Federal Hydro-power Generating Company RusHydro JSC Company RusHydro Generating Hydro-power Federal

RusHydro

Report on sustainable development of RusHydro Group for 2013 Report on sustainable development of RusHydro Group for 2013 for Group of RusHydro development Report on sustainable

© 2014, JSC RusHydro, all rights reserved. 2013 REPORT OF THE RUSHYDRO GROUP'S SOCIAL RESPONSIBILITY Section 2. Sustainable development 33 3.3 Social partnership 69 of the hydro-power generation in operating regions AND SUSTAINABLE DEVELOPMENT technical system Support for the Victims 70 2.1 Reliability and safety – the basis 33 of the Far East Flood of sustainable development Contents The Social Partnership Program 70 Responsibility. External Control System 34 in Khakassia and Liquidating the Social Consequences of the Sayano- Internal Control System 34 Shushenskaya HPP Accident Sustainability. RusHydro – 10 years of 2 sustainable development The Hydrological Situation 36 Charity and Sponsorship 71 Development. and Operating Regimes About the Report 4 of Hydro-Power Plants The “Involvement” Charity Fund 71

Report Scope 4 HPPs Disasters and Emergency 38 Corporate volunteering 73 This non-financial report reflects the analysis Preparedness of the RusHydro Group’s companies (the RusHydro Company Profile 5 Section 4. Environmental 75 Group) strategy on corporate social responsibility Occupational Safety and Production 38 responsibility Supervision and sustainable development, as well as essential Selection Criteria for Inclusion the 5 Issues to the Report 4.1 Environmental safety as the 75 facts and 2013 operational results in labor 2.2 Energy efficiency – the 41 criterion of sustainable development management, health protection, occupational and Forward-looking Statements 5 potential of clean energy environmental safety, responsible stakeholder Assessment of the Projects’ 77 engagement and participation in the socio-economic Approach Regarding External 5 The Concept of the Energy Efficiency 42 Environmental Impact Confirmation Improvement Program development of the regions. Environmental Impact and 77 Section 1. Energy of sustainable 7 Comprehensive Modernization 42 Environmental Load Decrease development Program Initiatives: the RusHydro Holding

The RusHydro Group in 2013 7 Energy Efficiency Measures and 44 Global Climate Change and 80 Achieved Results Environmental Responsibility 1.1 Clean energy – benefit 8 of sustainable development Optimizing Water Resource Usage 44 Responsible Interactions with 82 Stakeholders in Respect of The RusHydro Holding in 2013 8 2.3 Innovation – a quick path 46 Environmental Issues to sustainable development Key Features and Competencies 10 4.2 Development of the power 84 of JSC RusHydro Innovation and Sustainable 47 industry in the Far East – the Development preservation of the region’s natural resources Development and Use of other RES 10 Implementing Innovative 47 Development Projects Assisting the Social 84 Geographic Footprint 11 and Economic Development of the Regions of Operation Sustainable Development: 14 Creating an External Innovative 48 Environment 2013 Key Events RAO Energy Systems of the East 85

Interconnection of Strategy and 19 Development of Small-Scale 50 Hydro-Generation Development of the Power 86 Sustainable Development Goals Industry in the Far East and Environmental Responsibility 1.2 Growth of shareholder value – 22 Section 3. Social responsibility 53 sustainable development strategy Environmental Impact 88 3.1 Responsible interaction – 53 and Measures to Decrease the condition of corporate Accountability: the Board of Directors 24 the Load of RAO ES of the East Contact information: social responsibility Due Diligence: the Management Board 24 Development by the RusHydro 91 Analysis and Improvement of Social 54 Group of Renewable Energy Open Joint Stock Company Federal Hydro Responsibility Practices Authorized Capital Increase 25 Sources in the Far East Generating Company (JSC RusHydro) in 2012-2013 Interaction with Stakeholders 55 Glossary 94 Fairness: the Dividend Policy 26 3.2 Development of human resources – 64 Statement: GRI Application 96 Telephone: a guarantee of long-term growth Mailing address: Transparency and Financial Discipline 27 Level Check 7 Malaya Dmitrovka Street, 8 (800) 333-80-00 RusHydro's Social Policy 64 Moscow, Russia, 127006 Ratings and Awards 29 Independent Limited Assurance 97 Report to the Directors of Open Fax: HR Management – processes aimed 65 Fair Business Practices 29 Joint Stock Company Federal Hydro Location of offices: +7 (495) 225-37-37 at employees attracting and retaining Generating Company (OJSC RusHydro) 7 Malaya Dmitrovka Street, Risk management system 29 Moscow, Russia, 127006 Corporate website: Training and Development 67 Opinion of RSPP’s Non-Financial 98 www.RusHydro.ru Reporting Council on the Results of Human Rights 67 Considering the 2013 Report on RusHydro 51 Arkhitectora Vlasov Group Sustainable Development for the Street, Moscow, Russia, Purpose of Public Assurance 117393

1 Message from the Сhairman of the Management Board - General Director JSC RusHydro

The fact that in the reporting year we sustainable development”. In the opinion 65% of water inflow in their reservoirs RusHydro – 10 years of sustainable development were elected the Chairman of the Glob- of Russian power engineers, this topic and seriously reduced potential impacts al Sustainable Electricity Partnership reflects the main modern challenge, as on human settlements, the national (GSEP) for a one-year term shows the addressing sustainable development is economy and people of the region still international recognition of RusHydro’s impossible without innovation. suffered significant damage. Under these responsible attitude to sustainable circumstances, the RusHydro Group development. Among events, 2013 will be marked by launched a large-scale social support abnormal flooding in the Far East. Our program for victims. In total, to eliminate The main focus of the partnership for hydro-power infrastructure has stood the flood consequences, the Company has this term stated by RusHydro is “In- test. Despite the fact that the Zeyskaya channeled more than RUR 245 million to novations, as a quick path to global and Bureyskaya HPPs kept more than the neediest regions of the Far East.

The Far East will remain in the Company’s focus: the priority power grid modernization task has been implemented here. It is not just business. We have assumed major social obligations, because seven out of ten kilowatt hours produced here are consumed by the population and social infrastructure.

The main asset of RusHydro, which first time in Russian higher education, we consider a transparent informa- allows us to confidently move forward, the establishment of a new chair has tion policy and regular reporting, is our employees. The balanced sce- been funded from the own funds of to be a pre-condition for corporate nario for the Company`s development, members of the Company’s Manage- social responsibility. which includes commissioning 22.2 ment Board through the Charitable Dear Colleagues, In 2014, we celebrated our tenth anniversary. GW of new capacity by 2020, requires Fund “Involvement”, which operates On behalf of the Company, I thank 2004 is a year of the Company’s formation, constantly attracting new professional under the auspices of RusHydro. everyone, who has been and has I am pleased to present the sixth personnel. That was why in October remained with us these ten years, non-financial report of RusHydro, one and a starting point of the RusHydro Group’s 2013 the Company opened a Chair of Responsibility to the society and for their support and loyalty. of Russia’s largest energy holdings, sustainable development. the Hydro-power Industry and Renew- the shareholders guarantees the which is a part of the group of global able Energy Sources in the Moscow reliability and efficiency of our hy- We will do our best to justify leaders in renewable energy. Power Engineering Institute. For the dro-power facilities. In this case, it in the future. Since 2004, our corporate social to the consumers in distant regions of Under current conditions, the social responsibility guarantees sustaina- our country every year and to make a responsibility concept for a large public ble development and helps us look to significant contribution into improved company is becoming comprehensive. the future with confidence. Today, our Russia’s social and economic develop- Not so long ago, this responsibility understanding of social responsibility ment and Russian people’s quality of covers all key areas of the RusHy- life. This is also a great representation was perceived as providing relatively Yours sincerely, comfortable working and living con- dro Group. This is dynamic innovative of Russia’s interests in recognized ditions for employees, reasonably development, and construction of new international organizations and inter- Evgeny Dod, active participation in charity and electric energy facilities allowing us governmental energy projects. Сhairman of the Management Board - environmental protection. to increase electric energy supplies General Director

2 3 About the report Subsidiary companies 20. JSC Geoterm 26. JSC Pavlodolskaya HPP 32. JSC ChirkeyGESstroy 21. JSC Kolymaenergo 27. JSC Chuvash Energy Retail Company 33. JSC ESCO UES This Report on corporate social respon- JSC RusHydro has adopted an annu- The Report is prepared with regard to 22. JSC Verkhne-Mutnovskaya GeoPP 28. LLC Energy Supply Company of Bash- 34. JSC Sulak HydroCascade sibility and the sustainable development al cycle for non-financial reporting. requirements and recommendations of 23. CJSC International Energy kortostan 35. JSC Ust-Srednekanskaya HPP of the RusHydro Group for 2013 (here- This Report is the sixth non-financial the Sustainability Reporting Guidelines Corporation 29. JSC Ryazan Energy Retail Company 36. JSC Ust-SrednekanGESstroy inafter – the Report) reflects essential Report of the RusHydro Group. of the Global Reporting Initiative (GRI, 24. JSC KamGEK 30. JSC Krasnoyarskenergosbyt 37. JSC Zagorskaya PSPP-2 facts about the activities of the RusHydro version 3.1) and the GRI Electric Utilities 25. JSC Pauzhetskaya GeoPP 31. JSC Power supply company RusHydro 38. JSC Zaramagskie HPPs Group companies (from January 1 to The Report on corporate sustainability and Sector Supplement. December 31, inclusive). social responsibility for the 2012 calendar year is available at http://www.eng.RusHy- dro.ru/Sustainability/soc_responsibility. Company profile

Since its inception in 2004, the Holding’s hydro-power plants in accordance with The Following Terms are used in this Report companies’ main economic activity has the RCEA (the Russian Classification of been the production of electricity by Economic Activities). JSC RusHydro, RusHydro The RusHydro Group The RusHydro Holding or the Company: or the Group: or the Holding: Relates to the holding company, includes Relates to the group of companies, including Relates to the group of companies Selection criteria for inclusion the issues to the Report executive apparatus of JSC RusHydro JSC RusHydro and subsidiary companies, including JSC RusHydro and subsidiary and branches of JSC RusHydro. which are tied to JSC RusHydro by control and companies included in the Report scope. management relations. A full list and structure See full list below (the RusHydro Holding In preparing this Report, the Company • meetings of the working group on Re- • results of a meeting-dialogue with of the Group’s assets are available on the website in the Report scope). sought to fully reflect the most current is- port preparation; stakeholders, which was organized http://www.eng.RusHydro.ru/company/holding/ sues and topics, as well as to analyze their during report preparation; significance in terms of corporate social re- • monitoring thematic reports and issues sponsibility and sustainable development. of the world’s largest hydro-power • reviewing recommendations which are Report scope companies included in them, includ- received during the Public Assurance of The analysis and selection of topics to be ing those that JSC RusHydro has joint the Report in the Council on Non-finan- included in the Report is based on: projects or partnerships with; cial Reporting of the Russian Union of The following subsidiary companies are • the subsidiary companies of JSC RAO after public assurance of the RusHydro Industrialists and Entrepreneurs. included in the scope of this Report: Energy Systems of the East Holding Group’s non-financial report for 2012, this • interviews with JSC RusHydro • analysis of mass media publications; (hereinafter – RAO Energy Systems of Report includes a section dedicated to RAO management; • the subsidiary companies included the East) and subsidiary companies Energy Systems of the East (see Section 4.2 in the repair complex. which are tied to RAO Energy Systems Development of the power industry in the of the East by control and man- Far East – the preservation of the region’s In 2013, the repair and construction complex agement relations. natural resources – conserving natural was reorganized via the incorporation of resources of the Region). Forward-looking statements ShGER JSC, REMIK JSC, Turboremont-VKK As of December 31, 2013, JSC RusHydro JSC and Electroremont VKK as Gidrore- owned 84.39% of the authorized capital of • the subsidiary companies included in mont-VKK JSC; due to this, data collection and JSC RAO Energy Systems of the East. De- the scientific and research complex, Data included in the RusHydro Group’s forward-looking statements. Actual future Any forward-looking statements refer consolidation for the Report was complicated. spite the fact that JSC RAO Energy Systems design complex and IT complex. Report for 2013 on sustainable develop- results may differ materially from the only to the date of the 2013 Report on the Nevertheless, information about the repair of the East, regardless of the RusHydro ment that relate to the future are based on plans, goals, estimates and intentions set RusHydro Group’s social responsibility complex and repair activities is presented in Group, releases its own non-financial It is planned to consider an issue forward-looking information. Such words out in these forward-looking statements. and sustainable development. There is no the Report. During the next reporting period, report, in accordance with recommenda- of including the design, scientific and as “believe”, “anticipate”, “expect”, “esti- guarantee that the anticipated results will the Company plans to include the repair com- tions by the experts of Russia’s Union of research institutions in the scope of the mate”, “intend” or other words of similar be achieved, so they should not be regarded plex within the scope of the Report. Industrialists and Entrepreneurs (RUIE) Report in the next reporting period. meaning indicate the fact that they are as the most likely or standard scenario.

The RusHydro Holding within the Reporting Scope: Approach regarding external confirmation JSC RusHydro, including executive apparatus and branches: The RusHydro Group Sustainability Re- mation of its compliance with GRI В+. The Global Reporting Initiative (Global 1. Branch – the Bureyskaya HPP 9. The Karachay-Cherkessia branch 16. Branch – the Sayano-Shushenskaya port for 2013 for the first time passed PricewaterhouseCoopers CJSC acted Reporting Initiative, GRI) confirmed 2. Branch – the Volzhskaya HPP 10. Branch – the Cascade of Verkhnev- HPP named after P.S. Neporozhniy an independent audit in compliance as the independent auditor.* the compliance level of the Report with 3. Branch – the Votkinskaya HPP olzhskiye HPPs 17. Branch – the Cheboksarskaya HPP with ISAE 3000 and received confir- Sustainability Reporting Guidelines 4. The Dagestan branch 11. Branch – the Cascade of Kuban HPPs 18. Branch – the Corporate Hydro-power (version 3.1) at B+.** 5. Branch – the Zhigulevskaya HPP 12. Branch – the Nizhegorodskaya HPP University 6. Branch – the Zeyskaya HPP 13. Branch – the Novosibirskaya HPP 19. Branch – the Zagorskaya PSPP 7. The Kabardino-Balkaria branch 14. Branch – the Saratovskaya HPP (*) The independent auditor’s report is available at page 103 8. Branch – the Kamskaya HPP 15. The North Ossetian branch (**) The conclusion is given at the page 102

4 5 1. Energy of sustainable development Siberia Section 1. Energy Siberian Federal District of sustainable development This is a quite unique region. Siberia is home to the world famous Lake Baikal, the area of which is about the same as that of the Netherlands. It is the deepest freshwater lake on the planet. Only one river flows from the lake - the Angara. The Baikal’s waters are very clear, with visibility down to 50 m. About 20% of the world’s freshwater (not including glaciers) is found in Lake Baikal. Every year more than 2000 earthquakes The RusHydro Group in 2013 are registered around Lake Baikal. The world’s largest swamp, the Vasyugan Swamp, is also located in Siberia. It covers an area that is comparable to that of a number of European nations. The swamp contains the world’s largest peat beds. Siberia is also famous for the phenomenon known as the Tunguska Meteorite, The RusHydro Group, one of Russia’s The RusHydro Group – which it is assumed caused an explosion near the Podkamennaya Tunguska River more than 100 years ago. largest energy holdings and a leader in renewable sources-based electrici- 12% of Russia’s electricity Siberia contains 85% of all Russia’s reserves of lead and platinum. ty production, is an important element generation in 2013 of sustainable development for the entire Russian power industry.

The RusHydro Group companies are a core companies and a key State institution to develop the basic industry of the economy – RusHydro facilities’ 35,5 The region’s energy the electric power industry. In 2012, in accordance with a Decree 74% generation in the ГВт share of renewable consumption region of the Russian President, JSC RusHydro was included in the list installed electrical energy in the energy balance of strategic enterprises and strategic joint stock companies. capacity

215 billion 32 billion kWh kWh 15% of the energy The Group operates within the framework operating areas and are included in seven Electricity output, produced by the Group consumption for of the Unified Energy System of Russia Unified Energy Systems (UES). One of in 2013, amounted to 124.1 billion kWh, all of Siberia in eight federal districts. Generating these systems, the UES of the East, op- or 12% of total electricity output of UES Высокая маневренность enterprises include 112 energy facilities erates in isolation from the other six and of Russia power plants. ГЭС являются наиболее маневреннымиBoguchanskaya HPP и with a total installed capacity of more is an operating area of JSC RAO ES of the способны при необходимости существенно Omsk than 35.5 GW, which are located in seven East (a part of the RusHydro Group). увеличитьTomsk объемы выработки в считанные минуты, покрываяKemerovo пиковые нагрузки Novosibirskaya HPP Krasnoyarsk Novosibirsk

Barnaul Mainskaya HPP The RusHydro Group: generating capacities The RusHydro Group: 2013 key operating results Novokuznetsk and electricity output by energy source (electricity production, billion kWh)

Sayano- Irkutsk Type of Installed Shushenskaya HPP Share, % 2012 2013 Change, % generation capacity, GW Hydro- The RusHydro generation and The RusHydro Ulan-Ude 26.4 74 81.0 94.1 16.2 Holding other renewable Holding energy sources RAO ES Thermal RAO ES 9.1 26 31.5 30.0 (4.8) of the East generation of the East Total for the Total for the RusHydro 35.5 100 RusHydro 112.5 124.1 10.3 Group Group

In total, Group production increased increased 16.3% compared with 2012, energy sources; the share of which 10.4% during 2013 to a record 124.1 bil- and amounted to 94.1 billion kWh. It increased 4% compared with 2012 lion kWh. The RusHydro Holding’s hy- has changed the structure of Group and amounted to 76%. Population Area dro-power generation at the same time production in favor of renewable

20,000,000 5 mln km² The share of electricity produced from renewable about 30% of the area of Russia, or energy sources was 76% people 15 times the area of France 7 1. Energy of sustainable development

The RusHydro Holding: 2013 key financial indicators (RUR million)* The RusHydro Holding: installed capacity, electricity output, Russian regions and regulatory regimes*

Energy Installed Electricity output, Markets and Indicator 2011 2012 2013 Objects in the Russian Federation sources capacity, GW billion kWh regulatory regimes

Total assets 811,783 854,267 852,046 JSC RusHydro, including branches: Water 24.7 91.2

Total liabilities 286,387 313,862 255,339 The Far East and Siberia Water 10.5 40.7 WMEP / regulated tariffs Equity 497,685 515,086 579,530 The Center, Ural, and mid-Volga Regions Water 11.5 42.4 and free prices Total revenue 362,599 298,805 313,632 The South and the North Caucasus Water 2.7 8.1

Government subsidies (RAO ES of the East 9,097 10,796 13,246 Water and WMEP / regulated tariffs SDCs of JSC RusHydro 1.75 3.0 other RES and free prices Capitalization of JSC RusHydro 280,113 212,966 180,291 The RusHydro Holding TOTAL 26.45 94.2

*NOTE: the data on the consolidated financial statements of the RusHydro Group prepared in accordance with IFRS (*) HEREINAFTER IN THE REP

In 2013, the MICEX Index, Russia’s tric energy sector – the MICEX industry first five months of 2013, demonstrated Sales Construction main stock index, demonstrated slight index dropped 40%. The Russian better dynamics against the industry growth – 2%. The key deterrent for government’s decisions related to indicator in H2 2013 and decreased The structure of JSC RusHydro includes insignificant; the total supply volume to the the Holding’s assets include Russia’s stock market growth was de- limiting the growth rate of electric 23% for the year. In H2 2013, JSC four electricity supply companies in four retail market was 37 million kWh (or 0.03% hydro-power facilities under construc- celeration of the Russian economy and energy prices continue to put pressure RusHydro share prices were supported Russian regions, all these companies are of total electricity sales in 2013). The task tion and SDCs that construct and up- the outflow of foreign investors’ funds on electric energy company shares. by the Company’s strong operational guaranteeing suppliers, with their man- to improve service quality for customers of grade these facilities. from emerging markets. In general, JSC RusHydro shares, which followed and financial results. agement centralized in JSC ESC RusHydro, electricity supply companies is included in 2013 was not the best year for the elec- the MICEX Energy Index during the a subsidiary company. The share of retail the list of 2014 corporate priorities. in the sales structure of JSC RusHydro is

1.1 Clean energy – benefit Areas of activities and core assets

HPPs under construction of sustainable development Generation Sales and construction companies

The RusHydro Holding’s main economic sources of the Russian Federation, as activity is the production of electricity, and well as develops sea tides and wind 19 BRANCHES OF THE COMPANY * JSC CHUVASH ENERGY RETAIL JSC CHIRKEYGESSTROY the method of production is hydro-gen- energy-based generation, as well as COMPANY eration. As a major energy resource, the geo-thermal energy. JSC GEOTHERM JSC ESCO UES Holding’s companies use the hydro-re- LLC ENERGY RETAIL COMPANY OF 26.4 JSC KOLYMAENERGO (WPS) GW BASHKORTOSTAN JSC SULAK HYDROCASCADE of installed electric JSC VERKHNE MUTNOVSKAYA GEOPP capacity JSC UST-SREDNERANSKAYA HPP The RusHydro Holding in 2013 JSC RYAZAN ENERGY RETAIL COMPANY

CJSC INTERNATIONAL ENERGY The RusHydro Holding’s companies’ activity CORPORATION JSC UST-SREDNEKANGESSTROY includes the following areas: JSC KRASNOYARSKENERGOSBYT

Electricity Production JSC KAMGEK JSC ZAGORSKAYA PSPP-2 The installed capacity of generating tidal power plant; these assets’ aggregate JSC ENERGY RETAIL COMPANY RusHydro assets is 26.4 GW. The Holding compa- installed capacity amounts to 26.4GW. In JSC PAUZHETSKAYA GEOPP JSC ZARAMAGSKY HPP nies’ generating assets are located in 2013, the aggregate share of electricity the Russian Federation, as well as in the produced by the companies of the Holding Republic of Armenia, and include more amounted to 54% of the total electricity 100% * List of branches, as well as the full list of companies, included in the reporting scope of this Report, see CHAPTER ABOUT THE REPORT than 70 hydro-generating facilities, in- output of Russia’s hydro-power plants. share of RES in energy cluding 32 SHPPs; three GeoPPs, and one balance

8 9 1. Energy of sustainable development Key features and competencies Structure and share of renewable energy in the energy balance of JSC RusHydro (with an indication of energy sources) Installed Share in energy Power plants Energy sources of JSC RusHydro capacity, MW mix, % HPPs (including Small HPPs and PSPPs)* Energy of rivers 26,344.8 99.71 The RusHydro Holding plays a backbone role in the Russian electric power industry. Other RES (GeoPPs/TPPs): 75.7 0.29 The Verkhne-Mutnovskaya GeoPP* Geothermal 12.0 0.05 The Mutnovskaya GeoPP Geothermal 50.0 0.18 The companies of the Holding: The Company has unique The Pauzhetskaya GeoPP Geothermal 12.0 0.05 advantages within Russia’s The Kislogubskaya TPP** Tidal energy 1.70 0.01 • support key infrastructure power sector, being: for Russia’s vital activities and TOTAL, the RusHydro Holding 26,420.5 100.00 (hydro-power industry and other, RES) the key utility systems to ensure • A generator of the clean and guarantees their operation electric energy; and safety; • Energy efficient enterprise; • represent the instrument Geographic footprint of State policy, which can • Base for the system reliability; resolve complex social and economic problems; • Initiator of innovations in The Company has a tax registration as ily in the Murmansk Region (the North Terek, Gizeldon, Aksaut, and Maruha renewable energy; a major taxpayer in the Inter-regional Western Federal District), where in Rivers, on the Great Stavropol Canal • ensure the growth of the busi- Office of Russia’s Federal Tax service #4 the Kola Peninsula the Company has and the Nevinnomyssk Canal and ness` value, both through the • Corporation controlled by that is responsible for major taxpayers in implemented a tidal energy development at the Kuban Reservoir. technical upgrading of existing modern managers with Russian Federation. Generating facilities project, and Kamchatka (FEFD), where facilities and by investing in extensive experience in The key features and competencies of JSC RusHydro are located in 20 sub- geo-thermal power plants are under Water reservoirs of hydro-power plants new assets. managing hydro- power assets. of the RusHydro Holding can strengthen jects of the Russian Federation, including construction and operating. are owned by the state. The issues of the RusHydro Group’s positions and role six republics and 14 autonomous districts water structures management, their both within the country and abroad. (inter alia territories and regions). Hydro-power systems of the RusHy- protection and environmental safety lay dro Holding are located on the Volga, in the federal authorities’ sphere. The RusHydro Holding’s RES facilities Kama, Cunha, Bureya, Zeya, Yenisei, development has implemented primar- Ob, Kolyma, Vilyui, Sulak, Kara Koisu, Development and use of other RES Foreign assets In 2011, the assets of the RusHydro company, CJSC International Ener- MW. An increased presence on foreign Holding merged the plants of the gy Corporation. In June 2013, JSC markets is a long-term corporate stra- The Company conducts exploration In 2013, one of the deepest wells at To date, the total share of the capacity Sevan-Hrazdan Cascade of HPPs in RusHydro launched construction of the tegic priority of JSC RusHydro. and research into potential wind fields, the Mutnovsky geo-thermal field, based on alternative renewable energy the Republic of Armenia, which JSC Verkhne-Naryn Cascade of HPPs in geo-thermal fields and the dam loca- with a depth of 2,200 meters, was sources in JSC RusHydro’s energy balance RusHydro owns through its subsidiary Kyrgyzstan with a total capacity of 237.7 tions of small hydro-power plants using commissioned and the available was 0.3% (net of the small HPP share). both pilot projects and the organization capacity of the Mutnovskaya GeoPP-1 of system works. This allows the Com- was increased to 48 MW. JSC RusHydro’s development strategy set a pany to select the most promising design target indicator of capacity of RES projects in Contribution to the development of regional economies and construction technology. the portfolio at various levels of implementa- tion; that should reach 3% for 2015. JSC RusHydro implements large-scale • The Nizhne-Bureiskaya HPP in the • The Sakhalinskaya SDPP-2 in the investment projects in various Russian Amur Region (320 MW); Sakhalin Region (110 MW) (Phase 1); regions. The largest of them (the de- • The Gotsatlinskaya HPP in the Republic • The Yakutskaya SDPP-2 in the Republic RES projects portfolio signed capacities of plants under con- struction are shown here): of Dagestan (100 MW); of Sakha (Yakutia) (170 MW) (Phase 1); • The Zelenchukskaya HPP-PSPP in the • The Blagoveschenskaya CHP plant in Project’s capacity at the • The Boguchanskaya HPP in conjunction Program name State support measures for imple- development stage, MW with UC RUSAL on the Angara River Karachay-Cherkessia Republic (140 MW); the Amur Region (120 MW) (Phase 2). menting RES projects undertaken by in the Krasnoyarsk Region (2,997 MW); Small HPPs development program 500 the Russian Federation government • The CHP plant in Sovetskaya Gavan in Wind-diesel complexes in the territory of the Far East 42 should contribute to achieving JSC • The Ust-Srednekanskaya HPP in the the Khabarovsk Territory (120 MW); RusHydro’s goal. Solar electric plants in the territory of the Far East 44 Magadan Region (570 MW); Geothermal plants 65 Wind power plants 40 * Small hydro-power (SHPP) hereinafter means hydro systems of installed capacity up to 30 MW

** Acts as a pilot

10 11 Geographical Footprint of the Company* Operating HPPs under Operating HPPs Thermal Thermal HPPs construction in progress PPs PPs under * Total installed capacity of 37.5 GW includes the installed capacity of JSC construction Boguchanskaya HPP (1,998 MW)

37.5 Wind Geo Tidal Retail Solar GW PP PPs PP companies PP Total capacity of power plants Research and design organizations

• Kislogubskaya Tidal PP Egvenkinotskaya TPP Chaunskaya CHPP • Anadyr CHPP • Anadyrskaya Gas Engine CHPP • Nikolskoye Wind PP • Ust-Kamchatsk Wind PP • Lenhydroproject Ust-Srednekanskaya HPP Vedeneyev VNIIG Kolymskaya HPP • Arkagalinskaya TPP

Mosoblhydroproject Zagorskaya PSHPP • Zagorskaya PSHPP-2 • Ryazan retail energy company Tiksi Wind PP • • Labytnangi Mobile PP Kolyma NIIES • Nizhegorodskaya HPP Urengoy Mobile PP Hydroproject institute • Cheboksarskaya HPP • • Labytnangi Wind PP • Kyzym Mobile PP Saratovskaya HPP • Lena • • • • • Don • Dulgalakh Solar PP • Cascade • Chuvash retail energy company Yakutskaya TPP Tolmachyovskiye HPPs of Kubanskiye HPPs • • Kamskaya HPP Batamay Solar PP Magadanskaya CHPP Zelenchukskaya • • • Votkinskaya HPP Yakutskaya TPP-2 • • Enisei • PSHPP Yuchyugey Solar PPе • • • Bashkortostan retail • Vilyuy Verkhne-Mutnovskaya • energy company Cascade • • • • Volga of Viluysky HPPs• Kulu-Kyuel Solar PP GeoPP Volzhskaya HPP Zhigulevskaya HPP •• Mutnovskaya GeoPP • • • • Kalmykskaya Wind PP Mirninskaya TPP Nikolaevskaya CHPP Pauzhetskaya GeoPP • Karachaevo-Cherkessian Branch HPP Ob Komsomolskiye CHPPs Kabardino-Balkarian Branch HPP Amurskaya CHPP Zaramagsky • Northern Ossetian Branch HPP Byreyskaya HPP Kamchatskiye CHPPs HPPs • • Komsomolskaya CHPP-3 Angara • Dagestan Branch HPP • • Sakhalinskaya TPP • Cotsatlinskaya HPP Irtysh Boguchanskaya HPP • Sakhalinskaya TPP-2 • • Sevan-Hrazdan Cascade • • Armenia Chulmanskaya CHPP • Yuzhno-Sakhalinskaya CHPP • Nerunginskya TPP • • • Zeyskaya HPP • Novosibirskaya HPP • Blagoveshenskaya CHPP • • • • Krasnoyarskenergosbyt Raychikhiskaya TPP • • Sayano-Shushensky Branch Nizhegorodskaya HPP • • Amur Artyomovskaya CHPP Far-Eastern Energy Company • Mayskaya TPP Vladivostokskaya CHPP-2 Sovgavanskaya CHPP • Khabarovskiye CHPPs • Primorskaya TPP Naryn • Partizanskaya TPP Verhne-Narynskye Cascade • Kyrgyzstan • • Vostochnaya TPP 1. Energy of sustainable development

