At a Synchronous Pace

KALININGRAD MOSCOW PERM ULAN-UDE CHITA Severo-Zapadnaya TPP Kaliningradskaya TPP-2 Kashirskaya TPP Pechorskaya TPP Kostromskaya TPP Ivanovskiye CPP Cherepetskaya TPP Urengoyskaya TPP Permskaya TPP Dzhubginskaya TPP Verkhnetagilskaya TPP Sochinskaya TPP Yuzhnouralskaya TPP Iriklinskaya TPP ANNUAL REPORT 2012 Kharanorskaya TPP Gusinoozyorskaya TPP ANNUAL REPORT 2012 AT A SYNCHRONOUS PACE WWW.IRAO-GENERATION.RU ANNUAL REPORT 2012 OPEN JOINT-STOCK COMPANY INTER RAO - ELECTRIC POWER PLANTS OJSC INTER RAO – Electric Power Plants 2012 Annual Report Provisionally approved by the OJSC INTER RAO – Electric Power Plants Board of Directors on May 2013 (Minutes No.79 dated May 31, 2013) General Director G.F. Binko Chief Accountant M.R. Evdokimova 2012 2012 ANNUAL REPORT CONTENTS ANNUAL REPORT ■ Address from the Chairman of the Board of Directors of Corporate Management Structure and Principles 146 OJSC INTER RAO – Electric Power Plants 4 Principles and Documents 146 3 2 ■ Address from the General Director of LLC INTER RAO – Management and Supervision Bodies 147 Electricity Generation Management, the managing company ■ General Meeting of Shareholders 147 of OJSC INTER RAO – Electric Power Plants 6 ■ Board of Directors 147 ■ Board of Directors Fees 150 Information on the Company and its Position in the Industry 10 ■ Information on Management Bodies 151 INTER RAO’s Priorities 10 ■ Audit Commission 151 A Brief Review of the Company’s History 12 Internal Control System 152 CONTENTS Main Events of 2012 13 Auditor 153 Information on Plants 14 Information on Risks and the Risk Management System 47 CONTENTS Personnel and Social Policy 156 Financial and Economic Performance Overview 56 Personnel Structure 157 Remuneration 159 Revenue 56 Social Policy Principles and Milestones 160 Production Costs 58 Other Expenses and Income 59 Profit 59 Charity 164 Balance Structure 62 Financial Performance of the Company in 2012 69 Protecting the Environment 168 Environmental Policy Principles and Milestones 169 Industrial Activity 72 Qualitative Evaluation of the Company’s Environmental Impact in 2012 169 Electricity Generation 72 The Company’s Nature Conservation Activities in 2012 172 Heat Generation 75 The Company’s Environmental Objectives for 2013 173 Specific Reference Fuel Consumption (SRFC) Used to Generate Electricity and Heat 75 Fuel Consumption 77 Financial Statements 176 Maintenance and Repair of Power Generating Equipment 87 Audited Report for 2012 Financial Statements in Accordance with Russian Accounting Standards (RAS) 176 Electricity and Heating Sales 92 Accounting Reports for 2012 in Accordance with Russian Accounting Standards (RAS) 178 Information on the Structure of the Electricity Market 92 Electricity Sales 97 Appendices 185 Capacity Sales 104 Appendix 1. Information on Observing the Code of Corporate Conduct by Heat Supply 109 OJSC INTER RAO – Electric Power Plants 185 Appendix 2. Information on Large-scale and Related Party Transactions 186 Investment Activities 116 Appendix 3. Information on Energy Resource Volumes Used in 2012 188 Priority Investment Projects 116 Appendix 4. OJSC INTER RAO - Electric Power Plants Primary Equipment Characteristics 188 Technical Re-equipment and Modernization of Existing Industrial Facilities 123 Investment Activity Results in 2012 130 Contacts 201 ■ Company Details 201 Purchasing Activities 134 ■ Contacts for Shareholders 201 Basic Principles of the Company’s Purchasing Policy 134 ■ Contacts for the Press 201 Implementation of the Annual Comprehensive Purchasing Plan (ACPP) in 2012 136 ■ Company Auditor 201 Annual Purchasing Reports 137 ■ Company Registrar 201 Charter Capital, Securities and Dividend Policy 142 2012 2012 ANNUAL REPORT ANNUAL REPORT ADDRESS FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS OF OJSC INTER RAO – ELECTRIC 5 4 POWER PLANTS ADDRESS FROM THE CHAIRMAN We present to you the Annual Report covering nine months of 2012) made 42.5 billion rubles, of OF THE BOARD OF DIRECTORS the activities of OJSC INTER RAO - Electric which 36.5 billion rubles have been invested into Power Plants in 2012. new construction projects with another 6 billion rubles invested in financing the Company’s re- The key event for us last year was the completion equipment and reconstruction program. of the consolidation process of INTER RAO UES Group’s generating assets: On October 1, It is also important to note that as of the end of 2012, the industrial facilities that were previously the reporting period, the Company had very low OF THE BOARD OF DIRECTORS ADDRESS FROM THE CHAIRMAN owned by OJSC OGK-1 and OJSC OGK-3 leverage. As part of the Company’s accounts were merged with OJSC INTER RAO - Electric payable, there was no borrowed capital. This fact Power Plants. OJSC OGK-1 and OJSC OGK-3, demonstrates the high level of financial stability therefore, were dissolved and the shareholders and independence of the business as well as the of these companies were given the opportunity to availability of opportunities for using, as needed, convert their shares into attractive, highly-liquid