. to the terms of the concluded contracts.

Organization of Tax Accounting The earnings from selling of products (works, ser- IDGC of Centre and Volga Region, JSC, estimates vices) are registered for the purposes of taxation and pays taxes and tax collections according net of the taxes accrued on buyers, and sum dif- to the Russian Federation laws, laws of the Russian ferences. Federation constituent entities, normative legal enactments of institutions of local government.

Calculations under the profit tax are made according to requirements of Article 25 of the Tax Code of the Russian Federation. An accrual method is applied at registration of incomes and expenses when calculating the taxable profit. 81

Analysis of Business Results and Financial Position Dynamics

Dynamics of economic and financial indicators of 31 December 2008 without taking into account of the Company is presented for quarters III–IV the dynamics of changes for the reporting period. of the year 2007, for March and quarters II–IV of the year 2008. As of the end of the reporting period, the total balance sheet assets of IDGC of Centre and Volga Re- Estimation of changes in indicators following the gion, JSC (i.e. the amount of the assets which are results of the year 2008 in relation to the year at the Company’s disposal) equal RUR 59,256 mil- 2007 is not correct as indicators of the operational lion. company are non-comparable with indicators of the management company. Data for the analysis of the Company financial position are used as

Balance sheet for 2007-2008, RUR million

Indicator name Line 2007 Share in the 2008 Share in the code total amount, imple- total amount, % mented %

Assets

Noncurrent Assets Intangible assets 110 0 0 0.02 0.0 Fixed assets 120 2 2.9 40,684 68.7 Construction-in-process 130 0 0 4,924 8.3 Long-term financial investments 140 0 0 461 0.8 Deferred tax assets 148 0 0 95 0.2 Other non-current assets 150 0 0 0 0 Total section I 190 2 2.9 46,164 77.9

Working Assets Stocks 210 4 7.0 1,359 2.3 Value added tax 220 0 0 74 0.1 Debt receivable 230 0 0 342 0.6 (over 12 months)

continuation 82 Main Indicators of Accounting Statements and Review of Financial Results

Balance sheet for 2007—2008, RUR million

Indicator name Line 2007 Share in the 2008 Share in the code total amount, imple- total amount, % mented %

Assets Working Assets

beginning

Debt receivable 240 23 36.7 8,889 15.0 (under 12 months) Short-term financial investments 250 29 46.6 566 1.0 Monetary means 260 4 6.7 1,862 3.1 Other working capital 270 0 0 0 0 Total section II 290 60 97.1 13,092 22.1

Balance 300 62 100.00 59,256 100.00 (sum of lines 190 + 290)

Liabilities Capital and Reserves Authorized capital 410 10 16.2 11,270 19.0 Additional capital 420 0 0 24,654 41.6 Reserve capital 430 0 0 354 0.6 Undistributed profit of past years 460 0.07 0.1 2,176 3.7 Uncovered loss of past years 465 0 0 0 0 Undistributed profit 470 0 0 1,429 2.4 of the reporting year Uncovered loss of the reporting year 475 0 0 0 0 Total section III 490 10.07 16.3 39,883 67.3

continuation 83

Balance sheet for 2007—2008, RUR million

Indicator name Line 2007 Share in the 2008 Share in the code total amount, imple- total amount, % mented %

Liabilities beginning

Long-term Liabilities Loans and credits 510 0 0 10,424 17.6 Deferred tax liabilities 515 0.47 0.8 916 1.5 Other long-term liabilities 520 0 0 924 1.6 Total section IV 590 0 0.8 12,264 20.7

Short-term Liabilities Loans and credits 610 0 0 405 0.7 Accounts payable 620 51 82.9 6,275 10.6 Debt to participants (founders) 630 0 0 73 0.1 Deferred revenues 640 0 0 86 0.1 Reserves for future expenses 650 0 0 0 0 and payments Other short-term liabilities 660 0 0 271 0.5 Total section V 690 51 82.9 7,109 12.0

Balance 700 62 100.00 59,256 100.00 (sum of lines 490+590+690) 84 Main Indicators of Accounting Statements and Review of Financial Results

Structure of assets of the Company balance sheet (as of December 31, 2008)

22.1% Current assets

77.9% Non-current assets

Structure of liabilities of the Company balance sheet (as of December 31, 2008)

12.0% Short-term liabilities 47% Advances made 20.7% Long-term liabilities 67.3% Capital and reserves

As of the end of the reporting period the Company The main share of non-current assets is fixed as- balance is characterized by the following features: sets (RUR 40,684 million) — 88% of all non-current • A high share of non-current assets (RUR 46,164 mil- assets. lion) — 77.9% of the total balance sheet assets; • A significant share of debts receivable (RUR 9,231 million) — 15.6% of the total balance sheet assets or 70.5% of the working assets. 85

Fixed assets

Indicator name RUR million %

Land plots 21 0.1 Buildings 5,208 12.8 Electric grid constructions 24,403 60.0 and transfer mechanisms Machines and equipment 10,554 25.9 Other fixed assets 498 1.2

Structure of debt receivable (as of December 31, 2008)

47% 18% Advances made Receivables of other debtors

35% Debt of buyers and customers

Advances made (46.9%) prevail in the structure mers is on the level of 35.2% of all debts receiv- of debts receivable, the greatest part of which is able, including the share of debts under the con- presented by the advances which were given out tracts signed on rendering of services on electric to the building organizations — 90.5% of the to- power transmission through grids of IDGC of Cen- tal amount of advances. This is mainly connected tre and Volga Region, JSC, — 67.5% of all debts of with execution by the Company of the investment buyers and customers. program. The share of debts of buyers and custo- 86 Main Indicators of Accounting Statements and Review of Financial Results

Net assets value, RUR million

Indicator name 2007 2008

Net assets 10 39,969 Aggregate assets 62 59,256 Authorized capital 10 11,270

Dynamics of relation of net assets to aggregate assets, RUR million (as of December 31, 2008)

Net assets 39,969

Aggregate assets 59,256

Own sources prevail in the structure of the sour- Obligations of the Company as of 31.12.2008 ces of formation of the Company property (the equal RUR 19,373 million, including: capital and reserves RUR 39,883 million) — • long-term credits and loans: RUR 10,424 million 67.3% of the total balance sheet assets. The ad- or 53.8% of the total obligations amount; ditional capital (RUR 24,654 million) represents • short-term credits and loans: RUR 405 million the main share among own sources — 61.8%. or 2.1% of the total obligations amount; 87

• accounts payable (to suppliers and contractors) — amount of RUR 7,579.2 million for financing the in- RUR 6,275 million or 32.4% of the total obligations vestment program. amount; • other long-term and short-term obligations: RUR Accounts payable prevail in the structure of short- 2,269 million or 11.7% of the total obligations term obligations - 88.3% of the total amount (10.6% amount. of the volume of all sources of the property formation). Long-term obligations (RUR 12,264 million) are 20.7% of the total balance sheet assets. For the period from 1 March 2008 to 31 December 2008, the Company attracted long-term extra means in the

Structure of accounts payable (as of December 31, 2008)

1% Other creditors 33% Advances received

57% 2% Debt to suppliers Debt to state and contractors and nonbudgetary funds 5% Debt on labor payment 2% Debt on taxes and tax collections

The following elements prevail in the structure of ac- terms of payment by contract parties for services counts payable: on technological connection to the grids of IDGC • Debts to suppliers and contractors (RUR 3,579 mil- of Centre and Volga Region, JSC (payment for lion) — 57% of all accounts payable; these services is made with a full or partial ad- • Advances received (RUR 2,061 million) — 33% vancing). of all accounts payable that is connected with 88 Main Indicators of Accounting Statements and Review of Financial Results

Relation of the Company debts receivable and accounts payable, RUR million

Indicator name 2007 2008

Accounts payable (AP) 51 6,275

Debt receivable (DR) 23 9,231

± – 28 2,956

Relation of DR and AP 0.44 1.47

Relation of debt receivable and accounts payable, RUR million (as of December 31, 2008)

Accounts payable 6,275

Debt receivable 9,231

The relation of debts receivable and accounts payable is considered normal on the level of 1.2–1.5. Following the Company performance in 2008, this indicator is 1.47 and complies with the norm. 89

Following the results of the Company financial and economic performance in 2008, the following financial results were achieved:

Profit and loss statements for 2007—2008, RUR million

Indicator name Line 2007 2008 code

Earnings on sales of goods, products, works, services 010 159 31,686

Cost price of production and selling of products 020 –139 –28,464

Gross profit 029 20 3,222

Commercial expenses 030 0 0

Profit (loss) from sales 050 20 3,222

Interest receivable 060 0 11

Interest payable 070 0 –410

Income from participation in other organizations 080 0 1

Other income 090 0 2,271

Other expenses 100 –12 –2,702

Profit (loss) before taxes 140 8 2,393

Deferred tax asset 141 0 18

Deferred tax liability 142 0 –144

Current profit tax 143 – 7 –838

Other similar obligatory payments 145 0 0

Profit tax and other similar payments 150 – 7 –964

Profit (loss) from ordinary activities 160 0 1,429

Net profit 190 0.07 1,429 90 Main Indicators of Accounting Statements and Review of Financial Results

Structure of earnings by activity types, RUR million

Indicator name 2007 Share in 2008 Share in earnings, earnings, % %

Earnings from sales of goods, products, 159 100 31,686 100 works, services, including grid services 0 0 29,529 93 technological connection services 0 0 1,811 6 sales of goods (services) 159 100 339 1 of primary activities sales of non-core goods (services) 0 0 8 0

Receipts of earnings from primary activities for 2008 and maintenance of equipment of outside electric are generated in the following lines: power consumers prevail in the total earnings from • earnings from electric power transmission follo- other products; wing the results of 2008 equaled RUR 29,529 million • earnings from non-core assets (RUR 8 million), (93% of the earnings); which it is formed of incomes on the social sphere • earnings from rendering services on technological support. connection were RUR 1,811 million (6% of the earnings).

The earnings from other activities were formed of: • earnings from selling of other products (services) of primary activities (RUR 339 million). Other primary activities for IDGC of Centre and Volga Region, JSC, are works and services of industrial nature. Fol- lowing the results of 2008 the earnings from repair 91

Structure of the Company expenses for 2007—2008, RUR million

Indicator name 2007 Share 2008 Share in total in total amount, % amount, %

Material costs 0.5 0.4 7,292 25.6

Works and services of industrial nature 3.6 2.6 12,002 42.2

Labor payment and social assessments 67 48.0 5,049 17.7

Depreciation 0 0.0 2,420 8.5

Other costs 68 49.0 1,701 6.0

Total costs 139 100.0 28,464 100.0

Structure of cost price for 2008

26% 6% Material costs Other costs

9% Depreciation

18% Labor payment and social assessments 42% Works and services of industrial nature 92 Main Indicators of Accounting Statements and Review of Financial Results

The cost price of the sold goods, works and ser- power for compensation of losses of the electric vices for 2008 equaled RUR 28,464 million. The power in own grids of IDGC of Centre and Volga Re- main share in the structure of the cost price following gion, JSC: RUR 6,304.7 million (86.5% of the total the results of 2008 is made up of: expenses amount). • works and services of industrial nature: RUR 12,002 million (42.2% of all expenses), inclu- Following the results of the year 2008, the total profit ding payment of services of the territorial grid com- was RUR 3,222 million; the balance of other income panies for services on electric power transmission: and expenses was RUR (–)829 million; profit before RUR 4,940.0 million (41.2% of the total expenses taxes was RUR 2,393 million. The deferred tax as- amount), payment of services of JSC “UES FGC”: set, the tax liability and the current profit tax in ag- RUR 4,314.4 million (35.9% of the total services gregate following the results of the year 2008 were amount); RUR 964 million. • material costs: RUR 7,292 million (25.6% of all expenses) including settlement of accounts with Thus, the net profit received by the Company the selling companies for the purchased electric for 2008 was RUR 1,429 million.

Profitability Profitability ratio shows the Company activities ef- the indicators of the operational company (at ficiency as a whole. 31 December 2008) are non-comparable with indicators of the managing company (at 31 Decem- In order to calculate profitability indicators, the arith- ber 2007), the calculation is performed only on the metic mean values at the beginning and the end basis of the data at the end of the year 2008. of the reporting period should be used. Since

Profitability ratios, calculated according to the annual accounting reports (as of December 31, 2008)

Profitability indicator 2007 2008

Return on sales 12.47 10.17

Return on total assets (ROTA) 0.12 2.41

Return on equity (ROE) 0.73 3.67 93

Liquidity One of indicators of the enterprise financial position is its solvency that is an opportunity in due time to repay its liabilities.

Calculation of liquidity and solvency indicators

Liquidity and solvency indicators Formula 2007 2008

Absolute liquidity ratio (250+260) (f1) / (690-640-650) (f1) 0.64 0.35

Quick assets ratio (240+250+260+270)(f1) / (690-640-650) (f1) 1.09 1.61

Current liquidity ratio 290 (f1) / (690-640-650) (f1) 1.17 1.86

Share of current assets in total assets 290 (f1) / 700 (f1) 0.97 0.22

Values of absolute liquidity, quick assets and cur- 0.15–0.5; optimum value for the quick assets ratio rent liquidity ratios are within the limits of the stan- is or exceeds 0.95; optimum value of the current li- dard normative values. The recommended optimum quidity ratio is between 1–2. value for the absolute liquidity ratio is between

Financial Stability Financial stability of the enterprise depends both optimality of structure of the enterprise assets. on an optimality of structure of sources of the capi- Calculation of the indicators provided in the table tal (relation of equity and extra means), and an is made in order to estimate the financial stability. 94 Main Indicators of Accounting Statements and Review of Financial Results

Calculation of financial stability

Financial stability indicators Formula 2007 2008 implementation

Financial independence ratio 490 (f1) / 700 (f1) 0.16 0.67

Financial stability ratio (490+590) (f1) / 300 (f1) 0.17 0.88

As equity is a basis of independent activities of the is on the level which is not lower than the recom- enterprise, the significant share of the equity mended level. on the balance of the enterprise proves its suffi- cient financial independence. Following the results Following the results of the year 2008, financial sta- of the year 2008, the specific weight of the equity bility indicators are within the limits of the recom- was 67.3% of the total balance sheet assets, i.e. it mended optimum values.

Business Activity Indicators the end of the reporting period should be used. Business activity indicators for the reporting period Since the indicators of the operational company (at are within the limits of normative values. 31 December 2008) are non-comparable with indicators of the managing company (at 31 December In order to calculate business activity indicators, 2007), the calculation is performed only on the basis the arithmetic mean values at the beginning and of the data at the end of the year 2008.

Calculation of business activity indicators

Business activity indicators Formula 2007 2008 implementation

Asset turnover 010 (f2) / 300 (f1) 0.003 0.53

DR turnover 010 (f2) / (230+240) (f1) 7.000 3.43 AP turnover 010 (f2) / 620 (f1) 3.090 5.05 95

As a whole, following the results of the analysis as on the level that is good for the power sector. Thus of 31 December 2008, we can come to a conclu- the Company is actively developing through the reali- sion that the Company is financially stable and has zation of the large-scale investment program financed a structure of assets and liabilities that is close to the both due to own sources, and due to long-term extra optimum one. Efficiency of the Company activities is means.

Credit Policy

In the period from 29 February 2008 to 31 Decem- of the Company investment activity. All the credits ber 2008, IDGC of Centre and Volga Region, JSC, involved in the specified period were received with- carried out active actions on attraction of credit re- out granting by the Company of securing. Interest sources as a whole and long-term credit resources in rates on the available loan debts at 31 December particular. For the specified period the total volume 2008 do not exceed an operating limit of loan cost of the involved extra means was RUR 8.05 billion, parameters. including allocation of RUR 5.31 billion for financing

Data on change of the credit portfolio, RUR thousand

Extra means type Balance at Attracted Accrued Repaid Repaid Balance at Average 29.02.2008 within interests within interests 31.12.2008 weighted 29.02.2008– and discount 29.02.2008– and discount rate at 31.12.2008 within 31.12.2008 within 31.12.2008 29.02.2008– 29.02.2008– 31.12.2008 31.12.2008

Long-term extra means Financing of invest- 2,600,865 5,309,057 440,393 0 376,669 7,973,646 15.11% ment activities

Replenishment of cur- 1,275,397 2,270,104 432,696 1,135,866 167,740 2,674,591 15.07% rent assets

Total long-term extra 3,876,262 7,579,161 873,090 1,135,866 544,409 10,648,237 means

continuation 96 Main Indicators of Accounting Statements and Review of Financial Results

Data on change of the credit portfolio, RUR thousand

beginning

Short-term extra means Financing of invest- 95,535 0 8,374 95,535 8,374 0 ment activities

Replenishment of cur- 1,011,912 473,056 59,056 1,308,422 54,846 180,756 12.55% rent assets

Total short-term 1,107,447 473,056 67,430 1,403,957 63,220 180,756 extra means

Total 4,983,708 8,052,217 940,520 2,539,823 607,629 10,828,993 Total average weighted rate at 31.12.2008 15.06%

At 31.12.2008 IDGC of Centre and Volga Re- Among partner banks forming the credit port- gion, JSC, has no delayed debts on payment folio of IDGC of Centre and Volga Region, of the amounts of the main debt, interests, and pay- JSC, 31.12.2008 are: ments connected with servicing of credit resources. • Savings Bank (Sberbank); • Gazprombank; • Transcreditbank; • Bank of Moscow; • Eurofinance Mosnarbank. 97

Tariff Policy

The Company tariff policy aims at effective coo- “Uniform tariff” model peration of IDGC of Centre and Volga Region, JSC, In territory of the Company footprint, bodies of regu- with tariff and price state regulation bodies at es- lation of constituent entities of the Russian Federa- tablishment of tariffs for services on electric power tion apply the following model of contractual relations transmission and payment for technological con- of the retail market entities at rendering services on nection. electric energy transmission: in the Vladimir, Kaluga, Kirov, Nizhniy Novgorod, Ryazan and Tula region — Tariffs for Services model “the uniform tariff at the top”, in the Ivanovo on Electric Energy Transmission region — model “uniform tariff at the bottom”, in Re- From 2008, according to item 9 of Order of FTS public of Mari El and Udmurt Republic — “the mixed of Russia as of 28 November 2006 No.318-e/15 model of the uniform tariff”. “On amending the Methodical Instructions for calculation of regulated tariffs and prices for electric The necessary gross earnings (thermal) energy in the retail (consumer) mar- The necessary gross earnings (NGE) of the Compa- ket”, approved by Order of FTS of Russia as of ny are approved in the amount of RUR 36,648 mil- 6 August 2004 No.20-e/2, tariffs for services on lion that 46.3% exceeds the level of 2007. Distribu- electric energy transmission on one level of vol- tion of the total NGE for 2008 with a breakdown into tage are established equal for all consumers of the branches is presented in the diagram. services located in the territory of the respective constituent entity of the Russian Federation irre- NGE for maintenance of networks was RUR spective of networks of which organization they 16,310 million (NGE without taking into account are connected to. services of the territorial grid organizations (TGOs) and federal factors) that is 20.4% above the similar indicators in 2007.

Structure of necessary gross earnings approved for 2008

8% “Udmurtenergo” 11% “Vladimirenergo” 12% “Tulenergo” 4% “Ivenergo” 7% “Kalugaenergo” 7% “Ryazanenergo” 11% “Kirovenergo”

37% “Nizhnovenergo” 3% “Marienergo” 98 Main Indicators of Accounting Statements and Review of Financial Results

Average tariff Average tariff for services of electric energy transmission of IDGC of Centre and Volga Region, JSC, in 2008 was 63.88 kopecks/kWh that 35% over this indicator in 2007.

NGE growth Dynamics of average tariff 2008/2007, % in 2008—2007, kop./kWh

“Vladimirenergo” 68 41.58 9 70.19

“Ivenergo” 18 36.49 5 42.14

“Kalugaenergo” 25 68.17 4 78.83 64 “Kirovenergo” 47.74 10 70.22 11 “Marienergo” 46.05 5 49.14

47 54.81 “Nizhnovenergo” 37 71.27

“Ryazanenergo” 68 40.09 17 54.50 49.09 “Tulenergo” 60 15 80.34 33.22 “Udmurtenergo” 23 11 37.60

total 2007 grids maintenance 2008 99

Payment The decision as of 23 September 2008 No.16/1 for Technological Connection of the Prices and Tariff Department of the Admi- nistration of the Vladimir region took into account In 2008, on the basis of the analysis of sufficiency this application and fixed payment for technologi- of the fixed payment held, Kalugaenergo, Iven- cal connection to electric grids of JSC “Vladimir ergo, Kirovenergo, and Ryazanenergo branches Regional Electric Grid Company”, including pay- turned to tariff regulation bodies for the purpose of ment of the adjacent higher grid organization of revision of the amount of payment for technologi- IDGC of Centre and Volga Region, JSC, inclu- cal connection. ding payment of Vladimirenergo branch in amount of 11,536 RUR/kW. The results: • for Kalugaenergo branch, on 4 February 2008, Now Marienergo and Nizhnovenergo branches draw the payment for technological connection was up documents for the purpose of revision of the tech- fixed, including an investment component, nological connection payment amount. and taking into account a category of reliability of electric power supply required by the Ap- In Tulenergo branch and Udmurtenergo branch plicant. The average amount of payment for in the Udmurt Republic (except Izhevsk), the tariff technological connection has grown 5.2 times fixed by the tariff regulation body does not include in comparison with the previous and makes an investment cost of the grid organization. In cases 9,746 RUR/kW; when performance of obligations for technological • for Ivenergo branch, on 8 February 2008, RTS of the connection requires investment charges, techno- Ivanovo Region fixed payment for technological con- logical connection is carried out under an individual nection in the former amount. The average tariff for project. technological connection is 7,339 RUR/kW; • for Kirovenergo branch, on 29 January 2009, the The branches of IDGC of Centre and Volga Re- payment is fixed; it is differentiated under a territo- gion, JSC, also perform technological connection rial attribute. The average amount of payment for under individual tariffs in the cases which do not technological connection has grown in comparison contradict the current legislation. As a whole in the with the previous in the city by 16%; in the region — Company, in 2008, the payment for technological by 10%, and is 5,410 RUR/kW and 1,708 RUR/kW connection under individual projects for 44 consu- accordingly; mers for the capacity declared for connection equal • tariff case on revision of payment for technological to 314.5 MW for the amount of RUR 2,676.6 mil- connection for Ryazanenergo branch is being con- lion is fixed. sidered in REC of the Ryazan Region. The operating average tariff is 7,538 RUR/kW. The declared and fixed volumes and tariffs for technological connection in the reporting year 2008 and Vladimirenergo branch turned to the Prices and Ta- the declared volumes and tariffs for technological riff Department of the Administration of the Vladimir connection for 2009 in the branches of IDGC of region with an application for compensation of Centre and Volga Region, JSC, are presented in Ap- charges of investment nature which are borne by pendix No.7 to this Annual Report. Vladimirenergo branch in connection with realization of activities on technological connection by the subordinate grid organization of JSC “Vladimir Region- al Electric Grid Company”. Maintaining Exact Balance Maintaining Exact Balance

Profit Distribution and Dividend Policy 102 Profit Distribution and Dividend Policy

Profit Distribution According to the Charter of IDGC of Centre and Volga Region, JSC, the profit distribution decision Summing up the results of 2008, IDGC of Centre and is taken by the General meeting of shareholders. Volga Region, JSC, gained net profit in the amount The planned distribution of net profit following the re- of RUR 1,428,560 thousand*. The net profit is de- sults of 2008 is presented in the table. termined on the basis of the Company accounting statements.

Net profit distribution, RUR thousand

Indicator name According According to the results to the results of 2007 of 2008

Undistributed net profit 73 1,428,560

Reserve Fund 3.65 71,428 Dividends 0 0 Production development 0 1,357,132

* Due to the Company’s reorganization in the form of distribu- • net profit of the regional grid companies which became tion grid companies merging to it which was completed on the branches of the reorganized IDGC of Centre and 29 February 2008, the amount of the net profit according Volga Region, JSC, for the period from 29 February 2008 to the results of 2008 consist of: to 31 December 2008; • net profit of IDGC of Centre and Volga Region, JSC, as • net profit of the executive body of the reorganized IDGC a management company, for the period from 1 January of Centre and Volga Region, JSC, for the period from 2008 to 28 February 2008; 29 February 2008 to 31 December 2008.

According to the provisions stated in Article counts for 5% of the Company’s net profit. Thus, 8 of the Company’s Charter and Federal Law according to the results of 2008, the net profit “On Joint-Stock Companies”, the Reserve Fund share of RUR 71,428 thousand is allocated for the is created after the Company’s General Share- Reserve Fund. The Reserve Fund exists to cover holders Meeting decision taking. In accordance the Company’s losses, pay off the Company bonds with the Charter of IDGC of Centre and Volga and redeem the Company shares in case of other Region, JSC, the amount of obligatory annual as- means lack. sessments to the Company Reserve Fund ac- 103

Dividend payments yield information

Indicator name According According to the results to the results of 2007, RUR of 2008, RUR

Basic earnings per share 0.0007 0.01520

Diluted earnings per share 0.0007 0.01520

Amount of dividends in profit 0.00% 0.00%

Amount of payment per share — —

Dividend Policy ny’s shareholders, create necessary conditions for the Company’s liquidity, capitalization and in- The Company recognizes the importance of profit vestment attractiveness increase as well as provide acquisition by shareholders expressed in the form the effective balance between the Company’s net of dividends from the implemented investments profit allocation for dividends payment and neces- by means of its shares acquisition. The Company sary investments projects financing. establishes the transparent and clear mechanism of dividends amount determination. It ensures the most convenient order of their payment as well as takes other measures excluding the incomplete or untimely payment of the declared dividends.

To ensure the transparency of the dividends amount determination and order of their payment the Com- pany’s Board of Directors approved the “Regula- tions for the Dividend Policy of IDGC of Centre and Volga Region, JSC” (Minutes No.18 of the Board of Directors meeting as of July 18, 2008) which determine the conditions, order, term and form of the dividends payment. “Regulations for the Divi- dend Policy” text is presented on the Company’s Internet website. For more information please visit http://www.mrsk-cp.ru.

IDGC of Centre and Volga Region, JSC, Dividend Policy is aimed to meet all the rights of Compa- Doing a Powerful Dash Doing a Powerful Dash

Industrial Activities 106 Industrial Activities

Key Industrial Indicators

Amount of Electric Energy Losses to the grid. Summing up the year, the given figure in Electric Grids is within the limits of the standard value accounting for 5,830.02 million kWh or 9.35% of the report on Amount of the electric energy losses in electric supply to the grid and was taken into account du- grids of the branches being a part of IDGC of Cen- ring the tariffs determination for power transmission tre and Volga Region, JSC, for 2008 accounted for in 2008. 5,690.7 million kWh or 9.31% of power supplied

Information on the power supply and losses for 2006—2008.

Branch name Supply to the grid, Productive supply of power, Total losses, million kWh million kWh million kWh/% 2006 2007 2008 2006 2007 2008 2006 2007 2008

“Vladimirenergo” 6,294.3 6,429.6 6,587.2 5,605.1 5,754.5 5,873.3 689.2 675.1 713.9 10.95% 10.50% 10.84%

“Ivenergo” 3,821.7 3,816.3 3,686.9 3,639.6 3,648.3 3,533.6 182.1 168 153.3 4.76% 4.40% 4.16%

“Kalugaenergo” 3,866.0 4,000.9 4,176.0 3,301.4 3,345.3 3,520.2 564.6 655.6 655.8 14.60% 16.39% 15.70%

“Kirovenergo” 5,979.2 6,067.1 6,130.8 5,583.1 5,615.7 5,695.0 396.1 451.4 435.8 6.62% 7.44% 7.11%

“Marienergo” 2,732.7 2,755.4 2,842.7 2,402.1 2,453.5 2,564.7 330.6 301.9 278.0 12.10% 10.96% 9.78%

“Nizhnovenergo” 17,618.1 18,087.2 18,595.6 15,635 16,134.6 16,642.3 1,983.1 1,952.6 1,953.3 11.26% 10.80% 10.50%

“Ryazanenergo” 4,526.7 4,538.0 4,576.1 4,209.7 4,229.5 4,264.1 317.0 308.5 312.0 7.00% 6.80% 6.82%

“Tulenergo” 7,265.6 6,757.2 6,675.5 6,414.9 5,957.1 5,905.8 850.7 800.1 769.7 11.71% 11.84% 11.53%

“Udmurtenergo” 7,475.1 7,590.3 7,851.4 7,025.9 7,164.2 7,432.3 449.2 426.1 419.1 6.01% 5.61% 5.34%

Total in IDGC 59,579.4 60,042.0 61,122.2 53,816.8 54,302.7 55,431.4 5,762.6 5,739.3 5,690.7 of Centre and 9.67% 9.56% 9.31% Volga Region, JSC 107

Dynamics of power transmission services performance indicators 61,122 60,042 59,579 55,431 54,303 60,000 53,817 2006 40,000 2007 2008 20,000 5,763 (9.67%) 5,739 (9.56%) 5,691 (9.31%)

0 Supply to the grid, Volume of services Losses, million kWh the rendered, million kWh million kWh

Plan of decrease in losses of IDGC of Centre and Volga Region, JSC, for 2008 is fully implemented; the economy accounted for 168.6 million kWh.

Operational Process Management

The Presence of the Grids Control Centers (GCC), and the Functions Implemented

Branch “Vladimirenergo” GCC carries out non-operational functions. The preliminarily check-up of the GCC readiness to the implementation of the operation functions was carried out. The check-up program was coordinated by Vladimir Regional Dispatching Office on November 12, 2008. GCC readiness to the implementation of the operation functions is 90%. 108 Industrial Activities

Branch Branch “Ivenergo” “Kirovenergo” GCC has been carrying out operation functions GCC in 2008 carries out non-operation functions. since January 1, 2006 in the zone of the operation Summing up the check-up performed, the representa- responsibility of Ivanovo Electric Grids. tives of JSC “SO-CDO”, the GCC is ready to take the operation functions which are carried out since February 4 2009 in the zone of the operation responsibility of Southern and Northern Electric Grids.

Branch Branch “Kalugaenergo” “Marienergo” GCC has been carrying out operation functions GCC has been carrying out the operation functions since October 16, 2006 in the zone of the operation since October 19, 2007 in the zone of the operation responsibility of “Kalugaenergo” branch. responsibility of Ioshkar Ola Electric Grids. 109

Branch Branch “Nizhnovenergo” “Tulenergo” GCC carries out non-operation functions. The pre- GCC carries out non-operation functions. The preliminarily check-up of the GCC readiness to the im- liminarily check-up of the GCC readiness to the implementation of the operation functions was car- plementation of the operation functions was carried ried out. The check-up program was coordinated out. The check-up program was coordinated by Tula by Nizhniy Novgorod Regional Dispatching Office Regional Dispatching Office on November 7, 2008. on December 23, 2008. GCC readiness to the im- GCC readiness to the implementation of the opera- plementation of the operation functions is 85%. tion functions is 90%.

Branch Branch “Ryazanenergo” “Udmurtenergo” GCC carries out non-operation functions. The pre- GCC carries out non-operation functions. The preliminarily check-up of the GCC readiness to the liminarily check up of the GCC readiness to the im- implementation of the operation functions was car- plementation of the operation functions was carried ried out. The check-up program was coordinated by out. The check-up program was coordinated by Ud- Ryazan Regional Dispatching Office on June 26, murt Regional Dispatching Office on June 24, 2008. 2008. GCC readiness to the implementation of the GCC readiness to the implementation of the opera- operation functions is 90%. tion functions is 95%.

All the branches plan undertaking by GCC of operation functions in 2009.

110 Industrial Activities

Establishment of Grid Control Centers (GCCs) All branches of the Company have offices for GCCs personnel, and GCCs dispatchers are on duty twenty-four hours a day.

Establishment of Grid Control Centers (GCCs) in the Company’s branches

Action “Vladimirenergo” branch

1. Establishment of a program technical system at The project was executed. GCCs Contractor: JSC “StoriSvyazComplekt”; Agreement as of October 10, 2007 for the amount of RUR 65,109.2 thousand

Inclusion into the investment program of the The 2008 Investment Program for the creation of branches for 2008 and future years of expenses for GCC program technical system — RUR 28.22 million establishment of GCC program technical system (first quarter — RUR 18 million, second quarter - RUR 10.22 million). Investment program for 2009 is in the process of coordination

Execution of “The project for technological equipping The 2008 Spending Program was executed at 100% of GCCs” in accordance with the planned schedule of works on technological equipping of GCCs

2. Technological equipping of GCCs “PSI control” operational and information system; “BARCO” video wall installed at the dispatcher panel; remote control equipment — “Conus”, “Applications” and “Precise time source”” central receive/transmit stations; RASTRWin Mode Calculation” software; “Phoenix” dispatcher simulator; “RAP” compute software for analysis, control and calculation of power losses;

In 2009 the Company plans to purchase “Automated 111

“Ivenergo” branch “Kalugaenergo” branch

System of guaranteed power supply of GCC were GCC program technical system was established in implemented: 2004. Execution of works on GCC design, agree- Agreement as of April 25, 2008 with LLC “Nauka- ment with LLC “Systel Automation” as of March 6, Svvyaz Ivanovo” accounting for RUR 5,911.69 thou- 2007 accounting for RUR 2,048 thousand sand. GCC program technical system, agreement as of October 6, 2008 with LLC “StroiSvyazComplect” for the amount of RUR 200 thousand

The 2008 Investment Program for creation of GCC The 2008 Investment Program for creation of GCC program technical system: first and second quar- program technical system — RUR 4,644,322 (third ters — RUR 0; third quarter — RUR 5,911.69 thou- quarter — RUR 2,236.444 thousand, fourth quar- sand, fourth quarter — RUR 200 thousand. ter — RUR 2,407.878 thousand) Investment program for 2009 — RUR 14,300 Investment program for 2009 — RUR 3,662.720 thousand

The 2008 Spending Program was executed at 100% The 2008 Spending Program was executed at 100%

“PSI control” operational and information complex; “Kotmi NT” operational and information complex, “Applications” programming set Dispatch panel of type No.1, Dispatcher panel of type No.5, guaranteed electric power supply system with use of “Applicatons” computer software diesel generator set, uninterrupted power supply unit “Calculation of short-circuit current and relay protec- Remote control equipment: two sets of “TFM-12M” tion and automated equipment” computer software; modems “Operation of relay protection and automated equipment devices and emergency control automatics. In 2009, it is planned to purchase “Automated Development of reports and selection procedure” workplace for calculation relay protection systems computer software; in operative dispatch services” (short-circuit current “Start” software for oscillographic testing of failure calculation, settings accounting) computer software and abnormal regimes,

continuation 112 Industrial Activities

Establishment of Grid Control Centers (GCCs) in the Company’s branches

Action “Vladimirenergo” branch

beginning

workplace for calculation relay protection systems in operative dispatch services” (short-circuit current calculation, settings accounting) computer software

3. Installation of industrial and technological telephone In 2008: communication of GCCs with the regional dispatch Volga-Oka Bulk Power Systems Enterprise and administration, neighboring GCCs of other power Vladimir Regional Dispatch Administration installed companies, GCCs of Bulk Power Systems Enter- technological telephone communication. prises, Power Grids Enterprises, substations and Direct dispatch channels were installed in operative maintenance teams for execution of non-operating dispatch services of four production departments of functions (executed on the basis of current commu- the branch, TGC-6 and “Khimzavodskaya” substa- nication channels and communication equipment) tion Plan-6 / Execution-6. The basic means of communication with the substation are: high frequency communication channels at power, transmission lines, communication cable lines; cell communication, city automated telephone station and radio stations

4. Creation of information gathering and transmission SSPI program was sent for coordination to the re- system (SSPI) gional dispatch administration 113

“Ivenergo” branch “Kalugaenergo” branch

“TWr. Dispatcher Simulator” software; “Dispatcher adviser” software”, “Telecontrol Gateways” remote control equipment guaranteed electric power supply system with diesel generator set use

In 2009 it is planned to purchase a dispatch panel with a video wall and infrastructure

In 2008 a reserve digital communication channel be- In 2008 five the company installed: tween the GCC of the branch and Ivanovo Regional five communication channels between “Ageevo”, Dispatch Administration was organized. “Dubrava”, “Kirpichnaya”, “Lyudinovo” and “Du- Communication facilities: 142/111. minichi” substations, Power Grids Enterprise and The basic means of organization of communication GCC, under the plan. with substations are: Twenty-five channels of radio communication with high-frequency communication lines at power trans- operative teams/execution — 25 mission lines, Major means of the communication organization with communication cable lines; substations are the channels of HF communication cell communication, through power transmission lines, communication city automated telephone station cable lines; cell communication, city automated and communication through radio stations. telephone station and communication through radio stations

SSPI program was sent for coordination to the regio- The agreement “Works on construction of a multi- nal dispatch administration service digital grid of data transmission in “Kaluga- energo” branch (second stage)” for design and execution of the project was signed as of October 13, 2008 with LLC ”Senal”. The Agreement value accounts for RUR 12,790,000. Plan of December 2008/ performance of December 2008

continuation 114 Industrial Activities

Establishment of Grid Control Centers (GCCs) in the Company’s branches

Action “Vladimirenergo” branch

beginning

Inclusion in the Company’s investment program for Plans for 2009 determined the amount accounting 2008 and further years of costs for updating and for RUR 5,133 thousand (second quarter — RUR development of SSPI, installation of digital commu- 2,566.5 thousand, third quarter — RUR 2,566.5 nication channels and a remote control system with thousand) the branches’ facilities

Stage of SSPI project execution SSPI program was sent for coordination to the regional dispatch administration

5. Installation of digital communication channels and a Fourteen facilities are now controlled remotely (seven remote control system between GCCs and control- substations of “Vladimir Energy Power Supply Com- led facilities pany” production department and seven substations of Murom distribution zone); digital dispatch communication channels between up to seven facilities were installed (seven substations of Murom distribution zone). Plan 7/Performance-7. Central receive/transmit stations, “Conus” operational and information complex, A remote station based on “ICP CON” modules. “M-Link” communication equipment

115

“Ivenergo” branch “Kalugaenergo” branch

Expenses according to “The program of IT infrastruc- Works on construction of a multiservice digital network ture development in “Ivenergo” branch of IDGC of of data transmission of “Kalugaenergo” branch (second Centre and Volga region, JSC” for the period from stage) in 2008 — costs accounted for RUR 10,838,980 2008 to 2015”: (fourth quarter, 2008). 2009–2012 — 0; Remote control updating for 2008 — 2013 — RUR 15,000 thousand; Costs accounted for RUR 5,119,855 (fourth quarter, 2014 — RUR 15,000 thousand; 2008 — RUR 5,119,855) 2015 — RUR 15,000 (net of VAT) Investment program for 2009 (plan): construction of digital communication channels — costs accounted for RUR 42,500,000; remote control updating — costs accounted for RUR 12,718,000

SSPI program was sent for coordination to the regio- In 2008 100% of the invested money was spent nal dispatch administration

Remote control equipment: “ISET” (LLC “NTK Inter- Communication equipment: face”), “Systel” (LLC “Systel Automation”), “Konus-M” “Cisco C2960” and “Cisco ATA 186 Cisco Analog Tel- (LLC ”Konus-M”). ephone Adaptors” central control units Equipment of digital communication channels: “Quintum Tenor AFG-400” and “RAPIRA Industrial” voice — “ABTs-C” high-frequency communication equip- communication servers. ment at power transmission lines with digital process- Remote control: ing of sygnals, equipment made by ”Rissa” science and technical Centre — “FlexGain” multiplexation equipment 116 Industrial Activities

Establishment of Grid Control Centers (GCCs) in the Company’s branches

Action “Kirovenergo” branch

1. Establishment of GCC program technical system Contractor: JSC “Systems Development Depart- (PTS) ment”. Agreement as of June 7, 2007 accounting for RUR 5,068.70 thousand. Equipping of GCC with the dispatch and technical operation system and the program technical system Investment program for 2008 for establishment of the program technical system in the GCC accounted for RUR 1,119.16 thousand

Inclusion into the investment program of the Investment program for 2009 is in the process of branches for 2008 and future years of expenses for coordination establishment of the program technical system in GCCs

Execution of the project on technological com- Spending program for 2008 was executed at 100% munication and equipping of GCCs in the regional dispatch administration with the planned schedule of works directed to technological equipping of GCCs

2. Technological equipping of GCCs The following units were installed: “Dispatcher-NT” operational and information system, Dispatcher panel of type No.5 at the central receive/ transmit station equipped with “Sinkom-E” network synchronic communication adapter made by “Inter- face” science and technical Centre; “ASUREO” software system that receives and processes dispatchers’ applications for repair of equipment; guaranteed electric power supply system with the use of a diesel generation set. “Nezabudka” dispatch negotiation registrar at the GCC. 117

“Marienergo” branch “Nizhnovenergo” branch

Contractor: “Enera Engineering” The project was executed. The contractor is LLC “StroiSvyazComplect” Agreement as of July 1, 2007 accounted for RUR 80,307 thousand Agreement as of November 23, 2007 accounted for Investment program for 2008 for establishment of the RUR 62,222 thousand program technical system in the GCC accounted for Investment program for 2009 for installation of the RUR 40.370 thousand program technical system in the GCC accounted for RUR 14,143 thousand (fourth quarter)

Investment program for 2009 accounted for RUR Investment program for 2009 accounted for RUR 28,000 thousand 4,155 thousand (first quarter)

Spending program for 2008 was executed at 50% Spending program for 2008 was executed at 100%

Guaranteed electric power supply system with appli- “PSI Control” manufacturing execution system; cation of a diesel generator set and an uninterrupted “BARCO” video wall installed at the dispatcher panel; power supply unit(put into experimental exploitation), “Zayavki” software system; “BARCO” video wall installed at the dispatcher panel. “RastrWin” software for calculation, analysis and optimization of the modes of electric networks and The project requires the following industrial and tech- systems; nical resources: “Phoenix” regime simulator; “PSIControl” operational and information complex; “RAP” software for analysis, control and calculation “RastrWIN” software for calculation, analysis and of permissible losses of electricity; optimization of the modes of electric networks and “MARS” software; systems; “Cosmos” software; “Zayavki” software, “Modus” software, “Phoenix” regime simulator; guaranteed electric power supply system with use of “TWR-12” software; a diesel generator set. Electric security identifier; “Automated workplace for calculation relay protection systems in operative dispatch services” software. continuation 118 Industrial Activities

Establishment of Grid Control Centers (GCCs) in the Company’s branches

Action “Kirovenergo” branch

beginning

3. Installation of an industrial and technological te- The following was installed: lephone communication between GCCs and regional two digital communication channels between the dispatch administrations, neighboring GCCs of other GCC and the regional dispatch administration; power companies, GCCs of bulk power systems one digital channel and one switched channel of the enterprises, power grids enterprise, substations and city automated telephone station between GCCs of maintenance teams for execution of non-operating the branches and five production departments of functions (executed on the basis of current commu- the branch operative dispatch service; nication channels and equipment) Eight switched channels of the city automated telephone station installed between the GCC and the neighboring GCCs of the branches; One switched channel of the bulk power systems enterprise and one switched channel of the city automated telephone station installed between the GCC of the branches and the GCCs of the bulk power systems enterprise; analog communication channels installed between the GCCs of the branches and substations

4. Establishment of the information gathering and trans- The project “Installation of the dispatch technologi- mission system (SSPI) cal management system at GCCs” contains issues about the program technical system in the part about SSPI

Inclusion into the Company’s investment program for Total amount of costs (on a quarterly basis): 2008 and future years of expenses for updating and development of SSPI, digital communication chan- First quarter — RUR 16,667.6 thousand nels and installation of the system of remote control Second quarter — RUR 2,524 thousand over the branches’ facilities Fourth quarter — RUR 32,916.9 thousand

2009 investment program is in the process of coordination 119

“Marienergo” branch “Nizhnovenergo” branch

Lease of channels from mobile operators for com- Industrial and technological communication of the munication between the GCC and Ioshkar-Ola, Moun- GCC with necessary facilities was implemented on tain Mari and Sernur production departments, the the basis of the current communication network. Republic of Mari El, Russian Federation; In 2008, operative dispatch teams implemented Channel of data and voice transmission (leased from additionally 50 A/m at radio stations. In the second MTS) between “Marinergo” branch and “Sernur quarter of 2009 digital automated telephone stations Electric Grids” production department will be put into operation in each production department Thirty-eight “DX-500” automated telephone stations were purchased for distribution electric zones; they will help to organize internal industrial and technological communication. According to the 2009 industrial program, the company invested RUR 10,620,000 (inclusive of VAT) on installation, commissioning and start-up works

The SSPI project is being developed within the frame- SSPI program was sent to the regional dispatch work of the IDGC system automation project administration for coordination

Establishment of the GCC and updating of the remote Total amount of costs in 2008 for installation of com- control system accounts for RUR 40, 370 thousand munication channels accounts for RUR 8,000 thou- in 2008 (fourth quarter) and RUR 28,000 thousand in sand (fourth quarter) 2009 The 2009 investment program is in the process of The 2009 investment program is in the process of coordination coordination

continuation 120 Industrial Activities

Establishment of Grid Control Centers (GCCs) in the Company’s branches

Action “Kirovenergo” branch

beginning

Stage of SSPI project execution The first stage of the “GCC equipping with dispatch and technical operation system and program technical system” project was executed.

Execution of the second stage is in progress.

In 2009 it is planed to spend RUR 24,000

5. Installation of digital communication channels and The following was installed: the remote control system between GCCs and con- two digital communication channels between the trolled facilities GCC and the regional dispatch administration; one digital and one switched channel of the city automated telephone station between the GCC and five operating dispatch services of the branch production departments; eight switched channels of the city automated telephone station between the GCC and the adjacent GCCs of other companies; one switched channel and one switched channel of the city automated telephone station between the GCC and the GCC of the transmission power systems enterprise; analog channels between the GCC and substations; one analog and one digital channel between the GCC and the subsidiary enterprise of Thermal power station No.3 One analog and one digital channel between the GCC and “Azot” substation 121

“Marienergo” branch “Nizhnovenergo” branch

The project is being developed within the framework In 2008 the first stage of SSPI project was comple- of the system project of automation in IDGC of Centre ted. Updating of the remote control system in nine and Volga region, JSC production departments of the branch, in particular: replacement of “Granit” remote station with “Iset” remote station (made by “Interface” science and technical cooperative, based in Yekaterinburg) at fifty-two 110 kV substations; construction of the central receive/transmit station; Installation of “Dispatcher” operational and information complex (made by “Interface” science an technical complex)

Installation of the remote control system at substa- In 2008 the company leased from JSC “VolgaTele- tions: com” digital communication channels for com- Installation of “Sprut-1” central receive/transmit munication and transmission of information between station and five remote stations (made by “Systems the GCC and nine power grids enterprises based on Development Department” ltd based in Kirov, Rus- “Megatrans-3” ( made by CJSC “Natoks”) and “Allied sian Federation); Telesyn” (supplied by JSC ”EN-Telecom”) equipment Installation of “Sprut-2” remote station at “Mari-Turek” and “Kossolapovo” substations (made by Systems Development Department, ltd based in Kirov, Russian Federation); Replacement of the dispatch automated telephone system by “T7” dispatch automated telephone system in “Novotoryal” distribution zone. “T7” is produced by JSC “TELROS”. Installation of communication channels: RaD Mega- plex 2000 Multiplexer and RAD ASMI-52 and RAD FCD modems. Produced by RAD

continuation 122 Industrial Activities

Establishment of Grid Control Centers (GCCs) in the Company’s branches

Action “Ryazanenergo” branch

1. Establishment of the program technical system at The project was executed. GCCs Contractor: LLC “StroiSvyazComplect”. Agreement as of September 17, 2007, for the amount of RUR 53,136 thousand

Inclusion into the investment program of the Investment program for 2008 for establishment of the branches for 2008 and future years of expenses for program technical system in the GCC accounts for establishment of the program technical system in the RUR 2,557 thousand GCCs 2009 investment program is in the process of coordination First quarter — 0; second quarter — RUR 3,500 thousand; third quarter — RUR 5,250 thousand; fourth quarter — 8,700 RUR thousand

Execution of the project of technological equipping Spending program for 2008 was executed at 100% of GCC in the regional dispatch administration under the planned schedule of works on execution of GCC technological equipping

2. Technological equipping of GCCs “PSI Control” operational and information complex; “BARCO” video wall installed at the dispatcher panel; “RastrWIN” software for calculation, analysis and optimization of modes of electric networks and systems; “Zayavki” software; “ASUREO” software, Guaranteed electric power supply system with use of a diesel generation set and an uninterrupted power supply unit; “Smart-FEP” central receive/transmit station

3. Installation of industrial and technological telephone Type of communication: analog, mobile, city auto- communication system between GCCs and re- mated telephone station, trunk 123

“Tulenergo” branch “Udmurtenergo” branch

The project was executed. The program technical system was established in the Contractor: LLC “Systel automation”. GCC and launched on December 29, 2007. Agreement as of September 28, 2007 accounted for Contractor: “Energopromcomplect”. Agreements RUR 46,260 thousand as of May 18, 2007 accounted for RUR 25,598.082 thousand

The 2008 investment program of establishment of the The program technical system of the branch GCC program technical system in the GCC equalled RUR was established in 2007. 45,157 thousand (first quarter — RUR 19 thousand, second quarter — RUR 45,138 thousand) The 2009 investment program is in the process of coordination

Spending program for 2008 was executed at 100% The project was executed

“PSI control” operational and information complex; “Dispatcher” operational and information complex “BARCO” video wall installed at the dispatcher panel; (low level); “RastrWIN” software for calculation, analysis and opti- “SK-2003” operational and information complex (up- mization of modes of electric networks and systems; per level); “Zayavka” programming set, “S-2000” dispatcher panel; guaranteed electric power supply system with use of “Mitsubishi elektrik” conditioning system; a diesel generator set and an uninterrupted power “Powerware 9355-20-NHS-0” guaranteed electric supply unit power supply system; “Energiya” software for modes accounting; “ТКZ-3000” short circuit current calculation system; “Automated workplace for calculation relay protection systems in operative dispatch services” (short-circuit current calculation, settings accounting) software

Facilities to be connected, plan/performance 1. Facilities to be connected, plan/performance. Two 5/5 hundred and fifteen facilities were connected under

continuation 124 Industrial Activities

Establishment of Grid Control Centers (GCCs) in the Company’s branches

Action “Ryazanenergo” branch

beginning

gional dispatch administrations, neighboring GCCs Plan 85/ Performance 85 of other power companies, GCCs of bulk power Communication of dispatch Centres of production systems enterprise, power grids enterprise, substa- departments and radio dispatch Centres of elec- tions and maintenance teams for execution of non- tric network zones with repair teams and operative operating functions (executed on the basis of current dispatch teams — mobile, satellite and radio com- communication channels and equipment) munication

4. Installation of the information gathering and transmis- SSPI program operates stage-by-stage according to sion system (SSPI) the investment program

Inclusion in the Company’s investment program for 1. The 2008 Investment program — RUR 2,500 2008 and future years of expenses for updating and thousand development of SSPI, installation of digital commu- 2. The 2009 Investment program, third quarter — nication channels and the system of remote control RUR 4,400 thousand over the branches’ facilities

Stage of SSPI project execution The following facilities were connected to SSPI: twenty substations; twelve distribution zones; four production departments; regional dispatch administration. 125

“Tulenergo” branch “Udmurtenergo” branch

Type of communication: the plan. digital communication — five channels, 2.Types of communication: analog communication — two channels, Digital communication between the GCC and the mobile communication — one channel, regional dispatch administration; city automated telephone station — one channel Digital communication between the GCC and three production departments; Communication of dispatch Centres of production Analog communication between production depart- departments and radio dispatch Centres of elec- ments and twenty-five electricity distribution zones (in tric network zones with repair teams and operative particular, digital communication in three electricity dispatch teams — mobile, satellite and radio com- distribution zones), munication Analog communication between electricity distribution zones and 215 substations. Mobile, satellite and radio communication between dispatch Centres of production departments and radio dispatch Centers of electric network zones with repair teams and operative dispatch teams

SSPI program was coordinated with Tula regional Contractor for development and execution of SSPI dispatch administration. Tula regional dispatch project: LLC “Radiosystems” administration sent it in December 2008 to “United Plan-schedule of works concerning SSPI project Energy Systems Dispatch Management of Centre” for execution — 2008–2009 coordination. SSPI program was developped stage- by-stage according to the investment program

In 2008 — RUR 18,262.87 thousand: Third quarter of 2008 — RUR 34,052 thousand Automated dispatch control system — RUR fourth quarter of 2008 — RUR 79,455.3 thousand 51,992.81 thousand 2009 — none 2010 — RUR 30 million 2011 — RUR 30 million 2012 — RUR 30 million

The fourth quarter of 2009: Execution of the plan-schedule of SSPI in 2008: SSPI investment program — RUR 18,782 thousand; 1. Reconstruction of information exchange system of Communication systems updating — “Udmurtenergo” with the system of Udmurt regional RUR 8,525 thousand; dispatch administration(first programming set) was Reconstruction of the remote control system — executed at 100% (the agreed sum is RUR 40,512.3 RUR 10,591 thousand; thousand) continuation 126 Industrial Activities

Establishment of Grid Control Centers (GCCs) in the Company’s branches

Action “Ryazanenergo” branch

beginning

In 2008 100% of the investment program money was spent

5. Installation in GCCs of digital communication chan- Establishment of cannels: nels and the system of remote control over control- SDH equipment (made by Nortel Networks) for fiber- led facilities optic communication channels; “Line-M” equipment for communication channels and remote control system for high-frequency channels;

In total, eighty-five channels were established under the plan.

