Annual Report | 2020
HIGHRELIABILITY
LOWCARBON 1
2 About the Report 4 Message from the Chairman of the Board of Directors 6 Message from the Chairman of the Management Board — General Director
8 Company Profile HIGHRELIABILITY 10 Geographical Spread 12 2020 Milestones 17 Covid-19 Response 18 Business Model LOWCARBON 20 Production Chains 22 Ratings and Awards
RusHydro Group makes a great contribution to the development of the Russian electric power sector and the national energy security. RusHydro is the undisputed leader among Russian energy companies, and is also one of the world’s largest hydropower organizations.
Annual report 2020 of PSJC RusHydro, including information on sustainable development
Pre-approved by the Board of Directors of PJSC RusHydro
↗ THE APPENDICES BOOK
is available here Company Profile
↗ For the list of appendices, see p. 183 2 3 4 5
24 Market Position 58 Economics and Finance 128 Corporate Governance 180 Glossary and System Abbreviations 27 Strategy 72 Production and Sales 132 Compliance with 183 Appendices Book 34 Commitment 91 Human Capital the Corporate to UN Sustainable Development Governance Code 185 Contacts Development Goals 106 Occupational Health and 133 Governing Bodies Workplace Injuries 37 Key Performance 153 Shareholders and Investors Indicators 110 Environmental Protection 158 Investor Relations 40 Investment 122 Development of Local Activities Communities 160 Audit and Control
54 Innovative 124 Procurement 176 Report on Remuneration Development of the Governing and Control Bodies Appendices Strategic Strategic Review Performance Overview Corporate Governance ANNUAL REPORT | 2020
About the Report
Boundaries Standards as well as recommendations of 102–45 102–48 102–50 the Council on Non-Financial Reporting The report was prepared in line with under the Russian Union of Industrialists This 2020 annual report (“the Report”) the requirements of: and Entrepreneurs (RSPP)5. of Public Joint-Stock Company Federal ↗ the Bank of Russia’s Regulation Hydro-Generating Company RusHydro No. 454-P “On Disclosure of Information A representative of the senior (“PJSC RusHydro” or “the Company”) by Issuers of Issue-Grade Securities” management responsible for is the 16th annual report prepared of December 30, 2014; the preparation of the report is Deputy by the Company to address a diverse ↗ the Russian Government’s Resolution General Director for Financial and range of stakeholders. The report No. 1214 “On Improvement of Corporate Law Management. 102–32 has been prepared in an integrated the Governance Procedures at Open format to include comprehensive Joint-Stock Companies in Federal The previous annual report (2019) was information on the financial, operational Ownership and Federal State Unitary published on the 30th of April 2020. and sustainability performance of Enterprises” of December 31, 2010; 102–51 PJSC RusHydro and its affiliates, ↗ the Corporate Governance Code which together form RusHydro Group1 recommended by the Bank of Russia; (“the Group”). ↗ PJSC Moscow Exchange’s Listing Rules; Assurance ↗ the London Stock Exchange Guide The operational results of RusHydro to Listing; The accuracy of data provided Group (including financial and production ↗ the Disclosure Guidance and in the annual report has been ones) have been disclosed in line with Transparency Rules of the UK Listing confirmed by the Company’s Internal the IFRS reporting boundaries2, unless Authority; Audit Commission. The accuracy of otherwise specified in the notes to ↗ the Global Reporting Initiative the financial report has been confirmed the disclosure. The disclosure scope of Sustainability Reporting Standards by the Company’s independent auditor the social and environmental indicators (GRI SRS) and GRI G4 Electric Utilities opinion. Reliability of qualitative differs from that of the consolidated Sector Disclosures (GRI G4 — EU). and quantitative non-financial financial statements3. RusHydro Group’s This report meets the Core Disclosure information disclosed in accordance affiliates not included in the boundaries requirements4; with the GRI SRS has been verified of the disclosure are not material for ↗ the Guidance on Core Indicators for by the independent auditor in line the purposes of reporting. Entity Reporting on Contribution towards with the Assurance Engagements Implementation of the UN Sustainable Other than Audits or Reviews of Development Goals until 2030 of Historical Financial Information ↗ For the list of affiliates and other entities, the United Nations Conference on Trade of International Standard for Assurance see Appendix 27 of the Appendices Book and Development (UNCTAD); Engagements (ISAE) 3000 (revised). ↗ AA1000SES standard; The independent audit was performed ↗ The boundaries of the GRI SRS disclosure the Company’s internal regulations by JSC PricewaterhouseCoopers Audit. are indicated in Appendix 23 ↗ of the Appendices Book 102–46 (including RusHydro’s Corporate Governance Code, Information Policy Materiality, completeness and balance Regulations, etc.). of the reporting information has been confirmed by the public (stakeholder) The report has taken into account assurance of the report. feedback and recommendations from the expert committees of the Moscow Exchange and Expert RA rating agency ↗ For the conclusion on Public Assurance, see Appendix 24 judging the annual report competitions, of the Appendices Book
1 For the purpose of this report, RusHydro Group means a group of companies including PJSC RusHydro and its affiliated companies (affiliates). The affiliation is determined in accordance with Article 2 of Federal Law No. 39-FZ On Securities Market of April 22, 1996. The report also includes references to the following segments: • RusHydro Subgroup (the Headquarters of PJSC RusHydro, its branches and affiliates, except for JSC RAO ES East Subgroup). • JSC RAO ES East Subgroup means JSC RAO ES East and its affiliates engaged in electricity and heat generation, distribution and sales primarily in the Russian Far East, as well as transport, construction, maintenance and other supporting service companies; • ESC RusHydro Subgroup means affiliates of RusHydro Group engaged in sales of electricity and heat to end consumers. 2 The report also covers information on PJSC Boguchanskaya HPP, which is not an affiliate or part of RusHydro Group, but a joint venture of RusHydro Group and UC RUSAL. 3 The consolidation boundaries of environmental and social indicators are provided in Appendix 21. 4 GRI content index — Appendix 24, FTSE Russell in EU content index — Appendix 25. 5 Certificate of public certification of the report by the RSPP Council on Non-Financial Reporting — Appendix 20.
2 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Management’s responsibility Disclaimer: forward-looking Material topics 102–47 statement in respect of the information annual report and consolidated To identify material topics for disclosure financial statements This annual report contains information in the 2020 annual report, the Company on RusHydro Group’s plans and intentions conducted a survey of external and This annual report includes a fair review in the medium and long term. These internal stakeholders. We processed of the development and performance plans and intentions are forward-looking 24 questionnaires from internal of the business and the position of and their feasibility depends, among other respondents and 61 questionnaires PJSC RusHydro and its affiliates things, on a number of economic, political from external respondents. The following (RusHydro Group). The 2020 Annual and legal factors beyond the Company’s aspects were prioritized for a detailed Report describes RusHydro’s strategic control (key markets, changes in tax and disclosure in the report. priorities and achievements of target environmental legislation, etc.). As such, indicators, including the sustainable actual future performance indicators may ↗ For the consideration of stakeholders’ development matters that are of major differ from the forward-looking statements recommendations regarding disclosure of material topics, see Appendices 18 and 19 significance for the Group and its published in this annual report. of the Appendices Book stakeholders. It also provides an overview of the principal risks and uncertainties affecting the operations of RusHydro Material topics 103–1 Group. Topic Section The consolidated financial statements of Tariff regulation Production and Sales 72 RusHydro Group, prepared in accordance with the IFRS, include the results Ensuring safe operation of energy facilities Production and Sales 72 of PJSC RusHydro and its affiliates. for consumers and the population in the regions where RusHydro operates The financial statements give a fair presentation of the Group’s financial Development of energy infrastructure and Investment Activities 40 position and profit. modernization of production facilities
Quality of customer service (reliability Production and Sales 72 of electricity and heat supply, development Viсtor Khmarin, of user services) Chairman of the Management Board — General Director Occupational health and safety Occupational Health and Safety 106
COVID-19 response Company Profile 08 Yulia Medvedeva, Economics and Finance 58 Chief Accountant Production and Sales 72 Human Capital Development 91 Development of Local Communities 122
Renewable energy promotion Production and Sales 72 and RusHydro’s contribution ↗ For the Internal Audit Commission’s opinion, to Russia’s low-carbon economy see Appendix 17 of the Appendices Book Water use and discharge Environmental Protection 110
↗ For the opinion of the independent auditor Greenhouse gas and other Environmental Protection 110 of consolidated financial statements, air pollutant emissions see Appendix 16 of the Appendices Book
↗ For the independent auditor’s report ↗ For information on defining content ↗ For information on stakeholder on the audit results, which provides and materiality, see Appendix 25 engagement, see Appendix 36 limited assurance regarding the selected of the Appendices Book 102–49 of the Appendices Book non-financial information under the GRI SRS, see Appendix 22 of the Appendices Book
3 ANNUAL REPORT | 2020
Message from the Chairman of the Board of Directors 102–14
Dear shareholders,
2020 will be long remembered all over the world as a year of enormous challenges. The COVID-19 pandemic has tested the resilience.
For us at RusHydro, the year 2020 was very successful, as we launched a record number of new power facilities in two important regions of operation. In the North Caucasus, which continues to experience power shortages, we put on stream Zaramagskaya HPP-1 and three new small HPPs — Verkhnebalkarskaya, Ust-Dzhegutinskaya, and Barsuchkovskaya. In the Far East, where growth in electricity consumption in recent years has been significantly higher than elsewhere in Russia, the Company commissioned CHPP in Sovetskaya Gavan, Khabarovsk Territory, and a wind diesel facility in Tiksi, the Republic of Sakha (Yakutia).
To upgrade and expand the power infrastructure in the Far East, RusHydro fostered creation of a legal framework ensuring return on investments in the construction projects of Artemovskaya CHPP-2, Khabarovskaya CHPP-4, the second stage of Yakutskaya GRES-2, modernization of Vladivostokskaya CHPP-2, as well as the expansion of Neryungrinskaya GRES and Partizanskaya GRES. RusHydro Group has pledged to commission all six facilities with a total electrical capacity and heat capacity of almost 2 GW and 2,600 Gcal/h respectively in 2025–2027.
Apart from that, in December 2020, the Russian government RusHydro relies on its sustainable extended until 2028 the tariff smoothing mechanism in the Far financial and operating results East non-price zones, with RusHydro as its operator. to carry on with its production In line with its strategic goal to ensure sustainable development and investment plans of the energy sector in the Far Eastern Federal District, and continues delivering on its the Company has been upgrading the region’s energy facilities strategic goals, while acting in the interests of the Group’s shareholders and remaining a reliable partner to the government and the public.
4 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
and working to improve the quality including the Company’s dividend provided urgent financial assistance of customer service. As at December policy, and increased transparency. to healthcare institutions across 2020, RusHydro managed 12 convenient In line with its dividend policy, RusHydro its footprint helping them tackle high-tech client offices in the Far East. expects to pay over RUB 23 bn the COVID-19 pandemic to purchase Bringing online single billing and payment to its shareholders in 2020, which is medical equipment, medicines, personal centers in the Far East aligns with 1.5 times more than in the previous year. protective equipment and sanitizers. the goals set by the Russian President Our corporate governance is ranked to implement the Digital Economy and highest in Russia’s power industry. The Group’s tax payments to budgets Accessible Environment state programs. In 2020, the Russian Institute of Directors of different levels totaled RUB 93.4 bn, affirmed the Company’s rating at the Best exceeding its 2019 contributions. RusHydro also continued to expand Corporate Governance Practice level. the network of EV fast charging stations RusHydro relies on its sustainable in the Far East. RusHydro has been also recognized financial and operating results to carry for its contribution to a low-carbon on with its production and investment Commissioning of new power plants, economy in Russia as a predominantly plans and continues delivering on increased water inflows, and growth HPP-based electricity generating its strategic goals, while acting in in electricity consumption in the Far company: RusHydro Group is among the interests of the Group’s shareholders East, aided by efficient management, leaders in Russia in terms of sustainable and remaining a reliable partner allowed RusHydro again to post record development, which is confirmed by to the government and the public. production and financial results in the Company’s high standings in national The Company’s management is grateful the reporting year. Despite a 2.3% decline and international ratings. All leading to the shareholders for the trust they in electricity consumption across Russia, international rating agencies have have placed in RusHydro. We will continue electricity generation by RusHydro assigned RusHydro long-term investment making every effort to ensure RusHydro’s Group increased in 2020 and surpassed grade credit ratings with a stable outlook. stable development and increase its 150 bn kWh, with the Company’s revenue, capitalization. EBITDA, and net profit reaching all-time RusHydro Group supports the social highs. and economic development in its regions of presence by implementing various RusHydro’s market capitalization in 2020 initiatives in education, environment, grew by more than 40%, outstripping healthcare, culture and sports. both the Russian stock market and In the reporting period, the Company industry peers. Investors appreciated sponsored 600 social projects in Yury Trutnev, the Company’s stable financial position, the regions where it operates as part Chairman of the Board of Directors protection of shareholder rights, of its charity activities. RusHydro of PJSC RusHydro
5 ANNUAL REPORT | 2020
Message from the Chairman of the Management Board — General Director
Dear shareholders, colleagues and partners,
In the face of the pandemic, RusHydro Group’s top priority, as a backbone of Russia’s energy sector, was to ensure reliable operation of power facilities to avoid disruptions in electricity and heat supply to consumers, and to protect the health of its employees. The Group successfully coped with this task. Our prompt and well-coordinated actions helped contain the spread of COVID-19 at the Company’s facilities.
Despite the challenges posed by the pandemic and adverse weather conditions, 2020 was the most successful year in our 16-year history. The Group’s power generation increased 6% y-o-y to reach a record 151.5 bn kWh. RusHydro’s share in Russia’s total power generation went up to 14% against 13% in 2019. The strong performance was due to efficient planning of hydropower operational regimes amid higher-than-usual water levels in the reservoirs of the Volga-Kama HPP cascade, HPPs in Siberia and the Far East, commissioning of new and upgrades of existing energy facilities, and rising energy consumption in the Far Eastern Federal District.
The robust production results coupled with the management’s cost control efforts helped achieve sound financial performance. With revenue growing by 5.6%, operating costs increased by only 1%, while manageable cash costs declined by 2.1%. RusHydro Group’s EBITDA under the IFRS stood at RUB 120.3 bn, an all time high y-o-y. The Company’s net profit went up to RUB 46.6 bn.
Spending on the consolidated investment program in 2020 2020 highlighted RusHydro’s totaled RUB 74.3 bn1. The Group commissioned 180.8 MW and resilience, with thousands of our 203.9 Gcal/h of new electric and thermal capacity, 529.7 MVA employees working as a single of transformer substation capacity, and almost 1,500 km of transmission power lines. In 2020, we continued with RusHydro’s team. We have demonstrated Comprehensive Modernization Program upgrading six hydropower our ability to promptly mobilize units with a total capacity of 523 MW updated at five HPPs. all available resources, focus The Group will carry on increasing its energy capacity. on our strategy, and achieve The construction of Krasnogorskaya SHPP-1 and SHPP-2 is our goals. underway. RusHydro has won the tender to build two more
1 Including VAT.
6 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
small HPPs in the North Caucasus experience in attracting investments expanding, with 22 stations opened under RES-based DPM program for (RUB 10 bn expected by 2024) and build in five regions as at the end of the year. 2024. Work is ongoing to complete expertise in renewable energy generation. By 2022, we will bring the number of Ust-Srednekanskaya HPP in charging stations to 150. the Magadan Region and bring it RusHydro’s heat generation projects to design capacity of 570 MW. in the Russian Far East, a priority region In the reporting year, the Company for the Company, are proceeding under concluded two strategically important We launched the construction of the Comprehensive Trunk Infrastructure transactions. RusHydro Group the Pevek-Bilibino power lines with Upgrade and Extension Plan until 2024. consolidated over 94% of the PJSC DEK support installation commencing Construction of Artemovskaya CHPP-2, and JSC DRSK shares as part of a deal in December 2020 in extremely harsh Khabarovskaya CHPP-4, the second stage with minority shareholders, including Arctic conditions. The levelling of of Yakutskaya GRES-2, modernization SUEK, and 100% in JSC DGK in exchange Zagorskaya PSPP-2 building is well of Vladivostokskaya CHPP-2, as well as for JSC LUR and Primorskaya GRES underway. In 2020, we reinforced the expansion of the Neryungrinskaya technologically linked to it. Following the building from the outside and drilled GRES and Partizanskaya GRES are the deal, the installed capacity of hundreds of wells to inject solidifying expected to replace decommissioned RusHydro’s coal-fired power plants compounds under the foundation. power plants, and supply electricity decreased by 27%, significantly to the potential projects related to strengthening the Company’s ESG Among our key priorities is further the development of Russian Railways’ profile. In March 2020, we completed development of hydropower generation Eastern Operating Domain. The new the transaction to sell RusHydro Group’s and formulating government support power capacities will come on stream in stake in CJSC MEK, the operator of mechanisms. Russia’s hydropower 2025–2027. The Main Department of State Sevan-Hrazdan cascade of HPPs in potential has been utilized by only 20%, Expertise (Glavgosexpertiza) has already Armenia, to PJSC Hrazdan Energy despite being an environmentally friendly approved the design documentation for Company, part of Tashir Group. means of generating electricity that the Khabarovskaya CHPP-4 project. As a result, the Company’s financial debt fits well with the goal of transitioning decreased by RUB 4 bn (in ruble terms) to a low-carbon economy. COVID-19 has accelerated the adoption and the Group’s loan portfolio was no of digital technologies for settlements longer exposed to currency risks. The Company’s projects to upgrade with energy consumers. RusHydro decentralized power supply facilities in Group’s electricity retail companies 2020 highlighted RusHydro’s resilience, remote areas in the Far Eastern Federal promptly transitioned to providing remote with thousands of our employees working District launched in 2020 will also services to clients without any quality loss as a single team. We have demonstrated contribute to the creation of new highly and have since expanded online customer our ability to promptly mobilize all efficient generation with a significant assistance. The Company has been available resources, focus on our strategy, share of solar and wind power and energy working to consolidate retail companies and achieve our goals. We worked storage systems. To implement this in the Far East under the management hard to deliver strong performance program, RusHydro is attracting investor of PJSC DEK, which in 2020 started across the board for the benefit of our funding using energy service agreements. selling heat and power in the Kamchatka shareholders and ensure reliable power The first contracts were signed for Territory. We launched new single billing supply to our consumers. projects in six remote settlements and payment centers in Blagoveshchensk, in Yakutia, in Russia’s Arctic zone. Tynda and Petropavlovsk-Kamchatsky, The program will significantly reduce and an Integrated Contact Center for the cost of diesel fuel, its delivery and housing and utility services in five Far Victor Khmarin, storage, helping with investment returns. Eastern regions. Our network of EV fast Chairman of the Management Additionally, RusHydro will gain useful charging stations in the Far East has been Board — General Director
7 22 20 18 17 12 CompanyProfile 10 8 Ratings andAwards Production Chains Business Model Covid-19 Response 2020 Milestones Geographical Spread Company 1 profile provide electricitytransmission geothermal powerplantsinKamchatka, capacity ofaround7,000 MW and power plantsinthe Far Eastwitha total Group companiesalsooperate thermal pumped storage powerplants(PSPPs). highly maneuverable capacitiesofthree Caucasusand plants inthe North several dozenhydroelectric power Zeyskaya HPP(capacity of1,300MW), Bureyskaya HPP(capacity of2,010 MW), capacity ofover 10,600 MW), of Volga-Kama cascade(total installed (capacity of6,400 MW),ninefacilities HPP namedafter P.S. Neporozhniy Russia’s largestSayano-Shushenskaya 400 power generationfacilities,including RusHydro Groupcomprisesover wind, andgeothermalenergy. leading nationalproducer ofrenewableenergyfromwater flows,solar, one oftheworld’s leadinghydropower players. RusHydro Groupisthe PJSC RusHydro isRussia’s company and largest hydro-generating Milestones Company ↗ Company Profile 2004–2005 ANNUAL REPORT | 2020 REPORT ANNUAL was setuponthebasisof RAO UESofRussia’s HPPs. of September, 2003, PJSC RusHydro (until 2008 —OJSC HydroOGK) the Government ofthe RussianFederation No. 1254-r of the electricpowersector, inaccordance withOrderof During thecourse ofthe state programfor thereform See organizational structure for PJSC RusHyrdo’s of theAppendicesBook Appendix 20 ↗ of theAppendicesBook see Appendix3 in otherorganizations, For disclosureonparticipation 102–1
102–2 inMoscow.and headquartered In System (UES)ofRussia. ofthe UnifiedEnergy as part RusHydro Groupoperates The Company organizations andenergyretailers. engineering, andconstruction of R&D, planningandsurveying, the Group includesawidevariety to endconsumers.Inadditionto that, andsellelectricityheat services, joint-stock companiessince2012. the list ofstrategic enterprises and PJSC RusHydro hasbeenincludedin Order No. 1009ofAugust4, 2004, accordance ↗ is with registered of theAppendicesBook control, seeAppendix13 entities undertheCompany’s For information onmaterial legal the Russian in Krasnoyarsk President’s 102–3
ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
2006 2012 2017
↗ RusHydro and JSC RUSAL signed ↗ In accordance with the Decree ↗ RusHydro and VTB Bank implemented an agreement on the joint implementation of the President of the Russian a unique for the Russian market of the project of the Boguchany Power Federation, RUB 50 bn were added to transaction to acquire a 13% stake in and Metals Complex (BEMO). the authorized capital of RusHydro RusHydro and conclude a five-year ↗ The first stage of Irganayskaya HPP for the implementation of four priority settlement forward contract. (400 MW), Gelbakhskaya HPP (44 MW), thermal generation projects in the Far ↗ The construction of the first stage of Maginskaya (1.2 MW) and Agulskaya East: the construction of the second Yakutskaya GRES-2 with a capacity (0.6 MW) small HPPs were commissioned stage of Blagoveshchenskaya CHPP, of 193.5 MW — the largest power plant in Dagestan. the first stage of Yakutskaya GRES-2, built under the Decree of the President Sakhalin GRES-2 and CHPP in of Russia was completed. Sovetskaya Gavan. 2007−2008 2018 ↗ The Company’s Target Model was 2013−2014 accomplished. RusHydro combined more ↗ A unique wind power plant with than 50 hydroelectric power plants ↗ The major recovery and reconstruction a capacity of 900 kW was commissioned in 18 regions of the Russian Federation. of Sayano-Shushenskaya HPP was in the Arctic village of Tiksi. ↗ Two hydropower units of completed. The plant reached its ↗ In Vladivostok, Vostochnaya CHPP Bureyskaya HPP were put into design capacity of 6,400 MW. The entire was commissioned — the first large- operation. technological complex of the plant scale energy facility built in the capital underwent in-depth modernization, of the Primorsky Territory in 45 years. resulting in Sayano-Shushenskaya HPP The design annual electrical generation 2009 becoming the most modern and safe of the CHPP is 791 mn kWh, thermal hydroelectric power plant in Russia. energy — 1,377 ths Gcal. ↗ An accident occured at the Sayano- ↗ The first two hydropower units of Shushenskaya HPP. JSC RusHydro Ust-Srednekanskaya HPP in the Magadan promptly arranged the recovery work, Region were put into operation, 2019 and Power Machines was involved the plant reached a capacity of 168 MW. as a supplier of the main equipment. ↗ Boguchanskaya HPP reached ↗ Nizhne-Bureyskaya HPP was The first hydropower units were the installed capacity of 2,997 MW. commissioned. With the launch of reconditioned and put into operation ↗ The fourth power unit of Yuzhno- the fourth hydropower unit, the HPP in the shortest time possible. Sakhalinskaya CHPP-1 with a capacity of reached its design capacity of 320 MW. 139 MW started the commercial generation. ↗ Sakhalinskaya GRES-2 was commissioned with a capacity 2010 of 120 MW and a design annual output 2015 of 840 mn kWh, which is equivalent to ↗ RusHydro for the first time entered a third of Sakhalin’s electricity needs. the 2010 Top 250 Global Energy Company ↗ Gotsatlinskaya HPP with a capacity ↗ The official launch of the third Rankings compiled by Platts — taking of 100 MW in the Republic of Dagestan hydropower unit of Ust-Srednekanskaya the 113th line of the consolidated ranking and Batagay SPP with a capacity of HPP took place, the plant’s capacity and the second position in the list of 1 MW — the world’s largest solar power increased from 168 MW to 310.5 MW. the 50 fastest growing energy companies plant beyond the Arctic Circle, as well as in the world. four other SPPs of smaller capacity, were commissioned. 2011 2016 ↗ The Russian Federation added a controlling stake in JSC RAO ES East ↗ The construction of Zelenchukskaya to the Company’s authorized capital, HPP-PSPP with a capacity of 140 MW boosting the installed capacity of in turbine mode and 156 MW in pump RusHydro Group from 26.1 to 35.2 GW. mode was completed. ↗ The construction of the second stage of Blagoveshchenskaya CHPP was completed, resulting in the electric capacity of the plant increasing by 120 MW to 400 MW.
9 ANNUAL REPORT | 2020
Geographical
Spread 102–4 >400 Generation facilities 30 Regions of operation
↗ Interactive map of assets is available on the Company’s website
72 74
46 52 68
9 3 45 24 71 16 32 73 22 13 6 33 1 8 18
31 5 17
4 19 26 15 3 8 11 9 2 12 20 19 7 1
10 Newly commissioned energy facilities:
ZARAMAGSKAYA 1 HPP-1 VERKHNEBALKARSKAYA Existing hydro-generating Thermal PPs 2 SHPP branches and entities 35. Amurskaya CHPP-1 1. Boguchanskaya HPP 36. Anadyrskaya Gas Engine CHPP 2. Bureyskaya HPP 3 7. Anadyrskaya CHPP UST-DZHEGUTINSKAYA 38. Artemovskaya CHPP 3 3. Cascade of Verkhnevolzhskiye SHPP HPPs 39. Blagoveshchenskaya CHPP 4. Cascade of Vilyuyskiye 40. Vladivostokskaya CHPP-1 and CHPP-2 BARSUCHKOVSKAYA HPPs 4 5. Volzhskaya HPP 41. CHPP Vostochnaya SHPP 6. Votkinskaya HPP 42. Kamchatskiye CHPPs 7. HPPs of Dagestan branch 43. Komsomolskaya CHPP-1 and WIND DIESEL POWER 8. Zhigulevskaya HPP CHPP-2 5 9. Zagorskaya PSPP 44. Komsomolskaya CHPP-3 55 STATION IN TIKSI 10. Zeyskaya HPP 45. Kyzym Mobile PP 11. HPPs of Karachay-Cherkessia 46. Labytnangi Mobile PP 37 4 7. Magadanskaya CHPP 36 NIZHNE-BUREYSKAYA branch 60 6 12. HPPs of Kabardino-Balkarian 48. Nerunginskya GRES FLOATING SPP ASSETS branch 49. Nikolaevskaya CHPP 13. Kamskaya HPP 50. Partizanskaya GRES SOVETSKAYA GAVAN 14. Kolymskaya HPP 51. Raychikhinskaya GRES 7 15. Cascade of Kubanskiye HPPs 52. Urengoy Mobile PP CHPP 16. Nizhegorodskaya HPP 53. Khabarovskaya CHPP-1, 1 7. Novosibirskaya HPP CHPP-2, CHPP-3 18. Saratovskaya HPP 54. Chulmanskaya CHPP 55. Egvekinotskaya GRES 25 19. HPPs of Sayano-Shushensky branch 56. Yuzhno-Sakhalinskaya CHPP-1 69 5 14 20. HPPs of North Ossetia 5 7. Yakutskaya GRES 58. Arkagalinskaya GRES 58 65 66 branch 21 21. Tolmachevskiye HPPs 59. Mayskaya GRES 47 47 27 42 22. Cheboksarskaya HPP 60. Chaunskaya CHPP 70 23. Nizhne-Bureyskaya HPP 61. Yakutskaya CHPP 28 SHPPs 62. Yakutskaya GRES-2 62 29 being designed HPPs/PSPPs under 63. Sakhalinskaya GRES-2 61 construction 64. Sovetskaya Gavan CHPP 57 PSYGANSU 24. Zagorskaya PSPP-2 8 25. Ust-Srednekanskaya HPP SHPP 26. Krasnogorskiye SHPPs
49 4 BASHENNAYA 9 Wind PPs 43 SHPP 65. WPP in Ust-Kamchatsk 35 44 66. WPP in Nikolskoe 54 GeoPPs 6 7. WPP in Novikovo 67 68. WPP in Labytnangi 48 64 59 67 2 7. Verkhne-Mutnovskaya GeoPP 10 63 28. Mutnovskaya GeoPP 69. WPP in Bykov Mys 56 2 29. Pauzhetskaya GeoPP 53 7 34 23 39 75 51 6
38 Solar PP 50 Retail companies 70. SPPs in Yakutia 30 41 (21 power plants) 30. Far Eastern Energy Company 40 (DEK) 31. Krasnoyarskenergosbyt 32. Ryazan Retail Energy Company 33. Chuvash Retail Energy Company Research and design Energy sales zones organizations 71. Mosoblhydroproject 72. Vedeneyev VNIIG 73. Hydroproject Institute n. a. S. Zhuk Electric grid assets Electric grid company 74. Lenhydroproject Institute RusHydro 75. Khabarovsk Energy 34. DRSK Technological Company ZARAMAGSKAYA HPP-1 RusHydro is constantly increasing its electric generation, including through the implementation of 346 investment projects in the renewable energy MW segment. The Company ensures the sustainable 2020 Milestones development of the energy sector of the Russian Far East and participates in the state tasks for the accelerated socio-economic development of this region
SOVETSKAYA GAVAN CHPP 126 MW
VERKHNEBALKARSKAYA SHPP 10 MW
UST-DZHEGUTINSKAYA SHPP 5.6 MW
BARSUCHKOVSKAYA SHPP ↗ A deal was sealed to sell RusHydro Group’s stake in CJSC MEK, ↗ Energy sales ↗ 346 MW Zaramagskaya the operator of Sevan- ↗ As part of 5.25 in the area covered by HPP-1 was inaugurated Hrazdan cascade the Comprehensive MW Kamchatskenergo were in North Ossetia. of HPPs in Armenia, Modernization Program, transferred to Far Eastern The power plant was to PJSC Hrazdan Energy Volzhskaya HPP Energy Company in order built under a capacity Company, part of Tashir commissioned hydropower WIND-DIESEL POWER PLANT IN TIKSI, REPUBLIC OF SAKHA (YAKUTIA) to adopt uniform standards supply agreement. Group. As a result of unit No. 14, leaving only 3 and improve the quality of the divestment, RusHydro out of 23 of the plant’s customer service. Group’s financial debt hydropower units awaiting 3.9 decreased by RUB 4 bn. turbine replacement. NEW CAPACITY MW 346 –4 20/23 MW RUB bn hydropower units FLOATING SPP ON THE NIZHNE-BUREYSKAYA HPP capacity of reduction of RusHydro upgraded at Zaramagskaya HPP-1 Group's financial debt Volzhskaya HPP 54 2020 2020 2020 2020 kW January February March April ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
↗ RusHydro Group consolidated over 94% of the PJSC DEK shares as part of a deal with SUEK- affiliated companies — ↗ Russia's first mobile a 41.9% stake in PJSC DEK floating solar power plant was acquired in exchange with a capacity of 54 kW was for the Luchegorsky coal installed in the headrace of strip mine and Primorskaya Nizhne-Bureyskaya HPP. GRES technologically The SPP will help the HPP linked to it. Accounting for save on the consumption a subsequent RUB 40.5 bn of electricity for internal capitalization of intragroup ↗ PJSC RusHydro needs. debt, PJSC RusHydro also launched the first electric became the direct owner of vehicle fast charging a 99.99% stake in JSC DGK, station in the Khabarovsk which allows for stabilization Territory and pursues of the generating company’s further expansion of ↗ PJSC RusHydro ↗ As part of financial and economic the EV charging network completed additional share the Comprehensive standing. in the region. issuance. The Company Modernization Program, placed a total of 13 bn of Saratovskaya HPP shares, or 92.77% of the completed the upgrade additional issue, for the of hydropower unit No. 5, purpose of financing the the 13th upgraded unit ↗ PJSC RusHydro construction of two single- out of 24 installed at commissioned 10 MW circuit 110 kV Pevek-Bilibino the plant. Verkhnebalkarskaya power lines in Chukotka. small-scale HPP in Kabardino-Balkaria. It is the first facility of 13/24 this kind in Russia built hydropower units under the capacity supply upgraded at agreement (RES DPM) Saratovskaya HPP for renewables.