Electricity and capacity markets Year of Russia in the GSEP Abnormal flooding in the Far East The companies of the RusHydro Holding market relationships in the electric power The tariffs for electricity supplied conduct transactions with electric power industry is not yet possible, electricity and by the energy companies of the Far • JSC RusHydro is the Chairman of • The Company launched a large-scale and capacity in the wholesale electricity and capacity sales on the wholesale market East to the consumers (end tariffs) the Global Sustainable Electricity social support program for flood-af- 135,000 people were capacity market and retail electricity markets. are regulated by tariffs. are approved by the regulators on the Partnership* (GSEP) from June 2013 fected residents of the Far East; affected by flooding basis of the overall tariff level approved to June 2014; -- The RusHydro Holding allocated more Among the participants of the whole- A number of sectors with various terms by the Federal Tariff Service for the in the Far East. than RUR 245 million personal sale market are generating companies, of transactions and supply terms function regulated period. • In May 2014, the GSEP Summit with contributions of the Holding’s employ- energy sales organizations, (including in the wholesale eletrcicity market: participation of top global energy ees to those hit by the flood; guaranteed supply companies), elec- regulated contracts sector, the day-ahead In retail electricity markets the com- companies’ managers was held by tricity export/import operator, Federal market, free bilateral contracts sector panies of the Holding sell electricity JSC RusHydro in Moscow. -- Branches and SDCs of the RusHydro Grid Company (in terms of purchasing and the balancing market. purchased in the wholesale electricity Holding donated more than RUR electricity to cover transmission losses), and capacity market to end consumers in • The topic of the year is “INNOVA- 23.4 million; and major consumers. The partitipants In 2013, all electricity sold in the pric- the territories of the constituent entities TIONS, AS A QUICK PATH TO GLOBAL -- Organizations and enterprises of the of the market may act as both buyers and ing zones of the wholesale market by of the Russian Federation united in the SUSTAINABLE DEVELOPMENT”; The RusHydro Group electric power industry transferred sent more than sellers of the electricity and capacity. the RusHydro Holding’s companies was prcing zones of the wholesale market • Meetings of the GSEP management, more than RUR 8 million to the charita- sold for non-regulated prices excluding electricity is sold for non-regulated prices project and policy committees were ble fund “Awareness”, which operates Among the participants of retail markets electricity supplied to the population and except electricity sold to the population held in St. Petersburg; under the auspices of JSC RusHydro. are consumers, public utility services similar categories of consumers, as well and similar categories of consumers. RUR 245 million providers, energy sales (energy supply) as to the consumers of the North Cauca- • The International Seminar “Large • The Company proposed a construc- organizations, electricity producers in sus Region and the Republic of Tuva. Electricity supply to the population and Hydro-power Engineering: On the tion program for new hydro-power to those affected by the abnormal flooding retail markets, grid companies, oper- similar categories of consumers is con- Path towards Sustainable Develop- facilities on tributaries of the ational-dispatching offices in electric The territories of the Amur Region, ducted on the basis of regulated prices ment” was held in Tolyatti; Amur River to regulate spillways energy sector. the Primorsky Region, the Khabarovsk (tariffs) established by the executive in flood periods Region, the Jewish Autonomous authority in the sphere of state regulation • Yakutsk hosted the International Con- The wholesale electricity and capacity Region and the Southern part of the of tariffs of the constituent entity of the ference on Hybrid Systems in Isolated market operates in regions that are Republic of Sakha (Yakutia) are united Russian Federation. Areas “Renewable Energy in Isolated Commissioning new hydro- incorporated into pricing zones. The in the non-pricing zone of the whole- Systems of the Russian Far East”; Capital construction generating capacities first pricing zone covers the territory of sale electricity and capacity market In 2013, the companies of the RusHydro European Russia and the Urals, whereas of the Far East. These territories have Holding acted as participants of retail • The Nizhne-Bureiskaya HPP • Completing the construction of the the second zone encompasses Siberia. In peculiarities for organizing market rela- markets in the territory of the Repub- (the Amur Region) –a foundation Boguchanskaya HPP (the Krasno- non-pricing zones (Arkhangelsk and the tionships in electric power due to com- lic of Bashkortostan, the Krasnoyarsk Comprehensive modernization program was unwatered, the construction yarsk Region) –construction work Kaliningrad Region, the Komi Republic petition limitations among electricity Region, the Republic of Chuvashia, for existing HPPs of basic facilities was launched, on eight hydro-power units out of and Far East Regions), where for tech- suppliers and grid limitations relates and the Ryazan Region. and a contract for delivering hy- nine with a total design capacity of nological reasons, the organization of to electricity exchange. • The Volzhskaya HPP - three turbines dro-power units was concluded; 2,664 MW were fully completed; with a total capacity of 345 MW were replaced; • The Verkhne-Naryn Cascade • Restoring the Sayano-Shushenskaya NOTE: Detailed description of the markets in which the Holding operates is available in the 2013 Annual Report and on the Company’s website of HPPs (Kyrgyzstan) – the HPP (the Republic of Khakass- • The Zhigulevskaya HPP - two turbines preparatory stage of work was ia) - three hydro-power units were and one hydro-power unit with a total started, a working village for hy- commissioned, as a result, operating Sustainable development: 2013 key events capacity of 345 MW were replaced; dro-constructors was construct- capacity rose to 4480 MW; ed, and a feasibility study of the • The Kamskaya HPP - three turbines project was approved; • Constructing the Ust-Srednekanskaya with a total capacity of 63 MW were HPP (the Magadan Region) - two • Standard & Poor’s Agency • Moody’s Investors Service Agency • Fitch Ratings confirmed JSC replaced and two generators with a • The Gotsatlinskaya HPP (the Re- hydro-power units with a total capacity improved its outlook on JSC confirmed a Stable outlook on JSC RusHydro’s long-term foreign total capacity of 42 MW were upgraded; public of Dagestan) - installation of 168 MW were put into operation. RusHydro’s ratings and con- RusHydro’s ratings while confirming and local currency credit ratings of hydro-power units began, con- • The Rybinskaya HPP - one hydro- firmed its long-term credit an international scale long-term at BB+ and national long- struction of a dam is underway; Start of the construction programs rating at BB+, its short-term credit rating in foreign currency at term credit rating at AA (rus), power unit with a capacity of 55 MW for new thermal generating facil- credit rating at B and the Ba1 and a national scale rating at Stable outlook ** was replaced; • The Zelenchukskaya HPP-PSPP ities in the Far East national scale rating at ruAA+, Aa1.ru, Stable outlook*; (the Karachay-Cherkessia Repub- • The Saratovskaya HPP - one hori- Stable outlook; lic) - construction of a water pas- • The Yakutskaya SDPP-2 (Phase 1), Ya- zontal capsule unit with a capacity of sage for the tail pond was started, kutsk (the Republic of Sakha (Yakutia); 45 MW and two generators with a total construction of the lower reservoir capacity of 120 MW were replaced; • The Blagoveschenskaya CHP plant and the derivation is underway; (Phase 2), Blagoveshchensk (the * On March 28, 2014, Standard & Poor’s reviewed JSC RusHydro’s outlook from Stable to Negative, confirming the Company’s long-term credit rating at BB+, • The Cheboksarskaya HPP - one short-term credit rating at B and national rating at ruAA. The review of the Outlook is connected to Russia’s outlook revised in spring 2014. • Small HPPs in Kabardino-Balka- Amur Region); turbine with a capacity of 78 MW ** On March 24, 2014, Fitch Ratings reviewed JSC RusHydro’s outlook from Stable to Negative, confirming the Company’s long-term credit rating at BB+ and ria and Karachay-Cherkessia was re-constructed. • The CHP plant in Sovetskaya Gavan national rating at AA(rus). The review of the outlook is connected to Russia’s outlook revised in spring 2014. – the readiness of the Zaragizh- (the Khabarovsk Region); skaya HPP exceeded 50%, the project on the Big Zelenchuk • The Sakhalinskaya SDPP-2 (Phase 1), * GSEP - an international organization that unites the largest power utility companies from Small HPP was approved. Ilyinskii village (the Sakhalin Region). G8 countries (other than the United Kingdom), http://www.globalelectricity.org/ 14 15 1. Energy of sustainable development

Sustainable Environmental impact Development Strategy The roadmap of sustainable development* Social responsibility mitigation measures

• The Social Policy of JSC RusHydro • Implementation of environmental The RusHydro Holding’s mission and was adopted; management systems and the IMS Hydro-generation continued; long-term strategy are aimed at providing • A new collective bargaining agree- society with mostly “clean” energy, which • Implementing a comprehen- sive modernization program; ment for 2013-2016 was signed; • Research and Development to is obtained through the use of water flow Renewable power generation improve the environmental efficiency energy, with due attention being paid to • Restoring the Sayano-Shush- enskaya HPP and construct- • JSC RusHydro signed the Social • Participating in the de- of HPPs; environmental protection. ing a second shore spillway; Charter of the RUIE; Design and scientific velopment of regulatory Innovations complexes • Establishing a service center framework to promote RES • Financial support for environmental JSC RusHydro plans and implements its • The Stakeholder Map of JSC RusHy- for the monitoring and main- development; • Developing an innovative initiatives and the SPNA; long-term development in terms of the • Developing and implement- tenance of HPPs; development program; dro was developed; • Organizing the large-scale concept of sector development in accord- ing a single scheme for the • Project for the irrigation of the Vol- design and construction of • Entering into long-term construction of SHPPs, • Establishing a center of • A Chair of the “Hydro-power and ance with Russia’s Government’s plans HPPs and a single system contracts for equipment WPPs and Geo-thermal PPs, innovative solutions; ga-Akhtuba flood plain; maintenance and supply; bio-fuel energy facilities, RES” of the MPEI was established; and long-term forecasts. for the budgeted activity of • Creating systems for pro- JSC RusHydro; and implementing pilot pro- • Construction Program for • Receiving in management / jects for TES construction; duction process forecasting acquiring shares of en- and monitoring new tech- • Social and economic coopera- flood-protection sites on tributaries Key documents that underpin the Hold- • Creating EPC (M) full-cycle contractor; ergy utilities; • Establishing a fund for the nologies and innovations; tion agreements were signed in of the Amur River; ing’s companies’ sustainable develop- small hydro-power industry 14 regions in which the Company ment strategy include: • Establishing a research and • Providing guaranteed capacity in the North Caucasian • Creating a knowledge man- selection for HPPs and PSPPs agement system; is present; • Assessment of the project for the development center in the Federal District; RES field; on the long-term capacity Kankunskaya HPP with usage of MAG/ • The Concept of the long-term so- market; • Establishing company-oper- • Forming a continuous inno- • Program for the social and profes- • Developing and implement- ator for SHPPs; vative process; ΙΗΑ techniques for compliance with cio-economic development of the • implementing construction sional adaptation of orphans was ing a target model to repair • Developing innovative sustainable development criteria; Russian Federation until 2020; and service; projects for new HPPs and • Developing and implement- adopted; creating conditions to ensure ing a program for using activities in accordance with • Moving to long-term their economic efficiency. energy storage units. Russia’s Energy Strategy • Translation and presentation of MAG • The long-term forecast of Russia’s until 2030. • The photo project “People of Light”, partnerships with repair techniques in Russia (with the WWF); economic development until 2030; complex companies. dedicated to the tenth anniversary of the Company, was launched; • 3,000 people took part in a charitable • The Energy Strategy of Russia ecological action, the “oBEREGAi”; • 52 children of employees who are until 2030; students at profile HEIs received • Participation in the development of a corporate scholarships; regulatory framework to promote the • Sectoral strategies and long-term use of alternative RES continued; development plans for the oil and gas • Further development of corporate industries, non-ferrous metallurgy, and volunteering and charity initiatives. • Further development of the Compre- transport infrastructure, etc.; Reliable and Development Growth of hensive Program of the RusHydro safe operation of the hydro- the Company`s Group on the implementation of RES • The general layout of electricity gen- of HPPs power industry value in the Far East; eration facilities` locations until 2020 and RES (project until 2030); Corporate governance • Implementation of the program of biological diversion preservation in • Regional socio-economic devel- the policy and programs of Rus- • Record high dividends were paid by opment strategies and regional sia’s energy sector (in the field of JSC RusHydro; for the first time in energy strategies. hydro-power energy industry) within the Company’s histopry, 25% of 2012 the framework of UNDP/GEF. net profit was spent for dividends; International activities Water-economic complex Human resources Energy retail business • Acquiring foreign hy- • Studying opportunities to • Establishing a school of • Acquiring shares of energy • An effective monitoring system for dro-power assets; obtain company - operator young hydro-power engi- retail companies; the targeted use of budgetary funds status in the field of WEC neers; • Receiving hydro-power • Maintaining the status of with the participation of Russia’s and the launching of pilot assets in operation- projects. • Restoring technologists of guaranteeing supplier in the Audit Chamber, the Ministry of Eco- al / trust management the hydro-power industry; regions of presence; for the long term; nomic Development and Trade, the • Increasing cooperation with • Establishing companies Ministry of Energy and Sberbank of • Implementing investment profile HEIs and research of the ESC, which provide Russia was developed; projects to construct HPPs institutions; comprehensive services abroad; in the field of electricity • Forming a target order to supply, and energy • The authorized capital of JSC • Creating strategic part- train professionals. conservation etc.; RusHydro was increased and control nerships and alliances with global hydro-power • Obtaining new large over a number of hydro-power as- industry leaders. customers. sets was improved;

• The Company signed the Anti-Cor- ruption Charter of the RUIE;

(*) JSC RusHydro’s strategic plan for the period until 2015 with a view to 2020 was approved by the Board of Directors of JSC RusHydro (June16, 2010)

16 17 1. Energy of sustainable development Strategic plan for the period until 2015 and for the outlook up to 2020* Interconnection of Strategy Risk management system and Sustainable (1) Effective corporate (2) Ensuring the reliability Development governance in the interests and safety of hydro-power Long Term Strategic Initiatives Short Term Priorities Goals of all groups of shareholders engineering structures Implemented in 2013 and occupational safety • JSC RusHydro invariably follows the • Providing for the reliability standards of good corporate govern- JSC RusHydro considers corporate social • JSC RusHydro implements a set of • Corporate consolidation of ance, continuously upgrades its organ- of existing assets and their responsibility as an integral part of the management and technological pro- izational structure and improves the modernization; hydro-power energy assets: sustainable development. Meeting the cesses which ensure the reliable and efficiency of its management system. acquiring shares or taking for challenges of sustainable development safe operation of the industrial com- Since the Company’s inception, socially • Increasing installed capacity management the economically is based on the balanced management of plex. The RusHydro Holding’s system of responsible behavior is integrated economic, environmental and social as- monitoring the safety of HPPs is inte- via the implementation of efficient hydro-power generating into corporate governance processes pects of corporate responsibility. In 2013, grated into the production processes at and its corporate culture. JSC RusHy- investment projects; assets that are privately owned the following tasks were most important: all stages and ensures strict compli- and located in the territory of dro’s shareholders and management ance with safety standards and rules proceed from the fact that the work • Creating an efficient system of the Russian Federation; for the safe operation of hydro-power innovations management and of the management bodies should be facilities, as well as the effectiveness carried out with an appropriate level of of measures to prevent accidents and forming an uninterruptable • Increasing profitability of energy responsibility and accountability in the eliminate consequences. innovative process; sales companies; interests of the Company and its share- holders (including minority sharehold- • JSC RusHydro has organized a con- • Human resource development; • Developing activities in the field ers) and create conditions for sustaina- trol system for the technological and ble growth in shareholder value. production complex that ensures the of the hydro-power resources compliance of personnel`s qualifica- • Expanding the Company’s utilization system. • JSC RusHydro’s risk management and tion with rules and norms, as well as presence in foreign markets; internal control mechanisms are an working conditions under which the integral part of the corporate govern- operation and maintenance of instal- • Switching to a target capital ance system of JSC RusHydro and lations and the equipment of HPPs is structure and expanding should encourage greater transparency safe for all employees and, foremost, of management, maximize share- for operations and production staff. sources for implementation of New Priorities Planned for 2013 holder value and long-term sustainable the Investment program; development of the Group’s com- • The Holding has an effective risk man- panies’ business. agement system, which provides a pro- • Increasing efficiency of repair cedure for recording and investigating • To further strengthen the trust of accidents and incidents, and develops and maintenance services shareholders, employees, investors measures to prevent and eliminate in respect to the Company’s and the public, JSC RusHydro seeks to them and mitigate possible conse- assets: creating a repair and upgrade information transparency over quences (2.1 Reliability and safety – its activities and non-financial report- the basis of sustainable development). maintenance company; ing (1.2 Growth of shareholder value – sustainable development strategy). • Increasing competitiveness of the engineering complex.

(*) JSC RusHydro’s 2014 corporate development priorities were approved by the Board of Directors (Minutes № 190 dated November 29, 2013).

Detailed information on the RusHydro Group’s strategy is given in the 2013 Annual Report at www.RusHydro.ru/investors/reports/

18 19 1. Energy of sustainable development

(3) Improving energy (4) Integration of innovative (5) Taking into account (6) Providing opportunities (7) Reducing negative (8) Promoting socio- efficiency through the activities as a basis for the interests and external for the development environmental impact economic development development of electricity business processes stakeholders responsible of professional competencies in the regions of presence production based on engagement and social protection • The technological complex of JSC renewable energy sources Innovative development encompasses for employees RusHydro provides for production • Currently, JSC RusHydro’s largest all corporate activities. The RusHydro • JSC RusHydro’s management and with complete environmental safety investment project is the construction • Energy efficiency, resource saving and Holding’s goal in terms of innovative the State (its major shareholder) are • JSC RusHydro’s employees are a and industrial environmental control of four power engineering facilities a reduction in the energy intensity of development is to build on the success proactive in corporate social respon- team of professionals who work at at all stages of operating activities. in the Far East. Implementation of production activities are considered and global leadership of the RusHy- sibility, which aims to promote the dozens of hydro-power plants in Consistent environmental policy these projects is the first phase of by the companies of the Holding to dro Group, not only today, but into socio-economic development of the the Russian Federation and abroad; designed to promote natural resource JSC RusHydro`s Program of Energy be an integral part of JSC RusHydro’s the future. Since 2011, the Company regions in which the Company is these employees are a primary conservation in the regions in which Development for the Far East, aimed at social responsibility. The Company has been implementing an innovative present. The scope of social responsi- resource of the Holding. JSC RusHy- the Company is present is imple- replacing retired generation capacities aims at ensuring electricity supply development program. Technological bility is comparable to the geographic dro’s personnel policy is aimed at mented at all stages of operating and developing an infrastructure of reliability and achieving sustainable trends within the program cover the scope of activities and the number building long-term capacity and the activities and in all areas where cor- decentralized electricity supply sector development goals. entire spectrum of issues related to JSC of the Holding’s companies’ employ- sustainable development of human porate facilities are located, as well for the Far Eastern Federal District. RusHydro’s production, environmental ees. In practice, this responsibility is resources in the companies of the as when implementing infrastructure • The Company sees significant poten- • When implementing infrastructure and social responsibility. implemented taking into account the Holding and is based on goal-orien- investment projects. tial in reducing the energy intensity of projects as part of the Investment interests of all stakeholders and via tation, unity, continuity and associ- the hydro-power industry in re-tool- Developing RES, including small HPPs, • JSC RusHydro implements its envi- Program of JSC RusHydro, the Compa- social partnership in the regions. ation with the results of operating ing and upgrading installed capacity. geo-thermal and tidal plants, is an ronmental responsibility by conduct- ny’s management pursues a consistent activity principles. Today, this potential is realized as important component of the RusHydro • The Company views its employees, ing technical measures to assess and policy which is designed to promote part of the corporate comprehensive Holding’s innovative development. Some shareholders and investors, con- • Personnel management is carried mitigate environmental impact as socio-economic development and modernization program. Developing advanced hydro- and energy resource sumers of corporate products and out using the sector’s best labor part of the Company’s Production and contribute to natural resource con- promising resource-saving technolo- saving technologies used in operating services, business partners, suppliers practices. Dynamic development of Investment Programs, as well as by servation in the regions in which the gies for electricity generation is con- activities are developed in the scientific and contractors, governmental and the personnel corporate structure voluntary initiatives in collaboration Company is present. sidered to be a way to improve future institutes of the RusHydro Group. public organizations, professional and provides effective processes for with local communities, research and • In 2013, the RusHydro Group compa- energy efficiency. local communities, the mass media, attracting and retaining qualified development and public environmen- • The Company is constantly upgrad- nies continued to implementing joint HEIs and other educational institu- employees. Creating an effective tal organizations, and actively partic- • Successfully addressing these chal- ing the innovative development projects as part of a comprehensive tions as key stakeholders and seeks employee incentive system, that ipates in national and international lenges at the corporate level and management system, selecting and program to implement renewable mutually responsible stakeholder includes wage, social benefits and environmental initiatives. developing the innovative capacity of implementing innovative projects that energy sources in the Far East. Joint engagement. In 2013, significant guarantees to retain employees are the power-generating sector is a con- create the environment around JSC • Development of RES-based gener- projects with JSC RAO ES of the East in efforts were focused on analyzing among these processes. ation is an effective way to reduce tribution of JSC RusHydro to reducing RusHydro, which allows the Compa- interaction practices. the Far East are aimed at improving the the energy intensity of the fuel and ny to develop the innovative potential • The foundation of the staff’s pro- anthropogenic impact on the environ- environmental and energy efficiency energy complex and upgrading the of not only the Russian hydro-power • In its policy, JSC RusHydro strives to fessional development system is ment. Increasing the share of RES in of the region’s fuel and energy sector country’s energy security (2.2 Energy industry, but also of allied indus- follow international standards and continuous training - “corporate the energy mix of the Group lays the (4.2 Development of the power indus- efficiency is clean energy potential). tries. (2.3 Innovation – a fast track best practices in the fields of hu- elevators” designed to provide foundation for long-term sustainable try in the Far East – the preservation to sustainable development). man rights, labor, environment and advanced human resources devel- development. However, the RusHy- of the region’s natural resources). anti-corruption, and stakeholder en- opment for the RusHydro Holding. dro Group pays special attention to gagement. The Company shares and In recent years, there has been an developing projects in the Far Eastern in practice implements the principle influx of young specialists to the Federal District, where develop- of regular dialogues with stakehold- Company`s facilities, which can be ment has a significant potential to ers, which are set out in the Social considered a positive result of human reduce the environmental burden. Charter of Russian Business, of which resources management programs (4.1 Environmental safety as the crite- JSC RusHydro has been a member of (3.2 HR Potential development – rion of sustainable development). since 2013 (3.1 Responsible interac- a guarantee of long-term growth). tion – a condition of corporate social responsibility).

20 21 1. Energy of sustainable development

Structure of corporate 1.2 Growth of shareholder value – governance bodies The General Meeting sustainable development strategy of Shareholders supreme governing body

Corporate governance in JSC RusHydro • requirements for companies listed is carried out in strict accordance with: on the MICEX;

• Russian legislation; • requirements for companies listed on the London Stock Exchange. The Board of Directors Strategic management of the Company. Monitoring strategy implementation: approval of the strategic plan and target • recommendations of the Russian Code indicators in key areas: the Company`s development priorities for the year; business plan; investment program; of Corporate Conduct; development programs in key areas (including: the comprehensive modernization program, innovative programs, etc.). Chairman: Poluboyarinov Mikhail Igorevich

The Reliability, Energy The Audit Committee Efficiency and Innovations The Investment A (3 members) Committee Committee s cco (12 members) (10 members) nes unt air ab F ili ty The Human Resources The Strategy and Remuneration Committee The corporate governance Committee (9 members) system is based on (3 members) JSC RusHydro’s internationally recognized principles enshrined in JSC RusHydro’s Code of Corporate Chairman of the The Corporate Secretary The Internal Management Board Audit Service Governance Executive management at the Management D y Board level: approval of the Strategy ue c Implementation Plan (SIP); direct The Revision Commission d en management of internal control, internal i r audit and risk management lige spa nce Tran Dod Evgeny Vyacheslavovich

The Management Board

Direct subordination

Functional interaction Shareholder structure

JSC RusHydro shareholders include 31, 2013 was 66.84% of the Company’s Holders of JSC (*) In 2013, Evgeny Dod was Chairman of the Management Board of JSC RusHydro; in accordance with the resolution by the Board of Directors (Minutes №201 more than 360,000 Russian and foreign authorized capital. The share of stocks dated June 27,2014), starting July 1, 2014, Evgeny Dod performs duties of the Chairman of the Management Board - General Director of JSC RusHydro. investors. The Company’s major share- traded outside the Russian Federation RusHydro securities holder is the Russian Federation repre- in the form of depositary receipts*, at include more than sented by the Federal Agency for State the end of the reporting period, stood at Property Management. The State holds a 5.23% of the total number of shares. 360,000 Russian and controlling stake, which as of December foreign investors Shareholders’ impact on decision-making

(*) Depositary receipts certify the rights to 100 shares. More information about depository receipts is Participation in General Meetings of sion, the RusHydro Holding seeks to shareholder meetings and offers equal available on the Company’s website - http://www.RusHydro.ru/investors/stockmarket/drs/ Shareholders is the main mechanism promptly and fully disclose informa- voting rights to in person and absentee for shareholders to influence the tion on all agenda issues in meeting participants. Shareholders who partic- decision-making process. To provide materials. OJSC RusHydro guarantees ipate in meetings also have the oppor- shareholders with the opportunity to all shareholders the right to choose to tunity to speak freely and ask questions make informed and balanced deci- participate in person or in absentia in during the meeting.

22 23 1. Energy of sustainable development Accountability: the Board of Directors

The Board of Directors is governed by in accordance with the “Regulations Management processes of the social KPI target values for the Management Board The Company strives to constantly up- internal regulations “On the proce- for the payment of remuneration to responsibility management system are are approved by the Board of Directors based grade the quality of corporate governance, dure for convening and holding meet- members of the Board of Directors integrated into corporate governance on the approved business plan and strategic following best corporate practices in social ings of the Board of Directors of JSC of JSC RusHydro”** approved by the processes and the organizational devel- development priorities. The Regulations for the responsibility and sustainable develop- RusHydro”*. Remuneration for Board of Annual General Meeting of Sharehold- opment of the RusHydro Holding. Manu- procedure on paying remuneration and com- ment. New versions of internal regulations Directors members shall be calculated ers (June 30, 2010). facturing processes ensure the reliability pensation to members of JSC RusHydro’s Man- which govern the work of the Board of and safety of production and labor, and agement Board provide for quarterly and annu- Directors’ Committees were adopted in the compliance of HS operation processes al bonuses for individual performance of KPIs. 2013. Amendments to previously effec- with industry standards, technical and tive documents are aimed at structuring JSC RusHydro’s Board of Directors Independent directors on the Board of Di- The Chairman of the Board of Directors environmental standards. The results Corporate governance: issues reviewed by the Committees in consists of 13 directors (7 of them are rectors (elected June 28, 2013) is not a member of the collegial executive are analyzed and evaluated within the branches and SDCs accordance with their expert belonging. independent) who are elected annually by body (the Management Board). process of corporate business planning the Annual Shareholders Meeting. 1. Dr. Christian Berndt Andreas and the approval of annual business plans JSC RusHydro participates in the author- Another determining event in 2013 was the The Board of Directors for operating units. The effectiveness of ized capital of companies engaged in the adoption of JSC RusHydro’s Social Policy 2. Andrey Evgenievich Bugrov has five committees: technological and management processes production and supply of electricity and the (approved by the Board of Directors as of Structure of the Board of Directors of SRMS is intended to serve the success- construction of power generating facilities. April 1, 2013 No 177), which establishes 3. Viktor Ivanovich Danilov-Danilyan • The Audit Committee; ful resolution of goals and objectives for main directions of corporate development • The Company manages SDCs through its 4. Sergey Nikolaevich Ivanov corporate sustainable development. This in accordance with Russia’s concept of • The Human Resources and Remunera- representatives at General Meetings of 46% is evidenced by numerous awards received long-term socio-economic development tion Committee; Shareholders, the Boards of Directors and 54% 5. Denis Stanislavovich Morozov by the Holding in the CSR field. The list of for the period until 2020. control bodies of SDCs in accordance with • The Reliability, Energy Efficiency and the awards is available in the Addendum 1 6. Sergey Vladimirovich Shishin the Articles of Association and the Pro- Innovation Committee; to this Report. cedure for JSC RusHydro`s Interaction New versions adopted in 2013 7. Maxim Sergeevich Bystrov • The Investment Committee; Remuneration and with organizations in which the Company participates (adopted in 2010); The Articles of Association, adopted in a the incentive system new version (June 28, 2013) New membership of the Company’s • The Strategy Committee. Board of Directors was elected by the An- • Decision-making on the management To upgrade management effectiveness, the The Regulations for the procedure on nual General Meeting of Shareholders of issues of SDCs is attributed to the com- convening and holding the General Meet- Holding has developed a system of key per- JSC RusHydro (June 28, 2013, served as petency of the Company’s Management ing of Shareholders, adopted in a new formance indicators (KPI) aimed at achieving version June 28, 2013 of December 31, 2013), which consisted Board, except for decisions on the strate- strategic goals. The method for calculating of 13 members, six of whom were inde- gic issues of SDCs concerning: re-organ- Regulations for the Audit Committee of Independent directors and assessing key performance indicators pendent directors. Criteria for director ization, liquidation, changes in author- the Board of Directors, adopted in a new Directors (KPIs), as well as a list of them, is designed version October 15, 2013 independence (members of the Super- ized capital, and the approval of major in accordance with recommendations of the visory Board of Directors) are set out in transactions and the participation of SDCs Regulations for the Human Resources and Russian Ministry of Energy. In particular, JSC RusHydro’s Corporate Governance in other organizations, which are attribut- Remuneration Committee of the Board of reliability criterion, the EBITDA level, cost Directors, adopted in a new version Octo- Code***, which was adopted in 2010. ed to the competency of JSC RusHydro’s reduction due to the implementation of the ber 15, 2013 Board of Directors. cost management program, the execution of Regulations for the Strategy Committee capacity commissioning schedules and a plan of the Board of Directors, adopted in a New versions of internal new version October 15, 2013 for financing and implementing the Invest- documents Due Diligence: the Management Board ment Program were approved as annual KPI. Regulations for the Investment Commit- Specifically, the reliability criterion, the current JSC RusHydro’s principles and procedures tee of the Board of Directors, adopted in a new version October 15, 2013 liquidity ratio, the performance of quarterly for corporate governance are enshrined in Managing Sustainable schedules for financing and the implementa- Development “Under current conditions, the social responsibil- the Company’s Articles of Association and Regulations for the Reliability, Energy tion of the Investment Program on an actual internal regulatory documents* Efficiency and Innovation Committee of ity concept for a large public company is becom- basis since the beginning of the year were the Board of Directors, adopted in a new Key issues of sustainable development, * The complete list of internal documents is available version October 15, 2013 such as planning and construction the ing comprehensive. Today, our understanding also approved as quarterly KPI. on the corporate website: www.rushydro.ru/ corporate/regulations_and_docs/ progress of hydro-power facilities, and of social responsibility includes all key areas the performance of target programs are of JSC RusHydro.” reviewed at meetings of the Board of Di- rectors and the Management Board of JSC Evgeny Dod, RusHydro. Decisions taken in 2013 and Сhairman of the Management Board - Authorized Capital Increase in 2012-2013 performance results are reflected in this General Director Report in the relevant topic sections. Moving to the target capital structure In 2012, the Government of the Russian were invested as a contribution of the and expanding sources to implement the Federation agreed to the target funding of State to the authorized capital of JSC Investment Program are JSC RusHydro’s the Construction Program of new power RusHydro. The relevant decision to in- * Regulations for the procedure on convening and holding meetings of the Board of Directors of JSC RusHydro (new version) see at website http://www.RusHydro.ru/ corporate/regulations_and_docs main priorities for 2014. capacities in the Far East (the Program crease authorized capital by RUR 110 bil-

** Regulations for remuneration paid to members of the Board of Directors of JSC RusHydro see at website http://www.RusHydro.ru/corporate/regulations_and_docs for the power facilities development in lion was approved by the General Meeting the Far East) via budgetary means that of Shareholders in November 2012. * CORPORATE GOVERNANCE CODE OF JSC RusHydro SEE AT WEBSITE http://www.RusHydro.ru/corporate/