Type of communication: Analog, mobile, city automated telephone station and trunk 127

“Tulenergo” branch “Udmurtenergo” branch

Automated dispatch control system — RUR 10,591 2.Reconstruction of dispatch and technical operation thousand. system of Krasnodar distribution zone (first program- Program of SSPI development and updating was coming set) was executed at 100% (the agreement ordinated with Tula regional dispatch administration. amount is RUR 13,995 thousand). In December 2008 Tula regional dispatch adminis- 3.Updating of technological operation automated tration sent it to “United Energy Systems Dispatch system (Seltinsk distribution zone) was executed at Management of Centre” for coordination. 100% (amount of the agreement is RUR 59,000 thousand) The date of coordination in “United Energy Systems Dispatch Management of Centre” is unknown

Installation of data communication/transmission chan- Controlled facilities: nels: “Central Electric Networks” production department: “Tulenergo”: “Siemens HiPatch 4000” digital auto- “IKM-120” equipment, works via optical multimode mated telephone station; cable; the channel is leased from the Bulk Power “Tula Electric Networks” production department”: Systems Enterprise. stream Е1+Ethernet 28 Mb/s via “Proteus Microwave” “Glazov Electric Networks” production deparrment”: radio-relay communication. “KOTMI” central receive/ “MMX-12” equipment’ the channel is leased from transmit station LLC “Radiolink”. “New Moscow Electric Networks” production depart- “Southern Electric Networks” production department: fiber-optic communication line, 28 ports 100 ment: “FlexDSL Megatrans” equipment; it works via Mb/s each + 4 Е1 Nateks TDMoIP; copper cable belonging to the Bulk Power Systems “Suvorov Electric Networks” production department: Enterprise. Е1 leased form JSC “Vympelkom”. Last mile of the Lease of four streams (2 Mb/s) from JSC “MTS” fiber optic communication line 4 E1 multiplexer; Remote control system: 1) “Dispatcher” operational “Efremov Electric Networks”: E1 leased from JSC and information complex – two servers of remote “Vympelkom. ” Last mile of the fiber optic communi- control, modems, sinkoms. 2) “SK 2003” informa- cation line 4 E1 multiplexer; tion operational complex – two serves of the remote regional dispatch administration — Stream E1 con- control system. cerning the physical match. It was planned to organize the digital channels of Bulk Power Systems Enterprise — Stream E1 remote control under protocol 870-5-101/104 of the concerning the physical match. Ethernet 100 Mb/s Interregional Energy Committee concerning the physical match “Hydro Electric Station” production department: “Perekop” substation: automated telephones system Regional Dispatch Administration of 1 channel of the GCC via the physical pare Ethernet 100 Mb/s “Central Electric Netwrorks” production department via physical pare “Granit-M” remote station : Udmurt regional dispatch administration of 1 channel; “Southern Electric Networks” production department– Udmurt regional dispatch administration of 1channel; Plan/performance – 3/3 128 Industrial Activities

Connection to Power Grids Process Organization

The activities aimed to the technological connec- Detailed information concerning the applications tion in IDGC of Centre and Volga Region, JSC, and determined amounts and tariffs for technologi- are based on the federal and regional normative cal connection in the reporting year of 2008 and tar- and legal documents which are presented at IDGC iffs and amounts applied for in 2009 for this kind of of Centre and Volga Region Internet website at service in the branches of IDGC of Centre and Volga http://www.mrsk-cp.ru/?id=279, in the “Clients: Inter- Region, JSC, are presented in Appendix No.7 to this net Reception” section. report.

Implementing the client-oriented policy, IDGC of In 2008 the amount of the applied capacity for the Centre and Volga region, JSC, constantly develops technological connection to the electric grids of the the system of clients’ complex service. The number Company slightly decreased in comparison with of new Clients Service Centers (CSCs) opened in 2007. 2008 is 14 in addition to 10 exciting CSCs: • In Ivenergo branch — one CSC in the city of During 2007-2008, IDGC of Centre and Volga Re- Ivanovo; gion, JSC, acquired the following amount of the ap- • In Kalugaenergo branch — three CSCs in the city of plications for technological connection of the power Kaluga, two in the cities of Obninsk and Kirov; receiving equipment of different voltage: • In Kirovenergo branch — two CSCs in the cities of • In 2007 — 19,709 applications for the total capacity Kirov and Slobodskiy; of 2,208.49 MW; • In Marienergo branch — one CSC in the city of • In 2008 — 19,434 applications for the total capacity Ioshkar Ola; of 1,929.29 MW. • In Nizhnovenergo branch — two CSCs in the cities of Dzerzhinsk and Arzamas; The largest amount of the applied capacity (64%) • In Udmurtenergo branch — three CSCs in the cities is within the category of the applications for techno- of Izhevsk, Sarapul and Glazov. logical connection for more then 750 kW (6–10 kW), the smallest — the category of physical persons The consumers apply to the Clients Service Centre (4%). to acquire the necessary information concerning the procedure of technological connection to power grids, current tariffs for technological connection, concerning the form and contents of the application for technological connection, concerning the term of contract for technological connection and other issues.

Clients’ Services Centers receive, fill out and ana- lyze the applications for technological connection of power receiving equipment from physical and legal bodies. Technological connection of power receiving equipment to the electric grids is the business subjected to the state regulation. Payment for technological connection of power receiving equipment and objects of the electric grid equipment shall be determined in the bodies of the tariff regulation of the Russian Federation subjects. 129

Amount of the capacity applied, and the number of applications received in 2007—2008

Branch name Capacity applied

2007 2008 Amount of appli- For the total Amount of appli- For the total cations, pieces. capacity, MW cations, pieces capacity, MW

“Vladimirenergo” 1,698 49.16 2,143 60.55

“Ivenergo” 907 96.64 542 32.85

“Kalugaenergo” 4,023 592.70 3,361 957.06

“Kirovenergo” 1,703 162.62 2,378 69.89

“Marienergo” 727 30.63 719 11.94

“Nizhnovenergo” 5,266 564.60 5,004 355.41

“Ryazanenergo” 1,577 282.70 1,567 84.99

“Tulenergo” 1,562 306.08 1,523 270.12

“Udmurtenergo” 2,246 123.36 2,197 86.48

Total in IDGC of Centre 19,709 2,208.49 19,434 1,929.29 and Volga Region, JSC

Distribution of the applied capacity by connection types, MW

1,219.93 (64%) more than 750 kW (6—10 kV) 179.57 (9%) more than 750 kW (35—110 kV)

76.35 (4%) less than 15 kW physical persons 23.51 (1%) less than 30 kW (0.4 kV) 64.73 (3%) more than 30 kW (0.4 kV) 57.28 (3%) less than 100 kW (6—10 kV)

307.92 (16%) from 100 to 750 kW (6—10 kV) 130 Industrial Activities

Distribution of the amount of the applied capacity throughout the sectors of the industrial activities in branches

Capacity, MW 426.19 400

300

200 158.7 58.97 13.41 24.3 100 15.2 20.64 10.37 6.7 5.47 5.74 11.32 1.28 0.81 0.37 1.4 0.21 0.87

0 Industry Agriculture

Comparison table on signed technological connection contracts number and capacity amount for 2007—2008

Technical connection “Vladimir- “Ivenergo” “Kaluga- “Kirov- contracts signed energo” energo” energo”

2007 Number of contracts, pieces 1,448 516 2,330 1,525 For the total capacity of, MW 31.37 22.52 176.04 133.98

2008 Number of contracts, pieces 2,004 537 3,067 2,229 For the total capacity of, MW 56.62 101.01 766.71 57.42 131

“Vladimirenergo” branch “Nizhnovenergo” branch “Ivenergo” branch “Ryazanenergo” branch

504.27 “Kalugaenergo” branch “Tulenergo” branch “Kirovenergo” branch “Udmurtenergo” branch “Marienergo” branch 276.33 96.62 53.68 54.07 44.61 34.32 23.41 16.22 18.72 7.63 11.54 9.27 3.69 4.54 3.48 2.53 2.41

Domestic and social sphere Physical persons

“Marienergo” “Nizhnov- “Ryazan- “Tul- “Udmurt- Total in IDGC of Centre energo” energo” energo” energo” and Volga Region, JSC

558 3,675 1,041 1,414 1,474 13,981 8.65 87.53 139.72 193.56 75.34 868.71

643 4,489 1,491 1,274 2,004 17,738 11.53 246.53 74.41 138.00 70.36 1,522.59

In comparison with 2007 in the reporting period the amount of the signed technological connection contracts 27% increased. The signed contracts capacity 75% increased in 2008. 132 Industrial Activities

The largest number of contracts is within the category of applicants as physical persons with the applied capacity of 15 kW.

Number of signed technical connection contracts

Number of ap- 3,000 2,925 plications, pcs 2,285

2,000 1,684 1,314 1,365 969 850

1,000 738 567 416 381 351 340 277 153 190 177 47 76 18 45 11 97 40 11 7 7

<15 kW physical persons <30 kW (0.4 kV) >30 kW (0.4 kV)

Number of technological connection contracts by connection types

Capacity, 400 kW

300

200

100 28.82 11.26 3.02 2.78 15.63 17.69 1.85 6.99 9.04 4.52 2.42 2.69 2.05 3.91 2.72 8.07 3.41 4.28 2.18 0.6 0.6 0.43 0.72 0.72 0.43 1.34 0.69 0 <15 kW physical persons <30 kW (0.4 kV) >30 kW (0.4 kV) 133

“Vladimirenergo” branch “Ivenergo” branch “Kalugaenergo” branch “Kirovenergo” branch “Marienergo” branch “Nizhnovenergo” branch “Ryazanenergo” branch “Tulenergo” branch “Udmurtenergo” branch 434 279 150 166 173 145 139 117 85 57 41 96 115 96 90 28 46 36 23 13 13 10 12 10 8 5 0 0 0 0 1 0 3 0 2 4

<100 kW (6—10 kV) 100—750 kW (6—10 kV) >750 kW (6—10 kV) >750 kW (35—110 kV) 540.43 146.45 132.2 80.63 62.34 58.57 40.84 39.61 37.76 30.63 20.16 27.7 28.21 8.74 23.47 18.51 7.42 3.07 5.35 22.76 9.97 8.2 6.71 2.7 3.8 3.46 7.33 5.15 1.47 0 0 0 0 0 0 0.08

<100 kW (6—10 kV) 100—750 kW (6—10 kV) >750 kW (6—10 kV) >750 kW (35—110 kV) 134 Industrial Activities

Amount of the connected capacity in 2007 and 2008, MW

469.57

516.26

2008 2007

Amount of the connected capacity under the technological connection contracts

Capacity, MW 40

20 9.68 9.34 8.23 5.57 4.55 4.82 4.47 3.51 3.29 2.28 2.21 2.58 2.85 1.85 1.07 1.07 1.28 0.90 0.36 1.79 0.80 0.45 1.30 0.28 0.70 0.50 0.26

<15 kW physical persons <30 kW (0.4 kV) >30 kW (0.4 kV) 135

Amount of the newly connected capacity of the power receiving equipment under technological connection contracts in 2007 accounted for 469.57 MW; in 2008 it was 516.26 MW.

Distribution of the amount of the connected capacity by categories shows that the largest amount of the connected capacity in general in the Company is within the “more than 750 kW, 6(10) kV” category of connection.

“Vladimirenergo” branch “Ivenergo” branch “Kalugaenergo” branch “Kirovenergo” branch “Marienergo” branch “Nizhnovenergo” branch “Ryazanenergo” branch “Tulenergo” branch “Udmurtenergo” branch 56.70 51.17 37.47 37.10 26.92 25.36 22.42 21.86 19.78 19.08 18.05 12.64 11.17 11.32 10.76 10.22 9.43 7.53 5.50 5.06 5.01 4.72 2.43 2.68 1.68 1.30 1.29 1.32 0.20 0 0 0 0 0 0 0

<100 kW (6—10 kV) 100—750 kW (6—10 kV) >750 kW (6—10 kV) >750 kW (35—110 kV) 136 Industrial Activities

In the reporting period IDGC of Centre and Volga Re- To remove technological connection restrictions, they gion, JSC, decreased the amount of the non-satisfied carried out reconstruction of 35–110 kV substations demand for technological connection of the power and 10–0.4 kV distribution grids in all the branches of receiving equipment to the electric grids. IDGC of Centre and Volga Region, JSC.

Technological connection results 2007—2008

Number, pcs. 2007 19,709 19,434 17,738 20,000 2008 13,981 12,368

15,000 9,559

10,000 932 149

0 Applications Contracts signed Actual connec- Rejected made tions

The crisis economic situation affected the technological connection activities of IDGC of Centre and Volga Region, JSC, in the form of delay in payments and increase in number of customers’ re- quests to allow them to pay in installment under the signed contracts for technical connection. There is a tendency of a growing number of contracts cancelled and applications withdrawal. 137

Future Development Process Organization

The process of future development provides for re- works of the Tula power supply system up to 2012 alization of actions in the following directions: including an outlook up to 2017”; • estimation of urgency of the electric grids future • performance of the work “Updating of the future de- development schemes operating in the Company velopment scheme of 35–110 kV electric networks branches, organization of works on development of the Ryazan power supply system for the period up of new future development schemes and adjusting to 2015 including an outlook up to 2020”. of the existing schemes; • development and signing of the Agreements with ad- As for the branches of “Ivenergo”, “Marienergo”, ministrations of the regions providing the programs “Vladimirenergo”, the available schemes of future of prime actions on development and increase of re- development of electric networks are up-to-date liability of operation of electric grid complexes in the and do not require updating. Company branches; • interaction with JSC “UES FGC” with regard to sig- It is planned for “Kirovenergo” branch in 2010 to ning of the contracts for technological connection order the “Future Development Scheme of 35 kV to electric networks of JSC “UES FGC”; and above electric networks of Kirov city for the pe- • interaction with generation companies with regard riod up to 2015 including an outlook up to 2020”. to signing of contracts for technological connection of generation facilities to electric grids of the Com- It is planned for “Kalugaenergo” branch in 2010 to or- pany branches; der the “Future Development Scheme of 35–110 kV • control over realization of federal target programs. electric networks of Kaluga city for the period up to 2012 including an outlook up to 2017”. Future Development Schemes Agreements with Administrations Development and updating of future development of the Russian Federation Entities schemes in IDGC of Centre and Volga Region, JSC, is carried out according to Order No.15 as of 22 Ja- Agreements on development of electric ener- nuary 2008. gy systems of the Russian Federation entities and provision of reliable electric power sup- In 2008 IDGC of Centre and Volga Region, JSC, plies of consumers are signed in order to main- held competitive procedures and signed contracts tain reliable and steady functioning of the power for updating of future development schemes of the supply systems in a medium-term, elimination networks of 35 kV and above. In particular, contracts of the existing (projected) restrictions in electric on the following kinds of works were signed: power supplies of consumers, realization of pro- • performance of actualization of the “Future Deve- grams of complex development of the social in- lopment Schemes of 35–500 kV Electric Networks frastructure, full meeting of the demand for the in the Nizhniy Novgorod Region for 2007–2015”; electric power, and for the purpose of realization • performance of the work “Development Scheme of long-term programs of strategic development of the Udmurt power supply system for the period up of the electric power industry. to 2015 including an outlook up to 2020”; • performance of works on updating the “Future De- The programs realized according to the signed velopment Schemes of 35 kV and above electric net- Agreements are constantly adjusted regarding 138 Industrial Activities

the actions carried out, time of their realization struction of three 110 kV substations and 36.6 km of and volume of investments. In the Company bran- power lines of 110 kV was completed; and construc- ches, which have not signed such agreements yet, tion of 1 km of OL-110 kV was finished. their drafts are forwarded for coordination to the administrations of the regions. Within the limits of The III Tula Economic Forum held on 10 October 2008 between the Administra- In 2008, the “Nizhnovenergo” branch, accor- tion of the Tula Region and IDGC of Centre and Vol- ding to the program “Agreements on interaction ga Region, JSC, Agreement No.60-K-1/1948 was of the Government of the Nizhniy Novgorod region signed for cooperation at realization of the invest- and RAO “UES of Russia” on development of an ment project in the territory of the Tula region. This electric energy system of the Nizhniy Novgorod Agreement provides realization of the medium-term region and maintenance of reliable electric power investment program. supplies of consumers of the Nizhniy Novgorod region” (No.339-P as of 27 December 2006), signed Draft Agreements on interaction of the govern- contracts for design and exploration works at eight ments of the Ivanovo and Kaluga regions and IDGC substations of new construction; construction of new of Centre and Volga Region, JSC, on development 110 kV Strelka substation was launched; reconstruc- and increase of reliability of functioning of the grid tion of four 110 kV substations was completed. complex and programs of prime actions were prepared and forwarded for coordination to the regional In “Ryazanenergo” branch, according to the pro- administrations. gram “Agreements on interaction of the Govern- ment of the Ryazan region and RAO “UES of Rus- The “Kirovenergo”, “Marienergo”, Udmurtenergo” sia” on development of the electric energy system branches apply the Cooperation Agreements signed of the Ryazan region and maintenance of reliable in 2006 with the administrations of the regions. electric power supplies of its consumers” (No.34- The Agreements are framework and do not contain 1/4 as of 18 February 2008), in the reporting period programs of prime actions with indication of special the construction works of ODU-110, 220 kV were term of their execution and volumes of financing. executed and the first 200 MVA automatic transformer was installed at 220 kV Fakel substation; Draft Agreements on interaction with IDGC of Centre reconstruction of two 110 kV substations was exe- and Volga Region, JSC, were developed and forwar- cuted as well. ded for coordination to the governments of the Re- public of Mariy El and the Udmurt Republic. In the reporting period, in “Vladimirenergo” branch, according to the program “Agreements on interaction Technological Connection of the Administration of the Vladimir region and IDGC to the United National Electric Grid of Centre and Volga Region, JSC, at realization of Facilities prime actions on increase of reliability of electric The objects of grid facilities of UNEG in the ter- power supplies and maintenance of connection of ritories of the regions included in the service zone new consumers to electric networks for the 2008– of IDGC of Centre and Volga Region, JSC, are di- 2012 period” (No.213 as of 26 August 2008), recon- vided between three branches of JSC “UES FGC”: 139

TEG of Centre, TEG of Urals and TEG of Volga. Out tions, contract offers for realization of technological of 82 feeding centers of JSC “UES FGC” located connection were forwarded to applicants. in the territory of IDGC of Centre and Volga Region, JSC, 14 centers are referred to the closed feeding Realization centers according to the letters of RDA branches of of Federal Target Programs JSC “UES FGC”. The program “Dwelling” has been developed in the territory of the Ivanovo region within the limits In the reporting period, 33 applications for tech- of realization of the federal national project “Avai- nological connection to electric grids of JSC “UES lable and Comfortable Dwelling — to Citizens FGC” were prepared and forwarded to JSC “UES of Russia”. FGC”. Contracts for realization of technological connection to electric networks of JSC “UES FGC” were The program includes two objects: signed under 9 applications. • Ivanovo city, Moskovsky microdistrict; • Ivanovo city, Kohomskoe highway, Sukhovo-Derya- Technological Connection bihsky microdistrict No.2. of Generation Facilities The territory of the regions of the service zone Technological connection for objects of housing con- of IDGC of Centre and Volga Region, JSC, now instruction is planned to be performed from the exi- cludes generation facilities of JSC “TGC-5” and JSC sting networks. In order to connect new capacities, “TGC-6” included in the JSC “Integrated Energy the construction of “Ivanovskaya — 16” 110/6kV Systems” Holding (JSC “IES”) and JSC “TGC-4”. substation is planned. The generation facilities of JSC “TGC-5” are located in the territory of “Kirovenergo”, “Udmurtenergo”, “Marienergo” branches; JSC “TGC-6” — in the territory of “Vladimirenergo”, “Ivenergo”, “Nizhnov- energo” branches; JSC “TGC-4” — in the territory of “Tulenergo”, “Kalugaenergo”, “Ryazanenergo” branches.

In the reporting period, 5 out of 11 applications for technological connection of generation facilities to electric networks of IDGC of Centre and Volga Region, JSC, were cancelled by appliers. Currently there are 6 applications for technological connection of generation facilities: Kaluga TPS-1, Kirov TPS-3, Izhevsk TPS-1, Novogorkovskaya TPS, Igum- novskaya TPS, Dyagilevskaya TPS. Concerning Kaluga TPS-1, the contract for realization of technological connection to electric networks of Kaluga- energo branch was signed. As for the other applica- Clearing a New Height Clearing a New Height

Investment Activities 142 Investment Activities

Investment Activities Parameters

Cost and physical parameters for 2008 (including the operational period)

Indicator name “Vladimir- “Ivenergo” “Kaluga- “Kirov- “Marienergo” energo” energo” energo”

Capital disbursement, RUR million, 583.370 390.134 1,047.725 536.023 153.307 VAT excluded Putting in operation of fixed assets, 463.160 307.441 427.433 585.349 133.321 RUR million Financing, RUR million, VAT included 761.035 383.012 1,973.217 491.775 173.852

Capacity put in operation MVA 95.72 2.35 54.87 100.00 4.21 Km 275.42 98.47 135.11 261.90 22.66

Capacity gain MVA 58.25 2.35 38.62 61.70 4.21 Km 137.09 37.86 26.55 216.05 10.26

Cost and physical parameters for 2008 (operational period)

Indicator name “Vladimir- “Ivenergo” “Kaluga- “Kirov- “Marienergo” energo” energo” energo”

Capital disbursement, RUR million, 551.857 379.992 1,006.930 471.873 140.670 VAT excluded Putting in operation of fixed assets, 459.831 307.410 390.093 531.147 128.154 RUR million Financing, RUR million, VAT included 680.390 368.487 1,788.099 379.925 157.061

Capacity put in operation MVA 95.72 2.35 52.5 100.00 4.1 Km 275.42 98.47 129.04 261.90 20.90

Capacity gain MVA 58.25 2.35 36.22 61.70 4.05 Km 137.09 37.86 20.55 216.05 8.5 143

“Nizhnov- “Ryazan- “Tulenergo” “Udmurt- Executive Total in IDGC of Centre energo” energo” energo” body and Volga Region, JSC

3,105.852 996.493 853.680 428.277 42.361 8,137.222

1,595.279 528.445 650.633 633.696 23.007 5,347.763

6,076.842 1,165.646 953.850 599.859 79.138 12,658.226

16.00 103.22 16.00 40.00 0.00 432.37 306.44 204.66 146.08 49.91 0.00 1,500.65

6.00 38.22 6.00 40.00 0.00 255.35 187.68 128.76 9.33 0.00 0.00 753.58

“Nizhnov- “Ryazan- “Tulenergo” “Udmurt- Executive Total in IDGC of Centre energo” energo” energo” body and Volga Region, JSC

3,059.327 957.076 843.081 365.644 42.361 7,818.811

1,527.736 509.784 639.497 619.727 23.007 5,136.387

5,623.166 1,006.433 894.906 489.669 79.138 11,467.274

16.00 103.22 16.00 40.00 0.00 429.81 293.80 185.76 146.08 49.91 0.00 1461.28

6.00 38.22 6.00 40.00 0.00 252.79 187.68 128.76 9.33 0.00 0.00 745.82

Branches of IDGC of Centre and Volga Region, reconstruction (TRR) — RUR 5,724.1 million, pur- JSC, carried out investment activities in 2008 ac- chase of fixed assets — RUR 50.3 million. cording to approved investment program. Disburse- ment of capital investment was RUR 8,137.2 mil- Fixed assets were put in operation for RUR lion or 111.1% compared with planned RUR 5,347.76 million compared with the plan of RUR 7,322.9 million. It includes new building (NB) — 5,211.1 million. RUR 2,362.76 million, technical re-equipment and 144 Investment Activities

Dynamics of capital investment disbursement in the Company in total is positive. Amount of dis- bursed capital investments in 2008 increased in comparison with 2007 by RUR 2,495.833 million.

2006 2007 2008

Volume of capital investments for 2006—2008 8,137 5,641 RUR million 6,000 3,315 4,000 3,106 1,495 1,048 996

2,000 584 920 639 779 536 567 854 605 583 451 440 472 428 365 390 153 329 339 120 120 204 292 235 42 2 0 0 “Vladimir- “Ivenergo” “Kaluga- “Kirov- “Marienergo” “Nizhnov- “Ryazan- “Tulenergo” “Udmurt- Executive Total in IDGC of Centre energo” energo” energo” energo” energo” energo” body and Volga Region, JSC

Directions and Pattern of Investments

The following measures were implemented in 2008 purchased 416.17 km of 0.4–10 kV power transmis- within new building: sion lines. • 305.7 km of 0.4–10 kV overhead transmission lines • 14.17 km of 0.4–10 kV cable lines were built. were built including: “Vladimirenergo” — 7.56 km, • 15 transformer substations and distribution trans- “Ivenergo” — 33.98 km, “Kalugaenergo” — 16.82 former substations with total capacity of 12.15 MVA km, “Marienergo” — 5.45 km, “Nizhnovenergo” — were built. 127.96 km, “Ryazanenergo” — 114 km. There were 145

2006 2007 2008

Volume of capital investments for 2006—2008 8,137 5,641 RUR million 6,000 3,315 4,000 3,106 1,495 1,048 996

The works were implemented for the purpose of con- • 697.93 km of 0.4–10 kV transmission lines built nection of additional consumers and increase of dis- in 1973–1987; and 64.38 km of 35–110 kV trans- tribution grids reliability and provision of continuous mission lines were reconstructed. The work was supply of present consumers with electric power. carried out by contract way. Reconstruction of 0.4–10 kV overhead transmission lines was imple- The following steps were taken for reconstruction mented in all branches of IDGC of Centre and Vol- and technical re-equipment in 2008: ga Region, JSC. As a result of carried out exami- 146 Investment Activities

nations according to engineering documentation -- Replacement of accumulator batteries of SC 153-34.3-20.573-2001 “Methodological instruc- type (stationary, covered with electrodes) and tions on account and analysis of technical state…”, SS (stationary, short electric discharge) at 10 0.4–10 kV transmission lines were ascertained to substations of 110 kV. The accumulator bat- have unusable state. On the basis of analysis of teries replaced were overage. During their ope- information on amount of energy power transmis- ration, separate parts of batteries had been re- sion, prospects of consumption growth and quality placed more than once because of destruction of electric power, and with a glance on technical of glass jars. Operational properties according state of overhead transmission lines and high so- to engineering document 34.45-51.300-97 didn’t cial meaning of powered objects, the decision on correspond to standards. To increase reliability their reconstruction was made. of equipment and safety of operating personnel, • 77 oil switchers of 6–10 kV were replaced by va- accumulator batteries were replaced by new- cuum ones at 35–110 kV substations. Oil switchers type ones. are more exposed to physical deterioration and de- -- Reconstruction of relay protection and auto- preciation. According to surveys, speed characteris- matic equipment at 35–110 kV substations tics of majority of switchers are below the standard. with replacement of depreciated equipment Driving gears of switchers operate unreliably and by that microprocessor-based: replacement don’t yield to regulation (unstable work of driving of emergency control automatics (ECA) at 15 gear). Switches do not correspond to engineer- substations (automatic frequency load shed- ing documentation 34.45-51.300-97 as for many ding devices), assembling of arc protection at technical characteristics. Units with such switchers 6 substations. are fire and explosion dangerous. To increase reliability of electric power supply of consumers, cut The Most Significant Projects operating costs, protect life and health of employ- of Branches of IDGC of Centre ees, replacement of oil switchers by vacuum ones and Volga Region, JSC, which were was carried out. Put in Operation within the Structure • Depreciated equipment was replaced at 35–110 kV of Fixed Assets, and the Projects substations, including those according to approved Launched in 2008 target programs: “Vladimirenergo” branch: -- Replacement of isolating switches and short The projects put in operation in 2008: circuiters by 10 SF 6 circuit breakers at 110 kV • Yuriev-Polskaya-Nebyloe OL-110 kV, replacement substations and by 3 SF 6 circuit breakers at of worn out and outdated wire AZH 120 by AS 120. 35 kV substations. • ”Melikhovo” 110 kV substation, reconstruction with -- Replacement of oil-filled bushing by those with replacement of 6.3 MVA transformer by 16 MVA solid insulation of 110 kV switchers — 34 pieces; one; “Melenki” 110 kV substation with replace- of 35 kV switches — 6 pieces). As a result of ment of 10 MVA transformer by 16 MVA one; “Bo- exploitation measuring according to engineering golyubovo” 110 kV substation with replacement of document 34.45-51.300-97, insulation characte- 16 MVA transformer by 25 MVA one. ristics of bushings were above the limit. -- Replacement of porcelain cylindrical post insula- The projects launched in 2008: tion at 110 kV substations by polymeric insula- • Replacement of 25 MVA power transformer by tion — 335 pieces. 40 MVA one at “Gorokhovets” 110 kV substation. 147

• Expansion and reconstruction of “Zapadnaya” tion, “Kolosovo” 35 kV substation and construction of 110 kV substation with replacement of worn out and new 110 kV substation “Akhlebino” were launched. outdated 110 kV equipment: switches of MKP-110- type by oil-filled 110 kV current transformers; 110 kV “Kirovenergo” branch: disconnecting devices by LTB-145 switches; SF 6 The projects put in operation in 2008: current transformers TG-145 and disconnecting de- • Construction of the 2nd starting complex of “Zavod- vices SGF-123 with a motor drive of main cutters skaya” 110/6 kV substation. and grounding blades. • Construction of the 2nd stage of “Chizhi” • Expansion of “Gorodskaya” 110 kV substation with 110/35/10 kV substation. installation of 2 transformers of 16 MVA. • Construction of 10 kV “Chizhi-RTP Chistye Prudy” cable line of 1.85 km in length. “Ivenergo” branch: • Reconstruction of “Kommunalnaya” 110/10 kV sub- The projects put in operation in 2008: station with replacement of 16 MVA transformers by • Construction of the first stage of Lezhnevsky EGE 16/25 MVA transformers with forced cooling system. industrial base. • Reconstruction of “Kineshma-Gorodskaya” OL-35 “Marienergo” branch: kV for the amount of RUR 13.8 million. A section of The projects put in operation in 2008: 2.48 km of OL 35 kV was put in operation. • Construction of 10 kV cable line and “Sberbank RF” • Reconstruction of “Teikovo” substation with replace- transformer substation. Construction of CL-10 kV of ment of oil breaker of 110 kV by SF 6 breakers of 0.88 km in length and 2х1600 kVA block transformer 110 kV. substation was completed according to the contract for technological connection. The projects launched in 2008: • Reconstruction of “Pomialy-Shelanger” OL-110 kV. • Construction of the first stage of “Ivanovo-15” sub- At OL-110 kV, the АС-70 wire was replaced by АС- station was launched. In 2008, RUR 83.1 million 120 wire with replacement of hitch fittings and insu- were spent on these works. lators at the site of span No.1-80 of 17.9 km in length along the track of the existing OL, and expansion of “Kalugaenergo” branch: the route. The projects put in operation in 2008: • Reconstruction of “Shelanger-Suslonger” OL- • Reconstruction of “Galkino” 110 kV substation with 110 kV. At OL-110 kV, the АС-70 wire was replaced replacement of 6.3 MVA transformer by 25 MVA and by АС-120 wire with replacement of hitch fittings and reserve feeding received from “Pegas” 110 kV sub- insulators at the site of span No.24-80 of 10.0 km in station. length at the line of the existing OL, and expansion • Reconstruction of “Vorobyi” 35 kV substation with of the route. replacement of the existing 4 MVA transformer by 10 MVA one; of “Tishnevo” 35 kV substation with The projects launched in 2008: replacement of 2.5 MVA transformer by 4 MVA one. • Reconstruction of “Kozmodemyansk” 110/10 kV substation with replacement of 10 kV CDDEI (com- The projects launched in 2008: plete distribution device of external installation) by • In 2008, works on reconstruction of “Rusinovo” 10 kV CDU (closed distribution unit) with vacuum 110 kV substation, “Rosva” 110 kV substation, “Vor- switches and relay protection and automatic equip- sino” 110 kV substation, “Detchino” 35 kV substa- ment device of SPAK type, installation of control 148 Investment Activities

power box of “Tirosot” type; reconstruction of AIM- • Reconstruction of “Ryazan” 110 kV substation with SCEM (automated information and measuring sys- replacement of the 40 MVA power transformer by tem of commercial energy metering). that of 63 MVA (the capacity gain was 23 MVA); re- • Reconstruction of “Volga-Pomialy” OL-110 kV in placement of 110 kV supporting rod isolation. Volga and Zvenigovo regions of the Republic of Mari El of 12.36 km in length with replacement of wooden The projects launched in 2008: supports by metal and ferro-concrete ones. • Construction of “Pushchino” 220 kV substation with OL 110 kV overhangs to “Fakel-Pushchino” — 1 “Nizhnovenergo” branch: circuit; “Pushchino-Vozha” OL-110 kV; “Fakel-Push- The projects put in operation in 2008: chino” OL-110 kV — 2 circuits; “Pushchino-Dyagi- • Reconstruction of “Varya” 110 kV substation with re- levo” OL-110 kV with branch lines (to “Okruzhnaya” placement of Т-1 of 10 MVA by that of 16 MVA. substation, “Pechatnaya” substation). • Reconstruction of “Mokhovye Gory” 110 kV substation; “Quartz” 110 kV substation, “Pecherskaya” 110 kV “Tulenergo” branch: substation, “Ostankino” 110 kV substation with instal- The projects put in operation in 2008: lation of 25 MVAr reactive power compensators. • Reconstruction of “Zaokskaya” 110/35/10 kV substa- • Reconstruction of “Lyskovo” 110/10/6 kV substation tion with replacement of T2 transformer of 10 MVA by with replacement of 110 kV bulk-oil circuit breakers that of 16 MVA; replacement of isolating switches and by SF 6 circuit breakers. short circuitors by SF 6 circuit breakers of 110 kV. • Construction of “Airport” 6 kV distribution unit. • Reconstruction of “Bolokhovskaya” 110/35/6 kV substation and “Smychka” 110/35/6 kV substation The projects launched in 2008: with replacement of isolating switches and short cir- • Expansion of “Zapadnaya” 110 kV substation with cuitors by SF 6 circuit breakers of 110 kV. additional installation of two 2х40 MVA transformers. • Reconstruction of POL-10 kV from “Tekhnolog- • Reconstruction of “Sverdlovskaya” 110 kV substa- icheskaya” substation and translation of electric tion with construction of new 10 kV closed distribu- power supply of Koptevsky farm and Gornospa- tion device. satelnyi settlement to 10 kV supply. • Works are carried out for the purpose of increase of reliability of electric power supply of the central part “Udmurtenergo” branch: of N.Novgorod. The projects put in operation in 2008: • Construction of “Strelka” 110 kV substation • Construction of the 1st starting complex of “Zen- (2х40 MVA). itnaya” 110/6 kV substation with installation of 2х40 MVA power transformers. “Ryazanenergo” branch: • Reconstruction of “Sarapul” 110/35/10 kV substation The projects put in operation in 2008: with replacement of the 35 kV open distribution unit • Reconstruction of “Pechatnaya” 110 kV substation equipment and 10 kV complete distribution device of with replacement of the TRDN-25000/110-type po- external installation. wer transformer by TRDN-40000/110 (the capacity • Reconstruction of “Mostovoe” 110 kV distribution gain was 15 MVA); replacement of isolating switches unit with replacement of storage battery, direct cur- and short circuitors by 110 kV SF 6 circuit breakers; rent board and charging-recharging devices, sys- replacement of 110 kV supporting rod isolation. tems of inlet ventilation of the storage battery. 149

Dynamics of the structure of capital investments of IDGC of Centre and Volga Region, JSC, including by voltage classes, RUR million, VAT excluded

IDGC of Centre and Volga 2006 2007 2008 Region, JSC target implemen- % of imple- tation mentation

Lines of investment activities — total: 3,314.819 5,641.389 7,322.901 8,137.222 111%

Grid facilities, including 2,571.177 4,418.345 6,198.200 6,628.781 108%

Re-equipment and reconstruction, 1,546.818 2,695.271 3,283.287 3,669.749 112% including

Overhead HV 240.32 169.646 154.374 179.041 116% lines MV1 36.263 59.651 33.833 34.227 101% MV2 140.661 303.103 483.351 512.076 106% LV 360.232 627.993 511.127 551.902 108%

Cable lines HV 0 0 0.000 0.000 — MV1 0 13.83 0.000 0.000 — MV2 14.841 27.147 31.527 28.974 92% LV 0 4.267 0.269 0.439 163%

Substations HV 535.562 1,225.212 1,387.023 1,511.224 109% MV1 195.366 106.072 259.505 229.196 88% MV2 23.573 158.35 422.279 622.670 147%

New construction and expansion 816.415 1,313.546 1,998.424 2,147.231 107% of operating facilities, including

Overhead HV 18.6 81.893 211.693 213.419 101% lines MV1 54.106 0.582 0.000 0.000 MV2 25.862 41.554 125.264 171.572 137% LV 4.783 107.965 181.336 241.935 133%

Cable lines HV 0 0 0.000 0.000 — MV1 0 0 0.000 0.000 — MV2 0.977 99.643 43.867 41.851 95% LV 1.64 2.96 0.000 2.142 —

Substations HV 604.42 839.795 1,267.384 1,289.073 102% MV1 104.977 25.554 16.100 6.101 38% MV2 1.05 113.6 152.781 181.137 119%

Other electric grid facilities 207.944 409.529 916.489 811.801 98% (automation, communication)

continuation 150 Investment Activities

Dynamics of the structure of capital investments of IDGC of Centre and Volga Region, JSC, including by voltage classes, RUR million, VAT excluded

IDGC of Centre and Volga 2006 2007 2008 Region, JSC target implemen- % of imple- tation mentation

beginning

Devices of measuring and control 154.923 200.326 218.606 210.055 96% of electric power), including

AIEPAS (automated information 41.593 48.154 40.466 32.478 80% electric power accounting system) of the wholesale market in the structure of the investment program

Other means of measuring 24.631 64.272 0.700 0.671 96% and control of electric power

Reconstruction and re-equipment 29.707 135.395 345.675 461.091 133% of the future construction

Other industrial and economic 338.16 329.095 238.944 354.384 148% facilities

Equipment which is not included 171.755 436.107 296.384 372.78 117% in the estimates of construction

Objects of non-production sphere 0 9.028 0.000 0.000 —

Capital investment on intangible 0 0 0.000 59.825 — assets

Long-term financial investment 14.891 0 0.000 0.000 —

Purchase of fixed assets 33.91 113.093 112.623 50.309 45%

For reference: Disbursement of capital investment 136.743 969.962 1,884.095 2,277.409 121% for technological connection of consumers 151

Analysis of Capital Investments Structure Capital investment implementation at electric grid Disbursement of capital investments in 2008 objects in 2008 exceeded parameters of 2007 by was 107%. The disbursement increased by RUR 2,293.2 million. RUR 833.4 million compared with 2007.

Implementation in 2008 as for technical re-equipment and reconstruction grew in comparison with 2007 by RUR 944.5 million.

Structure of capital investments in 2008

0.7% 29.0%

70.3%

TRR NB Other

Investment program of IDGC of Centre and Volga Major reasons for increase of the investment pro- Region, JSC, in 2008 was implemented in amount gram’s implementation by 11.1% are: of RUR 8,137.222 million which is 111.1% with 1. Increase in volume of works connected with recon- planned RUR 7,322.901 million. struction and technological connection of new consumers. Capital investments in 2008 have the following 2. Growth of market prices for equipment and services structure: as a result of purchases. • Technical Re-equipment and Reconstruction — 70.3 %. The reason of deviation of actual indicators from • New Building — 29 %. planned ones at new building in the branch “Rya- • Other — 0.7 %. zanenergo” is short timely delivery of equipment by the supplier at “Puschino” 110 kV substation. 152 Investment Activities

Investment Program Financing Sources

Structure of the investment program financing in 2008 (including the operational period), RUR million, VAT excluded

Branch name Sources of External funding sources investments, total Raised funds Raised funds Payment for tech- (borrowing rate) (additional issue) nical connection

“Vladimirenergo” 583.370 273.992 0.000 7.356

“Ivenergo” 390.134 179.320 0.000 84.324

“Kalugaenergo” 1,047.725 99.554 0.000 576.550

“Kirovenergo” 536.023 234.356 0.000 15.782

“Marienergo” 153.307 44.267 0.000 5.241

“Nizhnovenergo” 3,105.852 1,587.809 0.518 270.405

“Ryazanenergo” 996.493 277.374 0.000 259.418

“Tulenergo” 853.680 474.505 0.000 39.143

“Udmurtenergo” 428.277 137.682 0.000 0.000

Executive body 42.361 41.074 0.000 0.000

Total in IDGC of Cen- 8,137.222 3,349.935 0.518 1,249.219 tre and Volga Region, JSC 153

Own funding sources

Depreciation in Unused depreciation Unused profit Payment for techno- reporting year of previous years of previous years logical connection

232.637 0.000 0.000 69.385

74.604 0.000 0.000 51.886

295.309 0.000 0.000 85.313

224.022 30.477 0.000 31.385

103.799 0.000 0.000 0.000

1,059.541 0.000 6.086 181.493

293.477 0.000 0.000 166.224

328.077 0.000 0.000 11.956

220.978 0.000 0.000 69.616

1.287 0.000 0.000 0.000

2,833.730 30.477 6.086 667.259 154 Investment Activities

Structure of the investment program financing in 2008 (the operational period), RUR million, VAT excluded

Branch name Sources of External funding sources investments, total Raised funds Raised funds Payment for tech- (borrowing rate) (additional issue) nical connection

“Vladimirenergo” 551.857 273.992 0.000 0.000

“Ivenergo” 379.992 179.320 0.000 83.520

“Kalugaenergo” 1,006.930 99.554 0.000 566.442

“Kirovenergo” 471.873 234.356 0.000 15.782

“Marienergo” 140.670 44.267 0.000 0.000

“Nizhnovenergo” 3,059.270 1,587.809 0.518 270.405

“Ryazanenergo” 957.076 260.374 0.000 256.322

“Tulenergo” 843.810 474.505 0.000 37.923

“Udmurtenergo” 365.644 96.443 0.000 0.000

Executive body 42.361 41.074 0.000 0.000

Total in IDGC of Cen- 7,818.811 3,291.695 0.518 1,230.394 tre and Volga Region, JSC 155

Own funding sources

Depreciation in Unused depreciation Unused profit Payment for techno- reporting year of previous years of previous years logical connection

194.187 14.293 0.000 69.385

45.825 19.441 0.000 51.886

240.537 15.084 0.000 85.313

172.950 17.399 0.000 31.385

86.340 10.063 0.000 0.000

884.044 135.058 0.000 181.493

243.448 30.708 0.000 166.224

273.667 45.030 0.000 11.956

184.692 18.478 0.000 66.031

1.287 0.000 0.000 0.000

2,326.977 305.554 0.000 663.674 156 Investment Activities

Volume of planned capital investment in conformity • technical re-equipment and reconstruction growth — with intermediate-term IP for 2009–2011 will equal RUR 1,412 million; RUR 26,949 million, including by years: • new construction growth — RUR 1,252 million. • 2009 — RUR 6,789 million; • 2010 — RUR 9,641 million; Dynamics of capital investment in 2011 in compari- • 2011 — RUR 10,519 million. son with 2010 will be RUR 1,068 million, including: • technical re-equipment and reconstruction growth — Dynamics of capital investments in 2010 in compari- RUR 1,447 million; son with 2009 will equal RUR 2,852 million, including: • new construction reduction — RUR 379 million.

Distribution of the investment program capital expenditures 2009—2011 in comparison with 2008, RUR million, VAT excluded

Branch name 2008 2009 2010 2011

“Vladimirenergo” 583.370 271.075 409.815 407.913 TRR 428.337 259.992 285.525 367.800 New construction 144.161 11.083 124.290 40.113 Others 10.872 0.000 0.000 0.000

“Ivenergo” 390.134 192.077 268.823 290.946 TRR 249.738 132.929 243.623 245.946 New construction 140.396 59.148 25.200 45.000 Others 0.000 0.000 — —

“Kalugaenergo” 1,047.725 201.744 916.521 1,198.945 TRR 695.714 199.944 770.627 1,098.433 New construction 347.963 0.563 145.894 100.512 Others 4.048 1.237 — —

“Kirovenergo” 536.023 123.514 548.846 725.617 TRR 314.735 118.755 258.968 612.459 New construction 208.260 2.959 289.878 113.158 Others 13.028 1.800 — —

“Marienergo” 153.307 914.081 168.642 180.615 TRR 112.035 731.781 168.642 180.615 New construction 41.272 182.300 — — Others 0.000 0.000 — —

continuation 157

Distribution of the investment program capital expenditures 2009—2011 in comparison with 2008, RUR million, VAT excluded

Branch name 2008 2009 2010 2011

beginning

“Nizhnovenergo” 3,105.852 2,967.222 2,711.733 2,280.727 TRR 2,340.886 1,479.748 479.659 243.134 New construction 745.036 1,487.474 2,041.456 2,037.593 Others 19.930 0.000 190.618 —

“Ryazanenergo” 996.493 881.774 1,753.469 1,164.869 TRR 568.544 611.774 1,046.768 926.570 New construction 427.936 270.000 706.701 238.299 Others 0.013 0.000 — —

“Tulenergo” 853.680 898.681 2,118.050 3,775.270 TRR 654.660 735.055 2,068.104 3,374.823 New construction 196.838 160.476 46.446 395.792 Others 2.183 3.150 3.500 4.655

“Udmurtenergo” 428.277 325.006 396.906 492.618 TRR 317.138 227.506 253.000 318.650 New construction 110.904 97.500 143.906 173.968 Others 0.235 0.000 — —

Executive body 42.361 14.110 348.535 1.750 TRR 42.361 14.110 348.535 1.750 New construction 0.000 — — — Others — — — —

Total in IDGC of Centre 8,137.222 6,789.284 9,641.340 10,519.270 and Volga Region, JSC TRR 5,724.149 4,511.594 5,923.451 7,370.180 New construction 2,362.765 2,271.503 3,523.771 3,144.435 Others 50.309 6.187 194.118 4.655 158 Investment Activities

Amount of planned capital investments according to Investment Program in 2009—2011, RUR million

8,000

6,000

4,000 1,198.9 916.5 914.1

2,000 725.6 407.9 409.8 271.1 548.8 268.8 290.9 123.5 180.6 168.6 201.7 192.1

0 “Vladimir- “Ivenergo” “Kaluga- “Kirov- “Marienergo” energo” energo” energo” 159

2009 2010 2011 10,519.3 9,641.3 6,789.3 3,775.3 2,967.2 2,711.7 2,280.7 2,118.1 1,753.5 1,164.9 881.8 898.7 396.9 492.6 325.0 348.5 14.1 1.8

“Nizhnov- “Ryazan- “Tulenergo” “Udmurt- Executive Total in IDGC of Centre energo” energo” energo” body and Volga Region, JSC

Leasing program of IDGC of Centre and Volga Re- Capital investment disbursements according gion, JSC, provides for lease purchase of equip- to signed statements of release and acceptance ment. Its net assets value is RUR 468.239 million of property under leasing agreements in 2008 without VAT (see list of equipment in Appendix No.7 (the period from 29 February 2008 to 31 December to Investment Program of the Company). Within 2008) were RUR 52.875 million. the frameworks of the purchase of equipment, one hundred and twenty nine leasing agreements were entered into with the following parties: “Energo- leasing” CJSC, “Petroenergoleasing” OJSC, “Hy- pothec Company of Sberbank” CJSC, “Yaroslavl Leasing Company” LLC, “Akvilon-Leasing” LLC. Total expenses of all leasing agreements are RUR 464.096 million.