2020 2020 2020 2020 May June July August ANNUAL REPORT | 2020
2020 Milestones
↗ As part of the Comprehensive Modernization Program, Cheboksarskaya HPP commissioned hydropower unit No. 4 with an upgraded generator. Nine out of the plant’s 18 generators ↗ Far Eastern Energy ↗ The CHPP in Sovetskaya ↗ For the first time, have been upgraded. Company launched Gavan with an electric PJSC RusHydro held its an Integrated Contact capacity of 126 MW Annual General Meeting Center to service more and a thermal capacity of Shareholders in than 3.6 million clients in of 200 Gcal/h was put absentia due to COVID-19 the Primorye, Khabarovsk on stream. This is the fourth restrictions. The meeting 9/18 and Kamchatka Territories, and final project of thermal approved the Company’s hydropower units Jewish Autonomous Region, power generation capacities annual report and financial upgraded at Neryungri District, Republic in the Far East implemented statements, the amount Cheboksarskaya HPP of Sakha (Yakutia), Amur by PJSC RusHydro of dividends and and Sakhalin Regions. in accordance with the payment date, elected the Presidential Executive new Board of Directors Order. members, etc.
2020 2020 September October ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
↗ PJSC RusHydro launched the first electric vehicle fast charging station in Kamchatka. At the end of December, 19 fast charging stations operated in the Far East, forming a single ↗ The first pylons of network in the Primorye, the 110 kV Pevek-Bilibino Khabarovsk and Kamchatka power line were installed territories, Amur and in Chukotka. The line will Sakhalin regions. connect Bilibino with Pevek, where Akademik Lomonosov floating nuclear TPP was commissioned in 2020. ↗ A 3,900 kW automated ↗ As part of wind diesel power the Comprehensive plant, unique in its kind Modernization Program, in the country, was Kamskaya HPP completed ↗ Two projects for commissioned in the Arctic the replacement of all small-scale 29.1 MW settlement of Tiksi, hydromechanical ↗ PJSC RusHydro launched HPPs in the North the Republic of Sakha equipment, including the first electric vehicle Caucasus proposed by (Yakutia). The plant will spillway gates, turbine fast charging station in PJSC RusHydro were produce more than chamber, and spillway the Sakhalin Region. This is selected for construction 12 mn kWh of electricity covers. one of the priority regions via a capacity auction for annually. in terms of installing fast renewables under capacity charging stations and supply agreements. the fifth region in the Far The new SHPPs — Eastern Federal District Psygansu in Kabardino- 3.9 ↗ PJSC RusHydro where the Company’s Balkaria and Bashennaya MW commissioned 5.6 MW network operates. in Chechnya — will be capacity of the automated Ust-Dzhegutinskaya commissioned in 2024. wind-diesel power plant small-scale HPP in the Karachay-Cherkess Republic, the second small-scale HPP built under the RES-based ↗ PJSC RusHydro ↗ Far Eastern Energy ↗ Far Eastern Distribution DPM program. commissioned 5.25 MW Company launched a single Company completed Barsuchkovskaya billing and payment the construction of all six small-scale HPP in center for utilities in planned substations and the Stavropol Territory, Petropavlovsk-Kamchatsky, transmission lines to supply 5.6 the third investment the first center of this power to the Power MW project implemented kind on the peninsula and of Siberia gas pipeline. capacity of Ust- under the RES-based the 12th high-tech client The last facility was Dzhegutinskaya SHPP DPM program. office in the Far East. the 110 kV KS-7 substation in the Amur Region.
2020 2020 November December ANNUAL REPORT | 2020
Events after the Reporting Date
↗ The Board of Directors ↗ RusHydro and Polyus ↗ Volzhskaya HPP ↗ RusHydro started elected Victor Khmarin Group signed the first completed its turbine the modernization of as the Chairman of non-regulated power replacement program. hydraulic structures the Management Board — purchase agreement for The generators at Sengileevskaya HPP, General Director. clean electricity produced by will be replaced by part of the Cascade Sayano-Shushenskaya HPP. 2026. The project is of Kubanskiye HPPs. part of RusHydro’s The comprehensive Comprehensive HPP modernization project Modernization Program. also provides for the replacement of all obsolete and worn-out equipment.
2021 2021 2021 2021 January February March April ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
COVID-19
Response SH 103–2
Amidst the coronavirus pandemic, RusHydro Group put its employees on RusHydro Group established a mixed working schedule, providing for an anti-coronavirus task force part of the work to be done from outside to prevent the spread of coronavirus of their regular workplaces. When needed, infection (COVID-19) at workplaces. plant operators worked on a rotational The task force monitors compliance basis. Separation screens were installed with the pandemic-related laws at those workplaces where it was not and regulations in the areas of possible for employees to maintain the Company’s operations. social distancing. Measures were taken at all corporate premises to separate In 2020, RusHydro Group organized flows of operational and non-operational mass workplace testing for COVID-19, personnel, contractor staff, and site with 10% of its personnel tested guards. Administrative personnel moved 10% every two weeks and 100% of to work from home. The Company made of personnel employees tested when returning to the full use of the services introduced tested work after a break (from holidays or in 2020, including online meetings and every two weeks working remotely). If test results were online revision of legal documents. positive, special sanitary measures were taken. Automatic measurement Timely sanitary measures, including of body temperature was organized provision of employees with personal at the entrance to the Company’s protective equipment and introduction 4 offices; temperature was also measured of special working schedules, ensured hours at workplaces once every four hours. continuity of business processes and temperature All employees had free access to helped avoid mass infections among measurement sanitizers for hand treatment. employees. time interval
17 ANNUAL REPORT | 2020
Business Model
BUSINESS LINES
rs served sume f con re o ctu u 3.2% Str
n w 96.8% do ak re 9.7% 5 b 10.2% organizations m ra g ro ELECTRICITY p t SALES n e m 37.6% 5 t s e organizations v In REPAIR 3 42.5% organizations 2.8% CONSTRUCTION
21.2% g 6 n i organizations d n e RESEARCH p s AND DESIGN D 29.3% & PROJECTS
R Headcount 46.6% 66,000 people ELECTRIC ENERGY >400 facilities
HEAT ENERGY 105,000 km
ELECTRIC POWER NETWORKS
R&D spending Investment program breakdown1 Structure of consumers served
Plant and equipment monitoring Rehabilitation and modernization Retail customers and operationй Construction of new facilities Corporate customers Design, construction, modernization and Utility connection repair solutions Other Energy efficiency and water management Environmental protection and sustainability
1 By the scope of completed projects. ELECTRICITY GENERATION FINANCE AND ECONOMICS rs served sume f con The Company expands its electricity generation volumes by improving The Company strives to increase its fundamental value, re o ctu u 3.2% the efficiency of the production programs and investment projects, investment appeal and value growth while ensuring reliable and Str taking into account their economic performance. safe operation of its facilities n w 96.8% do ak re 9.7% 5 b 10.2% organizations Share of low-carbon m ra Total revenue Net profit g electricity generation ro ELECTRICITY breakdown p t SALES n e ↗5.6 m 37.6% 5 t s e organizations > v In REPAIR 81% 429.6 46.6 3 RUB bn RUB bn 42.5% organizations 2.8% CONSTRUCTION 58.5% 21.2% Structure by energy market regulatory regime Price zone 1 EBITDA g 6 n Price zone 2 i organizations d n Non-price zone e RESEARCH p Isolated non-price area s 120.3 AND DESIGN D 29.3% Installed Generation Retail market RUB bn & PROJECTS capacity (EU2) R
40.1% 26.8% 24.9% 8.0% 0.2% 36.0% 31.7% 27.4% 4.8% 0.1%
46.6% 38.1 151.5 22.2 737.2 –5.9% Taxes ELECTRIC GW bn kWh GW tonnes ENERGY CO -eq./ths. Gcal 2 93.4 > RUB bn Capacity supplied Intensity of 400 Installed capacity Electricity in the first and second facilities of power plants generated price zones CO2 emissions 54.4 RUB bn federal HEAT 18,839 29.2 366.9 0.1% Direct ENERGY Gcal/h mn Gcal tonnes economic value CO2-eq./ths. Gcal 38.4 RUB bn 105,000 Installed heat Electricity Intensity of km regional Generated capacity supply CO2 emissions 14.1%
0.6 RUB bn 31.5 46.0 616 9.64% –0.13% local 429.9 GVA bn kWh MW RUB bn ELECTRIC POWER NETWORKS Installed capacity Electricity supply average 9.6% Distributed of transformer to the Far Eastern utility grid substations Federal District grid connections loss ratio 340.3 4.6% Electricity sales RUB bn Capacity sales 1 R&D spending Investment program breakdown Structure of consumers served 6.3% Heat and hot water sales Plant and equipment monitoring Rehabilitation and modernization Retail customers Government grants Retained and operationй Construction of new facilities Corporate customers (regional) Design, construction, modernization and Utility connection 6.9% Government grants repair solutions (tariff adjustment) Other 89.6 Energy efficiency and water management Other revenue RUB bn Environmental protection and sustainability
1 By the scope of completed projects. 19 ANNUAL REPORT | 2020
Shareholders and investors1
Allocated Dividend for dividends yield Production chains 15.7 4.94% RUB bn
Market capitalization PRICE ZONES 1, 2 NON-PRICE ZONE ISOLATED ZONE 345.8 OF THE FAR EAST RUB bn
Customers and consumers HPP/PSPP HPP HPP Output Output Output V Net output Capacity 25,327.1 4,340 1,258 of electricity supplied2 MW 102.7 MW 41.2 MW 7. 5 166.6↗10% 22,2↗2.3% bn kWh bn kWh bn kWh III bn kWh GW TPP TPP/DPP TPP/DPP Heat supply Utility connections 210 ↙2.7% ↙21.5% 5,145 22,846 1,699 4,557 29.2 616 MW MW Gcal/h MW Gcal/h I IV mn Gcal MW SPP/WPP/ GeoPP II Suppliers and contractors 81 Purchased goods and services REM WECM WECM REM MW 291 RUB bn ELECTRICITY DISTRIBUTION ELECTRICITY AND HEAT PURCHASES TRANSMISSION Authorities 38.3 bn kWh
Tax payments to budgets of different levels SALES ↗13.8% 93.4 SALES SALES RUB bn JSC-ENERGO
ELECTRICITY REM Employees DISTRIBUTION STAKEHOLDERS AND HEAT Average Personnel development TRANSMISSION salary costs 82.7↗5.2% 327.7↙3.5% RUB bn RUB mn
Regions of operation BUYERS/CONSUMERS Large industrial consumers / Grid companies / Retail companies / Retail consumers Funds allocated to charity ↗ For more on interaction with stakeholders, see Appendix 36 1.77 of the Appendices Book Electricity is generated by HPPs RUB bn Electricity is generated by TPPs 1 As at the end of 2020. Electricity is generated by SPPs, WPPs, GeoPPs 2 In the first and second price zones.
20 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
PRICE ZONES 1, 2 NON-PRICE ZONE ISOLATED ZONE OF THE FAR EAST
HPP/PSPP HPP HPP Output Output Output V 25,327.1 4,340 1,258 ISOLATED MW 102.7 MW 41.2 MW 7. 5 ZONE III bn kWh bn kWh bn kWh NON-PRICE TPP TPP/DPP TPP/DPP ZONES 210 5,145 22,846 1,699 4,557 MW MW Gcal/h MW Gcal/h I FIRST PRICE IV NON-PRICE ZONE ZONES SPP/WPP/ II SECOND PRICE GeoPP ZONE 81 REM WECM WECM REM MW
ELECTRICITY DISTRIBUTION ELECTRICITY AND HEAT PURCHASES TRANSMISSION 38.3 bn kWh
SALES
SALES SALES JSC-ENERGO Wholesale electricity Retail electricity System and capacity market market reliability
ELECTRICITY REM The wholesale electricity and capacity market Power plants with a capacity below 5 MW trade PJSC RusHydro provides DISTRIBUTION covers both price and non-price zones. in the REM. standardized primary frequency AND HEAT The first price zone comprises the European control and reactive power part of Russia and Urals, while the second Electricity sold in the retail market is either capacity adjustment services TRANSMISSION price zone encompasses Siberia. Special purchased in the WECM or sourced from to the UES System Operator wholesale trading rules apply to the non- the Group’s generating companies. without generating electricity. price zones that include the Arkhangelsk and Kaliningrad Regions, Komi Republic, In the non-price zones, the retail electricity price and regions in the Far East, including for end consumers is set based on the wholesale the Western and Central Energy Districts market prices. These prices apply to all end of the Republic of Sakha (Yakutia). consumers, with the exception of households and equivalent consumer categories. WECM sources electricity and capacity BUYERS/CONSUMERS from facilities with an installed capacity Households and equivalent consumer categories of over 25 MW. Power plants with a capacity are supplied with power at regulated prices Large industrial consumers / Grid companies / Retail companies / Retail consumers between 5 MW and 25 MW can trade in both (tariffs) approved by the regional executive the WECM and REM. authorities in charge of tariff regulation.
Electricity is generated by HPPs Electricity is generated by TPPs Electricity is generated by SPPs, WPPs, GeoPPs
21 ANNUAL REPORT | 2020
Ratings and Awards
Credit ratings1
PJSC RusHydro’s credit quality is confirmed by S&P Global Ratings, 2 2 Moody’s and Fitch — the three leading international rating agencies. All three BBB Baa3 assigned investment grade ratings Stable Stable to the Company in 2020, on par with November 23, 2020 December 7, 2020 the sovereign rating of the Russian Federation. In the reporting period, Analytical Credit Rating Agency (ACRA) confirmed PJSC RusHydro’s top credit rating on the national scale. BBB–2 AAA(RU) Stable Stable November 26, 2020 June 9, 2020
ESG ratings
RSPP indices 3.2/5 D- Index Leader
Leader of the Responsibility 3 Transparency and Sustainability Vector indices С 44.6
Annual report contests
The 2019 annual report enjoyed ranked seventh among the Top 50 in recognition in Russia and abroad, winning the EMEA region, was among the Top 10 top honors in multiple nominations. annual reports in Russia and secured In particular, it won the Best Disclosure 33rd place in Top 100 global annual on Corporate Governance category and reports, thus improving its last year’s scored a prize in the Best Disclosure ranking and achieving the highest result on Sustainable Development category among Russian companies. In addition, at the 23rd Moscow Exchange Annual our annual report took the highest Report Competition. It also earned awards in two categories from ARC a number of prestigious international Awards, including the gold prize among awards, including the highest (platinum) global energy equipment and services See other awards award among international utilities in companies and the silver prize in of the 2019 annual report Vision Awards LACP global contest, the Integrated Report category. ↗ on the Company’s website
1 As of April 1, 2021. 2 International scale foreign currency credit ratings by S&P Global Ratings, Moody’s, and Fitch Ratings. 3 Under the 2020 risk ratings methodology.
22 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Employer awards PR awards
PJSC RusHydro was named winner in PJSC RusHydro received five awards the Youth Policy. Companies with more at the 6th All-Russian MediaTEK than 50,000 Employees category at competition held under the auspices of the Ministry of Energy’s competition the Ministry of Energy. The Company’s for 2020’s best socially responsible press service was called the best among company in the energy sector. federal energy companies. The RUSSIA mural painted on the dam of Sayano- The Company’s efforts to organize online Shushenskaya HPP received a special workouts and competitions in running/ prize — Unconventional Approach and walking, cycling and cross-country Unique Project in the Energy Sector to skiing for employees working remotely Celebrate Russia Day. was recognized with the certificates Mass Participation in the VMarafone PJSC RusHydro won the 11th ConTEXt Project and Sporting Achievement in communication competition held the VMarafone Project from the Ministry under the auspices of the Ministry of Energy of the Russian Federation. of Energy. The History of Russian Power Sector Through the Lens Corporate Engineering Case of RusHydro’s History, a project Championship of Innovation and Work dedicated to the 100th anniversary of Improvement Proposals called Ratsenergy the GOELRO plan, won in the category RusHydro’s rankings won first place in the Area of Growth Best Information Support for Corporate from all leading category for personnel training projects Activities. RUSSIA mural painted on international rating at InterComm 2020, and received a third- the dam of Sayano-Shushenskaya HPP to agencies are set degree award in the Corporate Training of celebrate Russia Day was called the best at the sovereign the Year nomination at the Crystal Pyramid image-building initiative. investment level HR contest held by the Russian Union of Industrialists and Entrepreneurs (RSPP). PJSC RusHydro was included in Group A (Best Practice) of the annual RusHydro Group secured the first place Leaders of Corporate Charity rating. among power companies in HeadHunter’s Independent experts gave high praise annual ranking of Russian employers, and to the Company’s comprehensive the sixth place in the Energy and Mining charitable program that aims to create category. a favorable social environment and improve the quality of life for people across its footprint.
Two PJSC RusHydro projects won at Reliable Partner — Ecology, a nationwide Russian contest for best environmental practices held under See other public relations the auspices of the Federation Council awards on the Company’s ↗ official website of the Federal Assembly of the Russian Federation. RusHydro’s Ecological Paths was named the best ecotourism development project, and Solar Panels at Nizhne-Bureyskaya HPP became For further details the best project in renewable power on Youth Policy, see ↗ the Company’s website generation.
23 54 40 37 34 27 Strategy 24 Market Position 2 Strategic Development Innovative Activities Investment Indicators Key performance Goals Development to UN Sustainable Commitment review Market Position % y-o-y Industrial production,% in energypricescontributed to adecline environment anda drop The poor export for hotels andrestaurants(–24.1%). with the biggestslumpregistered sectors, the added value inservice There wasanotablereductionin resources. and slumpinglobaldemandfor energy attributable to theCOVID-19 restrictions The 3.1% declineinGDP2020was of physicalvolume vs.2019was96.9%. 2020 totaled RUB106,606.6 bn.Itsindex Russia’s nominalGDPasattheendof overview Macroeconomic 1 ANNUAL REPORT | 2020 REPORT ANNUAL disposal Water supply, sewage,andwaste Electricity, gas,andsteam supply Manufacturing Mineral extraction Industrial production Metric Source: Rosstat, calculations of the Russian Ministry ofEconomic Development. Source: Rosstat,calculationsoftheRussian Ministry 1 in 2020grewandreached14.2%. generation byRusHydro GroupinRussia by 1.1%.Andtheshareofelectricity the Far Eastern Federal Districtincreased by 2.3%, whileelectricityconsumptionin in domesticelectricityconsumption coronavirus infection ledto areduction The declineinGDPdueto thespreadof under theOPEC+ deal(–8.7% byvolume). primarily dueto reducingoilproduction decline in2020wasmineralextraction, The keydriver ofindustrialproduction in financeandinsurance(+7.9%). resulted inahigheraddedvalue services (–10.2%). The growing demand for financial in addedvalue inextraction industry 2019 –0.8 2.9 3.4 3.4 3.6 Total for theyear 2020 –2.5 –2.9 –3.8 –7.0 0.3 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Russian energy market in the region. The REM tariffs for The Group sells electricity in Russia both generating facilities operating in isolated in the wholesale electricity and capacity market overview zones are set by the regional authorities market (first and second price zones in charge of tariff regulation based on and UES East’s non-price zone) to major The Russian electricity and capacity the long-term indexation of required consumers and to retail consumers via market is comprised of the wholesale gross revenue approved by FAS Order its retail companies and guaranteed electricity and capacity market (WECM) No. 686/19 of May 29, 2019. suppliers. and the retail electricity market (REM). From 2011, system services are a major The Company also provides reactive The wholesale market is a place tool for maintaining reliability and high power capacity adjustment services where special types of commodities — quality of the Unified Energy System of to the System Operator of the Unified electricity and capacity — are traded Russia in the fully liberalized electricity Energy System without generating within the Unified Energy System across and capacity markets. electricity, as well as rated primary Russia’s economic space. The retail frequency control services. market trades in only one commodity — electric power. RusHydro’s position in RusHydro Group is one of Russia’s the industry 102–6 leading electric power producers, with The WECM participants include independent Russian energy companies generating companies, electric power With the generating assets of the Group as its main competitors. exporters/importers, electricity retailers, boasting a total installed power capacity electric grid companies (electricity of 38 GW, RusHydro ranks among purchases to cover transmission losses), the world’s top hydropower generating Russia’s top generating companies and large consumers. The activities of holdings. The Company’s energy assets by installed capacity3, GW infrastructure operators (for example, are comparable to those of leading global Gazprom 39 the UES System Operator, NP Market peers. Energoholding Council, JSC ATS, JSC CFS and others)1, 38 including their pricing policies and RusHydro Group counterparty relations, are subject to The world’s largest hydro- Inter RAO 30 government regulation and control. generating companies2, GW Rosatom State 28 China Three Gorges 75 Corporation Companies operating within Corporation (China) the designated price zones of the retail EuroSibEnergo 20 Eletrobras 51 electricity market are guided by the retail (Brazil) Siberian Generating market pricing rules based on the WECM 18 RusHydro 38 Company (SUEK) tariffs, while also taking into account (Russian Federation) T Plus (IES) 16 approved tariffs for services subject to Hydro-Québec 37 (Canada) government regulation. In some areas Unipro 11 of the Far East, including the isolated Corpoelec 24 (formerly E.ON Russia) (Venezuela) energy systems of the Kamchatka Enel Russia 6 U.S. Army Corps 21 Territory, Magadan Region, Chukotka of Engineers (USA) Autonomous Area and Sakhalin Region, Statkraft LUKOIL 6 the retail market is the only available (Norway) 19 option, as these areas are not linked to US Bureau 15 the Unified Energy System of the East. of Reclamation (USA) REM sales in isolated zones are covered Yalong Hydro (China) 15 by RusHydro’s subsidiaries (RAO ES East Subgroup) which are 100% regulated BC Hydro (Canada) 12 since there is no free electricity (capacity)
1 For the list of infrastructure operators in the energy sector, see https://minenergo.gov.ru/node/533. 2 Most of the companies’ installed capacity is based on state-owned HPPs. The chart shows total installed capacity data for all types of generation. 3 Companies’ data.
25 ANUUAL REPORT | 2020
A leading position by installed capacity is further strengthened by a number of unique properties of hydropower facilities, which dominate in RusHydro Group.
High profitability Flexibility of power generation
HPP/PSPP-based power generation HPPs can adjust output in response does not require fuel and is therefore to changing demand for power supply, not susceptible to fluctuations in which provides them with guaranteed fossil fuel prices (natural gas, oil, load during the times of peak demand coal, and other). Moreover, it remains when electricity price is the highest. highly profitable as pricing in the electricity and capacity markets is based on the cost of thermal power generation, which includes fuel expenses. 14.2% Eco-friendliness of electricity As a renewable resource, hydropower ranks among the most environmentally in Russia is generated by friendly sources of energy. Its use RusHydro Group High economic efficiency helps reduce emissions from thermal power plants and save hydrocarbons Low production cost of power for future generations. Hydropower generated by HPPs is the main reason produced at RusHydro’s HPPs why extra hydropower supplies and annually saves the planet 50 mt of
capacities are primarily and fully СO2-equivalent emissions (456 kg of
consumed within the unified energy CO2 × 109.3 bn KWh of carbon-free systems. generation).
RusHydro’s share in Russia’s electric power market
Electricity output, mn kWh Installed capacity, MW
RusHydro Share, RusHydro Share, Year Russia Group % Russia Group %
2018 1,091,700 143,853 13.2 250,400 38,803 15.5
2019 1,096,200 142,414 13.0 251,958 39,122 15.6
2020 1,063,700 151,431 14.2 251,096 38,060 15.2
↗ For a brief PEST analysis and SWOT analysis, see Appendix 31 of the Appendices Book 102–15
1
26 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Strategy 102–26
RusHydro Group’s mission is to ensure efficient use of water resources and reliability of the Unified Energy System of Russia, as well as to support the social and economic development of the Far Eastern regions by providing its existing and prospective consumers with access to energy infrastructure.
RusHydro Group’s Development Strategy1 2035 developed jointly with RusHydro. companies. RusHydro Group’s strategy until 2020 expected to run up to 2025 The industry strategy centers around seeks to implement the tasks outlined was approved by RusHydro’s Board of the transition from resource-based to in the energy strategy of the Russian Directors in June 2016. The Group’s innovative development of the energy Federation until 2035. strategy stems from the draft energy sector, focusing on the comprehensive strategy of the Russian Federation until upgrade of the Russian energy
RusHydro Group’s corporate values
Clean energy Engineering culture United team
↗ Ensuring environmental safety and ↗ Operating assets in a safe and ↗ Providing opportunities for protection of natural resources reliable manner the development and fair remuneration of the employees to build a competitive edge
Reliable business Young energy Prosperous society
↗ Implementing social policy which ↗ Promoting energy-related careers ↗ Promoting reliability and supports the Company’s employees among schoolchildren. infrastructure development, and residents across its footprint efficient use of water resources, utilization of hydropower potential and expanded use of renewable energy sources
Leading company Developmental environment
↗ Combining employees’ efforts, ↗ Implementing new technologies resources and business components and offering infinite opportunities to achieve excellence in every to foster further development aspect of the Company’s operations
1 Resolution of RusHydro’s Board of Directors No. 238 of June 8, 2016.
27 ANNUAL REPORT | 2020
HIGHRELIABILITY 181 MW HPP new capacity commissioned TECHNICAL CONDITION INDEX
↗5 p.p. ↗7 p.p. 85% 85% turbines generators
↗16 p.p. RusHydro ensures reliable 87% operation of transformers energy facilities for consumers and safe operation for society and the environment. Investment projects of RusHydro Group aim to improve the quality of energy supply LOW
↗ For further details, see page 40
28 RusHydro stepped up the volume of generation by hydroelectric power plants and other renewable energy facilities and minimized
CO2 emissions from HIGH TPP power generation
REDUCTION IN GREENHOUSE GAS EMISSIONS FROM TPPS
With its HPPs working, –14.6% RusHydro prevented atmospheric emission of 63 mt of
CO2-equivalent from the combustion of fossil fuel LOW CARBON FOOTPRINT ANNUAL REPORT | 2020
RusHydro Group’s strategic goals
The strategy sets out development goals for the entire RusHydro Group. Specific objectives were defined to achieve these goals.
Ensuring reliable Promoting steady Development of Increasing and safe operations development the Far Eastern the Company’s of the Company’s of electricity energy sector value facilities generation
RUSHYDRO GROUP’S STRATEGIC GOALS
The Company ensures Expanding electricity Ensuring sustainable Increasing the Company’s the reliable and safe generation volumes by development of the Far fundamental value, operation of equipment, improving the efficiency of Eastern energy sector investment appeal and hydraulic structures and the production programs and participating in value growth while ensuring thermal plant infrastructure and investment projects, the implementation of reliable and safe operation with regard to society and taking into account their national goals to streamline of its facilities environment, taking into economic performance the social and economic account the economic development of the region rationale for funds allocated for mitigating possible risks and reducing potential damage
KEY OBJECTIVES
Enhancing the operating Implementing the investment policy and changing Developing and enhancing performance and the development approaches to the investment program management efficiency transparency as regards the production and technology complex
Improving the efficiency of the Far Eastern asset management system and developing the Far Eastern energy sector
Expanding the talent pool
30 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Strategy update SH Enablers of Long-Term Development the Strategy Program The Company is currently updating RusHydro Group’s Long-Term the RusHydro Group Development The Company has a strategic Development Program for 2020–2024 Strategy for a new period until 2025 management system in place, which links (LTDP) was prepared in accordance with a prospect up to 2035. The new strategic management processes with with the instructions of the President Strategy factors in macroeconomic the incentive system. The system factors of the Russian Federation2 and forecasts and key international trends in the recommendations of the Federal the Russian Government3 and of the development of energy sector Agency for State Property Management1 approved by the Company’s Board of and world’s energy majors. on the development of key strategic Directors4. RusHydro Group’s Long- documents. Term Development Program relies on The Strategy relies on goals and the Group’s Development Strategy objectives provided for by the following until 2020 with an outlook for 2025, documents: Strategy the Consolidated Business Plan and ↗ National Security Strategy the key development programs. of the Russian Federation. ↗ Energy Strategy of the Russian In the reporting year, RusHydro Federation until 2035. Long-Term Development Group’s LTDP was implemented within ↗ Energy Security Doctrine of Program (LTDP) the framework of production, investment the Russian Federation. and innovative programs. Information ↗ Spatial Development Strategy on their implementation is set out in of the Russian Federation until 2025. the Report on progress against the LTDP Key development programs: ↗ National Program for in 2020 and Conclusion on the audit of the Socioeconomic Development ↗ Investment Program RusHydro Group’s LTDP implementation of the Russian Far East until 2024 ↗ Innovative Development Program in 2020. and with a prospect up to 2035. ↗ Production Program ↗ Russian President’s orders, ↗ Business Plan resolutions of the Government of ↗ For the Report on progress against the LTDP and Conclusion on the audit the Russian Federation, and other of RusHydro Group’s LTDP implementation laws and regulations with respect in 2020, see Appendices 9 and 10 of Strategy implementation the Appendices Book to the development of the country plan for the year and its power generation. (including Development ↗ Paris Agreement adopted Priorities) The LTDP implementation is audited on December 12, 2015 by in accordance with the Standard of the 21st Conference of the Parties evaluation of key performance indicators to the United Nations Framework KPI and incentive system of RusHydro Group’s Long-Term Convention on Climate Change Development Program and Specification (UNFCCC). for evaluation of progress against ↗ Environmental Security Strategy The key enablers of the strategy the LTDP and KPIs in 20205 developed of the Russian Federation until 2025 are RusHydro Group’s Long-Term on the basis of the Russian Government’s approved by Decree of the Russian Development Program and the Strategy recommendations6. President No. 176 of April 7, 2017 Implementation Plan outlining On the Environmental Security the Company’s development priorities Strategy of the Russian Federation as well as objectives and indicators aimed until 2025. at achieving its strategic goals.