24 25 1. Energy of sustainable development Structure of authorized capital Transparency and Financial Discipline In 2013, an additional securities issue As of December 31, 2013, the addition- Shareholder equity structure was made, whereby share capital was al share placement was completed, of JSC RusHydro increased 21.6 % and amounted to but due to the fact that changes in the Effective monitoring of the targeted use of budgetary funds RUR 386,255,464,890. As payment for constituent documents were properly 5.2% the shares to be placed in favor of the registered only in 2014, the Company’s 28.0% In 2013, the Group launched the Pro- As of April 1, 2014, RUR 6 billion were own funds (including JSC RusHydro and Russian Federation, RUR 50 billion has authorized capital increased after the gram for the power facilities develop- spent for development and approval of RAO ES of the East). RUR 1 billion is been allocated from the State budget. reporting period.* 66.8% ment in the Far East and implemented design and estimate documentation, funds from target budgetary funds that In addition, shares of JSC RAO Ener- priority activities, including the for- for purchase of equipment and advance the Group could use after a full cycle of gy System of the East, JSC SEC, JSC mation of main schemes to implement payments to head contractors, as well audit procedures and approvals required Ust-Srednekanskaya HPP, JSC Irkutsk * The actual closing date of placement - construction of thermal power facilities as for preparatory works; RUR 5.6 billion by the system of control over budgetary Grid Company and JSC Irkutskenergo November 26, 2013. Report on the additional share issue was registered by the Bank of in the Far East, and the establishment of this sum was the RusHydro Group’s funds expenditure as it described below. were transferred as payment for the Russia December 26, 2013 (i.e., during the of an effective system for monitor- reporting year). Relevant Changes in the shares. The Report on the issue results Articles of Association were registered January ing and supervising the financing was registered in December 2013 by the 28, 2014 (i.e. after the reporting period). The of these facilities. detailed information on the authorized capital “JSC RusHydro is interested in ensuring the full Bank of Russia. Relevant amendments to and shareholder structure is available on the Articles of Association were regis- the website. www.rushydro.ru/investors/ Other shareholders To implement investment projects transparency of the expenditures of budgetary stockmarket/capital Holders of depositary receipts (ADR&GDR) as part of the Program for the pow- tered January 28, 2014. The Russian Federation funds allocated by the State to build new gener- er facilities development in the Far * As of December 31, 2013 East, JSC RusHydro has established ating capacities in the Far East, and considers a special system that allows the State it a top priority to organize an effective moni- to monitor in real time the use of toring system for implementing these projects targeted budgetary funds received by with the participation of all interested ministries Fairness: the Dividend Policy JSC RusHydro as a part of additional share issue. State participants in the and departments.” system are the Accounts Chamber, The main objective of JSC RusHydro document was caused by change in Share of net the Ministry of Economic Develop- Evgeny Dod, profit channeled dividend policy is to ensure the strate- Russian law in respect of dividend pay- ment and Trade, the Ministry of Energy Сhairman of the Management Board - to pay dividends, gic development of the Company and ment and taxation, and by trends in use and Sberbank of Russia. General Director %, 2010-2012 25% the wealth growth of its shareholders of the International Financial Report- by establishing an optimal balance ing Standards during determining the between dividend payments to share- amount of dividend payment. A new ver- holders and profit capitalization. sion of Regulations was prepared with Financial monitoring system within the framework of the Power Industry due account of mid-term development According to the 2013 Company’s cur- trends, strategic goals and was aimed Development of the Far East Program rent dividend policy, a sum of guaran- 8.2% at improved investment attractiveness 6.6% teed dividends was calculated on the of JSC RusHydro. basis of consolidated net profit of the In 2013, the Company implemented priority activities, including the formation of basic schemes to implement the construc- RusHydro Group established by sum- The new Regulations calculate divi- tion of thermal power facilities in the Far East, and the establishment of an effective system for monitoring and supervising 2012 2010 2011 mation of net profits of the Company, its dends on the basis of profits estab- the financing of these facilities: subsidiary and second-tier subsidiary lished in the RusHydro Group’s IFRS opinion of Glavgosekspertiza for each es is allocated solely to finance the companies minus intra-group turnovers consolidated financial statements. • In March 2013, a contract between project and an audit conducted by an project through separate accounts on dividend income. At the end of 2012, This will increase JSC RusHydro’s in- JSC RusHydro and JSC Sberbank JSC RusHydro paid record high divi- vestment attractiveness. independent engineering company. opened in JSC Sberbank of Russia; Dividend yield of Russia for the banking support dends - total payment was RUR 3,675.5 of the Company`s of the facilities` construction • JSC Sberbank of Russia selected • on December 28, 2012, the Compa- 1.81% million. For the first time it was chan- shares, %, was signed; on a competitive basis independent ny signed a cooperation agreement neled 25% of 2012 net profit to pay divi- 2011-2013 engineering firms that conduct audits with the Accounts Chamber of the dends. The relevant decision was made • a system of banking servicing of projects and provide expert support Russian Federation. JSC RusHydro June 28, 2013 at the Annual Sharehold- which provides for the expendi- 1.04% for construction (a technology and on a quarterly basis and based on ers’ Meeting (based on 2012 results). ture of targeted budgetary funds pricing audit was conducted for the one-time requests sends information 0.64% through a four-level system of spe- construction of the Yakutskaya SDPP- to the Russian State Duma for pre- In March 2014, a new version of Regu- cial accounts OBS opened in JSC 2013 dividend payments 2 (Phase 1), and the Blagoveschen- paring reports to the Deputies; lations on Dividend Policy was approved Sberbank of Russia. Settlements were 25% of 2012 skaya CHP plant ( phase 2)); 2013 2011 2012 by the Board of Directors in March 2014. for work performed, procurement • a system of interactions with the The approval of the new version of the net profit of equipment and materials shall • to ensure the efficiency and trans- Russian Ministry of Energy and the be made exclusively through these parency and reliability of settlements Ministry of Economic Development accounts with mandatory super- with contractors, a single standard and Trade in terms of operational vision and the acceptance of the package of banking servicing agree- and regular reporting in formats Bank and its technical agents. ments has been prepared. Income stipulated by the agreement was Opening of funding is performed received from the placement of tem- developed. exclusively after receiving a positive porarily disposable monetary resourc-

26 27 1. Energy of sustainable development

Monitoring system of the targeted use of budgetary funds within the framework of the Power Industry Development of the Far East Program are carried out with the involvement In 2013, the investment projects for the of the Expert Council of the Govern- construction of the Kankunskaya HPP; ment of the Russian Federation and the Ussuriyskaya CHP plant and the Len- The Ministry of Economic The Ministry The Accounts Development and Trade of Energy Chamber by posting discussion results on the ingradskaya PSPP were audited. In 2014, Company’s Internet site. the audit of investment projects of the Company and its SDCs is to be continued. • evaluation of the effectiveness of capital • on-line monitoring of construction facili- investments and monitoring the targeted ties progress (via the reporting system of use of funds; JSC Sberbank and a Cooperation Agreement). Ratings and Awards

• The top 1,000 ranking of Russian • The Russian Institute of Directors • JSC RusHydro’s risk management managers included the following confirmed JSC RusHydro’s rating at team was the winner of the inter- winners: Chairman of the Manage- 7+ “Developed Corporate Govern- national contest “The Best Risk ment Board of JSC RusHydro E.V. ance Practice” in accordance with Management 2013” in the catego- Dod (among the top managers), the National Corporate Governance ry “The Best Comprehensive Risk Deputy Chairman of the Manage- Rating (NCGR) scale; Management Program”; ment Board of JSC RusHydro S.P. Tsoi (among GR Directors), Member • The National Award “Director • The Investor Relations Division (IR) of of the Management Board of JSC of the Year 2013” of the Association of the Company was recognized as the Corporate monitoring of RusHydro K.V. Bessmertny (among Independent Directors was received best among electric power compa- construction customers Financial Directors), Corporate Gov- by Andrey Bugrov, JSC RusHydro nies in Russia and the CIS by a vote of (SDCs in regions) ernance Director of JSC RusHydro (award in the category of 2013 Best Thomson Reuters Extel Europe 2013. Y.E. Stanyulenaite (among Corporate Independent Director); For more details, see Appendix to Section Governance Directors), HR Director 3: Development areas of social partnership: of JSC RusHydro V.V. Galka (among • The rating agency “REPUTATION” CSR AWARDS HR Directors) and Communications confirmed the corporate social A complete list of awards and ratings is available on the website: http://www.rushydro.ru/ Director of JSC RusHydro B. V. Zverev responsibility rating of JSC RusHy- company/ratings/ (among PR Directors). dro at AA(s), noted in its opinion the development of interactions with society, appreciation for employee • Financial supervision and • Independent pricing and the • State expertise of design and incentive programs; monitoring with the help of a technology audit of projects; estimate documentation. separate bank accounts system; Fair Business Practices Engineering Companies JSC Sberbank of JSC Sberbank The Glavgosexpertiza RusHydro finds the risk management goals and priorities. Further enhancing Company encourages the widespread system to be a tool to improve the sus- reputational capital and the confidence introduction and continuous improve- tainability of business processes and of shareholders, employees, partners ment of business practices guarantee the achievement of strategic and the investment community, the Pricing and technology audit of investment projects

In November 2013, JSC RusHydro’s the previous year and on conducting ing audit are that the candidates` Board of Directors approved Regula- technology and pricing audits for experience in conducting technology Risk management system tions for conducting the mandatory investment projects, including the audi- and pricing audit is at least 7 years technology and pricing audit of invest- tor’s opinion and findings that emerged and that they have at least 5 invest- ment projects, according to which all in- from public and expert discussions. ment projects worth RUR 1.5 billion The Holding’s companies’ activity is which is based on ISO 31000 principles and risk owners at different levels of vestment projects of an estimated cost or more each audited, as well as the associated with numerous risks, which and includes procedures to identify, decision-making was designated. With- of RUR 1.5 billion and more are subject The Regulations were developed in con- mandatory participation of at least under certain circumstances could analyze and assess, respond to and in this framework, Holding’s companies to a mandatory technology and pricing junction with the Expert Council of the 5 professionals with vocational ed- adversely affect its operating and monitor risks in all activity spheres. systematically monitor potential risk audit at all implementation stages. Government of the Russian Federation ucation and experience in provid- financial results, and social and natural events, and key risk indicators when and also set out the procedure for public ing services in the relevant field of environment. Taking responsibility for The Holding has a comprehensive risk implementing current operations and In accordance with Regulations, from and expert discussion of the course for activity for at least 5 years. the Holding’s companies’ sustainable management system, reporting on the investment projects and programs, as 2014 onwards, the Company is obliged the preparation, implementation and re- development, the management team of effectiveness of the system is regularly well as implementing plans to manage each year prior to April 5, to report sults of the technology and pricing audit. The public and expert discussion of the JSC RusHydro, in practice, implements submitted to the Risk and Audit Com- identified risks. to the Russian Government on imple- course of the preparation, implementa- the precautionary principle by introduc- mittee, internal procedures and meth- Detailed information on the risk management menting plans of the facility commis- Criteria in selecting organizations tion and results of the technology and ing and developing an effective com- ods of risk assessment were approved system of the RusHydro Group is available in the 2013 Annual Report (the Risk Management sioning of an investment program for to conduct the technology and pric- pricing audit of investment projects prehensive risk management system and a circle of responsible employees Policy): www.rushydro.ru/investors/reports/

28 29 1. Energy of sustainable development

Risk insurance Combating corruption Anti-Corruption Charter Managing In addition, JSC RusHydro maintains a for violations of the requirements of and illegal actions of the RUIE procurement activities register of unscrupulous contractors applicable legislation on personal In addition to the complex of measures (suppliers, executors, and contractors), data protection. In 2013, there were aimed at providing reliability of the equip- JSC RusHydro enshrines the principle of In July 2013, JSC RusHydro signed the Procurement for the needs of the Hold- including information on the cases of no incidents of the non-compliance of ment and structures, all key production the rejection of corruption in all its forms Anti-Corruption Charter of the Russian ing’s companies are conducted on the the evasion of a winner of the procure- the quality of provided services with facilities of the Holding are insured. and manifestations. The Company regu- Union of Industrialists and Entrepre- basis of annual comprehensive procure- ment procedure from signing a con- regulatory requirements and volun- larly monitors corruption risks as part of neurs, undertaking numerous voluntary ment programs approved by the Deputy tract, and the termination of a contract tary codes concerning the impact of For instance, construction and instal- the Comprehensive Program for the Pre- commitments, including compliance with Сhairman of the Management Board due to the improper performance of products and services on consumer lation work and property were insured, vention of Employees From Committing transparency and openness in procure- of JSC RusHydro and its SDCs/ADCs. obligations by a counter-party, as well health and safety. including those of the under-construction Illegal Actions, approved by Order No. ment procedures, cooperation with the as termination of a contract by a con- Zagorskaya PSPP-2 where in September 659 of JSC RusHydro (as of July26, 2012). government, and the refusal to obtain A collegial permanent body – the tractor and other recorded violations. Responsibility to consumers and the 2013, the turbine hall and the station yard Based on the results of risk analysis, illicit benefits. Central Procurement Commission customers of the ESCs of JSC RusHy- of were partially flooded through bro- Detailed information about procurement the Company develops and implements (CPC), headed up by the Deputy activities is available on the Company’s website: dro also implies the presence of techni- ken-driven joints and the intake ports of anti-corruption procedures that meet The Anti-Corruption Charter of Russian Chairman of the Board of JSC RusHy- zakupki.rushydro.ru/default.aspx cal support services and feedback. partially built culverts. Business, adopted by the business com- dro, has been established for ongoing The feedback is provided by customer international standards and monitors Product liability (retail their execution. The Company’s Director munity in 2012, is the implementation of monitoring and coordination of JSC service centers at local levels and work Restoration activity at the facility be- customers` service quality) of Internal Control and Risk Management the National Anti-Corruption Plan. RusHydro’s procurement activities. with consumer applications received gan immediately after the incident. The To implement a single procurement by the Public reception on the website performs on-line monitoring of compli- The companies of the Holding imple- Company plans to complete construction policy, CPCs are also established in of the Company – a single twenty-four- ance with regulatory requirements. In ments product liability and customer of the Zagorskaya PSPP-2. In view of the the SDCs/VZOs. To directly organize hour “Helpline”, which includes a vari- 2013, there were no cases of non-renewal service quality, providing the market complexity of the technical assessment “JSC RusHydro`s and conduct procurement procedures, ety of specialized communication chan- of contracts with business partners due with accurate, complete and timely in- of the effects of flooding, as of the date the CPC by its decision appoints a nels, including the online channel on to violations associated with corruption, signing on to the An- formation about its services. In accord- of this Report’s issuance, the Company permanent procurement commission. our website (www .rushydro.ru/ form). and completed legal actions associated ance with the approved JSC RusHydro’s cannot give an accurate assessment ti-corruption Charter To conduct large and complex procure- “Helpline” work is provided by the with corrupt practices against the compa- Standard of customer service, infor- of the damage and costs associated ment, the CPC by its decision attracts a internal control and risk management nies of the Holding or their employees. of Russian Business mation necessary for both existing and with responding to flood consequences. third-party organizer - an independent unit of JSC RusHydro, which organizes potential customers is available on the Recognition of the event at the under Starting in 2011, JSC RusHydro has had a demonstrates the organization which specializes in con- the review of received applications in Holding’s companies’ website and on construction Zagorskaya PSPP-2 as an “Helpline” – a specialized communication ducting procurement procedures. strict confidentiality in accordance with Company`s com- information stands in customer-related insured one and the subsequent payment feedback channel with employees of the JSC RusHydro’s internal documents. mitment to constant offices. All information about servic- of insurance compensation are possible Holding and the Holding’s companies’ Information about plans on the pro- es disclose on the website www.esc. only after an analysis of the causes of the counter-party representatives to re- improvement and curement of goods, work and services rushydro.ru, on the websites of region- event have been carried out by insurance ceive information from them concerning is posted on the official website of the to enhancing the al retail companies and in other public companies that was not completed by the preventing illegal actions by corporate Russian Federation www.zakupki.gov. sources, in promotional materials, date of this Report’s issuance. employees and preventing corruption. transparency of its ru, as well as on www.rushydro.ru and contracts, invoices, and all disclosure The procedure to prevent illegal actions includes inter alia: the procurement activities in the public procedures fully meet all regula- by employees and contractors is regu- notice, documentation on procurement, environment.” tory requirements. Preventing conflicts lated by the Company’s procedures and the draft contract, changes made to the notice and documentation, clarifications of interest the Regulation for the procedure on For all consumers – the customers of of documentation, and protocols drawn receiving, reviewing and responding to Irina Posevina, the ESCs of JSC RusHydro, the Compa- up during the procurement process, as JSC RusHydro’s* Code of Corporate applications received on JSC RusHydro’s Director of Internal Control ny guarantees legitimate rights to the well as other information in accordance Conduct, adopted in a new version in “Helpline.” All applications received on and Risk Management at JSC RusHydro non-disclosure of personal information, with legislative requirements. 2012, includes the concept of the conflict the “Helpline” during 2013 were analyzed and a safe living environment, as well of interests of employees and members and discussed. The Company conduct- The priority procurement method for as equal rights, regardless of gender of the Board of Directors, and establish- ed internal investigations on the most the Holding’s companies is a trans- and cultural features - the marketing es the duty of members of the Board of essential facts, and all necessary infor- parent competitive procedure that policy of the ESCs of JSC RusHydro and Directors to annually provide information mation was reported to the Chairman is performed on a specialized elec- approaches to consumer interactions about their affiliations. This practice is of the Management Board, the heads of tronic trading platform B2B-energo are based on all that in the regions. aimed at identifying and avoiding con- responsible structural divisions, branch- (www.b2b-energo.ru). Competitive The Company uses the personal data flicts of interest in decision-making at es and subsidiaries and the Company’s procedures on the electronic trading of consumers only for core activities the Board of Directors-level and helps to SDCs/ADCs. platform provides the free access of and does not use data in the promotion implement the precautionary principle at For more details, see BOOK OF APPENDICES suppliers to information on procure- of other services and products, as well the level of the Management Board and Appendix 1 “Quantitative indicators to the Report” ment, resulting in the almost complete as for purposes which the client did the Board of Directors. Additional mech- elimination of geographic and bureau- not consent for. The Company has not anisms to prevent the abuse of members cratic barriers to procurement. received any claims and complaints of Management Bodies` official positions contained in provisions on the insider information of JSC RusHydro (adopted in a new version in 2012).

* CODE OF CORPORATE CONDUCT of JSC RusHydro see on the website.rushydro.ru/corporate/ regulations_and_docs/documents/board/

30 31 2. Sustainable development of the technical system of hydro-generation Far East Section 2. Sustainable Far Eastern Federal District development of the technical The Russian Far East is situated in the most diverse climatic zones, from distinctly continental (all of Yakutia and the Kolyma districts of Magadan Region) to monsoon (the south-east). The southernmost point is in the latitude of Derbent and Dubrovnik, while the northernmost point is beyond the Arctic system of hydro-generation Circle, to the north of Barrow in Alaska. The entire Russian Far East, with an area larger than all of Europe, is home to 1.5 times fewer people than live in Moscow. The Far East covers three time zones, from +10 to +12 UTC. The region is classed as one of the richest regions of Russia and the world for its natural resources. It enables the region to play an important part in the national economy as regards a 2.1 Reliability and safety – the basis number of raw materials. For example, the Far East accounts for 98% of Russia’s diamond production. of sustainable development

Ensuring the safety and reliability of hydro-power structures

The concept of corporate “safety” is treat- interests, as well as the environment and the operational period, while maintain- ed in accordance with Russian legislation, economic entities. The term “reliabili- ing pre-set parameters for the entire RusHydro facilities as the hydro-power structures’ ability to ty” means the ability of equipment and service period. The region’s energy generation in the protect people`s life, health and legal hydro-power structures to operate during consumption region

43 billion 15 billion The concept of reliability and safety management of hydro-power structures kWh kWh Ust-Sredneskanskaya HPP Kolymskaya HPP 36% of the energy consumption of The safety and reliability of objects asset. An important component inter-related technological directly depend on the effective of the Holding’s companies man- and organizational processes, Высокая маневренность Tolmachevsky the entire Far ГЭСYakutsk являются наиболее маневренными и HPPs East management of the technical agement system is the Manage- in accordance with standards system, which is a set of indus- ment System of the Company`s and requirements for the sys- способны при необходимостиPetropavlovsk-Kamchatsky существенно увеличить объемы выработки в считанные trial and technological complexes Technical System that is provided tem to ensure the safe opera- минуты, покрывая пиковые нагрузки and is JSC RusHydro’s underlying by several functional units through tion of hydro-power facilities.

Blagoveshchensk Komsomolsk-on-Amur

Zeyskaya HPP Yuzhno-Sakhalinsk The effective management of the reliability Technical Policy provides for the devel- The effectiveness of the safety and Bureiskaya HPP and safety of hydro-power structures is regu- opment of measures for the Production reliability management system for the lated by numerous internal documents of JSC Program of the Company in the mid-term Holding’s companies’ generating facili- Khabarovsk RusHydro, of which fundamental ones are: (a six-year outlook) and the long-term ties is achieved by a dual control system (a 15-year time horizon). due to: (1) an internal audit of processes 1. the Concept of Safety and Reliability within the framework of the Technical Management System of Hydraulic Struc- -- The Production Program includes System conducted by JSC RusHydro’s Vladivostok tures, or HSes (the Concept) adopted in numerous, inter alia; the Technical Chief Technical Inspector, and (2) external 2009, which highlights major risk groups Rehabilitation and Reconstruction supervision, carried out by competent and control mechanisms; Program (TPiR) as part of the Com- supervisory bodies, for compliance prehensive Modernization Program with the rules and requirements of 2. a new version of the Technical Policy of for the Holding’s companies’ gener- applicable legislation, and industry JSC RusHydro adopted in 2011, which ating facilities, which was adopted in and environmental standards. sets a comprehensive approach to ensur- 2011 (for the period until 2025). ing the reliability and safety of equip- ment and the power facility as a whole - The Technical Policy also provides Population Area throughout its life-cycle. for the development of corporate regulations and standards - they 3. the Production Program of the Company specify industry standard provisions that is a main instrument to implement 2 taking into account specific features 6,300,000 6,215,900 km , JSC RusHydro’s Technical Policy. The of the HSes. 36% of the area of Russia people and about twice the area of India 33 2. Sustainable development of the technical system of hydro-generation External Control System Functional Structure of the Analytical Center

The hydro-power industry is an industry • Safety declaration The Safety Dec- Drafting the declaration is preceded by that operates under strict regulation laration is the main document that a complete examination of HSes with The Analytical Center and supervision, because hydro-power provides for HSes safety, and their the mandatory participation of repre- structures are objects which provide compliance with criteria of safety, sentatives from the Russian Federal critical support for the population. In design, and current technical reg- Service for Ecological, Technological Structured Options for managerial, technical information and technological solutions accordance with legislative require- ulations and rules, as well as de- and Nuclear Supervision and the Rus- Information and ments, safety declarations for hy- termines the nature and extent of sian Emergency Ministry. The Safety Analytical System dro-power structures are drafted for potential accidents and measures Declaration undergoes State expert (system for data collection, transmission, all of the Holding companies’ HSes, to ensure safe operation review and is approved by the Federal processing and information storage) which pertain to the safety declaration. Service for Ecological, Technological They are approved by the Federal Ser- and Nuclear Supervision. vice for Ecological, Technological and Expert and Analytical Controlling Nuclear Supervision. System system

Internal Control System

JSC RusHydro regularly carries out in- • comprehensive HSes condition assess the technical condition of HPPs ternal control measures at its facilities assessment that includes compre- during their operation, receive scien- and equipment conditions, in accord- hensive analysis of monitored HSes tific rationale and use global practices ance with approved procedures, includ- condition indicators (qualitative and of technical solutions and analogues in ing with the participation of third-party quantitative), actual loads, natural the facilities during the solutions aimed organizations. and anthropogenic impacts, data on at providing reliability and safety. Em- the level of facilities` operation, HSes ployees of the Center and experts from Establishing a System safety and reliability level assess- leading institutes in the hydro-power for Regular Data Collection, ment and change forecasts. industry supervise the operation of the Processing, and Analyz- Holding’s companies’ HPPs during their Structural ing Information on the JSC RusHydro`s life-cycle and work closely with the information Condition of HSes Analytical Center plants’ technical and engineering staff.

The process of assessing the condition The central element of HSes safety of hydro-power structures, which can and reliability management systems determine the degree of HSes compli- is JSC RusHydro`s Analytical Center ance with established HSes safety and (AC). The Center improves the quality reliability standards and regulations, of technological decisions made by consists of: the Chief Engineer’s Services, provid- ing with reliable and sufficient infor- • operative HSes condition diagnostics mation on production activities and “Today, a multi-level information-analytical center operates in the that includes comparison of diagnos- the system’s technical readiness for tic HSes condition indicators (qual- operation. The AC, with the help of the Holding. It provides for comprehensive collection and analysis of data itative and quantitative) with HSES expert-analytical center and the infor- on the performance of each hydro-power facility. Residents of the safety criteria; mation analytical center, monitor and regions in which hydro-power plants are present can rest assured that the Company makes every effort to ensure the reliable operation of its facilities and to minimize their environmental impact.”

Boris Bogush, a member of the Management Board - Chief Engineer of JSC RusHydro

34 35 2. Sustainable development of the technical system of hydro-generation

Quality control of work during Diagnostics and Extending Moreover, in the period of facilities opera- Managing Regimes design and construction the Operational Life tion the Company is mandated to develop of Existing Assets projects for pollutant emissions and dis- Each step of hydro-power engineers ulating the operational regimes of reser- of the HPPs, an issue of operational Design is conducted by its own design charge, projects of waste production norms in operating hydro-power plants is voirs, with territorial bodies of Russia`s regime management for the Zeyskaya center – JSC RusHydro`s subsidiary The Scientific Research Institute of and limits for waste disposal that should be very strictly regulated and controlled Emergency Ministry, the Ministry of Agri- HPP and the Bureyskaya HPP was con- companies (the Hydroproject Institute Energy Structures (NIIES, part of the approved by respective authorities respon- by the State: the regimes of filling and culture, Rosselkhoznadzor, Rosmorrech- sidered at meetings of the Government and the Scientific-Research Institute RusHydro Group) Center for the Control sible for environmental monitoring. the drawdown of reservoirs, and flood flot, Rosstroy, and JSC SO UES, and takes Commission on Emergency Prevention, of Energy Structures), furthermore, of Hydro-power Equipment Safety discharge at HSes are established into account the interests of all water Response and Fire Safety. Evgeny Dod, each project documentation undergoes (CCHES) and a special diagnostic lab- Risks connected to providing reliability by the Russian Ministry of Natural users and tasks that these departments Сhairman of the Management Board State examination. oratory to test equipment and materi- and safety: Resources, which is represented by the faced. Rosvodresursy and its territorial - General Director of JSC RusHydro, als by non-destructive methods when Federal Agency for Water Resources bodies, when determining the operational the Head of Russia`s Emergency At the construction stage, an automat- constructing, installing, repairing, and • To mitigate the risks of seasonal (Rosvodresursy). This Agency has terri- regime of reservoirs and hydro-power Ministry Vladimir Puchkov, the Heads ed diagnostic control system, which operating at enterprises which belong floods and freshets the hydro-meteor- torial divisions in Russian regions – the systems, guided by the provisions of the of Rosvodresursy, RosHydroMet, and performs the automatic collection to the group of hazardous production ological monitoring system operates BWMBs (Basin Water Management water legislation of the Russian Feder- Rostechnadzor and representatives of of readings and their computer pro- facilities, have been operating since within the framework of the Hold- Board), which define the operational ation and the Rules for the use of water the Russian Ministry of Energy partici- cessing to analyze the condition of the 2011. Center specialists are certified by ing, JSC RusHydro manages water regimes of HPPs. resources of reservoirs (PIVR ). pated in commission work. Decisions of hydro-power system`s facilities, is Rostekhnadzor to conduct diagnostics regimes, regulates reservoirs, and the Government Commission are taken introduced at plants. via non-destructive testing methods. builds and manages spillways, etc.; The territorial BWMBs provide instruc- In 2013, during the abnormal flood into account by the Amur BWMB in tions for reservoirs’ operational regimes, (caused by excessive rain) in the Far determining regimes for the Bureiskaya The Company places high demands Extending the operational life of the • The Company pays special attention which are agreed upon at meetings of in- East and the corresponding pressure and Zeyskaya HPPs during abnormal on its contractors. They must have a main equipment and improving ener- to possible risks related to terror- ter-departmental working groups on reg- increase on the hydro-power facilities rain flood discharge. workable, efficient management system gy efficiency during its operation are ist activities in the North Caucasus that takes into account all peculiarities provided for by a complex of annual territory. To mitigate this risk, the of the territorial distribution of JSC work in technical rehabilitation, recon- Company has implemented a complex RusHydro`s assets and also have suf- struction, repair and maintenance at program providing safety and an- ficient production capacities, qualified facilities and equipment. In 2013, JSC ti-terrorism protection; 2013 FLOOD: facts and figures reservoirs nearly two-thirds of • Thus, these two hydro-power plants personnel, as well as provide quality RusHydro’s TPiR Program funding was the Zeya and Bureya River inflow seriously reduced massive flooding guarantees and maintenance services. RUR 31,482.74 million including VAT, • The man-made disaster risk is average. • According to Russia’s RosHydroM- caused by the abnormal flood; of Amur Region territories. In the 46% of the Investment Program for the To mitigate this risk, the Company has et, in one month, beginning July 1, absence of the HPPs on the Bureya At the equipment procurement stage, year (see 2.2 Energy efficiency is clean implemented measures within the frame- above annual rainfall in some parts • On average, 9.37 km3 of water and Zeya Rivers, the entire volume JSC RusHydro concludes contracts energy potential). work of the comprehensive modernization of the Amur Region and in other passes through the Zeya HPP dam of extraordinary precipitation in with the manufacturing plant to train program for equipment and enhances the areas - 3-3.5 the monthly norm; in July and August. In 2013, the the upper reaches of the Zeya and its personnel to work on equipment, on Risk management skills of the Holding’s companies’ staff water was 2.6 times more during Bureya Rivers would have gone troubleshooting and on procedures to involved in operating and maintaining • Abnormal precipitation in the upper this less than two month period; down the riverbeds of the Zeya and repair purchased equipment. RusHydro operates in strict conform- equipment and construction facilities; reaches of the Zeya and Bureya Rivers Bureya Rivers towards Blagovesh- ance with design documentation that caused a sharp increase in inflow to • The Bureiskaya HPP stored 4.9 km3 chensk and further along the Amur includes a section of assessment • The seismic hazard in territories in Zeya and Bureiskaya HPP reservoirs; of water, which is 61% of the total River towards Khabarovsk. of environmental impact which re- which the Holding’s facilities are locat- abnormal flood volume which arrived ceived a positive opinion of respective ed is not significant as a rule, excluding • According to specialists, the at the Bureysky Reservoir (8.01 km3); regulatory organizations. HSes located in the North Caucasus hydro-power structures of the territory. These HSes are equipped with Bureiskaya HPP stored in their seismic monitoring systems.

Flood protection HSES projects in the Amur River basin

The most effective way to control floods which are based on design studies for The Hydrological Situation and Operating is to construct regulating reservoirs. In numerous hydro-power plants made in 2013, the Company began to develop a Soviet times. The Nizhne Bureyskaya HPP Regimes of Hydro-Power Plants construction program for flood control is the first link in a chain of such facilities hydro-power systems in the Amur basin, that can control flood run-off.

The Company has always paid special industry-wide. The RusHydro Holding’s It is difficult to overestimate HSes deterrent attention to managing the operation regimes hydro-power facilities have stood the test role during special periods like the one For more details, see 4.1. ENVIRONMENTAL SAFETY (Climate change and improving safety of hydro-power systems) of hydro-power plants. However, abnormal of strength. However, problems faced and that happened during the 2013 Far East floods in the Amur Region in 2013 forced lessons learned by the Company designat- flood. At such times, the management the Company to take a look at old prob- ed the national-scale of tasks to enhance of operational regimes of plants plays lems in new ways, and not only within the flood protection and to create new flood an important function. framework of the RusHydro Group, but protection for HSes.