Attributed costs of the Company under leasing agreements as a result of 2008 (the period from 29 February 2008 to 31 December 2008) were RUR 94.865 million. Keeping up with the Times Keeping up with the Times

Technical Re-equipment and Development 162 Technical Re-equipment and Development

Development Dynamics

In the beginning of 2008, IDGC of Centre and Volga • access to the corporate network via satellite liaison Region, JSC, developed the Regulations for Techni- channels (equipment of SDMA Sky Link type) and cal Policy in the distribution electric grid complex of small earthly satellite liaison (GILAT SATELLIT NET- IDGC of Centre and Volga Region, JSC. This docu- WORKS LTD); ment was prepared according to the Regulations • diagnostics technology of the electric equipment for Technical Policy in the distribution electric grid condition (“Metakon” isolators acoustic control complex of JSC “UES FGC”, examined by the Com- devices, check-up mechanisms of electric and pany Technical Council and coordinated with IDGC temporarily characteristics of the relay protection Management Center of JSC “UES FGC”. The regu- means and “Uranium-2” automation, organization lations approved in April 2008 stipulate an applica- of diagnostics and check-up of the electric and tion of new, modern electric equipment, materials temporary parameters of complex (РЕТОМ-51) and technologies. Besides, according to the regula- and simple (РЕТОМ-11М) relay protection auto- tions, application of the equipment that is material- matic means); intensive, unprofitable and inconvenient in operation • system of video conference connection and fiber- at the Company objects is vetoed or restricted. optic technological connection (Nortel Networks; RAD Communication, Cisco 10720); The list of the recommended equipment or equip- • “Сhromatec-crystal 5000” software complex used ment going through the process of certification in JSC for the gases analysis dissolved in oil in accordance “UES FGC”, JSC, was developed and is constantly with the guidelines (G) 34.46.303-98. updated in accordance with these Regulations to be The expenditures for these programs implementa- used in IDGC of Centre and Volga Region. tion accounted for RUR 19.03 million.

During new construction, reconstruction and re- New electrotechnical equipment: equipment, the modern electric equipment, materi- • power transformer of 110 kV equipped with the sys- als and new technologies were implemented in elec- tem of monitoring and transmission of the oil tem- tric grids of the branches, including: perature produced by the scientific manufacturing enterprise “Energomash”; New technologies: • SF6 circuit breakers (of LTB-145D1 type for the vol- • re-equipment of channels of telemechanics with a tage of 110 kV made by ABB, of ZAR1DT type made transition to the international standard of communi- by “Electrocontract — High Voltage Equipment” Ltd., cation under the international electric power techni- city of Moscow, of VEB and VGT type of JSC “Ural- cal commission protocol 60-870-5-101/104 (on the electrotyazhmash”; for the voltage of 35 kV of VG- basis of Central Operating Module – switchboard BEP and VGB type made by “Energomash” group of controller equipment (Ethernet network) Line Knot; the companies); international electric power technical commission • vacuum circuit-breakers (for the voltage of 35 kV protocol 870-5101/104, 3+1 system of the “transpa- of VBPS and VBET type produced by JSC “SMO rent” channel, РТС (RS-485/232 and Ethenet) with Contract”; for the voltage of 10 kV of VBM, VBEM, the module CEB GPS); VBPS type, of ВВ/TEL type produced by “Tavrida • thermal imaging technologies of the equipment con- Electric” Ltd.; of VVU type made by “Electroshchit” dition (with the use of thermal vision cameras of IR group of companies); 928 type made by Guide IR Company, France, Rus- • reclosers (for the voltage of 10 kV of РВА/TEL type sian representative — Diagnost Ltd.); produced by “RC Tavrida Electric” Ltd.) and column 163

selection units (for the voltage of 10 kV of PSS type made by “Uralenergoservice” Ltd.; fast operating made by “Initsiativa” Ltd.); light-protection with current blocking; BMACHR • measuring transformers of current (SF6 for the vol- microprocessor gadget of R&D center “Mekhano- tage of 110 kV of TG-145N type produced by “ABB tronika”); Electroenginerin g” Ltd., city of Yekaterinburg) and • test aggregates (KDZ-1 generator made by RPC of GIF type with isolation made of the cast epoxy “Kontakt”, “Universal Imitator” gadget for the check- resin (with the voltage of 35 kV made by RITZ, Ger- up and tooling of service terminals “Sirius”, Vektor- many). 2.0 M apparatus made by “SPC Technoservice- • cable with the voltage of 10 kV of 11.4 km total Electro” Ltd.). length with isolation made of the sewed polyethy- lene (of APvP2g-1x500/35-10 type made by JSC The expenditures in this area accounted for “Kamkabel”); RUR 354.89 million. • protected isolated cable for the voltage of 6–10 kV and 115.13 km in length (SIW-3 made by JSC New electrotechnical equipment of dispatch ad- “Irkutskskkabel”); ministrations: • isolators of the improved structure with application • telemechanics gadgets (KP Konus, MKM Konus, of the motor driving gear and polymeric insulators Zarya TMM devices; multiservice network of data (for the voltage of 110 kV of RGP type made by JSC transition of MU type of the USA-Russia joint pro- “Electroshchit Samara Factory”; of RGN type made duction; telemeasuring equipment of SHCHD type by JSC “ZEO”; for the voltage of 35 kV of RGP type made by JSC “Electrocentrnaladka”; hardware and made by JSC “ZETO”); software telemetric complex “Iset” produced by “NTK • overvoltage suppressors (for the voltage of 6–110 kV Interface” Ltd.; KP “RISSA” equipment produced made by “RC Tavrida Electric” Ltd and “Fenix-88”); by JSC RISSA research and development center; • devices of the permanent operative current (de- APTK “KOTMI NT” produced by JSC “Electrocen- vices of operative direct current SHOT-01-50-218-2 trnaladka”); made by “Energomashvin” Ltd.; geometrical ac- • information gathering and transmission equipment cumulator batteries of TB-600 type made by JSC (optical multiplexor produced by JSC “Telekom” “Tyumen Accumulator”; of 5SSАP350 type made R&D Company; analyzer of the transmission system by “Accumulator Kursk Factory” Ltd.; accumulator and connection cables produced by “Analyst Tele- batteries of the direct current of OpzS type made com Systems” Ltd.; VOCORD dispatch negotiations by JSC “Akku-Fertrib”, city of Moscow; device of registrars, Germany; multiplex equipment and infor- the operative direct current AUOT made by JSC mation transition made by “ADS” Ltd.; switchboards “MPOTK Tekhnokom”); made by Allied Telesyn; Tellur software complex; • relay protection automatic equipment (devices Miracle device, Germany); of micro-processor protections SHERA; voltage • high-frequency connection AKST “Linia-M” made regulator of PHM type; Sirius-ACHR frequency by JSC “Shadritelensk Phone Plant”; Siemens Hi- discharge terminal; RPAE microprocessor devi- Patch 4000 data transmission gadget; Breeze Ac- ses of Sirius type; RS-80, device of microproces- cess radio access systems made by “Breeze Ac- sor RPAE “Orion”; fixing microprocessor indicator cess”); of IMF type made by JSC “Radius-Avtomatika”; • information representing gadgets (video cubes RPAE device of TEMP type made by Engineering “BARCO” of “BARCO” production, dispatcher Center “Bresler”; anti-wreck automation complex switchboard PSI AG of PSI AG production). 164 Technical Re-equipment and Development

Expenditures in this direction accounted for • on implementation of program directed to the im- RUR 379.8 million. plementation of the integrated management system (IMS) and other issues. The total amount of means spent for the implementation of new technologies accounted for The Regulation P 0101-005-2008 “Management RUR 753.7 million. System of IDGC of Centre and Volga Region, JSC, in the Technical Council” entered into force under During the course of works implementation, the the Company’s Order No.457 as of December 15, Company did not make inventions, utility models 2008. and industrial samples. By the Company’s order No.458 as of December Technical Council 15, 2008 the structure of the Technical Council for Technical council of IDGC of Center and Volga Re- 2009–2010 was updated. The amount of the con- gion was established in November 2007. In 2008, 4 stant council members from the management appa- meetings of Technical council were carried out. The ratus and branches accounts for 23 people. issues concerning the annual working plan were examined there. On November 20, 2008 the agreement between IDGC of Centre and Volga Region, JSC, and non- Major examined questions: commercial partnership “Research and Develop- • on periodicity of the repair works of the main electro- ment Council of the Unified Energy System” (NP technical equipment and power transmission lines in “RDC UES”) was signed in accordance with the electric grids of IDGC of Centre and Volga Region; proposal of IDGC Holding, JSC. The activity of NP • on creation of the grid management centers “RDC UES” is of recommendatory nature and it cov- of branches and approval of the operation functions; ers the whole spectrum of technical and economic • on the condition of works aimed at telemechaniza- issues in the Unified Energy System of Russia. tion of power grids; • on the use of new equipment, materials and technol- It is supposed that the membership in the partner- ogies in the construction and maintenance of power ship allow to timely acquire information concerning grids; the new equipment and technologies of domestic • on technical examination of power equipment which and foreign production, support their rapid imple- finished its normative term; mentation and operative databases use concerning • on organization of the materials and equipment new developments in the sphere of electric power, coming-in control; as well as get necessary consultations concerning • on criteria of planning and implementation the issues we are interested in. of the program aimed at prevention of the power grids ageing (decrease of the technical wear); • on work in the conditions of the autumn and winter period of 2008–2009; • on the scheme and technical decisions during the preparation of technical specifications and requirements specifications; 165

Repair Program, Reconstruction and Re-equipment

Repair Program RUR 1,577.00 million that is 22% over the level of 2007. Thus expenses for the works carried out Following the results of the year 2008 the repair pro- for the company own use and using its own re- gram of the Company is executed in full. sources equaled RUR 599.95 million; expenses for the works which were carried out under contracts The expenses for repair of the main production as- of work and labor were RUR 977.05 million. sets as a whole on the Company in 2008 equaled

Expenses for repair by groups of electric power installations

Group names Expenses, RUR million

35–220 kV substations 400.38

35–220 kV overhead lines 149.33

0.38–10 kV electric grids 698.85

Buildings and constructions of electric grid objects 109.45

Other expenses 218.99

The repair program implementation

Repair program

Complex major repairs of 35–110 kV substations 188.0 pieces Major repairs of 35–110 kV overhead lines 5,625.6 km Major repairs of 35–110 kV power transformers 61.0 pieces Overhead lines of 0.4–110 location clearance 7,937.5 hectare Major repairs of transformer (distribution) centers of 6–10/0.4 kV 7,922.0 pieces Major repairs of 0.4–10 kV overhead lines 25,848.0 km 166 Technical Re-equipment and Development

Analysis of repair costs of IDGC of Centre and Volga Region, JSC, of major production facilities in 2006-2008

Ремонтные программы Implementation of Implementation of Implementation of 2006, RUR million 2007, RUR million 2008, RUR million

Repair costs, total, RUR million, 1,332.96 1,226.08 1,577.00 VAT excluded Company own use 530.24 540.18 599.95 Including: Labor remuneration fund 143.48 172.05 201.55

Unified social tax 38.17 46.86 52.68

Materials and spare parts 297.60 269.42 303.78

Other costs 50.98 51.85 41.94 Contract of work and labor 802.70 685.90 977.05 Ratio of Company own use / 40% / 60% 44% / 56% 38% / 62% Contract of work and labor, %

Analysis of repair costs

RUR million

2,000 1,898.14

1,577.00 1,170.87 1,332.94

1,500 1,226.08 Contract of 977.05 work and 802.70 685.90 labor 1,000 727.27 599.95 For company 530.24 540.18 500 own use and using its 0 resources 2006 2007 2008 2009 implementation implementation implementation target

In 2009 it is planned to assign RUR 1,898.14 million for the repair program performance that is by 20% more than in 2008. 167

Reconstruction Actual development of capital expenditures on re- and Technical Re-equipment construction and re-equipment in 2008 in IDGC of Electric Grid Facilities of Centre and Volga Region, JSC, equaled RUR 5,724.14 million that 37.5% exceed the 2007 level All the most important works planned for 2008 (RUR 4,161.1 million) and 145.5% exceeds the 2006 by the program of re-equipment and reconstruction level (RUR 2,331.5 million). were executed.

Reconstruction and technical re-equipment capital investments analysis, RUR million

2,000 4,000 6,000

Spent in 2006 2,331.5

Spent in 2007 4,161.1

Spent in 2008 5,724.14

Reconstruction and technical re-equipment most important works implementation

Object, equipment, Reconstruction Amount Financial investments element and technical re-equipment essence amount, RUR thousand

Overhead lines of Replacement of wire by SIW, replacement 340.78 km 540,234.4 0.4 kV of bearing constructions

Overhead lines of Replacement of wire by SIW-3, replace- 310.28 km 6–10 kV ment of bearing constructions 498,013.8 Reclosers installation 3 pieces

continuation 168 Technical Re-equipment and Development

Reconstruction and technical re-equipment most important works implementation

Object, equipment, Reconstruction Amount Financial investments element and technical re-equipment essence amount, RUR thousand

beginning

Cable lines of 6–10 kV 6–10 kV cable lines reconstruction with the 12.58 км 28,952 replacement of separate parts

Overhead lines Replacement of the cable and line arma- 57.92 км 209,501 of 35 kV and above ture, replacement of bearing constructions and lightning guard device.

Transformer substa- Replacement of transformers by those 9.6 МВА 24,920.1 tions of 6–10 kV with larger capacity Replacement of package transformer 10.27 МВА 10,930.1 substations by mobile ones

Substations of 35 kV and above: Distribution units of Replacement of units of complex distribution 31 units 23,161 6–10 kV devices of outer installation 6–10 kV units assembling, reconstruction 77 units 113,203.1 of 6–10 kV units with the replacement of oil switches by vacuum switches Replacement of voltage transformers 9 pieces 4,367

Distribution units of Replacement of circuit breaker 6 pieces 611 35 kV busings of 35 kV Replacement of separators and short circui- 3 pieces 2,544.4 tors of 35 kV by SF6 circuit breakers

Distribution units of Replacement of the bearing isolation 335 pieces 110 kV and above Replacement of the high voltage circuit 34 pieces 19,998 breaker busings Replacement of dischargers by overload 25 pieces suppressors. Replacement of 110 kV oil switches 2 pieces 8,184.0 by 110 kV SF6 ones Replacement of 110 kV disconnecting de- 10 pieces 54,768 vices and short circuitors

Transformers Replacement of power transformers by those 291,63 МVА 243,610 of larger capacity 13 pieces

Storage battery Storage battery change 10 pieces 21,450

continuation 169

Reconstruction and technical re-equipment most important works implementation

Object, equipment, Reconstruction Amount Financial investments element and technical re-equipment essence amount, RUR thousand beginning

RPAE (relay protec- Replacement of the automation blocks 14 pieces 596.3 tion and automatic regulating the power transformers load equipment) devices Replacement of automated frequency load 4 pieces 205.7 units by microprocessor ones Replacement of the failure prevention 11 substations 48,971 automated devices on the microprocessor basis Replacement of lines protection panels of 1 pieces 765.2 110 kV by microprocessor ones Installation of the arc protection 6 substations 8,551

Realization of Reactive Power Flow Management Programs

The development and realization of actions on re- nagement in Electric Grids and Branches of the active power flow management in electric grids of Company for 2008–2012, with the planed real branches of IDGC of Centre and Volga Region, amounts for 2008. JSC, is held according to the requirements of Or- der of RAO UESR as of December 11, 2006 No.893 The Technical Development Department is re- “On increase of stability, technical and economic ef- sponsible for work organization aimed at reactive ficiency of distribution electric grids and systems of power flow management, and grids management electric power supplies of consumers due to reac- centers are responsible for the same in electric tive power flow management and normalization of grids branches. Work groups were established in the voltage levels”. all the branches. They are responsible for reactive power flow management and normalization of the On the basis of regulations as of April 11, 2008 capacity levels under the guidance of technical is- No.27 and as of April 16, 2008 No.61 all branches sues deputy directors — chief engineers. The to- of the Company got developed and approved Target tal amount of work group members accounts for Program of Actions on Reactive Power Flow Ma- 63 people. During 2008, each quarter works were 170 Technical Re-equipment and Development

summed up in the form of video conferences and In 2008 a correction of the register of reactive power/ on February 10, 2008 the year 2008 work was capacity flow measuring and control being on the summed up. branches’ balance was carried out.

Information on the reactive power measuring and control means installed at the substations

Branch name Information on the reactive power measuring and control means installed at the branches’ substations

Total amount of installed Amount of reactive power It is necessary to ad- reactive power/capacity /capacity measuring and ditionally install reactive measuring and control control means installed power /capacity measur- means in 2008 ing and control means

“Vladimirenergo” 1,951 67 269

“Ivenergo” 2,550 475 42

“Kalugaenergo” 1,657 0 676

“Kirovenergo” 1,346 16 1,149

“Marienergo” 729 92 240

“Nizhnovenergo” 1,828 11 1,029

“Ryazanenergo” 474 0 561

“Tulenergo” 2,298 49 78

“Udmurtenergo” 1,670 216 550

Total in IDGC of 14,503 926 4,594 Centre and Volga Region, JSC

At present, only modern measuring devices are in- All in all, in 2008, the expenses for installation stalled at the grid objects of the branches and on the of measuring and control devices accounted for borders of the balance possession. Such devices RUR 6.69 million. help to measure simultaneously the amounts of active and reactive power/capacity. 171

Information on reactive capacity compensation devices (RCCD) installed at the consumers’ places

Branch name Total amount of installed Including those ready RCCD, MVAR for operation, MVAR

“Vladimirenergo” 285.7 115.0

“Ivenergo” 155.1 127.5

“Kalugaenergo” 125.9 125.9

“Kirovenergo” 226.4 159.2

“Marienergo” 28.8 26.9

“Nizhnovenergo” 303.9 128.9

“Ryazanenergo” 172.7 160.8 201.5 156.1 “Tulenergo” 318.8 318.8 “Udmurtenergo” 1,818.8 1,319.1 Total in IDGC of Centre and Volga Region, JSC The amount of consumers using reactive capacity compensation devices was increased from 72.0% to 72.55% for the passed year.

Information on reactive capacity compensation devices (RCCD) condition installed at the substations branches

Branch name RCCD nominal RCCD capacity in the pro- Notes capacity, MVAR cess of operation, MVAR 110 kV 6–10 kV 110 kV 6–10 kV

“Ivenergo” 52.0 10.0 — 6.6 Battery of static condenser (BSC) of 110 kV at Furmanov 1 substation is not necessary due to the regime. BSC 2 of 6 kV at Ivanovo 7 substation is planned to be restored in 2009. 172 Technical Re-equipment and Development

Information on reactive capacity compensation devices (RCCD) installed at the substations branches

Branch name RCCD nominal RCCD capacity in the pro- Notes capacity, MVAR cess of operation, MVAR 110 kV 6–10 kV 110 kV 6–10 kV

“Kirovenergo” — 73.2 — 61.3 BSC capacity restoration at Yaransk and Luza substations is planned in 2009, and at Nolinsk and Sovetsk substations by 2012.

“Nizhnovenergo” — 0.6 — 0.6

“Ryazanenergo” 78.0 47.9 78.0 47.9

“Tulenergo” — 7.4 — 0 RCCD is not used due to the decrease of the reactive capacity consumption

Total in IDGC of 130.0 139.1 78.0 116.4 Centre and Volga Region, JSC

During the passed year, 2 BSC were repaired with pacity of RCCD installed at the branches substa- the change of cups, thus, the capacity of BSC in- tions increased in 2008 by 131.2 MVAR (48.75%) creased by 4.7 MVAR (BSC at the substations of and accounted for 269.1 MVAR. 110 kV — Demyanovo and Uni, Kirovenergo). Ca-

Information on the cost-estimate documentation development in 2008 for the reactive capacity compensation devices planned to be installed at the branches substations

Branch name Object Amount of RCCD, RCCD capacity, pieces MVAR

“Vladimirenergo” Pokrov substation BSC of 110 kV 25

“Nizhnovenergo” Mokhovye Gory substation 2 BSC of 6 kV 15 Kvarts substation BSC of 10 kV 2.5 Ostankino substation BSC of 10 kV 2 Pecherskaya substation BSC of 6 kV 6 (1 stage 4, 8) Kalinino substation 2 BSC of 10 kV 0/6

Total in IDGC of 6 8 51.1 Centre and Volga Region, JSC 173

During the past year works included a check-up of • seventeen seminars with the heads and specialists 1,822 earlier issued technical specifications and of the branches were held; they were devoted to the technical tasks for connection of consumers, con- issues of the reactive power flows management and struction and reconstruction of the electric grids of normalization of the capacity levels; branches for meeting the requirements to support • PR programs were developed which are called “Re- the capacity coefficients at the level set forth. Newly active Power”. The are aimed at work with consu- issued technical conditions and technical tasks de- mers for the purpose of explanation of the economic termine the presence of such requirements. effect due to installation of the reactive power devices in the consumers’ power facilities; In 2008, the activities aimed to regulate reactive po- • 103 seminars were carried out. Their topic was wer flows and capacity levels and to normalize stan- “Reactive power, its role in the reliability and the dard and after-failure regimes were outlined accor- economy of power supply”. The representatives of ding to the carried out analysis of the knots load and management and specialists took part in them; capacity levels in standard and after-failure regimes • metrological check-up of 1,776 items of the reactive in the electric loads knots of the branch. According power measuring devices was carried out; to Minpromenergo Order No.49 as of February 22, • revision (calibration) of 28,224 measuring devices 2007, the requirements concerning the support of was carried out; tgφ were included in technical specifications. • 393 multifunctional measuring devices were installed; The Company’s branches within the framework of • replacement of the present active power measuring the joint agreements with the regional representa- devices by multifunctional measuring devices works tive offices created the programs of the electric grid in the amount of 533 pieces was carried out; complex development up to 2015 which included ac- • detection of 630 load problem knots by levels of reac- tivities aimed at reactive power flows management tive power consumption and the load levels in stan- at the electric grid facilities. dard and after-failure conditions was performed.

During the implementation of the activities directed The total cost of the reactive power flows manage- to the reactive power flows management, the fol- ment program implementation in 2008 accounted for lowing measures were taken: RUR 73.63 million. • the web pages called “Reactive Power” were created at Internet websites of branches of IDGC of Centre and Volga Region, JSC. They contain the materials explaining the physical essence of the reactive power and the role of the compensation devices in the transmission capacity of power transmission lines increase and power losses decrease; • the monitoring and examination of industrial enterprises is carried out. Their aim is to check the fact of actual state of engagement of RCCD, together with the reports making and letters forwarding with the recommendations aimed at engaging the existing RCCD. Their responsibility covers technical maintenance carrying out and bringing of RCCD up to the project figures as well as the installation of new RCCD aimed at the bringing of active and reactive ratio to the normative ones; Acting Flexible on the Changes Acting Flexible on the Changes

Position in the Sector. Market Share 176 Position in the Sector. Market Share

Position in the Sector presented in forms of incorporation of municipal unitary enterprises or state unitary enterprises. IDGC of Centre and Volga Region, JSC, is a natural monopoly entity. Under Order of FTS of Russia No.236-e of 27 June 2008, the Company is included Market Share in the register of natural monopoly entities in the fuel The total amount of the market in physical terms, ac- and energy complex, in relation to which the state cording to IDGC of Centre and Volga Region, JSC, regulation and control is carried out. in 2008 was 53,931.2 million kWh.

IDGC of Centre and Volga Region, JSC, is the sole The market share of IDGC of Centre and Volga Re- grid organization in the attended territories which gion, JSC, in 2008 equaled 68.1% that in physical has a technological connection to the Unified Na- terms is 36,753.1 million kWh. The share of other tional Electric Grid (UNEG) and the generating com- grid organizations (OGOs) in the market was 31.9% panies. In these circumstances the Company occu- that in physical terms is 17,178.1 million kWh. pies the leading position in the market of services on electric power transmission. The significant part of the electric power supplied to consumers passes through the Company grids. An exception is the consumers who are directly connected to generation bars.

There are also consumers who are directly connected to UNEG grids; however, from 2005 to 2008 IDGC of Centre and Volga Region, JSC, signed contracts with the organizations — owners of the UNEG grids equipment, the subject of which is lease of electric grid property which is on the border with directly connected consumers. Thus the company received the official right to render electric power transmission services to such consumers (so-called “last mile” contracts).

Despite the aforesaid, there are subordinate grid organizations in a number of regions of the Company electric power transmission services selling market that render similar services on transport of the electric power. Nevertheless, these organizations are connected to the Company grids and receive electric power from the Company grids.

In their majority, these organizations are owned by state and municipal institutions, and they are 177

Electric power transmission market

36,753.1 million kWh 68.1%

17,178.1 million kWh 31.9% Share of OGOs

Share of IDGC of Centre and Volga Region

The electric power transmission services market in the light of the regions attended is as follows

Branch name Productive supply, Productive supply Total productive Electric power million kWh of TGOs, supply to end transmission million kWh consumers, services market million kWh coverage, %

“Vladimirenergo” 5,873.3 3,008.9 5,548.3 51.6 “Ivenergo” 3,533.6 815.7 3,091.8 87.9 “Kalugaenergo” 3,520.2 1,262.9 3,511.8 64.3 “Kirovenergo” 5,695.0 1,801.9 5,807.6 67.0 “Marienergo” 2,564.7 1,010.9 2,294.9 67.7 “Nizhnovenergo” 16,642.3 5,012.9 16,108.1 72.2 “Ryazanenergo” 4,264.1 1,697.7 4,838.8 53.0 “Tulenergo” 5,905.8 2,061.6 5,700.0 67.4 “Udmurtenergo” 7,432.3 2,005.7 7,030.0 77.2 178 Position in the Sector. Market Share

IDGC of Centre and Volga Region, JSC, receives 3. Contracts with other (territorial) grid companies its main income from rendering services on electric which the Company signs for execution of its energy transmission to consumers. Tariffs (prices) own obligations to consumers, paying for the use for services are fixed by the regulatory authorities of grids for delivery of energy up to the end con- of the respective entities of the Federation. In order sumer. to derive incomes from rendering services on electric power transmission, IDGC of Centre and Volga Re- Groups of contracts are inseparably linked among gion, JSC, signs and executes contracts for services each other and constitute a uniform contractual on transmission with three groups of contractors: system.

1. Contracts with energy selling companies, direct con- Compensation of electric energy losses in the grids sumers of the wholesale and retail markets. of branches is carried out by means of signing the contracts for purchase of losses (now they 2. Contracts with JSC “UES FGC” which the Company are combined with contracts for transmission signs for execution of own obligations to consumers, services signed with energy selling companies paying for the use of grids of the Unified National (ESCs)). Electric Grid (UNEG) for delivery of energy to the distribution grid.

Number of transmission contracts for 2008

ESCs JSC “UES FGC” OGOs Total

48 9 345 402

The specified contracts are signed for attending the consumers of the Company services: more than 140 thousand legal entities and 2.5 million of household subscribers directly connected to the grids of the branches. 179

Tendencies of the Main Markets, manufacture of building materials, machine-buil- Macro- and Microeconomic Changes ding sectors, wood processing and manufacture of products of wood, textile and sewing manufac- The tendencies of development of the consumer ture, manufacture of leather and footwear, pulp- demand for electric power at the end of 2008 un- and-paper manufacture, chemical manufacture derwent significant changes. In the recent years, and manufacture of rubber and plastic products, down to the middle of 2008, a dynamical social and i.e. in the most developed industries in the cen- economic development was observed in the regions tral part of the Russian Federation where IDGC of the Russian Federation, in which the branches of Centre and Volga Region, JSC, carries out its of IDGC of Centre and Volga Region, JSC, carry out activities. its activities.

Therefore a decrease in the volume of the electric Since the beginning of the second half of the year power transmission services of the entities of Cen- 2008, the developing world crisis has streng- tral and Volga Region federal districts is projected thened a negative impact on economic develop- within the limits from 5% up to 10% from the level ment of Russia. Sharp falling of prices for main of the year 2008. The recession of the investment products of the Russian export together with de- activity, new construction and decrease in actual terioration of conditions of crediting and external incomes of the population obviously will also lead loans led to a decrease in the economic growth: to a significant decrease in the volume of the ser- in quarter IV the growth decreased to 1.1% in rela- vices of technological connection of consumers tion to the respective period of the previous year. to the Company electric grids. As a whole the growth rate of the gross national product was 5.6% for the year. In quarter IV of 2008, The development of the electric grid services market the industrial products as a whole decreased by in the Russian Federation in the nearest 3–5 years 6.1% compared to the respective period of 2007, in many respects will depend on the results of the an- including the processing manufactures — by 7.7%, ti-recessionary actions held now by the Government actual incomes at disposal decreased by 5.8%, in- of the country, and on the general changes of a so- vestments in the fixed capital fell by 2.3%. cial and economic situation in the world.

In 2009 a recession of industrial production by 7.4% In case of recommencement of the growth of exis projected, including processing production — port incomes of the Russian economy, stabilization by 9.7%. As a result of the expected recession of in- of the financial system, improvement of conditions dustrial production and decrease in rates of develop- of crediting, the investment activity in the industry and ment of other economic sectors, the electric power construction will become more intensive, and this consumption in the Russian Federation in 2009 is ex- in its turn will require an increase in manufacture pected on the level of 1,002.2 billion kWh that is 1.7% of power resources, including electric power. below the level of the year 2008.

The strongest decrease in industrial production in 2009 is expected in metallurgical production, 180 Position in the Sector. Market Share

Mutual Relations with Clients • In 2008 “a uniform tariff” tariff plans operated Current indicators of sales in physical and mo- in the territories of branches of IDGC of Centre netary terms and Volga Region, JSC; the relations with the subor- The growth of productive supply in relation to 2007 dinate grid organizations were settled. in IDGC of Centre and Volga Region, JSC, as a whole • Work on registration of contractual relations with equaled 2.1%. the clients entering into the wholesale market of the electric power and capacity since 2009 now goes on.

Productive supply of branches for 2006—2008

Branch name Productive supply of electric power, Dynamics of productive supply, million kWh % 2006 2007 2008 2007/2006 2008/2007 2008/2006

“Vladimirenergo” 5,605.1 5,754.5 5,873.3 102.7 102.1 104.8 “Ivenergo” 3,639.6 3,648.3 3,533.6 100.2 96.9 97.1 “Kalugaenergo” 3,301.4 3,345.2 3,520.2 101.3 105.2 106.6 “Kirovenergo” 5,583.1 5,615.6 5,695.0 100.6 101.4 102.0 “Marienergo” 2,402.1 2,453.5 2,564.7 102.1 104.5 106.8 “Nizhnovenergo” 15,635 16,134.6 16,642.3 103.2 103.1 106.4 “Ryazanenergo” 4,209.7 4,229.5 4,264.1 100.5 100.8 101.3 “Tulenergo” 6,414.9 5,957.1 5,905.8 92.9 99.1 92.1 “Udmurtenergo” 7,025.9 7,164.2 7,432.3 102.0 103.7 105.8

Total in IDGC of 53,816.8 54,302.6 55,431.3 100.9 102.1 103.0 Centre and Volga Region, JSC 181

Earnings from services on electric power transmission of branches for 2006—2008

Branch name Productive supply of electric power, Dynamics of productive supply, RUR million % 2006 2007 2008 2007/2006 2008/2007 2008/2006

“Vladimirenergo” 2,351.750 2,736.460 3,799.900 116.4 138.9 161.6 “Ivenergo” 1,139.811 1,294.968 1,376.057 113.6 106.3 120.7 “Kalugaenergo” 1,556.660 2,082.480 2,699.110 133.8 129.6 173.4 “Kirovenergo” 2,987.490 2,595.650 4,129.080 86.9 159.1 138.2 “Marienergo” 1,036.288 1,110.737 1,145.227 107.2 103.1 110.5 “Nizhnovenergo” 5,433,000 8,141.200 12,680.600 149.6 155.8 233.0 “Ryazanenergo” 1,656.776 1,629.283 2,658.385 98.3 163.2 160.5 “Tulenergo” 2,638.685 2,821.835 4,454.804 106.9 157.9 168.8 “Udmurtenergo” 2,107.737 2,331.463 2,710.353 110.6 116.3 128.6

Total in IDGC of 20,908.200 24,744.080 35,652.910 118.3 144.1 170.4 Centre and Volga Region, JSC

The growth of the value of services for 2008 in com- sides, a change of a tariff contractual model had parison with the year 2007 was caused by a change its certain effect: in 2007 the volume of the services of tariffs for services on transmission of electric rendered was determined “within the DGCs limits”; energy through grids, connection of new consu- in 2008 the tariff contractual model “uniform tariff” mers, a gain of electric energy consumption. Be- was applied. Ensuring Trustworthy Protection Ensuring Trustworthy Protection

Industrial Control and Labor Protection 184 Industrial Control and Labor Protection

Labor Protection, Production Injuries tion of production injuries and professional morbidity and Professional Illnesses are priority aims of labor protection in 2008. Indexes of safe production and labor protec- Absence of professional illnesses, significant de- tion at working places are among key indicators crease of production injuries, reduction of working of the Company effectiveness. time waste because of accidents, cost saving on compensations for work in harmful exposure, in- Absolute compliance with the requirements of the RF crease in labor productivity, rise of the rate of social legislation, improvement of labor safety and social and legal security of employees are results of labor protection of employees against professional risks, protection in 2008. life and health guard during working activities, reduc-

Amount of people injured in industrial accidents

2006 10 2

2007 5 2

2008 1

Total Death

Positive results for 2008 were achieved owing to im- • Provision of the personnel and workplaces with new, plementation of the Program of Actions on Provision modern means of protection and equipment; of Personnel Labor Safety and Health Preservation • Carrying out of actions on accident prevention; for 2008-2010. The actions of this Program were de- • Sanitary and engineering actions on prevention of veloped on the basis of the results of external and diseases; internal auditor checks, remarks and offers from rep- • Actions on the general improvement of working con- resentatives for the labor safety, analysis of reviews ditions. of traumatism. The main lines of the program: 185

Correctness of the chosen lines is proved by a sig- brigades, strengthening of measures of disciplinary nificant reduction in quantity of industrial accidents responsibility to infringers, increase of personnel’s and absence of occupational diseases in the re- interest in absence of labor rules infringement, and porting year. Besides, the reasons of a reduction increase of industrial discipline. in traumatism were improvement of quality of training and instructing of the personnel, strengthening The Company spent RUR 178 million for actions on of control over observance of rules of labor safety, labor safety and health preservation of the person- improvement of quality of sudden checks of working nel in 2008.

Structure of labor safety costs

17% Actions on accident prevenetion 70% Provision of employees with individual protection 6% equipment Sanitary and hygienic action on prevention of diseases

7% General improvement of working conditions

Dynamics of labor safety costs, RUR million

160 180

2007 159.96

2008 178.00 186 Industrial Control and Labor Protection

Assessment carried out. As a result of the assessment, 2,331 of Individual Working Places working places with working conditions classes 3.1-3.4 are revealed; 3,572 employees are working Assessment of working places is carried out to at these places. There were no working places with reveal working conditions in the Company. Total working condition class 4 revealed. As a result of amount of working places which are subjects of the assessment, measures on working conditions assessment in IDGC of Centre and Volga Region, improvement were worked out. In 2008, 277 meas- JSC, is 11,778. Assessment of 11,135 working ures in this field were carried out which is 100% of places out of the above-specified quantity has been the planned amount.

Classes of working conditions following the results of the working places assessment

17.4% Harmful (3.1)

47.7% 10.6% Permissible (2) Harmful (3.2)

5.5% Harmful (3.3)

18.7% 0.1% Optimal (1) Harmful (3.4)

Provision of Personnel with Personal During the selection of protective means, both cha- Protectors, Tools and Devices racteristics of protection against hazards (for example, To protect against occupation hazards and provide electric current) and operating convenience were taken effective work, personnel is supplied with tools, per- into account. Thus, use of temporary ground installed sonal protectors, work clothing and devices for safe without prop (from the land surface) allows not only working. Today the Company provides the person- avoidance of possibility to approach on-load conduc- nel with all necessary protective means according ting parts but also acceleration and simplification of to rules. Purchase of work clothing resistant to elec- working place development. That’s why the priority is tric arc was priority line of personal protection pro- placed on recent developments in the field of protection vision of employees in 2008. The Company spent means which were not used before or were limited. RUR 93,780 thousand on it, which is 53% of total expenses on labor protection and 75% of total ex- Furthermore, Collective Agreement provides for dis- penses on personal protection provision equipment tribution of additional personal protective means, of employees. special scouring powder and protective hand cream. 187

Psychophysiological Examination sets for training of operating and operating-repair of Personnel personnel is proved by a decrease of the amount of operating disturbances through the fault of em- Implementation of psychophysiological examination (hereinafter PE) allows full assessment of psycho- ployees. physiological professional suitability of a candidate or employee and assessment of functional state To develop paramedical first-aid dressing in case of and working capacity. The category of people which accidents, special simulators are used to work out are subject to PE was expanded in 2008: 3,236 of skills of cardiopulmonary resuscitation (mainly “GO- total 9,759 employees (33%) passed the examina- SHA”). tion, while 2,775 employees were examined in 2007. The amount of persons in “risk group” fell from 8% System of Internal Technical Control, to 6.4%. It became possible because of implementa- Compliance with Instructions tion of offered rehabilitation and recovery measures. The System of Internal Technical Control (hereinafter Each employee receives a recommendation on in- ITC) is operating at the Company on the basis of Or- crease of psychophysiological adaptation level as a der of JSC FGC UES of 29 June 2006 No.161r/158r result of examination. If needed, psychical consulta- “On Creation of System of Internal Technical Control tion, different correctional measures, recommenda- in Business Unit “Grids””, Order of JSC FGC UES of tions for further medical examination of specialists 28 July 2006 No.194r/188r “On Approval of Stand- of different skills on voluntary health insurance are ard Provisions of System of Internal Technical Con- carried out. trol in Business Unit “Grids””. Production control has a multi-level structure and is carried out by operat- Personnel Training ing personnel and operating-repair personnel (per- It is wide known that human factor primary influ- manent control), by entities authorized for condition ences long-run success of a company. That’s why and safe exploitation of electric power plants, build- the Company uses both traditional methods of ings and constructions at subdivisions of branches personnel training (study, instructions, etc.) and (production departments) and their deputies, heads methods which are special for energy industry — of structure departments and their deputies, spe- for example, special training at simulators and skills cialists, heads of production departments (periodic training at educational training ground. For these control). Periodicity of inspections is determined an- needs, branches of the Company are equipped with nually and approved by schedules at branches and educational and training grounds, modern computer production departments. training aids and simulators. To carry out training in labor protection, 188 labor protection cabinets are Organization and effectiveness of production control functioning at branches of the Company. at every production department is monitored by the Service of Production Control and Labor Protection Training sets which are used in the Company per- and management of production departments and sonnel training, allow modeling of accidents and structural subdivisions. Criteria of production control creation of their liquidation scripts. The equipment effectiveness are the following: proved its high operational reliability and meets • decrease of the amount of disadvantages and de- all requirements. Currently, branches of IDGC of fects revealed by state and senior departmental Centre and Volga Region, JSC, use the following bodies; cutting costs for their elimination; training sets and educational systems: TERS, TWR- • drop in technological disturbances including dis- 12, TRES, MODUS, ASOP-infosreda (Automated turbances because of personnel’s mistake; drop in Personnel Training System), Tsenturion, TOPAZ, economic loss because of them; Olymp: OKS. Effective implementation of program • fall in amount of traumatism. 188 Industrial Control and Labor Protection

Structure of industrial control

Deputy General Director for Technical Issues – Chief Engineer of the Company General management by the internal control system, control over compliance with industrial safety requirements in IDGC

Technical Departments of the Chief of Industrial Control and Labor Technical Inspection Department Company Safety Service of the Company of the Company Carrying out of industrial control Operational management and Fixing of deviations, analysis and over compliance with laws and coordination of activities of branches development of proposals for normative requirements on in the field of industrial control over taking the managerial decisions industrial safety compliance with industrial safety requirements

Deputy General Director for Technical Issues — Chief Engineer of the branch General management by the industrial system of control over compliance with industrial safety requirements in the branch

Technical Services of the Chief of Industrial Control and Labor Company Executive Body Safety Service (Division) of the branch Carrying out of industrial control Operational management and over compliance with laws and coordination of activities of industrial normative requirements on divisions in the field of industrial industrial safety control over compliance with industrial safety requirements

Deputy Chiefs – Chief Engineers of industrial divisions Organization of industrial control over compliance with industrial safety requirements at hazardous industrial objects of industrial divisions

Persons responsible for supervision Persons responsible for safe over safe maintenance of devices maintenance (from among chief at hazardous industrial objects engineers of EGEs and foremen) (from among specialists of technical Safe maintenance of devices in services and reliability and safety structural sub-divisions (EGEs, measures service) services, zones) Carrying out of industrial control over compliance with industrial safety requirements at hazardous industrial objects 189

Altogether 882 measures were ordered for implementation to state control bodies (except financial, tax, custom, etc.) in 2008. Five hundred and eighty of them have already been implemented; three hundred and two are at the stage of implementation up to the control period.

Information on ordered measures

Orders Ordered Implemented The term actions actions has for 2008 in 2008

Issued within the limits of the system 10,535 9,867 668 of internal technical control (ITC)

Issued by the Company technical 5,259 3,407 1,852 inspection (TID of IDGC)

Issued by state controlling authorities: Fire Inspection 882 580 302 Rostekhnadzor (Russian Federal Service for 1,968 1,837 131 Environmental, Technical and Atomic Supervision) Rospotrebnadzor (Russian Federal Consumer 189 125 64 Rights Protection and Human Health Control Office) State Labor Inspection 78 73 5

Organization of Health Protection in labor protection and social partnership with IDGC and Increase of Labor Safety Level of Centre and Volga Region, JSC. The work in this field is carried out continuously. In spite of economic The main aim of all Company’s efforts in this area is complexities in the country, the work will be conti- protection of life and health of our personnel. IDGC nued in the current year. of Centre and Volga Region, JSC, carried out permanent work in improvement of working conditions, reduction of the number of working places with poor working conditions and popularization of health mode of life. The program worked out for 2009 provides for active cooperation of the Company with regional authorities in the field of labor protection. This will allow realization of priority lines of state policy Supporting in any Case Supporting in any Case

Personnel Policy and Social Partnership 192 Personnel Policy and Social Partnership

Main Principles and Goals Structure of Eployees of Personnel Policy by Categories The Company personnel policy is a systemati- The structure of the Company employees by cate- cally realized, complete and long-term personnel gories is explained by a specificity of activities of the management strategy. Its main goal is full and enterprises of the distribution grid complex. A con- duly meeting the Company needs for manpower siderable part of the company personnel is employ- recourses of necessary quality and number. Thus ees. much attention is paid to improvement of the quality and efficiency of use of personnel potential, Age Structure of Employees motivation of the personnel for achievement of the Average age of the Company employees does not Company goals, provision of growth of employees’ exceed 45 years. The structure of the Company per- professionalism. sonnel by age categories is optimum: almost 50% are employees from 25 to 45 years old who are the The main principle of the personnel policy is a rap- most productive and qualified personnel. prochement of interests of the Company and the interests of each employee for the purpose of achieve- Qualification Structure ment of the maximal industrial and economic of Employees results. The Company field of activities and life supporting infrastructural role of electric grid facilities assume The realization of the goals and principles of the per- a presence of special requirements to the people sonnel policy is achieved owning to the following ac- working with the enterprises of the distribution grid tions: complex. • optimization and stabilization of the personnel structure of the Company key structural divisions; Around 60% of all categories of employees (includ- • selection of heads by a professional principle — ing, among workers — 20%) have higher and se- both following the results of internal competitions, condary vocational education that shows a high pro- and with attraction of outside candidates; fessional potential of the Company personnel. • formation and development of the Company uniform corporate culture, active sports activities; As of 31 December 2008, the Company person- • creation of an effective system of financial and non- nel are characterized by the same high qualifica- financial motivation of the company employees; tion level like in the previous year. Doctors of Sci- • increase of diligence, responsibility of employees ence and Candidates of Science are 22 employees for the duties exercised, strengthening of labor of the company; 278 employees have two higher and industrial discipline; educations, 5,790 people have higher vocational • creation and development of a system of training education, 5,557 employees have secondary voca- and improvement of professional skills of specialists tional education. and managers; • enhancement of efficiency of work with the person- The educational level of employees of the distri- nel reserve; bution grid enterprises remains invariably high • formation and expansion of a package of social privi- throughout several years; this is caused by an indus- leges and guarantees of the Company employees. trial necessity and high requirements to qualification • development of programs of non-state pension co- of the personnel. verage, voluntary medical insurance; • formation of a team according to the principles of the Company uniform corporate culture. 193

Structure of the Company employees by categories in 2008

3,176 (16.3%) Managers

5,067 (26.1%) 11,203 (57.6%) Specialists and personnel Workers

Age structure of the Company employees in 2008

1,418 (7.3%) working retirees

1,498 (7.7%) under 25 7,282 (37.4%) from 45 to retirement age

4,238 (21.8%) 5,010 (25.8%) from 25 to 35 from 35 to 45

Qualification structure of the Company employees in 2008

569 (2.9%) Post-basic education 300 (1.5%) 7,230 (37.2%) Candidates, doctors of sciences, Secondary education two higher professional educations

5,557 (28.6%) 5,790 (29.8%) Secondary professional education Higher education 194 Personnel Policy and Social Partnership

Training and Development Actual financial expenses for the training in 2008 of the Personnel equaled 1.41% of the wages fund. The Company priority task is preservation of the personnel potential, first of all the highly skilled person- Social Policy nel which form the personnel reserve. The presence High standards of the social responsibility to em- of the personnel reserve of the prepared experts al- ployees are determined in the Company. lows to minimize considerably the expenses for selection and adaptation of new employees, and to con- A large-scale work on formation and implemen- struct the system of investments into development tation of the uniform system of the Company of the personnel. This, in its turn, enables a career employees labor payment was carried out which growth for all categories of employees and conside- is aimed at a rise in the personnel’s interest ta- rably raises non-financial motivation and contributes king in the end result of the Company performance to keeping the staff in the Company. by achievement of a competitive level of wages. The wages of workers are formed taking into In 2008, 2,032 persons were included in the struc- account the performance and competitiveness ture of the personnel reserve; 101 of them were ap- of the supply on the respective segments of the la- pointed to the respective positions. bor market and are quarterly indexed on the basis of the consumer price index. Each employee of the Company is involved in the system of continuous training according Besides the adequate salary, the Company stimu- to the requirements to the position he or she oc- lates work of its employees by realizing a plenty cupies. The network of the sector educational of social privileges, guarantees and compensations centers and non-state educational institutions with provided to employees in addition to the norms fixed modern sites and training complexes, close co- in the Russian Federation laws, according to the Col- peration with regional special educational institu- lective Agreement between employees and employ- tions of higher and secondary vocational training er of IDGC of Centre and Volga Region, JSC. (Federal State Educational Institution of Additional Vocational Training “St. Petersburg Power Institute The Company social responsibility fixed in the Col- of Professional Skills Improvement” (university) and lective Agreement provides the following guarantees its regional representative offices, State Educational and payments for employees: financial assistance Institution of Additional Vocational Training “Insti- at going on vacation, financial assistance at a birth tute of Improvement of Professional Skills of Public of a child and registration of marriage, financial Sector Employees” (university) (Moscow), Ivanovo assistance to employees and retirees for burial, fi- State Power Institute of Improvement of Professional nancial assistance for anniversaries, grants to em- Skills (university)) give ample opportunities for the ployees retiring due to physical inability, grants professional development of employees. to children of the parents who died at the place of production, creation of conditions for holidays Total number of the Company employees who and health improvement of employees, provision passed training last year is 15,804, or 83.4% of passes to a health resort to their children, New of the average headcount. Year’s gifts and many other things. 195

The social stability and social security system is pro- • 171 people — awards of executive and legislative vided through such activities as realization of the authorities of the Russian Federation constituent system of medical coverage, insurance and health entities, improvement of employees, insurance against acci- • 4,367 people — corporate awards. dents. Sports actions play a greater part in uniting the Com- The system of non-state pension coverage of the pany team. In 2008 the First Olympics of the Com- employees through the State Pension Fund of elec- pany was held. The competitions were held under tric power industry actively functions in all bran- seven sports activities: volleyball, mini-football, ches of the company. In 2008, after reorganization ski race, table tennis, kettlebell sports, chess of the Company in the form of a merger with it of and swimming. Representatives of all nine Compa- the branches, uniform centralized contracts were ny branches in the number of 261 people took part signed between the Company and non-state pen- in the Olympics. sion fund of electric power industry on non-state pension coverage (NPC). The uniform “Regulations Realizing the principles of the social responsibility, for NPC of employees of IDGC of Centre and Volga the Company actively participates in charity activi- Region, JSC” were approved and put into effect. ties and renders financial support to medical, educa- The total number of the Company employees co- tional, cultural and religious institutions. vered by the NPO system in 2008 exceeded 23 thousand people, including retirees. Main- tenance and granting of additional benefits and guarantees within the limits of non-state pension coverage was a strong motivating factor for employees of all categories.

Besides various forms of financial reward, the Com- pany applies moral incentives.

The effective tool of moral incentive of labor teams and separate employees is representation of the most distinguished of them to the state awards, awards of the ministries and departments, and corporate awards.

In 2008 4,670 Company employees were awarded for the highest industrial performance and a long- term honest work, including: • 4 people — state awards, • 128 people — awards of various ministries and departments, Preserving Harmony with Nature Preserving Harmony with Nature

Environmental Protection 198 Environmental Protection

IDGC of Centre and Volga Region, JSC, is inte- tied to city systems of municipal water drain; and rested in ecological safety of production activities. control over quality of extracted underground waters To reduce negative influence on environment, steps is conducted. on environment protection and rational use of natu- • In order to protect and use lands rationally, in 2008 ral resources were taken throughout the year. They projects of specifications of waste formation and were formed in the structure of annual operating or- limits on its disposal (PSWFLD) were developed; der and program of environment policy realization formation of waste is measured; separate warehou- for 2008–2010. sing of waste of various hazard classes is organized; contracts for waste burial, waste and consumption As a whole IDGC of Centre and Volga Region, products recycling were concluded with the organi- JSC, realized the program of environmental policy zations having the respective licenses. for 2008 both regarding planned actions, and regar- • Advanced technologies are applied. In 2008 tech- ding volume of financing. The works were conducted nological actions included replacement of outdated and are continued to be carried out in the following equipment (oil-filled switches) by more modern (va- main directions: cuum and SF 6) circuit breakers, repairs of oil-filled • In order to protect atmospheric air from negative devices were carried out at substations. At construc- influence of economic activities, the control over tion and reconstruction of electric mains, the self- observance of toxicity and motor transport exhaust bearing isolated wires are applied. opacity specifications is held on a regular basis; • Control over influence of physical factors of electric projects of specifications of emissions are deve- systems is held. Electric networks of 0.4–220 kV as loped for reception of permits to emissions; indus- for their level of influence of electric and magnetic trial inspection over their observance is held. fields are not a source of harmful influence on the per- • In order to protect water resources, contracts were son and the environment. The control over the level concluded with the certified laboratories for carry- of acoustic noise was held within the limits of moni- ing out of the tool control over polluting substances toring the influence on atmospheric air in the field of in rain water and melted snow, in the sewage emp- sanitary protective zones of the enterprises.