1 Recommendations of the Federal Agency for State Property Management No. OD-11/18576 of April 29, 2014. 2 Instruction No. Pr-3086 of December 27, 2013. 3 Minutes No. 3 of January 30, 2014, Directive of the Russian Government No. 4955p-P13 of July 17, 2014. 4 Minutes No. 312 of August 24, 2020 as amended by resolutions of the Board of Directors (Minutes No. 316 of October 1, 2020). 5 Minutes No. 316 of October 1, 2020. 6 Directive of the Russian Government No. 6739p-P13 of July 30, 2020.
31 ANNUAL REPORT | 2020
Strategy The Strategy implementation plan The plan for 2020 was approved as part of implementation includes annual objectives and indicators the List of activities for RusHydro Group’s plan for specific business units and officers functions for which the following strategic of the Company to achieve RusHydro objectives were set. Group’s strategic goals.
Legend
Ensuring reliable and safe operations Promoting steady development Development of the Far Eastern Increasing the Company’s of the Company’s facilities of electricity generation energy sector value
Priority Strategic goals Progress
Developing production Additions to installed capacity of RusHydro following the implementation and technology complexes of the comprehensive modernization program in 2020 totaled 25.0 MW (15.0 MW at Votkinskaya HPP, 10.0 MW at Rybinskaya HPP). The share of imported equipment was 24% in 2020.
Commissioning In 2020, RusHydro Group commissioned: of new power and heat ↗ CHPP in Sovetskaya Gavan (126 MW, 200 Gcal/h), Khabarovsk generation facilities Territory; ↗ Verkhebalkarskaya SHPP (10 MW), Kabardino-Balkarian Republic; ↗ Ust-Dzhegutinskaya SHPP (5.6 MW), Karachay-Cherkess Republic; ↗ Barsuchkovskaya SHPP (5.25 MW), Stavropol Territory; ↗ Zaramagskaya HPP-1 (346 MW), North Ossetia.
Improving the efficiency As a result of the asset swap with SUEK, RusHydro increased its interest of the Far Eastern asset in the authorized capital of DGK to 100%. management system and developing the Far Eastern As part of centralizing repairs at our Far Eastern energy facilities, energy sector KhRAC was reorganized through the acquisition of KhPRC and Neryungrienergoremont.
Preparing strategy and RusHydro Group’s Long-Term Development Program for 2020–2024 prospect documents was approved by the Company’s Board of Directors (Minutes No. 312 for the Company of August 20, 2020). development. Pursuant to RusHydro Group’s Innovative Development Program for 2020–2024 with a prospect up to 2029 approved by the Company’s Board of Directors (Minutes No. 312 of August 20, 2020).
Improving the corporate RusHydro’s corporate governance rating confirmed at level 8 governance system (Best Corporate Governance Practice).
Development of RusHydro RusHydro Group’s network of electric vehicle fast charging Group’s EV charging stations was expanded to 22 in five regions of the Far East infrastructure (Primorye Territory, Khabarovsk Territory, Amur Region, Sakhalin Region and Kamchatka Territory).
32 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Strategic risks ↗ For the strategic risk management ↗ For the Report on climate change impact The Company maintains a strategic risk report for 2020 and climate risks, on RusHydro Group’s operation (TCFD), register which identifies risk owners see Appendix 28 of the Appendices Book see Appendix 33 of the Appendices Book and is reviewed on an annual basis.
In 2020, RusHydro Group’s strategic RusHydro Group’s strategic risk heat map for 2020 risk register consisted of nine risks. 1. Risk of failure to adhere to the capacity commissioning schedules, and/or funding and spending plan 1
2. Industrial safety risk HIGH 3. Risk of negative impact of EXTREMELY the environment on production 4. Low liquidity risk 5. EBITDA downside risk 8 6
6. Risk of inefficient resource management HIGH 7. Risk of adverse financial changes 8. Reputational risk 9. Corruption/fraud risk 2 3 7 5 In 2020, strategic risk assessments were 4 MEDIUM
revised due to the spread of COVID-19. PROBABILITY
Climate change risks constitute one of the most important aspects in risk 9 LOW management planning by the Company and its affiliates. These risks are reviewed separately.
In 2020, the respective risk owners LOW and the Control and Risk Management EXTREMELY Department analyzed and assessed EXTREMELY LOW MEDIUM HIGH EXTREMELY potential climate change risks for the short LOW HIGH term in the Group. See Appendix 28 CONSEQUENCE for the results of such analysis and assessment.
Strategic risk monitoring in 2020 102–29 102–30
Category Risk 2020 monitoring results (preliminary)
Investment Risk of failure to adhere to the capacity ↗ In 2020, these risks remained most critical for key risks commissioning schedules, and/or funding construction projects. and spending plan ↗ In 2020, measures were taken to mitigate these risks to an acceptable level. ↗ However, the scheduled construction deadlines were met in 2020 for all key construction projects.
Financial risks EBITDA downside risk In 2020, financial risks were within the financial target range. Risk of adverse financial changes Low liquidity risk
Non-financial Industrial safety risk In 2020, non-financial risks were within the target range risks Risk of negative impact of the environment applicable to the risk materialization assessment. on production Risk of inefficient resource management Reputational risk Corruption/fraud risk
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Commitment to UN Sustainable Development Goals RSPP SH
Promoting steady development of hydroelectric power plants (including RusHydro Group is fully in support of electricity generation in the Russian smaller HPPs), solar, wind, and geothermal global sustainable development initiatives, Federation with a focus on clean energy power plants. consistently integrating the most relevant is a key goal of RusHydro Group. UN SDGs into its operations. Specific The Company consistently expands RusHydro Group participates in objectives were defined to achieve these its electricity generation volumes by the implementation of national goals goals. 102–12 improving the efficiency of existing to streamline the social and economic facilities and commissioning of new development of the Far East, actively capacities, prioritizing generating investing in the construction of RES facilities relying on renewables, such as facilities in the region.
UN SDGs Targets Relevant indicators SDG implementation
1.2. GRI 202–1 Ratios of standard entry On average, the entry level wage is three times larger than level wage by gender compared to the minimum wage, exceeding it in certain regions of operation local minimum wage by more than 13-fold
3.8. С.3.1 Health and safety expenses RUB 2,270.6 mn
GRI 403–9 Occupational health 28 accidents to RusHydro’s staff that resulted in 28 injuries, and safety including seven fatalities. The accidents caused injuries to two managers (men), three skilled specialists (men) and 23 workers (21 men and two women).
GRI 403–10 Work-related ill health One case of work-related ill health
GRI 203–1 Infrastructure investments Healthcare investments of RUB 155 mn and services supported (partially)
4.3. С.2.2 Expenditure on training RUB 3.6 thousand per year per employee
GRI 404–1 Average hours of training Management: 68 hours per year per employee White-collar employees: 24 hours Blue-collar employees: 28 hours
6.3. В.1.1 Water recycling and reuse 3.3 bn m3 recycled water supply 20.51 mn m3 reused water supply
В.1.2 Water use efficiency 3.9 thousand m3 / RUB mn the ratio of water withdrawal to net value added
6.4. В.1.3 Water stress No water is withdrawn in water-scarce areas
GRI 306–1 Water discharge Waste water discharge into water bodies — 545.5 mn m3, (by treatment type) including: ↗ 312.5 mn m3 standard clean; ↗ 217.0 mn m3 untreated; ↗ 10.8 mn m3 insufficiently treated; ↗ 5.2 mn m3 treated to standard quality at treatment facilities
34 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
UN SDGs Targets Relevant indicators SDG implementation
7.1. А.3.1 Green investment 0.4% of consolidated revenue
7.2. GRI EU1 Installed capacity 38 GW For a breakdown by primary energy source and by regulatory regime, see Key production assets
GRI EU2 Net energy output 151.5 bn kWh of electricity 29.2 mn Gcal of heat energy For a breakdown by energy source and by regulatory regime, see Electricity and Heat Generation
G4-DMA. Programs, including those The Group’s businesses were involved in implementing in partnership with government, the Target Model for Utility Connection to Electrical Grids to improve or maintain access approved by the Russian Government’s Decree No. 147-r to electricity and customer support On target models for simplifying business procedures services and enhancing investment appeal of the Russian regions of January 31, 2017.
7. b. GRI EU28 Power outage frequency 1.83 (SAIFI) For a breakdown by subsidiary, see Accident Rate at RusHydro’s Facilities
GRI EU29 Average power outage 4.34 h duration (SAIDI) For a breakdown by subsidiary, see Accident Rate at RusHydro’s Facilities
А.1.1 Revenue RUB 429.6 bn1
8.2 С.4.1 Percentage of employees 94.7% covered by collective agreements
8.8. GRI 401–1 New employee hires 11,937 employees and employee turnover
GRI 401–2 Benefits provided Voluntary health insurance; to full-time employees that are not provided to temporary Insurance against accidents and diseases; or part-time employees Disability/temporary disability compensation; Maternity/paternity leave; One-off financial aid; Other payments and benefits in accordance with collective bargaining agreements and in-house rules and regulations
11.a С.2.3 Employee wages and benefits The average salary stood at RUB 82,715 with breakdown by employment type and gender The benefits package that includes private pension plans, VHI, insurance against accidents and diseases, and support in housing conditions improvement amounted to RUB 23,550
9.3. А.1.2 Added value RUB 215.8 bn2
9.4. А.3.3 Total expenditures RUB 610 mn on R&D
9.5. А.4.1 Percentage of local 99.997% procurement
9.b. GRI 203–2 Infrastructure For the results of construction activities under key investment investments and services projects, see Construction of Energy Facilities supported (partially)
1 Including subsidies. 2 Calculated as economic value generated net of operating expenditures: 429.9 – 214.1 = RUB 215.8 bn.
35 ANNUAL REPORT | 2020
UN SDGs Targets Relevant indicators SDG implementation
Charitable programs Charity spending in 2020: RUB 1.77 bn
12.5. В.2.1 Reduction of waste generation The aggregate waste generated by RusHydro Group’s power facilities totaled 1,918 mn tonnes, down 92.0% y-o-y
В.2.2 Waste reused, re-manufactured Accumulated waste is collected by specialized contractors duly and recycled licensed to collect, transport and treat such waste
12.6. GRI 302–4 Reduction of energy 1,073 thousand m3 in gas savings consumption 246 tonnes of natural fuel in diesel fuel savings 25,780.0 tonnes of reference fuel in savings of various fuel types 50,340 Gcal in heat savings 73,617.0 thousand kWh in electricity savings
GRI EU12 Transmission and distribution 9.64% losses as a percentage of total energy
13.2. В.3.1 Scope 1 GHG emissions 30.1 mn tonnes
GRI 305–7 Nitrogen oxides (NOX), 175.8 thousand tonnes
sulfur oxides (SOX), and other significant air emissions
15.1. GRI 304–3 Habitats protected Rehabilitated area — 52.6 ha or restored
15.5. GRI 306–5 Water bodies affected by 42 bodies water discharges and/or runoff For a breakdown by water body size, see Biodiversity Conservation
GRI 304-4 IUCN Red List species and Some 1.5 mn fries of valuable fish species released national conservation list species with habitats in areas affected by operations
16.5. D.2.2 Average hours of training 586 employees underwent training on anti-corruption issues per year per employee No records are kept on the length (in hours) of anti-corruption training; for a breakdown by region and employee share, see Anti-Corruption Efforts
GRI 205–3 Confirmed incidents No corruption cases were confirmed at RusHydro Group during of corruption and actions taken the reporting period
17.1. А.2.1 Taxes and other payments RUB 93.4 bn to the Government For a breakdown by budget level and for the structure, see Tax Payments
17.17. А.3.2 Community investment 0.4% of consolidated revenue
GRI 203–1 Significant indirect RUB 1.77 bn economic impacts
36 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
RusHydro Group’s participation RusHydro also participates in the working performance and achieve the goals in national projects RSPP group of the Russian Ministry of Energy set by its shareholders. Since 2017, to design an external power supply the management KPI system includes As part of the Comprehensive Trunk scheme for traction substations of annual KPIs of the Management Infrastructure Upgrade and Extension the second development phase of Board and KPIs under RusHydro’s Plan until 2024 approved by the Russian Russian Railways’ Eastern Operating Long-Term Incentive Plan (“LTIP”). Government’s Decree No. 2101-r of Domain, including the Baikal–Amur September 30, 2018, RusHydro Group Mainline and Trans-Siberian Railway. carries out the following activities to To this end, the following investment Annual KPIs of RusHydro’s construct and upgrade generating projects of RusHydro Group were Management Board in 2020 facilities for sustainable power supply included in the Comprehensive Trunk The annual KPIs of RusHydro’s to the consumers in the Far East: Infrastructure Upgrade and Extension Management Board for 2020 consist ↗ construction of Artemovskaya CHPP-2 Plan by the Russian Government’s of five financial and two industry- with a capacity of 400–450 MW / Decree No. 430-r of February 20, 2021: specific indicators. Financial indicators 450–550 Gcal/h to replace the ↗ construction of the fourth and fifth of the annual KPIs for RusHydro’s decommissioned Artemovskaya CHPP; power units of the Neryungrinskaya GRES Management Board include a mandatory ↗ construction of Khabarovskaya CHPP-4 with a total installed capacity of 450 MW; indicator required by Methodological with a capacity of 320.8 MW / 1,368.3 Gcal/h ↗ Partizanskaya GRES expansion to Recommendations 1388-r — return to replace the decommissioned increase the installed capacity by 280 MW. on equity (ROE). The Company’s Khabarovskaya CHPP-1; financial indicators are calculated ↗ upgrade of Vladivostokskaya CHPP-2 After the design stage is completed, based on the Group’s financial (replacement of turbine units these facilities are to be included in statements prepared under the IFRS. No. 1, 2, 3 and installation of three boilers the list of thermal power plants to be of 540 t/h each, 360 MW / 570 Gcal/h) modernized (rehabilitated) or constructed Resolution of the Board of Directors to replace the decommissioned capacities in the WECM non-price zones. approved the target annual KPIs of Vladivostokskaya CHPP-2; of RusHydro’s Management Board ↗ construction of Yakutskaya GRES-2 for 2020 and target KPIs under (second stage) with a capacity of Key performance indicators the fourth cycle of the Long-Term 160.2 MW / 200 Gcal/h to replace 103–3 Incentive Plan for 2020–20222. the decommissioned Yakutskaya GRES; ↗ construction of heat power station in The system of key performance Sovetskaya Gavan, 126 MW / 200 Gcal/h indicators (“KPI”) for RusHydro’s (commissioned in 2020); management team is based on ↗ construction of 110 kV Pevek- national statutory requirements1 and Bilibino power lines. is designed to improve the Company’s
1 Russian Government’s Directive No. 9054p-P13 of October 2, 2019 and Methodological Recommendations on the application of KPIs for business entities in which the share of the Russian Federation or a region of the Russian Federation exceeds 50% of their authorized capital, and performance indicators of state unitary enterprises for determining remuneration of their management, approved by the Russian Government’s Decree No. 1388-r of June 27, 2019 (“Methodological Recommendations 1388-r”). 2 Minutes No. 301 of a meeting held by the Board of Directors of December 26, 2019 as amended (minutes No. 304 of February 12, 2020).
37 ANNUAL REPORT | 2020
Target and actual KPIs of RusHydro’s Management Board in 2020 SH
Target KPI KPI achievement KPI Target Actual achievement Weight, % in 2020, %
EBITDA, RUB mn 181,282 191,720 Achieved 20 100
Return on equity (ROE), % 19.24 22.93 Achieved 15 100
Share of procurement from small 20 68 Achieved 10 100 and medium businesses, %
including procurement from small 18 39 Achieved and medium businesses only, %
Prevention of accidents exceeding Achieved Achieved Achieved 20 100 the limit number of accidents:
number of production-related accidents ≤ 5-year 0 Achieved average1
number of major accidents 0 0 Achieved
Adherence to the capacity commissioning 85 89.6 Achieved 20 100 schedule, funding and spending plan, %
Labor productivity2, % 5 17.31 Achieved 5 100
Decrease in operating expenses 2 4.67 Achieved 10 100 for the procurement of goods (works or services) per unit, %
KPIs of the Long-Term Incentive Plan (including total shareholder return (TSR) There are four KPIs covering the as a mandatory indicator required by second, third, fourth and fifth cycles of Methodological Recommendations 1388-r) RusHydro’s LTIP: three financial indicators and an integrated innovative KPI3.
Target and actual KPIs of the Long-Term Incentive Plan for 2018–20204
Target KPI KPI achievement KPI Target Actual achievement Weight, % in 2020, %
Total shareholder return (TSR), % 100 0 Not achieved 15 0
Integrated innovative KPI, % 85 97 Achieved 25 100
Free cash flow (FCF), RUB mn –117,064 12,719 Achieved 45 100
Earnings per share (EPS), RUB/share 0.84 0.94 Achieved 15 100
1 Equals to zero. 2 Hereinafter, the growth of labor productivity. 3 Approved by resolution of the Interagency Working Group for Implementing the Innovative Development Priorities of the Presidium of the Russian President’s Council for Modernization of the Economy and Innovative Development of Russia (Minutes No. AD-P36-247pr of December 17, 2015). The integrated innovative KPI is listed among KPIs in compliance with Directives of the Russian Government No. 1427p-P13 of March 3, 2016 and Resolution of the Board of Directors of RusHydro (Minutes No. 242 of October 10, 2016). 4 Approved by resolution of the Board of Directors of December 26, 2017 (Minutes No. 264 of December 28, 2017) as amended on April 24, 2018 (Minutes No. 269 of April 25, 2018), December 25, 2018 (Minutes No. 282 of December 27, 2018), February 19, 2019 (Minutes No. 283 of February 21, 2019) and December 24, 2019 (Minutes No. 301 of December 26, 2019).
38 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Target KPIs of the Long-Term Incentive Plan
KPI 2019–20211 2020–20222 2021–20233
Total shareholder return (TSR), % 100 100 100
Integrated innovative KPIs, % 85 85 100
Free cash flow (FCF), RUB mn –82,190 –74,332 –56,352
Earnings per share (EPS), RUB/share 0.80 0.85 0.89
KPIs of the Long-Term Development The target KPIs of the Group’s Long-Term RusHydro Group’s Long-Term Program Development Program were calculated Development Program provides for RusHydro’s Long-Term Development in accordance with RusHydro Group’s the following KPIs: Program consists of KPIs established draft Consolidated Business Plan for ↗ short-term KPIs (annual KPIs set for for 2020–20244. 2020–2024 (including the Consolidated the Company’s Management Board) Investment Program) and subject to ↗ medium-term KPIs (KPIs of the Company’s the initiatives stipulated in the Group’s Long-Term Incentive Plan) programs.
Target and actual short-term KPIs of the Long-Term development Program
2020 20215 2022 2023 2024
KPI Target Actual Progress Forecast
Return on equity (ROE), % 19.24 22.93 Achieved 19.44 19.71 19.45 19.73
EBITDA, RUB mn 181,282 191,720 Achieved 187,591 201,502 208,097 217,160
Prevention of accidents exceeding Achieved Achieved Achieved Achieved Achieved Achieved Achieved the limit number of accidents:
number of production-related ≤ 5-year 0 Achieved ≤ 5-year ≤ 5-year ≤ 5-year ≤ 5-year accidents average6 average average average average
number of major accidents 0 0 Achieved 0 0 0 0
Adherence to the capacity 85 89.6 Achieved 85 85 85 85 commissioning schedule, funding and spending plan, %
Share of procurement from small 20 68 Achieved 20 20 20 20 and medium businesses, %
including procurement from small 18 39 18 18 18 18 and medium businesses only, %
Growh of labor productivity, % 5 17.31 Achieved 5 5 5 5
Decrease in operating expenses 2 4.67 Achieved 2 2 2 2 for the procurement of goods (works or services) per unit, %
1 In accordance with resolution of the Board of Directors of December 25, 2018 (Minutes No. 282 of December 27, 2018) as amended on February 19, 2019 (Minutes No. 283 of February 21, 2019), December 24, 2019 (Minutes No. 301 of December 26, 2019), and April 14, 2021 (Minutes No. 326 of April 15, 2021). 2 In accordance with resolution of the Board of Directors of December 26, 2019 (Minutes No. 301 of December 26, 2019) as amended on April 14, 2021 (Minutes No. 326 of April 15, 2021). 3 In accordance with resolution of the Board of Directors of April 14, 2021 (Minutes No. 326 of April 15, 2021). 4 The Long-Term Development Program of the RusHydro Group for the period 2020–2024 was approved by resolution of the Board of Directors of PJSC RusHydro (Minutes No. 312 of August 24, 2020) as amended by resolution of the Board of Directors of PJSC RusHydro (minutes No. 316 of October 1, 2020). 5 In accordance with target values of annual KPIs for the Company’s Management Board for 2021, as approved by resolution of the Board of Directors of April 14, 2021 (Minutes No. 326 of 15 April 2021). 6 Equals to zero.
39 ANNUAL REPORT | 2020
Target and actual medium-term KPI of the Long-Term Development Program SH
2018–2020 2019–2021 2020–2022
KPI Target Actual Progress Target Target
Integrated innovative KPI, % 85 97 Achieved 85 85
Total shareholder return (TSR), % 100 0 Not achieved 100 100
Free cash flow (FCF), RUB mn –117,064 12,719 Achieved –82,1901 –74,3322
Earnings per share (EPS), RUB/share 0.84 0.94 Achieved 0.80 0.85
Investment activities SH 103–2
Investment policy RusHydro’s investments are governed by the Regulations on Managing Investing Activities Performed in the Form of Capital Investments.
RusHydro’s investment policy principles
Compliance of investment decisions and projects with statutory requirements, building Step-by-step approach codes and regulations, and environmental standards to implementation of investment projects
Compliance of investment decisions Analysis of costs and benefits associated Access to financing for all investment and projects with risk-return profiles with alternative investment decisions projects approved by the Board of Directors (performed at the end of each stage in case of a change in key project metrics)
Investment programs are approved consolidated investment program, which Investment objectives: by the Company’s Board of Directors is approved by the Management Board ↗ ensure stable power supply with and respective boards of directors in and presented to the Board of Directors no disruptions for the consumers; RusHydro Group’s subsidiaries, with of PJSC RusHydro. As far as electricity ↗ satisfy the growing energy the programs of electricity supplying suppliers are concerned, the drafts are consumption; subsidiaries additionally reviewed by submitted to the authorized government ↗ upgrade generating facilities; the authorized government agencies. agencies after being reviewed by ↗ reduce grid losses; The draft investment programs of the boards of directors in respective ↗ reduce power equipment failures subsidiaries are based on the Group’s subsidiaries. and wear and tear.
1 In accordance with the parameters of the Consolidated Business Plan of RusHydro Group for 2021–2025 and the adjusted KPI targets of the Company’s Third-Cycle Long-Term Motivation Program for 2019–2021 approved by the decision of the Company’s Board of Directors of April 14, 2021 (Minutes No. 326 of April 15, 2021). 2 In accordance with the parameters of the Consolidated Business Plan of RusHydro Group for 2021–2025 and the adjusted KPI targets of the Company’s Fourth Cycle Long-Term Motivation Program for 2020–2022 approved by the decision of the Company’s Board of Directors of April 14, 2021 (Minutes No. 326 of April 15, 2021).
40 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
COMBINED HEAT AND POWER PLANT IN SOVETSKAYA GAVAN, KHABAROVSK TERRITORY 126 MW installed electrical capacity
NEW LAUNCHES Heat for residents, energy for the port
Sovgavanskaya CHPP is the last of the four priority projects for the construction of thermal generation facilities in the Far East implemented in furtherance of the Decree of the President of the Russian Federation. Earlier, RusHydro commissioned the second stage of Blagoveshchenskaya CHPP, the first stage of Yakutskaya GRES-2 and Sakhalinskaya GRES-2.
The new power plant lays reliable groundworks for the development of the promising industrial and transport hub in Sovetsksya Gavan and the free port in Vanino, where a number of port infrastructure, fish and seafood processing projects are already underway and in the planning stage.
Thanks to the use of high-efficiency electric filters, the new plant meets high environmental standards — electric filters pick up at least 99.6% of ash particles. 126 200 630 MW Gcal/h mn kWh installed electrical installed heat average annual electricity capacity capacity generation
41 ANNUAL REPORT | 2020
Role of federal and regional and Development Plans of State RusHydro Group works to ensure that governments SH Corporations, State Companies and the Policy Papers contain only the most RusHydro Group liaises with federal Other State-Owned Organizations recent information on its energy facilities and regional governments of Russia in as Regards Their Implementation in and plans. developing and reviewing its investment the Far Eastern Federal District of Russia program. In line with Investment Approval of December 27, 2016, draft investment Rules for Electricity Suppliers approved programs of RusHydro’s subsidiaries Investment program for 2020–2030 by Resolution of the Russian Government that are not electricity suppliers but RusHydro’s updated investment program No. 977 On Investment Programs of engage in investment activities in for 2020 and investment program for Electricity Suppliers of December 1, 2009, the Far Eastern Federal District of Russia 2021–2030 were approved by Order of investment programs of RusHydro’s are subject to approval by the Ministry the Russian Ministry of Energy No. 28@ electricity supplying subsidiaries are for the Development of the Russian Far On Approval of RusHydro’s Investment reviewed and approved by the authorized East and Arctic. Program for 2021–2030 and Amendments government agencies (the Russian to RusHydro’s Investment Program Ministry of Energy or regional authorities) The Group cooperates with federal Approved by Order of the Russian Ministry with inputs from government agencies and regional governments of Russia of Energy No. 20@ of December 9, 2019 in the regions where such investment in preparing proposals and updating dated December 28, 2020. projects are implemented and federal information on the Group’s facilities in government agencies, including energy policy documents of the Russian RusHydro’s consolidated investment the Ministry of Finance, Ministry of Federation: program for 2020–2024 was approved as Construction, Housing and Utilities, ↗ the schemes and programs to develop part of the Group’s Consolidated Business Ministry of Industry and Trade, Ministry energy systems of Russian regions; Plan for 2020–2024 by resolution of of Economic Development, Federal ↗ the Scheme and Program to Develop the Board of Directors1. Antimonopoly Service, Market Council the Unified Energy System of Russia; Non-Profit Partnership and System ↗ the general layout of power generation Operator of the Unified Energy System. facilities in the Russian Federation; ↗ the general layout of gas industry Pursuant to Resolution of the Russian development in the Russian Federation; Government No. 1502 On Procedure ↗ the territorial planning layout for the Ministry of the Russian for the Russian power industry; Federation for the Development ↗ heat supply projects blueprints of the Russian Far East and Arctic for cities and settlements of Russian to Approve the Investment Programs regions.
1 Minutes No. 301 of December 26, 2019.
42 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
VERKHNEBALKARSKAYA SHPP, KABARDINO-BALKARIAN REPUBLIC 10 MW installed capacity
NEW LAUNCHES Small but powerful
Verkhnebalkarskaya SHPP is one of five small hydroelectric power plants that RusHydro has been building in the North Caucasus Federal District. Here there are the most favorable natural conditions for small hydropower.
Verkhnebalkarskaya SHPP is located in a high mountain area, on the Cherek Balkarsky River, which allows the use of a diversional scheme, where water is taken upstream and fed through high-pressure water pipelines to three horizontal turbines of Voith Hydro make with a capacity of 3.34 MW each, operating at a design head of 125 meters. This is a modern high-performance equipment tailored to the operating peculiarities of the SHPP.
The plant is the first fully-completed investment project for the construction of small hydroelectric power plants under the state program for the development of renewable energy generation with signing an agreement to supply capacity to the wholesale market. 10 61.4 1,000 MW mn kWh m installed average annual electricity altitude above capacity generation sea level
43 ANNUAL REPORT | 2020
Implementation of RusHydro New capacities commissioned in 2020 Group’s consolidated investment 1 program European part Spending on the consolidated Far East of Russia and Siberia investment program in 2020 totaled RUB 74.3 bn, including RUB 47.8 bn for Type Target Actual Target Actual the investment projects of RusHydro Electricity generation, MW 141.3 134.6 30.7 46.2 Subgroup and RUB 26.5 bn for the projects of RAO ES East Subgroup. Heat, Gcal/h 207.2 203.8 – – Power lines, km 1,160.9 1,432.2 14.9 1.7
Transformer capacities, MVA 691.8 529.7 32.0 –
Actual spending in 2018–2020, Key investment areas under RusHydro Group’s consolidated RUB bn (incl. VAT) investment program in 20202
92.7 Spending, RUB bn (incl. VAT) CAPEX, RUB bn (excl. VAT) 82.8 27.2 74.3 7.2 6.7 29.8 26.5 7.6 6.9 31.6 27.7
65.5 53.0 74.3 62.3 47.8 RUB bn (incl. VAT) RUB bn (excl. VAT)
2018 2019 2020 27.9 21.0
RusHydro Subgroup RAO ES East Subgroup Rehabilitation and modernization Utility connection Construction of new facilities Other
Investments in construction of new facilities in 2020
Spending, RUB bn (incl. VAT) CAPEX, RUB bn (excl. VAT)
6.2 3.9 8.2 7.9
27.9 2.4 21.0 RUB bn (incl. VAT) RUB bn (excl. VAT)
1 Includes RusHydro’s subsidiaries covered by 4.5 the Consolidated Business Plan, including SHPPs of Stavropol Territory and Karachay-Cherkess 5.4 2.9 Republic, Verkhnebalkarskaya SHPP, Hydroinvest, 2.6 RusHydro SSC from RusHydro Subgroup, NDES, 3.9 Neryungrienergoremont, KhPRC, Primorskaya GRES 1.0 (ceased to be part of the Group in June 2020) from JSC RAO ES East Subgroup. 2 Under the adopted management accounting Priority projects in the Russian Far East3 Priority projects in the Russian Far East standards: investment program spending means the total Ust-Srednekanskaya HPP Ust-Srednekanskaya HPP amount spent by the members of RusHydro Group Zaramagskiye HPPs SHPPs in the North Caucasian to implement investment projects, including Federal District disbursements to suppliers and contractors and Off-site infrastructure for priority projects project administrators’ expenses; and in the Russian Far East Off-site infrastructure for priority projects CAPEX means recognized capital investments. in the Russian Far East 3 SHPPs in the North Caucasian Federal Hereinafter in the table, the construction of District Other the Sakhalin GRES-2 and CHPP in Sovetskaya Gavan. Other
44 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
UST-DZHEGUTINSKAYA SHPP, KARACHAY-CHERKESS REPUBLIC 5.6 MW installed capacity
NEW LAUNCHES Accommodating the electricity shortage
With the commissioning of the Ust-Dzhegutinskaya small hydroelectric power plant, the energy deficit of the Karachay- Cherkessia was relieved. This is the third facility in the Republic commissioned by RusHydro under the state renewable energy development program with signing an agreement to supply capacity to the wholesale market.