36 37 2. Sustainable development of the technical system of hydro-generation HPPs Disasters and Emergency Preparedness JSC RusHydro`s goals • upgrading industrial safety at the • establishing and maintaining the in occupational health Company’s production facilities Company’s effective and efficient JSC RusHydro has created a func- In 2013, JSC RusHydro carried out the for emergency situations to urgently and safety: to a level which corresponds with management system in occupation- tional sub-system for preventing and following activities within the framework use it to localize and rectify emergency global best practices in electric al and industrial safety; responding to emergency situations, of emergency response preparation: situations and the consequences of acci- • continuously upgrading occupational generating companies by provid- the links of which are maintained in dents, the Company also has concluded and fire safety, monitoring the imple- ing timely technical rehabilitation • reducing industrial risks from newly constant readiness at the local level. • developing prevention and response cooperation agreements concerning the mentation of these commitments; and improving the reliability, commissioned and reconstructed facili- Work in the field of protecting cor- plans for natural and man-made emer- threat of and emergency situations with safety and accident-free operation ties by improving the preparation quality porate personnel from natural and gency situations and ensuring their the Federal State Autonomous Institu- • achieving a steady decline in acci- of process equipment; of pre-project and project documenta- man-made accidents is performed approval by the Emergency Ministry; tion “Situational and Analytical Center dents and industrial injuries; tion and conducting examinations. in full compliance with legal regu- (SAC) of the Russian Ministry of Energy” • developing plans for the localization of latory requirements and bylaws for (an agreement for the implementation of and response to emergency situations; hydro-power facilities. Monitoring information exchange in resolving tasks the protection status and organiz- • upgrading professional and accident-pre- to prevent and respond to emergency ing civil defense, and preventing and situations) and with the Federal Govern- vention training for operating personnel; Occupational safety and production supervision: organization and management responding to emergency situations ment Institution “The National Center across the RusHydro Group compa- • creating required financial reserves, for Crisis Management of Emergency nies are carried out by the Center reserves of building materials, machin- Ministry of Russia” (the Procedure for • Management of activities on occupa- • Development and supervision of • Supervision and implementation for monitoring the protection status ery, vehicles and other mechanisms; information exchange). tional safety at hydro-power facilities of the implementation of measures of measures on organizing occupational and operation of facilities. the Company and its SDCs, as well as on organizing occupational safety, safety, health care and industrial safety • conducting drills on civil defense and • the procedure for providing for the safe the organization and supervision of the health care and industrial safety directly at hydro-power facilities of the Planning and preparing measures preventing and responding to emer- operation and coordination of opera- implementation of occupational safety are carried out by the Occupation- Company and its SDCs are carried out for the rectifying the consequences gency situations: in total, 263 technical tional regimes of the HPPs in emergen- measures at the Company, including pre- al Safety Division of the Equipment by the Occupational Safety and Produc- of natural disasters and catastrophes, exercises, which involved about 60% of cy situations and in particular periods ventive measures to minimize production and Facilities Department (EFD), tion Supervision Services (OS&PSS) of programs for training / conducting total employees, were conducted; was improved; risks and to protect personnel is carried as well as by DTI and SK branches and the SDCs exercises in addressing consequences out by a member of the Management For more details, see. Appendix 1 “Quantitative • the membership of JSC RusHydro’s indicators to the Report” Board - Chief Engineer B.B. Bogush All employees of the Holding’s companies Commission on preventing and re- are provided with personal protective • insuring JSC RusHydro’s HPP hazard- sponding to emergency situations and equipment for natural and man-made ous facilities in accordance with FZ-225 ensuring industrial safety was specified emergency situations. Each year, the (dated July27, 2010) “On obligatory and its tasks were updated; Company’s employees are tested with civil liability insurance for the owner of software “Automated training system dangerous facilities against injuries in • a new warning procedure for emergency and monitoring the level of knowledge an accident at a hazardous facility”. and accident situations (both natu- of employees in the field of civil defense ral and man-made in nature) and an and emergency situation protection”. In Preventing and rectifying the internal emergency alert system were accordance with the action plan on civil consequences of emergency implemented; Occupational defense, and preventing and responding situations safety • contracts with professional rescue management to emergency situations, the Company units to respond to emergency sit- regularly conducts training activities con- Based on results of the abnormal flood Chief Engineer of uations and accidents at hazardous cerning emergency situations in branch- in the Far Eastern Federal District, JSC JSC RusHydro production facilities were concluded. es at the local level. RusHydro created a financial reserve

Development and supervision Occupational Safety and Production Supervision of the implementation of measures by the Occupational Safety Division JSC RusHydro has a modern occupation- JSC RusHydro`s Technical Policy defines processes for the preparation and timely EFD DTI and SK al safety management system, which is requirements for an integrated safe- submission of data on industrial safety at updated in response to changes in federal ty management system of production JSC RusHydro’s hazardous production fa- legislation in this field and structural processes, which includes an occupa- cilities and is an integral part of the pro- Supervision and implementation of measures on corporate changes. Each year, the Com- tional safety management sub-system. duction supervision “Monitoring” system organizing occupational safety, health care and pany holds activities to prevent accidents, An information system JSC RusHydro of Rostekhnadzor, has been introduced industrial safety in the field and sanitary-and-hygienic measures to Production Supervision harmonizes the and is successfully functioning. Occupational Safety and Production Supervision prevent occupational diseases, measures Services (OS&PCS) to improve general working conditions, as well as to provide employees with The Company’s priority in labor organization, personal protective equipment and the health care and industrial safety is to protect certification of employee workplaces. the life and health of employees during their employment

38 39 2. Sustainable development of the technical system of hydro-generation Measures and results in labor organization, health care and industrial safety 2.2 Energy efficiency is clean Main occupational health Workplace certification and safety directions Due to operational specifics, the Company In 2013 were certified 3,779 workplaces were certified, or 100% out of work- energy potential • measures to prevent occupational injuries; pays great attention to creating favora- ble labor conditions for its employees. In places subject to certification, of these • sanitary and hygienic measures to accordance with the Program for Labor 42% were recognized as compliant Upgrading energy efficiency in the prevent occupational diseases; Protection, and Industrial and Fire Safety with occupational safety requirements, power generation system “For Russia to reach the welfare standards in the Company’s Facilities for 2014-2020 which is 4% higher than the previous • measures to upgrade general working (approved by an Order of JSC RusHydro), year’s level. The number of work- of developed countries against the back- • As a strategic federal company, conditions; the Company carries out organizational and places with harmful* labor conditions JSC RusHydro plays an important ground of increased global competition technical events to upgrade labor conditions. dropped 4% compared with 2012. • providing employees with personal role in solving comprehensive so- and exhausted export and raw material protective equipment. As a result of measures undertaken in 2013, the cio-economic problems raised by the Russian government in the Con- sources, it is necessary to fundamentally In 2013, JSC RusHydro’s number of workplaces with hazardous working cept of Long-term Socio-economic occupational safety costs conditions declined 4% (compared with 2012) Development of the Russian Fed- upgrade the efficiency of utilizing all types were RUR143 million, eration until 2020, as well as in the of energy resources.” 2012 Workplace 2013 Workplace Energy Strategy of Russia until 2030. including RUR 72.9 million Certification Certification Russian State Program 42% for providing employees • The government, the main share- “Energy Efficiency and Energy Industry Development”. 38% with personal protective 62% 58% holder of JSC RusHydro, entrusts equipment the fuel and energy complex with the demanding task of improving ener- According to the Russian Ministry of Preventing occupational injuries gy security and reducing the energy • Optimizing water resource usage; Energy, the energy intensity of GDP Technical audits of numerous JSC RusHy- intensity of the energy sector. The in Russia is 2.5 times higher than the dro facilities were conducted within the Company plans its corporate devel- • Reducing energy consumption world average, and 2.5 - 3.5 times high- framework of the Operational Action Pro- opment strategy for production activ- for the Company’s own needs. er than in other developed countries. gram for preventing occupational injuries at ity development within the framework Workplaces with harmful labor conditions Workplaces with harmful labor conditions High energy intensity of electricity pro- the RusHydro Holding’s facilities (for details of these important challenges facing These priorities are also fixed in the Workplaces with optimal and acceptable Workplaces with optimal and acceptable duction is directly due to high depreci- see 4.1 ENVIRONMENTAL RESPONSIBILI- labor conditions labor conditions the country’s power engineers. Innovative Development Program and ation of fixed assets. More than 90% of TY (Environmental impact and measures to the Comprehensive Modernization * In accordance with Clause 14 of the Federal Law #426 “On Special Asession of Labor Conditions” dated existing power plant facilities and 70% reduce pressure: the RusHydro Holding). December 28, 2013, harmful labor conditions (3rd class) represent labor conditions in which the levels of harmful • The 2013 total effect of implementing Program, as well as supported by the and (or) hazardous production factors exceed the levels established by norms (hygienic norms) of labor conditions. of processing equipment for electrical measures to upgrade energy effi- Investment Program, which serves as grids were built before 1990. In implementing the Integrated accident The occupational safety fund and training of production and industrial personnel ciency and reduce indirect energy a tool for the implementation of the base registrar processes for accounting, RUR 143 million: the occupational safety fund in 2013 consumption has been evaluated According to the Russian Ministry of Strategic Plan on an annual horizon analyzing and scheduling for the fulfillment by the Company as being equiva- Energy, the industry operates 15% of and which defines key tasks for each of instructions for the public, and depart- The occupational safety fund: structure Training of JSC RusHydro employees, lent to an increase in production fully deteriorated fixed assets. As a corporate activity mental and corporate supervisory bodies, contractors and sub-contractors in of 2,070 million kWh/year, including whole, in RusHydro, the turbine con- in terms of occupational and fire safety, occupational health and safety 18% the direct effect by increasing the dition index is 67.29%, which corre- processes were automated in corporate energy efficiency of existing HPPs sponds to “satisfactory” technical con- branches in 2013. under the Comprehensive Modern- 20% 51% 27.8% 72.2% dition. However, in some branches, the ization Program and the indirect In 2013, to improve occupational and indus- deterioration index has reached 70%. one of optimizing water resource trial safety, including the improvement of usage and reducing power losses The 2010-2015 Program on energy quality of introductory and initial briefings in grids near the plants. conservation and upgrading energy on occupational and industrial safety con- 11% efficiency for RusHydro ducted among employees of contractors, Nationally important task industrial control and occupational safety The 2010-2015 Program on energy department functions in the generation The Russian State Program “Energy saving and upgrading energy efficiency segment were revised, as well as the or- Efficiency and Energy Industry Develop- sanitary and hygienic measures employees trained in occupational for RusHydro (hereafter referred to as ganizational control of their safety work at to prevent occupational diseases health and safety ment” provides basic areas of activities the Program) is the central link to the the Holding’s facilities strengthened. measures to prevent accidents other employees to upgrade energy efficiency using all providing employees with personal RusHydro Group’s common approaches types of energy resources: protective equipment to energy efficiency. Preventing occupational diseases measures to upgrade general In 2013, to prevent occupational diseases, working conditions 1. Energy saving and energy The document defines three main areas medical examinations of the Holding’s efficiency improvement; of activities to reduce the energy inten- companies’ employees and rehabilitation In 2013, the Company’s occupational safety sonnel from among Company employees and 2. Power industry development sity of production: measures based on the results of these costs were RUR 143 million. Of this, 51% (RUR the employees of contractors and sub-con- and modernization; examinations were conducted; employees 72.9 million) was aimed at providing employ- tractors and included training employees in • Upgrading energy efficiency were vaccinated; monthly days of occupa- ees with personal protective equipment. 9,047 techniques to provide first aid to industrial 3. Development of renewable at existing HPPs; tional and fire safety were held; and work- people (72.2% of employees) were trained in accident victims, studying reviews of injuries in energy sources ing conditions at workplaces were certified. occupational health and safety. Training was electric power organizations, and briefings and conducted among industrial production per- verification of employee knowledge.

40 41 2. Sustainable development of the technical system of hydro-generation The Program provides a range of activi- performance certificate for JSC RusHydro Within the framework of the Comprehensive Modernization Program, The Concept ties to reduce the Company’s own energy was developed. In 2013, the Company carried consumption at HPPs and market losses, out energy audits at the Bureyskaya HPP, the JSC RusHydro plans to reduce the deterioration rate of the total turbine of the Energy develop generation based on renewable Zeyskaya HPP, the Nizhegorodskaya HPP, fleet down to 32%, of generators down to 35% and of transformers energy sources, implement innovation in the Novosibirskaya HPP, the Sayano-Shush- Efficiency energy saving, and efficiently utilize water enskaya HPP and the Mainskaya HPP, the down to 44% by late 2025. resources, as well as measures to enter Cascade of the Verkhnevolzhskiye HPPs Improvement new service markets: energy saving, energy and the Cascade of the Kubanskiye HPPs. Upgrading energy efficiency at existing HPPs auditing, and energy metering. The tech- Based on the complex energy audit results, Program nological aspect of energy saving is at the the Company formed technical programs to During 2013, the total installed capacity of RusHydro’s generating companies increased 896 MW, including 62 MW thanks forefront of the Program, at first instance, upgrade energy efficiency. to the comprehensive replacement and modernization of turbines and hydro-power units Uniqueness of the RusHydro Holding’s the modernization of the Holding’s compa- Large-scale implementation of retro-fit- From 2012 to 2025, the Company plans to replace Financing the Comprehensive status (energy generation only from nies’ fixed assets. ting and upgrading programs at RusHydro Modernization Program, RUR bln renewable energy sources) contributes To evaluate energy saving potential at its power facilities in 2013, along with the to formation of the Program’s objectives facilities, the Company conducts energy commissioning of new capacity, provided audits of power plants every three years. On total electricity generation of 124.1 billion 33 the basis of energy performance certificates kWh, which is the highest value since the Increased Turbines energy efficiency of the branches, a consolidated energy Company was founded. Generators Transformers 32 of Russia’s economy

154 119 176 • Reduced use of organic fuel Comprehensive • Increased energy efficiency of Modernization Program electric energy industry by means of constructing efficient HPPs The Company has set itself a serious and ambitious units units of control wiring high-voltage of auxiliary • Increased energy efficiency of goal: all basic generating equipment that has equipment switches equipment 2012 major thermal and nuclear energy exceeded its safety lifespan 2013 generating units by means of wid- er use of energy storage systems Approved by JSC RusHydro in 2011, the The Program’s defining feature is that Comprehensive Modernization Program it focuses not on spot replacement of 8,000 396 >4,000 • Motivating electric energy consumers for generating facilities provides for the individual components and assemblies, to use energy saving technologies replacement of all safety life-expired but on comprehensive modernization of basic generating equipment by 2025. The generating facilities as unified techno- Program’s key requirement is the ab- logical complexes, with the replacement sence of safety life-expired basic gener- or reconstruction of main and auxiliary Increased ating equipment units by the end of CMP equipment, general station systems, and energy efficiency of implementation. hydro-power structures. the Holding’s business Comprehensive Modernization Program Construction Commissioning TPiR • Increased energy efficiency Targets by 2025 The Nizhne-Bureyskaya HPP (the Amur The Boguchanskaya HPP: construction The Volzhskaya HPP – three turbines with a of operating HPPs Based on the Region): the site has been unwatered, work on the planned eight hydro-power total capacity of 345 MW have been replaced. assessment of • Reducing turbine wear from 69% construction of basic structures has be- units with a capacity of 2,664 MW has gun, and the equipment supply contract been fully completed. But, because of The Zhigulevskaya HPP – two turbines • Optimized use of water resources equipment and hydro- in 2010 to 32% has been concluded. power output restrictions caused by and one hydro-power unit with a total power structures’ the unavailability of a power distribu- capacity of 345 MW have been replaced. • Reducing generator wear The Cascade of the Verkhne-Narynskie • Decreased energy consumption condition, the current HPPs (Kyrgyzstan): the preparatory stage tion scheme, only four units have been for the Company’s needs in all from 68% to 35% has started, a hydro construction camp put under load. The Kamskaya HPP – three turbines wear and the target has been erected, the project feasibility types of activities with a total capacity of 63 MW have been deterioration by the • Reducing wear of transformers study has been approved. The Sayano-Shushenskaya HPP: replaced, two generators with 42 MW year of CPM completion from 65% to 44% The Gotsatlinskaya HPP (Dagestan): hydro-power units №10, 6 and 5 have been total capacity have been modernized. were defined. installation of hydro-power units is in commissioned. Plant power is 4,480 MW. progress, the dam is being built. • Reducing wear of high voltage The Rybinskaya HPP – one hydro-power The Ust-Srednekanskaya HPP: two unit with 55 MW total capacity has been switches from 56% to 50% The Zelenchukskaya HPP-PSPP (Kara- Turbines, generators, chay-Cherkessia): erection of water con- units with a total capacity of 168 MW modernized. have been put under load. transformers and ducts for the lower pond is in progress, JSC RusHydro’s • Reducing wear of control wiring the construction of the lower basin and The Saratovskaya HPP – one horizontal 2010-2015 Program on control wiring equipment from 65% to 40% the diversion is underway. capsule unit with a capacity of 45 MW and two generators with a total capacity of energy conservation and equipment are the Small HPPs: the Zaragizhskaya SHPP 120 MW were replaced. upgrading energy most worn-out • Reducing wear of auxiliary (Kabardino-Balkaria) is 50% ready, the equipment from 54% to 34% project of the Bolshoi Zelenchuk SHPP equipment. (Karachay-Cherkessia) has been approved. The Cheboksarskaya HPP – one turbine with a capacity of 78 MW was reconstructed.

42 43 2. Sustainable development of the technical system of hydro-generation

The greatest effect in resolving the prob- • Measures to reduce electrical losses in Within the framework of the TPiR, apart Decline in domestic electricity consumption lem of increasing energy efficiency at the power transformers; from the replacement and modernization of Holding’s companies’ facilities in 2013 hydro-power units, the Company has been Reducing the Company’s own energy In 2013, there was a downward trend in the actual losses, the loss ratio (specific indi- was provided for by: • Installation of modern energy efficient conducting large-scale reconstruction of hy- consumption in the process of economic loss ratio in the near-station network, as a cator against the growth in electricity gen- equipment and machinery. dro-mechanical and electrical equipment of activity and network losses result of measures aimed at modernizing eration during the same period) decreased • Measures to increase the power and the HPPs, as well as hydro-power structures. efficiency of hydro-power units; the stations’ power equipment. Despite to 0.65% (compared with 0.74% in 2012). the slight increase in the absolute value of Actual losses were 606.1 million kWh.

Formation of lean behavior among consumers Energy efficiency measures Popularization and promotion of energy thematic forums and training seminars. all-Russian “Energy Efficient Russia” and achieved results conservation and energy efficiency among For all listeners, sessions are free. The Forum to attract the attention of the different population groups in the regions energy-saving work and projects of ESC general public and Russian citizens to the RusHydro’s energy sales companies have problem of saving energy. In 2010, the 2010-2015 Program on en- been repeatedly recognized by govern- Comprehensive meas- Economic effect of energy saving measures in 2013 ergy conservation and upgrading energy ment, regional and industry-wide awards. Special programs have been designed efficiency was approved by JSC RusHydro. both for those who are just learning to save ures taken by RusHydro 1. Output growth due to increasing 2. Output growth due to optimizing water As part of the Program, it was decided to Educational events in the field of energy energy, and for professionals in energy con- in 2013 to reduce energy capacity (technical re-equipment resource usage: establish at the premises of energy sales saving and upgrading energy efficiency servation. In addition, RusHydro conducts program): companies Regional Energy Efficiency large-scale charity events in children’s social consumption brought the In 2013, measures to optimize water and Energy Saving Centers (REEESCs). In 2013, the educational project “Imple- institutions in the regions where it operates Company a 2,070 million In 2013, efforts to upgrade energy resource usage brought the Company REEESCs work in Krasnoyarsk, Ryazan mentation of training programs within the as part of promoting energy saving. kWh growth in long-term efficiency brought the Company an additional electricity output of and the Republics of Bashkortostan and framework of REEESCs” gained further a 220.2 million kWh growth in 1,850 million kWh per annum, which is Chuvashia and represent multi-discipli- momentum. In addition, the Company average output* per an- electricity production per annum, equivalent to fuel saving in the amount nary exhibition and educational sites for was interacting with stakeholders in the num, which is equivalent which is equivalent to fuel saving in of 627 thousand tons of equivalent the amount of 75 thousand tons of fuel per year. to saving 712 thousand equivalent fuel per year. tons of equivalent fuel Implementation of additional services in the field of commercial energy accounting (*) The index is calculated as follows: the index “growth in long-term average output” is translated into tons and reducing emissions of coal equivalent (via the coefficient 0.341). To re-calculate the index, expressed in tons of coal equivalent, Energy supply companies are working working as management companies for Shilovo Social Rehabilitation Center for to the index “Reduction CO2 air emissions”, the coefficient 1.9 is used (CO2 emissions amount to 1,900- 1,353 tons per year 3,000kg/ t, depending on the type of coal). within the framework of RusHydro’s 2010- the housing market and the utility sector Children and Adolescents and the Panino 2015 Program on energy conservation in Krasnoyarsk and Chuvashia. To date, Secondary School in the Ryazan Region, (in terms of CO2). and upgrading energy efficiency, actively about 300 contracts for comprehensive and at Special (correctional) School № 2 providing energy auditing and thermal energy efficiency assessments at various in Cheboksary and Children’s and Youth control services to organizations and en- facilities have been executed. Within the Sports School of the Olympic Reserve terprises in Russian regions, conducting framework of pilot projects, the Compa- (Ice Hockey) № 4 in the Chuvash Republic. Optimizing Water Resource Usage express energy audits of houses and ny carried out free energy audits at the

• To upgrade the quality and timeliness • During the modernization of informa- hydro-meteorological observation net- of forecasts for inflow to HPPs sites, in tion-analytical system “Control Center work in the SHHPP dam lake. Modules 2010-2013, the Company carried out of HPP Cascades”, the Company im- of medium-term planning for HPPs of development projects for hydro-mete- plemented the medium-term planning the Far East and Siberia. orological observation networks within system for the water-energy mode of the framework of the Program. The the Volzhsko-Kamskiy Cascade HPPs. JSC RusHydro has a large and nationally Company, together with RosHydroMet, This system enables the Company to important task of national significance – is implementing a development project promptly make scenario calculations to develop the concept and effective man- for a hydro-meteorological observation for the operational modes of a hy- agement of Russia’s water resources network in the SHHPP dam lake. In the dro-power plant cascade and select the utilization system*. In 2013, proposals Dagestan branch, a hydro-meteorologi- best operational mode for the HPP, up- for the Company’s participation in its cal observation network was created on grading energy efficiency in water use. implementation were submitted to the the Sulak and Samur Rivers. 22 hydro- Government for consideration. • The Company began installation of logical stations and five meteorological (*) As instructed by the President of the Russian stations were equipped. hydrological station equipment for the Federation Vladimir Putin (Order № 2772 dated 15.10.2012)

44 45 2. Sustainable development of the technical system of hydro-generation 2.3 Innovation – a fast track Innovation and Sustainable Development to sustainable development Objectives and indicators of the Innovative Development Program

Integrating innovative activities Integrating innovative activities Program Objectives into Corporate Social Responsibility into business processes JSC RusHydro's Innovative Activities Concept processes and sustainable development

In 2013, the Company continued to work on Development Program has been function- Plan, the Technical Policy, the Program for The growth in the Company’s Energy efficiency: the total growth capitalization, the formation of strategic The Program’s projects provide for the in electricity generation through key priorities and targets for JSC RusHydro’s ing in RusHydro since 2011 and is integrat- the Safe Operation of Power Facilities, the competitive advantages through sufficient reliability and operational implementing energy efficiency 2011-2015 Innovative Development Pro- ed into the system of the Company’s strate- Energy Efficiency Program, and the annual integrating innovative solutions, methods, safety of the RusHydro Holding’s measures - to 3.3 billion kWh (4.04%) facilities; gram (with a view to 2021). The Innovative gic documents and programs (the Strategic production program, etc.). competencies and technologies into the (from 2011 till 2020); business processes of the Company and SDCs/auxiliary dependent companies; Environmental compatibility: the share Technologies and technical solutions of alternative RES in the installed Increasing labor productivity (not less being developed within the framework capacity structure -5%; than 15% within 5 years); of the Program are also intended to The Company’s innovative upgrade energy efficiency and energy development priorities saving; Interaction with stakeholders: the share of financing for R&D projects implemented include Significantly decreasing electricity with the participation of scientific and generation costs, engineering costs and educational institutions out of total R&D construction time (not less than 10% funds - up to 20% per year (from 2011 till within 5 years); Technologies and technical solutions being developed within the framework 2020); of the Program will be included in a list of recommended- to-use technologies Upgrading the environmental of the Database of the Company’s The share of the Company's revenues compatibility of generation, increasing allocated for financing innovative Technical Policy, if innovative projects reliability and safety of the RusHydro are successfully implemented. development (including R&D) by own Holding’s facilities Developing a new resources - 3% per annum. Increasing safety generation based Upgrading energy and reliability on RES efficiency Ecology Implementing Innovative Development Projects

JSC RusHydro has formed a multi-level Technology Platform “Advanced Technol- From the implemented R&D and research program to search for and select innova- ogies of Renewable Energy” (hereinafter – activities, RusHydro selects only those tive projects. New developments related the Technology Platform) initiated and coor- projects that lay the foundation for future to accomplishing technical tasks to up- dinated by JSC RusHydro play an important hydro-power sector development to be grade equipment operation are being re- role in forming an innovative environment. practically implemented. So, in 2013, the Generation Construction Water resources materials and materials and solved within the framework of research STC includes about 200 leading Russian Company approved for implementation management technologies technologies and development (R&D) and the research experts, academics and industry practi- 14 new projects. 34 projects have been activity of the Production Program. tioners. The decision of STC launches the implemented (at different stages) in 2013 practical implementation of the RusHydro from previously approved research and The Scientific and Technical Council of Group’s innovative projects, providing for development projects. JSC RusHydro (hereinafter – STC) and the objective professional external evaluation.

Creating and integrating new equipment and technologies in 2013

Supporting research and development of 1. In 2013, the Company completed the 2. In 2013, the Company obtained Improving innovative technologies and integrating development of standard equipment for 17 patents for inventions and utility Information and tel- Upgrading the Upgrading the quality of human corporate business efficiency of the them into production processes low-head small HPPs with orthogonal models, including ecommunication processes technologies capital assets thermal power sector hydro-power units

46 47 2. Sustainable development of the technical system of hydro-generation

After the reporting period, in May took place in Moscow. This was a Title Patent holder Subject 2014, the Company carried out the key event of Russia’s chairmanship Multi-layer combined antifouling coatings, Development of efficient methods Annual Summit of the Partnership with in the GSEP; the participants if the providing repellent and hemobiosebe RusHydro to protect the flow path of a HPP from participation of heads and represent- Summit summed up the result of the protection (invention) zebra mussel formation atives of major global energy com- year and discussed plans for energy Development of standard equipment for panies-GSEP members. The Summit systems development. Low-head mini-HPP (utility model) RusHydro low-head small HPPs with orthogonal hydro-power units Pumped-storage power plant with Development of the concept and pilot an underground location of the lower project of the pumped-storage power plant The Technology Platform "Advanced technologies of renewable energy" RusHydro reservoir and the combined passing with an underground location of the power method for the lower reservoir (invention) house and the lower reservoir (PSPPUR) In 2013, the Technology Platform “Ad- Government High Technology and Innova- In October 2013, the First International vanced Technologies of Renewable tion Commission Meeting in April 2011. In Forum on Renewable Energy “Renewable Energy” (hereinafter – the Technology 2013, the composition of the Technology Energy. Towards Raising Energy and Eco- Platform) gained further momentum. Platform included 108 organizations. 18 nomic Efficiency” (REENFOR-2013) was Creating an External Innovative Environment The Technology Platform was created projects totaling RUR 536 million were held under the auspices of the Platform. at the initiative of JSC RusHydro to form implemented within the framework of the JSC RusHydro sponsored the forum. In 2013, the Company continued scien- the Moscow State Construction University 2. For scientific and technical cooperation innovative development infrastructure Technology Platform. tific and technical activities in the field and St. Petersburg State University. Also, with the Siberian Branch of the Rus- and was approved by the Minutes of the of energy efficiency with its own scien- in 2013, JSC RusHydro signed the follow- sian Academy of Sciences to organize For more information about Technological Platform activities, please visit the Company’s website: http://www.rushydro.ru/activity/emerging_technologies/ tific institutes and in collaboration with ing agreements: the introduction of innovative products scientific organizations and educational and scientifically-intensive technologies institutions, as part of the Innovative De- 1. For strategic partnership with the developed by the Siberian Branch of Innovative development trends in the Technology Platform framework velopment Program. Some projects are National Research University Moscow the Russian Academy of Sciences using implemented by the Company with the Power Engineering Institute’s branch RusHydro’s technological potential; involvement of industry-specific refer- in Volzhskiy, and the Nevinnomyssk ence higher education establishments, Technological Institute; 3. For interaction with the Russian Foundation including: the Far East Federal University, for Basic Research to jointly implement innovative projects under construction.

Solar Hydro-power Power Supply Power (including large- Systems Wind Power Cooperation within the framework of the GSEP scale) using RES

Since 2008, JSC RusHydro has been The organization’s main objectives are: • Exchanging experience in the pro- a member of the Global Sustaina- duction and use of electricity and the ble Electricity Partnership (GSEP), • Developing a common sustainable devel- development of electricity markets; an international energy organization opment policy for the electricity industry; founded in 1991 that brings togeth- • Providing assistance to developing Sea / Ocean Hydrogen Energy er major energy companies from • Organizing large-scale debates on envi- countries. Power Power Storage Units the “Group of Eight” (G8) countries. ronmental protection, globalization and social policy;

• In June 2013, JSC RusHydro as- • As part of the international cooperation countries. To date, JSC RusHydro has sumed chairmanship of the Global with the GSEP, RusHydro prepares the contributed USD 300,000 to the GSEP

Sustainable Electricity Partnership Company’s position on all internation- Patagonia project (Argentina). Power (GSEP), an international energy al issues relating to the development Geo-thermal from Tides, Waves organization. JSC RusHydro declared of the Russian electricity sector, and • Russia’s Chiarmanship in the GSEP Power and Currents the theme of the year - “Innova- coordinates its position with the Russian is a milestone event for RusHydro and tions, a Fast Track to Sustainable Ministry of Energy. Within the framework Russian energy industry in general. Global Development”. This theme of the GSEP Design Committee, the The theme of the year – “Innova- reflects the Company’s position that Company participates in determining tions, a Fast Track ti Sustainable sustainable development problems and implementing joint pilot projects Global Development” – established a cannot be resolved without inno- in terms renewable energy and small direction of discussions for 2013-2014 vative breakthroughs. hydro-power plants in developing in the Partnership. Other RES-based Source: The Technology Platform “Advanced Technologies Technologies of Renewable Energy”

48 49 2. Sustainable development of the technical system of hydro-generation

Main participant groups for the Technology Low-pressure small HPPs (power of the rivers)

The Company is implementing low • In 2013, the Bolshoy Zelenchuk small pacities of these SHPPs are scheduled pressure small HPP projects (power HPP project developed by JSC RusHy- to be commissioned before 2017; of no more than 30 MW) mainly in the dro subsidiaries - JSC Hydroproject • JSC RusHydro’s proposals on the Government North Caucasus, as this region has good Institute and JSC NIIES - received hydro-generation potential; a positive opinion from the State systematic development of small expert review; hydro-power engineering have been • In 2013, the Company continued included in the projects of the State construction of the Zaragizhskaya • The 2013-2017 Investment Program Program “Energy efficiency and the Non-Profit HPP (28.8 MW) - the third stage of also includes five small HPP pro- development of the power industry”, Business Organizations the Cascade of Nizhne-Cherekski- jects in the Stavropol Region: the the Federal Target Program “Develop- ye HPPs. By year-end, construction Barsuchkovskaya HPP (4.8 MW), the ment of the water utilization system of readiness exceeded 50%. In 2014, the Sengileyevskaya HPP (10 MW), the the Russian Federation in 2012-2020” Company plans to complete construc- Stavropolskaya HPP (1.9 MW), the and the Departmental Target Program tion of the head pond and develop Yegorlykskaya HPP-3 (3.5 MW) and the “Development of small hydro-power on power house construction and the Bekeshevskaya HPP (1 MW), as well small- and medium-sized rivers, as well 110 kV outdoor switchgear. Start-up is as the Ust-Dzhegutinskaya SHPP (4.74 as for non-power waterworks of the scheduled for late 2014; MW) in Karachay-Cherkessia. The ca- Russian Federation in 2012-2020.”