List of main activities for avoidance of negative impact on the environment

No. Activity Branches Costs, RUR Result thousand

1 Development and “Ivenergo” 1,366.6 Reduction of the negative coordination of the “Vladimirenergo” impact on the environment maximum permissible “Kalugaenergo” emissions into the “Nizhnovenergo” atmosphere “Ryazanenergo” continuation 199

List of main activities for avoidance of negative impact on the environment

No. Activity Branches Costs, RUR Result thousand

beginning

2 Development and “Ivenergo” 1,825.5 Reduction of the negative coordination of the Draft “Vladimirenergo” impact on the environment maximum permissible “Kalugaenergo” waste generation and “Kirovenergo” waste disposal limits “Marienergo” “Ryazanenergo”

3 Development and “Vladimirenergo” 1,444.8 Reduction of the negative coordination of Draft “Nizhnovenergo” impact on the living sanitary protection zones “Udmurtenergo” environment and health of people

4 Measurement of physical “Vladimirenergo” 1,296.4 Control of the negative impact factors and test of the free “Nizhnovenergo” on the living environment and air in sanitary protection “Udmurtenergo” health of people zones

5 Manufacturer’s test of “Ivenergo” 405.8 Free air protection polluting substances “Vladimirenergo” emission “Marienergo” “Tulenergo”

6 Test of the quality of “Vladimirenergo” 63 Control over the impact of unearthed groundwaters “Nizhnovenergo” production activities on the “Kirovenergo” quality of groundwaters

7 Sample probe of polluting “Udmurtenergo” 221.6 Control over the negative substances in rain and “Tulenergo” impact on the environment melt waters

8 Collection, transportation, All branches 3,711.7 Reduction of the negative disposal, processing and impact on the environment elimination of first-fifth class wastes

9 Holding of environmental “Udmurtenergo” 235 Reduction of the negative audits with attraction of impact on the environment external auditors

Each quarter the branches of IDGC of Centre and Volga Regions, JSC calculate and assess charges for negative influence on the environment. 200 Environmental Protection

Dynamics of payment for negative influence on environment

RUR Payment for norma- 3,821.57 thousand 3,640.66 tive and excess 3,028.29 emissions discharge

3,000 2,501.99 of pollutants, waste 2,238.00 allocation 1,946.31 2,000 1,260.62

1,202.52 To water objects 1,032.28

1,000 To atmospheric air 117.07 142.04 49.69 For waste allocation 0 2006 2007 2008

Payment for negative influence on the environment The main component of payment for negative influ- shows an increasing trend which is connected with ence on the environment is payment for disposal of the annual indexation of rates of payment standards. production and consumer wastes.

Dynamics of production and consumption wastes generation, tons

Waste hazard 2006 2007 2008 classes

First class 3.29 3.97 3.636

Second class 7.80 9.03 5.545

Third class 222.48 205.25 131.67

Fourth class 2,780.01 3,162.68 3,254.09

Fifth class 1,778.82 2,248.90 1,678.57

Total 4,792.40 5,629.83 5,073.52 201

Production and consumption wastes generation in 2006—2008, tons 5,629.83 5,073.52 4,792.40 First class

3,162.68 3,254.09 Second class 2,780.01

2,248.90 Third class 1,778.82 1,678.57 Fourth class

222.48 205.25 131.67 Fifth class 7.80 9.03 5.55 3.29 3.97 3.64 Total 2006 2007 2008

Hazard classes of wastes

0.11% Second class

33.08% Fifth class

2.60% Third class 64.14% 0.07% Fourth class First class

In 2008, among the mixture of wastes generated in the production and consumption activities of IDGC of Centre and Volga Region, JSC, the most spread are wastes of the fourth (64.14%) and fifth (33.08%) hazard classes. First- and second-class wastes constitute in aggregate only 0.18% of all wastes generated by the Company. 202 Environmental Protection

Wastes temporarily stored in the territories of the the requirements of sanitary and nature protection Company’s subdivisions have a minor impact on the standards. Some of the employees are in charge of environment for the following reasons: dangerous production wastes management. • All generated wastes belong to a certain hazard • All wastes generated in the production and con- class that requires a special way of handling. sumption activities of the Company are transported • The Company’s subdivisions have special areas for to external organizations that have the necessary waste accumulation (sites, containers, etc) under licenses.

Current environmental protection expenses

Indicator name Actuality, RUR thousand 2006 2007 2008

Current environmental protection expenses, 6,306.850 8,868.443 9,096.611 in particular:

protection and efficient use of water resources 3,319.209 2,992.939 3,733.838

in particular, charges paid to other enterprises 3,184.176 2,670.488 3,263.497 (organizations) for sewage water treatment

free air protection 479.501 1,055.144 1,651.108

protection of the environment (land resources) 2,508.140 4,756.260 3,711.665 from production and consumption wastes

in particular, charges to other enterprises 2,161.427 4,277.170 3,394.154 (organizations) for reception, storage and disposal of wastes

Current environmental protection expenses are protection of the environment from production and growing gradually; this may be explained by tighte- consumption wastes in 2008 is connected with use ning of requirements set in the nature protection le- of condensers containing Polychlorinated biphenyls gislation and constant growth of costs of service pro- (“Kirovenergo” and “Vladimirenergo” branches). vided by external organizations. Growth of costs for 203

Dynamics of current costs for environment protection in 2006—2008

RUR thousand

8,868 Costs of water 10,000 9,097 resources protection

8,000 6,307 Costs of atmosphere

6,000 4,756 protection 3,712 3,319 3,734 2,993

4,000 2,508 Cost of land resources

1,651 protection 1,055 2,000 480

0 Total 2006 2007 2008

Application of advanced technologies and solu- (by reducing the total area of the cutting drift) and tions during their exploitation. It also helps to avoid bird One of the main directions of advanced technolo- killing. In the accounting period the length of elec- gies and solutions implementation (in terms of en- tricity transmission lines grew by 59%, as com- vironment) for electric power transport and distri- pared to 2007. bution in IDGC of Centre and Volga Region, JSC, are: • substitution of oil switchers for sulphur hexafluoride and vacuum switches. Sulphur hexafluoride and vacuum switchers have higher technical figures comparing with oil ones. They do not contain oil and, thus, are fire-safe and usually do not have a negative impact over the environment. The number of SF6 circuit breakers used by IDGC of Centre and Volga Region, JSC grows each year. • аpplication of self-supporting insulated wires. Ap- plication of self-supported insulated wires helps to reduce the armful effect of production activities on the environment at laying of electric power lines 204 Environmental Protection

Quantity of SF6 circuit breakers 164 124

85 110 kV SF6 72 circuit breakers

35 kV SF6 circuit breakers

2007 2008

Quantity of vacuum circuit breakers

2007 5,406

2008 6,199

Environmental staff competence environment. Thus, training of 51 employees respon- Professional development, retraining and skills im- sible for hazardous waste management took place in provement of specialists in the field of ecology is car- 2008. They passed the course “Professional prepa- ried out in the form of training seminars, refresher ration and right to work with dangerous wastes” (the courses under educational institutions and other or- sum of costs was RUR 402.2 thousand). Three spe- ganizations licensed to hold educational activities in cialists took the course “Internal Audit of Environment 205

Management System” in “Corporate Energy Univer- system under ISO 9001:2000, OHSAS 18001:2007 sity” CJSC (Moscow). Costs for their education were and ISO 14001:2004. RUR 105 thousand. Eighteen specialists completed the course “Training of Managers and Specialists for In 2008 the Company adopted and presented to its Environmental Safety Protection of General Econo- employees “The Policy of IDGC of Centre and Vol- mic Management System” (RUR 345.3 thousand). ga Region, JSC, in the field of quality, professional health, labor safety and environment protection” Environmental audit performance and “Environmental Aspects Management Stan- In 2008 environmental auditing continued in the dard” which determines identification procedures, branches of IDGC of Centre and Volga Region. estimation of relevance and environmental aspects These audits aimed to detect nonconformance to management. In 2008 “IDS Scheer” ltd auditors the demands of the environmental legislation and trained IDGC of Centre and Volga Region, JSC top ISO 14001:2004 and determine the main lines of mangers, middle managers and work group mem- activities on reduction of negative influence on the bers under the program “Practical approaches to environment. Thus, 15 environmental audits were management system optimization and preparation organized and carried out in 2008. for certification”. Besides, they carried out an estimation audit of the integrated management sys- The majority of environmental audits were organized tem. by IDGC of Centre and Volga Region, JSC specialists who had graduated from JSC “Corporate Ener- The representatives of certification body “Bureau gy University”. The held environmental audit did not Veritas Certification Russia” presented a certificate reveal any serious troubles in environment protec- to the management of IDGC of Centre and Volga tion but showed single non-compliances. The audi- Region, JSC, on 22 December 2008. According to ting group gave a qualified estimation of the branch the certificate, the management system of the exe- environmental protection activities. cutive body of IDGC of Centre and Volga Region, JSC, meets the requirements of ISO 9001:2000, “Udmurtenergo” branch carried out an internal en- ISO 14001:2004 and OHSAS 18001:2007. vironmental audit with attraction of “QMS Center” ltd external auditor. It aimed to determine whether Certification of all branches of IDGC of Centre and the Company’s activities conform to the nature pro- Volga Region is planned in 2009. tection legislation. The auditors checked 18 sites of the branch production departments. As a whole, the auditor group estimated positively “Udmurtenergo” performance. The environmental audit cost RUR 235 thousand .

Development, implementation and certification of the quality management system with regard of the requirements set by ISO 14001:2004

In 2008 IDGC of Centre and Volga Region, JSC, started to implement an integrated management Reasoning out Every Decision Reasoning out Every Decision

Purchasing Activities 208 Purchasing Activities

Main Provisions of the Company Policy in the Field of Purchasing Activities

The main provisions of the policy of IDGC of Centre The Company policy in the field of selection of and Volga Region, JSC, in the field of purchasing suppliers, contractors, executing parties regar- activities are observance of purchases openness ding goods, works, services. Requirements to and transparency principles, increase of the level participants of purchasing procedures. of competition of purchasing procedures’ participants, achievement of the maximal economic be- The Company heads for work with skilled, qualified nefit of their carrying out. suppliers, contractors, executing parties having positive business reputation and capable to offer neces- The purpose of the policy in the field of purchasing sary products, works, and services for delivery. activities is the establishment of uniform approaches to implementation of the Regulations for the Proce- In the process of arrangement of purchasing procedure of Carrying out Regulated Purchases of Goods, dures and preparation of purchasing documentation, Works, and Services for Needs of IDGC of Centre besides the general requirements to legal capacity and Volga Region, JSC, which provide: and presence of the transaction participants’ po- • uninterrupted supply of the Company with qualitative wers, the grounded requirements to an operational goods, works, services; experience, presence of resource (material, financial, • economic efficiency at carrying out of purchases; personnel) opportunities, organizational structure of • prevention of mistakes and abusing in the field the partner company and presence of the system of of purchases; interaction with contract parties (suppliers, subcon- • purchases of products on a competitive basis, and tractors, co-executing parties) are set forth. a raised control over decision-making in the situations when it is impossible to carry out purchases Requirements to the purchased goods, works, of goods and services in competitive markets; services • taking into account peculiarities of the purchased The Company heads for purchasing the products, inventory at choosing the strategy and procedure the quality of which complies with functional require- of preparation and carrying out of purchases; ments, consumer properties, technical capabilities, • professionalism at organization and carrying out ecological and industrial safety, and the price of of purchases. which corresponds to the quality.

Description of Applied Purchase Ways and Terms of Their Selection

The Regulations for the Procedure of Carrying out • Request for proposal; Regulated Purchases of Goods, Works, and Ser- • Request for quotation; vices for Needs of IDGC of Centre and Volga Re- • Competitive negotiations; gion, JSC, cover the following ways of purchases • Purchase from a single source; organization: • Purchase by participation in the procedures orga- • Tender; nized by products sellers. 209

Tender In case of purchasing of especially complex prod- IDGC of Centre and Volga Region, JSC, holds the ucts, a request for proposal may be held with ap- following types of tenders: plication of special procedures stipulated for such • depending on a possible circle of participants, a ten- purchases. der may be open or restricted; • depending on a number of stages, a tender may be Request for proposals is held at compliance with at one-, two- and many-stage; least one of the following terms: • depending on a presence of the procedure of pre- • the Company is pressed for time to hold a tender, qualification selection, a tender may be organized or its holding is inexpedient for any other weighty with carrying out or without carrying out of such reasons. At the same time there are no circumstan- a selection. ces demanding immediate carrying out of purchase from a single source, and the complexity of products In case of purchase of especially complex products, or terms of its delivery do not allow carrying out of a tender may be held with application of special pro- a request for quotation; cedures stipulated for such purchases. • It is necessary to carry out negotiations with participants, but the use of the procedure of two- and If the floor price of the proposal is the main criterion many-stage tender is inexpedient in connection with for selection of the winner, the Company may held time spending for other weighty reasons; a price tender. • when a prospect volume of purchases does not exceed RUR 5 million (VAT excluded) at purcha- Price tender is held in the following cases: sing of building materials, contract works and unique • at deliveries of simple products; (custom-made) equipment or RUR 3 million (VAT • at selection of one out of several suppliers, with excluded) at purchase of other goods, works, and which earlier, following the results of the open ten- services. der, frame agreements for deliveries of certain products for the term of up to one year were completed, Request for quotation provided all suppliers will be invited to the restricted Depending on a possible circle of participants, a re- price tender. quest for quotation may be open or restricted.

The open tender is a priority way of purchases. Application of a request for quotation may be carried out at purchases of simple products in already Request for proposals generated markets provided that the price of the IDGC of Centre and Volga Region, JSC, applies contract does not exceed: the following forms of a request for proposal: • RUR 5 million (VAT excluded) at purchase of buil- • depending on a possible circle of participants, a re- ding materials and contract works; quest for proposal may be open or restricted; • RUR 3 million (VAT excluded) at purchase of other • depending on a number of stages, a request for pro- goods, works, and services. posal may be one-, two- and many-stage; • depending on a presence of the procedure of pre- A restricted request for quotation without a restric- qualification selection, a request for proposal may tion of the contract price may be applied at purcha- be organized with carrying out or without carrying ses of constantly consumed simple products from out of such a selection. suppliers, with which earlier, following the results of 210 Purchasing Activities

the open tender, frame agreements for delivery of volume for prevention of an extreme situation or these products were completed. At the same time liquidation of its consequences, and replenishment the frame agreements should be completed for the of the established norms of the emergency stock term that should not exceed one year; there should of products; be at least three suppliers, and all of them should be • a possibility of reception of products only from one invited to submission of price proposals. supplier and absence of their equivalents; -- The reasons allowing to apply this item may Competitive negotiations be the following circumstances: a) the goods Depending on a possible circle of participants, com- (works, services) are produced with applica- petitive negotiations may be open or restricted. tion of a unique technology, or possess unique properties that is confirmed by the correspon- Depending on a presence of the procedure of pre- ding documents, and only one supplier can de- qualification selection, competitive negotiations may liver such products; b) the supplier is a mono- be organized with carrying out or without carrying polist registered in antimonopoly authorities in out of such a selection. accordance with the established procedures; c) the supplier is the only official dealer of the Competitive negotiations are held at purchases supplier possessing the above-stated proper- of especially complex products when it is necessary ties; d) the supplier is the only supplier, seller, to carry on negotiations with participants, but the contractor in this region provided that the costs use of the procedure of a two-stage tender or a re- connected with attraction of contract par- quest for proposal is inexpedient in connection with ties from other regions make such attraction time spending or for other reasons. economically unprofitable; e) the supplier or its unique dealer carries out warranty service Purchase from a single source and routine maintenance of the goods (works) Purchases from a single source may be carried out supplied earlier, and presence of another sup- in one of the following cases: plier is impossible under the warranty terms; f) • presence of an urgent need for products when purchase of services from the state organiza- carrying out of other procedures is inexpedient. tions, or from the organizations applying the At turning for a permit to purchase from a single tariffs which are established by the state tariff source on this basis, the Central Tender Commis- authorities (services of railways, transporta- sion, irrespective of the decision taken, checks up tion of gas, state check-up of measurement to assure itself that this promptness is not a conse- means, etc.). quence of inadvertence of the customer’s officials. • additional purchases are carried out when for the If necessary the commission organizes carrying out reasons of standardization, unification, and in order of a service investigation and punishment of those to maintain compatibility or continuity (for works, guilty; services) with the products purchased earlier, new • an urgent need in certain products which arose purchases should be made only from the same sup- owing to force majeure when application of other plier. When making a decision to purchase from a procedures is unacceptable. In this case a pur- single source on this basis, it is necessary to check chase of products from a single source is made in whether a change of the supplier, will make the cus- the volume which does not exceed the necessary tomer do the following: 211

-- at purchase of goods — force the customer pur- erage market prices) when such opportunity exists chase them with other performance capabilities during a very short time interval; (that may lead to significant technical difficulties • products are purchased from the parent company in operation and service); of the customer or subsidiary (dependent) enterpris- -- at purchase of works (or services) — force the es of the customer specially created for manufacture customer experience significant difficulties with or delivery of these products. A purchase is made respect to a change of the supplier possessing only within the first year of existence of this enter- a specific experience and accumulated busi- prise and provided that the annual volume of pur- ness ties. chases from such enterprise does not exceed 70% of the total annual need of the customer in these The amount of additional purchase (or a total amount products; of all finishing purchases from this supplier if there • an authorship contract for an amount exceeding were several of them) should not exceed 50% of the RUR 500,000 is completed (PPIT (physical persons price of the initial purchase: income tax) excluded), and a peculiarity of a pur- • at purchase of additional works or services which chase consists in that an equivalent substitution were not included in the original project (con- of products is impossible; tract) but which cannot be separated from the • at purchases of services on training or holding main contract without significant difficulties and of seminars (meetings) if a peculiarity of purchase which are necessary in view of unforeseen cir- consists in that an equivalent substitution of the exe- cumstances; cuting party is impossible; • in case of granting of a single application at carrying • presence of other circumstances demanding pur- out of a tender or any other open procedure when, chase only from a single source (only under the spe- in opinion of CTC, the terms of the application are cial decision of the Company Board of Directors). comprehensible, and carrying out of new procedures of purchases is inexpedient (for example, time Depending on which of the parties to the transaction for performance of purchasing procedures is ex- has shown an initiative, a purchase from a single pired, or carrying out of a new tender will not lead to source may be carried out by forwarding of the pro- a change of a circle of participants and occurrence posal on completion of the contract to a specific sup- of another winner) plier, or acceptance of the proposal on completion of • in case of purchase under the contracts completed the contract from one supplier without consideration on the basis of the frame (general) agreement pro- of competing proposals. vided that this agreement does not conflict with the antimonopoly law, and that it is completed according to the procedures of these Regulations for the Procedure of Carrying out Regulated Purchases of Goods, Works, and Services for Needs of IDGC of Centre and Volga Region, JSC, and for the term that should not exceed two years (or for realization of a certain project limited in time); • at purchases of goods and other assets at essentially reduced prices (considerably smaller than av- 212 Purchasing Activities

Description of Electronic Commerce Application

IDGC of Centre and Volga Region, JSC, and its electronic trading floor (trading and purchasing sys- subordinated branches are registered as competent tem) was used as means of e-commerce for carry- users of information and analytical, trading and ope- ing out of purchasing procedures. rational system “Market of Products, Services and Technologies for Electric Power Industry” (b2b-ener- The volume of the procedures held on ETF from go electronic trading floor (ETF)). In 2008, the floor the aggregate number of competitive procedures as was used for the publication of copies of notices on a whole in IDGC of Centre and Volga Region, JSC, competitive procedures held, and for tendering di- was 58.6%. rect on the electronic floor. Besides “Elektra TPS”

Procedure of ACPP Formation and Realization

Formation of the draft Annual Comprehensive Pur- contracts, definition of types of competitive proce- chasing Program (hereinafter referred to as ACPP) dures, relation of volume of purchases to volume of is made in the main lines according to production financing sources and is adjusted after the adoption programs for the next year. Formation of the pro- of budget indicators. gram is carried out by means of analysis of passing

Main indicators of execution of Annual Comprehensive Purchasing Programs 2008 of the branches and executive body of IDGC of Centre and Volga Region, JSC

Branch \ executive body Target, RUR million, Implementation, RUR ACPP execution, VAT included million, VAT included %

1 “Vladimirenergo” 1,159.921 1,206.764 104 6 “Ivenergo” 743.208 716.523 96 3 “Kalugaenergo” 5,496.351 4,290.072 78 4 “Kirovenergo” 1,436.959 1,298.115 90 7 “Marienergo” 575.967 546.981 95 9 “Nizhnovenergo” 10,363.801 11,434.529 110

continuation 213

Main indicators of execution of Annual Comprehensive Purchasing Programs 2008 of the branches and executive body of IDGC of Centre and Volga Region, JSC

Branch \ executive body Target, RUR million, Implementation, RUR ACPP execution, VAT included million, VAT included %

beginning

5 “Ryazanenergo” 1,696.948 1,462.701 86 2 “Tulenergo” 1,890.818 1,932.431 102 8 “Udmurtenergo” 869.019 888.663 102 10 Executive body 5,551.787 3,774.466 68* Total in IDGC of Centre 29,784.780 27,551.244 93 and Volga Region, JSC

* A material deviation of the purchases implementation for opening of credit lines with the total planned value of from the target is connected with the fact that 2 com- RUR 1,335.854 million, VAT included, were recognized petitive procedures for the right to complete contracts invalid.

The amount of open procedures out of the total of the regulated procedures as a whole in IDGC of Centre and Volga Region, JSC, equals 93%.

The Annual Reporting on Purchasing Activities Regarding Categories of Activities and Purchase Ways

The report on purchasing activities is presented The information on ACPP execution for 2008 is pre- in a form of reports on execution of the annual sented in Appendix No.8 to this Annual report. comprehensive purchasing program separately on branches and executive body of IDGC of Centre and Volga Region, JSC. Employing Innovative Developments Employing Innovative Developments

Information Technologies 216 Information Technologies

IDGC of Centre and Volga Region, JSC, has created Electric power supply of the system is carried out and permanently improves information and telecom- by two 15 kVA PowerWare 9125 UPS. For realiza- munications infrastructure. It is based on computer tion of guaranteed supply scheme, equipment was equipment (computer systems, servers, personal purchased: SDMO Montana diesel-electric set, Po- computers (PC) — working stations, back up ser- werWare UPS. Launch of the system is planned for vers, etc.) united into a joint corporate computer 2009. network. Branches also have DPCs which are directly relating Stock of computers and office equipment of IDGC of to the executive body. Design and exploration works Centre and Volga Region, JSC, is distributed among (D&E) on the topic “Development of Data Proces- executive body, branches, production departments sing Centers at IDGC of Centre and Volga Region, of branches and electric grid zones. Total amount of JSC” were carried out in 2008. As a result of the PC of the Company is 7,618 items. The ground of works, modernization of the branches’ Data Pro- the PC stock is computers produced by the corpora- ceeding Centers (DPC-2) is planned for 2009-2010. tion Fujitsu-Siemens particularly including all newly DPC-1 is scheduled to be put into industrial opera- purchased computers and server equipment. Such tion in 2009. method of purchase organization allows considerable decrease of expenses for computers support Almost all computers at branches and executive maintenance. Computer stock of the Company will body of the Company are jointed in local area com- be upgraded in the near future. Replacement of de- puter networks (LAN). In its turn, LANs are jointed preciated equipment at working places is planned. in united corporate computer network of IDGC of Creation of Data Processing Center (DPC-1) started Centre and Volga Region, JSC by backbone links. in 2008 at IDGC of Centre and Volga Region, JSC. Currently, both own fiber-optic and copper com- DPC-1 is located in an isolated room in 80 sq. m munication links and providers’ channels taken on area. For equipment placement, twenty telecommu- lease are used. nication closets were installed. Storage network is organized on the basis of two Brocade 5000 SAN- Design and exploration works (D&E) on moderniza- communicators with 32 ports each up to 4 Gbps. tion of data transfer network (DTN) of the Company FiberCAT SX80 redundant array of expansive disks were carried out in 2008. During realization of the (RAED) are used as containers (operating and for project, all branches will be connected with each reserved copies keeping). Server stock is based at other by fiber-optic communication links which will Fujitsu-Siemens rack mount servers. Data transmis- provide proper quality of all telecommunication ser- sion network is implemented at Allied Telesis AT- vices necessary for the Company (data transmission, 9924SP commutators of the level 3/4. video, telemetering information, telephony, etc.).

Full operation of DPC is impossible without engi- Thus, a joint information and telecommunications neering infrastructure which is presented by struc- infrastructure functions in the Company. The sys- tured cabling systems (SCS), electric power supply tem is permanently modernized and is a technical systems (including guaranteed), boxes, conditioning ground for improvement of information technologies systems, fire extinguishing systems, access con- at IDGC of Centre and Volga Region, JSC. trol systems, etc. Currently, precising conditioning system with cooling capacity of 90 kW and redun- The Company uses a variety of software and sys- dancy according to 1+1 scheme is implemented. tems, in particular: 217

• Automated Dispatch Control System (ADCS) MetaFrame Terminal Computer Software is used. of “FGC UES” JSC based on Documentum; • Information System (IS) “Enterprise Resource IDGC of Centre and Volga Region, JSC, became Management based on CIMCS ‘Flagman’”; a united operational company in 2008. It required • Automated Data System (ADS) of Budgeting reorganization of several business processes in of IDGC of Centre and Volga Region, JSC, based financial and business activities. Change of the on SAP BW; Company’s status determined directions of infor- • Expert and diagnostics information system of estimation networks’ development of the Company mation of oil-filled equipment “Albatros”; and its branches. Works on both improvement and • Working station of relay protection and automatic expanding of existing working places functioning, equipment; and in the field of new projects were carried out. • ARIS; Integration of branches into united information sys- • Software system “Smeta.Ru”; tem of resource management based on IS “Flag- • Software system of “KUB” CJSC; man” and operating on the whole area of the Com- • IS “Consultant Plus”; pany, became one of the most important goals. It • IS “Kodex”; allowed consolidation of efforts on optimization of • Strategic Information Complex “Dispatcher”; necessary material assets and services purchase • ADS “Budget”; by the Company, simplification of procedures and • “Planning” cash flow system; reduction of expenses for support of the contracts. • MODUS; It also allowed implementation of connection to • MOTIW; united payment system. • CIMCS “Purchases”; • Computer Software of regime calculation “RASTR Budgeting System of IDGC of Centre and Volga Re- Win”; gion, JSC, based on SAP BI was put into operation • Computer Software “Dispatcher Training”; in December 2008. Integration of the system with • Several specialized programs. Accounting Data System of “IDGC Holding” JSC is being carried out now. Moreover, the Company uses a variety of Microsoft public domain programs: • OS Windows; Implementation of corporate information system • MS Office; based on mySAP Business Suite products became • MS Visio; another major landmark in building of joint corporate • MS Project; information management system at IDGC of Centre • OS MS Windows Server; and Volga Region, JSC. Testing operation of sepa- • MS Exchange; rate modules of CIMCS is planned for 2009. • MS ISA Server; • MS SharePointPortal; A network version of ARIS program complex for • MS SQL Server , etc. preparation of information for planned implementation of integrated quality management system and The Company obtains licenses for the products its certification in 2009 was implemented last year. which provide functioning of CIMCS: Moreover, ADCS of “FGC UES” JSC electronic • SAP; document management system was put into ope- • Oracle. ration. Moreover, for terminal work of remote users, Citrix Implementation of the systems mentioned above 218 Information Technologies

(first of all, CIMCS based on SAP) will allow giving • Timely processing of available information to pre- up currently used separate program products and pare data for management decision-making; significant decrease of additional working hours. • Availability of feedback between made decisions and obtained results (financial results first of all). Effective organization of business processes is based on completing of the following tasks: Completing of the mentioned tasks is to a large ex- • Possession of objective, reliable, urgent information tent provided by implementation of CIMCS based on on the Company’s situation (first of all, financial in- SAP. formation);

Implementation of Automated Information and Measurement System of Commercial Accounting of Electric Energy (AIMSCAEE)

Wholesale electric power market mated system according to requirements of WEPM. Total number of accounting points in section of Thus, possibility of punitive sanctions for the Com- wholesale electric power market (hereinafter re- pany which are implemented by “ATC” JSC for the ferred as WEPM) of IDGC of Centre and Volga Re- wholesale market subjects will be excluded. gion, JSC, is 2,781 points. According to programs of modernization of AIMSCAEE WEPM of IDGC of Retail electric power market Centre and Volga Region, JSC, update of the auto- To improve accounting systems on retail elec- mated system in accordance with requirements of tric power market (hereinafter referred as REPM), wholesale market is implemented at 1,094 account- IDGC of Centre and Volga Region, JSC, carries out ing points. Within the programs of modernization of modernization/creation of electric power accoun- AIMSCAEE WEPM in 2009, the following supplying ting system at connections. The works are carried is planned: out according to the strategy of electric power ac- • 6 accounting points — with interval accounting me- counting systems modernization/creation on WEPM ters which suit WEPM; in the grids of distributive grid companies approved • 9 accounting points — with current transformers by “FGC UES” JSC. which suit WEPM; • 7 accounting points — with potential transformers According to the document, the most economically which suit WEPM. effective steps are taken primarily. They include: • forming of productive supply on load of apartment Realization of modernization / creation programs of buildings with installation of information and measu- AIMSCAEE WEPM of IDGC of Centre and Volga Re- ring complexes at the boundary of balance inven- gion, JSC will allow creation of the Company auto- tory; 219

• replacement of electric power information and With a glance of changing economic conditions measuring complexes with advance accuracy rat- in the country, amendment and coordination ing at connection with huge monthly electric power of programs of electric power accounting systems consumption; future development at branches of IDGC of Centre • installation of remote electric power accounting and Volga Region, JSC, with “IDGC Holding” JSC at the boundary of balance inventory and places is planned for 2009. Implementation of the programs of maximum electric power losses. will allow increase of the Company revenue.

Telecommunications

Improvement of corporate technological network Works within the project on organization of chan- of connection and data transfer was continued in nels for the Emergency Control Automatics (ECA) previous year. Within the project, territorially re- system were carried out in 2008. mote portable electric power plants and regional electric power plants are connected to joint cor- Further development of telecommunication net- porate network of branches. All measures on work of IDGC of Centre and Volga Region, JSC, modernization of data transferring networks are is planned for 2009. aimed first of all at increase of energy system operation effectiveness by integration of its all sections into one united information space.

Automation System of Control and Process Management

To prevent accidents at electric grids and reduce re- velopment and modernization of Networks Control sponse time for accidents remedy, implementation Center (NCC), installation of dispatcher panel at and development of the system for telemechanics, the base of display cubes were carried out in 2008 remote signaling and remote measurement are be- within the organization of NCC to implement the ing carried out. order of RAO “UES of Russia” of 30 January 2006 No.68 “On Approval of Purpose Organization and Works on projecting and creation of Automated Functional Model of Operation and Control Manage- Technological Management System (ATMS), de- ment of UES of Russia”. NCC complexes were put 220 Information Technologies

into test operation in 2008. Creation of program for other systems of data transfer including manage- control complexes modernization at production de- ment networks into common infrastructure; partments is planned for 2009. • failsafe principle which is based at some superfluity such as: It’s important to note that necessary amount of au- -- physical superfluity which is achieved by doubling tomated working places included in united measu- of some elements (if an element doesn’t work ring network of the Company are equipped currently properly, it is replaced by another element); according to amount of personnel in departments of -- information superfluity. the Company. Employees have access to automated management systems from their working places All IT processes are formalized according to exis- according to their scope of activities and functions. ting normative documents. The order of operation Corporate Integrated Management Control Systems of executive body IT departments of IDGC of Centre (CIMCS) in their turn cover all fields of activities of and Volga Region is fixed both in Regulations for De- the Company. partments for Information Resources Management (IRM) ATMS and IRM IT Infrastructure and CIMCS Configuration of IT-infrastructure is carried out on and in employment position descriptions. Organiza- the ground of normative documents of the Compa- tional structure of regional branches is described in ny in the field of IT and results of design and explo- their proper documents. ration works at the directions: “Domain Structure”, “Telephone Network”, “Data Transfer Network”, Determination of quality and control over state of “Data Processing Center” which were carried out processes are carried out on the basis of approved in 2008. Quality Control System (SLA) and ServiceDesk system implemented on its basis. Maintenance of IT While implementation of hardware and software infrastructure on the basis of signed agreements is complex of the Company, the following principles carried out by outsourcing company “SENAL” LLC. of configuration are considered as essential: • possibility of modernization of separate elements For formalization of IT processes and regulation of without considerable changes of the whole system; work on departments serving, a catalog of services • allowability of replacement of a separate element is worked out and approved. of the system by equipment of another manufacturer in accordance with generally accepted standards; To control and monitor consumers serving proces- • possibility of integration and interaction between dif- ses, ServiceDesk system for application accounting ferent systems and subsystems; is implemented. • relying on standard open solutions (one of base factors while making technical solutions is use of Criteria of the system’s quality of operation are: equipment and programming support by leading • availability of uncovered applications; manufacturers which have been acting on the mar- • efficiency of solving applied problems; ket for a long time and have occupied a steady po- • observance of dates when solving problems. sition); • implementation of Ethernet as base technology To create a necessary normative base in the field of which exists at any enterprise and can integrate any information technologies, the documents “Basic is- 221

sues of Technical Policy of IDGC of Centre and Vol- Main demands for forming of the customer’s Ser- ga Region, JSC, in the field of IT”, “Catalog of Ser- vices are fixed in the following internal documents: vices”, “Regulations for Information Safety”, “Stra- • “Regulations for technical policy of IDGC of Centre tegy of Information Safety Provision” were worked and Volga Region in the field of information tech- out and approved at executive body of IDGC of Cen- nologies”; tre and Volga Region, JSC. Proper documents were • “Standard of the Company’s IT activities manage- worked out at branches of the Company. ment”.

Activities of the customer’s Services at branches of the Company are regulated by proper documents, orders and employment position instructions.

The Most Important Results of the Company’s IT Infrastructure Development

The most significant results of the Company • creation and putting into test operation of Automated in 2008: Information Budget System of IDGC of Centre and • creation and defense of Automation System Project Volga Region, JSC, based on SAP BI; (ASP) of IDGC of Centre and Volga Region, JSC; • implementation and development of ADCS of “FGC • completion of the first stage of the project on crea- UES” JSC. tion and implementation of CIMCS based on SAP R3 and SAP BI at IDGC of Centre and Volga Region, JSC; • implementation of modernization and development of Data Processing Center (DPC-1) at IDGC of Cen- tre and Volga Region, JSC. Equipment of server farm, data storage systems and reserve copy systems were purchased. Their installation and putting into operation were implemented. Development of CIMCS began at just installed equipment; • introduction of ServiceDesk Customers Service Control and Monitoring System; 222 Information Technologies

The Most Important Results of IT Infrastructure Development at Branches of the Company

“Vladimirenergo” Branch Complex supply with optical connection equipment, radio connection, computing techniques, peripheral • The project of teleautomation was implemented and network equipment was carried out from Octo- at substations (SS) of “Kovrov Electric Grids” pro- ber to December 2008. duction departments (PD) (Murom EGZ, “Murom” substation integrated program, “Strelochnaya” substation, “Borisovskaya” substation, “Verbovskaya” “Ivenergo” Branch substation, “Zhdanovskaya” substation, “Or- • AIMSCAEE WEPM system for needs of “Energos- lovskaya” substation, “Fanernaya” substation) and byt” Municipal Unitary Enterprise at 86 accounting “Vladimir Electric Grids” (“Bazovaya” substation, points of “Ivenergo” substations was installed, fixed “Khimzavodskaya” substation, “Penkino” substa- and updated according to requirements of electric tion, “Undol” substation, “Suzdal” substation, “Su- power wholesale market. AIMSCAEE WEPM was dogda” substation, “Pokrov” SS) and control station put into operation, and the certificate of compliance of “Vladimir Electric Grids” PD. The project cost with technical requirements of ATS navigation pa- RUR 32.1 million. rameters was obtained. • Replacement of Automatic Telephone Station (ATS) • “Ivenergo“ PD were resupplied with office machines at Yuriev-Polsky EGZ of “Alexandrov Electric Grids” and equipment. Outdated office equipment stock PD, private branch exchange and dispatcher switch was replaced. board at “Gusev Electric Grids” PD with use of Mini- • “Ivenergo” NCC hardware and software complex com-DX500 ATS equipment was carried out. The on the base of SCADA “PSI Control” was put into project cost RUR 5,212.7 thousand. operation with the help of “Novintech” CJSC. Trai- • Technological data exchange between control ser- ning of “Senal” LLC personnel in management and vice of “Gusev Electric Grids” PD and “Vladimir- operation of hardware and software equipment was energo” Network Control Center (NCC) at 2 Mb/s carried out. channel. • System of NCC and communication centers guaranteed supply with electric power was introduces. The Under the project on forming of “Vladimirenergo” system includes UPS and diesel electric station. NCC, the following measures were carried out: • Testing of additional 2 Mb/s channel of connec- • Installation and start-up works of hardware and soft- tion with “Kineshma Electric Grids” PD was orga- ware complex (HSC) which are server equipment, nized and is being carried out (current E1, provider equipping of working places, telecommunication “Centertelecom”). It provided the opportunity to use equipment were concluded; all implemented information systems at the depart- • The server of “Applications” program complex was ment (Flagman, ADCS, ServiceDesk). installed, connection with PSI control Operational Information Complex (OIC) is carried out; “Kalugaenergo” Branch • Technological site of Telemetry Monitoring Sys- • Creation of “Kalugaenergo” digital multiservice data tem — hardware and software complex providing transferring network was carried on in 2008. monitoring of current telemetry parameters On-Line • System of NCC backup supply was put into opera- by WEB-browser is organized; tion. • “Vladimirenergo” NCC hardware and software com- • Modernization of teleautomatic equipment at five plex on the base of SCADA “PSI Control” has been substations was carried out. put into test industrial operation since 1 November • Nineteen dispatch conference registrars are imple- 2008. mented at EGZ.

223

“Kirovenergo” Branch • Software for auto transport service accounting according to data of “Kirovenergo” and “Auto Transport • All EGZs are connected to “Kirovenergo: joint cor- Enterprise” JSC, was put into operation. It allows porate data transferring network according to ADSL revelation of deviations between data of “Kirov- technologies. energo” and “ATE” JSC, finding out the reasons and • Within the frameworks of scheduled modernization carrying out of cost analysis. of the infrastructure, 3 laptops, 47 system blocks, • Automated system of technical requirements coordi- 41 monitors, 1 printer, 11 multifunctional devices are nation was developed and implemented. installed. • Installation of Corporate Information System (CIS) “Marienergo” Branch 1C: Manufacturing Enterprise Management is completed. All scheduled blocks of the system are put • Update of office equipment stock was carried out to into operation. provide stable operation of system and application • Control over execution of instructions by the Ser- software. vice for Production Control and Labor Protection: the • Software of “Albatros” expert diagnostics informa- complex reflecting amount of instructions with ability tion system for major electrical equipment state of analysis of executed, not executed instructions, monitoring system was purchased and implemen- at EGZ etc., was worked out. Correlation with docu- ted. ments of working stations of Energy Power Main • Set-up of data transferring channel to Yurinsk EGZ Computer Center (GVC Energetiki)- Disturbance In- was carried out. vestigation Analysis (DIA) was carried out. • Dispatch conference registrars were implemented at • The program for lines and substations equipment two EGZs. repair planning (ERORS) is being developed. The • Teleautomation of Mari-Tureksky EGZ and Sernur- program is aimed at maintenance of data base on sky PEPP was carried out. equipment in current status, specification, financial • Replacement of overaged ATS at Novotolyalsk EGZ and material resources planning for implementation was carried out. of repair works, control over periods of their implementation. “Nizhnovenergo” Branch • “Work sheet — Access” complex has been imple- • The first stage of forming of DPC engineering sys- mented. It allows getting of information on work tems of “Nizhnovenergo” branch is completed. sheets from the level of a EGZ to the level of a • The server farm on the base of FujitsuSiemens branch. The software is intended for reduction BladeFrame and FibreCat for decision-making on of input errors amount, time of work sheet for- development of mySAP BS Corporate Information malization, receiving of cumulative information on Resource Management System (CIRMS) EGZ, portable electric power plants (PEPP) and • The second stage of Information Collection and a branch in total, forming of analysis on infed in- Transfer Systems (ICTS) was realized: teleauto- formation. mation of thirty six 110 kV substation and fixation • ACS of Power Equipment Repair (PER ACS) was of about 50 km of fiber-optic communication links implemented. The system for coordination of, and (FOCL). control over realization of applications on equip- • Technological equipping of “Nizhnovenergo” NCC ment repair was implemented at following levels: on the base of SCADA “PSI Control” was finished. EGZ, PEPP, NCC, and Regional Dispatching Office Software and process complex was put into test (RDO). operation. 224 Information Technologies

• Fifty EGZs were connected to joint information • Introduction of corporate information management space of “Nizhnovenergo” branch. Six EGZs are system of IDGC of Centre and Volga Region, JSC, connected by FOCL, forty four EGZs are connected on the base of SAP CIMCS software and SAP BI by ADSL technology). information and analysis system was carried out. Specialists of “Tulenergo” participate in project solu- “Ryazanenergo” Branch tions creating. • Reconstruction of Automated Dispatch Control Sys- • “Tulenergo” NCC Production and technical complex tem (ADCS) was carried out (amount of transferred (PTC) on the base of PSIcontrol was put into test information is increased at sections between produc- operation. tion departments and Ryazan Regional Dispatching • Under the project on NCC building, “Tulenergo” Sie- Office (RDO), between production departments and mens Hipatch 4000 central ATS was put into test operation. NCC; teleautomation of three substations at Prioksk • Nineteen Cisco 2811 ADSL/K9 routers for con- PD was implemented). nection to digital connection network (DCN) and • Organization of connection channels for emergency reserve channels (“Tulenergo” VPN in the network control automatics system is completed (moderniza- of “Centertelecom” JSC) were implemented in tion of six communication centers was carried out, NCC. new digital connection complexes were installed at • Exchange of technical information between NCC seven substations). and electric grid enterprises (production depart- • Modernization of Starozhilovsky and Novodereven- ments) dispatch stations was implemented accord- sky EGZs connection complexes was carried out. ing to Interregional Energy Commission protocol Realization of the project allowed creation of mo- 60870-5-104-2004. dern high-speed connection and data transfer chan- • Within the frameworks of continuing building of NCC nels. (to allocate base equipment), antenna tower with • Reconstruction of carrier channels between 110 kV height of 70 m was built at Kimovsk EGZ. “Kombikormovaya” substation and 110 kV “Pronsk” • Projecting of the fourth launch complex of digital substation was carried out at Ryazan production connection network was implemented at Suvorov department. During the reconstruction, depreciated and Efremov regions. three-channel high-frequency communication ACS • Installation of additional high-frequency communi- (automated control system) facilities were replaced cation channels for Volovo EGZ, Kurkino EGZ, Ka- by “Line-M” CTCE (communication and teleme- mensk EGZ on the base of EHFCSDP-CSS (equip- chanics channels equipment) facilities. ment of high-frequency communication of signals • During the year, integration of engineering systems digital processing – combined semi-set) (EHFCS- for NCC was carried out. Installation, setting and DP-DM (digital modernized)) with four channels at putting into operation of software and hardware each direction was implemented at Efremov electric complex (SHC) NCC on the base of SCADA “PSI grids. Control” system were carried out. The complex is • Replacement of Volovo EGZ “Tricom K12” dispatch being in test operation. communicator for “Minicom DX500 compact” mini- ATS was carried out at Efremov electric station. “Tulenergo” Branch • Replacement of ACS-1c analog high-frequency • The change for outsourcing in the field of IT services communication equipment for EHFCSDP-DM digi- was carried out. A new organizational structure of tal equipment was carried out. Five sets of equip- “Tulenergo” IT departments was formed. ment were installed. 225

• High-frequency communication channel with 110 kV “Udmurtenergo” Branch “Nikulinskaya” substation on the base of ET-81 • The first stage of project “Reconstruction of the sys- equipment was carried out. tem of information exchange with automated system • Replacement of “Granit” teleautomatics integrated of Regional Dispatch Office system operator” was program for modern “Granit-RISSA” integrated pro- implemented. gram with support of IEC protocol 870-5-101 and • Project “Reconstruction of Krasnogorsk EGZ IEC protocol 60870-5-104-2004 and “Granit” (seven (CEZ) Dispatch and Process Management System 110 kV substations and five 35 kV substations). (DPMS)” was implemented. • “Nikulinskaya” 110 kV substation and “Hanino” 35 • “Enterprise Resource Management” IS on the base kV substation were telemechanized. of “Flagman” was put into operation. • Replacement of “Granit” CRTS (central reception • ADCS of “FGC UES” JSC was put into operation. and transmitting station) by TIPC (telemechanic information processing complex) at Schekinsk PD of Tula Electric Grids.

Projects on IT Infrastructure Development Offered for Implementation in 2009

• Modernization of hardware and software complexes of abnormal situations and making of optimal de- of the Company: cisions. Moreover, it will increase the clearness -- Development and modernization of DPC-1 and level during distribution of networks in the energy DPC at branches; system. -- Replacement and modernization of office equip- -- Implementation of ARIS business processes ment to provide compliance of IT infrastructure modeling system. Use of the system is neces- resources with current and future needs of the sary for high speed and quality implementa- Company’s activities. tion of quality management system (QMS) ISO • Creation and development of corporate information 9000:2001; system of management. -- Implementation of software of “Albatros” expert -- Introduction of CIMCS within the frameworks and diagnostics information system for major of SAP CIMCS project which started to be imple- electrical equipment state monitoring system. mented in 2008; • Creation and development of security system of pro- -- Implementation of electronic document man- tection against malicious code. agement system ADCS of “FGC UES” JSC (II • Development of data transfer system and telephone stage) connection system based on results implemented -- Purchase and implementation of instrumental (D&E) multipurpose Geographic Information System • Realization of programs on modernization/creation (GIS). Introduction of GIS will allow receiving of AIMSCAEE WEPM of IDGC of Centre and Volga of current and trustworthy information, modeling Region, JSC. Deserving Fair Appraisal Deserving Fair Appraisal

Statement of Opinions and Analytical Conclusions of the Management 228 Statement of Opinions and Analytical Conclusions of the Management

Deputy General Director for technical issues — chief engineer S. T. Andrus:

The policy of IDGC of Centre and Volga Region, JSC, pair, realization of works on reconstruction and is aimed to provide conditions for reliable, safe and re-equipment of the existing equipment were car- qualitative power supplies, and to realize technologi- ried out. Expenses for performance of repair pro- cal connection of energy installations of consumers. grams in comparison with 2007 increased by 22%, and capital expenditure development for recon- The Company activities in this area are carried out struction and re-equipment increased by 37.5%. in the process of constant tackling of a complex The system of scheduled preventive maintenance of tasks: and realization of actions on reconstruction and re- • improvement of networks technological management equipment of power facilities provided a necessary and application of modern methods of grid deve- level of reliability of their operation. lopment planning; • overcoming of the tendency of ageing of the main The actions held during 2008 aimed to increase power supply systems and electric equipment due reliability of electric power supplies of consumers to an increase in the scales of works on their and improvement of quality of service of electric reconstruction and re-equipment; grid objects in comparison with 2007 allowed • creation of conditions for application of new tech- to lower: nical solutions and technologies in the systems • number of technological breaks by 4.1%; of service, management, protection, information • undersupplies of electric power due to technologi- transmission, communication and systems of elec- cal breaks by 11.3%; tric power measuring (including, in the automated • average duration of technological breaks grid management centers); by 11.5%. • development of the methods of operation with use of modern means of diagnostics, technical In order to increase efficiency of maintenance and information-measuring systems. of electric grids, additional mobile emergency brigades were created; the new equipment repre- In the reporting period, performance of programs sented by 151 specialized machines was purchased. on qualitative service of the equipment, duly re- In order to maintain a reserve feeding of so- 229

cially significant objects, additional independent Novgorod, Tula, Ryazan regions and the Udmurt power supplies are purchased. The emergency stock Republic is continued for determination of volumes of material resources and equipment was fully of the new construction providing development replenished. of the industry, housing construction and household facilities. In order to improve professional skills of the operating maintenance and repair personnel, spe- Within the limits of future development, works on cialized emergency management trainings with at- synchronization of construction and reconstruction traction of experts of marketing, other territorial of the Company objects with activities of electric grid companies and administrations of cities were power grid complex of JSC “UES FGC” are held. held. Agreements on the procedure of interaction Proposals on 220—500 kV equipment innovation in the event of liquidation of possible emergencies are made; programs of prime measures on main- were signed with branches of JSC “UES FGC”. tenance of reliability of electric power supplies of consumers are jointly developed. In 2008 regular actions on securing the safety of the existing and implementing the modern In 2008 the Company within the limits of realiza- safe equipment which requires minimal mainte- tion of the investment program executed a number nance were held. Programs on provision of the of projects of new construction. The following personnel with modern protection devices for safe investment objects are among the large ones: manufacture of works, improvement of sanitary • construction of the first stage of “Zenitnaya” conditions of work, vocational training of em- 110 kV substation in Izhevsk for provision of elec- ployees with application of special simulators tric power of the reconstructed area of the city were carried out. All this allowed to avoid cases central part and the stadium of the Republic; of industrial traumatism at the Company elec- • commissioning of the second stage of “Chizhi” tric power objects, and considerably to lower 110 kV substation in Kirov city allowing to lo- the number of accidents with outside people wer deficiency of capacity, and commissioning of at power objects. the first stage of “Zavodskaya” 110 kV substation for connection of a blood product plant which is The primary goal for realization of technological under construction now; connection in 2008 was a decrease in the number • start-up of construction of “Strelka” 110 kV sub- of power deficient points i.e. the areas which station in Nizhniy Novgorod city for provision do not allow new technological connection. of electric power to inhabited and business complexes of Meshcherskoe Ozero microdistrict; For this purpose the reconstruction at ten 35— • performance of the main part of works on recon- 110 kV substations for the purpose of increase struction of “Fakel” 110 kV substation with its in their transformer capacity was held. Fifteen translation to 220 kV voltage that will allow projects on creation of new and reconstruction to remove a restriction on connection of new ca- of existing substations in Nizhniy Novgorod, Tula pacities of the energy unit in Ryazan city; and Kaluga regions were executed. • start-up of construction in the Kaluga region of “Vorsino”, “Akhlebinino”, “Rosva” 220 kV sub- For today the work on actualization of the Long- stations, “Kolosovo” and “Detchino” 110 kV sub- term Power Grids Development Plan of Nizhniy stations for feeding new objects of industrial 230 Statement of Opinions and Analytical Conclusions of the Management

and household nature, including such large con- than in 2007. In total, contracts were signed sumers as the cement plant of Lafarge group, for 1,522.59 MW that 75% exceeds the 2007 “Samsung Electronics Rus Kaluga” Ltd. enterprise, indicator. JSC “Corporation of Kaluga Region Development” industrial base and others; The amount of actually connected capacity in 2008, • construction of “Osinovaya” 110 kV substation in comparison with the previous year grew by 10% for connection of new inhabited and business and equaled 516 MW. buildings of the central part of Tula city. As a whole, the 2008 performance showed that In 2008, 17,738 contracts for technological the Company priority lines are chosen right that connection were signed that is by 27% more allows us to solve tasks set forth successfully.