Ust-Dzhegutinskaya SHPP is located on the Kuban River. To create water pressure across the turbines, the SHPP uses the dam built in 1962, which is a part of the Ust-Dzhegutinsky hydroelectric complex, which provides water intake to the Bolshoy Stavropol Canal. The SHPP is equipped with two vertical hydroelectric units with a capacity of 2.8 MW each, with adjustable-blade turbines operating at a design head of 31 meters.
The SHPP features the absence of power transformers — electricity is supplied to the power system at a generator voltage of 6 kV via two power transmission lines. 5.6 25.6 31 MW mn kWh m installed average annual electricity design head of capacity generation turbines
45 ANNUAL REPORT | 2020
Spending by source of funds The significant difference between required for contractors to complete in 2020, % the actual spending under their assignments and reductions in the consolidated investment program project costs following approval of design 3.4 3.8 and the 2020 target (– RUB 23.9 bn) was documentation (– RUB 7.7 bn); mainly attributable to: ↗ After completion and commissioning ↗ rescheduling of construction rollout of Zaramagskiye HPPs, savings under the investment projects of were recognized in accordance with the construction of two single-circuit the certificate of acceptance of completed 74.3 110 kV Pevek-Bilibino power lines construction project (– RUB 1.5 bn); RUB bn (incl. VAT) (construction stage No. 1) (– RUB 9.7 bn); ↗ update of the financing schedule for ↗ updates on the work schedules Ust-Srednekanskaya HPP (– RUB 1.1 bn) for rehabilitation and modernization, and Zagorskaya PSPP-2 (– RUB 1.0 bn) with the reasons including more time construction project. 92.9
Investment plans for 20212 Own Raised Planned spending, Targets for capacity Federal RUB bn (incl. VAT) commissioning
8.5 Type Target Consolidated investment program 10.2 spending by region in 2020 Electricity generation, MW 53.0 48.2 in accordance with the Business Heat, Gcal/h 2 7.0 Plan1, RUB bn 124.1 Transformer capacities, MVA 793.3 RUB bn (incl. VAT) Power lines, km 1,619.1
58.3 57.2
41.7
Rehabilitation and modernization 39.9 Construction of new facilities 32.6 Utility connection Other
Target Actual
European part of Russia and Siberia Construction and modernization energy capacities with new ones fitted Far Eastern Federal District of production facilities with efficient cutting-edge equipment, improving reliability, eliminating energy Construction of generating facilities shortages, and creating a capacity margin RusHydro builds and commissions and conditions to spur local economic power plants and develops energy development. RusHydro’s investment infrastructure in the Far Eastern Federal projects in the Russian Far East are District, helping to further national included in the Comprehensive Trunk goals related to supplying electricity Infrastructure Upgrade and Extension to citizens and industrial facilities. Plan until 2024 as approved by Decree RusHydro Group’s investment projects of the Russian Government No. 2101-r of are focused on replacing the retiring September 30, 2018.
1 By region breakdown according to the Business Plan. 2 Pursuant to RusHydro Group’s Consolidated Business Plan for 2021–2025 approved by the Company’s Board of Directors on April 14, 2021 (Minutes No. 326 of April 15, 2021).
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BARSUCHKOVSKAYA SHPP, STAVROPOL TERRITORY 5.25 MW installed capacity
NEW LAUNCHES Environmentally friendly electricity
Barsuchkovskaya SHPP is located on the Bolshoy Stavropol Canal. To create a water pressure across turbines, the SHPP uses the dam of the compensating reservoir of Kubanskaya HPP-4, which supplies water to Nevinnomysskaya GRES. The SHPP uses water that was previously passed through the spillway of the hydroelectric complex.
Barsuchkovskaya SHPP is equipped with three horizontal hydroelectric units with a capacity of 1.75 MW each, with adjustable-blade turbines operating at a design head of 12.7 meters.
5.25 24.7 481.8 MW mn kWh MW installed average annual electricity total capacity of the Cascade capacity generation of Kubanskiye HPPs
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Key investment projects and their impact on local economies across the Group’s footprint 203–2
Investments, RUB mn
Project 2020 Total Social and economic effects CHPP in Sovetskaya Gavan 7,552.2 33,464.9 ↗ Satisfying the rising local demand for electricity as a result of the sea port expansion, the construction of the Russian Installed capacity Far East’s largest coal terminal and the town’s development 126 MW, 200 Gcal/h as a transport hub; ↗ providing for centralized heat supply to Sovetskaya Gavan; Average annual output ↗ higher tax revenues at every government level; 630 mn kWh ↗ replacing retiring capacities and inefficient equipment at Mayskaya GRES; Year of commissioning ↗ making the Sovetskaya Gavan energy hub more reliable 2020
Second stage of gasification 226.0 420.0 ↗ Allowing a slowdown in tariff increases; at Anadyrskaya CHPP ↗ making power generation in Anadyr more sustainable; ↗ ensuring stable power and heat supply for the Anadyr Year of commissioning energy hub; 2021 ↗ improving the power generation efficiency at Anadyrskaya CHPP by using a cheaper fuel Ust-Srednekanskaya HPP 5,403.6 76,927.3 ↗ Generating power for Matrosov Mine (the Natalka gold deposit) to support the mining industry in driving Installed capacity the region’s economic growth; ↗ higher tax revenues at every government level; 570 MW (142.5 MW third stage ↗ making the isolated Magadan energy system more reliable commissioned in 2018) Average annual output 2,555 mn kWh Year of commissioning 2023
Construction of two 2,156.2 24,733.3 ↗ Supporting the development of the mining and metals single-circuit 110 kV cluster within the Chaun and Bilibino energy hub; ↗ allowing the Chaun and Bilibino energy hub to carry out Pevek-Bilibino power lines power exchange for the launch of a floating nuclear power (construction stage No. 1) plant; ↗ making the local energy system more reliable Length 490.59 km Year of commissioning 2023 Rehabilitation of power 22.6 26,452.8 ↗ Improving the quality and reliability of energy supplies production and to consumers in the Far East; ↗ replacing retiring power and thermal capacities of obsolete technology complex of and worn-out equipment; Vladivostokskaya CHPP-2 ↗ improving the quality and reliability of energy supplies with the replacement of turbo to consumers in the Far East generators No. 1, 2 and 3 and installation of three boilers of 540 t/h each Installed capacity 360 MW, 570 Gcal/h Year of commissioning 2027
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ZARAMAGSKAYA HPP-1, NORTH OSSETIA 346 MW installed capacity
NEW LAUNCHES The mountain-top hydroelectric power plant
Zaramagskaya HPP-1 is part of the unified hydroelectric complex of Zaramagskiye HPPs, which also includes the Main HPP, which supplies water purified from the sand to the tunnel of HPP-1. The commissioning of Zaramagskaya HPP-1 brought the electric power industry of North Ossetia to the whole new level of development: the total capacity of power plants in the Republic increased fourfold. Thanks to its capacity and high maneuverability, Zaramagskaya HPP-1 enhanced electic reliability of the entire North Caucasus Region. The HPP reduced the electricity shortage in the Republic of North Ossetia-Alania from 80 to 30%. In terms of its capacity, Zaramagskaya HPP-1 ranked third among the hydroelectric power plants in the North Caucasus.
The HPP structures are designed for earthquakes with a magnitude of 9 points, while they blend seamlessly with the surroundings and have a minimal environmental footprint.
346 842 1,600 MW mn kWh m installed average annual electricity altitude above capacity generation sea level
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Investments, RUB mn
Project 2020 Total1 Social and economic effects Construction of 6.0 72,874.3 ↗ Ensuring the social and economic development of Artemovskaya CHPP-2 the Primorye Territory; ↗ replacing retiring capacities at the existing Installed capacity Artemovskaya CHPP; 450 MW, 480 Gcal/h ↗ improving the quality and reliability of energy supplies to consumers in the Far East Year of commissioning 2025
Construction of 15.6 52,396.8 ↗ Helping to cover projected shortage of power in the region; Khabarovskaya CHPP-4 ↗ replacing retiring thermal and power capacities of Khabarovskaya CHPP-1; Installed capacity ↗ improving the reliability and efficiency of power supplies 320 MW, 1,386.3 Gcal/h in the region and heat supplies in the southern part of Khabarovsk Year of commissioning 2025
Construction of Yakutskaya 13.9 30,275.5 ↗ Developing centralized energy systems in line with social GRES-2 (second stage) and economic needs of the Republic of Sakha (Yakutia); ↗ replacing retiring capacities at the existing Installed capacity Yakutskaya GRES; 160.4 MW, 201 Gcal/h ↗ improving the reliability and efficiency of power supplies in the region, and improving the reliability of heat supplies Year of commissioning in Yakutsk 2025
RusHydro Group’s construction In the reporting year, key construction of critical structures that may affect projects did not involve physical quality assurance activities included: safety of capital construction facilities; or economic migration in 2020. ↗ monitoring the scope and timeliness ↗ controlling, jointly with contractors, EU22 of incoming inspections performed by compliance of completed construction contractors and controlling the accuracy facilities with design and construction of their inspection reports; documents and technical specifications. Construction quality ↗ monitoring contractor compliance assurance 103–2 with the warehousing and storage Our quality assurance procedures for Construction and installation quality requirements for materials and construction and installation, materials, assurance at RusHydro’s facilities equipment and controlling the accuracy structures and assemblies are compliant aims to ensure compliance of projects of relevant documents; with Russian laws, industry standards under construction with the approved ↗ monitoring the scope and timeliness and regulations, internal engineering design, design drawings, work execution of contractor controls focusing on standards, and regulatory requirements plans, construction regulations, rules, the sequence of capital construction for design documentation. standards and specifications. procedures and controlling the accuracy of respective reports; In addition to primary and secondary ↗ inspecting hidden works jointly federal legislation, all construction with the supervisors and contractors works are subject to both industry and conducting interim acceptance and RusHydro own internal quality
1 Preliminary estimation.
50 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
WIND-DIESEL POWER PLANT IN TIKSI, REPUBLIC OF SAKHA (YAKUTIA) 3.9 MW installed capacity
NEW LAUNCHES First hybrid generation project
The Arctic village of Tiksi, the Republic of Sakha (Yakutia), RusHydro commissioned an unrivaled in Russia wind-diesel power plant (WPP) with a power storage unit.
All elements of the WPP are united by an automated energy generation and distribution control system. Each year, the WPP will generate more than 12 million kWh of electricity, providing reliable power supply to the polar village of Tiksi with a population of five thousand people.
The use of wind turbines and modern efficient diesel units reduces fuel consumption by more than 500 tonnes per year, which greatly contributes to the ecological situation. All WPP equipment is winterized to meet the harsh conditions of the polar regions. Wind turbines operate at temperatures down to –50°C and can withstand wind speeds of up to 70 m/s. The height of each of the three wind turbines is 41.5 m, the diameter of the blades is 33 m. 900 3,000 1,000 kW kW kW wind power plant diesel power plant capacity of the energy capacity capacity storage system
51 ANNUAL REPORT | 2020
assurance standards. Our key design Program to develop the energy ↗ to identify the key locations for placing quality management principles and system in the Far Eastern Federal transmission lines and substations with the employees in charge are specified District with a view to accelerating a nominal voltage of 110 kV or higher; and in the Regulations on Managing and local economic growth 103–2 ↗ to determine the initial integrated cost Monitoring Investment Projects during The Program to develop the energy of the proposed measures and the effect the Development of Documentation for system in the Far Eastern Federal of the program on the RusHydro value. Construction of RusHydro Group’s New District with a view to accelerating Facilities as approved by RusHydro’s local economic growth1 (the “Program”) The Program stipulates the development Order No. 1021 of December 28, 2018. for 2019–2029 was approved by of generation facilities by erecting RusHydro’s Board of Directors in new generating sources to replace The Supervisory Board of the Uniform June 20192. In 2020, the Program the decommissioned obsolete equipment System of Conformity Assessment for was updated for 2020–2030. and cover expected loads, as well as Health, Safety and Environment, and efforts to upgrade the existing generation Safety in the Energy and Construction Top priorities of the updated Program: facilities. The Program also factors in Industries is developing the Uniform ↗ to offer optimal solutions for measures to support the external power System of Conformity Assessment the development of the power supply scheme for Russian Railways’ in Construction (Modernization and system in the Far Eastern Federal Eastern Operating Domain within the area Renovation of Immovable Property) District as a way to achieve projected of RusHydro Group’s responsibility: and requirements in respect of demand for electricity and capacity ↗ construction of power units the corresponding control activities. in the Far Eastern Federal District in No. 4 and 5 of Neryungrinskaya GRES Compliance monitoring is performed by the context of large-scale investment with a total installed capacity of up the Federal Environmental, Industrial and projects (including projects in priority to 450 MW in 2025; Nuclear Energy Supervision Service. development areas, the Far Eastern ↗ Partizanskaya GRES expansion Hectare program, and plans to to increase the installed capacity Before a power plant is commissioned, develop energy clusters in the Far by 280 MW in 2026. it receives an automated diagnostic Eastern Federal District) while linking control system that will read and process the construction of power facilities By 2030, RusHydro Group plans to measurements to help analyze the status to major investment projects; decommission generation equipment of facilities across the hydrotechnical ↗ to organize power generation with a total capacity of 1,309.3 MW complex. After completion of a hydraulic facilities and the grid infrastructure and commission generation equipment structure, its measuring equipment, for many years to come; with a total capacity of 2,247.7 MW, along with all data collected, is handed ↗ to create conditions for a long- upgrade the existing generation over by the construction company term balance between production equipment, raising its installed capacity by to the project administrator. and consumption in the UES 77 MW. To ensure a quality power supply East and technologically isolated to existing and prospective customers, as Quality assurance systems for electric power systems; well as power plant capacity, the Program new energy facilities are upgraded ↗ to prevent the forecasted provides for the commissioning of individually under agreements with power and capacity shortages in 7,347.3 km of transmission power lines the respective general contractors. the most efficient manner; with a voltage of 110 kV or higher.
1 The Program was developed in compliance with par. 2 of Minutes No. YuT-P9-2454 of a meeting at the office of Yury Trutnev, Deputy Prime Minister of the Russian Federation and Presidential Plenipotentiary Envoy to the Far Eastern Federal District, of April 25, 2018. 2 Meeting of RusHydro’s Board of Directors No. 292 of June 24, 2019.
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FLOATING SPP ON THE NIZHNE-BUREYSKAYA HPP 54 kW installed capacity
NEW LAUNCHES First floating solar power plant
The first mobile floating solar power plant in Russia is located in the reservoir of RusHydro’s Nizhne-Bureyskaya HPP. It is a pontoon module located in the upper stream of Nizhne-Bureyskaya HPP.
The SPP partially satisfies its internal needs, which will increase the net supply. If necessary, the mobile solar power plant can be quickly relocated, thus significantly expanding the range of its possible applications.
54 140 475 kW solar cells m2 installed total area capacity
53 ANNUAL REPORT | 2020
Innovative development RSPP SH ↗ improving the quality of equipment 4. Ensuring deeper engagement diagnoses coupled with proactive in green energy by unlocking The Innovative Development Program identification and mitigation the hydropower potential in Russian of RusHydro Group for 2020–2024 of operational risks; regions and developing RES-based with a prospect up to 20291 ↗ increasing labor productivity; alternative energy infrastructure (“RusHydro Group’s IDP”) was developed ↗ import substitution and reducing (wind, solar panels). in accordance with a resolution of the dependence on imported equipment; the Government Commission for ↗ reducing the environmental footprint. Economic Modernization and Innovative Amounts spent on the Innovative Development of Russia2 in 2019 based on 2. Assure RusHydro Group’s position Development Program5, RUB mn the results of the findings of an analysis as one of the most technologically 3,001.7 comparing the Group’s technological advanced energy companies, both 2,751.1 capabilities and innovation KPI with those domestic and international, including via: of its major peers3, as well as follow-up ↗ development of efficient construction, 2,372.9 proposals prepared and approved by modernization, repair and operation the Company’s Board of Directors4. processes for power generation facilities; 2,085.0 2,267.8 ↗ development of real-time monitoring 1,717.5 technologies for the core equipment; Key objectives the Innovative ↗ automation of maintenance Development Program and repair; and of RusHydro Group ↗ development of new innovative 916.7 655.4 483.3 1. Improving RusHydro Group’s economic products based on the Group’s know- and operational efficiency by using how and expertise (e.g. energy storage 2018 2019 2020 innovative engineering, technical and solutions, EV infrastructure development). management solutions focused on: RusHydro Subgroup ↗ extending lifespans and improving 3. Improvement of energy efficiency in RAO ES East Subgroup performance of equipment; the production and transportation of ↗ enhancing reliability and economic electricity and heat (including cutting efficiency of equipment; costs for internal needs and grid losses).
KPIs for the Innovative Development Program of RusHydro Group
Target Progress
Delivered Metrics 2019 2020 2021 2020 or not
R&D expenses, % of revenue 0.25 0.25 0.25 0.22 Not achieved6
Number of IP assets created during the year 17 18 19 27 Achieved
Efficiency of hydropower capacity management, 20.36 21.99 21.97 20.39 Achieved employees per 100 MW
Fuel efficiency, % 51.79 49.0 49.1 50.8 Achieved
Growth of innovative and high-tech productions – 10 10 10.6 Achieved procurement, %
HPP repair expenses, ‘000 RUB/MW 19.8 128.4 126.7 113.5 Achieved
Reliability criterion – 24 24 27 Achieved
1 Approved by RusHydro’s Board of Directors (Minutes No. 312 of August 24, 2020). 2 Meeting minutes No. 2 of October 22, 2018. 3 Conducted in line with the Russian Government’s Directive No. 3262p-P13 of April 27, 2018. 4 Minutes No. 294 of August 29, 2019. 5 The Innovative Development Program of RusHydro Group is funded solely with its own capital. 6 Due to restrictions associated with the spread of new coronavirus infection COVID-19, some R&D activities were rescheduled to 2021.
54 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Based on benchmarking of RusHydro’s The Updated Innovative Development International activities technological capabilities vs global peers, Program of RusHydro Group now Across its international operations, new solutions coming into play and covers relevant programs of both RusHydro Group focuses on attracting potential economic efficiency benefits, RusHydro and RAO ES East Subgroup, innovative technologies contributing the Company identified the focus of its which helps align innovative development to its accelerated development, as well as efforts while implementing the Innovative priorities across its footprint and save promoting services of its Research and Development Program in the reporting resources previously required to develop, Design Complex in international markets, period and also seeking to improve its approve and monitor two separate including by enhancing competencies global ranking. programs. in target segments of the global energy sector. Technical priorities of RusHydro Group development: Program for Intellectual Property The key areas of RusHydro Group’s ↗ develop solutions for process Rights Management SH international activities include: automation and remote control of facilities; Intellectual property rights management ↗ provision of services to / cooperation ↗ improve the methodology and tools, is an integral part of the Innovative with foreign energy companies and power and reengineer business processes of Development Program. The Group equipment manufacturers in the field controlling electric power generating identifies and protects IP assets. of construction and modernization facilities; Intellectual property management also of conventional energy projects, ↗ utilize new materials, equipment, includes marketing of rights to scientific maintenance projects; and technologies at power generating research results. ↗ implementation of advanced facilities; RES-based technologies providing ↗ promote digital transformation; for power supply to isolated areas in ↗ reduce environmental impact; Number of patents and licenses the Far Eastern Federal District; ↗ develop a risk-based model of power obtained ↗ monitoring and analysis of global facilities control factoring in the health energy developments. 30 of such facilities. On a global scale, RusHydro Group is 27 represented by its research and design Integrated innovative development institutions implementing projects in management for RusHydro and 11 countries: Uzbekistan, Kyrgyzstan, 25 RAO ES East Subgroup 25 Tajikistan, Laos, Vietnam, Angola, Turkey, 24 The following production companies and India, Egypt, Hungary, and Georgia. R&D institutions contribute to RusHydro Group’s Innovative Development Program: RusHydro’s services provided abroad ↗ RusHydro; include hydropower (construction of ↗ energy companies of the Far East hydropower and hydraulic structures), (JSC DGK, Far Eastern distribution 20 nuclear power (construction of hydraulic company (DRSK), PJSC Kamchatskenergo, 2018 2019 2020 structures), heat (construction of thermal PJSC Magadanenergo, power faciliites), construction of electric PJSC Sakhalinenergo, JSC Sakha power grids, construction of oil and gas Energy, JSC Chukotenergo, production and transportation facilities, JSC UESK, PJSC Yakutskenergo); ↗ Detailed progress including offshore facilities. ↗ design institutions (JSC Vedeneev reports on the Program for Intellectual Property VNIIG, JSC Hydroproject Institute, Rights Management within JSC Lenhydroproject and RusHydro Group are available on Rosimushchestvo’s JSC Mosoblhydroproject). interagency portal
55 ANNUAL REPORT | 2020
RusHydro Group actively cooperates with R&D spending, RUB mn (incl. VAT) R&D spending by area in 2020, % international governmental and non- 643 2.8 governmental specialized organizations, 619 610 and integration associations, including 148 21.2 the Eurasian Economic Commission of 223 183 the Eurasian Economic Union, CIS Electric 46.6 Power Council, the Asia-Pacific Economic Cooperation, the Shanghai Cooperation 610 Organization, the BRICS, etc. RUB mn (incl. VAT) 495 427 396 Representatives of RusHydro Group participate in committees and working 29.3 groups of a number of non-profit partnerships and international 2018 2019 2020 organizations, to which it is a member, including: RusHydro Subgroup Plant and equipment monitoring ↗ Global Sustainable Electricity RAO ES East Subgroup and operation Partnership; Design, construction, modernization ↗ International Hydropower Association; and repair solutions Energy efficiency and water management ↗ International Commission on Large Environmental protection and sustainability Dams; ↗ World Energy Council.
Key R&D projects implemented by RusHydro Group R&D projects to ensure sustainable development RusHydro’s Research and Design Complex consists of two units with Description Progress in 2020 different functions, structures, and Development and implementation of a process to partially restore heat competences. The Design Complex transfer surface elements of the condensing system of T-100 turbine unit includes JSC Lenhydroproject, with pre-cleaning from biological pollution when working with the sea water JSC Hydroproject Institute, at Vladivostokskaya CHPP-2 JSC Mosoblhydroproject and JSC KhETC, Objective: The work commenced in and acts as the general designer. to develop a commercial prototype of process water 2020. A patent information The R&D Complex comprises supply system to improve the system efficiency retrieval report and interim JSC Vedeneyev VNIIG and JSC KhETC by introducing an innovative technology for heat R&D reports were prepared, exchange intensification in turbine condensers and and commercial prototypes (Heat Generation Engineering Center a system of pre-cleaning from biological pollution with a pre-cleaning system in the Far Eastern Federal District) when working in the sea using the condenser of turbine were made. which conduct research in energy, unit No. 4 at Vladivostokskaya CHPP-2. industrial and civil construction, Solution: engineering protection, survey, to improve the vacuum in turbine condensers, reduce materials, technologies, technical their water resistance, equipment failures, costs of regulations, etc. penalties and repairs. Design of a composite power line conductor core based on thermoplastic resins In 2020, R&D spending totaled RUB 610 mn.1 2020 R&Ds were aimed Objectives: RusHydro developed and ↗ to achieve a 50% higher current-carrying capacity launched an experimental at addressing RusHydro Group’s most and reliability vs ACSR conductors without adding pultrusion machine and important (critical) technology issues weight (resulting in savings on account of the tested core prototypes. related to preventing potential process increased quantities of transmitted power); In 2020, the third and upsets that may result in undersupply ↗ to make overhead power lines and the entire grid fourth work stages were of electricity. more reliable by reducing the ice and wind load on pylons (resulting in extended conductor lifespans); completed (out of five). Supplement No. 1 dated ↗ 15% to 40% lower costs of building new crossings as fewer pylons will be required. September 15, 2020 to R&D contract No. 169 dated Solution: April 17, 2018 was executed to design a composite power line conductor core based to change the deadline for ↗ For the report on activities of design on thermoplastic matrices along with manufacturing work completion to May 31, and R&D institutes in 2020, see Appendix 29 of the Appendices Book equipment. 2021.
1 Including VAT.
56 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
R&D projects reducing risks of of Energy, which aims to leverage digital with a focus on digital transformation of natural disasters SH technologies and platform solutions to the Company. The Program aims to cut Damage caused by natural and revolutionize the energy infrastructure. costs on the development and operation industrial disasters outside RusHydro RusHydro Group’s digital transformation of its facilities by revolutionizing, Group’s facilities is one of the risks for is focused on improving operational intellectualizing and streamlining the Company. This risk results from efficiency of its core and supporting governance models based on the analysis the underprotection of RusHydro Group’s processes through: of the Company’s underlying business production assets against natural ↗ digital end-to-end technologies; processes. disasters. The risk management initiatives ↗ all-inclusive digital ecosystem; provided for by the 2020 calendar plan ↗ digital corporate culture. The following projects were added to include the following R&D projects: the Program in 2020: ↗ development and testing of To this end, the following objectives were ↗ creating a unified system to control a technology to monitor structural set for digital transformation: and monitor the performance of local stress in case of a tensiometer failure; ↗ arrange for drafting, selecting and generation facilities within RusHydro ↗ development of a hardware and implementing digital initiatives; Group; software system for monitoring and ↗ develop a talent pool with required ↗ interactive mapping of evaluating predicting the reliability of HPP/PSPP skills; the technical potential of using wind and hydraulic structures in geologically ↗ implement decision-making tools solar generation, relying on digital ground challenging environments; driven by data analytics. surface modelling at local generation ↗ development of an automated warning facilities in isolated and remote areas of system to detect ruptures and measure The Concept describes the target the Far Eastern Federal District; turbine flows at RusHydro’s diversion and component model and architecture for ↗ developing a unified system to control impoundment HPPs; the Company’s digital transformation utility connection and prospective ↗ development of recommendations on towards 2030. The target model relies on development; assessing the human impact on tailraces digital end-to-end technologies which ↗ upgrading server rooms at branches; with regard to the HPP equipment, help the Company achieve operational ↗ drafting design and construction hydraulic structures and energy excellence. documents for the automated process efficiency; management systems and main control ↗ research into new processes to Its focus areas include establishing panels of the Cascade of Kubanskiye repair and restore hydraulic structures, the Center of Excellence for Digital HPPs and Kabardino-Balkaria branch; extend their lifespans and enhance their Transformation, which will be seeking ↗ creating an information system for reliability, and draft implementation opportunities to improve business operating RusHydro Group’s shared guidelines; processes, analyze data and implement database of technical documents; ↗ introduction of an expert system to technological initiatives, i.e. options to ↗ automatic monitoring of task fulfilment support decision-making in response use and combine end-to-end technologies for the planned and secondary capacity; to incidents, accidents and emergencies in business solutions aimed at enhancing ↗ creating an AR-based mobile solution at RusHydro Group’s production facilities. transparency, flexibility and efficiency of for operations staff; the Company’s underlying processes. ↗ piloting a machine learning model to optimize the production equipment Business process digitalization Technological initiatives involve operating modes. As of today, RusHydro has the following various options for application and digital transformation documents in place: combination of end-to-end technologies ↗ RusHydro Group’s digital in business solutions aimed at increasing transformation concept1; the transparency, flexibility, and efficiency ↗ RusHydro Digitalization Program2. of operational and production processes.
RusHydro Group’s digital RusHydro Digitalization Program transformation concept The RusHydro Digitalization Program RusHydro Group’s digital transformation (the “Program”) is implemented concept (the “Concept”) is aligned with by the IT & Digital Development the Digital Power Industry national Department. The Program contains project initiated by the Russian Ministry a list and description of 22 projects
1 Developed in compliance with Order No. 952 of December 10, 2018 On the Approval of RusHydro Digitalization Program in accordance with the Digital Economy of the Russian Federation Program approved by the Russian Government’s Decree No. 1632 r of July 28, 2017, approved by resolution of the IT Coordination Committee No. 10 of June 15, 2020. 2 Approved by resolution of the IT Coordination Committee No. 12 of October 2, 2020, approved by Order No. 952 of December 10, 2018.
57 ГОДОВОЙ ОТЧЕТ | 2020 3
58 Economics and Finance 72 Production and Sales Economics and 91 Human Capital Development 106 Occupational Health and Workplace Injuries Finance 110 Environmental Protection 122 Development of Local Communities 124 Procurement Key financial indicators SH
RusHydro Group’s financial results reflect added 1.0%, mainly driven by higher costs growth of electricity generation in 2020 related to depreciation and amortization, due to higher long-term annual average property tax and purchased electricity water inflows to the majority of HPP and capacity amid a decrease in costs for reservoirs. The Group’s total revenue fuel and third party services. In 2020, in 2020 grew by 5.6% to RUB 429.6 bn, net income reached RUB 46.6 bn (77.6 times while EBITDA increased by 23.4% to as much as in 2019), while adjusted net RUB 120.3 bn. Total operating costs income totaled RUB 67 bn (up by 30.1%).
Income indicators, RUB bn
Metric1 2018 2019 2020 2020/2019
EBITDA, RUB bn 109.7 97. 5 120.3 23.4%
EBITDA margin, % 2 7.0 23.9 2 7.9 4 p.p.
Net income, RUB bn 31.8 0.6 46.6 7,666.7%
Net margin, % 7.8 0.2 10.8 10.6 p.p.
Earnings per share (EPS), RUB 0.0739 0.0121 0.1087 798.3%
Return on assets (ROA), % 3.4 0.1 4.9 4.8 p.p.
ROE, % 5.5 0.1 7.9 7.8 p.p.