Technology Design Finance “I see the change in approaches of different countries Organizations Platform and the leaders of these countries to the issues of green energy, green growth, and renewable energy. It is taking place in front of our very eyes. Russia is changing its attitude towards renewable energy sources. We think that they have a great future.”

Dmitry Medvedev, Experimental Education Russian Prime Minister Design Bureau

Development outlook

Science • Adopted by the Government in 2013, a 28, 2013 “On Mechanism of Stimu- results of the first competitive selec- Source: The Technology package of measures of State support lating Use of RES in the Wholesale tion of projects for future construction Platform “Advanced Technologies of for renewable energy through the Electricity and Capacity Market” and of generating facilities operating on Renewable Energy” mechanisms of the wholesale elec- by the Order of the Government of the basis of RES. Adoption by the Gov- tricity market gives new impetus to the Russian Federation #861-r dated ernment of the Russian Federation of the development of power engineers’ May 28, 2013. the regulatory base described above initiatives. The rules of establishing creates conditions providing economic a price for capacity of generating fa- • Adoption of the regulatory framework efficiency of investments into RES- cilities operating on the basis of RES, governing the sales of RES-generated based generation projects. Currently, Development of Small-Scale Hydro-Generation mechanisms and key parameters electricity on the retail market and the RusHydro Group considers an of support of the RES-based energy the wholesale electricity and capacity opportunity to take part in competitive generation in Russia were adopted by market and the 2014-2020 FTP R&D selection of projects for construction Development of small-scale RES generation the Decree of the Government of the was a significant advance in this area. of generating facilities functioning on Russian Federation #449 dated May In September 203, JSC ATS published the basis of RES. In 2013, the Company’s asset portfo- including 244 MW - small hydro-power through a wider use of the energy of lio included 35 small-scale plants (no plants (SHPP) or 1.2% of the total small rivers, and geo-thermal pow- more than 30 MW) working via advanced installed capacity of JSC RusHydro’s er, etc. is one of the Company’s stra- renewable energy sources (the power generating companies. tegic objectives. of small rivers, geo-thermal and tidal For more information see 4.2 POWER DEVELOP- power). The total installed capacity of Developing advanced RES-based tech- MENT OF THE FAR EAST (the RusHydro Holding: small-scale RES projects was 320 MW, nologies and upgrading energy efficiency RES pilot projects in the Far East

50 51 3. Social responsibility Central Russia Section 3. Social responsibility

Central Federal District and the Volga region For many centuries, this area was the center of the Russian state. This was a direct result of the region’s geographical location: in the center of the European part of Russia. This was the land where the Russian nation was formed. The central part of Russia has the country’s highest population density, at 3.1 Responsible interaction – a condition 59.70 people per km2. The district is Russia’s largest in terms of population numbers. The main natural wealth of the federal district is the iron ores of the Kursk Magnetic Anomaly. In terms of its geological of corporate social responsibility reserves, the Kursk Magnetic Anomaly tops the world list, while, in terms of book value, it is Russia’s number one. Other mineral resources include major reserves of chalk, limestone, fire and brick clay, marl and building, glass and molding sands. CSR Approaches

JSC RusHydro, in its social policy, aims general principles of the United Nations dialogue based on mutual respect of to comply with international standards Global Compact (UNGC Corporate Sus- interests, values, attitudes and differenc- and best practices in the field of human tainability) in the field of human rights, es of key stakeholders”, outlined in the rights, labor relations, environmental labor relations, environmental protection Social Charter of Russian Business. The protection and anti-corruption, interac- and anti-corruption). Company has been a member since 2013. tions with stakeholders, while focusing on the Guidance on Social Responsibility (the JSC RusHydro shares and implements RusHydro facilities’ ISO 26000 International Standard) and in practice the principle of “Systematic The region’s energy generation in the consumption region

Uglinskaya HPP

339 billion Zagorskaya Pumped Rybinskaya HPP The responsibility of the organization for the impact of its deci- Storage Station 40 Khorobrovskaya Mini HPP kWh Moscow billion sions and activities (including: products, services and processes) NizhegorodskayaВысокая HPPманевренность on society and the environment through transparent and ethical ГЭС являютсяNizhniy Novgorod наиболее маневренными и kWh способны при необходимости существенно 12% of the behavior that: увеличить объемы выработки в считанные energy минуты, покрываяCheboksary пиковые нагрузки consumption Cheboksarskaya HPP • promotes sustainable development, including the health Votkinskaya of the entire Kazan HPP and welfare of society; Kamskaya HPP Central part of Saratovskaya Zhigulevskaya Perm Russia HPP HPP Saratov • takes into account stakeholder expectations; Samara Volzhskaya HPP Volgograd • complies with applicable law and is consistent with international norms of behavior; • is integrated into activities throughout the organization and applied in its relationships with stakeholders within its sphere of its influence.

International Standard ISO/FDIS 26000 Population Area

68,000,000 1.7 mln km2, 10 % of the area of Russia, people or approximately five times the size of Italy

53 3. Social responsibility Analysis and Improvement Interaction with Stakeholders of Social Responsibility Practices

In 2013, JSC RusHydro conducted an anal- the process of interaction, was upgraded. tractors, State and public organizations, The Company seeks to develop effective tion for sustainable development In the the expert community and business. ysis of stakeholders. The analysis was car- Stakeholder identification was undertaken professional and local communities, the systematic dialogue with stakeholders. future, the Company plans to hold such All speakers unanimously expressed a ried out by questioning managers of the by the Company to clarify the formats and mass media, universities and other edu- To this end, in 2013, in the process of meetings on a regular basis (at least 2-3 high opinion of the efforts made by JSC Company’s executive office and assessed target groups to expand this interaction. cational institutions as key stakeholders. report preparation the Company organ- times per year). RusHydro’s management to improve the main stakeholder groups, and mecha- ized a round table with the participa- the reliability and safety of hydro-power nisms of interaction and influence. Based JSC RusHydro regards its employees, tion of stakeholders on the reliability The discussion was attended by repre- structures. Numerous issues discussed on the survey’s results, the Map of RusHy- shareholders and investors, consumers and safety of the RusHydro Holding’s sentatives of government agencies (in during the meeting will be further dro’s major stakeholder groups, indicating of the Company’s products and services, industrial activities. This topic and the particular, the Russian Federal Agen- developed in 2014. The next discus- the degree of their mutual influence in business partners, suppliers and con- issues discussed at this round table are cy for Water Resources), educational sion with stakeholders the Compa- reflected in this Report in section 2.1 institutions, public organizations, the ny plans to devote to the corporate RELIABILITY AND SAFETY – the founda- media, industry-specific organizations, social policy issues.

Stakeholders’ Map, indicating the degree of their influence on JSC RusHydro • JSC RusHydro’s corporate social More detailed information on the key themes of interaction with major stakeholder groups in 2013 is presented in the Table BASIC FORMS AND THEMES OF INTERACTION WITH KEY STAKEHOLDER GROUPS IN 2013, page 11. activities and JSC RusHydro's influence on them responsibility is realized in the process of interactions with society and local 1 2 3 communities in the regions in which Shareholders and investors 3 the Company interacts, and aims to create a favorable social environment. Transparency Federal authorities information that may affect the prices of team for analysts, investors and rating RusHydro securities. Corporate web- agencies were continued. Supervisory authorities • The intracorporate social policy is implemented in the field of person- JSC RusHydro provides full and timely site content is updated regularly. At the nel management and is designed to disclosure of all aspects of its activities request of shareholders, the Company The capital market is assigned no small Shareholders ensure rapid development of the talent (except in cases where information is provides copies of internal documents, part in assessing the performance of a trade secret). The main channel of documents and materials related to the RusHydro. Today, the Company is cov- Staff pool as the Holding’s companies’ main resource and the fulfillment of information disclosure is the corporate General Meeting of Shareholders, lists ered by 15 industry analysts from largest JSC RusHydro’s large-scale produc- website (http://www.rushydro.ru/ in Rus- of affiliates and other documents in ac- investment companies. Regional authorities tion tasks in the interests of the State, sian and http://www.eng.rushydro.ru/ cordance with the Russian Federal Law shareholders and the workforce. in English), which contains information On Joint Stock Companies. RusHydro strives to promptly respond to Investors about material facts, events, manage- all information requests from investors Investor Relations Media 2 ment structure, and results of financial and analysts and is an active participant Business partners and economic activities. The website in industry conferences and investment presents the Charter and other internal JSC RusHydro is open to contacts with forums, both Russian and foreign. In Suppliers and contractors documents, annual reports, quarterly the investment community. In 2013, information disclosure to investors, the Municipal authorities financial statements under Russian there were more than 200 individual and Company seeks to go beyond formal Accounting Standards (RAS), quarterly group meetings with managers of major requirements of the stock exchanges Customers and consumers financial statements under IFRS, press foreign and Russian funds investing in and market regulators, focusing on best releases, presentations, the corporate shares. Quarterly conference calls with corporate practices. Great attention is Local communities in the regions in which the Company operates newspaper, data on affiliates and other the participation of the management paid to non-financial disclosure.

Professional communities and non-profit organizations Level Company stakeholders’ the on of influence

Trade union organizations JSC RusHydro is recognized 1 2013: as the best company in the Educational institutions and universities 1st place in investor relations (IR-Ser- 2nd place in the category “Best field of investor relations vice) among electric power compa- IR-Manager” among mid-cap compa- (IR) among electric power Level of the Company’s impact on stakeholders nies – Thomson Reuters Extel Europe nies – Thomson Reuters Extel Europe companies (Russia and CIS),

rd according to voting results * Professional communities include energy, environmental, charitable and other 3 place in investor relations IR-Ser- organizations and expert communities. vice) among mid-cap companies – of Thomson Reuters Extel Thomson Reuters Extel Europe Europe 2013

54 55 3. Social responsibility

Employees Interaction with regional gional authorities in the regions in which social partnerships in regions in which and municipal authorities it operates and is creating a favorable they operates. Making social and eco- social environment for efficient develop- nomic cooperation agreements is one of HR Policy: conditions of employment Relationships between the Company and please refer to 2.1 “Work Safety and JSC RusHydro is making constant efforts ment of the companies of the Holding, the forms to develop social partnership. and workplace safety the workforce are governed by law and Production Control”). to provide strategic cooperation with re- including through the development of the Russian Labor Code. In 2013, a new JSC RusHydro seeks to shape an standard collective bargaining agreement The HR policy being implemented within attractive for employees work envi- was signed, which will be valid until 2016. the RusHydro Group helps create a coher- Mechanisms of interactions with authorities ronment focused on achieving results, Provisions of collective agreements apply ent staffing system for all levels of man- professional development and career to all employees (100%). The Work Safety agement based on professional education, As of 31.12.2013, 16 cooperation agreements growth. Fundamental objectives, section is compulsorily present in all stand- training and the re-training of managerial, were entered into with the following regions: principles of and approaches to Human ard collective bargaining agreements and engineering and technical personnel and Federal level Resources Management are fixed in individual employment contracts. skilled workers for research and devel- (legislative and executive 1. The Republic of Altai the Company’s Social Policy (which opment, construction, maintenance and was adopted in 2013). The Company does not utilize child and/ operational complexes (see 3.2 “Human authorities) 2. The Republic of Bashkortostan or forced labor (for further information Resource Development”). 3. The Republic of Dagestan

4. The Kabardino-Balkarian Republic Regulatory and supervisory authorities 5. The Republic of North Ossetia-Alania RusHydro operates in strict accordance Interaction with public authorities • The Company organized effective inter- 6. The Republic of Khakassia with the law - regulatory requirements, actions with government commissions • In 2013, JSC RusHydro represent- industry and environmental standards, created to solve the problems of the 7. The Krasnoyarsk Region and seeks to develop effective coopera- atives took part in Parliamentary Far East. To implement the invest- tion with national and regional authori- hearings and roundtables on regional ment projects “Construction of the 8. The Stavropol Region (two agreements) ties. Regulatory authorities have always development. They were organized Blagoveschenskaya CHP”, “Construc- paid greater attention to the energy by the Federation Council and the tion of the Sakhalinskaya SDPP-2”, 9. The Amur Region (two agreements) sector in general and hydro-pow- State Duma of the Federal Assembly “Construction of the CHP in Sovetskaya 10. The Astrakhan Region er in particular due to their specific of the Russian Federation. Gavan” and “Construction of the Yakut- Regional level features, in particular, high techno- skaya SDPP-2”, the Company formed • The Company’s representatives partic- 11. The Moscow Region logical components and socio-eco- working groups with the participation ipated in the meetings of the Working nomic responsibility. of regional authority representatives; 12. The Saratov Region Group on the preparation of the final decision on the practicality of Chebok- • As part of executing the government 13. St. Petersburg sarskaya HPP completion. The Work- task to participate in the management ing Group is part of the Government 14. The Magadan Region As a federal-scale power company, of the water utilization system, in 2013, Commission on the fuel and energy JSC RusHydro is both: the Company worked out the concept complex, the reproduction of the min- of modernization and the effective • an infrastructure supporting eral resource base and the upgrading management of the Russian water utility system, important for of economic energy efficiency; utilization system. This concept and the the country’s activities, and proposals for the Company’s partici- • The Chairman of the Management ensuring their performance pation in its implementation have been Board of JSC RusHydro, Evgeny Dod, is RusHydro’s obligations under and safety; and submitted to the involved ministries • development of scientific potential, sys- • carrying out charitable and spon- a member of the Government Commis- social and economic cooperation of the Russian Federation for consid- tems for staff training and upgrading sorship activities, participating in sion on rectifying the consequences agreements: • a State policy instrument which eration. At the time this Report was employee skills within the hydro-power measures to preserve cultural and of large-scale flooding in the Republic resolves complex social and being prepared, the Government was sector; historical heritage; of Sakha (Yakutia), the Primorsk, the economic problems. discussing the final scheme for water • participation in developing the Khabarovsk, the Magadan and the utilization system modernization; region’s hydro-power resources • involvement of SMEs, professionals • implementation of other agreed Amur Regions and the Jewish Autono- and potential; and regional employees to implement upon social programs in the mous Region, as well as of the Govern- • Participation in the development of the joint investment projects and construct field of health care, culture, ment Commission on the socio-eco- regulatory framework to promote the • location of production and cost-ef- HPPs in the region; and sports, etc. JSC RusHydro does not finance any nomic development of the Far East. use of renewable energy is one of the key fective HPPs in the regions, which political parties. However, it pays signif- Within the framework of Government measures ensuring the effective devel- enables the creation of new jobs, de- • participation in the construction and icant attention to the development of Commissions, the Company proposed opment of renewable energy in Russia. velops labor markets and broadens modernization of social infrastructure a dialogue with public authorities and the Program for the construction of Taking into consideration the adoption the tax base for consolidated budg- facilities (education, health care, cul- the discussion of industry situations. new hydro-power facilities on tribu- in 2013 of the package of State support ets of Russian constituent entities; ture, and sports, etc.); The Company believes that the current taries of the Amur River to regulate for the development of renewable energy situation and future development of the the spillway in flood periods, and the generation, in 2014, the Company plans national fuel and energy complex depend Program for engineering protection to develop interaction with legislative and in no small measure on the active stand. of residential areas; executive powers in this direction.

56 57 3. Social responsibility

Professional associations and non-profit organizations

Social Charter of Russian Business International cooperation The International Commission on Large Dams (ICOLD)

In 2013, RusHydro joined the Social 8. NP Energostroyalyans; In 2013, the RusHydro Holding’s com- • Participated in / provided expert support Charter of Russian Business. The panies were members of the following to the work of the intergovernmental In 2012, JSC RusHydro signed ICOLD’s of the Company’s representatives. 9. NGO Siberian Energy World Declaration on Reservoirs for Charter in the new version was adopted international organizations: working groups within: The text of the Declaration can be found at: by the Russian Union of Industrialists Association (SEA); Sustainable Development. The Decla- www.rushydro.ru/press/material/18031.html and Entrepreneurs (RSPP) in 2008. The ration is an appeal to unite the ef- 10. The all-Russian Association Charter is a set of fundamental princi- 8. The Electric Power Council forts of the international community The International Commission on Large of Employers “Russian ples of responsible business practices, 1. The Global Sustainable Electricity of the CIS (EPC of CIS); in the field of water infrastructure, Dams (ICOLD) is a non-governmental­ Union of Industrialists which defines the relationship between Partnership, GSEP, former Е8)*; including large dams and reservoirs, international organization estab- and Entrepreneurs” (RUIE); employee and employer, civil society 9. The Eurasian Economic and emphasizes the increasing role lished to coordinate the efforts of 2. The World Economic Forum, WEF; Community (EurAsEC); of dams and reservoirs in socio-eco- the professional community in the institutions, authorities, local commu- 11. NP Association of Land and nities, and specifies principles related nomic development. The document field of environmentally safe and Property Owners and Investors; 3. The International Hydro-power 10. The International Energy to environmental security. As of 2013, was developed and agreed upon by a efficient hydro-power engineering. Association, IHA; Agency (IEA); the Social Charter has been signed by 12. NP Innovation and R&D number of leading global organiza- In 2013, the Russian youth division of tions in the area of water manage- ICOLD was created with the support 248 organizations that unite more than Directors Club. 4. The International Commission 11. The Asia-Pacific Economic ment, with the active participation of JSC RusHydro. six million workers. on Large Dams, ICOLD; Cooperation (APEC); The Social Charter is recognized by 5. The International Association for 12. The Baltic Sea Region Energy Higher Education Establishments business organizations and complies Membership in these associations Hydro-Environment Engineering Cooperation (BASREC); with documents adopted at the interna- plays an important role in business co- and Research, IAHR; and other educational institutions tional level. The RSPP is a member of 13. The United Nations operation and helps RusHydro develop As a part of the corporate lift “The tion-and-Training and Information the Russian network of the UN Global 6. The Russian National Com- Economic Commission interactions with stakeholders in the company – Higher Education Institu- Centers, constantly expanding the Compact and permanently serves on mittee of the World Energy for Europe (UNECE); following areas: tion/College” RusHydro is consistently interaction with a network of indus- the steering committee. Council, WEC; creating sustainable infrastructure for try-specific universities and technical • Coordinating efforts across the in- 7. The Technology Association of the development of basic and extended schools of the federal and regional Membership in associations dustry to achieve the following tasks Canada (The Center for Energy vocational education at the premises levels. In 2013, the volume of funding facing the country’s energy sector, Industry, professional and public asso- Advancement through Techno- • Developing cooperation with interna- of the Corporate Hydro-power Uni- for the development of interaction with within the framework of the State ciations in which JSC RusHydro was a logical Innovation, CEATI); tional professional industry-specific versity and the Company’s Produc- universities totaled RUR 61.5 million. program for sector development: (1) member in 2013: organizations through joint research, energy-saving and energy efficiency; participated in expert working groups, (2) development and modernization of professional seminars and conferences: The Corporate Lifts model is aimed at attracting electric power industry; (3) develop- and supporting of future specialists from school 1. NP Market Council; ment of renewable energy utilization; to the companies of the RusHydro Holding, 2. All-Russian Industry Association • Contributing to the sustainable 14. The European Small Hydro of Employers in the Power as well as at increasing the profession’s development of Russia’s Unified Association, ESHA; Industry (RaEl); Energy System and the electric prestige and retaining the hydro-power power industry; 15. The International Council 3. NP Power Industry professionals’ dynasties. on Large Electric Systems Veterans Council; • Coordinating the efforts of the expert Voltage (Conseil Interna- community and creating industry and In 2013, the Company continued to expand The Company concluded agreements with 4. NP Corporate Educational and tional des Grands Réseaux inter-industry technology platforms cooperation with universities in the field of the following profile colleges: Scientific Center of the Unified Électriques – CIGRE); and scientifically-intensive hy- advanced scientific research and innovative Energy System; dro-power development projects; 16. The International Network of technologies. Some of these projects are • the Divnogorsk Hydro-Power College Basin Organizations (Réseau being implemented with the assistance of (Siberian Federal District); 5. NP Russian Hydro-power; * For more information on the Company’s • Contributing to the innovative devel- International des Organ- industry-specific universities, including: the participation in GSEP activities, please refer to • the Perm Industrial and Commercial 6. NP Innovations in the Electric opment of electric power sector and 2.3 INNOVATION, a Fast Track to Sustainable ismes de Bassin”, RIOB); Moscow State Construction University and advanced technologies in the field of Development (Creating an External Environment) College (Volga federal District); Power Industry; and the Company’s website (http://www.rushydro. St. Petersburg State University. renewable energy generation; ru/activity/gsep/). 17. The Union of the Electricity • the Saratov College for Bridge and 7. NP Scientific and Technical Industry, Eurelectric. Implementation of strategic partnership For more information on membership in Hydro-Power Structures Construction Council of the UES; • Contributing to the development of professional associations, please see the agreements with partner universities global anthropogenic impact mitiga- 2013 RusHydro Annual Report, Interaction (Volga Federal District); with non-profit partnerships and international tion initiatives. organizations. In 2013, to create a higher and extended • the Nevinnomyssk Technological Col- vocational education system in accordance lege (North Caucasian Federal District). with corporate requirements, the Company signed strategic partnership agreements At the Moscow Power Engineering Insti- with the Moscow Power Engineering Insti- tute (MEI), the Hydro-power and Renewa- tute’s branch in Volzhskiy, and with Amur ble Energy Department was opened. At the State University and the Nevinnomyssk MEI’s branch in Volzhskiy, the Company Technological Institute. organized training for undergraduates with a specialization in Hydro-power Plants and developed a curriculum for Hydro-power

58 59 3. Social responsibility

Plants specialization. Informational Long-term successful cooperation be- a structural unit of the SSHPP. The Labo- Local communities in the regions in which the Company operates support for admissions was organized. tween the the Sayano-Shushensky branch ratory’s task is to ensure the hydro-power For first-year students, the Company held of JSC RusHydro and the Sayano-Shush- structures’ reliability. The idea of creating an open lecture on the topic “The History enskaya branch of the Siberian Federal a higher education institution on the basis JSC RusHydro’s participation in the life Mechanisms of social partnership development in the regions of presence of the Volzhskaya HPP and the Future University (the Company’s basic university) of the existing energy company belongs to of communities is integral element of the of Renewable Energy” and arranged for is underway. In 2013, 35 graduates of Valentin I. Bryzgalov, Doctor of Engineer- Company’s corporate social responsibili- introductory practical training. the Sayano-Shushenskaya branch of the ing Science, who was the first General ty. As per corporate understanding, such Siberian Federal University were given Director of the Sayano-Shushenskaya participation is improving the quality of Cooperation, partnership, investment The following scientific-and-practical employment at the Holding’s companies’ HPP named after P.S. Neporozhniy. life in the regions in which the RusHydro conferences were held: facilities; 313 students completed practical Holding’s hydro-power facilities operate. training at JSC RusHydro’s branches. The role of educational institutions in The Company’s participation in the life • “The safety and reliability of hy- vocational training and the development of communities in these regions covers dro-power plants in modern condi- While studying at the university, students of the human resources potential of the such areas as tions” for students and post-graduates; have the opportunity to get acquainted electric power sector, as well as our in- with hydro-power structures of the the teraction with them, will evolve in 2014. 1. the economic development of the re- • “Engineering in the service of society” Sayano-Shushenskaya HPP’s division and gions in which the Company is present; for upper-form pupils, participants of For details, please see 3.2 Development of Human the operating experience of the Labora- Resources Potential (Processes aimed at attracting Hydro-power Classes and students tory of Hydro-power Structures (LHS) – skilled labor resources) 2. social programs and projects;

3. public hearings and consultations; Interaction with local communities “The hydro-power industry should be a workplace for talented young 4. giving notices to the local population is carried out both in cooperation with people who not only have received quality vocational education but who regional and local authorities, and in have also completed practical training.” interaction with the public.

E. Shchegolkov, Chief Engineer of the Cheboksarskaya HPP, a former graduate of MEI.

All projects for the development of social In 2013, considerable efforts and resourc- For more information about the Company’s contri- bution to the economic development in the regions Mass Media partnership in the regions in which the es were directed to help victims of flood- of presence, please see 4.2 DEVELOPMENT OF RusHydro Holding operates are intended ing in the Far East. The program for the THE ENERGY INDUSTRY IN THE FAR EASTERN FEDERAL DISTRICT (Promotion of socio-economic One of the principles of JSC RusHydro’s and environmentally friendly is the annu- The “Hydro-power Engineer’s School” to create a favorable social environment Rectification of social consequences of development in the regions of presence.) CSR is information transparency: the full al information project. The purpose of the information and education project is for efficient corporate development, the accident at the Sayano-Shushenskaya More information about how we implement social maintain the reputation of JSC RusHy- HPP and the social partnership program partnerships in practice in the regions and what and prompt disclosure of material facts Contest is to promote in society ideas of aimed at popularizing the hydro-power measures were taken in key areas in 2013 is about the Company’s activities, including hydro-power industry development, the industry and increasing the media and dro as a socially responsible company. in Khakassia gained further momentum.. available in 3.3 SOCIAL PARTNERSHIP (Charity and corporate volunteering). via effective interaction with the media. need for modernization and the benefits blogosphere representatives’ knowl- The Company’s information policy aims of upgrading energy efficiency. edge about the structure, objectives at satisfying stakeholders’ interests, and and role of hydro-power plants in the their right to timely and complete infor- In 2013, “The People of Light” photo energy system, as well as discussing mation. The JSC RusHydro’s Press Office project got underway. It is dedicated to the other topics and issues related to the Suppliers and contractors traditionally for several years running has tenth anniversary of the Company. In the development of the power industry and won the Ministry of Energy’s KonTEKst jubilee year, the project tells us about the Russian renewable energy sources. During 2013, the companies of the The largest suppliers and contractors Transparent Procurement System Contest, which is held among PR-de- most interesting events, stories, and most The School’s visiting session, which was Holding were working with 15 major under retro-fitting and modernization, The RusHydro Group of companies partments of companies in the fuel and importantly - the people of the Holding’s held in 2013 in Irkutsk, confirmed the counter-parties. The volume of work repair and operation programs: has introduced a unified procurement energy complex. In 2013, this award was companies, who by their work bring the media and blogosphere representatives’ performed under contracts with suppliers 1. JSC Hydroremont VKK; system regulated by the Regulations received for the third year in a row. LIGHT. The best local photojournalists desire to obtain basic knowledge in the and contractors amounted to RUR 31.5 on the purchase of products for JSC will travel to different parts of Russia, to field of the most important econom- billion (incl. VAT), with more than 40% 2. JSC Power Machines; RusHydro’s needs, which were approved The all-Russian “Energy of water” Con- cover the everyday work of hydro-power ic sectors and the study of practical of the total volume of payments made by the Board of Directors in 2011, taking test for the best media coverage about engineers. Every week throughout 2014, aspects of energy industry development, in 2013 being to the five largest of them 3. CJSC TH Privod-AZTPA; into account amendments as required the development of renewable energy one story about the life of PEOPLE OF THE as well as great interest in the activities among the Russian companies. by law, and standard procurement sources in Russia as the most promising LIGHT will be released. of the RusHydro holding. 4. LLC Energy Standard; provisions developed for SDCs/auxiliary 5. CJSC VNIIR Gidroelectroavtomatika. dependent companies.

Note. The list includes local suppliers and For details, please see 1.2 INCREASE OF contractors (according to the GRI EC6), SHAREHOLDER VALUE (Fair business practices; international companies are not included. Procurement management).

"We intend to further improve corporate procurement management mechanisms, while developing our own experience and using practical operating results of other State-owned companies."

Sergei Janson, Purchasing Director of JSC RusHydro 60 61 3. Social responsibility

Customers and Consumers ESK RusHydro corporate customer service standard Monitoring the quality of customer service Interaction with retail electricity • JSC Krasnoyarskenergosbyt power supply with all final consumers market entities (the Krasnoyarsk Region); in their regions on the basis of their “The control and qual- applications. The right ity of customer service Building a developed retail ener- • JSC RESK (the Ryazan Region); of choice gy sales business providing quality Optimizing retail management allow us not only to service and uninterrupted power • JSC Chuvashskaya Energosbytovaya improve our work, but to supply to consumers is one of the Kompania (the Chuvash Republic); In 2013, JSC RusHydro was working Completeness, optimize it. However, the areas of RusHydro’s strategic develop- to centralize the management system Uniformity relevance and ment, within the framework of which • ESKB – in the Republic of power supply companies and to of quality the reliability of evaluation of progress information; multi- the Company interacts with retail of Bashkortostan. upgrade their operating profitability to requirements channel delivery of is often made by the electricity market entities. improve the quality of services to retail information Company, while con- All energy sales activities in the regions customers. The Company managed to Efficient RusHydro carries out energy sales are carried out in accordance with a achieve significant cost reductions in process of sumer opinion should activities in the retail electricity and ca- unified corporate standard for providing the Company’s retail business, as a customer play the main role pacity market through a unified energy services to retail customers. All region- result of implementing measures to interaction sales structure, ESK RusHydro, which al sales companies have the status of centralize the management system and in this process.” sells electricity through regional sales a guaranteed energy supply company improve the operational efficiency of Individualized Responsiveness Evgeniy Gladunchik, companies in four regions: that must sign contracts for electric power supply companies. approach to complaints Executive Director of JSC RESK

In 2013, in inter-district customer service JSC RusHydro retail customers comprise more than 1.65 million Minimization of centers, ballot boxes were installed, and domestic customers and more than 69 thousand legal entities. customer time each customer can evaluate the quality of service by a particular employee. Last year, JSC RusHydro implemented the In 2014-2015, plans call for further the function of a sole executive body such as the personal account of a cor- virtual reception project at the corporate upgrading the management system and via optimizing the load on branch- porate customer, the personal account website. Through this reception, any of the power supply holding JSC ESK es. For this purpose, it is proposed to of a private customer, and email, etc. consumer can ask a question or leave RusHydro, within the framework of develop interactive services channels, Source: The Customer Service Standard. Requirements for process organization and implementation a detailed opinion on corporate perfor- and technical facilities, ESK RusHydro mance. In December 2013, the Unified Information Center for servicing ESK RusHydro customers was opened at JSC In accordance with JSC RusHydro’s Strategic Plan for the period till 2015 Awareness raising • Promoting in the regions, in which ESK RESK. Any consumer can use the center’s RusHydro operates, energy efficiency (with a view till 2020), providing quality service to power supply company services by calling on the multi-channel The main subjects of discussions with upgrade initiatives: educational projects customers is a new priority for 2014. telephone number. consumers in 2013 included: among the resident population and ser- vices related to identifying and imple- • Change in municipal housing economy menting energy-saving potential among In 2013, JSC Krasno- legislation, which abolished the obliga- At the beginning of 2013, a Unified Cor- Attending to ESK RusHydro enterprises and organizations; tion (but left the right) of the population yarskenergosbyt for porate Customer Service Standard was customers: the one-stop to autonomously submit readings of the second time was approved in all regional power supply principle • Other issues: receivables control, individual metering devices. Strict time companies. During 2013, in client offices settling nonpayment problem, the the winner of “The Best Objective and limits for metering were also canceled; of inter-district divisions in all regional unbiased review development of additional servic- of appeals es, as well as JSC RusHydro’s social Power Supply Company power supply companies, service quality • Issues of increasing payment discipline and charitable projects. of Russia” contest in evaluations of conformity to the Standard and timely informing different groups were carried out. of consumers on the change in current the category “Social- legislation and the regulatory frame- In 2013, at the end of ly Responsible Power Presumption work, including during the preparation Protection of the second and the of customer for the introduction of the social elec- Supply Company.” personal data good faith third quarter, JSC Attending to tricity consumption norms; The contest was held ESK RusHydro RESK made the top by the industry portal customers: the • Introduction of social electricity five in the Russian one-stop principle consumption norms in numerous “EnergyNews.” Russian citizens and entering the Federation in the Krasnoyarsk Region into the list of pilot rating “Power Supply regions for the project; Realization Companies: Efficien- Source: The Customer Service Standard. of the rights Requirements for process organization Feedback of disabled cy on the market”, and implementation and technical principle people and other facilities, ESK RusHydro vulnerable published by the NP groups Market Council.