Deputy General Director for corporate governance L. A. Podolskaya

The year 2008 became landmark for the Compa- “Ivenergo”, JSC “Kalugaenergo”, JSC “Kirovenergo”, ny — since 29 February IDGC of Centre and Volga JSC “Marienergo”, JSC “Nizhnovenergo”, JSC “Rya- Region, JSC, functions as a united operational zanenergo”, JSC “Tulenergo”, JSC “Udmurtenergo”, company with its responsibility center in Nizhniy which was set by the Company Board of Directors Novgorod city and manages nine regional bran- as an especially important task, was executed. ches. The action plan on reorganization of IDGC We did a lot to achieve the task set forth of Centre and Volga Region, JSC, in the form and to complete the reorganization at a stated of a merger with it of JSC “Vladimirenergo”, JSC time. 231

Today IDGC of Centre and Volga Region, JSC, is an After regional grid companies merging, for the pur- economically powerful, investment attractive inter- pose of the uniform personnel policy, the uniform regional distribution grid company with a huge system of payment and personnel labor incentives territorial responsibility zone and functional re- of IDGC of Centre and Volga Region, JSC, were ap- sponsibility zone tackling the issues from grids proved. This system considering features of the re- repair up to capitalization matters. gional markets of labor payment is aimed to realize the principle of equal tariff payment for the work In 2008 IDGC of Centre and Volga Region, JSC, of the equal value determined by the skills level performed a large-scale IR work (Investor relations) of each employee, complexity, quantity and quality and the work on listing of the shares on the share of the works performed. market. The result of these activities was such significant events for the Company as trading Within a year the Company showed a stable in single shares of IDGC of Centre and Volga growth of the number of the trained employees of Region, JSC, inclusion in RTS and MICEX indices, various levels and qualification; target work on se- passing of the listing procedure. We on a regular lection of the personnel, development of the per- basis informed on each of these events through sonnel reserve, maintenance of a high qualification mass media. The Company pays much attention and professional level of employees was held. to strengthening of relations with investors and analysts. For this purpose, the Company main- In the 4th quarter 2008, the Collective Agreement tains contacts with them; the recognition of IDGC between employees and the Company administra- of Centre and Volga Region, JSC, by the investment tion for 2009—2011 was signed. The contract and analytical community is analyzed; the level provisions provide a plenty of social privileges, of satisfaction of potential investors and share- guarantees and compensations provided to enter- holders by the information presented is studied. prise employees in addition to those fixed in the Within a year the company managers on a regular current Russian Federation laws. It is especially basis participated in seminars, conferences and road important in conditions of instability existing to- show where the results and prospects of activities day in the country and the world. of IDGC of Centre and Volga Region, JSC, were presented, wide business contacts were established. For the year 2008 the Company provided a re- registration of the property right to 100% of real In order to provide successful performance estate objects which earlier belonged to the merged of the Company shares on the stock exchange mar- DGCs. After carrying out of this procedure, the tax ket, the Company held actions aimed to increase and legal risks connected with real estate posses- the level of corporate governance and informa- sion were minimized. tion openness. In 2008 the committees for reliability, audit, personnel and remuneration, strategy Despite the changes in the economy connected with the and development were created; the important in- influence of the world financial crisis, the Company ternal documents were developed and approved. continues works on transition to a new tariff regu- The result of the work held in this direction was lation model based on return on investment (RAB). awarding “6 +” National Corporate Governance As a result of introduction of this system the Com- Rating “Developed Corporate Governance Practice” pany will become more transparent, predicted, stable to the Company in September 2008. and therefore investment-attractive. 232 Statement of Opinions and Analytical Conclusions of the Management

We will continue carrying out the actions un- of mutual understanding between all interested dertaken in 2008 to increase the Company in- persons — and as a result will allow to raise po- vestment appeal in the future. I am sure this tential investors’ interest in the Company securities will lead to a growth of capitalization, improve- and to involve additional investments. ment of corporate governance quality, achievement

Deputy General Director for economy and finance O. V. Tikhomirova

In spite of the fact that the year 2008 was profitability of all branches and to depart from anything but simple for IDGC of Centre and Volga the developed system of a division into leaders Region, JSC, the Company achieved impressing re- and outsiders. As a result all branches in full sults. Owing to a focused preliminary preparation performed the planned works for repair and service of plans of interaction of the Executive Adminis- of the electric grid equipment and closed the year tration of the organization and its branches, since with a positive financial result. In total, nine 1 March 2008 when IDGC of Centre and Volga branches of the Company provided the total net Region, JSC, started to carry out its activities as profit in the amount of RUR 1,428.6 million. a uniform operational company, the budget management system started to function successfully. For a full year the enterprise team worked upon From the very beginning we aspired to provide the program of transition to the electric po- 233

wer transmission tariff regulation system based Considering the developed economic situation, on the return on investment (RAB). The transi- the year 2009 will be as difficult for the Com- tion to a new method of tariff regulation is for pany as the previous year. We are in for mobili- IDGC of Centre and Volga Region, JSC, one of zation of all forces and means in order to com- the factors which can increase the investment. plete the investment projects which we launched, RAB regulation already today enables to involve to execute the necessary service and repairs of the the capital in the necessary volume. Besides, the equipment for maintenance of reliability of electric new system allows to lower the load on the con- power supplies of consumers. At realization of sumer who will pay expenses for the grid complex these scale plans, it is necessary to use the assets development within a long period which is stipu- rationally for preservation of the financial stabil- lated for the return on investment, rather than ity. For this purpose the Company will continue on a single-stage basis (within a year, according a regular work on the reduction of costs, search to the current procedure). RAB regulation already of new ways of improvement of business processes today provides an opportunity to involve the capi- and management policy. tal in the necessary volume, and for the consumer — to pay for it within a long period, rather than on a single-stage basis like now. The result of the work performed became the approval by the regional regulating authorities of RAB regulation indicators for 2009—2011 for “Ryazanenergo” and “Tulenergo” branches. It is planned that all other branches of the Company will finish transition to a new method of tariff regulation by 2010.

In the end of 2008 the Company activities in many respects were complicated by the crisis which captured the global economy. The reduction of production volumes was caused by a decrease in electric power consumption; there appeared difficulties with attraction of extra means and cases of delays in payment on the part on consumers. Despite this IDGC of Centre and Volga Re- gion, JSC, in full financed the investment projects launched in all regions, in the territory of which the company branches carry out their activities. The total amount of the money resources assigned in 2008 for the investment purposes equaled RUR 12,658 million. Conquering any Peak Conquering any Peak

Strategic Mission and Outlook 236 Strategic Mission and Outlook

The strategic task of IDGC of Centre and Volga Re- Volga Region, JSC, plans to implement the activities gion, JSC, is in the stable development and financial directed to the investment attractiveness increase indices improvement as well as the value increase and growth of the Company’s capitalization. Major of the Company due to the intensive development factors of corporate governance practice improve- at the market of the electric power transmission, in- ment of IDGC of Centre and Volga region, JSC, are: crease of the activity productivity and consumer’s • support of the Company’s positive image among supply reliability. the interested groups, information disclosure in the form of the quarterly report and material facts, Major Trends annual report, high quality information presentation of the Strategy Implementation on the Company’s web-site and etc.; 1. Management system improvement • transparency during the interested-party and major IDGC of Centre and Volga Region plans to imple- transactions making; ment the following activities with regard to the ma- • productive Board of Directors (presence of the com- nagement system improvement: mittees, independent directors in the Board of Direc- • to support the principle of uniformity of the organiza- tors); tional structures of the Company’s executive office • further implementation of the corporate governance and branches; code approved by the Company’s Board of Direc- • to optimize the functional responsibilities distribu- tors; tion from the point of view of the business processes • presence of the productive internal control office; speeding–up, as well as to optimize the amount and • constant work with the investors and shareholders, increase of the internal clients’ satisfaction degree. stock exchange analysts (productive IR program); • to support the principle of uniformity of the material • corporate governance rating increase; incentives system and ensuring of social guarantees • going through the listing procedure to include and benefits in the Company; the shares into the higher level quotation lists. • to settle the management system by goals in the Company; 3. Financial and economic development • to implement the uniform software complex with the From the point of view of the financial and economic use of sample, unified and standardized elements, activity for 2009 and near future, IDGC of Centre project solutions and software applications, com- and Volga Region, JSC sets forth the following ma- plexes and components; jor goals: • to increase the economic productivity (achievement • to preserve the Company’s financial stability of goals of a certain Branch and Company in gene- in the global recession conditions; ral, guided by the principles of the sensible use • to implement the timely financing of the planed of the resources available); works aimed at maintenance and service of power • to increase the social productivity (the degree of mee- gird equipment necessary for failure-free, reliable ting the needs and interests of salaried employees). and high quality power supply of the consumers; • to ensure the necessary amount of the investment 2. Corporate governance level increase program financing; Within the framework of further corporate gover- • to settle the economically viable tariffs for power nance quality improvement, IDGC of Centre and transmission for 2010 and further years with the use 237

of methods of the return on investment (RAB) in all the IDGC of Centre and Volga region, JSC, plans: regions of the Company’s branches presence; • further improvement of the grids technological ope- • to decrease costs and increase the Company’s eco- ration and use of the modern methods of the grids nomic activity. development planning; • overcoming the tendency of power systems major To achieve the goals set forth, IDGC of Centre Vol- grids and equipment ageing due to an increase ga Region, JSC, in near future plans to carry out of the scale of works aimed at the reconstruction the following activities in major trends: and technical re-equipment; • decrease and optimization of the operation activity • conditions creation for the use of new technical so- costs; lutions and technologies in the systems of service, • monitoring and assessment of risks which can have management, protection, information transmission, a negative impact on the financial and economic re- connection and systems of power measuring (inclu- sults of the Company’s activity and implementation ding automated systems of power grids operation); of the activities aimed at a decrease of such an in- • development of operation methods with the use fluence; of modern diagnostic facilities, technical, information • credit portfolio optimization aimed at the costs de- and measuring systems; crease for the debt service and ensuring of the Com- • implementation of programs aimed at the promotion pany’s financial stability; of high-quality service as well as the operative ser- • tariff campaign carrying out providing the approval vice level increase. of the long tern tariffs for electric power transmission with the use of the return on investment methods IDGC of Centre and Volga region, JSC, within (RAB); the framework of the consumers power supply • completion of the development and implementa- reliability increase, during the programs imple- tion of the budget management automated system mentation aimed to reconstruction and technical on the basis of SAP software, allowing to reduce re-equipment, implements modern equipment — time and labor costs to prepare information for ma- SF6 circuit breakers of 35–110 kV, vacuum circuit nagerial control and, consequently, increase the ef- breakers of 10–35kV, reclosers (in the distribution ficiency and productivity of the managerial decisions grids of 6–10 kV) as well as relay protection de- taking; vices, automation and SCADA-systems. The enu- • constant carrying out of work aimed at business merated equipment requires minimum service processes improvement touching the financial throughout the service life. and economic aspects of the activity as well as sha- ring the positive experience with the branches; To ensure the development of industry, housing • financial statements quality increase aimed to sup- construction and public utility the work is carried port the positive image of the Company at the secu- out. It is directed to actualization of electric grids rities market. future development schemes. They also carry out the work directed to the synchronization and the 4. Reliability provision. Service quality increase reconstruction of the Company’s objects with JSC To ensure the reliability of the consumers’ power “FGC UES” electric grid complex. Proposals di- supply and electric grids service quality increase, rected to 220–500 kV equipment innovation pro- 238 Strategic Mission and Outlook

gram are examined; the programs of high priority -- Payment for technological connection (advances measures directed to the consumers power supply received) — RUR 129.252 million reliability support are developed together with JSC -- Bank credits — RUR 3,563.471 million, inclu- “FGC UES”. ding RUR 1,096 million of newly obtained credits for branches where RAB-tariff regulation was ap- The basic goal for the implementation of the tech- proved. nological connection is a decrease of the amount • In 2010: of units experiencing power shortages that -- Depreciation — RUR 3,290.250 million are the districts “closed” for new technological con- -- Payment for technological connection (current nection. For these purposes, in 2008, the recon- year profit) — RUR 2,676.600 million struction at 10 substations of 30–110kV was car- -- Bank credits — RUR 3,674.490 million ried out increase the transformer capacity. Fifteen • In 2011: projects were implemented concerning new sub- -- Depreciation — RUR 3,684.850 million stations and those under reconstruction in Nizhniy -- Profit of the current fiscal year — RUR Novgorod, Tula and Kaluga regions. In 2009–2010, 1,748.690 million IDGC of Centre and Volga Region, JSC, will con- -- Bank credits — RUR 5,085.730 million tinue this trend. Growth dynamics (increase) of deprecation al- 5. Investment activity goals and objectives locations for IP in 2009–2011 accounts for 13.6% For the near future, 2009–2011, capital invest- for the period of 2009–2010 and 12% for the pe- ments financing is planned to be carried out within riod of 2010–2011. Profit amount from power the framework of medium-term investment programs transmission assigned for the investments will de- of grid infrastructure development. pend on the realization of the long term tariff policy and, for the present moment is determined in the The major trends of the investment policy in the me- amount of RUR 1,748.7 for 2011. Credit resources dium term are: growth in 2010–2011 is determined by the transition • decrease of basic production assets wearing out to the return on investment method (RAB). for the purpose to increase the present consumers power supply reliability, safety increase and costs decrease for operation of the existing electric grids; • new objects construction and electric grids development fin order to provide the connection of new consumers upon condition of signing technological connection contracts and advances acquisition under these contracts.

Major IP sources for 2009–2011 are: • In 2009: -- Depreciation — RUR 2,896.643 million -- Payment for technological connection (current year profit) — RUR 199.916 million 239

Investment projects information as well as the program of RF Ministry of Defense To develop the industry, social infrastructure aimed at housing provision to the armed forces and housing construction support with electricity, members. IDGC of Centre and Volga Region, JSC, RUR 6,789 -- In Suvorovsky district of the Tula region it is planed million of capital investments are planed in 2009 to build OL 35 kV from “Mikhailovskaya” substation in the investment program. of 35/6 kV to “Kuleshovo” substation of 35/6 kV of 12.7 km in length. RUR 17.8 million finan- In physical terms, in 2009 it is planned to put into cing is planned to implement the investment operation 701.9 MVA of transformer capacity and project in 2009. The construction of high vol- 338.3 km of power transmission lines. tage line is planed for connection of two single- ended plants which will increase the reliability of • Objects providing the additional capacity supply the consumers supply living in Suvorovsky district to the generation companies: of the Tula region. The agricultural enterprises and -- In the Kaluga region the reconstruction of OL more than 1,100 subscribers with the consumed 100 kV “Orbita-Sputnik” is carried out toge- total capacity of 2.7 MW are among them. ther with spur lines to the substations of 110 kV -- In the Kaluga region it is planed to construct “Kvan”, “Mayak” and “SDV”. Lines reconstruction new substation of 110/35/10 kV “Akhlebino” with is carried out for the purpose to provide the ad- power transformers of 2x25 MVA (1st stage) via ditional capacity to Kaluga Thermal Power Sta- double circuit high voltage line of 110 kV “Orbita- tion-1. Putting into operation of combined-cycle Dubrava”. The end of the construction is planed plant at Kaluzhskaya Thermal Power Station-1 in 2010. RUR 46.2 million financing is provided is planned for 2009. in 2009. The new substation construction will • Objects necessary to increase the reliability of IDGC help to increase the reliability of the distribution of Centre and Volga Region, JSC, distribution grid grid and connect new consumers. complex functioning: • Objects substantially influencing the autumn and -- In the eastern part of the city of Tula it is planned winter period of 2009/2010: to build 2-transformer substation of 110/10/6 kV -- In the city of Izhevsk the construction of 110 kV “Osinovaya” with the installation of power trans- “Zenitnaya” substation (2nd startup complex) with formers of 2x40 MVA, the construction of 110 kV the transformer of 40 MVA capacity is in the pro- cable line “Tula-Osinovaya” and OL 110 kV cess of implementation. To implement the project, “Metallurgicheskaya - Osinovaya”. In 2009, RUR RUR 16.2 million financing is planned for 2009. 145.7 million were planed for the implementa- The project implementation will allow to provide tion of the investment project. The construction power to the objects of the central part of Izhevsk of new substation will allow to solve the prob- city being under reconstruction together with the lem of the capacity deficiency in the central part central sports complex of the republic, medical of the city of Tula, as well as to provide the power diagnostics cardio-center and Izhevsk radio fac- resources for the development of housing con- tory. struction in Osinovaya Gora district in the city -- The Vladimir region witnesses the development of Tula. Besides, the construction of the substa- of 110/10 kV “Gorodskaya” substation with the tion will provide the implementation of the Fede- power transformers of 2х16 MVA installation. ral program “Reliable and Comfortable Dwelling” To implement the project, RUR 1.75 million fi- 240 Strategic Mission and Outlook

nancing is planned for 2009. The substation development is carried out for the purpose to solve the capacity deficiency in the city of Pokrov in the Vladimir region as well as to increase the reliability of distribution grids. -- The Ryazan region carries out the construction of “Pushchino” 220 kV substation with overhangs to OL 110 kV. RUR 270.1 million financing is planned to implement the investment project in 2009. The construction of new substation is carried out within the framework of implementation of the “Agreement on interaction of the Ryazan Region Government and RAO “UES of Russia” aimed at the electric power system of the Ryazan region development and reliable power supply of the Ryazan region consumers.” The project is of great social importance for the region. It allows to supply the additional capacity of 146 MVA necessary for the objects of new construction in the city of Ryazan, supports the implementation of federal and regional programs: “Affordable and Comfortable Dwelling”, “Public Health”, “Sports Development”. -- In the Ryazan region it is planned to reconstruct OL 110 kV “Yamskaya-Ryazan” with a spur line to the substation of 110 kV “Dashki” of 6.2 km in length and OL 110 kV “Dyagilevo-Ryazan” with a spur line to substation of 110 kV “Pechatnaya” of 9.16 km in length. To implement the investment projects, RUR 72.45 million financing is planned in 2009. The reconstruction of 110 kV substation is of great social importance to Rya- zan and the Ryazan region as far as it supports the power supply of the developing construction in the city of Ryazan as well as the implementation of the federal and regional programs: ”Affor- dable and Comfortable Dwelling”, “Public Health”, and “Sports Development”. Appendices 242 Appendix 1. Accounting Reports for 2008

Accounting Reports for 2008 243 244 Appendix 1. Accounting Reports for 2008 245 246 Appendix 1. Accounting Reports for 2008 247 248 Appendix 1. Accounting Reports for 2008 249 250 Appendix 1. Accounting Reports for 2008 251 252 Appendix 1. Accounting Reports for 2008 253 254 Appendix 1. Accounting Reports for 2008 255 256 Appendix 1. Accounting Reports for 2008 257 258 Appendix 1. Accounting Reports for 2008 259 260 Appendix 1. Accounting Reports for 2008 261 262 Appendix 1. Accounting Reports for 2008 263 264 Appendix 1. Accounting Reports for 2008 265 266 Appendix 1. Accounting Reports for 2008 267 268 Appendix 1. Accounting Reports for 2008 269 270 Appendix 1. Accounting Reports for 2008 271 272 Appendix 1. Accounting Reports for 2008 273 274 Appendix 1. Accounting Reports for 2008 275 276 Appendix 1. Accounting Reports for 2008 277 278 Appendix 2. Auditor’s Report of IDGC of Centre and Volga Region, JSC

Auditor’s Report of IDGC of Centre and Volga Region, JSC 279 280 Appendix 2. Auditor’s Report of IDGC of Centre and Volga Region, JSC 281 282 Appendix 3. Report of the Audit Commission of IDGC of Centre and Volga Region, JSC

Report of the Audit Commission of IDGC of Centre and Volga Region, JSC 283 284 Appendix 4. Information on IDGC of Centre and Volga Region, JSC, Compliance with the Corporate Conduct Code

Information on IDGC of Centre and Volga Region, JSC, Compliance with the Corporate Conduct Code

The information is prepared in accordance with Order No.03-849/r of the Federal Commission for Securities Market as of 30 April 2003 “On methodical recommendations to the structure and form of presentation of the information on compliance with the Corporate Conduct Code in annual reports of joint-stock companies.

No. Article of the Corporate Compliant / Note Conduct Code Non-compliant

General meeting of Shareholders 1 Notification of shareholders on Compliant The order of notification of shareholders about carrying out of General meeting of carrying out of General meeting of shareholders of shareholders at least 30 days prior the Company is fixed in item 11.5 of Article 11 of to the meeting date irrespective of the Charter. the items included in its agenda, unless a greater term is stipulated According to item 11.5. of the Charter: “Notice on by the legislation. carrying out of General meeting of shareholders is published by the Company in Izvestia newspaper”, and is placed on the Company Internet website no later than 30 (thirty) days prior to the date of its carrying out”.

2 Shareholders' opportunity to Compliant The Company observes requirements of Article 51 examine the list of the persons of FL “On Joint-stock Companies”; the list of the authorized to participate in the persons entitled to participation in General meeting General meeting of shareholders, of shareholders is given by the Company to be starting from the day of notification examined on demand of the persons included in on the General meeting of share- this list and possessing at least 1 percent of votes. holders through to closing the inter- The data of documents and postal address of the nal General meeting of sharehol- physical persons included in this list are given only ders, and in case of the in-absentia with the consent of these persons. General meeting of shareholders till the date of voting bulletins reception As a matter of practice, shareholders have an op- termination. portunity to examine the list of the persons entitled to participation in General meeting of shareholders through the registrar of IDGC of Centre and Volga Region, JSC — MCD. 285

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3 Shareholders' opportunity to examine Compliant In conformity with item 52 FL “On Joint-stock Companies” the information (data) which is sub- and item 11.7. of Article 11 of the Charter, the share- ject to submission during preparation holders of IDGC of Centre and Volga Region, JSC, are of the General meeting of sharehol- entitled within 20 days before carrying out of General ders, via electronic communication, meeting, and in case of carrying out of General meeting including the Internet. of shareholders, the agenda of which contains an item on reorganization of the Company, - within 30 days before carrying out of General meeting, to examine materials for General meeting of shareholders in the office of the Com- pany executive body and other places, the addresses of which are specified in the notice on carrying out of General meeting of shareholders. The order of examination by the persons entitled to participation in General meeting of shareholders, of the information (data) on the agenda items of General meeting of shareholders and the list of such information (data) are defined by the decision of the Company Board of Directors.

Besides according to item 4.1. of the Regulations for the order of preparation and carrying out of General meeting of shareholders, information materials on the agenda items of General meeting of shareholders should be published on the Internet web-site of the Company no later than the term of notification of shareholders on carrying out of General meeting of shareholders. The specified materials are recommended to be also published in English.

4 Shareholder's opportunity to submit Compliant According to subitem 2 of item 6.2. of Article 6 of the an item to the agenda of the General Company Charter, shareholders have the right to make meeting of shareholders or to de- proposals in the agenda of General meeting of share- mand a General meeting of shareholders in accordance with the procedure stipulated by holders without giving an extract from the legislation of the Russian Federation and the Charter the register of shareholders if their of the Company. rights to shares are registered in the shareholders registry and in case According to item 13.1. of Article 13 of the Company their rights to shares are registered Charter, the shareholders (shareholder) who are (is) in on the account of deposit, - the aggregate owners of at least 2 percent of voting shares sufficiency of an extract from the ac- of the Company, in time no later than 60 days after the count of deposit for execution of the termination of fiscal year have the right to bring items above-mentioned rights. in the agenda of the annual General meeting of shareholders and to recommend candidates for the Board of Directors and the Audit Commission of the Company. At reception of offers in the agenda of General meeting of shareholders, granting of an extract from the register 286 Appendix 4. Information on IDGC of Centre and Volga Region, JSC, Compliance with the Corporate Conduct Code

No. Article of the Corporate Compliant / Note Conduct Code Non-compliant

of shareholders is not required. If the rights to shares of the shareholder are registered on the account of depot, it is necessary to give an extract from the account of depot.

5 Provision in the Charter or inter- Partially The Charter and internal documents of the Company nal documents of the Joint-stock Compliant do not contain the statements providing compulsion company of a requirement of of their presence at General meeting of shareholders; obligatory presence of the General however, in the settled practice the General Director of Director, members of the Manage- the Company, Chairman of the Board of Directors and ment Board, members of the Board a part of members of the Board of Directors are pre- of Directors, members of the Audit sent at General meetings of shareholders. Commission and the auditor of the Joint-stock company at the General In conformity with item 10.10. of Article10 of the Com- meeting of shareholders. pany Charter, the function of the person presiding over the General meeting of shareholders is carried out by Chairman of the Board of Directors.

In case of absence of the Chairman of the Board of Directors and his/her deputy, the function of the person presiding over the General meeting of shareholders is carried out by any member of the Board of Directors under the decision of the Company Board of Directors or under the decision of the members of the Board of Directors who are present at the General meeting.

6 Candidates' obligatory presence Non-compliant The special norm is not provided for in the Charter. As during a consideration of items a matter of practice, at consideration at the General on election of members of the meeting of shareholders of the items on election of Board of Directors, the General members of the Board of Directors, General Director, Director, members of the Manage- members of the Management Board, members of Audit ment Board, members of the Audit Commission, invitations to General meeting of share- Commission, as well as the item holders are delivered to the candidates. on approval of the auditor of the Joint-stock company at the General meeting of shareholders.

7 Registration procedure of par- Compliant Item 5.1. of the Regulations for the Procedure of Prepa- ticipants of the General meeting of ration and Carrying out of General meeting of Share- shareholders in internal documents holders defines the procedure of registration of the of the Joint-stock company. persons entitled to participation in the General meeting of shareholders. 287

No. Article of the Corporate Compliant / Note Conduct Code Non-compliant

Board of Directors 8 Provision in the Charter of Joint- Compliant According to subitem 19, item 15.1, Article 15 of the stock company of the Board of Company’s Charter, approval of the business plan (cor- Directors’ authority for annual ap- rected business plan), investment program, report on proval of the financial and economic results of their performance, and approval (correcting) of plan of the Joint-stock company. cash flow benchmarks falls within the competence of the Company Board of Directors.

9 The procedure of risks management Non-compliant This procedure or another regulating document was not approved by the Board of Directors approved separately. in the Joint-stock company.

10 Provision in the Charter of the Joint- Compliant According to subitem 12, item 15.1, Article 15 of the stock company of the right of the Company’s Charter, election of the General Director Board of Directors to make a deci- and early termination of his/her powers, including the sion on termination of the General decision on early termination of the effect of the labor Director’s powers appointed by the contract with him, fall within the powers of the Company General meeting of shareholders. Board of Directors.

11 Provision in the Charter of the Compliant The Board of Directors defined the quantitative struc- Joint-stock company of the right of ture of the Management Board, elects members of the the Board of Directors to establish Management Board, and determines remuneration and requirements to professional skills compensation paid to the members of the Management and rate of remuneration of the Board. The competence of the Board of Directors also General Director, members of the includes early termination of powers, including early Management Board, heads of the termination of labor contracts with members of the Com- main structural divisions of the Joint- pany Management Board, bringing to discipli- stock company. nary responsibility of the General Director and members of the Management Board, decision-making on their stimulation, approval of the structure of the executive body and the coordination of separate nominees to separate positions of the Company executive body (subitems 13, 33, 41, 42 of item 15.1. of Article 15, the Charter). Besides, according to item 21.4. of Article 21 of the Charter, formation of the Company executive bodies and early termination of their powers is carried out under the decision the Board of Directors, except for the cases stipulated by the federal legislation and the Company Charter. The Board of Directors is entitled to make a decision on the termination of powers of the General Director and members of the Management Board and on formation of new executive bodies (item 21.10. of Article 21 of the Charter). 288 Appendix 4. Information on IDGC of Centre and Volga Region, JSC, Compliance with the Corporate Conduct Code

No. Article of the Corporate Compliant / Note Conduct Code Non-compliant

12 Provision in the Charter of the Joint Compliant According to item 21.6. of Article 21 of the Charter, stock company of the right of the the labor contract on behalf of the Company is Board of Directors to approve terms signed by Chairman of the Board of Directors or the of contracts with the General Direc- person authorized by the Board of Directors. Besides, tor and members of the Manage- according to item 21.7. of Article 21 of the Charter, ment Board. the Board of Directors or the person authorized by the Company Board of Directors, defines terms of the labor contract with the General Director and members of the Management Board, and according to item 21.9. of Article 21 of the Company Charter, he/she exercises the rights and duties of the employer with regard to the General Director and members of the Company Management Board.

13 Provision in the Charter or internal Non-compliant There is no such requirement in the Company Charter documents of the Joint-stock com- ant other internal documents. pany of the requirements concerning the fact that votes of members of the Board of Directors who are either the General Director or members of Management Board, are not taken into account of votes during approval of contract terms with General Director (a managing organization, a managing director) and members of the Management Board.

14 Presence in the structure of the Compliant The structure of the Company Board of Directors Board of Directors of the Joint-stock includes at least 3 (three) independent directors. company of at least 3 independent directors meeting requirements of the Corporate Conduct Code.

15 Absence in the structure of the Compliant There are no such persons in the structure of the Board of Directors of the Joint-stock Company Board of Directors elected at AGSM on 30 company of persons who were ac- May 2008. cused of crimes in the area of economic activities or crimes against the government, interests of public service and service in institutions of local government or who experienced administrative punishments for a violation of law in the area of the enterprise activity or in the area of finance, tax and tax collections and securities market. 289

No. Article of the Corporate Compliant / Note Conduct Code Non-compliant

16 Absence in structure of the Board Compliant There are no such persons in the structure of the of Directors of the Joint-stock Company Board of Directors elected at AGSM on 30 company of persons, being May 2008. participants, the General Director (managing director), member of a regulatory body or employee of a legal entity competing with the Joint- stock company.

17 Requirement in the Charter of the Compliant According to item of 16.2. Article 16 of the Charter Joint-stock company on election “Members of the Board of Directors are elected at the of the Board of Directors through Company General meeting of shareholders in accor- cumulative voting. dance with the procedure stipulated in item 10.8. of Article 10 of the Charter”. Item 10.8. of Article 10 of the Company Charter determines that election of the Board of Directors is held by cumulative voting.

18 Provision in internal documents Compliant According to item 4.1.6. of the Corporate Governance of the Joint-stock company of Code, the members of the Board of Directors undertake an obligation of members of the to withdraw from actions leading to a conflict between Board of Directors to withdraw their interests and the Company interests. In case of from actions leading or potentially occurrence of such a conflict, a member of the Board of leading to a conflict between their Directors undertakes to inform of this other members of interests and the interests of the the Board of Directors, and also to withdraw from voting Joint-stock company; obligation of on the respective items. disclosing the information on this conflict to the Board of Directors in Besides, according to the sense of item 3.5. of the case of its occurrence. Regulations for Procedure of Convocation and Carrying out of the Board of Directors meetings, the members of the Board of Directors at exercising of the rights and duties should operate in the Company's interests, exercise rights and act towards the Company honestly and reasonably.

19 Provision in internal documents Compliant Requirements to granting of the information on of the Joint-stock company of the transactions of insiders are included in item 4 of the Board of Directors members' duty Regulations for Insider Information of IDGC of Centre to notify the Board of Directors in and Volga Region, JSC. Thus, the information on all writing on their intention to make transactions of insiders with the Company securities transactions with securities of the and SDE (subsidiaries and dependent entities) Joint-stock company, if they are securities, according to item 4.4. of the Regulations members of the Board of Directors for Insider Information is revealed and supervised by of this Joint-stock company or the special division of the Company which controls its subsidiaries (dependent) insider information. Besides, according to item 4.2. of 290 Appendix 4. Information on IDGC of Centre and Volga Region, JSC, Compliance with the Corporate Conduct Code

No. Article of the Corporate Compliant / Note Conduct Code Non-compliant

companies, as well as disclose the the Regulations, insiders are obliged no later than information on the transactions with the 3rd day following the reporting day to submit such securities made by them. to the division supervising the insider information use a written declaration on transactions with the Company and SDE securities made for the reporting month.

20 Provision in the internal documents Non-compliant According to item 18.2. of Article 18 of the Charter, of the Joint-stock company of the the meetings of the Board of Directors are held requirement to hold meetings of the when necessary, but no less often than once a Board of Directors at least as often quarter. as every six weeks.

21 Meetings of the Board of Directors Compliant During the year 2008, the meetings of the Board of the Joint-stock company during of Directors were held no less often than every six the year which is the subject of the weeks. In the reporting year, the Board of Directors annual report of the Joint-stock held 24 meetings. company, are carried out regularly, at leas as often as every six weeks.

22 Provision in the internal documents Compliant Item 7 of the Regulations for Procedure of of the Joint-stock company of the Convocation and Carrying out of the Board of procedure of holding the meetings Directors Meetings of IDGC of Centre and Volga of the Board of Directors. Region, JSC, regulates the procedure of carrying out of the meetings of the Company Board of Directors.

23 Provision in internal documents Compliant Subitem 38 of item 15.1 of Article 15 of the Charter; of the Joint-stock company of subitem 24 of item 15.1 of Article 15 of the Charter. regulations on necessity of approval by the Joint-stock company’s Board of Directors of transactions for the amount of 10 and more percent of the cost of the Company assets, except for the transactions made during as a part of the Company’s every day economic activity.

24 Provision in internal documents Partially According to item 3.1.1. of the Regulations for of the Joint-stock company of the compliant Procedure of Convocation and Carrying out of the right of members of the Board of Board of Directors Meetings of IDGC of Centre Directors to receive from executive and Volga Region, JSC, members of the Board bodies and heads of the main of Directors are entitled to receive the information 291

No. Article of the Corporate Compliant / Note Conduct Code Non-compliant

structural divisions of the Joint-stock on the Company activity, including that making trade company the information required secret; they are entitled to examine all constituent, to perform their functions, as well as normative, registration, accounting, contractual and other responsibility for failure to provide documents of the Company. such information.

25 The Committee under the Board of Compliant The Strategy and Development Committee was Directors for Strategic Planning or established under the Board of Directors on 31 July 2008. another committee assigned such functions (except for the Committee for Audit and the Personnel and Remuneration Committee).

26 Provision of the Committee Compliant The Committee for Audit was established under the under the Board of Directors Board of Directors on 31 July 2008. (the Committee for Audit) which recommends the auditor to the Board of Directors of the Joint-stock company and cooperates with the auditor and the Audit Commission of the Joint-stock company.

27 Presence of only independent Compliant The structure of the Committee for Audit includes 1 (one) and non-executive directors in the independent director (A.M. Branis). Other members Committee for Audit. of the Committee for Audit (A.V. Kurochkin, V.V. Inozemtsev) are non-executive directors.

28 The Committee for Audit is Non-compliant According to item 7.1. of the Regulations for the managed by an independent Committee for Audit, the management by the Committee director. and the organization of its activity is performed by Chairman of the Committee - A.V.Kurochkin who is not an independent director.

29 Provision in internal documents Compliant According to item 11.3. of the Regulations for the of the Joint-stock company of Committee for Audit, the General Director and members access right for all members of of the Company Management Board are obliged to the Committee for Audit to any provide the information and materials which are necessary document and information of the for the members of the Committee for decision-making on Joint-stock company under the the items within the competence of the Committee. And condition of nondisclosure of according to item 12.1. of the Regulations, the members confidential information. of the Committee, the secretary of the Committee and the third parties involved in the Committee, are obliged to observe requirements of confidentiality with regard to the information they got access to in connection with their activity in the Committee. 292 Appendix 4. Information on IDGC of Centre and Volga Region, JSC, Compliance with the Corporate Conduct Code

No. Article of the Corporate Compliant / Note Conduct Code Non-compliant

30 Establishment of a Committee Compliant The Personnel and Remuneration Committee was under the Board of Directors (the established under the Board of Directors on 31 July Personnel and Remuneration 2008. Committee), whose function is to define criteria of candidates to the positions of members of the Board of Directors and develop the Joint- stock company’s policy in the area of remuneration.

31 The Personnel and Remuneration Non-compliant According to item 7.1. of the Regulations for Committee is managed by an the Personnel and Remuneration Committee, independent director. the management by the Committee and the organization of its activity is performed by Chairman of the Committee - V.N.Kalugin who is not an independent director.

32 Absence of officials of the Joint- Non-compliant The structure of the Personnel and Remuneration stock company in the structure of Committee includes the Company officials: the Personnel and Remuneration L.A.Podolskaya, O.V.Tihomirova. Committee.

33 Establishment of the Risks Non-compliant Such committee was not established under the Committee under the Board Board of Directors. of Directors or assigning such functions to another committee (except for the Committee for Audit and the Personnel and Remuneration Committee).

34 Establishment of Corporate Conflicts Non-compliant Such committee was not established under the Settlement Committee under the Board of Directors. Board of Directors or assigning such functions to another committee (except for the Committee for Audit and the Personnel and Remuneration Committee).

35 Absence of the Joint-stock Non-compliant Such committee was not established under the company officials in the structure Board of Directors. of Corporate Conflicts Settlement Committee. 293

No. Article of the Corporate Compliant / Note Conduct Code Non-compliant

36 The Corporate Conflicts Settlement Non-compliant Such committee was not established under the Board of Committee is managed by an Directors. independent director.

37 Provision in internal documents Compliant The procedure of establishment of Committees under of the Joint-stock company of the Board of Directors is stipulated in Article 19 of the the process of establishment and Company Charter. operation of the Board of Directors committees approved by Board of Besides, the procedure of formation and operation Directors. of the Committee for Audit is provided for in the Regulations for the Committee for Audit as of 31 July 2008; the procedure of formation and operation of the Personnel and Remuneration Committee is provided for in the Regulations for the Personnel and Remuneration Committee as of 31 July 2008; the procedure of formation and operation of the Strategy and Development Committee is provided for in the Regulations for the Strategy and Development Committee as of 31 July 2008; and the procedure of formation and operation of the Reliability Committee - in the Regulations for the Reliability Committee as of 12 October 2007.

38 Provision in the Charter of the Joint- Compliant Item 18.12. of Article 18 of the Company Charter stock company of the process of determines that the quorum for carrying out of a meeting definition of quorum of the Board of the Board of Directors is at least a half of elected of Directors allowing to provide members of the Company Board of Directors. for the obligatory participation of independent directors in the meetings of Board of Directors.

Executive Bodies 39 Provision of the collegial executive Compliant Item 21.1. of Article 21 of the Company Charter body (Management Board) of the stipulates presence of the collegial executive body - Joint-stock company. Management Board.

40 Provision in the Charter or internal Compliant According to subitem 7 of item 22.2. of Article 22 of the documents of the Joint-stock com- Charter, the competence of the Company Management pany of the regulations on necessity Board includes decision-making on making transactions, of approval by the Management the subject of which is the property, works and services, 294 Appendix 4. Information on IDGC of Centre and Volga Region, JSC, Compliance with the Corporate Conduct Code

No. Article of the Corporate Compliant / Note Conduct Code Non-compliant

Board for transactions with the the cost of which is from 1 to 25 percent of real estate, Joint-stock company’s the Company balance sheet assets defined at obtaining credits if the specified the date of decision-making on making of the transactions are not referred to transaction (except for the cases provided for large transactions and their fulfill- in subitem 38 of item 15.1. of Article 15 of the ment is not referred to ordinary Charter). economic activities of the Joint- stock company.

41 Provision in the internal documents Non-compliant A similar procedure is not fixed in the Company of the Joint-stock company of internal documents. the procedure of coordination of operations beyond the financial and Thus, the operations which are beyond the economic plan of the Joint-stock financial and economic plan are subject to company. inclusion in updating of the business plan. The order of updating, the coordination and approval of the Company business plans are carried out in conformity with the Business Planning Standard of the Company and comes into effect after its approval by the Board of Directors.

42 Absence in the structure of execu- Compliant The recommendation is complied with. tive bodies of a person being either There are no the specified persons in the a participant, General Director structure of the Company executive bodies. (managing director), member of managing body or employee of a legal entity competing with the Joint- stock company.

43 Absence of persons in the structure Compliant The recommendation is complied with. of executive bodies of the Joint- There are no the specified persons in the stock company who were found structure of the Company executive bodies. guilty in fulfillment of crimes in the sphere of economic activities or crimes against the government, interests of public service and service in institutions of local government, or who experienced administrative punishments for violations in the area of enterprise activity or in the area of finance, tax, tax collections, and the securities market. If functions of the sole executive body are carried out by a managing organization or a managing director, 295

No. Article of the Corporate Compliant / Note Conduct Code Non-compliant

the General Director and members of the management board of the managing organization or managing director must meet the requirements to the General Director and members of the Management Board of the Joint-stock company.

44 Provision in the Charter or inter- Non-compliant The Charter and internal documents of the Company do nal documents of the Joint-stock not contain such a requirement. company of the prohibition for the managing organization (managing However, according to item 21.3. of Article 21 of the director) to carry out similar func- Charter under the decision of General meeting of tions in a competing company, as shareholders, powers of the Company sole executive well as to be in any other material body can be delegated under the contract to the relations with the Joint-stock com- managing organization or the managing director. pany besides rendering services to The rights and duties of the managing organization the managing organization (mana- (managing director) for realization of the management ging director). by the Company current activity are determined by the legislation of the Russian Federation and the contract concluded by the operating organization (managing director) with the Company.

45 Provision in internal documents Compliant According to item 4.2.7. of the Corporate Governance of the Joint-stock company of Code, Chairman and members of the Management Board executive bodies’ duties to withdraw undertake to withdraw from actions leading to a conflict from actions leading or potentially between their interests and the Company interests. In leading to a conflict between their case of occurrence of such a conflict, Chairman and interests and the interests of the members of the Management Board undertake to inform Joint-stock company, and duties to of this the Board of Directors, and also to withdraw from inform the Board of Directors if such discussion and voting on the respective items. conflict occurs. Besides, according item 21.14. of Article 21 of the Charter, the General Director, members of the Management Board of the Company when exercising their rights and duties should operate in the Company's interests, exercise rights and act towards the Company honestly and reasonably.

46 Provision in the Charter or internal Non-compliant According to subitem 12 of item 10.2. of Article 10 of the documents of the Joint-stock com- Charter, the decision-making on transfer of powers of pany of criteria for election of the the Company sole executive body to the management managing organization (managing organization (managing director) and on the early director). termination of its powers is referred to the competence of the General meeting of shareholders. The rights and 296 Appendix 4. Information on IDGC of Centre and Volga Region, JSC, Compliance with the Corporate Conduct Code

No. Article of the Corporate Compliant / Note Conduct Code Non-compliant

duties of the managing organization (managing director) on performing the management by the Company current activity are determined by the legislation of the Russian Federation and the contract concluded by the managing organization (managing director) with the Company.

47 The Joint-stock company execu- Partially The Company executive bodies, including the tive bodies’ presentation of monthly compliant Management Board, give quarterly reports to the performance reports to the Board of Board of Directors (item 3.1.3. of the Regulations Directors. for the Management Board).

Besides, the reports are represented according to the current legislation, the action plan of the Board of Directors, and in the cases specified in the decisions of the Company Board of Directors.

48 Determination of the responsibility Compliant According to item 5.1. of the Regulations for for infringements of provisions on Insider Information, for wrongful distribution or the use of confidential and service use of the information, the Company insiders information stated in the contracts may be brought to disciplinary or civil liability concluded by the Joint-stock according to conditions of contracts concluded company with the General Director with the Company and the current legislation, (managing organization, mana- to administrative and the criminal liability ging director) and members of the according to the current legislation. According Managing Board. to the sense of item 1.3. of the Regulations, the insider - the person who has the right of access to insider information on the basis of the law, other normative and regulatory enactments, the duty regulations or the internal document of the Company, and also on the basis of the contract with the Company. The category of insiders include: the person who is carrying out functions of the sole executive body, members of the Management Board, members of the Board of Directors, members of the Audit Commission, and other persons referred to insiders by the Regulations for Insider Information. 297

No. Article of the Corporate Compliant / Note Conduct Code Non-compliant

Secretary of the Company 49 Presence in the Joint-stock com- Compliant According to Article 20 of the Charter, item 4 of the pany of a special official (secretary Regulations for Procedure of Convocation and Carrying of the Company) whose task is to out of the Board of Directors Meetings, the Corporate maintain supervision by bodies and secretary was elected in the Company. officials of the Joint-stock company over procedural requirements gua- ranteeing execution of the rights and legitimate interests of shareholders of the Company.

50 The process of appointment (elec- Compliant Item 4.2. of the Regulations for Procedure of Convoca- tion) of the secretary of the Com- tion and Carrying out of the Board of Directors Meetings, pany and duties of the secretary and item 3 of the Regulations for the Company Corpo- of the Company stipulated by the rate secretary determine the procedure of election of Charter or internal documents of the the corporate secretary. Item 4.32. of the Regulations for Joint-stock company. Procedure of Convocation and Carrying out of the Board of Directors Meetings, and item 2 of the Regulations for the Company Corporate secretary determine functional duties of the corporate secretary.

51 Provision of the Requirements to the Partially Item 20.6. of Article 20 of the Company Charter defines candidate of the secretary of the compliant that the rules of activity, the order of appointment and Company in the Charter of the Joint- the termination of powers, the term of appointment, stock company. the rights and duties of the corporate secretary are determined by the Regulations for Corporate secretary approved by the Company Board of Directors. On 18 February 2008, the Regulations for Corporate secretary of IDGC of Centre and Volga Region, JSC (Minutes No.8) were approved.

Item 3.6 of the Regulations for Corporate secretary provides requirements to the candidate of the Company secretary.

Material Corporate Actions 52 Requirement in the charter or inter- Compliant According to subitem 24 of item 15.1. of Article 15 of nal documents of the Joint-stock the Charter, a large transaction before its completion company to approval of a large should be approved by the Company Board of transaction before its fulfillment Directors. 298 Appendix 4. Information on IDGC of Centre and Volga Region, JSC, Compliance with the Corporate Conduct Code

No. Article of the Corporate Compliant / Note Conduct Code Non-compliant

53 Obligatory involving of an indepen- Compliant According to subitem 45 of item 15.1 of Arti- dent appraiser for estimation of the cle 15 of the Charter, the Board of Directors is market cost of the property which is entitled to approve a candidate to an indepen- a subject of a large transaction. dent appraiser (appraisers) for definition of the value of shares, property and other assets of the Company in the cases stipulated by the Federal Law “On Joint-stock Companies”, the Company Charter, and separate decisions of the Board of Directors.

54 Presence in the Charter of the Joint- Non-compliant These requirements are not determined in the stock company of the interdiction Charter. for taking any action while acquiring (taking over) a large stake of shares At the same time according to subitem 21.14. of of the Joint-stock company (take- Article 21 of the Charter, it is stipulated that “the over) aimed to protect interests of General Director, members of the Company Man- executive bodies (members of these agement Board when exercising their rights and bodies) and members of the Board duties should operate in the Company's interests, of Directors of the Joint-stock com- exercise rights and act towards the Company pany, as well as actions worsening honestly and reasonably …”. shareholders’ position in comparison with the existing position (in particular, the interdiction for taking actions by the Board of Directors before termination of prospective term of making the decision on the issue of additional shares, issue of securities convertible into shares, or securities enabling a person to purchase shares of the Company even if the right of such decision-making is provided to by the Charter).

55 Requirement in the Charter of the Compliant The recommendation is complied with; subitem Joint-stock company on an obliga- 45 of item 15.1 of Article 15 of the Charter defines tory involvement of an independent the powers of the Board of Directors for approval appraiser to estimate the current of the candidate of an independent appraiser market share price and possible (appraisers) for definition of the value of shares, changes in the share price as a property and other assets of the Company in the result of a takeover. cases stipulated by the Federal Law “On Joint- stock Companies”, the Company Charter, and separate decisions of the Board of Directors. 299

No. Article of the Corporate Compliant / Note Conduct Code Non-compliant

56 Absence in the Charter of the Compliant There is no such a requirement in the Company Charter. Joint-stock company of a release of the purchaser’s duty to propose shareholders to sell ordinary shares of the Company belonging to them (the issue securities convertible into ordinary shares) during a takeover.

The recommendation is complied with; subitem 45 of 57 Presence in the Charter or internal Compliant item 15.1 of Article 15 of the Charter defines the powers documents of the Joint-stock of the Board of Directors for approval of the candidate company of the requirement on an of an independent appraiser (appraisers) for definition obligatory involvement of an inde- of the value of shares, property and other assets of the pendent appraiser in order to define Company in the cases stipulated by the Federal Law “On the share conversion ratio during Joint-stock Companies”, the Company Charter, and sep- reorganization. arate decisions of the Board of Directors.

Information Disclosure 58 Presence of the internal document Compliant Regulations of the Information Policy of IDGC of Centre approved by the Board of Directors and Volga Region, JSC, was approved by the decision which defines rules and approaches of the Company Board of Directors on 18 February 2008 of the Joint-stock company to the (Minutes No.8). information disclosure (Regulations on the information policy).