additional external finance (with favorable terms). OJSC INTER RAO UES shares with considerable potential for growth. The main priority of the Company in 2013 is the further implementation of the investment The completion of the Company’s reorganization program, which, among others, provides a enabled for the creation of a unified operating significant increase in the installed power capacity profile for corporate management of INTER of the plants that are part of OJSC INTER RAO - RAO UES Group’s generating assets and for the Electric Power Plants and the decommissioning laying down of a reliable platform for growth in of obsolete equipment through the construction production efficiency and the financial stability of new modern power generation units. of the business. I am absolutely confident that the Company’s Thus, a very major step was taken toward management is fully aware of the objectives set the Company’s ambitious strategic objective by its shareholders and will successfully achieve to achieve a leading position in the Russian them ensuring further growth of the value of the generation market. business. The annual volume of investment as part of OJSC Alexander Matveev, INTER RAO - Electric Power Plants’ investment program (taking into account the financing of Chairman of the Board, OJSC INTER RAO - OJSC OGK-1 and OJSC OGK-3 during the first Electric Power Plants 2012 2012 ANNUAL REPORT ANNUAL REPORT ADDRESS FROM THE GENERAL DIRECTOR OF LLC INTER RAO – MANAGEMENT OF ELECTRIC 7 6 POWER PLANTS, THE MANAGING COMPANY OF OJSC INTER RAO – ELECTRIC POWER PLANTS ADDRESS FROM THE GENERAL operating electric power plants, plus one that is and the implementation of measures to reduce of Olympic Facilities and the Development of the DIRECTOR being built between Kaliningrad and Transbaikal, its impact on the environment and raise energy City of Sochi as a Mountain Resort.» with total installed power capacity of 19.7 GW. efficiency have become important components DIRECTOR DIRECTOR of the Company’s corporate social responsibility Along with that, there is a number of tasks The completion of the merger has caused a jump program. before the management of OJSC INTER RAO ADDRESS FROM THE GENERAL in the value of the Company’s assets, which, as – Electric Power Plants associated with further per the 2012 results, exceeded 229 billion rubles, In 2013, the implementation of OJSC INTER RAO improvements in synergy in the operation of the of which more than 74% are fixed assets. – Electric Power Plants’ investment program will consolidated assets and ensuring the growth of be continued. The following are scheduled to be key financial and production results. Simultaneously, as part of the Company’s long- commissioned in 2013: term strategy that it is focused on achieving by It is my opinion that the managing company and ■ Power unit No.4 with installed power capacity the year 2020, the absolute leadership among plant personnel of OJSC INTER RAO – Electric of 210 MW at the Gusinoozyorskaya TPP; Russian generating companies in terms of Power Plants will make every effort and use all efficiency, reliability and safety criteria, OJSC ■ Power unit No.1 with installed power capacity their experience to meet all of the objectives set INTER RAO – Electric Power Plants has continued of 400 MW at the Yuzhnouralskaya TPP -2; by its shareholders. the implementation of its large-scale investment ■ Power unit No.8 with installed power capacity program. of 225 MW at the Cherepetskaya TPP. Gennady Binko, In 2012, construction of three modern power Finally, an event important to the Company generation units was completed: In the first half of is scheduled to take place in 2013 – the General Director of LLC INTER RAO – 2012, a 325 MW CPP power unit was commissioned commissioning of the Dzhubginskaya TPP that is Management of Electric Power Plants, the at the Ivanovskiye CPP; in the second half – a being built as part of the «Program for Construction managing company of OJSC INTER RAO – In summing up the results of 2012, first of all, 460 MW CPP power unit at the Urengoyskaya Electric Power Plants I would like to note that it was the first year of TPP; and a 225 MW coal-based power unit at the operational activities for OJSC INTER RAO – Kharanorskaya TPP was commissioned. Electric Power Plants. From January 1, 2012 the Company started working in the electric power In 2012, the headcount at the electric power plants and sales market (before that, the operation of of OJSC INTER RAO – Electric Power Plants four industrial facilities owned by the Company, amounted to 12 765 people. as of the beginning of the year, was performed by OJSC INTER RAO UES on a lease basis). At the same time, paying great attention to improving the qualifications of our personnel and In October 2012 the process of reorganizing of to their training, the Company has continued to the Company was completed and the generating actively develop personnel training programs assets previously owned by OJSC OGK-1 having invested more than 65 million rubles.

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