Adjusted net income, RUB bn 70.8 51.5 6 7.0 30.1%
1 Net margin and EBITDA margin indicators factor in other operating income generated by RusHydro Group in 2018 (RUB 5.5 bn), in 2019 (RUB 1.2 bn) and in 2020 (RUB 1.2 bn) and are calculated as gain on financial assets at fair value Performance Performance overview through profit or loss, income from court rulings awarded, and proceeds from sale/exchange of shares. ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDIX THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Factor analysis of EBITDA by segment, RUB bn Total revenue 6.7 4.3 120.3 16.3 0.1 Total revenue performance and 97.5 4.6 breakdown, RUB bn
429,6 400.4 406.6 29.8 31.4 34.9 27.0 26.3 23.8 19.8 15.3 16.2 41.2 40.2 40.6 60.4 43.8 48.2 RusHydro generation Sales Far Eastern energy companies Other segments Retained earnings and intragroup operations
EBITDA 2019 EBITDA 2020 243.4 242.9 251.4
Factor analysis of EBITDA (expenses), RUB bn 2018 2019 2020 23.0 7.6 120.3 0.2 0.2 3.6 Electricity sales 1.1 0.8 0.2 Capacity sales 97.5 9.7 Heat and hot water sales Government grants (regional) Government grants (tariff adjustment) Other revenue Revenue, including government grants Purchased electricity and capacity Labor costs Grid companies’ services Fuel costs Third party services Taxes (excl. income tax) Other materials Growth of other revenues and expenses
EBITDA 2019 EBITDA 2020 The growth in revenue in 2020 vs 2019 was largely attributable to higher sales of electricity and capacity, mainly those by Profit distribution for 2019 (RAS), % generation facilities of RusHydro. ↗ The financial statements and 5.0 the independent auditor’s report are presented in Appendix 15 In 2020, RusHydro’s revenue from of the Appendices Book electricity sales grew by 7.4% on the back of higher electricity generation 40.6 ↗ The consolidated financial statements prepared in accordance with IFRS and amid higher-than-usual water levels the auditor’s report are presented in the majority of HPP reservoirs. in Appendix 16 of the Appendices Book 38.6 The revenue of Far Eastern energy RUB bn companies from electricity sales rose by 2.3% due to higher average sales prices 54.4 and volumes. The sales segment added 3.1%, mainly driven by higher net supply ↗ Detailed information at Far Eastern Energy Company, with on the distribution of profit allocated, inter alia, other companies negotiating new to the Company’s contracts with customers amid rising development is available Reserve fund on the Company’s website average sales prices. Company development Dividends
59 ANNUAL REPORT | 2020
highINVESTMENT ATTRACTIVENESS 23.3 RUB bn record high dividends for 2020 MARKET CAPITALIZATION GROWTH
↗46.1% 345.8 RUB bn
50% of RusHydro Group’s IFRS net profit was distributed to pay dividends low
↗ For further details, see page 40
60 During 2020, the companies of RusHydro Group took steps to optimize the cost of borrowing. As a result, the weighted average rate of ruble borrowings decreased to 6.7% per annum by the end high of the year
DECREASE IN THE TOTAL FINANCIAL DEBT
↙6% 219.2 RUB bn
1.0x net financial debt / EBITDA low LEVERAGE ANNUAL REPORT | 2020
The sales segment increased by 3.1% Financial assistance for 2020 mainly in PJSC DEK amid growing useful supply, as well as in received from other companies of the segment government 201–4 due to new energy supply contracts with customers and higher average selling price of electricity. In accordance with applicable laws of Russian regions, some companies The largest increase in revenue of the Group received government from capacity sales was achieved grants to fund the costs for difference in the generation segment of RusHydro between the approved electricity and following the commissioning heat tariffs and tariffs in the economic of Zaramagskaya HPP-1, feasibility study, as well as the costs for Verkhnebalkarskaya SHPP, fuel and purchased electricity. Regional Ust-Dzhegutinskaya SHPP, and grants were provided to companies Barsuchkovskaya SHPP. in the following areas: the Kamchatka Territory, Republic of Sakha (Yakutia), The growth in revenue from heat and Magadan Region, Chukotka Autonomous hot water sales was mainly attributable Area, and Sakhalin Region. to increased heat tariffs and net supply, as well as the CHPP launch in Sovetskaya In 2020, RusHydro Group received 120.3 Gavan. RUB 46.8 bn in government grants. RUB bn The total grants received by the Group’s EBITDA 2020 Far Eastern energy companies saw guaranteed suppliers under the Russian a decline in other revenue following Government’s Resolution No. 895 a dramatic drop in proceeds attributable On the Establishment of Base Electricity to the utility connection to the grids (Capacity) Rates (Tariffs) in the Far of Far Eastern Distribution Company Eastern Federal District amounted to (DRSK). At the same time, DGK RUB 27.0 bn in 2020. Other grants totalled increased its revenue from fuel sales and RUB 19.8 bn. maintenance services to Primorskaya GRES, which ceased to be part of the Group in June 2020, as well as from ↗ For governmental grants recieved by the Company in the reporting year electricity transmission at Yakutskenergo, see Appendix 8 of the Appendices Book Far Eastern Distribution Company and Magadanenergo. Other segments’ revenue shrank due to a slump in repair and maintenance and demand contraction for petroleum products caused by the pandemic.
62 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDIX THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Contributions In 2020, RusHydro allocated RUB 6.0 bn an uplift in the costs for consulting, contributed to its authorized capital legal, information and security services, to the authorized from the state budget to the authorized as well as the costs to purchase and capital capital of Chukotenergo to finance transport heat power. the construction of two single-circuit 110 kV Pevek-Bilibino power lines The increase in depreciation and As part of the program for capital (construction stage No. 1). amortization costs was due to construction of energy facilities, RusHydro the commissioning of new capacities received contributions to its authorized (Nizhne-Bureyskaya HPP, Sakhalinskaya capital from the state budget: GRES-2, Zaramagskaya HPP-1, CHPP Operating in Sovetskaya Gavan) and upgrades at RusHydro’s branches. Contributions to RusHydro’s expenses authorized capital, The rise in taxes (excluding income tax) RUB bn The increase in costs of purchased was mainly attributable to increased 7.0 electricity and capacity was driven by property tax following the commissioning rising volumes and prices in the sales of Nizhne-Bureyskaya HPP and 6.0 segment, while Far Eastern energy Zaramagskaya HPP-1, as well as property companies were switching from their refurbishment and upgrade and the new own generation to purchasing electricity fixed assets launched at RusHydro’s from the newly commissioned floating power plants. nuclear TPP in Pevek, Chukotka Autonomous Area.
The costs for third party services shrank
0 by 18.5% on the back of lower costs of utility connection to the grid and lower 2018 2019 2020 repair expenses, while the Group saw
Operating costs by year and type, RUB bn
2018 2019 2020 2020/2019, %
Labor costs 75.9 80.4 80.2 –0.2
Fuel costs 64.8 71.4 6 7.8 –5.0
Purchased electricity and capacity 41.8 46.3 56.0 21.0
Third party services 35.1 41.0 33.4 –18.5
Grid companies’ services 39.5 3 7.0 36.8 –0.5
Depreciation and amortization 22.3 25.7 28.9 12.5
Taxes (excl. income tax) 12.2 12.1 13.3 9.9
Other materials 10.9 11.3 12.1 7. 1
Water use costs 4.1 4.3 5.1 18.6
Other costs 8.3 7. 1 6.4 –9.9
Total 314.9 336.6 340.0 1.0
63 ANNUAL REPORT | 2020
Distribution of direct economic value
Direct economic value generated and distributed, RUB bn 201–1
Metric 2018 2019 2020
I. Economic value generated 402.1 405.6 429.9
Operating profit 353.4 362.1 377.8
Interest income and dividends received 8.9 7. 1 6.1
Losses from sale of assets (1.8) (1.6) (0.8)
Government grants 41.6 37.9 46.8
II. Economic value distributed 316.5 335.7 340.3
Operating costs 201.3 215.2 214.1
Salaries, allowances and other benefits 75.9 80.4 80.2
Payments to capital providers 11.9 11.7 16.7
Payments to government 26.1 26.9 27.5
Investments in communities 1.4 1.5 1.8
III. Economic value retained 85.5 69.9 89.6
Assets and a larger share of funds placed on the transaction with VTB Bank (PJSC) deposits with maturities of over 90 days decreased from RUB 28.5 bn (as of liabilities and higher income tax overpayments, December 31, 2019) to RUB 15.0 bn mainly those by RusHydro. (as of December 31, 2020). The change The change in assets was mainly in fair value of the non-deliverable driven by an increase in the cost of Fair value of the non-deliverable forward forward is mainly attributable to fixed assets due to the implementation for the Group’s shares recognized movements in RusHydro’s share of the Group’s investment program, in accordance with the terms of prices in the reporting period.
Assets, RUB bn
Metric 2018 2019 2020
Fixed assets 669.4 677.9 682.6
Non-current assets other than fixed assets 53.1 55.9 53.1
Cash and cash equivalents 65.4 41.0 58.3
Receivables and advances paid 75.2 54.3 52.2
Inventory 30.7 34.4 35.1
Other current assets 3 7.6 58.5 60.7
Non-current assets and assets of disposal group classified as held for sale 0.5 3.1 0.0
Total 931.9 925.1 942.0
64 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDIX THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
The Group’s liabilities changed towards of long-term borrowings. In June at RUB 13.3 bn as at 31 December 2020 an increase in short-term borrowings and 2020, the Group redeemed its Russian (Far Eastern energy companies). long-term debt payments with current bonds issued in June 2017 for a total maturities and a decline in long-term of RUB 10.0 bn. In the reporting The ratio of own and borrowed funds borrowings. The Eurobonds issued in period, the Group raised long-term and in 2020 amounted to 54.7%. February 2018 for a total of RUB 20.0 bn short-term loans from Sberbank, with were reclassified to the current portion total loans received in 2020 standing
Equity and liabilities, RUB bn
Metric 2018 2019 2020
Equity 586.2 569.9 608.9
Liabilities, including: 345.7 355.2 333.1
Long-term borrowings 157.9 162.5 129.9
Non-deliverable forward for shares 31.9 28.5 15.0
Deferred tax liabilities 13.8 15.3 1 7.6
Other non-current liabilities 22.0 22.4 22.8
Short-term borrowings 38.9 39.4 76.1
Payables and other accruals 64.6 59.6 54.4
Issued shares payables 0.0 7.0 0.0
Tax payables 16.6 17.2 17.3
Liabilities of disposal group classified as held for sale 0.0 3.3 0.0
Total 931.9 925.1 942.0
Debt portfolio of financial instruments, which allows it Total and net financial debt, to raise funding on the most favorable RUB bn, and leverage management terms in the current market environment. 1.5 Financial (FX and interest rate) risks are 1.2 RusHydro Group seeks to maintain marginal. During 2020, RusHydro Group 1.0 a balanced debt profile. worked on optimising its borrowing costs. 226.5 232.4 As a result, the weighted average rate 219.2 At the end of 2020, RusHydro Group’s of ruble-denominated borrowings at 1 total and net financial debt stood the end of the year stood at about 6.7% 144.6 131.1 at RUB 219.2 bn (down by 6%) and per annum, compared to 7.6% per annum 119.5 RUB 119.5 bn (down by 17%) respectively. at the end of 2019. As at December 31, At the end of the reporting period, net 2020, the shares of the Group’s rouble- financial debt / EBITDA was 1.0x, which denominated2 and fixed-rate financial confirms RusHydro Group’s strong debt (excluding liabilities under the non- financial position. deliverable forward for shares and lease 2018 2019 2020 obligations) account for 100% and 87% The Group’s debt is ideally balanced respectively, which means a zero FX Total financial debt by instrument, value and currency. risk and a marginal interest rate risk for Net financial debt RusHydro Group uses a diverse range RusHydro Group’s financial debt. Net financial debt / EBITDA
1 Net financial debt is calculated as financial debt less cash and cash equivalents (including bank deposits for up to one year) under the Group’s IFRS financial statements at the end of the reporting year. Financial debt includes long-term and short-term liabilities (less accrued interest payable), including liabilities under the non-deliverable forward for shares. 2 Including hedging FX liabilities to issue Eurobonds denominated in offshore Chinese renminbi.
65 ANNUAL REPORT | 2020
During 2020, RusHydro Group worked In 2020, the long-term part of the Group’s 45%) and short-term borrowings on optimising its borrowing costs. borrowings remained mainly represented (down by over 10%) as the Group’s As a result, the weighted average rate by long-term loans (49%) and debt need for new borrowings also declined of ruble-denominated borrowings securities (41%), including local bonds in view of its strong operating and at the end of the year stood at and Eurobonds. financial performance. In 2020, about 6.7% per annum, compared to RusHydro Group honored all its 7.6% per annum at the end of 2019. At the end of the reporting period, obligations under coupon payments, As at December 31, 2020, the shares the short-term part of the Group’s loan agreements, and debt securities of the Group’s rouble-denominated borrowings was structured similarly. redemption. and fixed-rate financial debt (excluding The increase in the short-term liabilities under the non-deliverable debt in 2020 was due to scheduled The Group has a balanced debt forward for shares and lease obligations) redemptions in 2021 that mainly related repayment schedule, including debt due accounted for 100% and 87% respectively, to the repayments on debt securities in 2021. which means a zero FX risk and a marginal (Eurobonds and local bonds) with interest rate risk for RusHydro Group’s an aggregate par value of RUB 34.7 bn At the end of the reporting period, financial debt. (including hedging FX liabilities to issue the Group had sufficient liquidity Eurobonds denominated in offshore to meet its obligations under existing Chinese renminbi). short-term loans and debt securities. Debt structure, % Given the remaining drawdown under 2020 saw a y-o-y decrease in both existing loan agreements, financial risks 1.4 0.5 long-term borrowings (down by over are considered insignificant. 16.7 31.1 36.9 Principal debt repayment schedule as at December 31, 2020 206 (excluding lease liabilities), RUB bn 80 Total 18.3 RUB bn 66.8 70 63.1 63.2 193.0
2.9 60 3.1 26.0 50
40 Long-term debt 30 25.9 Short-term debt 23.2 Loans and borrowings 20 13.9 Bonds (including Eurobonds) Long-term lease obligations 10 Other borrowings 2021 2022 2023 2024 2025+
66 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDIX THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Bonds Eurobonds ratings from at least two leading international rating agencies As of December 31, 2020, the outstanding and ACRA aligned with RusHydro’s Local bonds bonds of PJSC RusHydro included credit rating. five issues of Eurobonds for a total of As at December 31, 2020, the outstanding RUB 70 bn and 1.5 bn offshore Chinese bonds of PJSC RusHydro included renminbi placed by RusHydro Capital five issues for a total of RUB 45.0 bn Markets Eurobonds DAC company on (the aggregate value of outstanding the Irish Stock Exchange under Reg S. bonds was RUB 3.2 bn). All issues have confirmed long-term
Key parameters of RusHydro’s bond issues
Series 01 and 02 Series 07 and 08 Series 09 Issue parameters bonds bonds bonds Bond type Non-convertible State registration 4-01-55038-E 4-07-55038-E 4-09-55038-E certificated interest- number bearing bearer bonds 4-02-55038-E 4-08-55038-E with mandatory centralised custody Face value RUB 1,000 Registration date September 23, December 27, December 27, 2010 2012 2012 Nominal amount Series 01 — RUB 10 bn Placement date / April 25, 2011 February 14, 2013 April 28, 2015 of each issue Series 02 — RUB 5 bn Offer date / April 22, 2016 February 13, 2018 October 27, 2017 Series 07, 08, 09 — Maturity date April 12, 2021 February 02, 2023 April 21, 2023 RUB 10 bn each April 15, 2025 Offering price 100% Coupon rate Coupons 1–10 — Coupons 1–10 — Coupons 1–5 — 8.0% p.a. 8.5% p.a. 12.75% p.a. Coupons 11–20 — Coupons 11–20 — Coupons 6–16 — 9.5% p.a. 0.1% p.a. 7.5% p.a. Coupons 17–20 — coupon rate to be determined by the issuer Form of offering Open subscription, Yield 8.16% 8.68% 13.16% bookbuilding Coupon Semi-annual Last trade yield Series 01 — 9.34% Series 07 — 1.58% Series 09 — 5.63% payments as at December 31, 2020, % p. a. Series 02 — 7.61% Series 08 — 3.11%
Key parameters of Eurobond issues
Issue Coupon rate, Coupon Offering date Maturity date currency Amount, bn % p. a. payments ISIN
September 28, 2017 September 28, 2022 RUB 20.0 8.125 Semi-annual XS1691350455
February 15, 2018 February 15, 20211 RUB 20.0 7.4 0 Semi-annual XS1769724755
November 21, 2018 November 21, 2021 CNH 1.5 6.125 Semi-annual XS1912655054
November 27, 2018 January 27, 2022 RUB 15.0 8.975 Semi-annual XS1912654677
November 25, 2019 November 25, 2024 RUB 15.0 6.80 Semi-annual XS2082937967
1 Event after the reporting date: obligations under Eurobond ISIN XS1769724755 issue (coupon payments, redemption) were successfully met in full with its own funds.
67 ANNUAL REPORT | 2020
Cash flows Cash flow from operating, investing and financing activities, 58.3 RUB bn RUB bn As at December 31, 2020, RusHydro RusHydro Group’s cash 2.3 Group’s cash and cash equivalents 24.4 30.6 and cash equivalents amounted to RUB 58.3 bn (compared to as at December 31, 2020 41.0 bn as at December 31, 2019). In 2020, 87.0 51.1 RusHydro Group’s key sources to finance 75.6 its investing activities were income, depreciation charges, VAT refunds, other own funds of the Company, borrowings, 30.8% and the federal budget. In 2020, cash flow cash flow from operating 99.0 from operating activities rose by 30.8%. 84.6 75.7 activities rose The Group’s cash flows from operating activities before changes in working capital rose by 24.0% as a result of 2018 2019 2020 a higher operating income. Cash flows from operating activities The increase in cash used in financing Cash flows used in investing activities activities was due to a decrease in Cash flows used in financing activities the total amount of borrowed funds at the expense of own working capital.
Free cash flow, RUB bn
Metric 2018 2019 2020
Cash flows from operating activities 84.6 75.7 99.0
Cash for acquisition of fixed assets, including the repayment –67.4 –75.7 –59.7 of lease liabilities
Interest paid (including payments on cross currency swap –14.2 –14.9 –15.1 and costs of fixing the highest rate)
Interest received 5.5 5.6 5.4
Proceeds from sale of Inter RAO shares 2.2 15.0 0
Proceeds from sale and disposal of assets 1.8 1.3 0.3
Expenses related to the acquisition of shares in associates 0 0 –2.0 and disposal of subsidiaries
Free cash flow (FCF) 12.5 7.0 27.9
68 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDIX THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Tax payments Tax payments by RusHydro Group, %
3.1 0.9 RusHydro Group is one of the main 9.3 taxpayers in most of the regions of its operation. In 2020, tax payments to 35.2 budgets of all levels totaled RUB 93.4 bn, 13.7 including RUB 38.4 bn to regional budgets. 93,4 RUB bn
Tax payments to budgets of 17.6 different levels, RUB bn 20.2 93.4 0.6 RusHydro Group’s tax payments 82.1 81.2 to budgets went up by 0.7 0.6 38.4 VAT 34.3 35.1 Insurance contributions Income tax 13.8% Property tax 18.9 Personal income tax 16.8 18.0 Payment for the use of water bodies 54.4 Other taxes 46.2 46.4
2018 2019 2020
Federal including insurance contributions ↗ For more information on taxes paid to regional and Regional local budgets with a breakdown by Russian region, Local see Appendix 34 of the Appendices Book
Tax payments to regional budgets in 2020, RUB bn
Amur Region 4.7
Republic of Sakha (Yakutia) 3.2
Khabarovsk Territory 2.4
Primorye Territory 2.3
Moscow 2.2
Republic of Dagestan 2.1
Volgograd Region 2.1
Magadan Region 2.1
Krasnoyarsk Territory 2.1
Republic of Khakassia 2.2
Saratov Region 1.8
Samara Region 1.5
Kamchatka Territory 1.1
Other Russian regions 8.6
69 ANNUAL REPORT | 2020
highEFFICIENCY 17.3% labor productivity growth
NET PROFIT ↗77.7 times 46.6 RUB bn
Due to high production performance and cost control, RusHydro Group demonstrated strong financial results LOW
↗ For further details, see page 40
70 No accidents or incidents that caused environmental high damage
GENERATED BY RENEWABLE ENVIRONMENTALLY FRIENDLY GENERATION FACILITIES
↗3 p.p. 81% of RusHydro Group’s electric energy 1.7 RUB bn spent for environmental protection LOW ENVIRONMENTAL IMPACT ANNUAL REPORT | 2020
Production and Sales SH
Key production down 1,623 MW year-on-year. The installed Program at Rybinskaya HPP (+10 MW) heat capacity declined to 18,839 Gcal/h, and Votkinskaya HPP (+15 MW). assets or by 182.2 Gcal/h. The installed capacity structure shows Key changes in the installed capacity the prevalence of large HPPs generating Generating facilities at RusHydro Group’s facilities were 29,409 MW2, or 77.3% of the total installed driven by the commissioning of capacity, while 7,054.8 MW, or 18.5% of Electricity and heat production is the key Zaramagskaya HPP-1 (346 MW), the installed capacity, is generated by business of RusHydro Group. The Group’s Verkhnebalkarskaya SHPP (10 MW), the TPPs of RAO ES East Subgroup. asset structure includes over 70 renewable Ust-Dzhegutinskaya SHPP (5.6 MW), The Group’s assets also include energy facilities, along with some thermal Barsuchkovskaya SHPP (5.25 MW), 1,200 MW Zagorskaya PSPP, 300 MW generation facilities and electrical grid CHPP in Sovetskaya Gavan (126 MW), Zelenchukskaya HPP-PSPP and 15.9 MW assets in the Far East. As at January 1, sale of Primorskaya GRES (1,467 MW) Kubanskaya PSPP. The Group’s renewable 2020, the installed capacity of RusHydro and HPP in Armenia (561 MW), energy facilities, including GeoPP, WPP Group’s power plants, including as well as the implementation of and SPP, account for a total installed Boguchanskaya HPP, totaled 38,060 MW1, the Comprehensive Modernization capacity of 80.76 MW.
Installed capacity structure Installed capacity structure Installed capacity structure by generation type, MW EU1 by regulatory treatment, % EU1 by primary energy source, % EU1
1,516 8.0 0.2 4.0 7,054 18.5
81 40.1 0.2 24.9 38,060 38,060 38,060 MW MW MW
29,409 77.3 26.8
PSPP, HPP-PSPP Price zone 1 HPP HPP Price zone 2 TPP RES UES East’s non-price zone PSPP, HPP-PSPP TPP Isolated non-price zone RES Retail market
1 Including JSC Boguchanskaya HPP (a joint venture of PJSC RusHydro and RUSAL). The capacity reduction was mainly due to Primorskaya GRES ceasing to be part of RusHydro Group. 2 Not including PSPP and HPP-PSPP.
72 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDIX THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Installed capacity, GW Length of overhead and underground transmission power lines by regulatory regime, km EU41 39.4 39.7 38.1 2018 2019 2020
Grid class WECM REM WECM REM WECM REM 30.1 30.5 30.2 Length of transmission power lines
Overhead power lines
220 kV – 5,179.9 2,041.0 3,241.9 2,044.4 3,523.7
110 kV 7,975.2 5,898.0 10,568.8 3,482.5 10,599.8 3,620.9 9.3 9.2 7.9 35 kV 8,856.0 6,916.5 12,479.0 3,471.9 12,486.3 3,490.7 2018 2019 2020 Cable power lines
RAO ES East Subgroup 110 kV 40.1 4.7 41.2 4.6 44.1 4.6 RusHydro Subgroup 35 kV 91.6 4.0 91.6 6.1 92.9 6.4
Length of distribution power lines Electric grid Overhead power lines 6 (10) kV 20,621.8 11,025.4 28,035.4 3,596.2 28,004.0 3,787,1 RAO ES East Subgroup’s companies are responsible for power transmission and 0.4 kV 20,503.1 11,677.3 28,020.8 4,109.2 27,718.9 4,329.7 distribution both in UES of the East and in Cable power lines technologically isolated energy systems. 6 (10) kV 1,267.9 2,085.8 1,880.2 1,317.2 1,941.3 1,419.7
The changes in the length of transmission 0.4 kV 1,119.7 1,480.4 1,785.6 847.2 1,854.7 884.1 power lines (+ 0.8%) and the number (+1.2%) and capacity (+3.1%) of Total 104,747.4 105,020.4 105,853.3 transformer substations are primarily associated with the commissioning of newly built facilities, signing of lease Number and installed capacity of 6–220 kV transformer substations (repairs and maintenance) agreements for grid infrastructure facilities, utility 2018 2019 2020 connections to grids, and stock-taking of grid assets. Losses in grids were brought Metric WECM REM WECM REM WECM REM down to 9.64%. Number of 220 kV 1 27 8 24 8 25 transformer substations
Capacity of 220 kV 80 3,351 1,152 3,117 1,119 3,435 transformer substations
Number of 110 kV 246 139 317 73 319 73 transformer substations
Capacity of 110 kV 7,667 4,694 10,119 2,596 10,396 2,619 transformer substations
Number of 35 kV 479 386 656 228 613 219 transformer substations
Capacity of 35 kV 4,446 1,715 4,965 1,365 5,044 1,382 transformer substations
Number of 6 (10) kV 11,121 9,601 16,542 4,105 16,725 4,242 transformer substations
Capacity of 6 (10) kV 3,565 3,799 5,368 1,832 5,595 1,884 transformer substations
Total substations 22,000 21,953 22,224 1 Measured by chain. Total capacity of 29,317 30,514 31,474 substations
73 ANNUAL REPORT | 2020
Heat supply networks and Retail companies Energy System1, last year saw boiler stations the reduction in Russia’s electricity Sales are consolidated within ESC generation and consumption by RusHydro Group’s subsidiaries RusHydro Subgroup, which manages 3.1% and 2.4%, respectively. (JSC DGK, PJSC Kamchatskenergo, the Group’s retail subsidiaries acting as PJSC Magadanenergo, guaranteed suppliers in certain Russian PJSC Yakutskenergo, regions and supplies electricity both Electricity generation, bn kWh JSC Teploenergoservis, JSC Sakha directly and via its retail subsidiaries. 151.5 Energy) operate heat generation 144.3 142.8 equipment and heating networks to Price zones 1 and 2 are covered by 32.2 provide heat to large communities PJSC RESK, JSC Chuvash Energy Retail 34.5 34.4 and industrial facilities. Electric boiler Company, PJSC Krasnoyarskenergosbyt. houses of RusHydro’s branches Bureyskaya and Zeyskaya HPPs also JSC DEK, which is managed by supply heat to consumers in the Far ESC RusHydro, services consumers 119.3 Eastern Federal District. of electricity and heat in the non-price 109.8 108.4 zone of the wholesale market and Length of heat supply networks, km territorially isolated energy systems: DGK, Yakutskenergo (Neryungri District
of the Republic of Sakha (Yakutia)), 2018 2019 2020 Sakhalinenergo, and Kamchatskenergo.
2020 RusHydro Subgroup Length of one-pipe heat 4,008.5 RAO ES East Subgroup supply networks Operating Length of two-pipe heat 2,002.8 The Group’s electricity generation supply networks performance made up
Number and installed capacity Electricity and heat 14.2% of local boiler stations, generation of the Russian total power including branches’ electric generation boiler houses In 2020, the Group’s power generation, including Boguchanskaya HPP, increased by 6.0% y-o-y and amounted to 151.5 bn kWh. According to 225 the System Operator of the Unified number of boiler stations
3,694.0 Gcal/h installed heat capacity
1 https://www.so-ups.ru/fileadmin/files/company/reports/disclosure/2021/ups_rep2020.pdf
74 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDIX THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Generation structure by primary Generation structure by regulatory HPP and TPP installed capacity energy source in 2020, % regime in 2020, % EU2 utilization factor (ICUF), %
0.3 4.8 0.1 48.0 45.0 44.8 19.5 43.1 41.7 40.9 36.0 27.4 151.5 151.5 bn kWh bn kWh
80.2 31.7 2018 2019 2020
Hydro resources Price zone 1 HPP Carbon feedstock Price zone 2 TPP GeoPP, WPP and SPP UES East (non-price zone) Isolated non-price zone Retail market
RusHydro Group’s strong performance RusHydro Group’s contribution As a major HPP operator, RusHydro was due to efficient planning of HPP to low-carbon economy was among the first in Russia to hydropower operational regimes amid in Russia SH 103–2 start developing projects relying on higher-than-usual water levels in geothermal, solar and wind power the reservoirs of the Volgo-Kama HPP The focus on a low-carbon economy generation. Using renewables is a top cascade, HPPs in Siberia and the Far above all relies on the development priority for RusHydro Group, which East, commissioning of new and upgrades of renewable sources of energy. keeps ramping up installed capacities by of existing energy facilities, and increased In accordance with Federal Law building new facilities and commissioning energy consumption in the Far Eastern No. 35-FZ On Electric Power Industry new power generation facilities. Federal District as compared to 2019. dated March 26, 2003, renewable sources of energy include water, solar, wind, and geothermal energy. Hydropower Use of solar and wind power Heat supply, ‘000 Gcal and energy based on other RES do not Since 2012, RusHydro Group has result in fossil fuel combustion and commissioned 22 solar power plants with 29,864 29,985 29,184 thus produce no direct СО2 emissions. a total capacity of 2.9 MW and five wind Therefore, RES-based power plants power plants with a total capacity of 3.9 MW qualify for low-carbon generation. in the Far Eastern Federal District.