59 Presence in internal documents Partially There is no such a requirement in the Company internal of the Joint-stock company of the compliant documents. However the Company discloses such infor- requirement on the information mation at taking decisions on issuing shares according disclosure on the purpose of the to a general rule. shares issue, on persons intending to purchase the shares to be issued, including a large share holding, and on the fact if the top officials of the Joint-stock company participate in the purchase of the Company’s shares to be issued. 300 Appendix 4. Information on IDGC of Centre and Volga Region, JSC, Compliance with the Corporate Conduct Code

No. Article of the Corporate Compliant / Note Conduct Code Non-compliant

60 Presence of the list of the infor- Partially According to subitem “e” of item 2.2. of the Regula- mation, documents and data in compliant tions for Procedure of Preparation and Carrying out internal documents of the Joint-stock of General meeting of Shareholders of IDGC of Cen- company which should be given to tre and Volga Region, JSC, the list of the information, shareholders for decision-making on documents and materials which should be given to the items submitted to the General shareholders for taking decision on items submitted meeting of shareholders. to the General meeting of shareholders is approved by the Company Board of Directors at preparation for carrying out of the General meeting of shareholders.

61 Presence of the Joint-stock company Compliant The Company has a website disclosing the informa- web-site in the Internet and regular tion in section “Shareholders and Investors”. The disclosure of information on the website address is http://www.mrsk-cp.ru. Joint-stock company on such web- The Company provides duly updating of the corpo- site. rate website, including disclosing of the information according to the Regulations for Information Policy.

62 Presence in internal documents Compliant According to subitem 5.2.8.2. and 5.2.8.3. of the of the Joint-stock company of the Regulations for Information Policy, the Company requirement on the information discloses the information on holding of the Company disclosure on transactions of the shares by members of the managing bodies and their Joint-stock company made with the affiliates, and its subsidiaries or dependent economic persons referred, according to the entities, with specification of quantity, category of Charter, to the top officials of the shares, and also the information on transactions Joint-stock company, as well as on between the specified persons and the Company. the transactions of the Joint-stock company made with the organizations in which the top officials of the Joint-stock company directly or indirectly own 20 and more percent of the authorized capital of the Joint- stock company or which can be essentially influenced by such persons.

63 Presence in internal documents Compliant Item 5.2.10. of the Regulations for Information Policy of the Joint-stock company of the of IDGC of Centre and Volga Region, JSC, deter- requirement to disclose the informa- mines that the Company discloses the information on tion on all transactions which can material transactions. Thus a material transaction is a influence the market price for the transaction which may render a material influence on Joint-stock company’s shares. the Company activity. 301

No. Article of the Corporate Compliant / Note Conduct Code Non-compliant

64 Presence of the internal document Compliant The Company approved the Regulations for Insider approved by the Board of Directors Information of IDGC of Centre and Volga Region, on the use of the essential informa- JSC, (Minutes of the meeting of the Board of Direc- tion on activity of the Joint-stock tors No.8 as of 18 February 2008). company, shares and other securities of the company and transactions with them which is not available to everybody and a disclosure of which can essentially influence the market value of shares and other securities of the Joint-stock company.

Control over Financial and Economic Activity 65 Presence of the procedures of the Compliant By the decision of the Company General meeting internal control over financial and of shareholders - Management Board of RAO “UES economic activity of the Joint-stock of Russia” as of 5 October 2007(Minutes 1751pr/2), company approved by Board of the Regulations for the Audit Commission of IDGC of Directors. Centre and Volga Region, JSC, were approved. The Company Board of Directors as of 25 Decem- ber 2008 (Minutes 30) approved the Regulations for Internal Control Procedures of IDGC of Centre and Volga Region, JSC.

66 Presence of a special division of Compliant A special division operates in the Company - Internal the Joint-stock company providing Control and Audit Department, which provides obser- for an execution of procedures of vance of procedures of the internal control functions. internal control (of the Control and Also in order to carry out the control over the Com- Inspection Service). pany financial and economic activities, the General meeting of shareholders elects the Company Audit Commission (item 24.1 of Article 24 of the Company Charter).

67 Requirement to definition of struc- Non-compliant According to subitem 10 of item 10.2. of Article 10 of ture and membership of the Control the Company Charter, the election of the members and Inspection Service of the Joint- of the Audit Commission and the early termination stock company by board of direc- of their powers is referred to the competence of the tors stipulated in internal documents Company General meeting of shareholders. of the Joint-stock company. 302 Appendix 4. Information on IDGC of Centre and Volga Region, JSC, Compliance with the Corporate Conduct Code

No. Article of the Corporate Compliant / Note Conduct Code Non-compliant

68 Absence in the structure of the Compliant There are no such persons in the structure of the Control and Inspection Service of Control and Inspection Service. persons who were found guilty in committing crimes in the sphere of economic activity or crimes against the government, interests of public service and service in institutions of local government, or who experienced administrative punishments for infringements in the area of enterprise activity or in the field of the finance, tax, tax collections, and the securities market.

69 Absence in the structure of the Compliant There are no such persons in the structure of the Control and Inspection Service of Control and Inspection Service. the persons being a part of any executive body of the Joint-stock company, and the persons being participants, General Director (managing director), members of managing bodies or employees of a legal entity competing with the Joint- stock company.

70 Presence in internal documents of Compliant According to item 7.5. of the Regulations for the Audit the Joint-stock company of the term Commission of IDGC of Centre and Volga Region, of presentation of documents and JSC, the documents and materials asked about, data to the Control and Inspec- should be presented to members of the Company tion Service for estimation of the Audit Commission within 2 (two) business days from financial and economic operation the moment of reception of the inquiry. held, and responsibility of officials and employees of the Joint-stock According to item 6.1.2. of the Regulations for the company for their failure to present procedures of internal control of IDGC of Centre and the documents and data in the Volga Region, JSC, granting of necessary documents specified term. for carrying out of checks are carried out by heads of the Company divisions, branches and representative offices in a 3-day (three-day) term, under the inquiry of the Company division which is authorized to carry out the internal control/audit. 303

No. Article of the Corporate Compliant / Note Conduct Code Non-compliant

71 Presence in the internal docu- Compliant Item 8.6. Regulations for the Audit Commission ments of the Joint-stock compa- IDGC of Centre and Volga Region, JSC: ny of the Control and Inspection The report of the Company Audit Commission is Service’s duty to inform the Com- made up in 3 copies no later than 2 (two) days mittee for Audit of the revealed from the moment of carrying out of a check and infringements, and in case of the is signed at the meeting of the Audit Commission latter’s absence, presence of the following the results of the check by all members duty to inform the Board of Direc- of the Audit Commission and the experts - spe- tors of the Joint-stock company cialists involved for carrying out of a check. of such infringements. One copy of the report is stored at the secretary of the Audit Commission, one is forwarded to the Chairman Board of Directors, one is forwarded to the Company General Director.

Item 6.1.4. of the Regulations for Procedures of Internal Control of IDGC of Centre and Volga Region, JSC: The Company division which is authorized to carry out the internal control/audit, annually informs the Committee for Audit under the Company Board of Directors on the infringements revealed as a result of checks in financial and economic acti-vity, including on the facts of non-compliance, inadequate (inefficient) compliance with the internal documents approved in the Company.

72 Presence in the Charter of the Non-compliant This procedure is not stipulated in the Company Joint-stock company of the Charter. requirement on preliminary estimation by the Control and Inspection Service of expediency of fulfillment of the operations not stipulated by the financial and economic plan of the Joint-stock company (non-standard operations). 304 Appendix 4. Information on IDGC of Centre and Volga Region, JSC, Compliance with the Corporate Conduct Code

No. Article of the Corporate Compliant / Note Conduct Code Non-compliant

73 Presence in internal documents Compliant The Company Charter determines a certain list of of the Joint-stock company of the the non-standard operations demanding approval order of coordination of a non- of the Company Board of Directors (subitem 30, standard operation with the Board 38 item 15.1 Article 15 of the Company Charter). of Directors.

74 Presence of the internal document Compliant Item 7 of the Regulations for the Audit Commis- approved by Board of Directors sion of IDGC of Centre and Volga Region, JSC, defining the order of carrying out determined the procedure of holding the auditor inspections of the financial and checks. economic activity of the Joint-stock company by the Audit Commission.

75 Execution by the Committee for Partially According to item 3 of the Regulations for the Audit of the evaluation of the Audi- compliant Committee for Audit, the Committee carries out tor’s Report before it is presented to control over performing of independent audit of shareholders at the General meet- the consolidated financial reports and accounting ing of shareholders. reports of the Company, and elects candidates of the Company external auditors, estimates their qualification, quality of work and their compliance with requirements of independence.

Dividends 76 Presence of the internal document Compliant The Company Board of Directors on 18 July approved by the Board of Directors 2008 (Minutes No.18) approved the Regulations and used by the Board of Direc- for Dividend Policy of IDGC of Centre and Volga tors as guidelines while approving Region, JSC, which is followed by the Board of recommendations on the amount Directors at taking of recommendations on the of dividends (Regulations on the amount of dividends. Dividend Policy). 305

No. Article of the Corporate Compliant / Note Conduct Code Non-compliant

77 Presence in the Regulation on Compliant According to item 4.1. of the Regulations for the Dividend Policy of the rules of Dividend Policy, the procedure of definition of definition of the minimum net profit the minimal share of net profit of the Joint-stock share of the Joint-stock company company allocated for payment of dividends is dividends payment and conditions determined. of non-payment or incomplete payment of dividends per preferred Item 8.3. of the Regulations determine the share, the amount of dividends per conditions, according to which dividends are not which is defined in the Charter of paid or are partly paid per preferred shares, the the Joint-stock company. amount of dividends per which are defined in the charter of the Joint-stock company.

78 Publication of the data on the Compliant The Company provides placement of the Regula- dividend policy of the Joint-stock tions for Dividend Policy of IDGC of Centre and company and changes to it in peri- Volga Region, JSC, and all changes to it in a odicals stipulated by the Charter of mode of a constant access on the Company the Joint-stock company for publi- Internet web-site at: http://www.mrsk-cp.ru (item cation of notes on General meetings 9.1. of the Regulations for Dividend Policy). of shareholders, and publication of Besides, according to item 9.4. of the Regula- the specified data on the Joint-stock tions for Dividend Policy, in the cases stipulated company’s web-site in the Internet. by the Company Charter, the statement on decision-making on payment of dividends is published by placement of the information in Izvestiya newspaper. 306 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

JSC “MCD” 1. To determine that the conditions of this Agreement — Minutes are applied to relations of the Parties from the moment of 25.06.2008 of the end of the reorganization of IDGC of Centre and No.8 Volga Region, JSC, in the form of merging with it of the following regional distribution grid companies (DGCs): — JSC “Vladimirenergo”, — JSC “Ivenergo”, — JSC “Kalugaenergo”, — JSC “Kirovenergo”, — JSC “Marienergo”, — JSC “Nizhnovenergo”, — JSC “Ryazanenergo”, — JSC “Tulenergo”, — JSC “Udmurtenergo”. 2. To determine that monthly value of services on keeping and storing of the Register specified in Appendix No.1 to this Agreement is fixed proceeding from the assumed total of personal accounts of IDGC of Centre and Volga Region, JSC, on the assumption of merging of all DGCs specified in item 2 this Agreement. This monthly value of services on keeping and storing of the Register is subject to proportional reduction proceeding from the amount of RUR 60.00 (sixty) for one personal account a year, VAT excluded, under the rate defined by the legislation of the Russian Federation, in the event that any of the specified DGCs does not merge with IDGC of Centre and Volga Region, JSC.

JSC “UES Parties of the transaction are: — Minutes FGC” Lessor — JSC “UES FGC”, of 05.03.2008 Sublessee — IDGC of Centre and Volga Region, JSC No.9 Subject of the transaction: Transfer to the Sublessee in temporary using for a fee of a part of uninhabited premise No.18 of the total area of 55.28 sq.m located on the 1st floor of the uninhabited building at the address: Moscow, Nikolovorobitsky lane 9, bld. 1-4. Contract price: The rent under the present Contract consists of: The Fixed Part determined by the Parties in the amount of 306,529.81 (three hundred and six thousand, five hundred and twenty nine) rubles and 81 kopecks a month. Besides, VAT is paid according to the current 307

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

laws of the Russian Federation. The Settlement Part determined on the basis of invoices issued to Lessor monthly by the proprietor of the Building with calculation of the value issued by municipal services for the services connected with maintenance and functioning of the Building accommodating the Premises transferred under this Contract, under the following formula:

where:

Cm.s. ∑ — Total monthly costs of Lessor according to the invoices issued to Lessor by municipal services for services connected with functioning and maintenance of the Building accommodating the Premises transferred under this Contract; F — correction factor equal to the relation of the area of the Premises under-leased (55.28 sq.m.) to the total usable area of the Building (6,152.43 sq.m.). Within three business days from the moment of signing the contract, the Sublessee places to the Lessor's settlement account a security deposit in the amount of a quarter Fixed Part of the Rent that is 1,085,115.53 (one million, eighty five thousand, one hundred and fifteen) rubles and 53 kopecks Payment arrangements under contract: The Rent for using the Premises is placed by the Sublessee to the Lessor's settlement account monthly in the amount defined by this Contract. Payment of the Fixed part of the rent is carried out monthly in the term from the 1st to the 5th business day of the current month. The Settlement Part of the rent is paid by the Sublessee monthly within 5 (five) business days from the moment of reception by it of an invoice and a calculation of the value for the municipal services connected with maintenance and functioning of the Building accommodating the Premises under this Contract. Duration of contract: This contract is made for the term of 11 (eleven) months and comes into effect from the moment of its signing.

RAO “UES of Parties to contract. Principal — Company, Agent — RAO 5,950,257.00 Minutes Russia” “UES of Russia”. of 05.03.2008 Subject of contract. RAO “UES of Russia” assumes liability No.9 on its own behalf, but at the Company's expense, to sign 308 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

the contract on performance of works for definition of object-by-object replacement value of the assets belonging to the Company (hereinafter referred to as the “Contract for Estimation”), to exercise the rights and duties of the Customer under the specified contract and to provide the Company wit the results of the work; and the Company assumes to pay RAO “UES of Russia” remuneration for the services rendered. The works under the Contract for Estimation are carried out according to the requirements of RBKS, Accounting Regulations “Registration of fixed assets” 6/01 approved by Order No.26n of the Ministry of Finance of the Rus- sian Federation as of 30 March 2001. Contract price: Contract price for estimation on definition of replacement value of objects of the fixed assets is 5,950,257 (five million, nine hundred and fifty thousand, two hundred and fifty seven) rubles, VAT included in the amount defined by the legislation. The Company pays RAO “UES of Russia” acting as the Customer under the Contract for Estimation, the money resources for payment of works under the Contract for Estimation in the amount of 100% of all above-stated amount of the contract, and pays remuneration to RAO “UES of Russia” under the Contract in the amount of 0.05 (nought point nought five) percent of the above- stated amount of the contract. Duration of contract: The contract comes into effect from the moment of its signing by both the Parties and operates till full performance by the Parties of the obligations undertaken by them

JSC “MCD” Parties to contract: 656,764.87 Minutes Customer — Company of 18.04.2008 Executing Party — JSC “MCD” No.12 Subject of contract: The Executing Party undertakes under the assignment of the Customer to render services on execution of the functions of the tabulation board of the annual General meeting of shareholders of IDGC of Centre and Volga Region, JSC (hereinafter referred to as the “Company”) held on 30 May 2008 in the form of a joint presence (hereinafter referred to as the “Meeting”) and the functions on preparation of this Meting under the contract terms, and Customer undertakes to pay these services. 309

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

Execution of actions and rendering of services is carried out by the Executing Party in the volumes and term determined by the Contract. Contract price: The cost of actions and services of the Executing Party enumerated in item 2.1.1-2.1.3 of the Contract is determined in the amount of 656,764 (six hundred and fifty six thousand, seven hundred and sixty four) rubles and 87 kopecks, VAT included in the amount defined by the legislation of the Russian Federation. Payment is made: the advance payment - in the amount of 50% within 5 (five) calendar days from the date of the invoice; 50% of cost - within 3 (three) calendar days after the date of signing by the Parties of the Certificate of Accep- tance of the Services Rendered. As agreed, the cost of actions and services of the Executing Party can be revised in view of actually rendered services of the Executing Party under the contract.

JSC “MCD” Parties to contract: 910,226.05 Minutes Customer — Company of 18.04.2008 Executing Party — JSC “MCD” No.12 Subject of contract: The Executing Party undertakes under the assignment of the Customer to make actions and to render service on manufacturing and dispatch of materials of the annual general meeting of shareholders of IDGC of Centre and Volga Region, JSC (hereinafter referred to as the “Company”) held on 30 May 2008 in the form of a joint presence (hereinafter referred to as the “Meeting”) under the terms of this Contract, and Customer undertakes to pay these services. Execution of actions and rendering of services is carried out by the Executing Party in volumes and term determined by the Contract. Contract price: The cost of actions and services of the Executing Party (in view of charges made) enumerated in item 2.1.1 of the Contract is defined in the amount of RUR 224,613 (two hundred and twenty four thousand, six hundred and thirteen) rubles, VAT included under the rate defined by the legislation. The payment is made as follows: 100% of cost - advance payment, within 5 (five) calendar days from the date of the invoice. 310 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

As agreed, the cost of actions and services of the Exe- cuting Party may be revised in view of actually rendered services of the Executing Party under the contract. The cost of actions and services of the Executing Party (in view of charges made) enumerated in item 2.1.2 of the Contract is defined in the amount of RUR 685,636 (six hundred and eighty five thousand, six hundred and thirty six) rubles and 05 kopecks, VAT included under the rate defined by the legislation. Payment is made as follows: 100% of cost — advance payment, within 5 (five) calendar days from the date of the invoice.

JSC Parties to contract: 70,000.00 Minutes “Corporate IDGC of Centre and Volga Region, JSC — Customer. of 25.04.2008 Governance JSC “Corporate Governance Institute” — Executing Party. No.13 Institute” Subject of contract: — The Customer charges, and Executing Party takes up obligations on rendering services of written translation of texts of the Annual Report of IDGC of Centre and Volga Region, JSC, from Russian into English. Cost of services and procedure of payment: — The cost of services under the contract is defined according to Application No.1 to this Contract proceeding from the volume of the translation specified in the Application. — The total cost of services under the contract for the period of its effect is 70,000 (seventy thousand) rubles, VAT included in the amount of 18% that is 10,677 rubles (ten thousand, six hundred and seventy seven) rubles and 97 kopecks. — Actual cost of services is determined proceeding from the volume of written translation and is specified in the invoice. Term of rendering of the services: — The Contract comes into effect from the moment of its signing and is in effect till 31 December 2008 The term of rendering services under this contract is defined by the Parties in the agreed application for translation.

JSC “SO Parties to the transaction: Minutes UPS” Party 1 — “Interregional Distribution Grid Company of of 12.05.2008 Centre and Volga Region”, Joint Stock Company, No.14 Party 2 — Joint-Stock Company “System Operator of 311

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

Unified Power System” (JSC “SO UES”). Subject of the transaction: The Party 2 compensates to the Party 1 the cost of the charges which are incurred by the Party 1 for payment of rent for using the land area of 6,145 sq.m, under the building and adjoining territory according to the Contract of land rent No.320 as from 19.04.1995 located at the address: city of Nizhniy Novgorod, Shlisselburgskaya Street 29 (hereinafter referred to as the Building), premise P1 of the area of 939.5 sq.m. in which belongs to the Party 2. Contract price: Calculation of the charges compensated by the Party 2 to the Party 1 on rent payment for using of the land area occupied by a part of the Building (premise P1) located at the address: N.Novgorod, Shlisselburgskaya street 29, P 1, is specified in Application No.1 to this agreement. The compensation is made in conformity with item 1102 of the Civil Code of the Russian Federation. The monthly amount of the charges compensated by the Party 2 to the Party 1, for the period of effect of this Agree- ment is defined as 6.58% of the amount monthly spent by the Party 1 for rent payment for using the land area of 6,145 sq.m located at the address: city of Nizhniy Novgorod, Shlissel- burgskaya street, 29. The charges of the Party 1 on rent payment for using the land area of 6,145 sq.m are confirmed by notices, other documents forwarded by the Lessor of the land area located at the address: city of Nizhniy Novgorod, Shlisselburgskaya street, 29, to the Party 1, which contain the amount of rent for using the land area. The monthly amount of the charges which are subject to compensation by the Party 2 to the Party 1 for rent payment in 2007 and the 1st quarter of 2008, for using the land area under the Building, premise P 1 in which belongs to the Party 2, located at the address: of N.Novgorod, Shlisselburgskaya street 29, according to application No.1 to this agreement is: In 2007 — 861 (Eight hundred and sixty one) rubles and 39 kopecks In 2008 — 994 (Nine hundred and ninety four) rubles and 85 kopecks Payment arrangements under contract: Settlement of accounts between the parties are made quarterly before the 25th day of the month following the settlement quarter on the basis of the invoice issued by the Party 1 to the Party 2. Validity of the agreement: From the moment of its signing, the agreement extends its 312 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

effect to the relations between the Parties which arose since 1 September 2007 and is in effect till the moment of its cancellation by the Parties.

NEIPF To approve the Contract for non-state pension coverage Minutes between IDGC of Centre and Volga Region, JSC, and of 12.05.2008 Non-State Energy Industry Pension Fund , under which No.14 the following pension plan No.10 is applied “Pension Plan with the fixed contributions and payment of pension up to full depletion of means (duration of at least five years) for depositors — legal entities” according to the Pension Rules of NEIPF for realization of the program “Special Merits “, on the terms according to the application.

NEIPF To approve the Contract for non-state pension coverage Minutes between IDGC of Centre and Volga Region, JSC, and of 12.05.2008 Non-State Energy Industry Pension Fund , under which No.14 the following pension plan No.9 is applied “Pension Plan with the fixed contributions, joint financing and payment of pension up to full depletion of means on the account of the Participant (duration of at least five years)” according to the Pension Rules of NEIPF for realization of the Parity Plan, on the terms according to the application.

NEIPF To approve the Contract for non-state pension coverage Minutes between IDGC of Centre and Volga Region, JSC, and of 12.05.2008 Non-State Energy Industry Pension Fund, under which No.14 the following pension plan No.1 is applied “Pension Plan with the fixed contributions and life payments of pension” according to the Pension Rules of NEIPF for realization of the Supporting and Stimulating programs, on the terms according to the application.

JSC “UES Parties to contract: 1,257,892.44 Minutes FGC” IDGC of Centre and Volga Region, JSC — Customer. of 28.05.2008 JSC “UES FGC” — Executing Party. No.16 Subject of contract: The Executing Party renders the Customer services of communication which provide liaison channels for use, and the Customer pays services according to contract provisions. 313

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

Cost of services and payment procedure: The cost of services under the contract is determined on the basis of calculation of cost of services according to Applica- tion No.1 to this Contract: The total cost of services under the contract for the period of its effect is 1, 257,892.44 rubles (One million, two hundred and fifty seven thousand, eight hundred and ninety two rubles and 44 kopecks), VAT included in the amount of 18% — 191,881.92 rubles (one hundred and ninety one thousand, eight hundred and eighty one rubles and 92 kopecks). Monthly payments are: 104,824.37 rubles (one hundred and four thousand, eight hundred and twenty four rubles and 37 kopecks), VAT included in the amount of 18% - 15,990.16 rubles (fifteen thousand, nine hundred and ninety rubles and 16 kopecks). Payment of services is made by the Customer within 15 (fifteen) bank days, from the moment of reception of the invoice and the Certificate of the Executed Services signed by the parties, by transfer of money resources to the settlement account of the Executing Party. Term of rendering of services: The contract comes into effect from the moment of its signing and extends its effect to the mutual relations which have arisen since 1 January 2008. The contract is in effect up to 31 December 2008.

SEI “EC Parties to contract: 1,715,560.00 Minutes Energetik” Customer — IDGC of Centre and Volga Region, JSC, of 28.05.2008 Executing Party — SEI “EC Energetik” No.16 Subject of contract: In connection with the plan of training for 2008 the Customer charges, and the Executing Party holds training of the Customer’s employees, under applications agreed by authorized representatives of the Customer. Contract price: The cost of rendered educational services according to the plan of training for 2008 is defined in the amount of 1,715,560 (One million, seven hundred and fifteen thousand, five hundred and sixty) rubles and 00 kopecks, the VAT is not assessed according to Article 346.12 and 346.13 of Chapter 26.2 of the Tax Code of the Russian Federation. The procedure of payments: the Customer makes 100% advance payment on the basis of the invoice within 5 business days from the moment of the invoice issuing. Validity: This contract comes into effect from the moment of its signing by the Parties and is in effect till 31 December 2008. Condi- 314 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

tions of the contract extend to the relations of the Par- ties which have developed since 29 February 2008

JSC “SO Parties to contract: 2,142.05 Minutes UPS” IDGC of Centre and Volga Region, JSC — Executing of 28.05.2008 Party. No.16 JSC “SO UPS” — Customer. Subject of contract: The Customer charges, and Executing Party undertakes to perform the following work: according to a written application of the Customer to test the following special means given by the Customer: step-ladder — 1 pcs., dielectric gloves — 4 pairs. Cost of services and payment procedure: The price under this contract is 2,142 rubles and 05 kopecks (Two thousand and forty two) rubles and 05 kopecks, VAT included in the amount of 18% — 326 rubles 75 kopecks, according to calculation of cost of works on testing of individual protections means for Tula RDA of JSC “SO UPS” (Application No.1). Term of performance of works: Within 15 calendar days from the moment of signing of this contract. Duration of contract: This contract comes into effect from the moment of its signing by the parties and is in effect till full performance by the parties of obligations undertaken.

Tulener- Parties to contract: 1,478.20 Minutes gokomplekt, IDGC of Centre and Volga Region, JSC — Executing of 28.05.2008 JSC Party. No.16 Tulenergokomplekt, JSC — Customer. Subject of contract: The Customer charges, and Executing Party undertakes to perform the following work: According to a written application of the Customer, to test the following special means given by the Customer: dielectric gloves — 3 pairs, body belt — 1 pcs., man- holes — 1 pcs. Cost of services and payment procedure: The price under this contract according to calculation is 1,754 rubles and 90 kopecks (one thousand, seven hundred and fifty four) rubles and 90 kopecks, VAT included in the amount of 267.70 rubles. Term of performance of jobs: 315

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

Within 15 calendar days from the moment of signing of the present contract. Duration of contract: This contract comes into effect from the moment of its signing by the parties and is in effect till full performance by the parties of obligations undertaken.

SEI Parties to contract: 19,491.53 Minutes “Educational Customer — IDGC of Centre and Volga Region, JSC, of 28.05.2008 Center” Executing Party — SEI “Educational Center” No.16 Subject of contract: The Customer charges, and the Exe- cuting Party renders consulting services, in the form of a seminar for a representative of the Customer (Application No.1), further called the Hearer, on the subject: “Regulation for purchases of goods, works, services in electric power industry” according to the program of the seminar in the volume of 24 teaching periods. The program is made in conformity with the Standard of RAO “UES of Russia” S-EES ZD 5 - 2005 “Professional Training” of the System of Standards for Organization of Purchasing Activities (approved by the Management Board of RAO “UES of Russia” on 27 June 2005, minutes 1242pr.) Contract price: The cost of rendered consulting services is 23,000 (twenty three thousand) rubles and 00 kopecks, VAT included of 3,508 (three thousand, five hundred and eight rubles and 47 kopecks). The Procedure of payments: Customer makes 100% advance payment on the basis of the invoice issued by the Executing Party. Duration of contract: This contract comes into effect from the moment of its signing by the Parties and is in effect till execution of all obligations by both the Parties. The conditions of this contract extend to the relations of the Parties which have developed since 15 April 2008.

MVP, JSC Parties to contract: 50,837,458.00 Minutes Customer — IDGC of Centre and Volga Region, JSC of 28.05.2008 Executing Party — Motor Vehicle Plant, JSC No.16 Subject of contract: Granting in temporary use of vehicles and mechanisms with carriages, with granting services on driving of vehicles and mechanisms and services on their maintenance (service) and operation. Contract price: the estimated cost under the contract is 316 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

59,988,200.00 (Fifty nine million, nine hundred and eighty eight thousand, two hundred) rubles and 00 kopecks, VAT (18%) is 9,150,742 (nine million one hundred and fifty thousand, seven hundred and forty two) rubles and 00 kopecks. Payment of services in parts: the first payment — up to the 10th day of the month following the settlement month, payment on the basis of the issued invoice and the certificate of the rendered services in the amount of 50% of the invoice. The second payment — up to the 28th day of the month following the settlement month, payment on the basis of the issued invoice and the certificate of the rendered services in the amount of 50% of the invoice. Duration of contract: it comes into effect from the moment of its signing and is in effect till 31 December 2008.

MVP, JSC Parties to contract: 26,037,441.00 Minutes Customer — IDGC of Centre and Volga Region, JSC of 28.05.2008 Executing Party — Motor Vehicle Plant, JSC No.16 Subject of contract: Duty to deliver the entrusted car- goes, including heavy and oversized and to carry out transportation of passengers. Contract price: the estimated cost under the contract is 30,724,180.00 (thirty million, seven hundred and twenty four thousand, one hundred and eighty) rubles and 00 kopecks, VAT (18%) is 4,686,739 (four million, six hundred and eighty six thousand, seven hundred and thirty nine) rubles and 32 kopecks. Payment of services in parts: the first payment – up to the 10th day of the month following the settlement month, payment on the basis of the issued invoice and the certificate of the rendered services in the amount of 50% of the invoice. The second payment — up to the 28th day of the month following the settlement month, payment on the basis of the issued invoice and the certificate of the rendered services in the amount of 50% of the invoice. Duration of contract: it comes into effect from the moment of its signing and is in effect till 31 December 2008.

MVP, JSC Parties to contract: 65,883,050.85 Minutes Customer — IDGC of Centre and Volga Region, JSC of 25.06.2008 Executing Party — Motor Vehicle Plant, JSC No.16 Subject of contract: Gives in temporary use the vehicles 317

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

and mechanisms without rendering of driving services, renders services on organization of pre-trip and after-trip medical surveys of the personnel and checkup of vehicles and mechanisms, supply of petroleum products, spare parts and materials necessary for regular (daily) maintenance service, keeping of travelling documentation on maintained vehicles and mechanisms. Contract price: the estimated cost under the contract is 77,742,000.00 (seventy seven million, seven hundred and forty two thousand) rubles and 00 kopecks, the VAT (18%) is 11,858,949 (Eleven million, eight hundred and fifty eight thousand, nine hundred and forty nine) rubles and 15 kopecks. Payment of services in parts: the first payment – up to the 10th day of the month following the settlement month, payment on the basis of the issued invoice and the certificate of the rendered services in the amount of 50% of the invoice. The second payment — up to the 28th day of the month following the settlement month, payment on the basis of the issued invoice and the certificate of the rendered services in the amount of 50% of the invoice. Duration of contract: it comes into effect from the moment of its signing and is in effect till 31 December 2008.

NINEO Parties to contract: 2,098,393.45 Minutes “Energetik Customer — IDGC of Centre and Volga Region, JSC of 25.06.2008 Educational Executing Party — Non-state Independent Noncommercial No.17 Center” Educational Organization “Energetik Educational Center” Subject of contract: The Customer charges, and the Executing Party takes up duties on training employees of the Customer, within March- December 2008 according to the annual training plan which is an integral part of the this contract (Application No.1). Contract price: The estimated amount of the contract for rendering consulting services is 2,098,393 (Two million, ninety eight thousand three hundred and ninety three) rubles and 45 kopecks, VAT is not assessed (Chapter 21 Article 149 of the TC RF). Procedure of payment: Payment of services of the Executing Party is carried out within 15 days from the moment of the invoice. Duration of contract: This contract comes into effect from the moment of its signing and extends its effect to the relations of the parties developed since 1 March 2008. The Contract is in effect till 31 December 2008, regarding calculations — till full execution by the parties of obligations 318 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

JSC Parties to contract: 89,120.95 Minutes “WGC-3” IDGC of Centre and Volga Region, JSC — Executing of 25.06.2008 Party. No.17 JSC “WGC-3” “Cherepetskaya state district power station named after D.G.Zhimerin” — Customer. Subject of contract: The Executing Party renders the Customer the services of “Chromotographic Analysis of transformer oil”, and Customer pays services according to the contract provisions. Cost of services and payment procedure: The total cost of services under the contract for the period of its effect is 105,162 (one hundred and five thousand, one hundred and sixty two) rubles and 72 kopecks, VAT included in the amount of 18% — 16,041 (sixteen thousand and forty one) rubles and 77 kopecks. The Customer pays to the Executing Party an advance payment in the amount of the cost of the 1st stage of performance of services (Application No.1) — 45,840 (forty five thousand, eight hundred and forty) rubles and 16 kopecks, VAT included in the amount of 18% — 6,992 (six thousand, nine hundred and ninety two) rubles and 57 kopecks - at least within 10 days up to the day of the beginning of the 1st stage of performance of services under the invoice issued by the Executing Party. Final settlements under the contract are made by the Customer within 10 days from the moment of signing the certificate of delivery - acceptance of the rendered Services on the 2nd stage under the invoice issued by the Executing Party. Duration of contract: The contract comes into effect from the moment of its signing by the parties and is in effect till 31 December 2008.

JSC “En- Parties to contract: 50,000.00 Minutes gineering Customer — IDGC of Centre and Volga Region, JSC, of 25.06.2008 Center of Executing Party — JSC “Engineering Center of Power No.17 Power Indus- Industry of Urals” try of Urals” Subject of contract: Expansion of the area of certification of the metrological service of “Kirovenergo” branch of IDGC of Centre and Volga Region, JSC, for the right to carry out calibration works. Cost of the contract: 319

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

The cost under the contract is 59,000 (fifty thousand) rubles and 00 kopecks, the VAT (18%) is 9,000 (nine thousand) rubles and 00 kopecks Payment of services: payment is to be made within 30 days after the date of signing of the certificate of acceptance of the executed works. Duration of contract: It comes into effect from the moment of its signing and is in effect till 31 August 2008

Tulener- 1. To determine the monthly price of the additional agreement Minutes gokomplekt, No.2 to the contract on performance of actions of mobilization of 25.06.2008 JSC preparation regarding storing of material assets of the 2nd No.17 group as of 27 October 2005 No.95 between IDGC of Centre and Volga Region, JSC, and Tulenergokomplekt, JSC, in the amount of 20,553 (twenty thousand five hundred and fifty three) rubles and 29 kopecks, VAT excluded. 2. To approve the additional agreement No.2 to the contract on performance of actions of mobilization preparation regarding storing of material assets of the 2nd group as of 27 October 2005 No.95 between IDGC of Centre and Volga Region, JSC, and JSC Tulenergokomplekt, JSC, according to the application to this decision.

IDGC of Parties to contract: 190,712.55 Minutes Centre, JSC Customer — IDGC of Centre and Volga Region, JSC; of 25.06.2008 Executing Party — IDGC of Centre, JSC. No.17 Subject of contract: The Executing Party undertakes under the assignment of the Customer to render services on the organization and carrying out of the seminar “Transition to RAB Tariff Regulation” for 23 representatives of the Customer. Services include: — The organization of rent of a conference hall in hotel “Re- naissance Moscow” for carrying out of the seminar; — Development and printing of “Methodical instructions for calculation of tariffs with use of the method of return on investment”. Customer undertakes to properly pay the services rendered. Cost of services and payment procedure: Cost of services is 225,040 (two hundred and twenty five thousand, forty) rubles and 81 kopecks, VAT included in the amount of 18% — 34,328 (thirty four thousand, three hundred and twenty eight) rubles and 26 kopecks 320 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

Payment by the Customer to the Executing Party of the services rendered is carried out by transfer of money resources to the settlement account of the Executing Party within 5 bank days after signing by the Parties of the Certificate for the services rendered. Duration of contract: This contract comes into effect from the moment of its signing and is in effect till execution by the Parties of the obligations. Conditions of the Contract are applied to the relations of the parties which have developed since 8 April 2008.

JSC “MC Parties to contract: 38,135.59 Minutes CEI” Customer — IDGC of Centre and Volga Region, JSC, of 25.06.2008 Executing Party — JSC “MC CEI” No.17 Subject of contract: The Customer charges, and the Executing Party undertakes to render the Customer’s representatives the organizational and consulting services on the organization and carrying out of a seminar conference on the subject: “Personnel maintenance of post-reform power industry” (Program of the action is in Application No.2 to the contract) to render other additional services connected with the organization and carrying out of the Action. Cost of the contract: The cost of participation in the action of one Hearer with purchase of electronic “Collection of assistance and methodical materials for management of the personnel of the power companies” is 45,000 (forty five thousand) rubles and 00 kopecks, VAT included in the amount of 6,864.41 (six thousand eight hundred and sixty four rubles and 41 kopecks). Procedure of payments: Payment of services of the executing party is made by the Customer as 100% advance payment on the basis of the invoice issued by the executing party. Duration of contract: This contract comes into effect from the moment of its signing and is in effect till the moment of execution by the Parties of all obligations assigned to them by the Contract. 321

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

RAO “UES of Parties to contract: 149,922,561.42 Minutes Russia” Creditor: RAO “UES of Russia” of 25.06.2008 Debtor: IDGC of Centre and Volga Region, JSC No.17 Subject of contract: Definition by the Parties of the order of repayment of debts of JSC “Nizhnovenergo” reorganized on 29.02.2008 in the form of merging with IDGC of Centre and Volga Region, JSC, to the Creditor in the amount of 149,922,561 (one hundred and forty nine million, nine hundred and twenty two thousand, five hundred and sixty one) rubles and 42 kopecks, VAT included in the amount of 22,869,543 (twenty two million, eight hundred and sixty nine thousand, five hundred and forty three) rubles and 27 kopecks, under agreement No.180-ur on settlement of paying off the debts under interests and penal sanctions as of 28 March 2003. Contract price: The debts in the amount of 149,922,561 (one hundred and forty nine million, nine hundred and twenty two thousand, five hundred and sixty one) rubles and 42 kopecks, VAT included in the amount of 22,869,543 (twenty two million, eight hundred and sixty nine thousand, five hundred and forty three) rubles and 27 kopecks are paid off by transfer from the Debtor to the Creditor of simple noninterest-bearing notes of IDGC of Centre and Volga Region, JSC, on the following provisions:

No. Term of payment Principal Price of note amount (RUR) (RUR)

1 Upon presentation, but 9,370,160.09 9,370,160.09 not earlier than 25.06.2012

2 Upon presentation, but 9,370,160.09 9,370,160.09 not earlier than 25.09.2012

3 Upon presentation, but 9,370,160.09 9,370,160.09 not earlier than 25.12.2012 322 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

No. Term of payment Principal Price of note amount (RUR) (RUR)

4 Upon presentation, but 9,370,160.09 9,370,160.09 not earlier than 25.03.2013

5 Upon presentation, but 9,370,160.09 9,370,160.09 not earlier than 25.06.2013

6 Upon presentation, but 9,370,160.09 9,370,160.09 not earlier than 25.09.2013

7 Upon presentation, but 9,370,160.09 9,370,160.09 not earlier than 25.12.2013

8 Upon presentation, but 9,370,160.09 9,370,160.09 not earlier than 25.03.2014

9 Upon presentation, but 9,370,160.09 9,370,160.09 not earlier than 25.06.2014

10 Upon presentation, but 9,370,160.09 9,370,160.09 not earlier than 25.09.2014

11 Upon presentation, but 9,370,160.09 9,370,160.09 not earlier than 25.12.2014

12 Upon presentation, but 9,370,160.09 9,370,160.09 not earlier than 25.03.2015

13 Upon presentation, but 9,370,160.09 9,370,160.09 not earlier than 25.06.2015

14 Upon presentation, but 9,370,160.09 9,370,160.09 not earlier than 25.09.2015

15 Upon presentation, but 9,370,160.09 9,370,160.09 not earlier than 25.12.2015

16 Upon presentation, but not 9,370,160.09 9,370,160.09 earlier than 25.03.2016

Total 149,922,561.42 149,922,561.42

Place of drawing-up and place of payment — Nizhniy Novgorod city 323

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

RAO “UES of Parties to contract: 79,204,754.10 Minutes Russia” Creditor: RAO “UES of Russia” of 25.06.2008 Debtor: IDGC of Centre and Volga Region, JSC No.17 Subject of contract: Definition by the Parties of the order of repayment of debts of JSC “Kirovenergo” reorganized on 29 February 2008 in the form of merging with IDGC of Centre and Volga Region, JSC, to the Creditor in the amount of 79,204,754 (Seventy nine million, two hundred and four thousand, seven hundred and fifty four) rubles and 10 kopecks, VAT is not assessed, for payment of dividends on the basis of minutes No.16 of the annual general meeting of shareholders of JSC “Kirovenergo” as of 16 May 2005. Contract price: The debts in the amount of 79,204,754 (Seventy nine million, two hundred and four thousand, seven hundred and fifty four) rubles and 10 kopecks, VAT is not assessed, paid off by transfer from the Debtor to the Creditor of simple noninterest- bearing notes of IDGC of Centre and Volga Region, JSC, under the following provisions:

No. Term of payment Principal Price of note amount (RUR) (RUR)

1 Upon presentation, but 7,920,475.41 7,920,475.41 not earlier than 25.12.2011

2 Upon presentation, but 7,920,475.41 7,920,475.41 not earlier than 25.12.2012

3 Upon presentation, but 7,920,475.41 7,920,475.41 not earlier than 25.12.2013

4 Upon presentation, but 7,920,475.41 7,920,475.41 not earlier than 25.12.2014

5 Upon presentation, but 7,920,475.41 7,920,475.41 not earlier than 25.12.2015

6 Upon presentation, but 7,920,475.41 7,920,475.41 not earlier than 25.12.2016

7 Upon presentation, but 7,920,475.41 7,920,475.41 not earlier than 25.12.2017 324 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

No. Term of Principal Price of note payment amount (RUR) (RUR)

8 Upon presentation, but 7,920,475.41 7,920,475.41 not earlier than 25.12.2018

9 Upon presentation, but 7,920,475.41 7,920,475.41 not earlier than 25.12.2019

10 Upon presentation, but 7,920,475.41 7,920,475.41 not earlier than 25.12.2020

Total 79,204,754.10 79,204,754.10

Place of drawing-up and place of payment — Nizhniy Novgorod city

JSC “Energe- Parties to contract: 299,949.10 Minutes tik Sanatorium- Customer — IDGC of Centre and Volga Region, JSC, of 18.07.2008 Preventorium” Executing Party — JSC “Energetik Sanatorium-Preven- No.18 torium” Subject of contract: Under this contract the Executing Party undertakes to render the Customer medical services in a health center located at the address: Izhevsk, Votkinskoe Shosse street 105, daily in the business days, except for the days off (Saturday, Sunday) and non-working holidays, and the Customer undertakes to pay these services. The Executing Party will organize work of the health center for granting the following medical services to workers of the Customer: — pre-medical reception; — first medical aid, including bandaging; — intravenous, intramuscular, hypodermic injections, inoculations; The volume of the used medicines under this contract is determined by the parties in the process of their actual use. Contract price: The cost of rendered medical services is 299,949 (two hundred and ninety nine thousand, nine hundred and forty nine) rubles and 10 kopecks, VAT is not assessed. 325

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The procedure of payments: Payment by the Customer is carried out upon termination of the settlement period (the settlement period is a month) by transfer of money resources to the settlement account of the Executing Party, within 20 (twenty) bank days from the moment of signing by the parties of the certificate of the services rendered. Validity: This contract comes into effect from the moment of its signing by the authorized representatives of the parties, and extends its effect since 1 February 2008 and is in effect till 31 December 2008, and regarding non-executed (inadequately executed) obligations - till full (appropriate) execution by the parties of obligations under this contract

“Energobal- To approve the additional agreement No.9 to the contract of 201,886.54 Minutes ance-Center” rent No.71-ur from 1 October 2007 between IDGC of Centre of 31.07.2008 Ltd. and Volga Region, JSC, and “Energobalance-Center” Ltd. as No.19 an interested-party transaction, according to application No.4 to this decision.

JSC “EEC of Parties to Additional Agreement: 351,896.06 Minutes Volga Region” Customer — IDGC of Centre and Volga Region, JSC,, of 22.08.2008 The Executing Party — JSC “EEC of Volga Region — Nizhe- No.20 gorodsetenergoproekt branch. Subject of the Additional Agreement: the subject of this additional agreement No.2 is definition of the volume and cost of the works which are carried out by the Executing Party under the contract, in view of additional works. Item 1.2. of the Contract should be read in the following version: “Scientific, technical, economic and other requirements to the work carried out are contained in the technical project (Application No.1) and addition to the technical project (Application No.5) which is an integral part of this Contract”. The price of the Additional Agreement: 351,896 (Three hundred and fifty one thousand, eight hundred and ninety six) rubles and 06 kopecks, including reconstruction and re- equipment - 298,217 (Two hundred and eighty nine thousand, two hundred and seventeen) rubles and 00 kopecks, the VAT of 18% is 53,679 (Fifty three thousand, six hundred and seventy nine) rubles and 06 kopecks. Validity: this Additional Agreement comes into effect from the moment of its signing by the Parties and is in effect till the moment of the termination of execution by the Parties of obligations on it. 326 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

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JSC “UES Parties to contract: 1,280,300.00 Minutes FGC” IDGC of Centre and Volga Region, JSC — DGC of 22.08.2008 JSC “UES FGC” — FGC No.20 Subject of contract: Realization of technological connection of power installations of DGC (“Stekolnaya” 110 kV substation) of the declared additional maximal capacity of 19 MW located in the Aleksin area, Tula region, to the cells of OL 110 kV “Shipovo-Glebovo 1” and “Shipovo-Glebovo 2” at ODU 110 kV of “Shipovo” 220 kV substation. Contract price: Full cost and order of payment of actions on realization of technological connection of power installations of DGC to grid objects of FGC are determined following the results of the Project developed and approved in accordance with the established procedure, carrying out of competitions, conclusion of turnkey contracts and deliveries of the equipment that is signed by the Parties of the Additional Agreements to this contract. Validity: This contract comes into effect from the moment of its signing

JSC “MC Parties to contract: 14,900.00 Minutes CEI” Customer — IDGC of Centre and Volga Region, JSC, of 22.09.2008 Executing Party — JSC “MC CEI” No.21 Subject of contract: Customer charges, and the Executing Party takes up obligations to render representatives of the Customer organizational and consulting services on the organization and carrying out of seminar on the subject: “Actual problems of normalization and management of the number of the personnel of the power companies” to render other additional services connected with the organization and carrying out of the Action. Cost of services: The total value of organizational and consulting services for the number of hearers (Application No.4) is 14,900 (fourteen thousand and nine hundred) rubles and 00 kopecks, VAT included (18%) — 2,272 (Two thousand, two hundred and seventy two) rubles and 88 kopecks. Procedure of payments under the Contract: Payment of Services of the Executor is made by the Customer as 100% advance payment on the basis of the invoice issued by the Executing Party. The Customer is obliged to 327

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settle an account of the Executing Party within 3 (Three) days from the moment of its reception. Duration of contract: This contract comes into effect from the moment of its signing and is in effect till the moment of execution by the Parties of all obligations assigned to them by the Contract.

MVP, JSC Parties to contract: 40,000.00 Minutes Executing Party — IDGC of Centre and Volga Region, JSC of 22.09.2008 Customer — JSC “Motor Vehicle Plant” No.21 Subject of contract: The Executing Party undertakes to render service on washing linen (overalls, towels and other) belonging to the Customer, and the Customer undertakes to accept and pay rendered services. Contract price: Contract price is roughly 40,000 (forty thousand) rubles, including the VAT of 6,101 (six thousand, one hundred and one) rubles and 69 kopecks Cost of washing of 1kg of dry linen is 66.54 rubles, including VAT of 10.15 rubles that is proved by the calculation document which is an integral part of this contract (Application No.5). Duration of contract: This contract comes into effect from the moment of its signing by the parties and operates up to 31 December 2008

JSC “UES Parties to contract: 1,280,300.00 Minutes FGC” IDGC of Centre and Volga Region, JSC, — DGC of 22.09.2008 JSC “UES FGC” — FGC No.21 Subject of contract: Realization of technological connection of power installations of DGC (new 110 kV substation) of the declared additional maximal capacity of 55 MW in the Mihailovsky area, Ryazan region, to the cells of OL-110 kV “Mikhailovskaya-Luch 1” and “Mikhailovskaya -Tsementnaya” at ODU — 110 kV of “Mikhailovskaya” 500 kV substation. Contract price: Full cost and order of payment of the actions on realization of technological connection of DGC’s power installations to grid objects of FGC are determined following the results of the Project developed and approved in accordance with the established procedure, as well as carrying out of competition, conclusion of turnkey contracts and delivery of the equipment that is arranged by signing by the Parties of Additional Agree- 328 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

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ments to the contract. Validity: This contract comes into effect from the moment of its signing.

JSC “UES Parties to contract: 1,280,300.00 Minutes FGC” IDGC of Centre and Volga Region, JSC, — D GC of 22.09.2008 JSC “UES FGC” — FGC No.21 Subject of contract: Realization of technological connection of power installations of DGC (“Transelektro” 110 kV substation) for the declared additional maximal capacity of 16 MW located in Uzlovaya, the Tula region, to the cell of OL 110 kV “Severnaya-Uzlovaya” at ODU — 110 kV of “Severnaya” 220 kV substation and to the cell of OL “Begichevo-Partizan” 110 kV substation at ODU — 110 kV of “Begichevo” 220 kV substation. Contract price: Full cost and order of payment of the actions on realization of technological connection of DGC’s power installations to grid objects of FGC are determined following the results of the Project developed and approved in accordance with the established procedure, as well as carrying out of competition, conclusion of turnkey contracts and delivery of the equipment that is arranged by signing by the Parties of Additional Agreements to the contract. Validity: This contract comes into effect from the moment of its signing.

JSC “UES Parties to contract: 819,392.00 Minutes FGC” IDGC of Centre and Volga Region, JSC, — DGC of 22.09.2008 JSC “UES FGC” — FGC No.21 Subject of contract: Realization of technological connection of power installations of DGC (“Aleshnya” 110 kV substation) of the declared additional maximal capacity of 9 MW in Leninsky area, the Tula region, to the cells of OL 110 kV “Leninskaya-Aleshnya 1” and “Leninskaya-Aleshnya 2” at ODU — 110 kV of “Leninskaya” 220 kV substation. Contract price: Full cost and order of payment of the actions on realiza- 329

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tion of technological connection of DGC’s power installations to grid objects of FGC are determined following the results of the Project developed and approved in accordance with the established procedure, as well as carrying out of competition, conclusion of turnkey contracts and delivery of the equipment that is arranged by signing by the Parties of Additional Agree- ments to the contract. Validity: This contract comes into effect from the moment of its signing.