62 63 3. Social responsibility 3.2 HR Potential development – HR Management – Processes Aimed a guarantee of long-term growth at Employees Attracting and Retaining

The Standard Collective Bargaining Personnel Recruitment Developing a personnel The RusHydro Holding’s employees are a Agreement (BA) is the main document and Rating motivation system team of professionals working at tens of RusHydro’s Social Policy regulating social and labor relation- hydro-power plants in Russia and beyond. The ships in the companies of the Holding Personnel recruitment for all vacant In 2013, the total salary budget grew Company considers its workforce to be its ma- In 2013 the Company’s Board of Directors Implementing the above-mentioned and to implement and plan JSC RusHy- positions in the RusHydro Holding, in- 13.5%. The average salary growth jor asset. Recently, there has been a distinct adopted JSC RusHydro’s Social Policy priorities should contribute to the reali- dro’s HR policy. The document sets cluding corporate managerial positions, rate registered during the year was inflow of young specialists to the Holding’s which formulates “equal conditions for all zation of JSC RusHydro’s social respon- forth numerous guarantees and bene- is performed on a competitive basis. All ahead of the Consumer Price In- companies’ facilities. This is a positive result of employees in respect to intra-corporate sibility position and will also enhance the fits for organization employees. candidates irrespective of their gender dex (CPI). Indexing of the minimal the Company’s HR management programs. labor flow” and defines three priorities Company’s attractiveness as an employer or nationality have equal opportunities tariff rate is accomplished quarterly, in HR management and development, to attract and retain the best employees. In 2013, the Company’s branches to fill any vacancies, depending on the in accordance with p.3.3. of the In 2013, RusHydro’s namely the following: re-concluded standard BAs with em- candidate’s qualifications. JSC RusHy- Power Industry Tariff Agreement. Social policy goals ployees due to the development of the dro employs no special local personnel head count stood at 1. The creation of an institutional envi- new BA for 2014-2016. The new version recruitment procedures, but in the Personnel Salary Structure • The development of national State ronment to attract and retain young of JSC RusHydro’s BA was re-worked major regions of presence, a consider- (core business) 14,239 employees projects and the implementation of specialists; in compliance with the Power Industry able number of employees, including the Company’s socially responsible Tariff Agreement (for the 2013-2015). mid-level executives, are actually local. The number of employees within the 2. The formation of employee commit- position; 8% Russian Federation broken down by RF ment to JSC RusHydro’s goals and The standard collective bargaining Personnel Rating 10% subjects (as of 31.12.2013) principles; • The development of mutual responsi- agreement is developed during collec- 5% bility and social partnership practices; tive negotiations with the participation The RusHydro Holding’s employees are 3% 3. The improvement of labor relationships of trade union and employee represent- subjected to periodic certification to • Upgrading JSC RusHydro’s attractive- with regard to the interests of the em- atives. The content, structure and the check their adequacy for the positions 9% ness as an employer to attract and 3% ployer, the employees, the sharehold- procedure of concluding the Collective that they hold. Checking involves rating retain the best employees. ers and the State. Bargaining Agreement is determined the professional, business and personal 33% by Article 41 of the Russian Labor Code 8 attributes of the employees, as well as Социальная политика JSC RusHydro (LC), thus empowering the parties to results of their occupational activities. define the content and structure of the The certification procedures, performed 29% collective bargaining agreement via JSC RusHydro’s Social Policy adopted in April 2013 once every three years, cover man- negotiations. The BA does not include agers, specialists and the Holding’s a provision on the minimum period for companies’ service personnel regard- Principles Tasks Goals notifying employees regarding essential less of gender. Some employees were BA changes. This provision is regulated certified in 2013. The Central Federal District by the Russian LC. The Southern Federal District For more information refer to Appendix 1 Tariff payment “Quantitative Indicators” Bonuses The North-Western Federal District The standard minimum period for The Far East Federal District Additional payments The Siberian Federal District notifying employees on forthcoming Processes used to attract and cost of living bonuses The Volga Federal District essential changes in corporate activ- and retain labor resources Northern allowance The North Caucasus Federal District Regional premium rate ities that may impact the interests of Average salary payment every employee is at least two months The creation of an efficient and flexible Length of service (Article 180 of the Russian LC). These system to attract and retain employees Other labor-related payments The number of employees outside of changes include (but are not limited forms the foundation for HR manage- the Russian Federation broken down to): a dismissal in case of organization- ment. Significant attention is paid to by regions (as of 31.12.2013.) CPI growth rate vs the core business al liquidation, or workforce reduction. personnel motivation and material personnel average monthly salary The Labor Code stipulates that the ne- and non-material stimuli, as well as to social security. growth rate 12 125 gotiations are to start within seven days from the corresponding request of the 463 initiating party.

For more information refer to Appendix 1 “Quantitative Indices”

JSC RusHydro’s Social Policy Priorities

• Interaction with the • Healthcare, health • The Housing Program; young and educational protection and the programs; promotion of a healthy • Professional and social lifestyle; adaptation of graduates • Support of family values from boarding schools and and motherhood; • The Pension Plan; orphanages; The Republic of Armenia Russian Federation consumer price index The Republic of Tajikistan (goods and services) The Kyrgyz Republic Average monthly salary growth rate

64 65 3. Social responsibility

Insurance Programs • Professional and social adaptation Human Rights for graduates of boarding schools The corporate employee insurance and orphanages. JSC RusHydro’s approach to observing feedback with corporate management, es conducted for the same purpose. the collective negotiations, signing programs are efficient for motivating human rights is based on adhering to the companies of the Holding have Meetings and discussions involving of collective bargaining agreements and retaining personnel. The Company All BA guarantees and benefits cover all all Russian legal requirements. The established Public Reception Rooms. JSC RusHydro’s management and and upon the request of any party implements numerous such programs, full-time employees. The new version Company conducts no business and There are also workforce conferenc- trade unions are conducted during of the social partnership. including compulsory pension and med- of the BA was complemented with new concludes no investment agreements ical insurance. The Company also offers provisions pertaining to the Social Policy in regions with a high risk of human its employees an opportunity to partici- and the Program for the professional and rights violations. The Company guar- pate in non-governmental pension (NGP) social adaptation of graduates of board- antees its employees that their rights and voluntary medical insurance (VMI) ing schools and orphanages, adopted by for labor, rest, and old age and disa- Training and development programs. In 2013, the percentage of JSC JSC RusHydro in 2013. The new BA also bility pension will be implemented in RusHydro employees participating in NGP includes a section dedicated to benefits accordance with Russian Labor Law The development of HR potential is an ment costs are considered by the Com- programs amounted to almost 50%. The and payments due to foster parents and Code requirements. The Company also ongoing corporate strategic priority, pany to be a major component of human percentage for the RusHydro Group is guardians. Besides, the new BA also guarantees that it uses no forced or which has been included in the list of JSC capital investments. slightly lower, as NGP programs are not specifies new benefits for employees with mandatory labor in any form. RusHydro’s 2013 priorities. HR develop- implemented in some of the Company’s family duties – the BA stipulates material SDCs, since the implementation of NGP benefits for the parents of first-graders The employees of the companies of programs is dependent on the long-term and graduates, and an additional paid the Holding are free to exercise their financial results of the SDCs. The struc- leave for parents of first-graders. freedom of association, as the majority HR Potential Development ture of pension provisions consists of of the RusHydro Holding’s compa- pension plans with pre-set/fixed install- Housing program for the employees nies have established and operating ments. Actuarial settlements are held trade unions. The priority right to take part in the The availability of highly skilled and responsible managers, on a regular basis; thus the Company housing program is provided to the young specialists and workers is the Company’s main strategic prevents the risks of incomplete coverage Types of feedback and the specialists under 30 years of age who of pension liabilities by the Company. effects of the collective priority in HR management have no housing of their own, as well as at bargaining agreement The companies of the Holding annually specialists who moved from other regions, on management select companies for employees’ volun- and key and highly-qualified employees. tary medical insurance competitively. An JSC RusHydro compensates mortgage Communications between the Сhair- open tender is used to select insurance rates and housing rental expenses to the man of the Management Board - Personnel attraction Personnel development companies capable of providing reliable employees with diplomas with the profile General Director and representatives and fully-fledged personal insurance specialization and employed in the Com- of the staff working in the Company’s coverage for the RusHydro Holding’s pany within three months after graduating branches and SDCs was first initiat- employees. In 2013, SK Alliance was from Russia’s higher education institutions ed in 2012. The communications are selected to be JSC RusHydro’s official with which the Company concluded the carried out via video-conferencing. insurer in 2014. strategic cooperation agreements. In addi- JSC RusHydro intends to further tion, the Company assists all employees in develop the practice in question. Social guarantees and benefits upgrading their housing conditions, func- for employees tioning as a middle man between employ- To upgrade the efficiency of staff and ees and credit, real estate and insurance management interactions, as well The new version of JSC RusHydro’s organizations, to provide discounted rates as the efficiency of communications BA contains all existing guarantees and preferential terms. among employees from different SDCs, and benefits for employees, providing an intra-corporate portal and a forum personnel with the following: are accessible at http://blog.rushydro. ru. The portal is used to publish news, • Non-governmental pension plans and normative and administrative docu- voluntary medical insurance; The number of employees participating ments of the Company and reference in the 2012-2013 Housing Program • Additional paid compassionate leave; information, as well as information on Group operations and the operations • Material support for employees, retired scale. “The Messenger of RusHydro,” employees and their families; 282 an intra-corporate monthly journal, is traditionally recognized as the leader • One-time payments to employees; 232 among corporate publications (includ- Development of the RusHydro ing in competitions). workforce potential • Care for the employees’ children. 155 149 To facilitate communication between New social programs adopted in 2013: management and the workforce and • Support for families and mothers; to inform employees and consult with them, as well as to exercise employee • Healthcare, health support and the 2010 2011 2012 2013 promotion of a healthy lifestyle;

66 67 3. Social responsibility Processes used to attract qualified human resources

The lack of key personnel is assessed Centers of Technological Creativity and The Company arranged and carried out Formation of the HR reserve Supporting the dynasties of hydro-power by JSC RusHydro as an essential risk. Hydro-Power Classes for Pupils the first stage of the Hydro-Power School specialists and upgrading occupational The personnel The Company implements the Priority of Internet portal. 2013 marked the second year in a row in prestige HR Development Program and forms an The Company organizes and supports the which JSC RusHydro hosted a competi- training costs in HR reserve and a motivation and social Centers of Technological Creativity and 1,000 copies of the book “The Histo- tion for specialists under 30 years of age In 2013, corporate scholarships were 2013 amounted to support system in accordance with the Hydro-Power Classes organized in the ry of Engineering in the USSR” were entitled “The Internal Source of Energy”. granted to 52 children of the Compa- Strategic Risks Management Plan. These secondary schools in the regions of pres- published. The competition is intended to form a re- ny’s employees who study with good RUR 128.4 million ence. The biggest one was organized in serve of promising specialists to become and excellent marks at the industry’s measures are intended to establish a As a part of the stage “Corporate Lift- the Cheremushki locality; approximately managers of the RusHydro Holding’s higher educational institutions. The long-term competitive advantage for the the Company” was conducted: Detailed information on JSC RusHydro’s Priority 300 pupils took part in it, and 11 hobby companies’ structural divisions and to RusHydro Holding’s scholarships are Development Concept and the Corporate Lifts Company, allowing it to attract and retain system can be found in 2013 Annual Report qualified personnel. groups functioned in it. in 2013, the fiаер Classroom and distance training of cor- initiate the promotion of young employ- used to support the dynasties of hy- (HR Policy and Development of HR Potential) at http://www.rushydro.ru/investors/reports/ Hydro-Power Class was opened in Uglich porate personnel ees to managerial positions, as well as dro-power specialists and to upgrade The Priority of HR Development Concept on the basis of RusHydro Educational and to facilitate sustainable professional occupational prestige. of JSC RusHydro “From the new school Industrial Information Center; 20 pupils The system of occupational development growth and to foster corporate culture to the workplace” determines the HR undergo trainings there. and personnel training that exists in the within the Holding. Policy of the RusHydro Holding, taking RusHydro Holding allows for ongoing into account the forecast availability of re- Summer Energy School 2013 on-the-job advancement of qualifica- quired qualified personnel. The Concept, tion for corporate employees, improving From July 21 to August 3, 2013, the Dynamic representation of employee training, 2012/2013 Training of employees broken down together with the corporate lifts system, their knowledge and skills and providing third Summer Energy School (SES) was by categories, man-hours in 2013 is used to implement a project of target- for a sustainable HR reserve and for arranged by the Corporate Hydro-Power ed development for key competencies of the growth of the Holding’s companies’ University in the Rybinsk district, the future hydro-power industry specialists workforce potential. Yaroslavl region. This project is imple- beginning from their early years, realizing mented as a part of the HR Development measures for the early occupational ori- Concept of JSC RusHydro “From the new The Corporate Water 2012 entation of junior and senior high school school to the workplace.” This year, the Power University, ab- 2013 pupils and the training of students in School was held all over the country. 40 hydro-power occupations in accordance breviated as KorUnG, pupils from 12 regions took part in it. A with the Holding’s companies’ needs, and lecture by Professor Jean-Jacques Fry, is a research, infor- establishing conditions required for the a member of the International Com- efficient activity of young specialists. mational, education- mission on Large Dams, a well-known al, methodology and JSC RusHydro strives hydro-power specialist, was a real gift for the members of SES. consultancy center of Managers, Specialists and Workers, to establish an in- manpower-hours employees, manpower-hours Energy of Education-2013 JSC RusHydro. The manpower-hours stitutional environ- main University tasks In 2013, over 100 pupils from 34 Russian ment consisting of (*) The diagrams display an average value – an average number of manpower-hours determined by regions тв the CIS countries took part include: the provision summing the amount of time actually spent on training (undergoing special training programs to advance an internal on the job in the corporate academic competition qualifications) for each category of employees in regard to the number of employees in each category of systemic reliability during on, as well as off, time mentorship system, a in physics for senior students “Energy of Education.” Four participants of the and corporate sustain- Corporate Hydro-pow- “Energy of Education” won the Hope of able development by er University, the Energy Industry All-Russian Academic Competition for pupils. The corporate developing workforce Sayano-Shushenskaya academic competition is held every year competencies and pre- 3.3 Social partnership branch of the Siberian in cooperation with the Moscow Energy paring HR potential for Federal University, Institute and will be held in 2014. the power industry in operating regions which is located in the Studying Hydro-Power Industry Basics JSC RusHydro shares and implements of job creation, budget contributions, The Charity and Sponsorship Program direct vicinity of the The key components in managing the As a part of the career guidance program the principle of systematic dialog with conducting technical events aimed at was approved by JSC RusHydro’s Board system in question are JSC RusHy- major hydro-power “Energy of Education” the Company stakeholders including local commu- assessment and mitigation of environ- of Directors in the beginning of 2013. The dro’s HR Management Department provided educational and methodological nities. As a matter of practice, this mental impact and voluntary initiatives initial RUR 970 million invested in the station, and a network and the Corporate Water Power Uni- materials (Very Important Water, Hydro- dialog respect the interests of all of interactions with local communities Program (including RUR 880.3 million for versity (KorUnG). The University is a of federal and regional quiz, Electrical Quiz and Video Library of stakeholders and is conducted through that include charitable programs and the Executive Board) was adjusted during multi-level personnel training estab- Hydro-Power Sector) to the teachers and social partnership in regions by means corporate volunteering. 2013 to total RUR 1,220 million, according occupational colleges lishment consisting of training centers students of secondary schools, arranged to the Board of Directors decision. career guidance lectures for 300 senior with classroom and distance training In 2013, the following educational pro- students and methodological seminars facilities. The Sayano-Shushenskaya jects were implemented as a part of the for 205 teachers from 128 schools. Training Center located in Sayansk stage “Corporate Lift – New School”: is one of these centers.

68 69 3. Social responsibility

Energy, as well as Krasnoyarskenergosbyt • RUR 28 million were spent to purchase • The Program of the health resort Support for the Victims JSC and IDGC of Siberia JSC. 24 apartments for the families of the treatment for the victims’ families and victims of the accident with no apart- injured persons is continued. of the Far East Flood Since the accident the Company spent ments of their own. some RUR 184.7 million to provide social support for the victims and their fam- • The Company pays monthly scholar- Liquidation of Social To implement a large-scale sponsorship nel One, JSC RusHydro donated RUR 20 sistance to 309 families and to reconstruct ily members of those who died in the ships to the children of the accident Consequences of the program intended to provide assistance million to help people affected by the flood several infrastructure facilities in the Amur result of the accident (the data valid on victims receiving their first primary, to flood victims in the Far East, involv- in Far East regions. region, including the boarding school for 31.03.2014). The support was conduct- secondary and higher professional ed- Accident at the Sayano- ing, among other things, the financial children from flooded areas. ed via the following social programs: ucation. The scholarships will be paid Shushenskaya HPP assistance and the reconstruction of The “Involvement” Charity Foundation: payment of monthly allowances to the till the last child from every victim’s regional infrastructure, the Company personal donations made by employees From August 15 to November 2013 for families with children, scholarship and family graduates from a higher educa- project implemented spent RUR 257 million in 2013, of which of the RusHydro Group of Companies and fast processing of data about people who pension support, purchase of apartments tional establishment. by RusHydro HPP RUR 100 million were sent to the Amur transferred to the “Involvement” Charity suffered from flood and providing them for the victims’ families who don’t own Region, with two transfers amounting Foundation to help Amur Region victims targeted aid, RusHydro’s community liaison house, victims’ loans redemption etc. • The Company paid RUR 18 million in became one of the Top- to RUR 50 million each handed over to exceeded RUR 37 million. The corporate office functioned in Zeya, the Amur Region. the form of monthly allowances to 32 20 of “The Best Social the Khabarovsk Region and the Jewish initiative was supported by the Power Indus- RusHydro’s employees purchased and • The support of the retired parents and families with children under 18. This Autonomous Republic. try Employers Association, the all-Russian passed to the Ministry of Emergency Situa- spouses of those who died in the acci- support will be granted to families till Projects of Russia 2013” Power Industry Trade Union and numerous tions special protective means and equip- dent is implemented on ongoing basis. their junior children come of age. National Program Within the framework of the “All Together” other industry organizations. The donated ment to conduct evacuation of people in the Charity Initiative organized by the TV Chan- amount was spent to provide financial as- Amur regions suffered from flood. Charity and Sponsorship The Social Partnership Program in Khakassia and Liquidating the Social Consequences of the The “Involvement” Charity Foundation On August 7, 2012, the Board of Directors of 2013 on the basis of the Moscow Energy preparing engineers for all stages of the JSC HydroOGK Management Company de- Sayano-Shushenskaya HPP Accident Institute, the National Research Univer- production life-cycle, including: design, cided to establish “Involvement”, a non-com- sity was founded due to the Foundation research, construction and operation. mercial charity foundation. The foundation A program for the complex development ited by power industry and hydro-power cilities in Khakassia. Delegates approved support. The Chair in question will be a is a non-commercial charity organization of the Cheremushki Settlement social engineering specialists. The amount the results of the Company’s investments center for the corporate program of ed- The establishment of the above-men- established based on voluntary property con- infrastructure, developed in a joint effort invested by JSC RusHydro to develop into regional social and economic devel- ucating specialists to meet JSC RusHy- tioned Chair and its further function- tributions made to assist charitable activities with the government of the Republic settlement infrastructure for the 2009 to opment, including the complete renova- dro’s needs. Cooperation with the chair ing will be financed by JSC RusHydro carried out in accordance with Russian Feder- of Khakassia and the administration of 2014 period exceeded RUR 600 million. tion and re-equipment of the “Eureka” will enable the Company to participate in through the “Involvement” Foundation. ation laws and the Foundation’s Charter. Sayansk, can set an example for social Lyceum and the out-patient hospital partnership and for fruitful cooperation In the beginning of 2014, a delegation established by the Company within the with regional authorities. The fifth year of of representatives from the Presiden- frameworks of the Program for complex In 2013, projects Program implementation resulted in the tial Council for the Development of Civil settlement development. implemented by the The projects implemented by the 2. Targeted charity programs for reconstruction of social facilities in the Society and Human Rights visited the “Involvement” Charity “Involvement” Foundation in 2013 religious organizations and to Cheremushki Settlement, which is inhab- JSC RusHydro’s industrial and social fa- amounted to more than RUR 48 the Chair of Hydro-power at the Foundation amount- million, including the following: Moscow Energy Institute. ed to more than “Firstly, we were very impressed by the people, who love their HPP and 1. Provision of support to the 3. The program of support their work. They feel very involved in everything that goes on, being very RUR 48 million. Company employees and other to the victims of the flood physical persons in trouble. in the Far East active contributors to the reconstruction process.” The Foundation’s activities are target- Mikhail Fedotov, ed at the provision of financial support an Advisor to the President of the Russian Federation, the Chairman of the Council to employees of RusHydro and their for the Development of Civil Society and Human Rights, speaking to Sayano-Shushenskaya HPP employees family members who are in trouble. The Effects produced by the establishment 3. Savings resulting from beneficial Foundation is also there to help industry of the “Involvement” Charity Foundation taxation of charitable support (de- Reconstruction and the Sayano-Shushen- dation of social consequences of the the establishment of conditions for the veterans, and retired figures of Russian creasing the taxable base and tax skaya HPP will be completed in 2014. The Sayano-Shushenskaya HPP with the upbringing of children. culture and art, as well as scientists and 1. The emergence of obvious addressees for deductions); social support program for family members budget of RUR 185 million was launched teachers. Other patronized categories the donors (physical persons and compa- of victims of the Sayano-Shushenskaya acci- during the first days after the occur- The organizations which provided em- include: ill children, orphans, children nies of the RusHydro Group of Companies) 4. Increased transparency in the use of dent will continue for at least 10 more years. rence of the accident. The Company’s ployment to 61 members of the fami- with disabilities or those who come from to provide targeted charity support; donated funds (online visualization of JSC RusHydro’s Board of Directors decided project is of a comprehensive nature, as lies of those who died in the result of disadvantaged families. The Foundation operations for all charity programs); to allocate some RUR 1,300 million to the it is intended to provide assistance and the accident include the following: the also supports socially significant pro- 2. The development of a universal simple above-mentioned support program. support to the victims and the family Sayano-Shushensky branch of JSC RusHy- jects and young talented researchers. and easy to use charitable mechanism 5. The development of a mechanism for members of those who died in the result dro, JSC SShGER, JSC ЕС RusHydro and (provides the function of accepting systemic control over the efficiency of Approved by the Board of Directors of of the accident, including the provision of Sayano-Shushenskiy branch of the Armed The Chair of Hydro-power and Renew- funds, and the execution of documents, donations already received. the Company, a program for the liqui- comfortable housing and subsistence and Security Guards of the Russian Ministry of able Energy Sources established in including tax deductions);

70 71 3. Social responsibility

the Cathedral of Assumption of the Joseph and “The Center for Humanitarian Pro- Sail of Hope Support of children’s and grassroots sports supported by JSC RusHydro takes place Preservation of cultural and Volotsky Monastery. grams” charity foundations; annually since 2005. The initiative involves historical heritage The Company’s corporate strategy includes The “Sail of Hope” Program implements dif- the cleaning of shores of rivers and water The amount spent by JSC RusHydro on Other social projects and charity • Charity donations to the Research and charitable programs are intended to educate ferent water sports projects in the 19 regions bodies from anthropogenic solid house- the financial support of different religious initiatives Practical Center for Medical Assistance to a new generation of energy sector profes- in which the Company operates. Corporate hold wastes. The Initiative is implemented organizations in 2013 exceeded RUR 50 the Children with Cranio-facial Anomalies sionals and to improve the social atmosphere branches provide financial support to chil- by all branches of the Company in regions million. The Company participated in the • The “Born by the Energy” project was and Congenital Diseases of the Nervous in the regions in which the Company’s HPPS dren’s and youth sports schools practicing of operation. The participants include the construction of a new cathedral dedicated implemented to supply expensive medical System. operate. Under the “Sail of Hope” Federal underwater swimming, sailing, whitewater RusHydro Holding’s employees, repre- to the Annunciation of the Holy Mother on diagnostic equipment to maternity homes Long Term Program JSC RusHydro, its rafting, table tennis, judo, football and hock- sentatives of municipalities, environmen- • Financial assistance for the “Alania” Foot- the territory of the Saint Trinity Seraphim and birthing units in regions in which the branches and subsidiaries across the country ey. The Company facilitates the participation tal activists, schoolchildren, students of ball Club includes financing the Club’s Monastery in Diveevo. Company operates. The amount spent by have implemented key charity projects. The of young sportsmen in regional, federal and secondary and higher education establish- the Company for the above-mentioned ongoing activities, development of the Program is meant to support children from international competitions and tournaments. ments and the representatives of mass The Company provided financial assistance purposes comprised RUR 6 million; children’s football school in the Northern disadvantaged families and children with media. The collection of wastes takes for the reconstruction of the Church of the Caucasus and Southern Region of Russia. disabilities. The projects implemented as a Educational programs place in the form of a sporting competition • The formation of a grant fund for the Icon of Holy Mother of Tikhvin and for the To learn more about the Company’s charity initiatives part of the Program received all-Russian and and grants with the winners being awarded in the renovation of the Holy Thursday David’s Russian Geographic Society; and partner projects implemented in 2013 visit: regional charitable programs awards. end. The organizers of the Initiative pro- http://www.rushydro.ru/sustainable_development/ Hermitage, as well as for the restoration of socialotvetstvenost/alms/ The key educational project implemented vide all necessary tools and transport for • Support for the “Creation”, “Give a Life” Support for children’s boarding within the framework of JSC RusHydro’s the participants, as well as for the removal homes and pre-school facilities charity program is the contest for student of wastes. In 2013 the Initiative was imple- papers on hydro-power and renewable ener- mented in all regions of Russia, with the Corporate Volunteering As a part of the Sail of Hope Program JSC gy sources. The contest called “The Energy number of participants exceeding 3,000. RusHydro and its branches all over the of Development” celebrates its fifth year in During 2013, the Company actively imple- country implement charitable projects such 2013. The history of the contest includes the The Initiative implemented in the period from Apart from providing charitable dona- A program for the social and mented the program in six children’s homes: as the purchase of equipment for social participation of some 100 higher education 2005 to 2013 resulted 500 tons of wastes tions on a yearly basis, the companies occupational adaptation of adaptation rooms in children’s boarding institutions with more than 500 students removed, including the beautification and of the Holding also encourage the boarding school graduates • The “Volzhsky” Children’s Home in the homes, the construction of children’s play- and post-graduates who have submitted improvement of beaches and embankments voluntary individual participation of its The program was launched in May 2013 city of Rybinsk, the Yaroslavl Region; grounds, the organization of various contests papers to the contest. More than 30 contest (with the supply of sand, installation of beach employees in different social projects. within the framework of the “From New and competitions, children’s New Year winners have decided to pursue careers in equipment, repair and painting of benches). • The “Volzhsky Children’s Home” in the School to the Workplace” Concept of the parties, and the provision of support for chil- the hydro-power industry The number of the Initiative participants The corporate volunteer-based pro- city of Volzhsky; priority development of the Company’s dren’s sporting facilities, etc. these projects exceeded 12 thousand children, teenagers and jects are closely associated with HR potential. The program helps children are aimed at local communities develop- “Energy of Development” students’ annual adults, who provided for clean shores, beaches the main addressees of corporate • Secondary Boarding School No 37 in who have lost their parents adapt to their ment and improvement of the social climate projects contest and embankments and learned the lessons of charity initiatives. the city of Volzhsky; new lives in boarding schools and beyond, in the regions of the RusHydro Holding’s environmental care and civil responsibility. preparing them to enter industry-dedi- • The “Swallow” Children’s Home in the companies’ presence, they are to support “Energy of Development” students’ pro- JSC RusHydro is of the opinion that cated educational institutions and to be city of Sayanogorsk; the most unprotected population - children jects contest is organized by the Company Environmental and educational projects corporate volunteering contributes to the employed by the Holding’s hydro-power from disadvantaged families and boarding for the students and post-graduates of the development of corporate culture, helps to companies after graduation. The chil- • “Children’s Home No 3” in the city of Perm; homes. JSC RusHydro contributes to the leading Russian technical universities since The President of the Russian Federation resolve the most urgent problems in regions dren learn about different occupations organization of playrooms to socially adapt 2009. The competition is five years old now declared the year 2013 to be the year of of its operation and enables the Holding’s • The “Hope” Children’s Home in the within the industry and visit the Holding’s children in boarding homes and orphanag- and in 2013 the number of its participants environment protection. Pursuant with companies’ employees to actively interact village of Balakhonovskoye, the Kochu- facilities, guided by volunteers who are es. The “Sail of Hope” integrates the social exceeded 80 students and post-graduates the declaration, the Company increased with local communities. beevo District. employees of the Holding’s companies. adaptation and education of such children from 25 higher educational institutions. the volume of its charity contributions to in spheres associated with the hydro-power The contest jury was chaired by Evgeny support environmental organizations and industry making it possible, among other Dod, the Сhairman of the Management ecological reserves. The total amount of things, for them to learn some trade. The Board - General Director of RusHydro JSC. money invested in such contributions in In 2013, the Program’s implementation • Social support of the Program, meaning • Consultancy, organizational and psy- children who go into the hydro-power indus- Other members of the jury included the 2013 comprised some RUR 8 million. priorities included: the implementation of a list of benefits chological support for target groups try thanks to the project will probably form members of the Management Board and and encouraging payments for curators, participating in the Program; the Company’s future HR potential. the managers of the RusHydro Holding’s JSC RusHydro supports local ecologists in • The social, occupational and spiritual mentors and other target groups partici- enterprises, as well as the members of the their efforts to implement the biodiversity development of orphans and parent- pating in the Program; • Interactions with industry-oriented One of the most significant projects im- power engineering research community. The and natural environment preservation pro- less children; educational institutions; plemented in 2013 is the construction of a seven winners of the contest will be sent to grams in biosphere reserves and on pro- • Organization of JSC RusHydro’s volunteer new nursery school called “Islet” in the city Europe to proceed with their training. The tected natural territories. Other supported • Equipping children’s homes with movement to participate in the lives of • Interactions with ministries, departments of Volsk, the Saratov Region. The nursery contest’s diploma is taken into account when activities include environmental tourism learning facilities, and games, etc.; children living in children’s homes in the and other State authorities responsible school for 280 children is equipped with the developing a database of specialist positions routes and the arrangement of rest areas. regions in which the Company operates; for orphans and parentless children. most advanced facilities. with an opportunity of subsequent employ- The environmental projects implemented ment with the hydro-power companies (you last year include the joint initiatives with JSC RusHydro provided financial support can visit the official website of the contest at a number of reserves, including Zeisk to facilitate the publication of a book called www.konkurs-er.rushydro.ru). and Khingan, Nechkinsky and Darvinsky In 2013, corporate volunteers host- The Company also arranged for train- In December 2013, JSC RusHydro hosted “Water – the unusual in the usual.” The book reserves, Kabardino-Balkarsky mountain ed thirty events for children living ing workshops and practical courses to a pre-New Year charity event to collect for children and teenagers was published by Environmental initiatives natural reserve, Teberdinsky, Kerzhensky in 270 children’s homes in the Yaro- be conducted for teachers and vol- money for children living in children’s DETGIZ Publishing House and is available in and North Osetia natural protected territo- slavl and Volgograd Regions, the unteers participating in the Program. homes. The amounts collected were “oBEREGAi” Environmental Initiative all regions in which the Company operates. ries, “Cranes’ Motherland” nature reserve, Republic of Khakassia, the Perm and Children from children’s homes in five transferred to volunteers so that they The major part of book copies is provided to An all-Russian Charity Environmental Ini- Volga-Akhtubinsk flood plain natural part Stavropol Regions. regions participated in the “My Rights” could organize New Year parties for chil- children’s homes, schools and libraries. tiative known as “oBEREGAi” initiated and and “Samarskaya Luka” national park, etc. role-playing game. dren participating in the Program

72 73 4. Environmental responsibility Caucasus Section 4. Environmental North-Caucasus Federal District responsibility The Caucasus is a historical transport artery for the Old World and also the source of many natural resources, including oil and gas. The Caucasus has some of the world’s most diverse topography. The region is home to the humid and the arid, subtropics and glaciers, valleys and mountains. On just 0.5% of the land area, there are 40% of the different types of the world’s landscapes represented. The Caucasus is even known as the world’s topographical laboratory. Here, almost one tenth of its area remains untouched 4.1 Environmental safety as the criterion by humans. The Caucasus is home to as many as 50 peoples and 40 languages, not counting the multitude of dialects and sub-dialects. They include Abkhazian, which has only two vowel of sustainable development sounds, but 60 consonants. One of the rare languages of the Caucasus, Abaza, is acknowledged to be one of the most difficult languages in the world. The Abaza people, listed in the Red Book of the Peoples of the Russian Empire, numbers a population of just 30,000, of whom only a third speak the Abaza language. Environmental policy: approaches and principles Nevertheless books are still published, newspapers printed and online forums maintained in the language. In terms of the number of fauna and flora residing here, the Caucasus comes first among other regions in the same latitudes and is topped only by tropical countries.