RusHydro Group’s WPP- and SPP-based facilities capacity and electricity generation
2018 2019 2020
Capacity, MW 5.2 5.2 6.8
2018 2019 2020 Generation, ‘000 kWh 3,614.5 3,712.2 5,305.6
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Our R&D specialists have designed equipment performance. As part of its reduce the cost of construction and prototype wind diesel and solar diesel projects to upgrade low-efficient diesel operation. In 2020, we successfully power stations and tested a range of power generation, RusHydro Group plans commissioned and accepted equipment, including energy storage to comprehensively modernize some Verkhnebalkarskaya SHPP (10 MW), units, all to be used in isolated energy 90 MW of DPPs and install up to 30 MW Barsuchkovskaya SHPP (5.25 MW), and hubs of the Far Eastern Federal District. of RES-based generation units, along Ust-Dzhegutinskaya SHPP (5.6 MW) with energy storage systems. as renewable energy sources. As part In 2020, RusHydro Group completed of its RES support program, RusHydro its project to erect a wind-diesel power Group will implement four SHPP projects plant in Tiksi, Republic of Sakha (Yakutia), Use of hydropower until 2024. including a new 3 MW diesel power plant, Given the global agenda and focus a wind turbine, and an energy storage on carbon neutrality, hydropower is system. The wind diesel power plant has set to deliver a number of benefits to Comprehensive modernization, a total capacity of 3.9 MW. 2020 saw the Russian economy by propeling rehabilitation, and upgrade the completion of the design stage of the growth of local communities and programs the fourth wind turbine from Komai with increasing the share of renewable RusHydro’s Comprehensive a capacity of 300 kW in the settlement and low-carbon energy on the back of Modernization Program for generating of Ust-Kamchatsk, Kamchatka Territory. extensive but untapped water resources facilities aims to make sure that no core At Nizhne-Bureyskaya HPP, we completed of Russia which accounts for about 9% generation equipment with expired safe a unique hybrid renewable generation of the world’s hydropower potential operation life remains in place by 2025. project for a total of 1.3 MW of capacity and ranks second globally in terms of The rehabilitation and modernization as part of a stationary solar power plant hydropower resources. Smaller HPP program of RusHydro’s branches draws and Russia’s first floating solar power projects do have a potential, too. upon the Comprehensive Modernization plant. Program and focuses on extending Work is ongoing to complete the lifespan of the core generation In line with an action plan to modernize Ust-Srednekanskaya HPP in the Magadan equipment, reducing production costs diesel (coal and fuel oil) power generation Region, following which it will reach and enhancing the overall economic in remote and isolated areas1, work the designed installed capacity of 570 MW efficiency of power plants. is underway to organize contests for (with 320 MW to be commissioned). selecting RES-based upgrade projects in RusHydro Group using energy service Smaller HPP projects in Russia have Health of RusHydro’s HPP agreements. The focus is on unified a potential of around 7 GW and ample core equipment, % technical solutions using hybrid energy opportunities for development. In 2000, 100 facilities reliant on RES and an energy as part of the smaller HPP development storage system or a transition of program, work was carried out for generating equipment to a different type the 2020-2025 horizon to optimize 87 of fuel. The facility is expected to be technical requirements to new smaller fully automated, with a system of remote HPPs at design stage in order to make 80 85 monitoring to be put in place to control design solutions more efficient and 80 78 85
78 76 Planned schedule for project commissioning 71 68 Plant 2021 2022 2023 2024 Total 60 Bashennaya SHPP – – – 10.0 10.0 2018 2019 2020
Psygansu SHPP – – – 19.1 19.1 Turbines Krasnogorskaya SHPP-1 and SHPP-2 – 49.8 – – 49.8 Generators Transformers Total – 49.8 – 29.1 78.9
1 Approved by Dmitry Kozak, Deputy Chairman of the Russian Government, No. 7456p-P9 of August 15, 2019.
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Units of core equipment replaced transformer was commissioned at 24/7 call center. Currently, customer or modernized Votkinskaya HPP to support increased handling operations are being transferred power transmission from the plant. to a single platform irrespective of their location as a way to facilitate Cheboksarskaya HPP commissioned administration. Equipment an automated diagnostic control system for hydrotechnical facilities. The new In 2020, electricity fed to the Group’s type 2018 2019 2020 2021 (forecast) equipment helps assess the safety of charging stations totaled 219,873.6 kWh. Turbines 7 11 6 6 the plant’s equipment in real time mode Generators 8 9 5 9 and quickly forecast any changes in Since the launch in 2019, EV charging the current state. Nine of the plant’s 18 stations have provided about 40,000 Transformers 6 4 4 6 generators have already been upgraded. charging sessions, saving more than 130,000 liters of hydrocarbon fuel1, which
Following the upgrade of hydropower translates into some 160 t savings in CO2 Additions to installed capacity, MW units, the capacity of RusHydro Group’s emissions into the air2. existing HPPs increased by 25 MW: 15 62.5 MW for Votkinskaya HPP and 10 MW for RusHydro Group’s charging stations 55.5 10.5 Rybinskaya HPP. comprise units that have the latest 10.5 equipment in place and enable partial 10.0 5.0 In 2020, the rehabilitation and battery top-ups for multiple cars in just modernization program of RAO ES East a few minutes and a full charge cycle of 12.0 12.0 Subgroup saw completion of several under 30 minutes. Most of the stations 25.0 3.0 important projects, including: can charge two EVs simultaneously. 10.0 10.0 ↗ upgrade of a 220 kV overhead Their software provides for remote 30.0 power line Cascade of Viluysky HPPs — process control across all the stations 7.5 Aikhal — Udachny; and supports a mobile app where users 15.0 15.0 ↗ upgrade of protective relaying and can pay for the services.
2018 2019 2020 2021 (forecast) high-frequency channels of emergency automatic emergency response systems RusHydro Group has seen strong interest Votkinskaya HPP at Kamchatskenergo; for the EV charging infrastructure from Cascade of Verkhnevolzhskiye HPPs ↗ installation of a T-3 transformer businesses operating in different areas, Nizhegorodskaya HPP at Oktyabrskaya 35/6 transformer including taxis, car sharing, delivery Saratovskaya HPP substation; services, cafes/restaurants, standby Novosibirskaya HPP ↗ upgrade of Artyk-Nera 110 kV overhead cars of utilities and other services, Zhigulevskaya HPP power line; cargo handling, and security services. ↗ upgrade of the fuel equipment unit of Using electric vehicles in these areas generator No. 3 at Kyzym Mobile PP; has a positive impact on the entire Under RusHydro’s Comprehensive ↗ rehabilitation of Khabarovskaya value chain as business owners that use Modernization Program, March 2021 CHPP-3 with conversion of the peaking EV deliver a reduction in logistic costs saw the upgrade of hydropower units at boiler plant to natural gas combustion; while end users ultimately pay less for Volzhskaya HPP. Turbines and generators ↗ second stage of the Anadyr CHPP the product or service they get. Today, were replaced at hydropower units No. 14 gasification project. our EV charging infrastructure is used by and No. 18. New units were manufactured EV taxi and delivery services, and in 2021 by Power Machines, a Russian company. we plan to start working with corporate To date, 21 turbines and 14 generators RusHydro Group’s EV charging cars and cars of private security firms’ out of 22 have already been replaced. infrastructure response units in Vladivostok and RusHydro Group is running a project vicinities. At Saratovskaya HPP, turbine No. 5 was to develop a network of electric vehicle replaced, which improved the generating (EV) charging stations in the Far Eastern As part of this area of business, RusHydro equipment health index and increased Federal District. As at the end of 2020, Group plans to cover the majority of the plant’s installed capacity to the EV charging network had more regions and roads in the Far Eastern 1,427 MW. Following the hydropower than 4,000 customers doing more than Federal District so that electric vehicles unit replacement at Votkinskaya HPP, 150 charging sessions daily. Customer can move between neighboring cities, the plant’s installed capacity reached support is available online via WhatsApp towns and regions in the Far East. 1,080 MW. Also in 2020, a new 1T power and Telegram and also a hotline of our By the end of 2021, we plan to increase
1 As compared to same class gasoline Nissan Leaf cars. 2 According to a report by the European Environmental Agency (EEA) report titled Average CO2 emissions from new cars and new vans increased again in 2019 and dated June 26, 2020: https://www.eea.europa.eu/highlights/average-co2-emissions-from-new-cars-vans-2019.
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the total number of fast charging stations the absorbing capacity of woodland the reservoir absorbing capacity to in the key cities of the Far East to 50 ecosystems in Russia. It took them nearly determine the greenhouse gas emissions before further increasing this number to two years to produce an algorithm for and absorption balance for typical 150 as early as the end of 2020. calculating greenhouse gas emissions hydropower reservoirs. To this end, and absorption by water reservoirs, put RusHydro started an R&D project on together a database of national water measuring greenhouse gas emissions Cooperation to combat climate reservoirs and estimate greenhouse gas and evaluating the absorbing capacity change emissions and absorption by hydropower of hydropower facilities, which implies RusHydro and EuroSibEnergo joined reservoirs in Russia. These estimates 3 years of in-situ measurements efforts to develop a methodology for show that carbon absorption by benthal of greenhouse gas emissions and calculating greenhouse gas emissions by deposits fully offsets methane emissions absorption by 9 of RusHydro Group’s
HPP freshwater reservoirs and evaluating in CO2-equivalent. hydropower reservoirs (Bureyskoye, their absorbing capacity, which project Zeyskoye, Sayano-Shushenskoye, was awarded to the Faculty of Biology of Going forward, the findings need to be Kolymskoye, Rybinskoye, the Moscow State University known to supported by in-situ measurements Kuybyshevskoye, Volgogradskoye, have prepared guidelines for evaluating of greenhouse gas emissions and Boguchanskoye, Chirkeyskoye).
Pricing principles on the key markets SH
The Group sells electricity in Russia both non-price zone) to major consumers and ↗ For information on changes in tariffs in the wholesale electricity and capacity to retail consumers (in price, non-price and in the key markets, see Appendix 26 market (first and second price zones of isolated zones) via its retail companies, of the Appendices Book the wholesale market and UES East’s including the guaranteed suppliers.
WEM WEM producers
Large WEM consumers
Guaranteed suppliers Electricity retailers
Retail market producers
Retail market consumers REM
Unregulated prices Not higher than WEM prices for GSs Not higher than maximum unregulated prices Regulated household prices
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Performance in ↗ water inflow in reservoirs of rivers changes in the number and structure of in Siberia 30–35% above normal levels counterparties. the first and second in Q1, in line with the long-term annual ↗ Capacity sales under capacity supply price zones average in Q2 and Q3, and 10–25% above agreements (DPM) grew by 100.9% the long-term average in Q4; following the completion of repairs ↗ water inflow in the Zeyskoye reservoir at Gotsatlinskaya HPP and capacity WECM sales 65–85%, 5–25%, and 10–65% above normal commissioning at Zaramagskaya HPP-1 levels in Q1, Q2, and Q4, respectively. and RES-based facilities. RusHydro directly sells electricity and capacity in the WECM’s first and second price zones. Supply of capacity Electricity prices, in the first and second price RUB/MWh1 zones of WECM, GW Net supply of electricity in the first 1,500 22.2 and second price zones of WECM, 21.4 21.7 bn kWh 1,287 1,247 1,212 110 1,200
102.9 890 896 99.1 872 100 900 96.0 94.4
91.7
90 600 2018 2019 2020 2018 2019 2020 87.3 Price zone 1 Change in capacity supply was due to: Price zone 2 80 2018 2019 2020 ↗ 1.6% higher sales of capacity under regulated contracts as a result of larger Net supply capacity volumes supplied by producers Lower pricing in price zone 1 in 2020 was Electricity supplied of electricity in the price zones of due to higher output by HPPs and as the wholesale market under regulated a result an increase in price-taking supply, contracts for 2020; along with weaker demand on the back of The increase in actual output and net ↗ The 5.8% increase in sales under anti-COVID-19 measures. In price zone 2, supply of electricity of 2019 by 9.0% capacity auctions (KOM) due to higher the price performance was the result and 10.0% y-o-y, respectively, was mainly actual supplies of capacity driven by of both the COVID-19 response and due to: strong water inflows; grid restrictions on capacity exchange ↗ increased water inflow in reservoirs ↗ 2.6% lower capacity sales under into Western regions and changes in of the Volga-Kama cascade in 1H 2020; unregulated bilateral contracts due to the maximum allowable exchanges.
1 TSA data.
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DAM prices, PJSC RusHydro, The capacity sales weighted average In 2020, total net supply by RusHydro RUB/MWh price under KOM in zones 1 and 2 Group’s energy retailers stood at increased by 6.8% y-o-y from 19.0 bn Kwh, which is a 2.1% decline y-o-y. 1,500 RUB 725,757 / MW per month to RUB 774,756 / MW per month as a result In 2020, ESC Subgroup supplied electricity 1,285 1,298 1,209 of annual indexation of the KOM price to 2,005,142 consumers in the retail 1,200 and higher surcharge to the capacity market, including 1,945,667 households on price in zones 1 and 2, which is an direct contracts. The number of contracts instrument to drive a reduction in tariffs remains stable across consumer groups, in the Far East to the base rate defined except for households and utility service 900 825 838 by the Russian Government. providers. These groups demonstrate 774 both positive and negative trends. Individual customers grew in number REM sales as households started signing direct 600 contracts with RusHydro’s affiliates1, 2018 2019 2020 The sales in the first and second price while consumers among management zones are consolidated within ESC companies, condominiums and housing Price zone 1 RusHydro Subgroup, which supplies associations shrank as unreliable utility Price zone 2 electricity both directly and via its service providers were leaving the market retail subsidiaries acting as guaranteed and other management companies were The actual DAM sales price went down suppliers in three Russian regions. taking over their housing stock. by 3% y-o-y, which was the result of increased price-taking supply of HPPs starting early 2020 and reduced Number of consumers of electricity in service in price zones 1 and 2, consumption amid COVID-19. number of contracts EU3
2018 2019 2020 KOM prices, PJSC RusHydro, RUB/MWh per month Manufacturing industry 2,680 2,653 2,388
5,000 Transportation and communications 1,232 1,282 1,213 4,312.8 Agriculture 2,168 2,300 2,189 4,000 State-financed 7,654 6,880 7,357
3,000 Management companies, condominiums, 1,997 2,529 2,391 2,327.4 2,922.4 housing associations, etc. 2,000 Wholesalers-resellers 83 98 94
Housing and utilities 456 419 393 1,000 342.7 347.7 374.4 Heat suppliers 132 137 120
0 Other 42,513 43,350 43,330 2018 2019 2020 Households 1,808,857 1,892,519 1,945,667
Price zone 1 Total 1,867,772 1,952,167 2,005,142 Price zone 2
1 Under Federal Law No. 59-FZ.
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Net supply in price zones 1 and 2, Operations Starting 2020, electricity tariffs for bn kWh end consumers in isolated zones are in non-price and set through long-term indexation of 20.3 19.4 19.0 required gross revenue in pursuance of 1.6 isolated zones SH 1.8 the Russian Government’s Resolution 2.7 2.1 2.5 No. 64 dated January 30, 2019. 2.4 3.4 Non-price and isolated zones of 3.3 3.2 the Far Eastern Federal District are In 2020, the overall increase in average covered by Kolymaenergo, Nizhne- electricity tariffs for consumers Bureiskaya HPP, RAO ES East Subgroup in the isolated zone of the Far Eastern and RusHydro’s branches Bureyskaya Federal District amounted to 10.5% y-o-y. 12.6 11.8 11.3 and Zeyskaya HPPs. The smallest increase was registered for consumers of the isolate zone of the Republic of Sakha (Yakutia) (3.3%),
2018 2019 2020 Electricity market while the largest one was delivered by Chukotenergo (41.3%). The strong PJSC Krasnoyarskenergosbyt Net supply of electricity, increase in Chukotenergo’s tariffs JSC Chuvashskaya Electricity bn kWh was due to higher costs to purchase Sales Company electricity following the commissioning 44.9 46.0 PJSC Ryazanenergosbyt 43.4 of a floating nuclear power plant. 5.3 JSC ESC RusHydro 4.5 4.7 6.6 6.4 7.2 Federal Laws No. 508-FZ of 0.3 1.7 December 28, 2016 and No. 129-FZ 2.3 2.6 2.6 The reduction in net supply of of June 30, 2017 On Amendments to PJSC Krasnoyarskenergosbyt in 2020 the Federal Law On Electric Power was predominantly due to: Industry introduced a surcharge to ↗ large consumers entering the WECM; 30.2 30.1 29.8 the capacity price in the first and second ↗ temperature changes (1.6°С higher price zones, helping to bring tariffs in than in 2019); the Far East down to the Russian base ↗ consumers switching to direct (average) rate. These amendments contracts with producers in the retail 2018 2019 2020 provide for a surcharge to be applied electricity market; to the capacity price in the WECM price ↗ consumers purchasing electricity from RAO ES East Subgroup zones, with proceeds from the surcharge retailers; Kolymaenergo transferred to certain regional budgets ↗ reduced charges under statements of Nizhne-Bureiskaya HPP of the Far Eastern Federal District off-the-meter consumption and expiration RusHydro’s branch Bureyskaya HPP in the form of target non-repayable of the calibration interval; RusHydro’s branch Zeyskaya HPP contributions. ↗ suspension (restriction) of activities of most entities as part of efforts against As part of the effort to bring electricity COVID-19. Activities in non-price and isolated (capacity) prices (tariffs) for zones of the Far Eastern Federal District the Far Eastern consumers other The increase in net supply of rely on tariffs established by the FAS than households to the Russian base JSC ESC RusHydro for 2020 was due to: of Russia and executive authorities (average) rate, the Government issued ↗ start of energy supplies to ten of Russian regions responsible for Decree No. 3259-r of December 31, production sites beginning from state regulation of tariffs1. There are 2019 to set the base electricity January 2020; no unregulated tariff zones in the Far (capacity) price (tariff) for 2020 at ↗ increased consumption of electricity Eastern Federal District. RUB 5.0 per kWh. by large consumers.
↗ For information on changes in tariffs in the key markets, see Appendix 26 For information on changes in tariffs ↗ of the Appendices Book in the key markets, see Appendix 26 of the Appendices Book
1 Federal Law No. 35-FZ On Electric Power Industry of March 26, 2003 outlines the basic principles and methods of state regulation in the electric power industry and the regulators’ scope of authority. The basic principles and methods of price (tariff) regulation in the electric power industry and the procedure for setting tariffs are set out in the Russian Government’s Resolution No. 1178 On Pricing in the Field of Regulated Prices (Tariffs) for Electric Power of December 29, 2011.
81 ANNUAL REPORT | 2020
The increase was mainly due to higher market. Its commercial sales of capacity of 1,467 MW ceasing to be part sales volumes associated with Inter RAO, electricity and capacity in the WECM of JSC DGK, which resulted in a ca. 25% Transneftenergo, Viluyskaya HPP-3, amounted to RUB 46.05 bn in 2020. reduction in the total installed capacity Rusenergosbyt, and Rusenergoresource. of JSC DGK sold in the wholesale The decrease in the volume of electricity and capacity market. This In 2020, JSC DGK supplied 18.9 bn electricity (capacity) supply y-o-y was also led to a 12% decrease in the volume kWh in the non-price zone of the Far due to the generating equipment of of electricity sales of JSC DGK in East’s wholesale electricity (capacity) Primorskaya GRES1 with an installed the wholesale market compared to 2019.
DEK’s electricity purchases and sales in the WECM non-price zone
Metric 2018 2019 2020 2020/2019, %
WECM electricity purchases, bn kWh 31.0 36.3 38.4 5.8
Cost of WECM electricity (capacity) purchases, RUB bn 51.6 62.4 69.0 10.6
WECM electricity sales, bn kWh 11.2 15.9 1 7.6 10.7
Cost of WECM electricity (capacity) sales, RUB bn 20.2 28.6 33.2 16.1
Number of electricity consumers in service in non-price and isolated zones of the Far Eastern Federal District EU3
2018 2019 2020
Manufacturing industry 3,230 3,274 3,121
Transportation and communications 2,295 2,292 1,983
Agriculture 1,712 1,783 1,780
State-financed 12,142 12,274 11,084
Management companies, condominiums, housing associations, etc. 12,154 12,960 12,371
Wholesalers-resellers 28 32 40
Housing and utilities 957 1,019 858
Heat suppliers 3 5 17
Other 56,589 56,838 57,529
Households 2,478,200 2,504,738 2,531,598
Total 2,567,310 2,595,215 2,620,381
1 Prior to June 2020, Primorskaya GRES was a subsidiary of DGK, with the plant’s generation volumes included in DGK’s figures in the 2019 Annual Report.
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Heat market Heat is supplied on a centralized basis from thermal power plants and boiler 23,728 RAO ES East Subgroup and RusHydro’s stations operated by energy systems. Gcal branches Zeyskaya and Bureyskaya HPPs Some energy systems engage in both heat net supply of heat in 2020 generate and distribute heat in the Far production and distribution, while others Eastern Federal District. do not go beyond production operations.
Net supply of heat, ‘000 Gcal
2018 2019 2020
JSC DGK 15,284 16,447 16,429
PJSC Kamchatskenergo 1,431 1,440 1,344
PJSC Magadanenergo 839 855 901
PJSC Yakutskenergo 1,912 2,006 2,025
PJSC Sakhalinenergo 1,463 1,449 1,434
JSC Chukotenergo 382 380 365
JSC Teploenergoservis 959 928 936
JSC Sakhaenergo 44 42 37
JSC UESK 56 56 55
RusHydro’s branch Zeyskaya HPP 143 145 143
RusHydro’s branch Bureyskaya HPP 65 64 59
Total 22,578 23,813 23,728
Heat tariffs are regulated under Number of consumers of heat in service in non-price and isolated zones The Russian Government’s Resolution of the Far Eastern Federal District EU3 No 1075 On Pricing in the Field of Heat Supply dated October 22, 2012. 2018 2019 2020
In the Far East, heat tariffs in 2020 Manufacturing industry 443 406 393 were set using the long-term indexation Transportation and communications 60 37 60 method in line with the Guidelines for Calculation of Regulated Prices (Tariffs) Agriculture 33 30 36 for Heat Supplies approved by FTS Order State-financed 3,378 3,293 3,207 No 760-e of June 13, 2013. Management companies, condominiums, 2,516 2,463 2,262 housing associations, etc.
Heat suppliers 10 11 10
Other 14,104 14,768 14,329
Households 874,030 865,952 892,535 ↗ For information on changes in tariffs in the key markets, see Appendix 26 Total 894,574 889,960 912,832 of the Appendices Book
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Electricity transmission The reduction in the number of signed Consumer and executed contracts for utility In 2020, total electricity fed to the grids connection was due to measures taken to interaction SH RSPP 103–2 in the Far Eastern Federal District stood contain the COVID-19 outbreak in 2020. at 46.0 bn kWh. The grid losses amounted In line with its strategy to improve to 9.64%, down 0.13% vs 2019. EU12 In 2020, RusHydro Group’s companies customer experience, RusHydro Group were involved in implementing has been launching single settlement RusHydro Group regularly implements the Target Model for Utility Connection and information centers. The centers initiatives to reduce energy losses, to Electrical Grids1. The program seeks provide clients with a single payment including meter testing and replacement, to simplify the procedure for utility document (which in some territories switching to less powerful transformers, connection for legal entities or sole covers up to 20 types of services). installing higher accuracy class proprietors requesting the power of As at the end of 2020, 49 centers were equipment, etc. up to 150 kW with receiver reliability operational, including four centers that category 2 and 3. RusHydro Group’s opened during the reporting period. This companies involved in the program project, along with the introduction of Utility connection are JSC DRSK, PJSC Kamchatskenergo, single payment documents, translates PJSC Sakhalinenergo, into an up to 97–99% increase in utility Between 2011 and 2020, JSC DRSK PJSC Magadanenergo, JSC Chukotenergo, payment collection practice. provided utility connections to and PJSC Yakutskenergo. The share of 101.9 thousand applicants to the total applications filed by the applicant through In addition to face-to-face services, maximum capacity of 3,057 MW. Since the Personal Account stands at 12% for COVID-19 restrictions of 2020 helped 1 June 2016, a Far Eastern Hectare JSC Chukotenergo, 59% for JSC DRSK, develop alternative ways of reaching program has been run across the Far and 67% for PJSC Sakhalinenergo. out to clients. Across the footprint of Eastern Federal District. Since the launch ESC RusHydro Subgroup, 78% of clients of the project, JSC DRSK has provided use internal and external interactive connections to electrical grids for services to submit their meter readings. 930 applicants, with another 480 facilities 46 In 2020, the share of retail customers to be connected within the time limits bn kWh that receive their bills in electronic form specified in the unility connection total electricity fed to the grids in increased by 3.5 times; at the end of contracts. the Far Eastern Federal District the reporting period, it amounted to 9.5% of the total number of individual consumers. Utility connection for consumers
Period 2018 2019 2020 2020/2019, % Receivables
Contracts signed ‘000 25.7 23.6 20.4 –13.6 To prevent receivables from growing any further, RusHydro Group relies on all MW 901 1,203 1,102 –8.4 remedies legally available to it to recover Contracts executed ‘000 22.7 20.9 1 7.6 –15.8 debts and make sure current bills are paid as they fall due. MW 582 785 616 –21.5
1 Approved by Russian Government’s Decree No. 147-r On Target Models for Simplifying Business Procedures and Enhancing Investment Appeal of the Russian Regions of January 31, 2017.
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Receivables from buyers and The level of payment for electricity consumers, % consumed in retail electricity markets in Russia’s European part and Siberia averaged 99.2%.
39.6 As at December 31, 2020, ESC RusHydro 40.8 Subgroup’s receivables stood at 66.2 RUB 10.0 mn, thus adding 3.1% y-o-y. RUB bn Changes in receivables over 2020 in terms of their duration show that there is a decline in receivables overdue for under three months and also a reduction in other non-restructured overdue 10.2 9.4 receivables.
At RAO ES East Subgroup, as at On time December 31, 2020, total payments Overdue for under three months Overdue three months to one year received for electricity and heat totaled Overdue for over one year 98.7%, with receivables of RUB 36.1 bn. The company received 99.2% of payments for electricity and 97.6% for heat in retail markets. The receivables The principal debt owed to RusHydro for for electricity and heat amounted 4 electricity and capacity supplies stood to RUB 16.2 bn and RUB 19.9 bn, single settlement and at RUB 8.7 bn. Total payments received respectively. During the year, receivables information centers by RusHydro for electricity and capacity increased by RUB 1 bn. were launched in 2020 supplies to the wholesale and retail markets amounted to 99.7% in 2020 vs The main reasons for reduced payments 99.8% in 2019. for energy in 2020 (by 0.5 to 0.8%) were limited measures used for non-payment The improvement in the level of due to the COVID-19 restrictions. obligations discharge in 2020 was due to first payments of 100% of current 2020 saw the accumulation of debt and wholesale market obligations associated bankruptcies of entities that may not be with guaranteed suppliers of the North disconnected from supplies and socially Caucasus Federal District (subsidiaries important entities, along with increased and affiliates of Rosseti), which maintained receivables of the housing and utilities their status of a wholesale market sector. participant, voluntary discharge of obligations by counterparties, out-of-court settlement and debt recovery through court, including enforcement proceedings.
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Measures to improve and encourage corporate consumers to 2020 was 66.4% more than in 2019, with discharge their contractual obligations, the total claims value reaching RUB 413 mn, payment discipline ESC RusHydro Subgroup has been also an increase of 63.9% y-o-y. actively involved in the regional phase of RusHydro Group’s retail companies use the Reliable Partner, an annual federal the following three approaches to improve campaign, for several years now. Limitations on energy supplies debt recovery: to consumers for failure to pay ↗ outreach measures aimed at for electricity and heat consumers and executive authorities Debt recovery to improve payment discipline; Limitation of electricity and heat ↗ recovering debt through court; In 2020, RusHydro’s debt recovery actions consumption for non-payment is ↗ restrictions and fines (for households for non-payments translated into 19 court an effective measure, but a last resort in and management companies, until awards for a total of RUB 1.6 bn, including ensuring debt recovery. The procedures restrictions are introduced). arbitration awards of RUB 928.6 mn. of notifying consumers in arrears of any Of the total amount, guaranteed suppliers limitations in consumption and actual of the North Caucasus Federal District implementation of the same are in full Outreach account for 59.2%. Taking into account compliance with applicable laws1. carry-over balances, RusHydro actually After disconnection, the electricity Raising customer awareness about timely received RUB 1,502.5 mn under court supply may not be resumed until payments for the energy supplied is a major awards in the reporting period. the debt has been paid in full (or a debt measure to improve payment discipline. restructuring agreement has been While a moratorium on any limitations in Besides, in 2020: signed), including the penalties and utility supplies and fines for non-payments ↗ RAO ES East Subgroup filed 233,800 reconnection fees. were in place as a result of the COVID-19 claims to recover debt on energy response measures in line with the Russian consumed (electricity and heat) for a total After limitations of supplies and fines for Government’s Resolution No. 424 of April 2, of RUB 10.2 bn and actually received households and utilities provides became 2020, outreach efforts were especially RUB 7.4 bn under court awards. partly unavailable2 in 2020, the total relevant and proved an effective way to ↗ ESC RusHydro Subgroup filed 78,800 number of disconnections stood at encourage timely payments on the part of claims to recover debt on electricity 58,200. Electricity supplies were limited households, entities and businesses. consumed for a total of RUB 3.66 bn and for 55,100 households and 3,100 legal actually received RUB 1.14 bn under court entities. For heat supplies, the figures ESC RusHydro Subgroup companies awards. stood at 157 and 1,081, respectively. organized publicity campaigns aimed In 2020, ESC RusHydro Subgroup sent at improving payment discipline. After sanctions were temporarily disallowed 244,200 notifications about limitations By developing interactive services, between April 6 and December 31, for a total of RUB 20.7 bn. the companies managed to stay in the Group’s affiliates stepped up their touch with consumers at all times, thus efforts to file claims with magistrates courts minimizing the risk of non-payments. to recover debt owed by individuals. As part In order to strengthen payment discipline of this work, the number of claims filed in
1 Procedure for Consumption Limitations in Circumstances Other Than Power Facility Repairs or (Risk of) Emergency Operating Modes as per the Russian Government’s Decree No. 624 of May 24, 2017. 2 As per the Russian Government’s Resolution No. 424 On Specifics of Utilities Provision to Owners and Users of Premises in Apartment Blocks and Houses of April 2, 2020.