JSC “UES Parties to contract: 1,280,300.00 Minutes FGC” IDGC of Centre and Volga Region, JSC, — DGC of 22.09.2008 JSC “UES FGC” — FGC No.21 Subject of contract: Realization of technological connection of power installations of DGC (for connection of internal “Kran” 110 kV substation) for the declared additional maximal capacity of 30 MW located in Uzlovaya, the Tula region, to the cell of OL 110 kV “Severnaya-Uzlovaya” at ODU — 110 kV of “Severnaya” 220 kV substation and to the cell OL of “Begichevo-Partizan” 110 kV substation at ODU — 110 kV of “Begichevo” 220 kV substation. Contract price: Full cost and order of payment of the actions on realization of technological connection of DGC’s power installations to grid objects of FGC are determined following the results of the Project developed and approved in accordance with the established procedure, as well as carrying out of competition, conclusion of turnkey contracts and delivery of the equipment that is arranged by signing by the Parties of Additional Agree- ments to the contract. Validity: This contract comes into effect from the moment of its signing.

JSC “UES Parties to contract: 512,120.00 Minutes FGC” IDGC of Centre and Volga Region, JSC, — DGC of 22.09.2008 JSC “UES FGC” — FGC No.21 Subject of contract: Realization of technological connection of power installations of DGC (OL-110 kV “Borskaya-1”, OL-110 kV “Borskaya-2”, OL-110 kV “Sitniki”, OL 110 kV “Ostankino”, OL-110 kV 330 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

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“Quartz”) of the declared additional maximal capacity of 5 MW located in Borsk area, the Nizhniy Novgorod region, to ODU — 110 kV of “Borskaya” 220 kV substation. Contract price: Full cost and order of payment of the actions on realization of technological connection of DGC’s power installations to grid objects of FGC are determined following the results of the Project developed and approved in accordance with the established procedure, as well as carrying out of competition, conclusion of turnkey contracts and delivery of the equipment that is arranged by signing by the Parties of Additional Agreements to the contract. Validity: This contract comes into effect from the moment of its signing.

JSC “UES Parties to contract: 1,280,300.00 Minutes FGC” IDGC of Centre and Volga Region, JSC, — DGC of 22.09.2008 JSC “UES FGC” — FGC No.21 Subject of contract: Realization of technological connection of power installations of DGC (“Gorodskaya” 110 kV substation, “Zapadnaya” 110 kV substation) of the declared additional maximal capacity of 51.62 MW (96 MVA) located in Dzerzhinsk, the Nizhniy Novgorod region, to the cells of OL-110 kV No.190 and No.192 at ODU — 110 kV of “Oka” 220 kV substation. Contract price: Full cost and order of payment of the actions on realization of technological connection of DGC’s power installations to grid objects of FGC are determined following the results of the Project developed and approved in accordance with the established procedure, as well as carrying out of competition, conclusion of turnkey contracts and delivery of the equipment that is arranged by signing by the Parties of Additional Agreements to the contract. Validity: This contract comes into effect from the moment of its signing. 331

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JSC “UES Parties to contract: 1,280,300.00 Minutes FGC” IDGC of Centre and Volga Region, JSC, — DGC of 22.09.2008 JSC “UES FGC” — FGC No.21 Subject of contract: Realization of technological connection of power installations of DGC (“Strelka” 110 kV substation) of the declared additional maximal capacity of 37.4 MW in the Nizhniy Novgorod region, to the cell of OL 110 kV “No.196” at ODU — 110 kV of “Luch” 500 kV substation. Contract price: Full cost and order of payment of the actions on realization of technological connection of DGC’s power installations to grid objects of FGC are determined following the results of the Project developed and approved in accordance with the established procedure, as well as carrying out of competition, conclusion of turnkey contracts and delivery of the equipment that is arranged by signing by the Parties of Additional Agree- ments to the contract. Validity: This contract comes into effect from the moment of its signing.

JSC “UES Parties to contract: 960,225.00 Minutes FGC” IDGC of Centre and Volga Region, JSC, — DGC of 22.09.2008 JSC “UES FGC” — FGC No.21 Subject of contract: Realization of technological connection of power installations of DGC by the total connected capacity of 80 MVA, with a planned mode of power consumption of 44.14 MW located in the central part of Izhevsk of the Udmurdt Republic, namely: of earlier connected “Pozim-Rabochaya” OL 110 kV (1, 2 circuits), the connected capacity of which is increased by 80 MVA, in view of connection of “Zenitnaya” 110/6 kV substation to the 110 kV networks of DGC (“Zenitnaya” substation is put in operation for the first time). Contract price: Full cost and order of payment of the actions on realization of technological connection of DGC’s power installations to grid objects of FGC are determined following the results of the Project developed and approved in accordance with the established procedure, as well as carrying out of competition, conclusion of turnkey contracts and delivery of the equipment that is arranged by signing by the Parties of Additional Agree- ments to the contract. 332 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

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Validity: This contract comes into effect from the moment of its signing.

JSC “UES To approve Additional Agreement No.1 to the applica- Minutes FGC” ble Contract for realization of technological connection of 22.09.2008 No.16/TP-М4 as of 17 August 2007 between IDGC of No.21 Centre and Volga Region, JSC, and JSC “FGC UES” according to application No.6 to this decision of the Board of Directors

JSC “UES Parties to contract: 1,167,339.52 Minutes FGC” Customer — IDGC of Centre and Volga Region, JSC of 22.09.2008 Contractor — JSC “UES FGC” No.21 Subject of contract: Under this Contract, the Contractor undertakes under the assignment of the Customer to carry out the following works for needs of “Marienergo” branch: development of the project, purchase of the equipment, performance of construction and starting-up and adjustment works for reconstruction of “Kundysh” 110/35/10 kV substation, Shirokundysh village, Kilemarsky area, the Republic of Mari El; Contract price: The Contract price is determined by the budget documentation and is 1,167,339.52 (one million, one hundred and sixty-seven thousand, three hundred and thirty nine rubles and fifty two kopecks), VAT included in the amount of 18% — 178,068.74 (one hundred and seventy eight thousand, sixty eight rubles and seventy four kopecks); Duration of contract: This contract comes into effect from the date of its signing and is in effect till full execution by the Parties of the obligations undertaken; it is drawn up in two copies, each having equal validity, one copy for each of the Parties.

JSC “UES Parties to contract: 2,108,660.00 Minutes FGC” IDGC of Centre and Volga Region, JSC, — “Customer” of 22.09.2008 and No.21 JSC “UES FGC” for maintenance and repair of Trans- mission Electric Grids of Volga — “Contractor”; Subject of contract: 333

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The contractor undertakes to execute under the Customer’s assignment design and prospecting works for needs of “Marienergo” branch for updating the design and budget documentation: expansion of “Krasnyi Most” 110/10 kV substation from OL-110 kV in Kilemarsky area of the Republic of Mari El; Contract price: Contract price is determined by the budget documentation and is 2,108,660.00 (two million, one hundred and eight thousand, six hundred and sixty) rubles and 00 kopecks, VAT included (18%) in the amount of 321,660,.0 (three hundred and twenty one thousand, six hundred and sixty) rubles and 00 kopecks; Duration of contract: The beginning: from the moment of the contract signing. The termination: on 1 December 2008, but in any case till performance by the parties of the obligations under this Contract

JSC “TGC Parties to contract: 3,000,000.00 Minutes No.4” Buyers — IDGC of Centre and Volga Region, JSC; JSC “Ter- of 22.09.2008 ritorial Generating Company No.4” No.21 Seller — Igor Leonidovich Kotenev, the citizen of the Russian Federation Subject of contract: Under the present contract the Seller undertakes to transfer to the possession of Buyers, and Buyers - to accept and pay for the architectural and sculptural composition “Prometheus” (“Prometheus” sculpture with a heraldic ring and architectural decorative pedestal) hereinafter called the “Goods”. The form, amounts and other features of the Goods: Figurative, round sculptural image “Prometheus”, overall dimension is 2.3 m. from feet up to the top of the head; material is bronze covered with patina; the ring with heraldic bas-reliefs; overall dimension: diameter of 160 sm, height of 80 sm; material - bronze covered with patina; the architectural decorative pedestal; overall dimension is 2.8 *2.2 sm; material is iron covered with patina, hydroprotected. Contract price: 1. Cost of “Prometheus” architectural and sculptural composition is 3,000,000 (three million) rubles; VAT is not assessed. Procedure of payment: Payment of “Prometheus” architectural and sculptural composition is made as follows: 1. Advance payment in the amount of 1,500,000 (one million, five hundred thousand) rubles is payable to the Seller within 15 calendar days from the date of signing this Contract. 334 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

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The amount of advance payment is transferred by the Buyers to the personal account of the Seller specified in section “Details of the parties” of this Contract, in equal shares: each by 750,000 (seven hundred and fifty thousand) rubles. 2. Final settlement is made within 10 calendar days from the date of signing by the Parties of the Certificate of reception and transfer of the Goods, by transfer of the rest of the amount of payment (in view of the paid advance payment) as money resources to the personal account of the Executing Party specified in section “Details of the Parties” of this Contract, in equal shares by each of the Buyers. 3. The parties independently bear the tax obligations arising at them in connection with this contract.

JSC “TGC Parties to contract: 500,000.00 Minutes No.4” Customers — IDGC of Centre and Volga Region, JSC, of 22.09.2008 JSC “Territorial Generating Company No.4” No.21 Executing Party — Igor Leonidovich Kotenyov, the citizen of the Russian Federation Subject of contract: Under this contract the Executing Party undertakes to perform works on installation and assemblying of “Prometheus” architectural and sculptural composition belonging to the Customers under the right of common share property, including “Prometheus” sculpture with a heraldic ring and architectural and decorative pedestal, hereinafter together called the Sculpture, in the territory adjoining to the building at the address: Tula, Timiryaze- va street 99, on the site of this territory specified by the Customer, including works on preparation of the site for installation of the Sculpture. Contract price: The total price of Works equal 500,000 (five hundred thousand) rubles. VAT is not assessed. The specified cost of Works is final, is not subject to change and includes cost of installation of the Sculpture, works on preparation of the territory, installation of the Sculpture, materials used, indemnification of all other charges of the Execu- ting Party connected with execution of this contract. Procedure of payment: Payment of cost of Works is made in the following order: 1. Within 10 (Ten) calendar days from the date of signing this Contract, the Customers transfer an advance 335

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payment in the amount of 250,000 (two hundred and fifty thousand) (each Customer transfers 125,000 (one hundred and twenty five thousand) rubles) to the personal account of the Executing Party which is specified in section “Details of the Parties” of this Contract; 2. Within 10 (ten) calendar days from the date of signing by the Executing Party and both the Customers of the Certificate on acceptance of the works executed - final settlement under this Contract, in view of the paid advance payment, by transfer of the rest of the money resources to the personal account of the Executing specified in section “Details of the Parties” of this Contract, in equal shares by each of the Customers. 3. Personal income tax according to the legislation of the Russian Federation is withdrawn at settlements under this Contract under the amounts paid to the Executing Party by each of the Customers.

JSC “EEC Parties to contract: 2,000,000.00 Minutes of Volga IDGC of Centre and Volga Region, JSC — “Customer” of 22.09.2008 Region” JSC “EEC of Volga Region” — “Customer”; No.21 Subject of contract: The contractor undertakes to execute under the Customer’s assignment the design and prospecting works for needs of “Udmurtenergo” branch - revision of the working design “arch.No.8286 JSC “Nizhegorodskselenergoproekt”, “Purga” 110/35/10 kV substation. Replacement of the equipment in CDU — 10 kV and protection of power transformers”, Malaya Purga village, the Udmurt Republic; Contract price: Contract price is determined by the budget documentation and is 2,000,000.00 (Two million) rubles and 00 kopecks, VAT included (18%) — 305,084.75 (Three hundred five thousand, eighty four) rubles and 75 kopecks; Duration of the contract: The beginning: from the moment of signing the contract. The termination: December 2008, but in any case till performance by the parties of the obligations undertaken by this Contract.

JSC “UES Parties to contract: 18,017,362.50 Minutes FGC” IDGC of Centre and Volga Region, JSC — “Customer” and of 22.09.2008 JSC “UES FGC” for maintenance and repair of Transmission No.21 Electric Grids of Volga — “Contractor”; 336 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

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Subject of contract: The Contractor undertakes to execute under the Customer’s assignment design and prospecting works for needs of “Marienergo” branch the following works: development of the project, purchase of the equipment, performance of construction and starting-up and adjustment works for reconstruction of OL-110 kV Pomialy- Shelanger of Zvenigovo area, the Rpublic of Mari El; Contract price: Contract price is determined by the budget documentation and is 18,017,362.50 (eighteen million, seventeen thousand, three hundred and sixty two) rubles and 50 kopecks, VAT included in the amount of 18% — 2,748,411.23 (two million, seven hundred and forty eight thousand, four hundred and eleven) rubles and 23 kopecks; Duration of contract: The beginning: from the moment of signing of the contract. The termination: 30 November 2008, but in any case before performance by the parties of the obligations under this Contract.

JSC “UES Parties to contract: 960,225.00 Minutes FGC” IDGC of Centre and Volga Region, JSC, — DGC of 22.09.2008 JSC “UES FGC” — FGC No.21 Subject of contract: Realization of technological connection of power installations of DGC of the total connected capacity of 306 MVA (“Sennaya” 110 kV substation, “Varvarskaya” 110 kV substation, “Kovalikhinskaya” 110 kV substation) of the declared additional maximal capacity of 192.65 MW. Contract price: Full cost and order of payment of the actions on realization of technological connection of DGC’s power installations to grid objects of FGC are determined following the results of the Project developed and approved in accordance with the established procedure, as well as carrying out of competition, conclusion of turnkey contracts and delivery of the equipment that is arranged by signing by the Parties of Additional Agreements to the contract. Validity: This contract comes into effect from the moment of its signing. 337

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JSC “UES Parties to contract: 960,225.00 Minutes FGC” IDGC of Centre and Volga Region, JSC — DGC of 22.09.2008 JSC “UES FGC” — FGC No.21 Subject of contract: Realization of technological connection of power installations of DGC of the total connected capacity of 286 MVA (“Mostootryad” 110 kV substation, “Shuvalovskaya” 110 kV substation, “Severnaya” 110 kV substation) of the declared additional maximal capacity of 118.12 MW. Contract price: Full cost and order of payment of the actions on realization of technological connection of DGC’s power installations to grid objects of FGC are determined following the results of the Project developed and approved in accordance with the established procedure, as well as carrying out of competition, conclusion of turnkey contracts and delivery of the equipment that is arranged by signing by the Parties of Additional Agree- ments to the contract. Validity: This contract comes into effect from the moment of its signing.

JSC “SO Parties to contract: 20,414.00 Minutes UPS” IDGC of Centre and Volga Region, JSC — Lessor of 09.10.2008 JSC “SO UPS” — Lessee No.22 Subject of contract: Transfer to the Lessee in temporary for-a-fee using of a part of uninhabited 4-storey office building (the total area of the building is 8,466.7 sq.m.) located at the address: the Nizhniy Novgorod region, N.Novgorod, Rozhdestvenskaya street 33, letters А-А2, consisting of the uninhabited premise No.85 which is on the third floor, of the total area of 17.3 sq.m. Contract price: Rent a month for 1 sq.m. of the area of the rented uninhabited premise is 1,180 (One thousand, one hundred and eighty) rubles, including VAT (18%) of 180 (one hundred and eighty) rubles. The total amount of rent a month is 20,414 (twenty thousand, four hundred and fourteen) rubles, VAT included (18%) of 3,114 (Three thousand, one hundred and fourteen) rubles. The rent does not include municipal payments and charges connected with the maintenance and operation of the building. The order of compensation of municipal payments and other charges connected with the maintenance and operation of 338 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

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the building (the area proportionally occupied by the Lessee) is defined by the Parties additionally and is drawn up as a separate Agreement for compensation of charges of the Lessor. The rent is paid by the Lessee from the moment of signing by both the parties of the certificate of reception and assignation of property. Payment arrangements under contract: Lessee monthly no later than the 15th day of the month following the settlement month, makes rent payments for the current month on the basis of the invoice issued by the Lessor. Duration of contract: The contract comes into effect from the moment of its state registration and is in effect till on 31 July 2013.

JSC “SO Parties: Minutes UPS” Party 1 — IDGC of Centre and Volga Region, JSC of 09.10.2008 Party 2 — JSC “SO UPS”. No.22 Subject of the transaction: Compensation by Party 2 to Party 1 of the cost of the municipal and other payments specified in Application No.1 to this Agreement, in proportion to the area of the premise occupied in the uninhabited building passed in rent by Party 1 to Party 2 according to contract provisions of rent of real estate between IDGC of Centre and Volga Region, JSC, and JSC “SO UPS”, namely a part of the uninhabited 4-storey building (the total area of the building is 8,466.7 sq.m. located at the address: the Nizhniy Novgorod region, N.Novgorod, Rozhdestven- skaya street 33) consisting of the uninhabited premise No.85 of the building, the total area of 17.3 sq.m., located on the 3rd floor. The list of charges under the maintenance and service of the building, compensated by Party 2 to Party 1 is specified in Application No.1 to this Agreement. Contract price: Compensation by Party 2 to Party 1 of cost of the municipal and other payments specified in Application No.1 to the Agreement on reimbursement No.1 is carried out proportionally to the area of a part of the uninhabited 4-storey building (the total area of the building is 8,466.7 sq.m. located at the address: the Nizhniy Novgorod region, N.Novgorod, Rzhdestvenskaya street 33) consisting of the uninhabited premise No.85 of the building 339

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located on the 3rd floor. Payment arrangements under contract: Settlements between the Parties are made up to the 15th day of the month following the settlement month, on the basis of the invoices forwarded by Party 1 to Party 2. Duration of contract: The agreement comes into effect from the moment of its signing by both the Parties and expires by consent of the parties or upon expiration of the contract of rent of real estate, on the basis of which the real estate specified in item 1 of the Agree- ment was transferred in temporary possession and using to Party 2.

NEIPF Parties to contract: 22,708.72 Minutes IDGC of Centre and Volga Region, JSC — Lessor of 09.10.2008 Non-State Energy Industry Pension Fund — Lessee. No.22 Subject of contract: Transfer to the Lessee in temporary for-a-fee use of a part of uninhabited 6-storey building (the total area of the building is 7,126.7 sq.m.; it is located at the address: the Udmurt Repub- lic, Izhevsk, Sovetskaya street 30) consisting of 2 uninhabited premises, of the total area of 22.9 sq.m. Contract price: Rent a month for 1 sq.m. of the area of rented uninhabited premises is 733 (Seven hundred and thirty three) rubles and 96 kopecks, VAT included (18%) in the amount of 111 (one hundred and eleven) rubles and 96 kopecks. The total amount of rent a month for possession and use of property under this contract is 22,708 (twenty two thousand, seven hundred and eight) rubles and 72 kopecks, VAT included (18%) of 3,464 (Three thousand, four hundred and sixty four) rubles and 65 kopecks. The rent under the Contract includes payment for possession and using of property, municipal, operational and administrative charges of the Lessor. The rent is paid by the Lessee from the moment of the signing by the Parties of the contract. Payment arrangements under contract: The rent for the month ended is transferred by the Lessee to the settlement account of the Lessor no later than the 15th day of the month following the settlement month, on the basis of the invoice issued by the Lessor no later than the 5th day of the month following the settlement month. 340 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

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JSC “SO Parties to contract: Minutes UPS” IDGC of Centre and Volga Region, JSC — Lessor of 09.10.2008 JSC “SO UPS” — Lessee No.22 Subject of contract: Transfer to the Lessee in temporary for-a-fee using of a part of the uninhabited 7-storey building of the industrial laboratory house (the total area of the building is 4,454.5 sq.m.; it is located at the address: Vladimir region, Vladimir city, B.Nizhegorodskaya street 106) consisting of the uninhabited premises of the total area of 388.45 sq.m. Contract price: The rent under this contract includes: 1) the fixed part including a payment for possession and use of the uninhabited premises specified in item 1.2. and equals 584 (Five hundred and eighty four) rubles and 67 kopecks, including VAT (18%) of 89 (Eighty nine) rubles and 19 kopecks for 1 sq.m. a month. The total amount of the fixed part of rent a month equals 227,115 (Two hundred and twenty seven thousand one hundred and fifteen) rubles and 06 kopecks, including VAT (18%) of 34,644 (Thirty four thousand, six hundred and forty four) ruble and 67 kopecks. 2) the variable part including monthly expenses of the Lessor for the maintenance and service of the building. The variable part of the rent is paid to the Lessor by the Lessee in the amount in proportion to the area of rented uninhabited premises in the building (8.72% of the total amount of charges under the maintenance and service of the building). The rent is paid by the Lessee from the moment of transfer to the Lessee of property under the certificate of reception and transfer. Payment arrangements under contract: Lessee monthly no later than the 15th day of the current month pays the fixed part of the rent for the current month on the basis of the invoices issued by the Lessor no later than the 5th day of the current month. The variable part of the rent is paid by the Lessee before the 10th day of the month following the settlement month on the basis of the invoices issued by the Lessor no later than the 5th day of the month following the settlement month. Duration of contract: The contract comes into effect from the moment of its state registration, and is in effect till 30 June 2013. 341

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JSC “SO To approve Additional Agreement No.1 on amending the Con- Minutes UPS” tract of rent of uninhabited premises with the right to repur- of 09.10.2008 chase No.49 as of 24.07.2006 between IDGC of Centre and No.22 Volga Region, JSC, and JSC “SO UPS” in accordance with Appendix No.6 to this decision of the Board of Directors.

JSC “SO Parties to contract: Minutes UPS” IDGC of Centre and Volga Region, JSC, — Lessor of 09.10.2008 JSC “SO UPS” — Lessee No.22 Subject of contract: Transfer to the Lessee in time for-a-fee use of a part of uninhabited 6-storey building (the total area of the building is 7,126.7 sq.m.; it is located at the address: the Udmurt Republic, Izhevsk city, Sovetskaya street 30) consisting of the uninhabited premise located on the 5th floor, the total area taking into account places of shared use is 20 sq.m. Contract price: Monthly rent for 1 sq.m. of the area of rented uninhabited premises is 733 (seven hundred and thirty three) ruble and 96 kopecks, VAT included (18%) in the amount of 111 (one hundred and eleven) rubles and 96 kopecks. The amount of rent a month is 14,679 (fourteen thousand, six hundred and seventy nine) rubles and 20 kopecks, VAT included (18%) in the amount of 1,657 (one thousand, six hundred and fifty seven) rubles and 01 kopecks. Besides property use payment, the amount of a monthly rent under this Contract includes municipal, operational and administrative charges of the Lessor. Payment arrangements under contract: The rent for the month expired is paid by the Lessee to the settlement account of the Lessor no later than the 15th day of the month following the settlement month on the basis of the invoices issued by the Lessor no later than the 5th day of the month following the settlement month. Duration of contract: The Contract comes into effect from the day of its signing by the parties and transfer to the Lesseeу of the property specified in item 1.2. of the Contract, and is in effect till 31.12.2008.

JSC “UES Full cost and order of payment of actions on realization of Minutes FGC” technological connection of power installations of DGC to of 09.10.2008 electric grid objects of FGC are determined following the No.22 results of the Project developed and approved in accordance 342 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

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with the established procedure, carrying out of purchasing procedures at the option of contractors, signing of works and labor and equipment delivery contracts that is registered by signing by the Parties of the Additional Agreement to this contract. To approve the Contract between IDGC of Centre and Volga Region, JSC, and JSC “UES FGC” according to Application No.7 to this decision of the Board of Direc- tors.

To approve Additional Agreement No.1 on amending Minutes the Contract of rent of premises No.70070060 as of of 09.10.2008 25 October 2007 between IDGC of Centre and Volga No.22 Region, JSC, and Non-State Energy Industry Pension Fund according to application No.8 to this decision of the Board of Directors.

MVP, JSC To approve Additional Agreement to the contract of Minutes granting of vehicles and mechanisms without driving of 09.10.2008 services No.70590004 as of 28 May 2008 between No.22 IDGC of Centre and Volga Region, JSC, and Motor Vehi- cle Plant, Joint Stock Company, according to application No.9 to this decision of the Board of Directors.

MVP, JSC To approve Additional Agreement to the contract of Minutes granting of vehicles and mechanisms with carriages of 09.10.2008 No.70590005 as of 28 May 2008 between IDGC of No.22 Centre and Volga Region, JSC, and Motor Vehicle Plant, Joint Stock Company, according to application No.10 to this decision of the Board of Directors.

NEIPF Parties to contract: 12,900.00 Minutes Customer — IDGC of Centre and Volga Region, JSC of 09.10.2008 Executing Party — NEIPF No.22 Subject of contract: The Customer charges, and the Executing Party assumes liability to render service on the organization and carrying out of a seminar on the subject: “The New in the Taxation and Tax Control in 2008. The Main Lines of 343

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Tax Reform in 2008-2009” according to the Seminar Program (Application 2 to this contract) and the list of representatives of the Customer (Application No.1 to the contract). Place of carrying out of the seminar: Moscow, Krasnoka- zarmennaya street 13 P. Term of rendering of services: 9 September 2008. Contract price: Cost of participation in the seminar of one representative of the Customer is 12,900 (Twelve thousand, nine hundred) rubles and 00 kopecks, VAT included (18%) in the amount of 1,967 (One thousand, nine hundred and sixty seven) rubles and 80 kopecks. Procedure of payments: Payment is made as 100% advance payment no later than 3 (Three) business days prior to the beginning of the Seminar on the basis of the Executing Party’s invoice.

JSC “UNPG Parties to contract: Minutes Glavset- Party 1 — IDGC of Centre and Volga Region, JSC, of 09.10.2008 servis” Party 2 — JSC “UNPG Glavsetservis” No.22 Subject of contract: rendering of services on the organization of a reserve liaison channel between the additional office of the company located at 19v Boinovsky lane and the central office at 33 Rozhdestvenskaya street. Cost of services and payment procedure: Cost of works (one- time) on the organization and adjustment of a liaison channel equals 41,766.10 (Forty one thousand, seven hundred and sixty six rubles and 10 kopecks) including VAT of 6,371.10 (six thousand three hundred and seventy one rubles and 10 kopecks). Cost of works (monthly) on maintenance service of a liaison channel is 40,120 (forty thousand one hundred and twenty rubles and 00 kopecks) including VAT of 6,120 (Six thousand, one hundred and twenty rubles and 00 kopecks). Payment under the Contract is made by the Customer monthly on the basis of the Acceptance Reports of the rendered services signed by the Parties, the invoice issued by the Executing Party, in time no later than on the 10th day of the month following the settlement. Duration of contract: the Contract is valid from the moment of its signing up to 31 December 2008 344 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

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NEIPF To approve the Contract of non-state pension coverage Minutes between IDGC of Centre and Volga Region, JSC, and of 24.10.2008 Non-state Energy Industry Pension Fund, under which No.24 the plan No.3 is applied “Pension plan with the fixed payments and payments of pensions up to full depletion of means (duration of at least five years)” according to the NEIPF Pension Rules intended for realization of the NPF Supporting Program which is an interested-party transaction, on the conditions according to Application No.2 to this decision of Board of Directors.

NEE EC To approve the additional agreement to the contract for Minutes “Energetik” non-state pension coverage as of 18 April 2008 No.347 of 24.10.2008 signed between IDGC of Centre and Volga Region, JSC, No.24 and Non-state Electric Industry Pension Fund, which is an interested-party transaction, on conditions according to Application No.3 to this decision of the Board of Directors.

Tulener- To approve the contract on rendering services between Minutes gokomplekt, IDGC of Centre and Volga Region, JSC, and Tulener- of 24.10.2008 JSC gokomplekt, JSC, which is an interested-party transac- No.24 tion, on the conditions according to Application No.4 to this decision of the Board of Directors.

NEIPF 1. To approve the additional agreement to the contract Minutes for non-state pension coverage as of 3 March 2006 of 12.11.2008 No.20Р006/02.124.14.06 signed between IDGC of No.25 Centre and Volga Region, JSC, and Non-state Electric Industry Pension Fund, which is an interested-party transaction, according to Application No.1 to this decision of the Board of Directors. 2. To approve the additional agreement to the contract for non-state pension coverage as of 23 October 2006 No.13P003/04.36 signed between IDGC of Centre and Volga Region, JSC, and Non-state Electric Industry Pension Fund, which is an interested-party transaction, according to Application No.2 to this decision of 345

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the Board of Directors. 3. To approve the additional agreement to the contract for non-state pension coverage as of 25 December 2007 No.07-28/1 signed between IDGC of Centre and Volga Region, JSC, and Non-state Electric Industry Pension Fund, which is an interested-party transaction, according to Ap- plication No.3 to this decision of the Board of Directors. 4. To approve the additional agreement to the contract for non-state pension coverage as of 7 July 2006 No.10P100/812keu signed between IDGC of Centre and Volga Region, JSC, and Non-state Electric Industry Pension Fund, which is an interested-party transaction, according to Application 4 to this decision of the Board of Directors. 5. To approve the additional agreement to the contract for non-state pension coverage as of 10 March 2006 No.010-p signed between IDGC of Centre and Volga Region, JSC, and Non-state Electric Industry Pension Fund, which is an interested-party, transaction according to Application 5 to this decision of the Board of Directors. 6. To approve the additional agreement to the contract for non-state pension coverage as of 9 June 2006 No.01P017 signed between IDGC of Centre and Volga Region, JSC, and Non-state Electric Industry Pension Fund, which is an interested-party transaction, according to Application 6 to this decision of the Board of Directors. 7. To approve the additional agreement to the contract for non-state pension coverage as of 12 September 2005 No.7-10/626ur signed between IDGC of Centre and Volga Region, JSC, and Non-state Electric Industry Pension Fund, which is an interested-party transaction, according to Ap- plication 7 to this decision of the Board of Directors. 8. To approve the additional agreement to the contract for non-state pension coverage as of 26 December 2005 No.10P084 signed between IDGC of Centre and Volga Region, JSC, and Non-state Electric Industry Pension Fund, which is an interested-party transaction, according to Ap- plication 8 to this decision of the Board of Directors. 9. To approve the additional agreement to the contract for non-state pension coverage as of 19 April 2005 No.10P047 signed between IDGC of Centre and Volga Region, JSC, and Non-state Electric Industry Pension Fund, which is an interested-party transaction according to Application 9 to this decision of the Board of Directors. 10. To approve the additional agreement to the contract 346 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

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for non-state pension coverage as of 1 January 2006 No.011-p signed between IDGC of Centre and Volga Region, JSC, and Non-state Electric Industry Pension Fund, which is an interested-party transaction, according to Application 10 to this decision of the Board of Directors.

NP “UES Parties to contract: 1,573,000.00 Minutes STC” IDGC of Centre and Volga Region, JSC (a member of of 12.11.2008 the Partnership); No.25 NP “UES STC” (Partnership). Subject of contract: Determination of the procedure of becoming a member of Partnership of the Partnership, determination of the rights and duties of a member of the Partnership and the Partnership. Procedure of contributions making: The amount of a membership subscription is 1,573,000 (one million, five hundred and seventy three thousand) rubles and it is paid by money resources within 30 days after decision-making by the Board of Directors of a member of the Partnership on becoming a member of the Partnership. The membership contribution for 2009 is 1,500,000 (one million, five hundred thousand) rubles and it is paid up to 1 February 2009. The amount and procedure of payment of yearly membership contributions in the future are determined by decisions of the Supervisory Council of the Partnership.

JSC Parties to contract: 24,000.00 Minutes “Energetik Customer — IDGC of Centre and Volga Region, JSC of 12.11.2008 Sanatorium- Executing Party — “Energetik Sanatorim-Preventorium”, No.25 Prevento- JSC rium” Subject of contract: The Executing Party undertakes under the Customer’s assignment to organize physical health improving training in a sports hall, swimming-pool, hereinafter referred to as the Services, in “Energetik Sanatorium Preven- torium” located at the address: Izhevsk city, Aviatorov street 10, and the Customer undertakes to pay these 347

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services in accordance with the procedure and on the conditions stipulated by this contract. This contract comes into effect on 1 November 2008 and expires on 31 December 2008, and regarding the obligations which were not executed (inadequately) - up to full (appropriate) execution by the parties of obligations under this contract. Days and hours of classes: Monday — sports hall from 18.00 till 19.00; Tuesday — sports hall from 18.00 till 19.00; Wednesday — sports hall from 18.00 till 19.00, swimming-pool from 19.00 till 20.00; Thursday — sports hall from 18.00 till 19.00, swimming-pool from 19.00 till 20.00; Friday — sports hall from 18.00 till 19.00, swimming-pool from 19.00 till 20.00. Contract price: Cost of services for one hour is: in a sports hall: 450 (Four hundred and fifty) rubles and 00 kopecks, including the VAT of 18%, swimming-pool: 1,200 (One thousand, two hundred) rubles and 00 kopecks, including the VAT of 18%. Cost of this contract may not exceed 12,000 (twelve thousand) rubles a month. In case of change of the cost of the Services, the Executing Party in writing informs the Customer of this. Procedure of payments: Payment by the Customer of the services is carried out upon termination of the settlement period. The settlement period is a month. Payment is carried out by transfer of money resources to the settlement account of the Executing Party, within 10 (ten) days from the moment of signing by the parties of the Certifi- cate of Services Rrendered. The settlement of accounts is considered performed from the moment of receipt of money resources on the settlement account of the Executing Party.

NEE EC “Ener- Parties to contract: 100,000.00 Minutes getik” Executing Party — IDGC of Centre and Volga Region, JSC, of 28.11.2008 Customer — NEE EC “Energetik” No.27 Subject of contract: The Executing Party undertakes to execute under assign- 348 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

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ment of the Customer, and the Customer undertakes to accept and pay the following works: calibration and repair of measurements devices (MD). MD types, taking for repairs of which is possible within the limits of the Contract are determined by the Price List (Application No.1 to the Contract). Contract price: Final Contract price is determined after actually executed amounts of works, but may not exceed 100,000 (one hundred thousand) rubles, VAT included of 15,254 (fifteen thousand, two hundred and fifty four) rubles and 24 kopecks. Payment under this Contract is made by the Customer under the certificate of the executed works according to the Certificate of Acceptance of the Works Executed signed by the parties. Duration of contract: This contract comes into effect from the moment of signing by the parties and is in effect till 31 December 2009

JSC “UNPG Parties to contract: 250,000.00 Minutes Glavset- Executing Party — IDGC of Centre and Volga Region, of 28.11.2008 servis” JSC No.27 Customer — JSC “UNPG Glavsetservis” Subject of contract: The Executing Party undertakes to execute under assignment of the Customer, and the Customer undertakes to accept and pay the following works: calibration and repair of measurements devices (MD). MD types, taking for repairs of which is possible within the limits of the Contract are determined by the Price List (Applica- tion No.1 to the Contract). Contract price: Final Contract price is determined after actually executed amounts of works, but may not exceed 250,000 (two hundred and fifty thousand) rubles, VAT included of 38,135 (thirty eight thousand, one hundred and thirty five) rubles and 59 kopecks. Payment under this Contract is made by the Customer under the certificate of the executed works according to 349

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the Certificate of Acceptance of the Works Executed signed by the parties. Duration of contract: This contract comes into effect from the moment of signing by the parties and is in effect till 31 December 2009

JSC “UES Parties to contract: 7,554.00 Minutes FGC” IDGC of Centre and Volga Region, JSC, — “Subscriber”; of 28.11.2008 JSC “ UES FGC” — “Sub-subscriber”. No.27 Subject of contract: “Subscriber” undertakes to provide supply of cold water to the object of “Sub-subscriber” — “Izhevsk” substation (Izhevsk city, Votkinskoe shosse 109); cold water within the established limit of 74 m3/month, and “Sub-subscriber” makes payments on conditions of this contract. Contract price: It makes 7,554 (seven thousand, five hundred and fifty four) rubles and 96 kopecks, VAT included 18% of 1,152 (one thousand, one hundred and fifty two) rubles and 45 kopecks. Validity: The contract comes into effect from the moment of its signing and is in effect till 31 December 2008.

MVP, JSC To approve the additional agreement to the contract of Minutes granting of vehicles and mechanisms without driving services of 28.11.2008 No.70590004 as of 28 May 2008 between IDGC of Cen- No.27 tre and Volga Region, JSC, and Motor Vehicle Plant, JSC, according to Application No.2 to this decision of Board of Directors.

MVP, JSC To approve the additional agreement to the contract of Minutes granting of vehicles and mechanisms without driving services of 28.11.2008 No.70590005 as of 28 May 2008 between IDGC of Cen- No.27 tre and Volga Region, JSC, and Motor Vehicle Plant, JSC, according to Application No.3 to this decision of Board of Directors. 350 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

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NEE EC 1.1. To determine the price of the contract for rende- 62,568.00 Minutes “Energetik” ring of educational services between IDGC of Centre of 10.12.2008 and Volga Region, JSC, and NEE EC “Energetik” in the No.28 amount of 62,568 (Sixty two thousand, five hundred and sixty eight)rubles and 56 kopecks, the VAT is not assessed (chapter 21 of item 149 of Article 14 of the Tax Code of the Russian Federation). 1.2. To approve the contract on rendering educational services between IDGC of Centre and Volga Region, JSC, and NEE EC “Energetik”, according to Application No.1 to this decision of the Board of Directors. 2.1. To determine the price of the contract for rende- 5,636,465.58 ring of educational services between IDGC of Centre and Volga Region, JSC, and NEE EC “Energetik”, in an estimated amount of 5,636,465 (five million, six hundred and thirty six thousand, four hundred and sixty five rubles) and 58 kopecks, the VAT is not assessed (Chapter 21. Article 149 of the Tax Code of the Russian Federation). 2.2. To approve the contract on rendering educational services between IDGC of Centre and Volga Region, JSC, and NEE EC “Energetik” according to Application No.2 to this decision of Board of Directors.

NEE EC 1. To determine the price of the contract in the word- 2,514,343.00 Minutes “Energetik” ing of the additional agreement No.1k to contract of 10.12.2008 No.70690011 as of 25 June 2008 between IDGC of No.28 Centre and Volga Region, JSC, and NEE EC “Energe- tik”, in the amount of 2,514,343 (two million, five hundred and fourteen thousand, three hundred and forty three) rubles and 85 kopecks, the VAT is not assessed. 2. To approve additional agreement No.1 to contract No.70690011 as of 25 June 2008 between IDGC of Centre and Volga Region, JSC, and NEE EC “Energetik” according to Application No.3 to this decision of the Board of Directors.

JSC “MC 1. To determine the price of the Contract for rendering 25,000.00 Minutes CEI” of organizational and advisory services between IDGC of 10.12.2008 of Centre and Volga Region, JSC, and JSC “MC CEI”, No.28 351

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in the amount of 25,000 (twenty five thousand) rubles and 00 kopecks, VAT included (18%) - 3,813 (three thousand eight hundred and thirteen) rubles and 56 kopecks. 2. To approve the Contract for rendering organizational and advisory services between IDGC of Centre and Volga Region, JSC, and JSC “MC CEI” according to Application No.4 to this decision.

JSC “UES To approve the report of settlement of disagreements to the Minutes FGC” Contract about realization of technological connection No.20/ of 10.12.2008 TP-М4 as from 19.09.2008 between IDGC of Centre and No.28 Volga Region, JSC, and JSC “UES FGC”, according to Ap- plication No.5 to this decision.

JSC “En- Parties to contract: 11,800.00 Minutes gineering Customer — IDGC of Centre and Volga Region, JSC of 18.12.2008 Center of Executing Party — JSC “Engineering Center of Power Industry No.29 Power Indus- of Urals” try of Urals” Subject of contract: The Customer charges, and the Executing Party takes up carrying out of the following works “Support of the database of the automated system of registration of operating normative documents for metrological services of energy enterprise (ASR ND — metrology)”. Contract price: Contract price, according to the report of the coordination of the contractual price (application 2) is 11,800 (eleven thousand, eight hundred) rubles and 00 kopecks, VAT included of 1,800 (One thousand, eight hundred) rubles and 00 kopecks Payment for performance of works under the contract is made as an advance payment of 100% of the price of works on the basis of the invoice. Duration of contract: This contract comes into effect from the moment of signing by its both parties and is in effect up to 31 December 2008.

JSC “IJSC To approve Additional Agreement No.1 on amending Contract 253,126.92 Minutes Energoga- No.02/08 of rent of real estate as of 01.01.2008 between of 18.12.2008 rant” IDGC of Centre and Volga Region, JSC, and JSC “IJSC No.29 352 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

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Energogarant”, according to Application No.2 to this decision of the Board of Directors.

JSC “UES To approve the Additional agreement on cancellation of Minutes FGC” the Contract of rent of real estate No.16 as of 25 August of 18.12.2008 2006 between IDGC of Centre and Volga Region, JSC, No.29 and JSC “UES FGC”, which is an interest-party transaction, with the following provisions: Parties to the additional agreement: Lessor — IDGC of Centre and Volga Region, JSC Lessee — JSC “UES FGC”. Conditions of the additional agreement: 1. Lessee undertakes to return to the Lessor the rented property under the certificate of reception and transfer in that quality condition, in which the Lessee received it at the moment of the conclusion of the Contract in view of a degree of normal deterioration, within 5 business days after signing the additional agreement. 2. The Lessee undertakes to settle an invoice with Les- sor for using the rented property, and to pay debts on rent payment (if there are any debts) within 10 business days from the moment of presentation by the Lessor of the corresponding invoice and other payment documents.

JSC “UES To approve Additional Agreement on cancellation of the Minutes FGC” Contract of rent of real estate No.0149 from 30 March of 18.12.2008 2007 between IDGC of Centre and Volga Region, JSC, No.29 and JSC “UES FGC”, which is an interested-party transaction, on the following provisions: Parties of the additional agreement: Lessor — IDGC of Centre and Volga Region, JSC, Lessee — JSC “ UES FGC “. Conditions of the additional agreement: 1. The contract of rent is cancelled since 31 December 2008 2. Lessee undertakes to return to the Lessor the rented property under the certificate of reception and transfer in that quality condition, in which the Lessee received it at the moment of the conclusion of the Contract in view of a degree of normal deterioration, within 5 business 353

Party Material terms Amount of trans- Remarks to contract action (RUR)

days after signing the additional agreement. 3. The Lessee undertakes to settle an invoice with Lessor for using the rented property, and to pay debts on rent payment (if there are any debts) within 10 business days from the moment of presentation by the Lessor of the corresponding invoice and other payment documents.

JSC “UNPG 1. Parties to contract: 29,475.05 Minutes Glavset- Lessor — IDGC of Centre and Volga Region, JSC, of 18.12.2008 servis” Lessee — JSC “UNPG Glavsetservis” No.29 Subject of contract: Transfer to the Lessee in temporary for-a-fee use and possession of a part of a uninhabited building of the repair- industrial base (the total area of the building is 1,177.9 sq.m., it is located at the address: the Kaluga region, Sukhinichi , Sholokhova street 25), consisting of the uninhabited premise, the total area is 10.9 sq.m. Contract price: The amount of a rent for 1 sq.m. of the property specified in item 1.2. of the Contracts is 245 (two hundred and forty five) rubles and 83 kopecks, including the VAT (18%) of 37 (Thirty seven) rubles and 50 kopecks a month. The total amount size of rent a month under the contract is 2,679 (Two thousand, six hundred and seventy nine) rubles and 55 kopecks, VAT included (18%) of 408 (Four hundred and eight) rubles and 74 kopecks. The rent under the contract does not include municipal, operational and administrative charges of the Lessor, namely: Charges on heating of the building; Charges connected with security organization of the building; Charges connected with household waste disposal; Charges on maintenance of water supply and sewing; Charges connected with cleaning of the building; Charges on provision of electric power supply of the building. The specified charges are compensated to the Lessor by the Lessee in the amount proportional to the area of rented uninhabited premises in the building in a 10-day term on the basis of invoices and other payment documents issued by the Lessor, and copies of invoices and other payment documents of suppliers’ municipal services. The rent is paid by the Lessee from the moment of transfer by the Lessee of property under the certificate of reception and 354 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

transfer. Duration of contract. The contract comes into effect from the date of its signing by the Parties and is in effect within 11 months.

2. Parties to contract: 40,675.00 Lessor — IDGC of Centre and Volga Region, JSC. Lessee — JSC “UNPG Glavsetservis” Subject of contract: Transfer to the Lessee in time for-a-fee possession and use of real estate, namely: 1) a part of the uninhabited 2-storey building of the fitting shop (the total area of the building is 154.3 sq.m., it is located at the address: the Ivanovo region, Vichuga , Leningradskaya street 34 “A”), consisting of 5 uninhabited premises, the total area is 117.2 sq.m.; 2) an uninhabited one-storey building of household premises, the total area is 45.5 sq.m. located at the address: Ivanovo region, Vichuga, Leningradskaya street 34 “A”, “B”. Contract price: The rent under the contract includes: 1) the fixed part including a payment for possession and use of 1 sq.m. of the uninhabited premises specified in item 1.2. of the Contract a month and is: The uninhabited premises located in the building of fitting shop located at the address: Ivanovo region, Vichuga, Leningradskaya street, 34 “A”, lit. “B” — 250 (two hundred and fifty) rubles, including the VAT (18%) of 38 (thirty eight) rubles and 14 kopecks; The uninhabited premises which are located in the one-storey building of household premises located at the address: Ivanovo region, Vichuga, Leningradskaya street 34 “A”, lit. “B” — 250 (Two hundred and fifty) rubles, including the VAT (18%) of 38 (Thirty eight) rubles and 14 kopecks. The total amount of the fixed part of a rent a month for possession and use under the contract is 40,675 (forty thousand, six hundred and seventy five) rubles, VAT included (18%) in the amount of 6,204 (six thousand, two hundred and four) rubles and 66 kopecks. 2) the variable part including monthly expenses of the 355

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

Lessor under the maintenance and service of the building, namely: Charges on heating of the building; Charges connected with security organization of the building; Charges connected with household waste disposal; Charges on maintenance of water supply and sewing; Charges connected with cleaning of the building; Charges on provision of electric power supply of the building.

The variable part of the rent is paid to the Lessor by the Les- see in the amount which is in proportion to the area of rented uninhabited premises in the building in a 10-day term on the basis of invoices and other payment documents issued by the Lessor, and copies of invoices and other payment documents of suppliers municipal services The rent is paid by the Lessee from the moment of transfer to the Lessee of property under the certificate of reception and transfer. Duration of contract: The contract comes into effect from the date of its signing by the Parties, and also transfer by the Lessee of the property specified in item 1.2. of the contract and is in effect till 1 December 2009.

JSC “UES To approve Additional Agreement No.1 on amending the Con- Minutes FGC” tract of rent of real estate No.13/07 as of 1 January 2007 be- of 25.12.2008 tween IDGC of Centre and Volga Region, JSC, and JSC “UES No.30 FGC”, which is an interested-party transaction, according to Application No.4 to this decision of the Board of Directors.

“Energobal- Parties to contract: 2,008,435.00 Minutes ance-Center” Lessor — IDGC of Centre and Volga Region, JSC of 25.12.2008 Ltd. Lessee — “Energobalance-Center” Ltd. No.30 Subject of contract: Transfer to the Lessee in time for-a-fee possession and use of a part of uninhabited 10-storey office building (the total area of the building is 8,086.4 sq.m., it is located at the address: the Ryazan region, Ryazan city, MOGES street 12), consisting of uninhabited premises, the total area is 280.90 sq.m. 356 Appendix 5. Information on Interested-Party Transactions Recognized as Such in Accordance with the RF Laws, which were Completed by IDGC of Centre and Volga Region, JSC, in 2008

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

located on the 8th floor. Contract price: The rent under the contract includes a payment for possession and use of rented property, and monthly expenses of the Lessor under the maintenance and service of the building in the amount which is proportional to the area of rented uninhabited premises. The amount of rent for possession and use of 1 sq.m. a month is 550 (five hundred and fifty) rubles, including the VAT (18%) of 83 (eighty three) rubles and 90 kopecks. The total amount of the rent a month is 154,495 (one hundred and fifty four thousand, four hundred and ninety five) rubles, VAT included (18%) of 23,567 (Twenty three thousand, five hundred and sixty seven) rubles and 03 kopecks. The rent is paid by the Lessee from the moment of the conclusion by the Parties of the contract. The parties came to an agreement that the payment for the Property actual use and possession before the moment of signing of the contract is paid in full within 20 business days from the moment of invoicing by the Lessor. Duration of contract: The contract comes into effect from the date of its signing by the parties and is in effect within 11 months. The parties came to an agreement that effect of the contract extends to the relations of the Parties which has arisen since 1 November 2008 in connection with actual using by the Lessee of the property.

MVP, JSC Parties to contract: 31,265,110.77 Minutes Customer — IDGC of Centre and Volga Region, JSC,. of 25.12.2008 The contractor — Motor Vehicle Plant, JSC. No.30 Subject of contract: The contractor undertakes to execute under the Cus- tomer’s Technical Project the works on clearing routes for OL 10-110 kV, and the Customer undertakes to accept and pay the work according to contract provisions Contract price: The cost of works under the contract is determined by the protocol about results of the open competition held 357

Party Material terms Amount of trans- Remarks Party Material terms Amount of trans- Remarks to contract action (RUR) to contract action (RUR)

on 1 November 2008, the Technical Project and the budget documentation which are an integral part of the contract and is 31,265 ,10.77 rubles (Thirty one million, two hundred and sixty five thousand, one hundred and ten rubles and 77 kopecks), VAT included in the amount of 18% — 4,769,254.19 rubles (four million, seven hundred and sixty nine thousand, two hundred and fifty four rubles and 19 kopecks). Final settlement is made by the Customer for works actually performed by the Contractor no later than 20 calendar days after the full completion of works (including elimination of the lacks revealed during acceptance), after signing by the parties of the certificate of acceptance of the executed works and on condition of granting by the Contractor of the invoice. Duration of contract: The contract comes into effect from the moment of its signing and is in effect till 31 December 2009.

JSC “TGC-4” To approve Additional Agreement No.3 on amending Contract 466.20 Minutes No.138/3 of rent of real estate as of 1 April 2005 between of 25.12.2008 IDGC of Centre and Volga Region, JSC, and JSC “Territo- No.30 rial Generating Company No.4” (JSC “TGC-4”) which is an interest-bearing transaction, according to Application No.14 to this decision of the Board of Directors. 358 Appendix 6. Information on Participation of IDGC of Centre and Volga Region, JSC, in Nonprofit Organizations

Information on Participation of IDGC of Centre and Volga Region, JSC, in Nonprofit Organizations

No. Name of nonprofit organization Date of joining Main activity line of and its location nonprofit nonprofit organization organization

Joining of legal entities (associations and unions) — — —

Nonprofit partnerships

1 “Innovations in Electric Energy Industry” 29.02.2008 Assistance in introduction and use by Nonprofit Partnership (“INVEL” NP) the Partnership members of the ad- 19 Leninsky avenue, Moscow city, Russian vanced engineering and technological Federation solutions, innovations providing an increase of efficiency of their activities in the sphere of generation, transmission, distribution and selling of electric energy.