JSC RusHydro has developed • Taking into account environmental • Decreasing the probability of a and approved an Environmental safety as a priority component of negative environmental impact Policy, which is based on the national security; throughout all stages of the life-cy- following principles: cle of hydro-power facilities; • Conserving energy and rationally using energy resources; • Prioritizing preventive measures. RusHydro facilities’ The region’s energy generation in the consumption region

The Goal of the Company’s Environmental Policy: The goal is 23 billion Stavropol 8 billion HPPs of the to upgrade environmental safety and to increase capitalization Karachay– kWh Cherkess Essentuki kWh Branch by ensuring the reliable and safe production of electric energy, HPPs of the % of the energy Kabardino-Balkar ВысокаяBranch маневренность consumption exercising a consistent approach to natural energy resource HPPs of North-OssetiaГЭС являются наиболее маневренными и of all the entire Branch usage and increasing social responsibility. способны при необходимости существенно Caucasus увеличить объемыVladikavkaz выработки в считанные минуты, покрывая пиковые нагрузки Region Grozny JSC RusHydro has developed corpo- JSC RusHydro carries its responsi- softening the potential or real negative rate standards in the environmen- bility for the environmental safety impacts on local communities. The tal safety of operating activities. A of the Company’s production activity Company conducts regular monitor- number of other documents reg- throughout the life-cycle of hydro-pow- ing of environmental aspects during ulating procedures in the sphere er facilities, during the pre-design and its HSes’ operations; these data are HPPs of the Dagestan Branch of environmental control and en- design stage, as well as during the taken into consideration in the course vironmental footprint manage- construction and operation of these of the Company’s equipment opera- ment during operations performed facilities. Responsibility also includes: tions in both normal and abnormal Makhachkala by RusHydro are in the process assessing the environmental impact, modes and during annual update of of development and upgrading. engaging in the ongoing monitoring of the Company’s environmental policy social and environmental impacts and implementation program.

Derbent

Population Area

9,500,000 170,700 km² 1% of the area of Russia, or about people five times the size of Belgium 75 4. Environmental responsibility Power projects’ environmental impact assessment and management mechanisms Assessment of the Projects’ Environmental impact assessment Environmental Impact and management mechanisms

Social and economic aspects of planning request of the water basin authorities But, the companies of the Holding (WBA). The schemes for the compre- participate in public discussions in In Russia, water bodies, including water hensive use and safety of water bodies regards to the environmental impact reservoirs, are owned by the federal are approved by the Federal Agency for of future hydro-power stations state. According to the Russian Water Water Resources. at the planning stages. Code, water bodies are provided to JSC RusHydro for long term use for For more detailed information on JSC RusHydro’s PLANNING Making decisions on the planning and decision-making approaches to minimize (feasibility study IMPLEMENTATION OPERATION hydro-power energy generation on the deployment of energy infrastructure environmental risks, refer to the Company’s (environmental impact web site at. (www.rushydro.ru/file/main/global/ and reconciliation) (design and basis of water use agreements. Issues of facilities also falls within the framework construction) management) company/safety/environmental/Podhody.pdf) managing water bodies as well as their of governmental authority. In accordance protection and environmental safety with this, all issues related to relocating fall within the framework of the federal inhabitants in connection with the deploy- • Generalized assessment • Qualitative and quanti- 1. Pollution prevention government. The environmental assess- ment and development of energy facilities of the project’s impact tative characteristics of and minimization ment of projects is performed at the fall within the powers of authorities. on natural complexes the facility’s probable of environmental (taking into account impact on the natural impact based on public opinion); and social environment, implementation of the and possible environ- best technologies; Environmental Impact and Environmental Load • Natural and environ- mental, social and eco- mental assessment of nomic consequences of 2. The system of Decrease Initiatives: the RusHydro Holding the proposed project project implementation environmental location (taking into ac- (feasibility study); management; count public opinion); Environmental Management System • Implementation 3. Technical • Assessment of the measurements and control over the The Company's Facilities with the The implementation of the Environmen- • 2013 was marked by the implemen- current environmental (re-tooling and measures listed in Environmental Management System tal Management System (EMS) at the tation of the Integrated Management conditions at the loca- modernization, the project’s feasibil- Company’s branches and generating Systems (IMS) at the Kubanskiye tion and in the vicinity reconstruction); ity study (engineering subsidiaries is one of the tools to realize HPPs Cascade; of a hydro-power facility The Volzhskaya HPP documentation); JSC RusHydro’s Environmental Policy. and water bodies; 4. Preserving biological The Zhigulevskaya HPP The project involving EMS implemen- • The Nizhegorodskaya HPP, certified • Development of a draft diversity; tation was launched by the Company in for Quality Management System (QMS) • Environmental impact for the performance of The Kamskaya HPP 5. Modernization (R&D and 2007. The first Russian HPPs certified in compliance, has EMS and OHSAS assessment. work intended to mini- innovation); The Zagorskaya PSPP accordance with EMS and ISO 14001:2004 functionality, which are almost ready mize the environmental requirements included the Zhigulevskaya for certification and integration with impact of facility con- The Upper Volga HPP Cascade* 6. Taking into account the and the Volzhskaya HPPs. The certi- EMS in 2014; struction (engineering global nature of climate The Votkinskaya HPP+ fied HPPs undergo a compliance audit documentation). • Two branches, including the Kuban- change; on a yearly basis, and are re-certified The Cheboksarskaya HPP skiye HPP Cascade and the Chebok- every three years. 7. Interactions with The Kubanskiye HPPs Cascade** sarskaya HPP, were re-certified for stakeholders; • On December 31, 2013, six branches compliance with ESM, with an audit The Kolymskaya HPP of JSC RusHydro (the Volzhskaya HPP, performed by the largest international 8. Voluntary initiatives. The Nizhegorodskaya HPP** the Zhigulevskaya HPP, the Kamskaya companies specialized in this sphere. HPP, the Cheboksarskaya HPP, the * OHSAS 18001 Zagorskaya PSPP and the Kubanski- ** ISO 14001, OHSAS 18001 and ISO 9001 ye HPPs Cascade) were certified for compliance with EMS and ISO 14001 + The environmental management system is implemented but not certified yet. requirements;

Throughout all stages of the • EMS was implemented but not certified project’s life-cycle at the branches the Votkinskaya HPP, the Upper Volga HPP Cascade and the Nizhegorodskaya HPP;

76 77 4. Environmental responsibility

Atmospheric air protection Preserving biological diversity

• In 2013, the Company’s Karachae- • In May 2013, an environmental char- • Development by the Company’s The companies of the RusHydro Holding contribute to strengthening the green- The RusHydro Holding’s companies’ vo-Cherkessky branch performed itable campaign focused on stocking Dagestan branch of fish protection produce electricity using green energy house effect). During the initial period, major operations concerned with HPP the annual stocking of fish in the of fish in the Kuibyshev water res- initiatives and the assessment of sources with minimal environmental after the establishment of a water body, electricity production generate no atmos- Teberda River. The five-year program ervoir in the Chuvash Republic was the impact of HPPs activities on impact, promoting rational natural increased СО emission takes place due pheric emissions (CO or other green- 2 2 for replenishing rivers’ bio-resourc- organized by JSC RusHydro and JSC water resources. The assessment resource use, as well as preserving and to the decomposition of flooded organ- house gases). The pollutants are emitted es calls for the annual stocking of Chuvashskaya Energosbytovaya Kom- was performed in coordination with recovering ecosystems. ic matter, including: plants, organic into the atmosphere by motor vehicles Karachaevo-Cherkessia rivers with pania. 15 thousand baby starlets were the territorial office of the Russian deposits and earth humus. The situation and due to activities performed to provide 50-100 thousand baby brook trout. released in the Volga River in the low- Ministry of Fish Industry. The results The companies of the becomes more stable in later periods, for the normal condition of equipment (oil The stocking locations were se- er water of the Cheboksarskaya HPP. of the assessment made the design as the bottom deposits conserve carbon, regeneration, use of storage batteries, RusHydro Holding produce lected and approved by an order of and construction of fish protection preventing atmospheric emissions. welding, and metals processing, etc.). all electricity using only the Russian Ministry of the Fishing facilities inappropriate. Organic matter borne by discharge The Holding’s companies control atmos- Below is the list of other initiatives for Industry based on research data per- eco-friendly renewable waters can decompose in such water pheric emissions periodically. According preserving the bio-resources of rivers taining to the recovery of the brook bodies, but this situation is no different to the monitoring data, in 2013, the vol- and the related environment, imple- The Rushydro Holding’s hydroengi- energy sources trout population, which is close to from what is observed in usual rivers ume of pollutants were insignificant and mented by the Company in 2013: neering facilities are not located in extinction. During the Program’s five No considerable amounts of carbon and lakes. Scientific research does not did not exceed permissible limits. the protected natural territories or in years, stocking locations will change dioxide are emitted during the operation confirm hypothetic active carbon dioxide • Field studies and inspections of river adjacent zones. For more information refer to Appendix 1 to enable the natural reproduction of water bodies (meaning amounts that emissions from such water bodies. “Quantitative Indicators to the Report” areas adjacent to HPP locations in of fish in these rivers. Karachaevo-Cherkessia performed to assess the efficiency of fish protec- tion and fish-passing facilities at the Asaut, Marukha and Bolshoi Zelen- Safe disposal of waste chuk Rivers, and to check the impact on river bio-resources; The Holding’s companies’ operations ated during reconstruction, repair and dro’s branches and SDCs generate no generate production and consumption facility service work. All waste is handed radioactive waste, use no PCB-containing waste. The largest share is made up of over to dedicated contractors for further materials and generate no waste. waste from hazard class 4 and 5 gener- burial, deactivation or use. JSC RusHy- For more information refer to Appendix 1 “Quantitative Indicators to the Report” Initiatives to mitigate the environmental impact of products and services

• The implementation of a research Water use and water protection During implementation of R&D projects Ortogonal hydraulic turbines are the project entitled “The Development aimed at biological resources pro- unique development that does not have and Testing of a Hydro-dynamic Bio All water bodies affected by the Com- the territory of the support base. The In 2013, the Company has carried out tection, the following measures were analogue in the world. The turbines’ Resources Protection Complex” is pany’s operations are used in strict projects have been approved by gov- reconstruction, repair of water control taken in 2013: advantage is an ability to retain the di- planned for 2015. The project implies compliance with Russian legal require- ernment experts. Implementation is structures and shore protection work at rection of spinning in the turbine when the construction of such a complex at ments and terms of water use agree- planned for 2015. nine HPPs to properly maintain wa- • A draft of a preliminary national the direction of water flow is chang- the Uglichskaya HPP. ments. All permits are arranged timely ter protection areas. Five more HPPs standard entitled “Environmental ing. This feature is used in tidal power Engineering initiatives to decrease Protection: Norms for the loss of and approved by the respective regula- underwent the planned replacement of • At present, the NIIES Institute devel- plants that are now being developed by the environmental load oil products during the operation of tory organizations. There were no facts oil-filled electric equipment with equip- oped an orthogonal turbine runner the Company. Moreover, the turbines hydro-turbine equipment. Calculation of environmental laws violation in 2013 ment containing no oil (vacuum and for low pressure small HPPs adapted may be efficiently used in the low pres- of turbine oil losses during the op- by the Company. The engineering initiatives implemented gas-insulated), or equipment containing for the safe passage of fish. A low sure small HPPs. After certification the eration of hydro-turbine equipment” at the RusHydro Holding’s facilities pur- lesser amounts of oil. pressure small HPP equipped with orthogonal turbines can compete with was developed by JSC RusHydro The Company pays great attention to suant to the Program for the compre- such a runner will be tested in Q2 Aldena turbines (that are being devel- in a joint effort with NIIES – a R&D the water purification. In 2013, the hensive modernization, reconstruction 2014 at the Khorobrovskaya HPP. oped by Voith Siemens) due to their North-Ossetian branch concluded and repair of hydro-turbine equipment Institute of Power Facilities. Once low cost, increased efficiency and wide a contract to establish waste water have proven to be the most efficient in corrections have been introduced into range of HPP water head. purification systems at the Dzaujikan- decreasing environmental load, as they the documents, it will be approved skaya, Ezminskaya and Gizeldonskaya minimize or completely eliminate oil by the Technical Committee of the hydro-power plants in 2014. products in water bodies during the op- Russian Standards Authority. eration of hydro-turbine equipment. In The Cheboksarskaya HPP has devel- 2013, such initiatives were implemented oped a project for the reconstruction of at the Volzhskaya, Zhigulevskaya, Kam- purification plants for drainage water skaya, Novosibirskaya, Saratovskaya coming out of the HPP building and HPP and at the Verkhnevolzhskiye for melt and rain water coming from HPPs Cascade.

78 79 4. Environmental responsibility Global Climate Change and The analysis of field studies at • According to different estimates, the • Data analysis from meteorology meteorology stations within the change in the average yearly air tem- stations located in the Yenisei River Environmental Responsibility limits of the receiving basins of the perature in the Bureya and Zeya River basin, within the limits of the re- water bodies of the HPPs operated basins within the limits of the HPP’s ceiving basin of the Sayano-Shush- by the RusHydro Holding shows receiving basins was positive judging enskaya HPP water body, showed considerable temperature changes by data obtained from all meteorology an average yearly air temper- “An exponential increase in abnormal natural and climatic in the region. stations. The increase in the average ature increase of 1-3ºС during yearly temperature amounted to 2 the considered period phenomena is an indisputable indication of the necessity degrees Celsius over the last 50 years; of making every human activity green, be it management, production or social activity. This is also true for the hydro-power industry. It is not by chance that environmental safety became Flood-2013: lessons learned and conclusions one of the long-term strategic priorities of Russia’s energy policy, The 2013 Far East flood, caused by abnormal summer rainstorms, which “The floods have become deeper along with energy security and budget efficiency.” were the strongest in recorded history, made the Company take a fresh look and more serious and the time span Marina Seliverstova, at climate change issues, encouraging has decreased. I think we should Head of the Russian Federal Agency of Water Resources it to further upgrade flood protection systems. Together with the government, systematically modify the assessment JSC RusHydro is considering the pos- sibilities of constructing new anti-flood model for water economy use. We should In 2013, JSC RusHydro performed no minimization methods in the deci- The RusHydro Group’s companies HPPs and regulated water bodies capa- quantitative assessment of conse- sion-making process, the Company undertake regular energy-saving ble of preventing flood run-offs. also change the forecasting model and quences for the Company associated takes into account climate and hydro- measures. They are aimed at reducing with climate change, although the logical forecasts to adapt to possible internal energy consumption, devel- construct flood protection facilities.” Company is aware of the probable climate change. In a joint effort with oping and promoting energy services impact of climate change on perfor- the Russian Water Supervision Author- ultimately targeted at implementing Evgeny Dod, mance results for the hydro-power ity, the Company develops a hydro-me- energy-saving technologies and de- Сhairman of the Management Board - industry as a whole and on Company teorological forecasting method in crease consumer power consumption. General Director performance in particular. areas adjacent to the operating HPP to minimize said risks and to upgrade Starting from 2013, JSC RusHydro has The development of structural and tem in the zone of the estuary and delta To identify risks and to include risk forecasting quality. published on its web site data on the engineering solutions for watering of fronts and reduce biological diversity hydrological situation at the Company’s the Volga-Akhtubinsk flood plain and fish and birds species composition HPPs. The data is published using a in the local fauna. special iconographic model (refer to Taking into account global changes in the Climate change and upgrading the safety of waterworks facilities www.rushydro.ru/press/polovode_2013/ climate and the hydrological situation, To provide for the adequate water- infografics/). Information on the HPP’s rapid and considerable fluctuations in the ing of the Volga-Akhtubinsk flood The Company’s medium-term priorities Partnership. The development of the waterworks facilities. Conference partic- operating regimes is updated daily and Caspian Sea level and their consequenc- plain and to optimize operation of the include: analyzing climate change risks hydro-power industry in climate change ipants recognized the necessity of imple- can be freely accessed. es have become very urgent, as these Cheboksarskaya HPP, the Company during strategic development planning conditions became major issues on the menting new schemes for hydro-power consequences are likely to decrease the has developed a draft of a technical and developing corresponding approach- agenda of the 5th All-Russian Conference use to focus on the flood protection of Volga’s water content and contribute to design specification calling for the use es. Taking into account the scale of the of Hydro-power Engineers. Specialists territories by constructing self-regulated the drying of the Volga-Akhtubinsk flood of an additional distribution plant in problem, JSC RusHydro deals with it on emphasized the high probability of future waterworks facilities at feeders. plain. This in turn can result in numer- the lower pool to provide direct inflow its own, as well as in cooperation with increases in flood run-offs on Far East ous negative consequences, including of water into the Akhtuba riverbed. stakeholders, such as the “Hydro-power rivers, which necessitates recalculating environmental and economic ones. Water The project has been approved by the Industry of Russia” Non-Commercial flood run-offs to improve the safety of discharge at the Cheboksarskaya HPP expert community. At present, it is contributes to preserving the unique being considered by the Water Prob- biota of the Volga-Akhtubinsk flood plain. lems Institute of the Russian Academy Suspension of the watering may lead to of Sciences as one option to address critical consequences for unique ecosys- engineering solutions.

80 81 4. Environmental responsibility

In 2013, RusHydro became the The translation of the Protocol ed a training workshop in Nizhny Responsible Interactions FIRST COMPANY in RUSSIA to into Russian was accomplished Novgorod for public organizations. assess the Kankunskaya HPP by RusHydro (in a joint effort with The workshop, which was attended with Stakeholders in Respect project using the Hydro-power the WWF in April 2013). It was ap- by RusHydro representatives, includ- Sustainability Assessment Protocol. proved by the IHA Board, received ed Protocol presentation, followed by to Environmental Issues In 2014, the Company plans to assess the official status and published at a discussion on the prospects of its one of its facilities with the assis- http://www.hydrosustainability.org. application in Russia. tance of IHA experts. In June 2013, the WWF Russia host- “The Company intends to maintain fruitful cooperation with international governmental and non-governmental organizations, R&D and educational institutions working in the field of An example of the visual presentation of results of hydro-power projects' compliance with sustainable environmental protection and ecological safety.” development criteria

RusHydro’s Environmental Policy Hydro-power Sustainability Assessment Protocol The 2013 initiatives below are examples of efficient interaction and international cooperation:

P-1: Discussion Public hearings and consultancy P-23: Flow regime in the lower pool P-2: Management The interaction concerning the public River, pertaining to an increase in the Environmental Center (Nizhny Novgorod), 5 P-3: Proving necessity environmental assessment of design water level in the Cheboksarskoye water- the Industrial Ecology Research Institute P-22: Water body planning and strategic compliance documents concerning the construction body to the mark of the normal impound- (Moscow) and the Russian Academy of 4 P-4: Selecting a site of the Cheboksarskaya HPP on the Volga ed water level of 68m involved the Dront Natural Sciences. Р-21: Water quality and a structure

P-5: Environmental and social P-20: Erosion and deposits 3 impact. Assessment and management UN projects related to biological diversity conservation 2 Activities performed within the working of Nature RF) are underway. A con- The Company plans to perform an P-19: Biodiversity P-6: Integrated project and invasive species management groups of the UN Development Pro- cept for collecting innovative solutions environmental assessment of facilities gram (UNDP) working on the projects pertaining to biodiversity preservation designed in the Far East, the Nizhne-Bu- 1 “Preservation of biodiversity of water for the hydro-power industry has been reiskaya HPP and the Nizhne-Zeyskaya Р-18: Healthcare P-7: Hydrological resources and swamp lands of the Lower Volga” prepared by the Company in coopera- HPP, taking into account environmen- (UNDP/GEF) and “Biodiversity pres- tion with the UNDP, taking into account tal factors. The Company also plans to ervation issues in the policies and advanced international practices. A develop numerous legislative proposals P-17: Cultural heritage P-8: Infrastructure safety development programs of the energy training workshop has been conducted on the inclusion of criteria for preserving sector of Russia” (UNDP/GEF/Ministry on preserving biodiversity. biodiversity into normative requirements. P-16: Labor conditions P-9: Financial sustainability

P-15: Local community P-10: Project advantages Assessment of the compliance of hydro-power projects with sustainable development criteria P-14: Relocation Р-11: Economic viability

RusHydro is a major contributor to the in 2010 can serve as an example of As of today, the Hydro-power Sustainability P-13: Communities and sources of existence P-12: Material management promotion (in Russia) of best interna- such practices. The Council supervises Assessment Protocol has been recognized, impacted during project implementation tional practices of assessing the com- the practical implementation of the ratified and recommended for use by many pliance of infrastructural hydro-power Protocol in question. international organizations, including the industry projects with sustainable WWF. Assessment results obtained using Source: www.hydrosustainability.org development criteria throughout the Protocol use allows hydro-power the Protocol (as shown in the diagram) are life-cycle of said projects. The Hy- sector representatives to maintain convenient to use when choosing consen- dro-power Sustainability Assessment a regulated dialogue with all stake- sus options and suggestions on a particular Protocol developed by the International holders, including: local communi- hydro-power facility, as well as for upgrad- Hydro-power Association (IHA) and ties, local authorities and members ing management processes and business approved by the Council for the Sus- of non-profit organizations and procedures used in the industry on the tainable Development of Hydro-power environmental organizations. basis of daily operations.

82 83 4. Environmental responsibility 4.2 Development of the power industry in the The Far East Power Industry Development Program Far East – the preservation of the region's natural resources st The Sakhalinskaya SDPP-2, The Yakutskaya SDPP-2, 1 stage the Ilyinsky Settlement, the Tomarinsky District, the Sakhalin Assisting the social and economic Region, the 1st stage development of the regions of operation

“The analysis of the actual economic situation shows that the inequal- ity of tariffs creates inequality in economic activity conditions and in people’s living standards as well. Therefore, we should start regional development with power industry development. This will be just the The TPP in the city of Sovetskaya first step in the development of Eastern Siberia and the Far East.” Gavan, the Khabarovsk Region The Blagoveschenskaya TPP, the 2nd stage Vladimir Putin at a meeting with Viktor Ishaev and Evgeny Dod, the Kremlin, November 22, 2012

Current and future projects implemented in the Far East Federal District

The management of the RusHydro Group The Company faces the difficult and namely a TPP in the city of Sovetskaya exercises a comprehensive approach responsible task of constructing and Gavan, the Sakhalinskaya SDPP-2 (the to implementing infrastructural and commissioning electric power facilities first stage), the Yakutskaya SDPP-2 in (the investment projects, pursuing the policy with total electric power amounting to first stage) and the Blagoveschenskaya intended to ensure the economic po- 520 MW and heat power of 563Gcal/h in TPP (the second stage). Capitalization The project is operated by the Group RAO Energy Systems of the East (a member of the RusHydro Group). tential of the regions on one hand, and a very short time. The facilities are to be support provided for RusHydro by the to preserve their natural wealth on the constructed within a very limited peri- State government comprises RUR 50 bil- other. This is also true for the Far East od, resulting in a dramatic increase in lion. Implementation of these projects is where the Group launched numerous generating facilities in the Far East; thus the first stage in the Company’s program RAO Energy Systems of the East large-scale new construction projects in establishing the basis for further econom- to develop the power industry of the Far 2013, implementing the Federal Targeted ic development of the entire region. East to replace outdated power capacities Program of power industry development and to develop the infrastructure of the in the Far East region (hereinafter re- The Far East Power Industry Development decentralized energy supply sector of the 30 31.8 ferred to as the Far East Power Industry Program stipulates construction of four Far East Federal District. billion million Development Program). electric power facilities in the Far East, kWh Gcal

The key investment project implemented by the Company involves the Energy Heat energy production output construction of four priority projects on the territory of the Far East to execute Order No 1564 (dated 22.11.2012) “On Further Development of the Federal Hydro-power Generating Company RusHydro JSC.” Installed heat Installed heat capacity capacity

17.9 thousand 9.1 GW Gcal/h

84 85 Наименование 4. Environmental responsibility программы 4 RAO Energy Systems of the East JSC energy globally. The total installed heat in the second non-price zone of the The diagram of current and future projects 4 1 The Nizhny-Bureiskaya HPP (hereinafter referred to as RAO ES of the capacity of the RAO ES of the East’s Unified Energy System of the East and in implemented in the Far East Federal District 4 2 The Ust-Srednekanskaya HPP East) is the biggest energy holding that power facilities (as measured on Decem- six isolated energy systems. The share 4 4 supplies electric and heat energy in the ber 31, 2013) amounts to 17.9 thousand owned by JSC RusHydro in the authorized 3 The Shilkinskaya HPP Far East. RAO ES of the East became a Gcal. Coal represents 58% of all burned capital of RAO ES of the East amounted to 12 4 The HPP cascade at the Selendzha River member of the RusHydro Group in 2011 fuel, gas represents 39% and fuel oil 84.39% as of December 31, 2013. 5 The Gilyiskaya HPP and is the sixth largest producer of heat takes 3%. RAO ES of the East operates 13 6 The Nizhny-Zeyskaya HPP 4 4 4 4 7 4 4 4 The Nizhny-Nimanskaya HPP 4 4 RAO ES of the East, core assets: the number of facilities with specified primary sources 4 8 The Dalnerechensk HPPs cascade 4 4 4 4 1 The TPP in the city of Sovetskaya Gavan 4 4 4 2 Number of facilities Type of energy resources 4 4 4 1 The Sakhalinskaya SDPP-2, the first stage 4 4 4 4 4 3 The Yakutskaya SDPP-2, the first stage TPP 19 Coal, gas 4 570 4 4 4 4 The Blagoveschenskaya TPP, the second stage SDPP 10 Coal, gas 4 4 4 4 4 5 The Vostochnaya TPP DPP 244 Heating oil 2 4 4 4 4 6 The Ussuriyskaya TPP HPP 3 Hydro-power 4 4 4 The Gas Turbine Unit WPP 3 Wind energy 4 4 7 17 at the Vladivostokskaya TPP-2 SPP 4 Sun energy 4 8 The Steam and gas unit at the 460 2 Vladivostokskaya TPP-2 4 4 The Chapter contains SELECTED DATA on the environmental impact caused by the production activities of RAO ES of the East, as the Holding’s data is beyond 170 4 9 The Antonovskaya TPP the scope of this Report. 3 4 10 10 The Yakutskaya SDPP-2, the second stage Fully disclosed non-financial reports complying with GRI standards are available in the RAO ES of the East Report on Corporate Social Responsibility and 4 5 Sustainable Development at http://www.rao-esv.ru/shareholders-and-investors/disclosure-of-information/ 4 14.5 11 4 3 Unit No 3 of the Neryngrinskaya SDPP 12 4 The TPP in the city of Pevek 13 The TPP in the Bilibino settlement JSC RusHydro owns 84.39% of the authorized capital 11 14 The Khabarovskaya TPP-4 of RAO ES of the East 4 The Steam and gas unit at the 3 4 4 15 15 5 Komsomolskaya TPP-5 6 4 110 1 The SPP in the Batagai settlement (the 4 320 15 Republic of Sakha-Yakutia) Development of the power industry in the 7 15 188 1 110 2 The Complex project for the development of 2 wind power generation in the Kamchatka region 120 4 Far East and environmental responsibility 1 3 Commissioning of the power unit at the Pauzhetskaya geo-thermal PP 4 Facilities under construction 4 Recognizing the fact that the produc- inefficient HPPs within the frame- the energy and environmental efficien- The Program for the development of solar Facilities to be constructed 8 4 4 4 and wind power generation in isolated tion activity of member-companies work of the Far East Power Industry cy of the region’s power industry. power districts of the Far East of the RusHydro Group can present a Development and comprehensive Electric capacity, MW 9 4 Thermal capacity, Gcal/h The Increase in the Mutnovsky geo-thermal potential climate change risk in the program on the implementation of The complex program aimed at RES 7 6 5 PP's capacity due to the installation of a regions of the Far East Federal Dis- renewable sources of energy in the implementation within the framework turbine operating on the secondary steam 5 8 trict, RusHydro and RAO ES of the East Far East Federal District. of the Group contributes to reduced implement planned and comprehen- specific greenhouse gases emission 420 sive measures to reduce atmospheric The projects implemented by RusHydro, equivalent per kWh. The program is 139.5 pollutants emitted by regional heat in conjunction with RAO ES of the East, being continued in 2013. power plants and to gradually rebuild in the Far East are intended to upgrade

The RusHydro Group management; implements a comprehensive initiatives; • Total electric capacity – 5.3 GW • Water bodies will decrease the level • total capacity amounting environmental policy • A reduction in harmful and • Total thermal capacity – of the Amur River during catastrophic to 60 MW by 2016 floods by 680 cm intended to preserve the greenhouse gas emissions; • Bio-diversity preservation. 3.095 Gcal/h • by 2020 – 120 MW region’s natural wealth. 3 4 5 6 7 8 4 The Company’s policy is based • Safe waste disposal; 6 7 8 9 10 11 on the following: JSC RusHydro’s projects • Water use and water protection 12 13 14 15 JSC RusHydro’s and JSC RAO ES of the East’s joint projects • Environmental impact JSC RAO ES of the East’s projects

* The project is implemented within the agreement on the development of renewable energy sources concluded by and between the government of the Republic of Sakha (Yakutia) and JSC RAO ES of the East ** The project is implemented within the agreement on the development of renewable energy sources concluded by and between the government of the Kamchatka Region and JSC RAO ES of the East 86 87 4. Environmental responsibility The reduction in the volumes of con- “Carbon dioxide (CO ) is the only and the most Environmental impact and measures to sumed fuel and greenhouse emissions 2 in 2013 was caused, among other things, significant anthropogenic greenhouse gas in the decrease the load of RAO ES of the East by hydrologic conditions and increased atmosphere with its share in the total impact of water content in the Far East during the summer and autumn periods. Also of greenhouse gases on the climate amounting to significance during the period was the 64%. From the start of the industrial age in 1750, Reduction in harmful atmospheric emissions efficient coordination of the RusHydro Group’s production activities, leading to a the carbon dioxide content in the atmosphere RAO ES of the East on a quarterly basis and DAG-16) to monitor levels of emissions Greenhouse gases emissions by the decrease in energy output by the RAO ES grew 39%. This growth was primarily caused records the emissions of long-living green- to follow industrial indicators comply with Holding’s branches and SDCs are of the East’s thermal power plants and a by emissions resulting from the combustion of house gases and other industrial emis- environmental norms. Methods of deter- consequences of the generation of redistribution of load for the generating mineral fuels, as well as depersonalization and sions into the atmosphere. The quarterly mining annual gross CO2 emissions with electric energy, heat or steam as well facilities in favor of the RusHydro Hold- records are based on the fuel balance of flue gases by thermal power plants’ boilers as of transportation of materials and ing’s HPPs, mainly the Bureyskaya HPP changes in land use practices.” RAO divisions. RAO ES of the East’s SDCs and boiler houses are established by indus- personnel. In 2013, harmful atmospheric and the Zeyskaya HPP. During the year, use gas analyzers (including DAG-510-MW trial environmental standards. emissions continued to decrease. the output of the last two HPPs grew 12% and 18%, respectively. The Bulletin of the World Meteorological Organization

This resulted in changing the energy Long-living greenhouse gases are materials and personnel. Coal power balance in the Far East Federal District in the result of anthropogenic activities. plants generated the major share of 1. For the Government should contain greenhouse gas The Order of the President of favor of “clean” energy: during the year, The emissions of these gases by RAO pollutants emitted to the atmosphere of the Russian Federation: emission reduction norms for the Russian Federation “On different economic sectors. the share of energy produced using re- ES of the East’s branches and SDCs in 2013 (some 62%). The share of in the Reduction of Greenhouse a) To ensure the reduction of green- newable sources grew 4% compared with result from production activities, as RAO ES of the East’s fuel balance Gas Emissions” house gas emissions by 2020 to a 2. This Order is to become effective 2012, to amount to 35% in 2013. well as from the transportation of amounted to 58%. from the day it is officially To implement the Climatic Doctrine level not exceeding 75 percent of the same in 1990; published. of the Russian Federation approved 2012 RusHydro Group: the share of The structure of the fuel basket of all The structure of the emissions of long- by Decree No 861-rp of the President power facilities (RAO ES of the East) living greenhouse gases broken down b) Within 6 months, to approve a plan V. Putin, the President “clean” energy in the energy balance of of the Russian Federation (December the Far East Federal District was 31% by fuel types (RAO ES of the East) of action to ensure greenhouse of the Russian Federation 17, 2009), it is hereby ordered: gas emissions do not exceed the Moscow, the Kremlin above-mentioned limits. The plan September 30, 2013, No 752 39% 37% 31%

69% 58% 3% 62% 1%

In 2013, negative environmental impact RAO ES of the East fell by 741 thousand of emissions of long-living greenhouse Solid fuel Oil fuel showed signs of decreasing compared tons of reference fuel, resulting in a gases by RAO ES of the East was 5% Gase with 2012. The total volume of fuel reduction in atmospheric emissions by (compared with 2012). consumed by generating facilities of 2,075 thousand tons. The total reduction

CHP Total direct and indirect volumes of long-living greenhouse gases emitted 2012/2013: the consumption of fuel and HPP by all facilities of RAO ES of the East with specified mass energy resources and emissions of long-living greenhouse gases fell 5% Re-building and gasifying In 2013, RAO ES of the East proceeded Indicator 2012 2013 Change, % (RAO ES of the East) 2013 RusHydro Group: the share of thermal power plants with the replacement of outdated capac- “clean” energy in the energy balance of Consumption of fuel and ities and the transfer of its power plants the Far East Federal District was 35% energy, thousand tons of 15,077.8 14,336.5 (5) 43.6 41.5 To minimize the negative environmen- reference fuel (the TPPs in the Sakhalin, Primorie, Kam- tal impact, construction and rebuilding chatka and Khabarovsk Regions), to the Emissions of long-living green- investment projects have been imple- house gases (re-calculated 43,572.1 41,475.3 (5) use of natural gas. The natural gas-fired 35% mented, which are intended to operate on in СО2), thousand tons gas-engine Anadyrskaya TPP operated natural gas using environmentally efficient by JSC Chukotenergo increased its power 15.1 14.3 65% gas turbine equipment, low waste, and output. According to preliminary esti- The table above contains aggregate data for all facilities of the RAO ES of the East, including carbon dioxide minimum impact and innovative technol- mates, after the completion of the second (CO2), methane (CH4),nitrous oxide (N2O) and excluding CFC-12 and CFC-11 (and other solid suspended harmful substances). The data on CH and N2O are re-calculated in CO .To re-calculate a value expressed ogies for preparing and supplying fuel . A 4 2 stage of gasification, the annual reduction in tons of coal equivalent to a value of emissions of CO equivalent to the atmosphere a ratio of 1.9 is used 2012 2013 2012 2013 2 decrease in the use of coal and fuel oil as (with CO2 emissions amounting to 1,900-3,000 kg/t, depending on coal grade) of emissions from the Vladivostokskaya fuels to fire existing TPPs and the gradual TPP-2 will comprise some 55-60% (com- consumption of fuel Emissions of long-living transfer of generating facilities of RAO ES and energy resources, greenhouse gases pared with 2010). In 2013, the share of of the East to natural gas (where practical thousand tons of (re-calculated in СО2), gas in the fuel balance of RAO ES of the reference fuel thousand tons and economically and environmental- East comprised some 37%. ly efficient) will contribute to improving CHP HPP environmental conditions.