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Reliability and to eliminate gaps identified by government, institutional and internal safety of production supervisory bodies, the Company has facilities SH implemented the supervisory information Program of Stable system6 and integrated recorder for Power Grid Operation the analytical database of supervisory in the Sakhalin Region One of RusHydro Group’s strategic goals activities7. To improve the reliability of is to provide a reliable power supply and electricity supply to the region, ensure safe operation of equipment, Meeting the above industrial safety goals the Government of the Sakhalin hydraulic structures, and production helps reduce industrial risks associated Region and RusHydro Group facilities. with hazardous production facilities as developed the Program of a result of better process control, quality Stable Power Grid Operation 8 RusHydro Group’s Technical Policy1 of repairs and industrial safety audits. in the Sakhalin Region . defines requirements imposed on The Program9 provides for the reliability and safety management Ways of ensuring reliable and safe facility improvements in the technical system for equipment and structures operation include: condition of equipment, (RSMSES) governed by the Regulations ↗ quality assurance at design and upgrades of grid infrastructure on the Reliability and Safety Management construction phase; at 45 facilities, and long-term System for Hydraulic Structures and ↗ external regulatory supervision; development and utility connections for new consumers, Hydroelectric Power Plants2. As part ↗ internal process monitoring; which involves construction and of the RSMSES, dedicated operating ↗ compliance with industry and corporate upgrades of nine facilities. procedures have been put in place for operating standards and procedures; the Analytical Center, one of the key ↗ implementation of the Technical Policy The Program requires a total elements in the system assessing and engineering system controls. of RUB 35 bn in funding, with the state of equipment and structures, RUB 15 bn of that amount provided from D&A charges at to liaise with the Company’s Headquarters, The dual control and monitoring of existing Sakhalinenergo facilities 3 branches and subsidiaries . compliance with industrial safety (including 50% amortization requirements at hazardous production of Sakhalinskaya GRES-2 The following documents were developed facilities — both internally and externally in the amount of RUB 7.8 bn) and and adopted as part of the industrial (by state supervisory bodies) — facilities commissioned as part safety management system: secures efficient control over safety of the Program. ↗ Standard Regulations on In-Process and reliability of existing assets. Currently, the Program relies Monitoring of Compliance with Industrial only on tariffs included into Safety Requirements at Subsidiary’s RusHydro Group has 542 hazardous Sakhalinenergo’s investment Hazardous Production Facilities4; production facilities registered in program. ↗ RusHydro’s In-Process Monitoring the State Register of Hazardous Information System5 (fully implemented Production Facilities, including across the Company’s branches). 145 facilities owned by PJSC RusHydro and 397 facilities owned by its To oversee preparation of RusHydro’s subsidiaries. facilities for special operating conditions and control corrective actions designed
1 RusHydro’s Technical Policy was approved by the Board of Directors of PJSC RusHydro (Minutes of the Board of Directors No. 307 of April 9, 2020). 2 Approved by RusHydro’s Order No. 515 of August 8, 2017. 3 Approved by RusHydro’s Orders No. 430 of June 20, 2018 and No. 862 of November 9, 2018. 4 Approved by RusHydro’s Order No. 473 of June 19, 2020. 5 Commissioned by RusHydro’s Order No. 1170 of November 11, 2013. 6 Put into operation by Order of the Company No. 451 of May 28, 2019 and Decree of the Company No. 358r On Supporting the Operation of the Supervisory Information System of August 26, 2019. The system has been rolled out across the Company’s branches. 7 Put into operation by Decree of the Company No. 467r On Using a Data Reporting Form — Integrated Recorder for the Analytical Database of Supervisory Activities of December 8, 2015. 8 In pursuance of the Russian Government’s Instruction No. YuT-P9-13pr of March 18, 2016. 9 The Program’s priority initiatives falling within Sakhalinenergo’s area of responsibility and operations are approved by the Ministry of Energy’s Letter No. АТ-2669/09 of March 15, 2019, Minutes No. AN-114pr of April 2, 2019).
87 ANNUAL REPORT | 2020
Accident rate at The number of accidents involving (67%) were caused by recurrent natural RusHydro Group's generating facilities, hazards, third parties not engaged in RusHydro Group’s electrical equipment and 110+ kV power operations, and animal or bird activity. facilities lines totaled 1,127 in 2020. Most accidents
Cause of accidents in 2020
Number of Causes of accidents incidents
Natural hazards 253
External impact (impact caused by third parties not engaged in operations, animal and bird activity, 498 manufacturing and assembly defects, contractor errors, etc.)
Operational deficiencies (in-house staff errors, low-quality repairs and maintenance, 332 inadequate SOPs, manuals, layouts, etc.)
Other 47
System Average Interruption Frequency Index (SAIFI)1 EU28
2018 2019 2020
JSC DRSK 0.87 1.64 1.47
PJSC Yakutskenergo 2.97 0.10 2.47
JSC Sakhaenergo 0.51 0.19 0.04
PJSC Magadanenergo 0.73 1.71 0.29
PJSC Sakhalinenergo 2.34 2.83 1.37
PJSC Kamchatskenergo 1.32 1.37 1.59
JSC UESK 0.18 0.05 0.05
JSC Chukotenergo 1.03 0.51 1.74
System Average Interruption Duration Index (SAIDI), h2 EU29
2018 2019 2020
JSC DRSK 1.08 2.04 2.20
PJSC Yakutskenergo 6.02 0.14 6.85
JSC Sakhaenergo 0.57 0.34 0.12
PJSC Magadanenergo 1.44 1.13 0.55
PJSC Sakhalinenergo 4.93 3.85 1.65
PJSC Kamchatskenergo 1.86 2.14 2.21
JSC UESK 0.36 0.94 0.06
JSC Chukotenergo 8.16 7.4 5 0.64
1 The System Average Interruption Frequency Index (SAIFI) is calculated using the formula (∑li x Ni) / NT, where li is the total number of interruptions per annum for a group of customers Ni, and NT is the total number of customers served. The index is calculated for the entire location served. Unscheduled interruptions for which the grid company was responsible for are taken into account. 2 The System Average Interruption Duration Index (SAIDI) is calculated using the formula (∑li x Ni) / NT where ti is the total duration of interruptions per annum for a group of customers Ni, and NT is the total number of customers served. The index is calculated for the entire location served. Unscheduled interruptions for which the grid company was responsible for are taken into account.
88 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDIX THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Emergencies In RusHydro Group, the following Emergency management functions and officials are responsible for the protection of population and In pursuance of the Order of the Russian Preparedness for natural territories from emergencies: Ministry of Energy1, RusHydro Group disasters and emergencies ↗ Situation Analysis Center and Industrial established a functional subsystem of and Occupational Safety Department the National Emergency Management RusHydro Group is responsible at the Headquarters; System (NEMS). for reliable and uninterrupted ↗ first deputy directors — chief operation of its facilities. To this end, engineers with the direct involvement The Company’s emergency prevention a dedicated system was implemented of civil defense and emergency and response and fire safety commission at the Company’s production sites to response engineers reporting to them — (the “Commission”) is the supervisory prevent and respond to natural disasters at the Group’s branches; body of the subsystem responsible and emergencies. In particular, efforts ↗ employees authorized to deal with for the timely situation assessment are made to prevent process upsets the issues of civil defense and protection and decision-making on emergency and accidents, and if an interruption of population from natural and industrial prevention. The Commission’s annual occurs, the Group does its best to bring emergencies — at RusHydro’s subsidiaries. action plans stipulate efforts to the facility operation back to normal facilitate the safe passage of flood as soon as reasonably possible. Volunteer emergency response teams, water during the spring and summer Furthermore, employees of RusHydro local warning systems and contracts period, prepare for the fall and winter Group have regular trainings in civil for professional emergency response peak loads, and secure the stable defense and emergency response. services have been put in place across operation during the fire and storm For the purpose of rescue and RusHydro Group’s facilities operating seasons. The Commission manages emergency recovery operations, extremely dangerous and highly and coordinates the operations of the Company has established a back-up dangerous hydraulic structures or hazard standing bodies and management bodies fund of documentation on RusHydro class II and class III facilities duly assigned responsible for the day-to-day operation Group’s hazardous facilities, which is to respective civil defense categories. of the functional subsystem. maintained by the government. To fulfil regulatory requirements on safety For the purpose of emergency Key potential sources of natural of hydraulic structures, the Company prevention and response, RusHydro disasters and industrial emergencies provides for the mandatory insurance of put in place resource stockpiles at at RusHydro Group’s production public liability of those who own hazardous its branches operating hydraulic facilities: facilities, in respect of their harmful impact structures and a dedicated financial ↗ high magnitude low-frequency as a result of emergency (the insurance reserve at RusHydro. The dedicated (once every 100 years) flood; limit under the mandatory insurance financial reserve for emergencies was ↗ unfavorable weather conditions contract on the hydraulic structure established on a centralized basis in and resulting disruptions in electricity owner’s public liability is stated by the interests of RusHydro’s branches by supplies; legislation in the amount of RUB 6.5 bn), transferring 1% of the average monthly ↗ technological incidents affecting as well as for voluntary insurance of public revenue from electricity and capacity the equipment of power plants and grid liability, increasing the insurance amount sales. All subsidiaries have established infrastructure; up to RUB 35.5 bn, which corresponds the required financial reserves and ↗ accidental oil spill affecting economic to the public liability insurance level of resource stockpiles for emergency assets and people. leading Russian power companies. prevention and response.
1 Order No. 792 On the Functional Emergency Management Subsystem at Organizations (Facilities) of the Energy Industry and Organizations (Facilities) Subordinate to the Russian Ministry of Energy of September 24, 2018.
89 ANNUAL REPORT | 2020
To remedy the effects of Maysak and The Program expenditures amount to This issue is primarily covered through Haishen typhoons hitting the Primorye RUB 14.6 bn to be covered by RusHydro mass media (materials published in Territory and ensure a more reliable (RUB 10.5 bn) and tariffs (RUB 4.1 bn). printed and online media) and school power supply in the region, safety lessons on hazardous and RusHydro launched the Power Grid No emergencies were registered at harmful health impact of various power Modernization and Upgrade Program RusHydro Group facilities in 2020. installations in the event of exposure in the Primorye Territory for a total of within a hazardous distance. RUB 14.6 bn (incl. VAT) to be spent in 2021-2025 in compliance with Minutes Emergency recovery exercises All generating and network facilities are No. YuT-P9-77pr of a meeting at the office marked with Danger! Electricity! signs of Yury Trutnev, Deputy Prime Minister of Employees are trained in emergency in accordance with GOST. In addition, the Russian Federation and Presidential recovery as part of the corporate civil information posters are used to indicate Plenipotentiary Envoy to the Far Eastern defense and emergency response training the location of standalone facilities and Federal District, dated December 10, 2020. program. The list of persons to be trained devices. was compiled in accordance with Russian The Program aims to bring electric power laws and regulations. In 2020, there were 10 accidents, grids back to normal, enhance their including six third-party fatalities weather resistance and ensure a reliable In line with the schedule for 2020, involving RusHydro Group assets. power supply as required. It covers highly RusHydro Group conducted: Of this number, eight fatalities resulted deteriorated facilities and those most ↗ 7 comprehensive exercises; from approaching energized parts of prone to breakdowns (including in adverse ↗ 290 facility-based exercises; power installations or overhead power weather conditions) likely to entail severe ↗ 76 table top exercises and training lines closer than the minimum approach social and economic consequences in sessions; distance. Another one was due to case of their shutdown. ↗ 38 tactical training exercises. the traffic accident involving a vehicle of DRSK’s branch Khabarovsk Power The Program is scheduled for 2021 In 2020, 134 people took training or System. The accident was caused by through 2025 and includes: advanced professional training at a third-party traffic violation. The last ↗ rehabilitation of 35–110 kV electric training centers and as part of civil one was death of a man (a bystander) power grids; defense courses, including six civil at the facility of the Khabarovsk Heating ↗ equipment upgrade at 35–110 kV defense managers and 48 chairmen Grid joint venture of JSC DGK. transformer substations; and 48 members of emergency ↗ rehabilitation of 0.4–10 kV electric prevention and response and fire 2020 saw legal proceedings launched power grids; safety commissions. in connection with a fatality due to ↗ forest corridor clearing and expansion; the traffic accident involving RusHydro ↗ repairs on buildings and structures; Group assets. ↗ procurement of small powered plants, Prevention of injuries and special-purpose machinery, emergency fatalities involving RusHydro power supplies; Group’s assets EU25 ↗ increased current-carrying capacity of 110 kV power lines feeding Russian A special emphasis in occupational safety Railways’ traction substations; is placed on the prevention of injuries ↗ islanding of 6–10 kV electric power among local residents arising from grids. contact with the Group’s facilities.
90 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDIX THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Human Capital Development
We monitor the Group’s staffing ↗ holding professional skills competitions HR policy requirements on an ongoing basis to among the employees, including provide our generating facilities with the WorldSkills Russia championships; RusHydro Group’s generating facilities qualified specialists in the long run. ↗ providing early career guidance in Russia and abroad are staffed with to school and university students in professionals with extensive operational The Company implements the concept of the regions where the Company operates; experience and technical expertise. advanced human resource development ↗ implementing a program to provide RusHydro’s HR policy aims to ensure From School to Workplace, as well as social and professional guidance for ongoing improvement of labor relations training and career guidance programs to children from orphanages; and social development, create efficient build short-, mid- and long-term staffing ↗ developing training complexes; and safe work environment, facilitate systems. ↗ creating up-to-date and safe digital career growth, and ensure decent living educational solutions to ensure quality standards and well-being for employees As part of the concept, we developed of training and career guidance across the Group and its affiliates. and launched a permanent system of programs. corporate elevators to support training of As at December 31, 2020, the Group qualified specialists starting secondary employed 66,018 people, down 5.07% school. The trainees follow the route y-o-y mainly due to the disposal of New school — University — the Company. Corporate culture assets under a swap deal with a company affiliated with SUEK Group, in the Far A number of measures to attract, Eastern Federal District and CJSC MEK train and retain employees underlies RusHydro Group’s corporate culture in Armenia in 2020. Total headcount our staffing system and ensures safe is an essential tool reflecting its values of the said assets as at December 31, and reliable operation of RusHydro’s and strategic business priorities, 2019 stood at 2,225 people. In addition, facilities. as well as leveraging employees’ measures were taken to optimize initiatives to deliver on the Company’s the white-collar staff headcount. Our key projects to improve the staffing long-term goals. system include: Men represent the majority of all ↗ building strategic partnership RusHydro Group’s corporate culture employees (67.1%). In the management with industry secondary and higher relies on values outlined in the Company’s cohort, there are 3.5 times as many men educational institutions; strategy and shared by its employees as women, in the blue-collar category — ↗ contributing to the development of and is embodied in a number of tools and 4.3 times as many men as women due the national qualification system; measures described in the Social Policy to industry specific features and harsh ↗ establishing a network of information section. In order to unlock the potential of working conditions. Nonetheless, women centers for on-site training in the regions our employees, find the best application make up 62.2% of all employees in of the Company’s footprint; for their skills and knowledge and the white-collar category. ↗ creating a comprehensive system help them gain new competencies, of simulation training for operational we implement special development, One of RusHydro Group’s priority tasks personnel using digital technologies and training and mentorship programs as in the area of personnel management platform solutions; described in the HR Policy section. is attracting young talent. 24.5% of RusHydro Group’s employees are aged 35 or younger.
91 ANNUAL REPORT | 2020
Workforce structure by age, RusHydro Group — headcount, gender and category Workforce structure by age people1 in 2020, people 405–1 in 2020, % 405–1
69.7 69.5 28,741 3.0 66.0 20.3 21.5
49.6 49.9 46.9 12,892 66,018 people
7,752 7,824 6,619 25.2
19.8 19.9 19.1 2,190 30.0
2018 2019 2020 M F M F M F Managers White-collar Blue-collar employees employees RusHydro Subgroup <25 years RAO ES East Subgroup <25 years 25–34 years 25–34 years 35–44 years 35–44 years 45–54 years 45–54 years >55 years >55 years
Headcount by country and region, people 102–7 102–8
Region, country 2018 2019 2020 Russia Far Eastern Federal District 52,801 52,961 50,289 North Caucasian Federal District 3,727 3,712 3,702 Central Federal District 3,858 3,689 3,569 Volga Federal District 3,557 3,571 3,521 Siberian Federal District 3,439 3,322 3,130 North-Western Federal District 919 893 883 Southern Federal District 621 655 589 Ural Federal District2 311 312 306 Foreign countries Republic of Tajikistan 31 29 28 Republic of Uzbekistan – 1 1 Republic of Armenia 401 402 –
The majority of the Group’s employees for over 76% of RusHydro headcount. RusHydro Group hires seasonal labor. work in the Far Eastern Federal District, Most of RusHydro employees work full- In 2020, 17 workers were hired for where the Group’s facilities account for time (98.7% for RusHydro Subgroup the heating season and navigation and three fourths of total power generation. and 99.8% for RAO ES East Subgroup) 10 workers were employed to restore ice In addition, RAO ES East Subgroup and under permanent employment fields and ski trails. provides electricity and heat transmission contracts (87.1% for RusHydro Subgroup and distribution to end users. In total, and 96.9% for RAO ES East Subgroup). the Far Eastern Federal District accounts 102–8
1 In calculating the metric for 2020, the perimeter excluded some of the Group’s non-priority companies as compared to the 2019 perimeter. The exclusion effect does not exceed 0.5% of the headcount as at December 31, 2019. 2 The Ural Federal District is the location of the personnel of PJSC Mobile Energy. In the annual report for 2019, the headcount of PJSC Mobile Energy was included in the Central Federal District headcount.
92 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDIX THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Employment in 2020, % In 2020 RusHydro Group hired 0.5 99.5 11,937 people 66,018 people
Full-time Part-time
Percentage of employees reaching retirement age in the next 5 and 10 years by category, %1 EU15 850 5 years 10 years new jobs created in RusHydro Group Employee category people % people % in 2020 Management 723 1.1 1,610 2.4
White-collar employees 1,132 1.7 2,623 4.0
Blue-collar employees 2,986 4.5 5,740 8.7
Total 4,841 7. 3 9,973 15.1
Recruitment In 2020, RusHydro Group hired 11,937 people and created 850 new jobs RusHydro Group recruits staff, including following inauguration of additional management, on a competitive basis. generating capacities, increased scope This approach enables the Company of service projects, and transition to to recruit motivated people who meet direct contracts with energy consumers. the qualification requirements and On top of that, the Company increased are capable of growing professionally. sales and opened single billing and Candidates regardless of gender, age and payment centers in the Far East. nationality compete for vacancies, with professional skills as the main selection criterion.
1 Age of retirement on general or special terms.
93 ANNUAL REPORT | 2020
Total number of employees hired and dismissed in 2020,1 people 401–1
<25 years 25-34 years 35-44 years 45-54 years >55 years
Region M F M F M F M F M F Total
Hired
Far Eastern Federal District 865 307 1,738 878 1,761 916 1,161 645 723 509 9,503
Southern Federal District 4 3 21 0 17 4 21 6 8 1 85
Volga Federal District 35 2 89 18 97 43 49 19 20 5 377
North Caucasian Federal 161 3 483 7 172 20 82 13 48 6 995 District
Central Federal District 42 17 75 32 67 54 79 28 52 20 466
North-Western Federal 14 12 9 5 9 6 5 4 2 12 78 District
Siberian Federal District 24 19 43 44 76 86 31 32 29 31 415
Republic of Tajikistan 0 0 0 0 0 0 0 1 0 0 1
Republic of Uzbekistan 0 0 0 0 0 0 0 0 0 0 0
Ural Federal District 1 0 2 1 2 3 3 2 1 2 17
RusHydro Group Total 1,146 363 2,460 985 2,201 1,132 1,431 750 883 586 11,937
Dismissed
Far Eastern Federal District 436 143 1,579 605 1,851 867 1,507 730 1,613 791 10,122
Southern Federal District 1 1 22 0 19 8 22 8 22 6 109
Volga Federal District 31 2 99 13 79 44 43 36 66 26 439
North Caucasian Federal 177 1 331 14 156 29 157 18 114 20 1,017 District
Central Federal District 16 7 76 50 88 63 70 32 88 57 547
North-Western Federal 7 2 14 6 5 2 4 2 13 33 88 District
Siberian Federal District 12 10 49 60 92 107 58 64 74 78 604
Republic of Tajikistan 0 0 1 0 0 1 0 0 0 0 2
Republic of Uzbekistan 0 0 0 0 0 0 0 0 0 0 0
Ural Federal District 3 1 3 1 2 2 0 0 6 5 23
RusHydro Group Total 683 167 2,174 749 2,292 1,123 1,861 890 1,996 1,016 12,951
1 The metric does not include the headcount reduction as a result of JSC LUR (1,823 employees) and CJSC MEK (402 employees) leaving RusHydro Group in 2020. The number of dismissed employees of JSC DGK takes into account staff dismissal during 2020 as a result of transfer to LLC Primorskaya GRES (1,308 employees), which subsequently left the Group.
94 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDIX THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Financial motivation and RusHydro Group adheres to the principle Key areas of employee training remuneration of equality and non-discrimination on the basis of gender. We ensure equal RusHydro Group’s motivation and base salary for all categories of male and remuneration policy seeks to maintain female employees. a competitive salary level. Statutory training under the requirements of the Federal The remuneration systems in RusHydro Further professional training Environmental, Industrial Group are in compliance with the Russian and Nuclear Supervision Service labor legislation. They ensure increase The continuous training system is in place of Russia, the Federal Service in real wages of employees by means to develop employee competencies to for Labor and Employment, of annual wage indexation and financial meet their current job requirements and other controlling authorities incentives (bonuses) conditional on and be promoted as part of the talent the results (key performance indicators) pool arrangement. The Company offers of the Group affiliates and employee employees professional retraining performance (individual bonus indicators). opportunities, including in accordance with occupational standards, and has in Technical training required for place regulations on employee training. performing job duties Average monthly salary of employees at RusHydro Group, RUB Average hours of training per employee, h/person 404–1 100 150 152 Management and leadership 136 trainings
82,715 78,575 80 75,171 80 High education 58 57
60 2018 2019 2020 Project management training F M F M F M 2018 2019 2020
Managers Average entry-level wages at RusHydro White-collar employees Group are three times higher than Blue-collar employees the statutory minimum monthly wage; Corporate governance training in certain regions of operation, they are more than 13 times higher than The reduction in training hours for women the statutory minimum monthly wage. in all employee categories is due to 202–1 a decrease in the headcount of female employees across the Group of RusHydro Second professional degree in the respective periods.
95 ANNUAL REPORT | 2020
In 2020, RusHydro Group’s personnel RusHydro Group’s personnel training and development costs amounted development costs, RUB mn to RUB 327.7 mn. Distance learning 190 188 allowed for wider coverage and lower 180 costs per course. 149 151 147
Average training expenses by employee category, RUB/person 404–1
2018 2019 2020
RusHydro Subgroup
Managers 7,789 2,667 2,154
White-collar employees 8,394 2,854 2,294 2018 2019 2020 Blue-collar employees 5,138 1,451 1,468 RusHydro Subgroup RAO ES East Subgroup RAO ES East Subgroup Managers 8,134 4,842 4,813
White-collar employees 9,266 5,007 4,626 In 2020, RusHydro Group provided Blue-collar employees 6,904 5,213 5,336 a total of 54,266 training courses to its employees under corporate training programs, further professional education and occupational training programs. Learning and training programs 404–2 A marginal y-o-y decrease in the number of courses was due to COVID-19-related Form of training Frequency restrictions and cancellation of a number of offline programs. Further professional training At least once every five years RusHydro Group has in place corporate Occupational training As required by regulators, in case of retraining for a new career training platforms to support employee training: the Corporate Hydropower Occupational retraining As required for operational reasons to enable University (RusHydro’s branch in Moscow, employees to do a new type of work or to receive Volzhsky and Cheryomushki), Center additional qualifications as well as for talent pool for On-site Training in Energy (Yakutsk), training Dolzhenko Personnel Training Center at Corporate trainings On an as-needed basis when required Khabarovsk Generation branch of DGK to solve specific tasks (Khabarovsk), Training Center (Artem), Magadanenergo training centre (Magadan), Internal training in production Annually Sakhalinenergo training centre (Yuzhno- and technical skills Sakhalinsk) and Kamchatskenergo training Short-term training programs Annually, with the content depending and consultation center (Petropavlovsk- (seminars, conferences) on business needs Kamchatsky), offering further professional education programs, including those Distance learning Annually, with the content depending on business needs in line with professional standards, and occupational training.
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Corporate Hydropower Types of talent pool programs School of Economics for 48 employees University included in the talent pool for the position of branch director and key positions in In 2020, the Corporate Hydropower Talent pool the chief branch engineer team; University developed 20 new ↗ online course on occupational training further professional training and run in collaboration with the Moscow occupational retraining programs State University of Civil Engineering for for the Company’s employees in Young talent pool 23 employees included in the current accordance with the education license talent pool for the position of chief project issued in 2017. 20,572 employees of A group of young specialists engineer and project manager at research RusHydro Group underwent training up to 30 years old who have and design functions of the Company’s demonstrated potential to become in 2020, with 16,719 of them completing affiliates. professionals and/or leaders and 40 online courses. receive regular targeted training to improve their qualifications 2020 saw the selection of talent pool In addition to training, the Corporate under the Internal Source of candidates for the position of first deputy Hydropower University holds Energy program branch director — chief engineer2, competitions and professional with 191 employees from the Company’s excellence contests among RusHydro branches and affiliates taking part. Group employees. These events are As a result, three talent pool groups intended to facilitate best practice Talent pool for any given comprising 54 employees were formed: sharing, identify best performers, position ↗ current talent pool for the position of and demonstrate the latest technologies. chief engineer and deputy chief engineers 2020 saw the 2nd Corporate A group of employees from of the branch — 12 employees; Engineering Case Championship of the headquarters and branches ↗ current talent pool for the position of Innovation and Work Improvement who combine strong leadership head of the chief branch engineer team — Proposals called Ratsenergy. The event competencies and professional 19 employees; skills commensurate with corporate brought together 168 employees from ↗ talent pool of candidates selected for requirements for a particular 22 Group companies1. The winning managerial training — 23 employees. managerial position teams presented their cases at the 13th National Scientific and Technical In 2020, the Company carried on Conference Hydropower. Hydraulic with the Internal Source of Energy-4 Engineering. New Developments and In 2020, the Company arranged and program for the young talent pool. Due Technologies. conducted the following training modules to the COVID-19-related restrictions, under the management talent pool the majority of the program’s events took programs: place online. Internal Source of Energy-4 Talent pool ↗ personal performance improvement saw the introduction of the second training training for 10 employees included in module on Methods of Engineering RusHydro Group implements programs the current talent pool for the position Thinking. On top of that, seven teams to build and develop its management of branch director and key positions in of RusHydro’s young professionals talent pool. These programs aim to ensure the chief branch engineer team; participated in the Young Specialists’ seamless and continuous management ↗ online course on project management League at the CASE-IN Autumn Cup, succession, improve the management developed by corporate experts for an international engineering championship recruitment and appointment process and 44 employees included in the talent pool where young employees from energy to encourage personnel to pursue career for the position of branch director and key companies compete in solving engineering development and incentivize employees positions in the chief branch engineer team; cases. Following selection stages, one to enhance their professional skills and ↗ online course on the company value team of four specialists made it into competence. growth run in collaboration with the Higher the final round.
1 RusHydro’s Order No. 613 dated August 7, 2020 on the championship results. 2 RusHydro’s Order No. 155 dated February 28, 2020 on selecting talent pool candidates.
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As part of its work with young specialists and values at, the Vostok All-Russian Personnel assessment SH and support for RusHydro Group’s Young Youth Educational Forum in the Far Employees Community, the Company: East, 8th Russian Working Youth The Corporate Hydropower University, ↗ implemented nine projects from Forum, Youth Day of the 13th National a branch of RusHydro, assesses the community’s action plan for Scientific and Technical Conference employee potential to join the Company’s 2019-2020 in such areas as Technology Hydropower. Hydraulic Engineering. management talent pool using Leadership, Professional Development, New Developments and Technologies various professional and managerial Health and Safety, and Creating and the Young Energy Engineers competency appraisal methods, including Comfortable Environment in the Regions conference that took place as part the Assessment Center. of Operation RusHydro Group’s; of the #TogetherBrighter festival ↗ held the 3rd annual community of the Russian Energy Week 2020 In 2020, RusHydro continued its active conference on the sidelines of international forum. contribution to the development of the 10th Fast and the Furious forum for the national qualification system young specialists visited by 120 young We updated five industry professional employees of RusHydro Group; Cooperation with standards effective since 2015 and ↗ held an online information and universities SH RSPP applied by RusHydro Group. The new consulting course on project versions of professional standards were development that brought together As a responsible employer, RusHydro accepted by the National Qualification 80 employees of RusHydro Group. Group is interested in developing young Development Agency as compliant with Following the course, the Young professionals in the regions where it professional standard requirements Employees Community drafted an action operates. To this end, RusHydro interacts and recommended for further approval plan for 2020-2021 that includes and signs cooperation agreements by the Russian Ministry of Labor and 13 projects in four of the community’s with educational institutions all across Ministry of Justice. key areas; the regions. ↗ arranged for the participation of its Several new assessment sites were young specialists in working groups RusHydro Group offers career guidance opened across the Group’s footprint to under the Russian Civic Chamber’s for hydropower students to familiarize hold qualification assessments in line with Coordination Council for the Development them with their future occupation Federal Law No. 238-FZ On Independent of Communities of Young Professionals; by arranging practical training and Qualification Assessment of July 3, 2016. ↗ arranged for the submission of seven helping them to take part in corporate The Company’s representatives are projects by its young specialists to and national competitions and events. permanent members of the Energy Sector the New Idea national contest of projects Moreover, the Group offers employment to Occupational Qualifications Council. With among young employees of energy students depending on its need for young RusHydro Group’s assistance, the council companies. The contest results will be talent. The Company’s staff members developed and approved 42 professional announced in Q2 2021. participate in educational activities qualifications for hydropower, heat, and sit on the boards of trustees of wind and solar power to be adopted by RusHydro Group’s Young Employees educational institutions. RusHydro is also the National Qualification Development Community comprises some 100 represented in the federal educational Agency. employees. To ensure cross- and and methodological association of higher multi-functional interaction in 2020, education for the integrated group of Four new tools for assessing professional young specialists participated in, and disciplines 13.00.00 Electrical and Heat qualifications (for employees of represented RusHydro’s interests Power Engineering. emergency services, workers doing
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repairs and construction of hydraulic Nine occupational examinations for Social policy SH structures and employees responsible seven qualifications took place across for scheduling HPP operations) were the assessment sites of the Volga Training developed to be used by RusHydro’s Center of the Corporate Hydropower RusHydro’s social policy1 establishes Qualifications Assessment Center. University and Sakhalinenergo training the key principles, goals and objectives The Energy Sector Occupational center. The Company’s employees are for the Group’s social development Qualifications Council also updated and tested for adequacy to the job and have across the regions of operation. reapproved seven previously developed their professional, business and personal The policy is primarily governed assessment tools to improve the range qualities and achievements assessed. by the Industry Tariff Agreement of tasks. Managers and white-collar employees, for the Electrical Power Industry of regardless of gender, are assessed the Russian Federation. In interacting once every three years. 404–3 with employees and partners, the Company relies on the Social Charter of the Russian Business, Percentage of RusHydro Group employees who underwent periodic ISO 26000, and the UN Global Compact. performance and career development appraisal, by gender and category 102–12 (% of total headcount across the specified category), 2020404–3 Social policy objectives: White-collar ↗ furthering the Company’s socially Managers employees responsible agenda; ↗ promoting shared social responsibility M F M F and social partnership practices; RusHydro Subgroup 5.6 2.8 6.3 3.4 ↗ making RusHydro Group more attractive as an employer to recruit and RAO ES East Subgroup 2.6 0.7 3.6 2.4 retain the best talent.