2 “Council of Electric Energy Industry Vet- 03.12.2008 Registration of veterans, conditions erans” Nonprofit Partnership (“Council of of their life and labour activities, and Electric Energy Industry Veterans” NP) support of actions on improvement of 119, bld. 55, Mira avenue, Moscow city, veterans' life conditions, in particular, Russian Federation rendering of assistance in solution of housing problems and organization of sanatorium treatment and holidays, rendering of material aid.

3 “Scientific and Engineering Council of the 20.11.2008 Consideration of the most sig- Unified Energy System” Nonprofit Partner- nificant issues of the UES and its ship (“UES SEC” NP) elements functioning, examination of various projects and works, analysis, concepts and strategy of the UES development, advanced methods and technologies, priority researches, programs of research and development, technical regulation and standardization, publishing activities in electric energy sector. 359

No. Name of nonprofit organization Date of joining Main activity line of and its location nonprofit nonprofit organization organization

Institutions 4 “Tula Educational Course Complex” 29.02.2008 Educational research activities, train- Non-state Educational Institution ing of workers and specialists in vari- of Primary and Extension Educa- ous areas. tion (“Tula ECC” P&EE NEI) 101-А Timiryazeva street, Tula city, Russian Federation.

5 ”Energetik” Educational Complex” 29.02.2008 Educational research activities, Noncommercial Educational Institution training of workers and specialists in (”Energetik” Educational Complex NEI) various areas 22А Voroshilova street, Izhevsk city, Republic of Udmurtia, Russian Federa- tion.

6 “Ivanovo Educational Center” Non- 29.02.2008 Educational research activities, commercial Educational Institution training of workers and specialists in (“IEC” NEI) various areas 3 B (“Б”) Suzdalskaya street, Ivanovo city, Russian Federation.

7 Non-state, Noncommercial Education- 29.02.2008 Educational research activities, al Institution of Personnel Vocational training of workers and specialists in Training and Extension Education various areas “”Energetik” Educational Center” (“Energetik” Educational Center) 5 Ogaryova street, Kaluga city, Rus- sian Federation. 360 Appendix 6. Information on Participation of IDGC of Centre and Volga Region, JSC, in Nonprofit Organizations

No. Name of nonprofit organization Date of joining Main activity line of and its location nonprofit nonprofit organization organization

Autonomous nonprofit organizations 8 “Energetik” Educational Center, Non-state 29.02.2008 Accelerated vocational training and Autonomous Nonprofit Educational Organi- retraining of workers and specialists of zation the respective qualification. (“Energetik” Educational Center NANEO) 9 Lomonosova street, Kirov city, Russian Federation.

Other nonprofit organizations Coordination of the organization mem- 9 Regional Association of Employers “As- 16.12.2008 bers’ activities in the sphere of social sociation of Employers and Commodity and labor relations and economic rela- Producers of the Vladimir Region” tions connected with them, represen- (AECP VR RAE) tation and protection of the rights and Room 104, 21 Oktyabrsky avenue, Vladimir legitimate interests of the Organization city, Vladimir region, Russian Federation. members.

10 Non-state Pension Fund of Electric Energy 29.02.2008 Non-state pension coverage of the Industry (Nonprofit Organization) (NPF of Fund participants on the basis of Electric Energy Industry) contracts for non-state pension cove- 16, bld. 5, Bersenevskaya embankment, rage with the Fund investors in favour Moscow city, Russian Federation. of the Fund participants on a voluntary basis, irrespective of the state pension coverage.

11 All-Russian Industry Association of Employ- 10.10.2008 Cooperation, representation and pro- ers of Electric Energy Industry tection of interests of employers of the (RaEl Association) sector in relations with the government 14/23, bld.1, Avtozavodskaya street, authorities, institutions of local govern- Moskow city, Russian Federation. ment, trade unions, their associations and other organizations of hired workers, other unions. 361

No. Name of nonprofit organization Date of joining Main activity line of and its location nonprofit nonprofit organization organization

12 “Council of Economic Managers” Nonprofit 11.12.2008 Formation of the coordinated position Organization - Association of Employers of of the employers association members the Kirov Region (“Association of Employ- concerning regulation of social and ers of the Kirov Region”) labor relations and economic relations office 33, 10 Moskovskaya street, Kirov connected with them; defending of this city, Russian Federation position in mutual relations with trade unions and their associations, government authorities, institutions of local government.

13 Vyatka Commercial and Industrial Chamber 16.12.2008 Rendering assistance, representa- (Vyatka TIC, VTIC) tion and protection of interests of 4 Profsoyuznaya street, Kirov city, Russian the Chamber members inside of the Federation. country and abroad on the issues connected with realization of economic activities.

14 Trade and Industrial Chamber of the Rus- 16.12.2008 Rendering of assistance to the Rus- sian Federation (TIC of Russia, TIC of the sian organizations and businessmen Russian Federation) in their activities, representation and 6/1, bld. 1, Ilyinka street, Moscow city, Rus- protection of interests of the Chamber sian Federation. members inside of the country and abroad on the issues connected with realization of economic activities. 362 Appendix 7. Amounts of, and Tariffs for Technological Connection Submitted to Tariff Regulatory Body in the Reporting Year 2008 and for the Year 2009, and Tariffs for Technological Connection Approved by Regulatory Body Amounts of, and Tariffs for Technological Connection Submitted to Tariff Regulatory Body in the Reporting Year 2008 and for the Year 2009, and Tariffs for Technological Connection Approved by Regulatory Body

Power range, Voltage level “Vladimirenergo” Branch kW in connection point, kV 2008

Capacity at calcu- Submitted pay- Agreed pay- lation of payment ment for techno- ment for techno- for technological logical connec- logical connec- connection, kWv tion, RUR/kW, tion, RUR/kW, without VAT without VAT

Up to 30 kW 0.4 kV 885 3,415 4,982 including

From 30 to 100 kW 526 5,231 7,390 including

From 100 to 750 kW — — — including

More than 750 kW — — —

Up to 100 kW 6–10 kV 1,545 7,139 7,237 including

From 100 to 750 kW 7,700 10,622 8,756 including

More than 750 kW 9,418 13,401 13,483

Up to 15 kW Individual persons RUR 550 including VAT for each connection including and legal entities for communal and household needs

* Payment for technological connection is set by the Order of the Department for Prices and Tariffs under the Administration of Vladimir Region of 9 August 2007 No.19/4. Payment is in force since 15 August 2007. The branch will apply to regulating bodies to review amount of payment in case of insufficiency. 363

2009

For “Vladimir Regional Capacity at Submitted pay- Agreed pay- For “Vladimir Re- Electric Grid Company” calculation of ment for techno- ment for techno- gional Electric Grid OJSC as subordinate payment for logical connec- logical connec- Company” OJSC grid company technological tion, RUR/kW, tion, RUR/kW, as subordinate grid connection, kWv without VAT without VAT company

11,536 — — 4,982 11,536

11,536 — — 7,390 11,536

11,536 — — — 11,536

11,536 — — 7,237 11,536

11,536 — — 8,756 11,536

11,536 — — 13,483 11,536 364 Appendix 7. Amounts of, and Tariffs for Technological Connection Submitted to Tariff Regulatory Body in the Reporting Year 2008 and for the Year 2009, and Tariffs for Technological Connection Approved by Regulatory Body

Power range, Voltage level “Ivenergo” Branch kW in connection point, kV 2008

Capacity at Submitted pay- Agreed pay- For “Ivgorelec- For “Kineshma For “Vichuga For “Ivanovo calculation of ment for techno- ment for techno- troset” MUE as Municipal Electric Municipal Elec- Management payment for logical connec- logical connec- subordinate grid Grid” JSC as tric Grid” JSC as Electric Grid technological tion, RUR/kW, tion, RUR/kW, company subordinate grid subordinate grid Company” LLC connection, kW without VAT without VAT company company as subordinate grid company

Up to 30 kW 0.4 kV 289 15,450 15,450 including

From 30 to 100 kW 495 15,195 15,195 including

From 100 to 750 kW 495 15,195 15,195 including

More than 750 kW — — —

Up to 100 kW 6–10 kV 535 7,142 7,142 including

From 100 to 750 kW 3,952 6,758 6,758 including

More than 750 kW — — —

Up to 15 kW Individual persons RUR 550 including VAT for one connection including and legal entities for communal and household needs 365

Power range, Voltage level “Ivenergo” Branch kW in connection point, kV

7,142 7,142 7,142 7,142

6,758 6,758 7,142 6,758

6,758 — 6,758 6,758

— — — —

7,142 7,142 — —

6,758 6,758 — —

— — — — 366 Appendix 7. Amounts of, and Tariffs for Technological Connection Submitted to Tariff Regulatory Body in the Reporting Year 2008 and for the Year 2009, and Tariffs for Technological Connection Approved by Regulatory Body

Power range, Voltage level “Ivenergo” Branch kW in connection point, kV 2009

Capacity at Submitted pay- Agreed pay- calculation of ment for techno- ment for techno- payment for logical connec- logical connec- technological tion, RUR/kW, tion, RUR/kW, connection, kW without VAT without VAT

Up to 30 kW 0.4 kV — — 15,450 including

From 30 to 100 kW — — 15,195 including

From 100 to 750 kW — — 15,195 including

More than 750 kW — — —

Up to 100 kW 6–10 kV — — 7,142 including

From 100 to 750 kW — — 6,758 including

More than 750 kW — — —

Up to 15 kW Individual persons RUR 550 including VAT for one connection including and legal entities for communal and household needs

* Regional Service for Tariffs considers the issue on expediency of review of payment for technological connection with a glance of actual indicators in 2008, changes in tax legislation and method of calculation of payment for technological connection. 367

For “Ivgorelec- For “Kineshma For “Vichuga For “Ivanovo troset” MUE as Municipal Electric Municipal Elec- Management subordinate grid Grid” JSC as tric Grid” JSC as Electric Grid company subordinate grid subordinate grid Company” LLC company company as subordinate grid company

7,142 7,142 7,142 7,142

6,758 6,758 7,142 6,758

6,758 — 6,758 6,758

— — — —

7,142 7,142 — —

6,758 6,758 — —

— — — — 368 Appendix 7. Amounts of, and Tariffs for Technological Connection Submitted to Tariff Regulatory Body in the Reporting Year 2008 and for the Year 2009, and Tariffs for Technological Connection Approved by Regulatory Body

Power range, Voltage level “Kalugaenergo” Branch kW in connection point, kV 2008

Capacity at calculation of payment for technological connection, kW

II reliable III reliable electricity electricity supply supply category category

Up to 30 kW 0.4 kV 1,520 1,925 including

from 30 to100 kW 1,020 1,050 including

over 100 to 500 kW 1,200 1,430 including

over 500 to 750 kW 10,080 17,280 including

over 750 kW 3,900 3,000

up to 100 kW 6–10 kV 250 400 including

over 100 to 500 kW 1,500 3,000 including

over 500 to 750 kW 3,000 3,250 including

over 750 kW 68,133 5,000

up to 15 kW Individual persons 5.5 minimum labor payments (with VAT) including and legal entities for communal and household needs 369

Submitted payment for technological Agreed payment for technological connection, RUR/kW, without VAT connection, RUR/kW, without VAT

II reliable III reliable III reliable III reliable electricity electricity electricity electricity supply supply supply supply category category category category

36,216 27,476 10,000 9,600

31,176 23,956 9,950 9,550

29,916 23,053 9,900 9,500

28,896 22,190 9,850 9,450

28,909 22,183 9,800 9,400

34,087 24,186 10,000 9,600

31,489 22,602 9,950 9,550

30,515 22,278 9,900 9,500

30,257 22,183 9,850 9,450 370 Appendix 7. Amounts of, and Tariffs for Technological Connection Submitted to Tariff Regulatory Body in the Reporting Year 2008 and for the Year 2009, and Tariffs for Technological Connection Approved by Regulatory Body

Power range, Voltage level “Kalugaenergo” Branch kW in connection point, kV 2009

Capacity at calculation of payment for technological connection, kW

II reliable III reliable electricity electricity supply supply category category

Up to 30 kW 0.4 kV — — including

from 30 to100 kW — — including

over 100 to 500 kW — — including

over 500 to 750 kW — — including

over 750 kW — —

up to 100 kW 6–10 kV — — including

over 100 to 500 kW — — including

over 500 to 750 kW — — including

over 750 kW — —

up to 15 kW Individual persons 5.5 minimum labor payments (with VAT) including and legal entities for communal and household needs

* Payment for technological connection is set by the Ministry of competition policy and tariffs of Kaluga Region of 4 February 2008 No.4-ek. At the present time, documents on review of payment for technological connection are being prepared. 371

Submitted payment Agreed payment for technological for technological connection, RUR/kW, without VAT connection, RUR/ kW, without VAT * III reliable III reliable electricity electricity supply supply category category

— 10,000 9,600

— 9,950 9,550

— 9,900 9,500

— 9,850 9,450

— 9,800 9,400

— 10,000 9,600

— 9,950 9,550

— 9,900 9,500

— 9,850 9,450 372 Appendix 7. Amounts of, and Tariffs for Technological Connection Submitted to Tariff Regulatory Body in the Reporting Year 2008 and for the Year 2009, and Tariffs for Technological Connection Approved by Regulatory Body

Power range, Voltage level “Nizhnovenergo” Branch kW in connection point, kV 2008

Up to 30 kW 0.4 kV 4,635 9,084 9,300 including

From 30 to 100 kW 5,965 8,843 8,900 including

From 100 to 750 kW 5,965 8,843 8,900 including

More than 750 kW 5,965 8,843 8,900

Up to 100 kW 6–10 kV 22,660 7,885 7,400 including

From 100 to 750 kW 28,703 7,655 7,000 including

More than 750 kW 32,145 7,215 6,750

Up to 15 kW Individual persons 5.5 minimum labor payments (with VAT) including and legal entities for communal and household needs

* Payment for technological connection is set by the Decision of Regional Tariff Service of Nizhniy Novgorod Region of 25 January 2007 No.4/1. At the present time, documents on review of payment for technological connection are being prepared. 373

2009

— — 9,300

— — 8,900

— — 7,400

— — 7,000

— — 6,750 374 Appendix 7. Amounts of, and Tariffs for Technological Connection Submitted to Tariff Regulatory Body in the Reporting Year 2008 and for the Year 2009, and Tariffs for Technological Connection Approved by Regulatory Body

Power range, Voltage level “Kirovenergo” Branch kW in connection point, kV 2008

Capacity at Submitted pay- Agreed pay- calculation of ment for techno- ment for techno- payment for logical connec- logical con- technological tion, RUR/kW, nection, RUR/ connection, kW without VAT kW, without VAT (Kirov / Kirov (Kirov / Kirov (Kirov / Kirov Region) Region) Region)

Up to 30 kW 0.4 kV 100 / 1,720 8,514.5 / 3,060.12 8,021.92 / 3,664.24 including

From 30 to 100 kW 400 / 1,016 8,551.02 / 3,251.85 8,196.36 / 4,041.55 including

From 100 to 750 kW 400 / 1,016 8,551.02 / 3,251.85 8,196.36 / 4,041.55 including

More than 750 kW 400 / 1,016 8,551.2 / 3,251.85 8,196.36 / 4,041.55

Up to 100 kW 6–10 kV 450 / 4,024 4,833.76 / 1,234.82 4,785.3 / 1,361.4 including

From 100 to 750 kW 1,800 / 11,305 6,603.29 / 743.93 4,785.3 / 1,361.4 including

More than 750 kW 13,021 / 1,069 4,982.96 / 975.63 4,785.3 / 1,361.4

Up to 15 kW Individual persons RUR 550 including VAT for one connection including and legal entities for communal and household needs

* Payment for technological connection at the branch “Kirovenergo” is set by the Decision of Regional Tariff Service of Kirov Region of 29 January 2009 No.2/1. 375

2009

For “Communenergo” Capacity at Submitted payment for tech- Agreed For “Com- JSC (“Kosino” 35/10 calculation of nological connection, RUR/ payment for munenergo” kV Substation and payment for kW, without VAT (Kirov / Kirov technological JSC as sub- networks of “Omutninsk technological Region) connection, ordinate grid Chemical Plant”, “Vos- connection, kW RUR/kW, with- company tochnaya” 110/6 kV (Kirov / Kirov II reliable elec- III reliable elec- out VAT (Kirov / Substation) as subordi- Region) tricity supply tricity supply Kirov Region)* nate grid company category category

3,929.84 340 / 1,640 18,814.82 / 12,955.66 / 8,682 / 4,026 8,571.4 7,355.17 4,023.11

4,307.15 340 / 1,640 18,814.82 / 12,955.66 / 8,682 / 4,026 8,571.4 7,355.17 4,023.11

1,627.0 5,400 / 909 8,980.74 / 7,938.09 / 5,327 / 1,465 6,010.4 4,748.06 2,997.41

1,627.0 5,400 / 909 8,980.74 / 7,938.09 / 5,327 / 1,465 6,010.4 4,748.06 2,997.41 376 Appendix 7. Amounts of, and Tariffs for Technological Connection Submitted to Tariff Regulatory Body in the Reporting Year 2008 and for the Year 2009, and Tariffs for Technological Connection Approved by Regulatory Body

Power range, Voltage level “Marienergo” Branch kW in connection point, kV 2008

Up to 30 kW 0.4 kV 598.94 14,326.66 14,326.66 including

From 30 to 100 kW 1,208.5 7,780.81 6,612.21 including

From 100 to 750 kW — — — including

More than 750 kW — — —

Up to 100 kW 6–10 kV 769 25,984.95 23,475.76 including

From 100 to 750 kW 2,770 9,702.28 9,702.28 including

More than 750 kW — — Individual tariff

Up to 15 kW Individual persons RUR 550 including VAT for one connection including for communal and household needs

Up to 15 kW Legal entities for 2,163.3 including communal and household needs

* Payment for technological connection is set by the Decision of Regional Tariff Service of the Mary-El Republic of 2 April 2007 No.38. At the present time, documents on review of payment for technological connection are being prepared. 377

2009

— — 14,326.66

— — 6,612.21

— — —

— — 23,475.76

— — 9,702.28

— — Individual tariff 378 Appendix 7. Amounts of, and Tariffs for Technological Connection Submitted to Tariff Regulatory Body in the Reporting Year 2008 and for the Year 2009, and Tariffs for Technological Connection Approved by Regulatory Body

Power range, Voltage level “Ryazanenergo” Branch kW in connection point, kV 2008

Up to 30 kW 0.4 kV 26,161.00 7,998.15 7,998.00 including

From 30 to 100 kW 26,161.00 7,998.15 7,998.00 including

From 100 to 750 kW 26,161.00 7,998.15 7,998.00 including

More than 750 kW 26,161.00 7,998.15 7,998.00

Up to 100 kW 6–10 kV 26,161.00 7,998.15 7,998.00 including

From 100 to 750 kW 26,161.00 7,998.15 7,998.00 including

More than 750 kW 26,161.00 7,998.15 7,998.00

Up to 15 kW Individual persons RUR 550 including VAT for one connection including and legal entities for communal and household needs

* Currently the materials on determination of payment for technological connection to electric networks of the branch are under consideration of Regional Energy Commission of Ryazan Region. 379

2009

Capacity at calculation of payment Submitted payment for techno- Agreed pay- for technological connection, kW logical connection, RUR/kW, ment for techno- without VAT logical connection, RUR/kW, II reliable elec- III reliable elec- II reliable elec- III reliable elec- without VAT* tricity supply tricity supply tricity supply tricity supply category category category category

— 295 — 13,040.78 —

— 323 — 13,089.89 —

2,695.5 7,646.3 13,456.42 13,275.53 —

11,435.2 11,266.4 13,222.13 13,101.45 —

35,110.2 4,821.6 12,262.98 12,162.59 — 380 Appendix 7. Amounts of, and Tariffs for Technological Connection Submitted to Tariff Regulatory Body in the Reporting Year 2008 and for the Year 2009, and Tariffs for Technological Connection Approved by Regulatory Body

Power range, Voltage level “Tulenergo” Branch kW in connection point, kV 2008

Capacity at Submitted pay- Agreed payment calculation of ment for techno- for technological payment for logical connec- connection, technological tion, RUR/kW, RUR/kW, connection, kW without VAT without VAT

Up to 30 kW 0.4 kV 65 10,726 400 including

From 30 to 100 kW — 7,742 400 including

From 100 to 750 kW — — — including

More than 750 kW — — —

Up to 100 kW 6–10 kV 1,047 7,742 400 including

From 100 to 750 kW 10,791 4,741 400 including

More than 750 kW 116,883 9,784 Individual tariff

Up to 15 kW Individual persons RUR 550 including VAT for one connection including and legal entities for communal and household needs

* The agreed payment for technological connection does not include investment component and technological connection which required expenses of investment nature. They are implemented case-by-case. 381

2009

Capacity at Submitted Agreed payment calculation of payment for for technological payment for technological connection, technological connection, RUR/ RUR/kW, connection, kW kW, without VAT* without VAT

— — 400

— — —

— — 400

— — Individual tariff 382 Appendix 7. Amounts of, and Tariffs for Technological Connection Submitted to Tariff Regulatory Body in the Reporting Year 2008 and for the Year 2009, and Tariffs for Technological Connection Approved by Regulatory Body

Power range, Voltage level “Udmurtenergo” Branch, Izhevsk kW in connection point, kV 2008

Capacity at calcu- Submitted payment Agreed payment for lation of payment for technological technological confor technological connection, RUR/ nection, RUR/kW, connection, kW * kW, without VAT without VAT

Up to 30 kW 0.4 kV — — — including

From 30 to 100 kW — — — including

From 100 to 750 kW — — — including

More than 750 kW — — —

Up to 100 kW 6–10 kV 11,000 15,293 11,100 including

From 100 to 750 kW 11,000 15,293 11,100 including

More than 750 kW 11,000 15,293 11,100

Up to 15 kW Individual persons RUR 550 including VAT for one connection including and legal entities for communal and household needs

* Branch “Udmurtenergo” doesn’t obtain 0.4 kV and 6–10 kV electric networks on its balance in Izhevsk. The networks are on the balance of municipal unitary enterprises. Payment for technological connection is payment for indirect technological connection to networks of the branch and investment component of payment for technological connection assigned at reconstruction of main substation. 383

2009

Capacity at calcula- Submitted payment Agreed payment tion of payment for for technological for technological technological connec- connection, RUR/ connection, RUR/ tion, kW * kW, without VAT kW, without VAT

— — —

— 11,100 —

— 11,100 — 384 Appendix 7. Amounts of, and Tariffs for Technological Connection Submitted to Tariff Regulatory Body in the Reporting Year 2008 and for the Year 2009, and Tariffs for Technological Connection Approved by Regulatory Body

Power range, Voltage level “Udmurtenergo” Branch , the Udmurtian Republic kW in connection point, kV 2008

Capacity at calcu- Submitted payment Agreed payment lation of payment for technological for technological for technological connection, RUR/ connection, RUR/ connection, kW kW, without VAT kW, without VAT

Up to 30 kW 0.4 kV 2,500 1,583 264 including

From 30 to 100 kW 2,500 1,583 240 including

From 100 to 750 kW — — — including

More than 750 kW — — —

Up to 100 kW 6–10 kV 2,500 1,583 86 including

From 100 to 750 kW 2,500 1,583 86 including

More than 750 kW 2,500 1,583 80

Up to 15 kW Individual persons RUR 550 including VAT for one connection including and legal entities for communal and household needs

2009

Capacity at calcu- Submitted payment Agreed payment lation of payment for technological for technological for technological connection, RUR/kW, connection, RUR/ connection, kW without VAT kW, without VAT*

— — 264

— — 240

— — —

— — 86

— — 80 386 Appendix 8. Information on Implementation of Annual Comprehensive Program of Purchases 2008

Information on Implementation of Annual Comprehensive Program of Purchases 2008

Total amount of purchases:

Purchase way Open Restricted Open Restricted Open tender tender request for request for request for quotation quotation proposal

«Vladimirenergo» branch Target 800,119 60,899 3,500 4,950 172,623 Execution 792,203 50,943 3,500 4,950 234,376

«Ivenergo» branch Target 638,809 0 27,851 0 53,871 Execution 632,557 0 9,210 0 57,954

«Kalugaenergo» branch Target 4,584,822 0 15,018 0 737,658 Execution 3,393,345 0 11,836 0 688,849

«Kirovenergo» branch Target 997,719 0 8,425 1,180 326,382 Execution 728,456 0 7,155 21,907 394,026

«Marienergo» branch Target 422,107 0 0 643 153,217 Execution 417,587 0 0 642 127,552

«Nizhnovenergo» branch Target 8,478,116 21,614 4,027 4,224 513,156 Execution 9,244,779 19,687 4,254 3,798 452,859

«Ryazanenergo» branch Target 1,572,148 0 0 0 115,338 Execution 1,259,962 0 0 11,327 126,856

«Tulenergo» branch Target 1,383,816 0 5,100 0 183,381 Execution 1,408,662 0 4,832 0 200,416

«Udmurtenergo» branch Target 575,514 27,253 0 0 180,103 Execution 591,235 24,355 0 0 164,046

Executive office Target 3,840,430 0 8,400 531 63,222 Execution 2,128,025 0 0 295 150,853

Total of IDGC of Centre and Volga Region, JSC Target 23,293,599 109,766 72,321 11,529 2,498,951 Execution 20,596,810 94,984 40,786 42,919 2,597,787 387

Restricted Open Restricted Single source Single source (fol- Total request for competitive competitive lowing the results of (amount proposal negotiations negotiations invalid open tenders) of purchases)

0 0 0 117,830 0 1,159,921 0 0 0 117,830 2,962 1,206,764

0 0 0 22,678 0 743,208 0 0 0 16,802 0 716,523

6,560 0 0 152,293 0 5,496,351 6,197 0 0 152,292 37,553 4,290,072

135 0 0 103,118 0 1,436,959 185 0 0 137,642 8,744 1,298,115

0 0 0 0 0 575,967 0 0 0 1,200 0 546,981

7,108 1,019,521 0 316,035 0 10,363,801 5,624 1,021,750 0 372,816 308,963 11,434,529

1,180 0 0 8,282 0 1,696,948 1,118 0 0 59,091 4,347 1,462,701

0 0 0 318,521 0 1,890,818 0 0 0 318,521 0 1,932,431

0 59,000 0 27,149 0 869,019 0 59,000 0 29,346 20,682 888,663

0 1,081,263 0 557,942 0 5,551,787 1,937 936,367 0 555,086 1,903 3,774,466

14,983 2,159,784 0 1,623,847 0 29,784,780 15,061 2,017,117 0 1,760,626 385,153 27,551,244 388 Appendix 8. Information on Implementation of Annual Comprehensive Program of Purchases 2008

Including sections of ACPP:

New construction and expansion of electric grid facilities

Purchase way Open Restricted Open Restricted Open tender tender request for request for request for quotation quotation proposal

«Vladimirenergo» branch Target 249,937 0 0 0 15,737 Execution 281,526 0 0 0 33,343

«Ivenergo» branch Target 11,191 0 0 0 0 Execution 17,174 0 0 0 0

«Kalugaenergo» branch Target 221,004 0 0 0 5,225 Execution 127,386 0 0 0 0

«Kirovenergo» branch Target 18,880 0 0 0 42,302 Execution 18,571 0 0 0 809

«Marienergo» branch Target 76,202 0 0 0 11,841 Execution 91,263 0 0 0 9,316

«Nizhnovenergo» branch Target 2,613,528 0 0 0 20,899 Execution 2,415,788 0 0 0 35,428

«Ryazanenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Tulenergo» branch Target 235,999 0 0 0 0 Execution 226,249 0 0 0 0

«Udmurtenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

Executive office Target 0 0 0 0 0 Execution 0 0 0 0 0

Total of IDGC of Centre and Volga Region, JSC Target 3,426,742 0 0 0 96,004 Execution 3,177,957 0 0 0 78,897 389

0 0 0 35,000 0 300,674 0 0 0 35,000 0 349,869

0 0 0 0 0 11,191 0 0 0 0 0 17,174

0 0 0 54,359 0 280,588 0 0 0 54,359 0 181,745

0 0 0 12,390 0 73,572 0 0 0 54,102 0 73,482

0 0 0 0 0 88,043 0 0 0 0 0 100,579

0 0 0 49,270 0 2,683,697 0 0 0 106,051 69,620 2,626,887

0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 235,999 0 0 0 0 0 226,249

0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 151,019 0 3,673,765 0 0 0 249,512 69,620 3,575,986 390 Appendix 8. Information on Implementation of Annual Comprehensive Program of Purchases 2008

Reconstruction and re-equipment of electric grid facilities

Purchase way Open Restricted Open Restricted Open tender tender request for request for request for quotation quotation proposal

«Vladimirenergo» branch Target 223,546 0 0 0 126,020 Execution 231,977 0 0 0 156,019

«Ivenergo» branch Target 475,939 0 10,563 0 27,856 Execution 501,820 0 5,679 0 35,422

«Kalugaenergo» branch Target 4,013,165 0 7,186 0 672,690 Execution 3,105,894 0 5,441 0 652,420

«Kirovenergo» branch Target 260,094 0 0 1,180 93,225 Execution 94,223 0 0 1,182 253,010

«Marienergo» branch Target 116,818 0 0 0 55,685 Execution 111,728 0 0 0 47,788

«Nizhnovenergo» branch Target 4,595,820 0 0 0 145,456 Execution 5,367,332 0 0 0 175,182

«Ryazanenergo» branch Target 1,144,234 0 0 0 27,395 Execution 963,089 0 0 0 78,501

«Tulenergo» branch Target 789,892 0 0 0 100,103 Execution 854,054 0 0 0 120,635

«Udmurtenergo» branch Target 318,436 0 0 0 110,380 Execution 322,597 0 0 0 116,348

Executive office Target 0 0 0 0 0 Execution 0 0 0 0 0

Total of IDGC of Centre and Volga Region, JSC Target 11,937,945 0 17,749 1,180 1,358,809 Execution 11,552,714 0 11,120 1,182 1,635,326 391

0 0 0 26,638 0 376,204 0 0 0 26,638 802 415,436

0 0 0 5,791 0 520,149 0 0 0 6,509 0 549,430

0 0 0 8,486 0 4,701,527 0 0 0 8,485 5,700 3,777,940

0 0 0 0 0 354,499 0 0 0 0 3,232 351,647

0 0 0 0 0 172,503 0 0 0 1,200 0 160,716

0 624,080 0 95,375 0 5,460,730 0 626,309 0 95,375 184,823 6,449,021

1,180 0 0 0 0 1,172,809 1,118 0 0 0 0 1,042,708

0 0 0 172,701 0 1,062,696 0 0 0 172,701 0 1,147,390

0 0 0 2,000 0 430,816 0 0 0 2,000 0 440,945

0 0 0 0 0 0 0 0 0 0 0 0

1,180 624,080 0 310,991 0 14,251,934 1,118 626,309 0 312,908 194,557 14,335,234 392 Appendix 8. Information on Implementation of Annual Comprehensive Program of Purchases 2008

Energy repair (repair) works, maintenance

Purchase way Open Restricted Open Restricted Open tender tender request for request for request for quotation quotation proposal

«Vladimirenergo» branch Target 262,771 0 0 0 17,605 Execution 217,779 0 0 0 33,023

«Ivenergo» branch Target 129,052 0 17,288 0 13,231 Execution 101,495 0 3,531 0 11,010

«Kalugaenergo» branch Target 180,663 0 4,292 0 35,171 Execution 76,610 0 2,855 0 24,000

«Kirovenergo» branch Target 216,044 0 8,425 0 140,885 Execution 138,160 0 7,155 20,725 114,016

«Marienergo» branch Target 41,077 0 0 0 78,040 Execution 38,531 0 0 0 68,937

«Nizhnovenergo» branch Target 821,265 21,614 4,027 3,304 308,083 Execution 873,802 19,687 4,254 2,878 208,964

«Ryazanenergo» branch Target 250,682 0 0 0 62,611 Execution 152,711 0 0 8,731 32,381

«Tulenergo» branch Target 214,716 0 5,100 0 68,418 Execution 216,692 0 4,832 0 62,867

«Udmurtenergo» branch Target 197,176 0 0 0 42,296 Execution 216,529 0 0 0 37,188

Executive office Target 255,801 0 0 0 7,948 Execution 116,952 0 0 0 120,181

Total of IDGC of Centre and Volga Region, JSC Target 2,569,246 21,614 39,132 3,304 774,288 Execution 2,149,260 19,687 22,626 32,334 712,567 393

0 0 0 2,800 0 283,176 0 0 0 2,800 2,160 255,762

0 0 0 8,584 0 168,155 0 0 0 1,991 0 118,026

0 0 0 28,066 0 248,192 0 0 0 28,066 28,077 159,608

0 0 0 34,696 0 400,050 0 0 0 33,004 3,414 316,474

0 0 0 0 0 119,117 0 0 0 0 0 107,468

7,108 0 0 131,364 0 1,296,766 5,624 0 0 131,364 54,520 1,301,091

0 0 0 7,040 0 320,333 0 0 0 48,900 2,160 244,883

0 0 0 119,139 0 407,373 0 0 0 119,139 0 403,530

0 0 0 2,890 0 242,361 0 0 0 2,890 3,673 260,280

0 59,000 0 34,959 0 357,708 1,937 59,000 0 34,746 0 332,816

7,108 59,000 0 369,538 0 3,843,230 7,561 59,000 0 402,900 94,004 3,499,937 394 Appendix 8. Information on Implementation of Annual Comprehensive Program of Purchases 2008

IT purchases

Purchase way Open Restricted Open Restricted Open tender tender request for request for request for quotation quotation proposal

«Vladimirenergo» branch Target 49,831 0 0 0 8,898 Execution 49,650 0 0 0 8,290

«Ivenergo» branch Target 8,732 0 0 0 11,800 Execution 7,201 0 0 0 10,720

«Kalugaenergo» branch Target 135,156 0 0 0 17,102 Execution 50,059 0 0 0 9,254

«Kirovenergo» branch Target 4,329 0 0 0 12,666 Execution 0 0 0 0 2,440

«Marienergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Nizhnovenergo» branch Target 239,807 0 0 0 30,040 Execution 227,265 0 0 0 24,721

«Ryazanenergo» branch Target 97,638 0 0 0 11,800 Execution 96,677 0 0 0 10,534

«Tulenergo» branch Target 62,333 0 0 0 4,191 Execution 53,684 0 0 0 6,236

«Udmurtenergo» branch Target 3,999 0 0 0 2,593 Execution 3,341 0 0 0 1,994

Executive office Target 112,653 0 0 0 23,874 Execution 110,434 0 0 0 12,169

Total of IDGC of Centre and Volga Region, JSC Target 714,477 0 0 0 122,964 Execution 598,311 0 0 0 86,358 395

0 0 0 0 0 58,729 0 0 0 0 0 57,940

0 0 0 0 0 20,532 0 0 0 0 0 17,921

0 0 0 894 0 153,152 0 0 0 894 0 60,207

0 0 0 1,978 0 18,973 0 0 0 1,058 0 3,498

0 0 0 0 0 0 0 0 0 0 0 0

0 395,442 0 40,025 0 705,314 0 395,441 0 40,025 0 687,453

0 0 0 0 0 109,438 0 0 0 0 0 107,211

0 0 0 17,241 0 83,765 0 0 0 17,241 0 77,161

0 59,000 0 60 0 65,652 0 59,000 0 60 0 64,396

0 989,263 0 189,878 0 1,315,668 0 857,567 0 189,878 0 1,170,048

0 1,443,705 0 250,077 0 2,531,223 0 1,312,008 0 249,157 0 2,245,833 396 Appendix 8. Information on Implementation of Annual Comprehensive Program of Purchases 2008

Research and development

Purchase way Open Restricted Open Restricted Open tender tender request for request for request for quotation quotation proposal

«Vladimirenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Ivenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Kalugaenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Kirovenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Marienergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Nizhnovenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Ryazanenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Tulenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Udmurtenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

Executive office Target 0 0 0 0 0 Execution 0 0 0 0 0

Total of IDGC of Centre and Volga Region, JSC Target 0 0 0 0 0 Execution 0 0 0 0 0 397

0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 398 Appendix 8. Information on Implementation of Annual Comprehensive Program of Purchases 2008

Consultation services

Purchase way Open Restricted Open Restricted Open tender tender request for request for request for quotation quotation proposal

«Vladimirenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Ivenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Kalugaenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Kirovenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Marienergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Nizhnovenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Ryazanenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Tulenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Udmurtenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

Executive office Target 54,360 0 0 0 2,950 Execution 57,722 0 0 0 0

Total of IDGC of Centre and Volga Region, JSC Target 54,360 0 0 0 2,950 Execution 57,722 0 0 0 0 399

0 0 0 0 0 0 0 0 0 0 0 0

67 0 0 0 0 67 67 0 0 0 0 67

0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 18,000 0 75,310 0 0 0 18,000 0 75,722

67 0 0 18,000 0 75,377 67 0 0 18,000 0 75,789 400 Appendix 8. Information on Implementation of Annual Comprehensive Program of Purchases 2008

Services of appraisers

Purchase way Open Restricted Open Restricted Open tender tender request for request for request for quotation quotation proposal

«Vladimirenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Ivenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Kalugaenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Kirovenergo» branch Target 0 0 0 0 350 Execution 0 0 0 0 0

«Marienergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Nizhnovenergo» branch Target 0 0 0 0 3,603 Execution 0 0 0 0 3,495

«Ryazanenergo» branch Target 4,602 0 0 0 0 Execution 3,900 0 0 0 0

«Tulenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

«Udmurtenergo» branch Target 0 0 0 0 0 Execution 0 0 0 0 0

Executive office Target 0 0 0 0 1,875 Execution 0 0 0 0 1,432

Total of IDGC of Centre and Volga Region, JSC Target 4,602 0 0 0 5,828 Execution 3,900 0 0 0 4,927 401

0 0 0 0 0 0 0 0 0 0 0 0

68 0 0 0 0 418 118 0 0 0 0 118

0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 3,603 0 0 0 0 0 3,495

0 0 0 0 0 4,602 0 0 0 0 0 3,900

0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 1,875 0 0 0 0 0 1,432

68 0 0 0 0 10,498 118 0 0 0 0 8,945 402 Appendix 8. Information on Implementation of Annual Comprehensive Program of Purchases 2008

Other purchases

Purchase way Open Restricted Open Restricted Open tender tender request for request for request for quotation quotation proposal

«Vladimirenergo» branch Target 14,034 60,899 3,500 4,950 4,363 Execution 11,271 50,943 3,500 4,950 3,701

«Ivenergo» branch Target 13,895 0 0 0 984 Execution 4,868 0 0 0 802

«Kalugaenergo» branch Target 34,834 0 3,540 0 7,470 Execution 33,396 0 3,540 0 3,175

«Kirovenergo» branch Target 498,371 0 0 0 36,954 Execution 477,501 0 0 0 23,751

«Marienergo» branch Target 188,010 0 0 643 7,652 Execution 176,065 0 0 642 1,510

«Nizhnovenergo» branch Target 207,696 0 0 920 5,075 Execution 360,592 0 0 920 5,069

«Ryazanenergo» branch Target 74,992 0 0 0 13,532 Execution 43,585 0 0 2,596 5,440

«Tulenergo» branch Target 80,876 0 0 0 10,669 Execution 57,983 0 0 0 10,678

«Udmurtenergo» branch Target 55,903 27,253 0 0 24,835 Execution 48,768 24,355 0 0 8,515

Executive office Target 3,417,617 0 8,400 531 26,575 Execution 1,842,918 0 0 295 17,071

Total of IDGC of Centre and Volga Region, JSC Target 4,586,228 88,152 15,440 7,045 138,109 Execution 3,056,947 75,298 7,040 9,403 79,713 403

0 0 0 53,392 0 141,138 0 0 0 53,392 0 127,757

0 0 0 8,302 0 23,181 0 0 0 8,302 0 13,972

6,560 0 0 60,488 0 112,892 6,197 0 0 60,488 3,776 110,572

0 0 0 54,054 0 589,379 0 0 0 49,478 2,098 552,828

0 0 0 0 0 196,305 0 0 0 0 0 178,218

0 0 0 0 0 213,692 0 0 0 0 0 366,582

0 0 0 1,242 0 89,766 0 0 0 10,191 2,187 63,999

0 0 0 9,440 0 100,985 0 0 0 9,440 0 78,101

0 0 0 22,199 0 130,190 0 0 0 24,396 17,009 123,043

0 33,000 0 315,105 0 3,801,227 0 19,800 0 312,462 1,903 2,194,449

6,560 33,000 0 524,222 0 5,398,755 6,197 19,800 0 528,149 26,973 3,809,519 Contact Information Contact Information 405

Contact and Reference Information

Full name “Interregional Distribution Grid Company of Centre and Volga Region”, Joint Stock Company

Abbreviated name IDGC of Centre and Volga Region, JSC

Primary state registration number 1075260020043

TIN (taxpayer reg.No.) 5260200603 RRC (registration reason code) 526001001

Bank detains Settlement account 40702810800140000005 Nizhniy Novgorod branch of CB “AGROPROM- CREDIT” Ltd. Nizhniy Novgorod city Correspondent account 30101810800000000758; RCBIC 042202758

Location 33 Rozhdestvenskaya street, Nizhniy Novgorod city Russia 603950

Postal address 33 Rozhdestvenskaya street, Nizhniy Novgorod city Russia 603950

E-mail [email protected]

Website www.mrsk-cp.ru 406 Contact Information

General Director Evgeny Viktorovich Ushakov Tel.(reception): +7 (831) 431 83 59, 431 83 03 fax (reception): +7 (831) 434 11 22

Shareholder and investor relations Vladimir Igorevich Koltunov chief of corporate governance department Tel.: +7 (831) 431 83 43 E-mail: [email protected]

Natalia Gennadievna Kiseleva chief of corporate events division Tel.: +7 (831) 431 74 46 E-mail: [email protected]

Corporate secretary Natalia Anatolievna Kutanova lead expert of corporate relations division Tel.: +7 (831) 431 74 00 (extension 30-07) E-mail: [email protected]

Press center Galina Vladimirovna Novikova chief of government authorities, public organizations, mass-media relations department Tel.: +7 (4842) 71 63 49 E-mail: [email protected]

Lyudmila Sergeevna Petrovskaya chief of public relations division Tel.: +7 (831) 431 74 48 E-mail: [email protected]

“Hotline” for clients 8 800 100 33 00

Internet Reception for clients http://www.mrsk-cp.ru/?id=279 407

Information on Branches. Postal Addresses and Telephones

“Vladimirenergo” 106 B. Nizhegorodskaya street, Vladimir city 600016 Tel.: +7 (4922) 21 57 61 Fax: +7 (4922) 21 55 65

“Ivenergo” 8/2 Krutitskaya street, Ivanovo city 153000 Tel.: +7 (4932) 38 63 71 Fax: +7 (4932) 33 99 17

“Kalugaenergo” 9/12 Krasnaya Gora, Kaluga city 248000 Tel.: +7 (4842) 71 63 59 Fax: +7 (4842) 56 56 11

“Kirovenergo” 51 Drelevskogo street, Kirov city 610000 Tel.: +7 (8332) 64 76 50 Fax: +7 (8332) 69 13 71

“Marienergo” 39а Panfilova street, Ioshkar-Ola city, Republic of Mari El 424006 Tel.: +7 (8362) 42 52 92 Fax: +7 (8362) 41 28 80

“Nizhnovenergo” 10 Novaya street, Nizhniy Novgorod city 603950 Tel.: +7 (831) 431 93 59 Fax: +7 (831) 431 93 81

“Ryazanenergo” 12 MOGES street, Ryazan city 390013 Tel.: +7 (4912) 20 43 50 Fax: +7 (4912) 20 44 30

“Tulenergo” 99 Timiryazeva street, Tula city 300012 Tel.: +7 (4872) 32 77 69 Fax: +7 (4872) 32 71 14

“Udmurtenergo” 30 Sovetskaya street, Izhevsk city, Udmurt Republic 426004 Tel.: +7 (3412) 66 15 66 Fax: +7 (3412) 66 15 22 408 Contact Information

Information on Auditor

Full name “Fineart-Audit” Limited Liability Company Abbreviated name “Fineart-Audit” Ltd PSRN 1024001183898

Location 60 Udaltsova street, Moscow city 1196070 Postal address 60 Udaltsova street, Moscow city 119607 Telephone number +7 (495) 431 99 70, (499) 726 91 13 Fax +7 (499) 726 91 12 Web site www.fineart-audit.ru

Permit for carrying out of activities License for carrying out of auditor activities No.Е 006407 as of 7 September 2004, issued by the RF Mi- nistry of Finance under Order No.250 as of 7 September 2004 for 5 years

Information on Registrar

Full name Joint Stock Company “Moscow Central Depository”

Abbreviated name MCD TIN 7708047457

Location 3, bld. “B”, Orlikov lane, Moscow 107078 Postal address 34, bld. 8, Bolshaya Pochtovaya street, Moscow city 105082 Tel. +7 (495) 221 13 34

Permit for carrying out of activities License for carrying out of activities on register keeping No.10-000-1- 00255 as of 13 September 2002; issued by the Federal Commission for the Securities Market for an indefinite time Glossary 410 Glossary

Abbreviations ACPP — Annual Comprehensive Program of Pur- MICEX Stock Exchange, MICEX — Closed Joint chases Stock Company “Moscow Interbank Currency Ex- ADCS — Automated Dispatch Control System change” AWP — Autumn and winter period NC — New construction CIMCS — Corporate Information Management NP “UES STC” — Non-for-Profit Partnership Computer System “Scientific and Technical Council of Unified Energy CSS — Client Service Center System” CTC — Central Tender Commission PL — Power line DEW — Design and exploration work PTS GCC — Program technical system at Grid Con- DGC — Distribution grid company trol Centers DPC — Data Processing Center QMS — Quality management system DTS — Distribution transformer substation RAO “UES of Russia” — Unified Energy System EGA — Electric grids area of Russia, Open Joint-Stock Company of Energy In- EGE — Electric grids enterprise dustry and Electrification ETF — Electronic trading floor RDA — Regional dispatching administration FFMS of Russia — Federal Financial Markets Ser- RPAE — Relay protection and automatics equipment vice of Russia RPCI — Reactive power compensating installations RTS — Regional Tariff Service GCC — Grids Control Center RTS — Russian Trading System (Stock Exchange) HVL — High-voltage power line SDC — Subsidiary and dependent company ID — Industrial division “SO UPS”, JSC — “System Operator of the United IDGC — Interregional distribution grid company Power System”, Joint-stock Company IDGC MC of JSC “FGC UES” — Interregional TC — Technological connection Distribution Grid Complexes Management Center TEG — Transmission electric grid of “Federal Grid Company of Unified Energy Sys- TGC — Territorial generating company tem”, Joint-Stock Company TS — Transformer substation IMS — Integrated Management System IP — Investment Program UES SO — CDA — “System Operator — Central IT — Information Technologies Dispatching Administration of Unified Energy Sys- tem” Open Joint-Stock Company (JSC “UES SO — JSC — Closed joint-stock company, open joint- CDA”) stock company JSC “FGC UES” — “Federal Grid Company of Uni- UNPG — United National (All-Russian) Power Grid fied Energy System”, Joint-Stock Company VAT — Value-added tax JSC “IDGC Holding” — Joint-Stock Company “Holding of Interregional Distribution Grid Compa- WGC — Generating company of the wholesale elec- nies” tric power market

KPI — Key performance indicators

Ltd. — Limited liability company 411

Units of Measurement Terms hz — Hertz — electrical frequency Capitalization — market value of the company. It is calculated as the multiplication of the shares value kV — Kilovolt — voltage unit of measurement and their amount. kVA — Kilovolt-ampere — gross capacity unit Company — “Interregional Distribution Grid Com- of measurement pany of Centre and Volga Region”, Joint Stock Com- kW — Kilowatt — electric capacity unit of measure- pany. ment kWh — Kilowatt-hour — produced electric power Distribution grid company, DGC — open joint unit of measurement stock company, created due to division of JSC AO- energo into types of activities on the basis of electric MW — Megawatt — electric capacity unit of complex objects not belonging to the united national measure-ment (all-Russian) power grid. MVA — Megavoltampere — current transformers Dividend — part of the Company’s net profit, distri- capacity unit of measurement buted between the shareholders. MVAr — Megavar — electric reactive capacity unit of measurement Electric current frequency — amount opposite to the electric current period. Electric current period — the smallest period of time when coming to an end all the immediate mea- nings of the periodic electric current repeat in an un- changed sequence. Electric power — sector of the Russian Federation economy including the set of economic relations, occurring in the process of production (including the production in the regime of the combined output of electric and heat power), electric power transmission, operative and dispatch management in power industry, selling and consumption of electric power with the use of industrial and other property objects (including the objects being a part of the unified national power system of Russia) belonging to electrification objects and other persons on the basis of the right of ownership and federal laws. Electric power is the basis of economy and life support functioning. Electric power system — electric part of the power system and current using equipment fed from it, united by the community of production process interests, as well as transition, distribution and consumption of power.

Listing — the total amount of procedures concerning the admission of the securities to circulation in the order approved by the trading organizers. 412 Glossary

Major transaction — a transaction which can ring the reliable supply of power consumers, whole- considerably influence on the Company’s acti- sale market functioning, as well as interconnected vity. The list of such transactions shall be defined operation of Russian electric power system and that by the Company independently. of the foreign countries.

Net assets — amount determined by means of subtraction of amount of liabilities of a joint-stock company accepted for calculation, from the amount of assets accepted for calculation.

Power transmission line — electric installation consisting of cords, cables, insulation elements and supporting structures subjected to transmit electric power between two items of power system with the possible intermediate selection. Productive supply — amount of electric power transmitted to final consumers of electric power, connected to the grids of the company.

Relay protection — devices meant for the automatic switch off of the damaged element with the help of switch offs from the feed source as well as subjected for reaction to the dangerous unregulated power system elements work regimes. Requirements specification — technical document, determining the whole set of requirements to production, production work, control and acceptance.

Share market — a part of the financial market, com- prising the organized trade of the securities through different exchanges as well as at over-the-counter market. Subsidiary and dependent companies — legal bodies, where the Company possesses more than 20 per cent of voting shares, or due to the dominant participation in the authorized capital, as well as according to the signed agreement or due to other reasons, and is entitled with the right to define the decisions taken by legal bodies.

United National (All-Russian) Power Grid, UNPG — is the set of the electric grids and other electric industry facilities belonging to electric power subjects on the basis of the right of ownership or any other right determined by the federal laws and ensu-