88 89 4. Environmental responsibility

The repairs of the ash collection sys- Pursuant to a Decree of the Russian the European Union set for environ- tems of boilers and other measures Government on the implementation of mental protection initiatives and the Development by the RusHydro implemented pursuant to the TPiR the Kyoto Protocol, only JSC DGK has handling of industrial waste classi- Program contribute to a reduction in two valid agreements for the sale of fied as hazardous. Group of renewable energy the atmospheric emissions of long-liv- СО ERUs. All other SDCs of RAO ES of 2 Refer to the RAO ES of the East Corporate and ing greenhouse gases and the easing of the East do not participate in selling Social Responsibility Report at http://www.rao-esv. ru/activities/innovation/index.php и http://www. sources in the Far East the industrial load on the environment. CO2 emission quotas. rao-esv.ru/social-responsibility/environment- In 2013, repairs of the ash collection protection/ for more detail on environment * Decree No 780 of the Russian Government “On protection. systems were performed at JSC Maga- Measures to Implement Article 6 of the Kyoto Protocol to the UN Framework Convention on danenergo and JSC Chukotenergo. Climate Change (dated 15.09.2011) Environmental impact and The development of the power • The transfer of the industry onto a new • The establishment of conditions for the The implementation by RAO ES of the measures to decrease the industry using tidal, wind, solar technological base, including car- development of national research and East’s companies of the environmen- Cooperation with the EBRD and the ap- load listed in the far east and geo-thermal energy bon-free processes, SMART grids and the technology base; proval of the Environmental and Social tal policy also involved reconstructing power industry development distributed generation; power facilities of the Vladivostok- Initiatives Plan In 2013, member-companies of the • The establishment of distributed skaya TPP-2 and the Khabarovskaya program RusHydro Group proceeded with the • The diversification of energy balance generation to upgrade power supply TPP-3 respectively and the construc- In 2013 the Holding launched the im- implementation of joint projects and the and energy security; reliability and quality. plementation of an Integrated Man- The technical designs of power facili- integration of management systems of tion of an ash dump for the Partizan- ties built within the framework of the skaya SDPP. The ash dump, known agement System (IMS) consisting of innovative development for RAO ES of the The key priorities of renewable generation are the following quality management, environmental Program are developed in accordance East and RusHydro. The generation of en- as Zelenaya Balka, was constructed with environmental safety principles using synthetic materials, such as management and occupational safety ergy from renewable sources is one of the Business Segment Future Markets systems complying with ISO 9001, ISO and the use of the most advanced priorities of RusHydro concerning innova- geo-membranes and geo-textile. technologies for natural resource use. 14001 and OHSAS 18001 international tions and promising technologies, as such The RusHydro Holding The Program stipulates the construc- Financing load decrease initiatives standards. The integrated systems are generation is environmentally friendly. tion of two SDPPs and two TPPs. One implemented in all subsidiaries and North-West: the Murmansk Region, the Far East: the Tidal power generation In 2013, RAO ES of the East’s total capital dependent companies of RAO ES of the of the four power facilities under In addition, the development of renewable Khabarovsk Region expenditures amounted to RUR 17.3 billion, East. The implementation is carried out construction will be gas-fired (the energy sources contributes considerably including RUR 9.5 billion for financing the Yakutskaya SDPP-2), whereas the other to the following: Minor hydro-power generation in accordance with Agreement No 44222 Republics of the Northern Caucasus (low pressure small HPPs) TPiR Program, and RUR 446.3 million spent (dated 05.12.2012), which concluded by three will be coal-fired. • The development of domestic manufac- on environment protection measures. and between RAO ES of the East and the Construction and mounting work are turing of high technology equipment for The Far East: the Kamchatka Region, Sakhalin, the EBRD pursuant to the Environmental Geo-thermal power generation The implementation of the 2013 princi- preceded by due diligence on the renewable power generation (local- Kuril Islands, the Krasnodar Region and Social Initiatives Plan (ESIP) adopt- pal investment projects resulted in an environmental impact in regions of ization), based on best international ed to upgrade environmental efficiency 11.2% reduction in atmospheric emis- construction in accordance with all practices; Wind power generation Lower Volga of the RAO ES of the East’s operations sions (including long-living greenhouse normative requirements and environ- for the 2013-2016 period and for the gases and harmful solids generated mental standards. All three power • The creation of new employment RAO ES of the East subsequent credit period. by coal fuel, such as: soot, coal and units of the TPP in the city of Sovet- opportunities; skaya Gavan will be equipped with Distributed renewable power wood dust, and boiler ash). The vol- JSC Yakutskenergo became the first The Far East (RAO ES of the East) generation ume of ash waste fell 8.2%, while dependent company of the Holding to highly efficient electric filters, which energy consumption decreased 4.3%. implement the IMS and to undergo cer- collect ash from beyond the boiler. The Solar power plants Yakutia, the polar regions The use of enhanced cooling systems tification in 2013. The implementation of equipment will be supplied by Stavan, resulted in a reduction in water intake international standards in all other SDCs an environmental protection division of from surface sources, thus decreasing is planned for 2014-2016. Alstom Power machine tool concern, wastewater discharge into water bodies the market leader in manufacturing by 4.8%. 11 hectares of ash dumps ESIP initiatives in 2013 included emission-cleaning equipment. were remediated. the following: The RusHydro Holding: pilot renewable power generation projects in the Far East A recycling process water supply Sale of ERUs pursuant • A tender conducted to develop, system, envisaged by the design of the Promising projects are implemented by Geo-thermal power plants in Kamchatka to the Kyoto Protocol implement and prepare for certifying Sakhalinskaya SDPP-2, will allow for a the RusHydro Holding’s companies on the the Integrated Management System considerable decrease in waste water basis of three geo-thermal power plants The Pauzhetskaya The Mutnovskaya The Verkhne- GTPP GTPP Mutnovskaya GTPP An opportunity to act as a seller of Emis- (IMS) consisting of quality manage- volume, thus significantly reducing in Kamchatka and one tidal energy gen- sion Reduction Units (ERU)* on the inter- ment, environmental management negative environmental impact. eration plant on the shores of the Barents Installed power 12 MW 50 MW 12 MW national market of carbons (in accordance and occupational safety systems Sea, the only such facility in Russia. Average annual output 43 million kWh 360.7 million kWh 63 million kWh with the Russian procedure for implement- complying with ISO 14001:2004 and To minimize the potential negative ing the mechanisms of the Kyoto Protocol) OHSAS 18001:2007 international environmental impact generated by can provide an additional incentive to make standards. The tender was won by all facilities under construction, these facilities will be equipped with waste- environmental policy more transparent. EKOSERTICA LLC Research and Pro- Activity areas include the following: erny Centr Vozobnovlyaemoi Energetiki • The construction of a secondary steam water treatment systems and other * The ERU is the emission reduction unit or the duction Center (Moscow); (the Engineering Center of Renewable power plant at the Mutnovskaya GTPP equipment facilitating the rational use unit of absorption of greenhouse gases, which is • The construction of the binary power Power Generation) since 2009. Almost all and the development of engineer- calculated based on the basic level of emissions. • A number of SDCs and 43 employees of natural resources. plant on the site of the Pauzhetskaya The ERU is equivalent to 1 ton of СО2. The unified equipment for the binary unit has been ing solutions for the manufacture of ERU is 1 ton of CO2 equivalent. The unified ERU of of RAO ES of the East were trained Refer to http://www.rushydro.ru/activity/razvitie_ GTPP. The project, which is unique manufactured domestically. The general serial equipment for geo-thermal 1 ton of CO2 equals to 1. To calculate ERU for other greenhouse gases, the volume of ERU is multiplied on requirements of the international energetiki_dalnego_vostoka/ for greater detail on for Russia, has been implemented by the Far East Power Industry Development Program designer of the project is NIIES – the power plants using the potential by GWP. For example, the methane GWP equals 21, standards (ISO 9001, ISO 14001 and RusHydro and its subsidiary, the Inzhen- and for NO2 it equals 320, where GWP is the Global Power Facilities Research Institute. heat of the intake pit Warming Potential. OHSAS 18001), and on directives of

90 91 4. Environmental responsibility

RAO ES of the East: pilot renewable generation projects in the Far East Federal District Wind power generation Commissioning of the wind-diesel power This is the first industrial wind power and wind power plants (WPP) plant on Bering Island generation facility implemented pursuant In 2012, a program was launched to RAO ES of the East for the period till 2016 to as the Program). Program develop- to the Program. In the future, the Program replace diesel power generation in the with a view till 2020 (hereinafter referred ment will be completed in 2014. At present, the RusHydro Holding is consid- In 2013, RAO ES of the East launched will allow for the replacement of up to 50% decentralized sector of the Far East Fed- ering the possibility of implementing 10 WPP operation of the wind-diesel power of diesel generation in isolated power dis- eral District and to implement renewable projects with a total capacity of 16MW. These plant on Bering Island in the Nikol- tricts of the Kamchatka Region. Apart from power generation. 13% of diesel-fired power plants in the Far East projects are intended to be implemented skoye settlement, the Kamchatka Bering Island, the wind-diesel power plants Federal District can be considered as potential facilities jointly with RAO ES of the East. Implemented Region. The power plant consists of will be installed in 7 settlements located The successful implementation of pilot for generation replacement, or for modernization in isolated power districts of the Far East, two up-to-date Vergnet GEV-MP wind mainly along the peninsula’s shorelines. projects has formed the basis to start the the wind and diesel plants will allow for sav- power units with a total installed development of a long-term Renewable using alternative generation, such as solar ings of up to 40% of fuel. The efficient use power of 550 kW. In June 2013, Yakutsk hosted Generation Development Program for the or wind power generation. of wind power plants in generation systems Expected effects include the following an international conference operated by municipal companies on the “Renewable generation in territory of the Far East Federal District also Pilot projects implemented by RAO ES of the East in the Far East Federal District: solar and wind power plants • A provision for average annual output isolated systems of the Rus- has great potential. There are two existing of 50% of electricity and 20% of heat projects in Kamchatka, including a 550 kW sian Far East Region.” The Diesel fuel savings Diesel fuel savings power using wind power generated by Price of the project, Settlement Installed power, kW in tons of reference in RUR thousand per wind-diesel power plant on Bering Island in conference was supported by RUR million excl. VAT the wind-diesel power plant; fuel per annum annum the settlement of Nikolskoye and a 275 kW the Ministry of Federal Rela- Solar Power Plants (SPP) wind power generation plant in Ust-Kam- • Diesel fuel savings will amount to tionships and Foreign Affairs chatsk. In the nearest future, the Company The Batamai settlement 30 16.2 497 3.1 some 350 tons or RUR 12.5 million per of the Republic of Sakha is considering a pilot project involving the annum (in 2013 prices). The Yuchugei settlement 20 9.3 284 1.7 construction of a wind power farm in the (Yakutia). The conference was The Dulgalakh settlement 20 14.3 330 2.0 Ust-Kamchatsky settlement (3 MW) and in organized by RusHydro and The Kudu-Kyel settlement 20 10,2 290 2,0 the Tilichiki settlement (3 MW). RAO ES of the East. Wind Power Plants (WPP) The wind and diesel power plant 550 538.2 11 145 118.6 in the Nikolskoye settlement The WPP in the Ust-Kamchatsk 275 275.4 4 874 52.2 settlement “An example of a wind-diesel power plant on Bering Island The WPP in the Bykov Mys settlement 40 50 1 284 5.3 demonstrates a unique economic model that allows for the implementation of such models without any tariff consequenc- The Holding’s renewable power generation development program is the basis for a systemic approach to implementing renewable power generation projects es for consumers. Renewable power generation is quite new in on the territory of the Far East Federal District. The target values for Program Russia and we take special pride in the fact that the RusHydro implementation: 60 MW till 2016 and 120 MW till 2020. Group became a segment leader.”

The complex program for the implementation of renewable power generation in the Far East Evgeny Dod, Сhairman of the Management Board - The systemic approach to the develop- The effects expected from the im- According to estimates of RAO ES of the General Director ment of renewable power generation in plementation of renewable power East, the potential total capacity of renew- the Far East will allow for the following: generation projects in the Far East able generation facilities to replace diesel Federal District:: power generation in decentralized power • To determine optimal locations districts where the companies of RAO ES Solar power generation in the Polar Regions for facilities; • Improved power supply reliability of the East operate can range from 150 to and quality; 200 MW*, thus resulting in considerable • To determine typical Starting from 2011, the Sakhaenergo, a SPPs in the Polar Regions operate in a covery period of up to 12 years comprises environmental potential in the form of fuel engineering solutions; • The partial solution of the problem subsidiary of JSC Yakutenergo (a member combined mode, using the energy of 80 46 MW.* The forecast increase in fuel savings and a decrease in the atmospheric of cross-subsidizing diesel power of RAO ES of the East) has successfully solar batteries and diesel fuel. prices strengthens solar power potential impact of long-living greenhouse gases. • To attract necessary investments; generation, slowing down the tariff operated four solar power plants (SPP) all the more. Project implementation will potentially growth rate; with a total capacity of 90 kW. The SPPs Expert assessments of solar power (*) According to data of the State Information • To implement the projects System in the field of power saving and improving result in the reduction of CO2 emissions are located in the remote regions of the potential in the Far East Federal District energy efficiency (www.gisee.ru) in the shortest possible time • A reduction in atmospheric pollutant to the atmosphere of from 120 to 160 tons Republic of Sakha (Yakutia). Two of the prove that the total capacity of priority emissions. per annum.* SPPs were commissioned in 2013. All SPP construction projects with a cost re-

* The value is calculated as follows: the value of the “average long-term generation” is converted into tons of coal equivalent (applying the ratio of 0.341).

To re-calculate the value expressed in tons of coal equivalent into the value of “reduced atmospheric emissions re-calculated in СО2” a ratio of 1.9 is used (CO2 emissions amount to 1,900-3,000kg/t, depending on coal grade)

92 93 Glossary

Terms and abbreviations used in the report

Organizations, including JSC RusHydro, its subsidiary companies included R&D Research and development activities The RusHydro Holding in the scope of the Report (a complete list is available in the chapter or the Holding ABOUT THE REPORT) SR Scientific research The Group of companies, JSC RusHydro and subsidiary companies which have Facilities in the field of renewable energy sources usage, including hydro- The RusHydro Group control and management relations with JSC RusHydro. (a complete list is RES facilities power facilities with a single installed capacity of less than 25 MW, wind, tidal, or the Group available on the website: www.rushydro.ru / company / structure) geothermal and solar energy facilities JSC RusHydro The Holding company with head office in Moscow, includes Executive office of WECM Wholesale electricity and capacity market or the Company JSC RusHydro and branches of JSC RusHydro Integrated Energy System - combination of several energy systems united by a IES BWMB Basin Water Management common mode of operation, having a common dispatch control VZO Subsidiary and dependent companies of SDCs of JSC RusHydro D&S Design and survey work Action list as part of the restoration program of the SSH HPP which is developed Project "Boguchanskoye Energy Metallurgical Association" - the investment project of JSC RusHydro and Company RUSAL to create the Boguchanskoye Restoration and in accordance with the design documentation of the restoration project of the Project BEMA reconstruction of the SSH SSH HPP. This action list does not include the activities of technical rehabilitation Energy and Metallurgical Association which includes completion of the HPP and reconstruction of property complex of the SSH HPP and the Mainskaya HPP construction of the Boguchanskaya HPP and construction of aluminum factory set out in TPIR of the Investment Program of JSC RusHydro Production complex Portfolio of generating assets of the Company by type of production process All existing, under construction and designed facilities, qualified as renewable Hydro-power facilities REM Retail electricity market hydro-power energy sources - HPPs, PSPPs, TPPs Сhairman of the Management Board - General Director, Deputy Сhairmen of the Management of the HS Hydro-power structures Management Board - Deputy General Directors; members of the Management Company PSPP Pumped storage power plant Board, Directors of the branches Hydro-power plant – power plant as a single production-technological complex MM Mass Media which includes HSes and equipment that converts mechanical energy of water HPP SS HPP The Sayano-Shushenskaya HPP named after P.S.Neporozhniy into electrical energy. In this Report, HPPs include small HPPs and PSPPs, unless otherwise indicated. SDCs of JSC RusHydro united by type of activity, supportive to the production complex. Technological complexes include scientific and research complex, Technological complex SDCs Subsidiaries and dependent companies of JSC RusHydro design complex, construction and installation complex, repair complex and Long-lived greenhouse gases - associated with human activities and include: information and technological complex; carbon dioxide, methane, nitrous oxide, CFC-12 and CFC-11. These five major LLGHGS TPiR Technical rehabilitation and reconstruction gases account for approximately 96% of radiation exposure to the atmosphere caused by LLGHGs Total nominal active capacity of generators at electric power plants which are Installed capacity part of the Company’s structure The Unified Energy System of Russia (UES of Russia) consists of 69 regional electric power systems, which, in its turn, form 7 integrated energy systems The electric power complex of UES of Russia includes about 700 electric power UES (IES): of the East, Siberia, the Urals and Middle Volga, South, Center and North- plants (with capacity of over 5 MW). At the end of 2012 the total installed capacity West. Аll energy systems operate in synchronous mode (in parallel) Electric Power Complex of UES of Russia was 223,070.83 MW. In 2013, electric power plants of UES of Russia produced 1,023.5 billion kWh. In 2013 output of HPPs was 174.8 billion Life cycle of production Phase sequence, which is passed by production complex of HPPs/ PSPPs - kWh (data of SO UES) complex of HPPs / PSPPs "Initiation", "Design", "Construction", "Operation", "Liquidation" Set of investment projects as a list of objects of capital investment in fixed Investment program of assets, their main characteristics and amounts of funding which is drawn up JSC RusHydro for one year or other specified time period and formed on the basis of local regulatory documents of JSC RusHydro Units of Measurement Permanent executive management bodies, as well as officials (employees) Executive office and structural divisions of JSC RusHydro, which do not relate to the branches GW Gigawatt – a unit of electric power (1 gigawatt equals 1,000 megawatts) of the Company Gcal Gigacalorie – a unit of measurement for thermal energy KPI Key performance indicators Gcal/h Gigacalorie/hour - a unit of measurement for thermal capacity Large and medium-sized Hydro-generating assets of JSC RusHydro with an installed capacity hydro-power facilities of over 25 MW kWh Kilowatt-hour – a unit of measurement for produced electricity SHHPs Small HPPs MW Megawatt – a unit of measurement for electrical capacity

94 95 Statement: GRI Application Level Check

96 97 Opinion of RSPP’s Non-Financial Reporting Council on the Results of Considering the 2013 holders; the analysis of which, as stated, of the Company’s responsible business of corporate volunteering. The Report Report on RusHydro Group Sustainable Development for the Purpose of Public Assurance was held during the reporting year to practice. It indicates the objectives and covers the Company’s social programs develop and improve the practice in this principles of the Environmental Policy, and activities addressed to local commu- area. The Report outlines the Company’s presents plans to reduce the negative nities. These programs and activities are The Non-Financial Reporting Council management structures and systems, ment, and an expansion in the disclosed actions in the interests of sharehold- impact, certify environmental manage- implemented in prioritized areas of the of the Russian Union of Industrialists achievements and key operating results, performance indicators, including ers, an important component of which ment systems in corporate branches, Company. The Report provides informa- and Entrepreneurs (RSPP) (hereinaf- the stakeholder interaction system. environmental and social aspects of includes information distribution and and develop scientific research for eco- tion on the expenditures of RusHydro to ter referred to as the Council), estab- the Company and its subsidiaries’ reporting, and dividend policy. It covers logical orientation. The Report includes implement social programs. lished in accordance with a decision of The Company’s application of the inter- performance. the issues of cooperation with investors information on biodiversity conservation, the Bureau of the Management Board national reporting system is taken into and the financial community, provides the organization of a complex assess- Final Provisions (Resolution dated 28.06.2007), upon account as part of the public assurance The Company’s Report for 2013 con- information about the collaboration with ment on how power facility construction an initiative of the RusHydro Group of the Report. However, confirmation of tains significant information on the higher education institutions for innova- projects have an environmental impact In general, the information presented (hereinafter the Company, the Holding the Report’s level of compliance with in- following aspects of responsible tive development and personnel training. throughout the life cycle of power equip- in the 2013 Report of the RusHydro Company, the Group, RusHydro), has ternational reporting systems is beyond business practices: Developing and strengthening human ment. It provides data for the branches Group, outlines the Company’s position considered the 2013 Report on RusHy- the scope of this Opinion. resources are among the Company’s on emissions and discharge of pollutants in respect to priority tasks in the field dro Group Sustainable Development Economic freedom and responsibility. priorities. The Report provides informa- into the air and water bodies, and indus- of corporate social responsibility and (hereinafter the Report). Responsibility for the information and The Report provides data on the ac- tion on measures being undertaken to trial waste, as well as measures to re- sustainable development and their con- statements contained in the Report is tivities of RusHydro within the context improve the efficiency of staff relations, duce these impacts. The Report outlines nection to business strategy, presents The Company requested that RSPP or- borne by RusHydro. The reliability of the of sustainable development strategy. including information on the adoption of the Company’s plans to participate in the the main elements of the control system, ganize public assurance by the Council, actual data contained in the Report is It contains information about events RusHydro’s Social Policy, the signing of a sales of CO2 emission quotas within the and highlights 2013 results in key activ- which forms an opinion about the signif- not the subject of the public assurance. during the reporting period, which are new Collective Agreement, the imple- framework of Kyoto Agreement imple- ity areas. The Report presents a target icance and completeness of information important for the Company to achieve mentation of a set of personnel pro- mentation. Considerable attention in the development trend for the period up to disclosed in the non-financial report, on The present Opinion has been prepared its strategic goals, the Group’s key grams, social guarantees for workers, Report is given to energy efficiency and 2015 and with a view till 2020, including the Company’s performance from the for the RusHydro Group. The Company performance indicators for 2013, and and measures to improve working con- resource conservation in the Company’s the creation of an effective innovation perspective of the Social Charter of Rus- may use this Opinion, both for internal 2014 development priorities. The Report ditions and labor protection. It presents operations. Lines of activities and main management system, human resources sian Business, containing responsible purposes and for purposes of communi- shows the Company’s exclusive role information on numerous performance measures in this area are fixed within development, labor and environmental business practice principles. cation with its stakeholders by publish- in the development of electric power indicators within the field of personnel the relevant Program of JSC RusHy- protection, and the promotion of the ing it without any changes. engineering in Russia. It provides infor- management. The report addresses the dro for 2010-2015, and reflected in the reliability of existing assets. Within the During the period from June 3 to June mation on the ongoing modernization issues of building business relationships Innovative Development Program of the context of sustainable development, the 23, 2014, Council members examined Conclusions policy, emphasizes the importance of with suppliers and customers, includ- Comprehensive Modernization Program. Report highlights approaches to stake- the contents of the Report presented innovation and related prospects for the ing improving customer service, and The Report contains specific indicators holder engagement and challenges for by RusHydro and made this Opinion Based on the analysis of the Report, Group’s business and sustainable hy- upgrading procurement procedures, as for environmental aspects, including the future in this area. in accordance with the Rules of Pub- as well as public information posted dro-power development in general, and well as measures to control the activities data on the costs of environmental pro- lic Assurance of Corporate Non-Fi- on the Company’s official corporate includes information on relevant corpo- of suppliers and contractors. It includes tection in 2013. The Company is reported The Report contains a significant amount nancial Reports, which are approved website, and the collective discussion rate programs. It provides a list of the information about the interaction with to be actively participating in the devel- of specific indicators for economic, by the Council. of the results of the Company’s in- largest investment projects. It reports on different levels of governmental author- opment of environmental legislation in social and environmental performance, dependent evaluation carried out by achievements and plans for the devel- ities, including signing socio-economic cooperation with government agencies, and has been prepared using guidelines The members of the Council have the members of the Non-Financial Report- opment of alternative and renewable cooperation agreements in the regions including in the area of creating a regu- applied in Russian and international necessary competence in the fields of ing Council of the RSPP, the Council energy sources. The Report provides the in which the Company operates. The Re- latory framework for promoting the use reporting practices (the Global Report- corporate responsibility, sustainable de- confirms the following: general system of corporate governance, port provides information on member- of alternative energy sources. ing Initiative Sustainability Reporting velopment and non-financial reporting, including the allocation of responsibility ship and participation in various Russian Guidelines version 3.1 and the GRI Elec- comply with the ethical requirements of The RusHydro Group Sustainable for sustainable development issues. It and international organizations, includ- Participation in the development of tric Utilities Sector Supplement), which assessment independence and objectiv- Development Report for 2013 contains provides information on the implemen- ing the Global Partnership for Sustaina- local communities. The Report states ensures the continuity of information ity and express their personal opinions significant information, covers key areas tation and development of the integrated ble Energy, in which JSC RusHydro has that the Company is actively involved in and comparability with other companies as experts, rather than the opinion(s) of of responsible business practices in risk management system, which, as been presiding since 2013. The Report the socio-economic development of the in the industry. organizations that they represent. accordance with the principles of the noted, is based on ISO 31000 principles. also contains a summary of the dialogue regions in which it operates, concluding Social Charter of Russian Business, and The Report outlines the main actions to with stakeholders when this Report was agreements with local authorities. Key The Report on the Sustainable Develop- The Report was evaluated based on the with sufficient completeness discloses comply with RusHydro’s Code of Ethics. being prepared, and announces plans to activities in 2013 included the construc- ment of the RusHydro Group for 2013 is following criteria for completeness and information on the Company’s activi- The Report emphasizes the importance develop this practice in the future. tion of new hydro-power facilities, the the sixth corporate non-financial report, the significance of the information con- ties in these areas. of measures taken to implement control creation of power complexes, and the which reflects continuity in the develop- tained therein: procedures and ensure fair business Human rights. The Report states that re- development of industrial engineer- ment of reporting process, adherence to Recommendations of the RSPP’s Council practices, the commitment to which is spect for human rights within the Com- ing. The Report devotes considerable the principles of openness and transpar- The information is considered significant following the public assurance of the demonstrated by the Holding Company pany is carried out under Russian law. It attention to the Company’s participa- ency, and the Company’s progress on the because it reflects the RusHydro Group’s Company’s previous report for 2012 were joining the Social Charter of Russian presents detailed information on various tion in the development of the Far East. way to increasing transparency. activities on implementing the responsi- taken into account during preparation of Business in 2013 and the signing of the aspects related to employment and the It also shows the Company’s role in ble business practice principles dis- the 2013 Report. The relevant informa- Anti-Corruption Charter. social protection of workers. Respective fighting against abnormal floods and closed in the Social Charter of Russian tion is contained within the text of the obligations are fixed in various RusHydro overcoming the consequences (of said Business (www.rspp.ru). Report. RSPP Council recommendations Partnership in business. The Report corporate documents. floods). The Report provides informa- have found their ways into, in particular, states that stakeholder engagement is tion on programs to assist residents Completeness suggests that the Com- improvement in the Report’s structure, a seen as a condition of corporate so- Environmental conservation. The Report in connection with the accident at the pany, in an integrated manner, reflects fuller disclosure of the implementation cial responsibility, an important factor states that ensuring environmental Company’s Sayano-Shushenskaya HPP, its activities – the values and strate- of its sustainable development strategy for sustainable development. It shows safety and reducing the negative impact the activities of the Charitable Foun- gic guidelines which form their basis, and approaches in the field of manage- approaches to interactions with stake- on the environment are among priorities dation “Involvement”, and the practice

98 99