Social policy tasks: Personnel management system ↗ the 3rd corporate competition for ↗ creation of an institutional environment development plans operations staff at RusHydro Group’s for attracting and retaining young talent; thermal power plants; ↗ maximization of employee commitment The following initiatives are planned ↗ Corporate Championship WorldSkills to RusHydro’s goals and principles; for 2021: Russia Juniors in Smart Electricity ↗ improvement of occupational relations ↗ professional skills competitions Metering Systems; taking into account the interests of in the repair and maintenance of 110 kV ↗ a conference of RusHydro Group’s the employer, employees, shareholders, overhead power lines; Young Employees Community. and the government. ↗ the 3rd Corporate Engineering Case Championship of Innovation and RusHydro Group companies sent Work Improvement Proposals called their employees to the World Ratsenergy; Construction Championship, which ↗ the 3rd Corporate Championship took place at Sochi’s Main Media Center WorldSkills Russia Juniors in Electrical on April 20–23, 2021. Installations;
1 Approved by the Board of Directors (Minutes No. 177 of April 1, 2013).
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Social policy The Company grants the following RusHydro Group companies took part benefits to its full-time employees:401–2 in the project, competing with their ↗ voluntary health insurance; colleagues, completing challenges and ↗ insurance against accidents and fighting for the top rankings. They kept diseases; training even during the pandemic. ↗ disability/temporary disability Work with young people, training compensation; programs ↗ maternity/paternity leave; Corporate pension plans ↗ one-off financial aid in case of death of a close relative; Private pension coverage is in focus ↗ other payments and benefits in of the Company’s social policy. It was accordance with collective bargaining introduced in 2008 to employees at Support for families and mothers agreements and internal regulations. RusHydro’s branches by offering several pension plans designed to finance To support young families, the Group the pension savings of different target provides them with one-off payments employee groups. In 2020, the Company Healthcare and healthy lifestyle in connection with the registration of continued implementing revised pension promotion marriage, the birth of a child, childcare plans, which were amended in 2019 allowance for up to three years, in line with changes in the Russian compensation of expenses for nursery pension system. New Regulations on and kindergarten (daycare) costs. Private Pension Plan for Employees at RusHydro’s Headquarters were approved Pension coverage One of the Company’s social policy priorities by Order No. 124 of February 19, 2020, is health and healthy lifestyle promotion. and the pension savings of employees at Offline sporting events and the traditional RusHydro’s branches were audited. RusHydro Group Spartakiad were moved to 2021 due to the pandemic restrictions The private pension plans include: Housing program introduced in Russia by Presidential ↗ The parity plan, jointly financed by Executive Order No. 239 of April 2, 2020 an employee and the Company, with On Measures to Ensure the Sanitary and their contributions dependant on Epidemiological Safety of the Population the employee’s period of participation in Connection with the Spread of the Novel in the program. To support soon-to- Social and professional guidance Coronavirus Infection (COVID-19). retire employees in accumulating for orphans At the same time sporting events held pension capital, increased parity ratio online also received a lot of attention from has been established. the Company employees. In May 2020, ↗ The corporate plan (financed by the Young Employees Community initiated the Company) consisting of: RusHydro in Good Shape, a campaign → the “Supporting” option — allowing employees to share their ways the Company accumulates pension of keeping fit in lockdown by posting contributions on registered pension videos to social networks with the caption accounts of employees who, #rushydroingoodshape. as a result of the reform of the state pension system, do not receive or The biggest sports event of the year was have a limited opportunity to form online competitions for running (walking), the funded part of the work pension cycling, and cross-country skiing, (for employees born before 1966); organized by the Ministry of Energy for → the “Well-deserved pension” energy sector employees and launched option — the Company accumulates on September 1, 2020 at the Vmarafone pension savings for employees platform. Over 400 employees at retiring in 5 years and having a track
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length of service of at least 10 years Improving housing conditions Volunteering SH RSPP in the industry and state awards, for employees including those of the President and RusHydro Group promotes corporate Government of the Russian Federation, RusHydro has been implementing volunteering, encouraging individual state agencies, and corporate awards a program to improve housing conditions and team-based involvement of its for working on energy facilities during for employees since 2008. The priority employees in socially important projects. recent 10 years; right to participate in the program is The Company’s volunteering program → the “Veterans” option — given to young professionals under gives its employees an opportunity the Company accumulates pension the age of 30 who do not have their own to do good deeds by participating savings on the pension accounts of its apartment or house, relocated specialists, in charity activities outside their working former employees as a supplementary key and highly qualified specialists, hours. pension for retired employees. as well as employees with three or more children, and single parents. In 2020, RusHydro Group addresses the following PJSC RusHydro continues to offer 114 employees of the Company, including charity areas: education, environment, its "Co-financing” option where its branches, received compensation of sports, health, support to veterans, an employee, the Company, and interest payments on mortgage loans and and commemoration of World War II. the government jointly finance his or lease expenses. The program pays special attention her pension savings. Private pension to supporting children and vulnerable plans are in place at 24 subsidiaries, The corporate programs on improving citizens. with the following companies providing employee housing conditions are most of the financing: Transport aimed at attracting and retaining The volunteering program is formed Company RusHydro, Kolymaenergo, young talent and highly qualified to meet the needs of the regions DGK, Far Eastern distribution company, specialists and are implemented by where RusHydro Group operates. Far Eastern Energy Company (DEK), Yakutskenergo, Sakhaenergo and Each employee can choose a charity and Kamchatskenergo. Kolymaenergo. The Company provides area that appeals to them and fits their loans for employees to purchase housing schedule. close to their workplace and partially Security for RusHydro Group’s compensates them for interest on liabilities under pension mortgage. RusHydro’s volunteering plans1 201–3 initiatives 2020 For the purpose of selling residential 11.2% property included in the non-core asset ↗ Environmental volunteer project “Good registers of Nizhne-Bureyskaya HPP caps”: more than 200 kg of plastic caps Estimated coverage ratio and Boguchanskaya HPP, the Company collected; of special assets vs. liabilities under the scheme developed an instalment-based payment ↗ oBEREGAi charitable environmental (fair value of plan assets / framework for employees purchasing program: over 3,000 people in 13 regions current value of plan liabilities), % the property, depending on their family collected more than 2,600 bags of composition, level of income per family garbage; member, and minimum subsistence ↗ Suitcase of Goodness: this initiative income in the region. The Board covered three focus areas. The Company of Directors approved the sale of volunteers collected 26 boxes of 62 residential properties and donation of toys for children with serious health four residential properties to employees conditions, more than 5,000 stationery at Nizhne-Bureyskaya HPP, and the sale items for children getting ready for Net pension liabilities of 38 residential properties to employees school, 17 suitcases of clothes and other as at Decemberw 31, 2020 at Boguchanskaya HPP. necessities for elderly people, and more than RUB 125,000 for boarders of three social institutions; 7,787 ↗ Charity Fair to support charitable RUB mn foundations and organizations;
1 Liabilities under IFRS as appraised by FBK.
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↗ Heights of Memory: as part of this ↗ Volunteering during the pandemic: Rights of employees charity project, volunteers refurbished collecting food and basic necessities abandoned monuments, planted trees for lonely seniors on lockdown and for and interaction and flowers near mass graves of Soviet doctors in hospitals; with trade unions RSPP soldiers who died during World War II; ↗ Targeted support of children with ↗ Events held to celebrate serious illnesses; the 75th anniversary of the Victory in ↗ Initiatives to refurbish city At RusHydro Group, employees the Great Patriotic War: congratulations infrastructure. are free to fully exercise their right to veterans, participation in the Windows to freedom of association. Most of Victory, Garden of Memory, Immortal As part of the volunteering and charitable of RusHydro Group’s companies Regiment, St. George Ribbon events, Young Energy program, the Group’s have trade unions in place. In 2020, collection of food baskets; employees facilitate social integration 30,770 employees of RusHydro Group ↗ Visits to the Company’s facilities, and provide professional guidance for (46.6% of the headcount) were members contests and other events held to children from orphanages. The Young of trade unions. 407–1 celebrate the 100th anniversary of Energy covers twelve orphanages the GOELRO plan; and involves over 120 volunteers from All of RusHydro Group’s generation ↗ Volunteering initiatives to celebrate RusHydro Group. In 2020, offline branches and 31 subsidiaries have the Knowledge Day and the New Year: meetings with mentors were restricted collective bargaining agreements in place. clean-up days, festivals, competitions, due to the pandemic. Yet volunteers still In 2020, 94.7% of the Group’s employees contests, special ceremonies and gave catch-up lessons in Russian and were covered by collective bargaining greetings in social institutions for orphans Maths to children in orphanages as part agreements. 102–41 and children without parental care, kids of their preparation for the high school with special needs, kids with special needs, graduation exams and entrance exams RusHydro and its 11 subsidiaries lonely seniors, and in child care facilities; at technical schools. In 2020, 42 children are members of the All-Russian ↗ Collecting gifts for orphans and from the orphanages supported Industry Association of Electrical children without parental care, kids with by RusHydro entered professional Power Industry Employers “ERA of special needs, kids with special needs, educational institutions; a girl from Russia”, while another subsidiary has and lonely seniors; Lastochka Orphanage (Republic joined the Industry Tariff Agreement ↗ Fundraising and purchasing toys, of Khakassia), who graduated from for the Electrical Power Industry of food, gifts for families with three or more the Divnogorsk hydropower technical the Russian Federation. children and those in need; school and specialized in hydropower facilities, was employed by Kolymaenergo. The Industry Tariff Agreement is a regulation governing social and Due to the COVID-19 pandemic and In 2020, RusHydro employees joined labor relations and defining the general associated restrictions on public the all-Russian charity project Dream principles for economic relations events, in 2020, annual blood donation With Me as part of the Christmas at energy companies. The Agreement campaigns at RusHydro Group offices Tree of Wishes campaign launched sets a minimum level of guarantees had to be cancelled. However, many of by the Russia — Land of Opportunity for employees and provides the Company’s employees still decided presidential platform. The aim of a framework for collective bargaining to donate blood in blood centres across Russia. the campaign is to grant wishes to agreements at the Company and its children and teenagers. subsidiaries.
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All companies that are “ERA of Russia” In case of changes in organizational or members comply with the key provisions technical conditions of labor, or changes of the Industry Tariff Agreement of control, or restructuring, employees pertaining to: and their representatives shall be ↗ the amount and frequency of notified within the timeframe set out in indexation of the minimum monthly the Russian labor legislation. In addition, rate of pay; under Clause 4.9.1 of the Industry Tariff ↗ one-off payments made prior to Agreement, employers must notify trade a paid leave; unions of the expected reorganization ↗ financial assistance provided in within 20 days after the meeting of the face of certain events (marriage, shareholders adopts relevant resolution, childbirth, death of close relatives); and disclose the schedule of such ↗ one-off payments to retiring reorganization. Under collective employees; bargaining agreements of branches and ↗ compensation to families in cases of subsidiaries, appropriate provisions of work-related fatalities and deaths caused the Industry Tariff Agreement apply to by common diseases or home accidents; reorganization, and either party may and initiate mutual employment consultations. ↗ other benefits provided for by 402–1 30,770 the Industry Tariff Agreement if employees the company is financially able to of RusHydro Group make the payments (50% discount of are members of trade unions the regular charge for electricity and heat, compensation of childcare expenses, monthly compensation payments to employees on childcare leave, etc.).
Notably, RusHydro provides employee benefits and guarantees that are higher than those set forth in the Industry Tariff ↗ For more details on Agreement in terms of both scope and the Industry Tariff Agreement, visit the website of amounts paid. 401–2 the “Era of Russia”
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highSOCIAL RESPONSIBILITY
+ 19.4% charity expenses THE AMOUNT OF TAX REMISSIONS OF RUSHYDRO GROUP TO THE BUDGETS OF ALL LEVELS
↗13.8% Creating 93.4 conditions and RUB bn opportunities for the sustainable development of the local communities where RusHydro Group operates and creating a favorable social environment is one of the priority areas of the Company’s activities LOW
↗ For further details, see page 40
104 According to the results of the first national anti-corruption rating of the Russian business, RusHydro was awarded the highest A1 class rating – a company with the highest level of anti-corruption high enforcement
CONFIRMED CASES OF CORRUPTION 0 cases 586 employees
were trained in anti-corruption policies and methods LOW CORRUPTION RISK ANNUAL REPORT | 2020
Occupational Health and
Workplace Injuries SH
Distribution of responsibility for occupational health Workplace safety 6 management and safety management 403–3 framework
103–2 403–1 Level Member of ↗ Management of health and safety activities at hydropower facilities
the Management Functions Board, First Deputy ↗ Setting up and ensuring oversight over The key areas, directives, and General Director – health and safety activities, including commitments regarding employee safety Chief Engineer preventive measures to minimize are set forth in RusHydro Group’s operational risks and protect employee Health and Safety Policy1. health The Company also has the following internal regulations in place: ↗ Regulations on PJSC RusHydro’s Industrial and ↗ Development, oversight and control of Occupational Health and Safety Occupational occupational health and industrial safety Management Framework2; Safety Department measures at the Company level ↗ 2020-2023 Action Plan for Injury Risk Mitigation at RusHydro Group3; ↗ RusHydro’s Internal Standard No. 05.02.126–2020 (Rules for the Safe Health and safety ↗ Development, oversight and control of occupational health and Maintenance of Hydraulic Structures functions at industrial safety measures directly and Hydroelectric and Hydromechanical branches and at branches and affiliates Equipment at Hydroelectric Power Plants)4; affiliates ↗ regulations governing RusHydro’s production operations and processes5. To control and monitor contractors and ↗ assesses the knowledge of employees RusHydro Group’s occupational health subcontractors operating at its facilities, authorized to issue instructions and and safety management framework RusHydro Group: requests, manage and supervise covers organizational, technical, sanitary ↗ collects data on their employees for operations; prepares regulatory and hygienic, treatment and preventive, granting access to the facilities; documents for them; medical and social measures aimed ↗ holds health and safety briefings ↗ develops and implements corrective at ensuring safety and protection of (including fire safety and safe work actions based on the monitoring of employee capability, health and life. practices) for contractors’ employees; contractors’ operations.
1 Approved by RusHydro’s Order No. 372 of April 20, 2015. 2 Approved by RusHydro’s Order No. 744 of September 21, 2020. 3 Approved by RusHydro’s Order No. 1075 of December 18, 2020. 4 Approved by RusHydro’s Order No. 519 of July 3, 2020. 5 Approved by RusHydro’s Order No. 730 of September 10, 2019. 6 Approved by RusHydro’s Order No. 420 of June 15, 2018 and amended by RusHydro’s Order No. 90 of February 5, 2021.
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Key focus areas Emergency and fire response drills are ↗ workplace rounds to identify also a routine exercise at the Company’s violations of occupational, industrial in health and safety facilities, as are occupational health and fire safety rules by in-house and management and safety briefings for in-house and contractor staff; contractor staff. In 2020, a total of 7,049 ↗ reviews of proposals from employees, employees completed occupational trade unions or other employee Occupational safety training safety courses, including 640 enrolled in authorized bodies aimed at improving and knowledge assessment the Corporate University’s programs. working conditions and occupational 403–5 safety 403-4; ↗ (occupational) health and safety The training is based on a special Mitigating workplace provisions in formal agreements with occupational safety course including injury risks trade unions 403-4; tests to assess how well employees and ↗ purchasing and restocking first-aid kits; labor safety officers1 know the relevant One of the Company’s priorities is to ↗ potable water supply to employees; requirements. We judge this from both make sure that workplaces comply with ↗ infectious disease prevention; the theoretical and practical standpoints statutory health and safety requirements. ↗ personnel preventive vaccination; and do not charge any employees for The assessment of 100% workplaces ↗ training employees on first aid to taking this program. takes place as scheduled. the injured using robot simulators and distance learning; Employees taking up a new job also A range of initiatives is implemented to ↗ arranging for employee visits to sports undergo dedicated training and internship identify occupational hazards, assess facilities and swimming pools; in the workplace. The thematic events occupational risks and investigate ↗ centralized procurement of protective include those aimed at: accidents at the Group’s production clothing and footwear in the uniform ↗ preventing injuries in electrical facilities, including: 403–2 corporate style for employees of installations, work at height, confined ↗ special assessment of working the Company’s affiliates; spaces, pressure equipment, construction conditions to identify occupational ↗ providing employees with protective work, loading and unloading operations, hazards; clothing, footwear and personal protective lifting equipment, appliances and ↗ assessment of workplace conditions, equipment (PPE); mechanisms; definition of their class; ↗ organizing PPE storage, care, repair ↗ improving production safety culture, ↗ operational control of compliance and replacement; ensuring traffic safety, training staff for with sanitary rules as well as sanitation ↗ providing employees with detergents fall and winter seasons; and epidemic prevention measures; and decontaminants; ↗ training staff for maintenance ↗ staff interviews and meetings; ↗ providing milk or equivalent products campaigns. ↗ overviews of injuries in electrical to employees working in hazardous installations and development of injury conditions; prevention measures 403-4; ↗ disinsection and deratization measures.
1 Except for part-timers and probationary employees.
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Occupational healthcare Injuries and Injuries mainly occurred due to breaches 403–6 of work management requirements by occupational persons in charge. Each accident was Working conditions at the Group’s diseases investigated, with urgent preventive facilities are assessed on a regular basis. measures put in place. If these conditions are found hazardous, the employees receive social guarantees In 2020, RusHydro Group had In 2020, RusHydro Group recorded and compensations. Medical staff 28 accidents involving its own personnel, an occupational disease affecting monitors employee health via mandatory resulting in 28 injuries and seven a skilled specialist (a man) as a result of regular medical check-ups and psychiatric fatalities. In total, two managers (men), noise. The Company issued a relevant examinations. In 2020, no instances three specialists (men) and 23 workers report. No occupational diseases were of unfair treatment as a result of health (21 men and two women) were injured. recorded by RusHydro’s contractors in condition were identified. No health 403–9 the reporting period. 403–10 condition data (personal data) are disclosed to third parties. 403–3
Our VHI coverage includes: ↗ organization and provision of healthcare services in line with the outpatient and inpatient care, and Number of casualties Number and types of injuries emergency medical aid programs; of accidents in 2020 ↗ outpatient care, emergency and routine 2 inpatient treatment, emergency medical 0.513 1 aid and foreign travel insurance; 1 0.234 0.272 ↗ preventive measures (employee 0.296 0.248 0.256 1 vaccination and examinations) to reduce threats to human life or health. 0.060 0.030 4 14 0 28 0.049 0.078 injuries VHI forms a part of the benefits package 0.012 and covers all the staff. All Group employees receive voluntary insurance 41 1 against accidents and diseases. 28 28 The insurance coverage applies 24/7. 24 4 20 19 17 8 9 Bone fracture 2018 2019 2020 Bruising Thermal burns RusHydro Subgroup Electric shock RAO ES East Subgroup Ligament rupture Lost Time Injury Frequency Rate (LTIFR) Wounds Fatal Injury Frequency Rate (FIFR) Bites Other
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In 2020, the hazards that resulted Health and safety Plans to improve the H&S in severe injuries included: management framework ↗ mechanical hazards (six severe expenses injuries); The 2021 calendar plan provides for ↗ electrical hazards (one severe the following initiatives: injury). The Company consistently provides ↗ improve occupational safety based funding for health and safety and on zero tolerance to OHS violations; In 2020, eight injuries (bruising and bone workplace injury prevention initiatives, ↗ improve personnel training and fractures) were recorded among workers including RUB 2,270.6 mn invested during competencies; of contractors operating at RusHydro the reporting period. ↗ improve safe work practices; Group’s facilities where the Company is ↗ raise public awareness about safety responsible for ensuring safe working Health and safety expenses declined at energy facilities. conditions (six men, including two fatal due to lower spending on measures to injuries, and two women). In connection improve labor conditions or prevent with all the accidents, the Company took workplace accidents, partly offset by urgent measures and developed an action increased costs associated with measures plan to eliminate the impact on others. to prevent occupational diseases.
Categories of employees with fatal Health and safety expenses, Health and safety expenses by and severe injuries in 2020 RUB mn category in 2020, %
1 2,464.7 2,270.6 16.9 2,083.8 491.6 2 469.4 489.5 37.0
14 7 2,270.6 injuries RUB mn 1,973.1 1,801.2 1,594.3 4 34.2
11.9
2018 2019 2020
Severe injuries to workers RusHydro Subgroup Provision of personal protective Fatal injuries to workers RAO ES East Subgroup equipment Fatal injuries to managers Improvement of labor conditions Fatal injuries to skilled specialists Prevention of occupational diseases Injury rate reduction and accident prevention
109 ANNUAL REPORT | 2020
Environmental Protection
RusHydro Group operates hydropower Environmental RusHydro Group takes into account generation facilities accounting for over global standards for environmental 80% of the Group’s electrical capacity. management management and international best This puts biodiversity conservation at system SH practices applicable to energy projects. the top of its strategic priorities, along While planning and carrying out its with a focus on greenhouse gas and operations, the Group abides by other pollutant emissions from coal and RusHydro Group adheres to environment the precautionary approach adopted by gas fired power plants. Environmental protection and sustainable use of the UN Conference on Environment and metrics underpin its ongoing natural resources while observing Development in 1992.1 modernization initiatives together with the approved Environmental Policy, which energy conservation and higher energy is based on Russia’s national policy for RusHydro’s subsidiaries undergo an annual efficiency, advancement of renewable environmentally sustainable development audit to confirm their compliance energy, and innovative development, and safety, the Constitution of the Russian with the ISO 14001 environmental which cumulatively helps reduce negative Federation, federal laws and regulations, management system. In March 2020, environmental footprint and increase and international treaties of the Russian DRSK had its environmental management the Company’s shareholder value. Federation governing the same. system recertified under ISO 14001:2015. The Environmental Policy is binding The audit of Yakutskenergo’s integrated RusHydro Group ensures environmental on all companies within RusHydro Group management system, including safety at all stages of the life cycle of its as well as entities that collaborate with the environmental management system, industrial facilities. Prior to starting a new the Group on contractual terms. was conducted remotely in two stages, project or modifying the existing facilities with no inconsistencies identified. (at the project initiation and design The Policy sets out KPIs seeking to Due to the restrictions resulting from stages), the Company procures to assess increase the installed capacity of low- the novel coronavirus infection outbreak, their impact on environment. carbon generation, reduce direct and per DGK performed no environmental audits unit greenhouse gas emissions, prevent in 2020. species elimination as a result of operating activities, additionally train staff in To assess the impact on environment environmental protection, etc. The plan by and ensure industrial control, RusHydro 2025 is to increase the share of installed introduced corporate standards such as 2020 saw no incidents or accidents capacity of low-carbon generation and Hydroelectric Power Plants: Environment causing environmental damage within reduce greenhouse gas emissions by more Protection, Environmental Impact RusHydro Group. than 6% as compared to 2015 (base year Assessment. Guidelines and Hydroelectric recommended by the Russian Ministry Power Plants: Industrial Environmental of Economic Development). The intensity Control. Standards and Requirements.
of СО2 emissions is set to decrease 7.7% in the electricity generation segment and RusHydro has a robust environmental 6.4% in the heat production segment. impact management framework in place.
1 “Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.” (Rio Declaration on Environment and Development, 1992).
110 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDIX THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
RusHydro’s environmental RusHydro Group has a permanent Investments in environmental management system expert collective body, the Scientific and protection Technical Council (STC), which provides for a unified system of technical In 2020, total investments in RusHydro Group1 expertise ensuring that R&D solutions, environmental protection stood at projects and programs are examined RUB 1,737.8 mn (down 8.4% y-o-y), driven ↗ RusHydro’s Executive Office for compliance with the Technical Policy by lower current (operating) costs and (Management Board) and applicable technical regulations. costs for capital repair of environmental ↗ Deputy Director General for To ensure environmental safety while protection fixed assets. Project Engineering and International developing new technical solutions, Cooperation the Company established the STC’s ↗ Environmental Resources task force on water reservoirs and RusHydro Group’s environmental Management environmental protection. costs by type, RUB mn ↗ Deputy Chief Engineer ↗ Department of Technical Regulation 1,897.1 The Group supports industry-specific ↗ Environmental protection 1,693.5 246.6 1,737.8 and international initiatives to reduce specialists of the Group’s branches 159.2 140.0 the man-made load on the environment and subsidiaries 417.4 and strives to adopt best practices 363.7 485.8 for the successful implementation of its environmental projects. RusHydro Scientific and Technical is a member of international industry associations such as the Center Council (STC) 1,170.6 1,233.1 1,111.9 for Energy Advancement through Technological Innovation (CEATI), ↗ STC Bureau ↗ STC’s task forces on equipment, the International Hydropower facilities and business areas Association (IHA) and the International 2018 2019 2020 ↗ STC’s task force on water Commission on Large Dams (ICOLD). reservoirs and environmental Membership in these organizations Current (operating) costs per year protection enables the Company to interact with Environmental protection services the world community on the safe, Costs for capital repair of environmental innovative and sustainable development protection fixed assets of hydropower. Expert community To promote the principles of sustainable ↗ R&D institutions development in Russia, the Company ↗ Institute for Water Problems of contributes to the implementation the Russian Academy of Sciences of the Hydropower Sustainability ↗ Faculty of Biology of the Moscow Assessment Protocol (HSAP) as State University a statutory instrument. ↗ Papanin Institute for Biology of Inland Waters of the Russian Academy of Sciences ↗ Federal Agency for Water Resources, etc.
1 Based on the Company’s new organizational structure approved by Order No. 58 of February 5, 2021.
111 ANNUAL REPORT | 2020
RusHydro Group’s environmental costs by area, RUB mn
Metric 2018 2019 2020 2020/2019, %
Atmospheric air protection and climate change prevention 389.7 423.2 370.6 –12.4
Waste water collection and treatment 591 609.2 602.5 –1.1
Waste management 468.2 590.4 414.5 –29.8
Protection and reclamation of lands, surface and ground waters 121.1 1 87.6 194.1 3.5
Environmental protection against noise, vibration, 3.3 4.9 3.1 –36.7 and other physical impacts
Preservation of biodiversity and protection of natural areas 8.7 12.6 60.5 380.2
Environmental radiation safety 0.09 0.1 0.3 200.0
Research activities and developments to mitigate human 12.6 16.6 10.5 –36.7 interventions
Other environmental protection areas 101.8 52.5 81.7 55.6
Total 1,693.5 1,897.1 1,737.8 –8.4
RusHydro Group’s pollution charges, RUB mn
Metric 2018 2019 2020 2020/2019, %
Charges for air pollutant emissions by on-site facilities, 2 7.8 22.2 1 7.9 –19.4 including:
for volume or amount of air pollutant emissions within 16.9 18.0 16.4 –8.9 permissible limits
for volume or amount of air pollutant emissions within 0.7 0.0 0.0 0.0 temporary permissible limits
for volume or amount of emissions in excess of approved 10.2 4.2 1.5 –64.3 limits
Charges for pollutant discharges into water bodies, including: 7. 3 13.5 8.3 –38.5
for volume or amount of discharges within permissible limits 0.4 0.5 0.5 0.0
for volume or amount of discharges within temporary 0.0 0.0 0.0 0.0 permissible limits
for volume or amount of discharges in excess of approved 6.9 13.0 7.8 –40.0 limits
Charges for industrial and consumer waste disposal, including: 63.8 56.1 38.4 –31.6
for waste disposal within permissible limits 56.9 52.7 34.8 –34.0
for industrial and consumer waste disposal in excess of 6.9 3.4 3.6 5.9 approved limits or limits set forth by the environmental impact statement and reports on industrial and consumer waste generation, usage, decontamination, and disposal
Total 98.9 91.8 64.6 –29.6
112 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDIX THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
In 2020, RusHydro Group’s limit- Environmental penalties and non-financial sanctions exceeding charges accounted for 19.97% 1 of its total pollution charges. Metric 2018 2019 2020 2020/2019, %
Penalties, RUB mn 2.3 1.6 2.7 68.8
Number of non-financial 58 35 22 –37.1 sanctions
Energy consumption ↗ modernization of HVAC systems for Energy efficiency powerhouses and auxiliary buildings and efficiency (including weather controls); 2020 saw electricity and heat ↗ rehabilitation of heated buildings and consumption across the Group totaling RusHydro Group’s energy saving facilities, elimination of warm air leaks, 4,954 mn kWh and 1,149,000 Gcal initiatives are governed by Federal reduction in indoor infiltration; respectively. Law No. 261-FZ On Energy Saving ↗ rehabilitation of heating and hot water and Improving Energy Efficiency and supply systems, electric boiler houses, TPPs heavily rely on electricity for own Amendments to Certain Legislative modernization of pump stations, elevators consumption accounting for a hefty Acts of the Russian Federation of (replacing mechanisms for frequency- 10-16% of RusHydro Group’s electricity November 23, 2009 and the respective regulated drives); generation. In 2020, HPPs consumed 1.2% programs for energy saving and ↗ replacement of hydropower units of the electricity they produced. increased energy efficiency (ESEEP). with ones with a higher efficiency rate, The companies of JSC RAO ES East modernization of automatic control and The main non-renewables used by Subgroup engaged in regulated excitation systems; the companies of JSC RAO ES East activities2 run their own programs for ↗ modernization and rehabilitation of Subgroup to produce energy include coal, energy saving and increased energy hydraulic structures, including service, natural gas, and fuel oil. In addition, they efficiency for 2021-2026.3 emergency and repair gates, phased consume some other non-renewables, rehabilitation of water intakes and including diesel fuel and firewood. Key areas for improving RusHydro’s industrial water disposal areas; As for renewables, geothermal steam from energy efficiency: ↗ replacement of power transformers the Mutnovskoye hydrothermal deposit ↗ modernization of interior and exterior, with energy saving ones, replacement in the Kamchatka Territory is used. routine and emergency lighting systems of air circuit breakers with gas-insulated The fuel mix of JSC RAO ES East (partially based on automatic controls); ones (as compressors are phased out). Subgroup’s TPPs remained virtually unchanged.
1 Calculated as a ratio of environmental charges for pollutant emissions, discharges and waste disposal in excess of approved limits to total environmental charges. 2 JSC DGK, JSC DRSK, PJSC Kamchatskenergo, PJSC Magadanenergo, PJSC Mobile Energy, PJSC Sakhalinenergo, JSC Sakhaenergo, JSC Teploenergoservis, JSC Chukotenergo, JSC UESK, PJSC Yakutskenergo. 3 Based on the updated Regulations for Developing, Negotiating, Approving, Implementing and Monitoring Programs for Energy Saving and Improving Energy Efficiency for Subsidiaries Engaged in Regulated Activities (approved by the Company’s Order No. 462 of July 2, 2018).
113 ANNUAL REPORT | 2020
RusHydro Group’s own energy consumption in 2020 302–1
In money terms, Source type In-kind RUB mn, net of VAT
2018 2019 2020 2020
Energy consumption
Electricity consumption, mn kWh 5,445 5,428 4,954 1,399.9
Heat consumption, ‘000 Gcal 978 1,100 1,149 234.6
including renewables
Geothermal energy, ‘000 Gcal 413 412 472 137.4
Hydropower, mn kWh 1,508 1,483 1,398 1,009.0
Non-renewables
Coal, mn tonnes 17.5 16.3 13.5 33,398.1
Fuel oil, ‘000 tonnes 110 159 202 3,966.3
Motor gasoline, mn liters 5.6 6.3 4.9 194.0
Natural gas, bn m3 5.1 5.6 5.6 27,816.9
Other fuel (including diesel fuel, kerosene, 147 149 137 8,109.2 and firewood), ‘000 tonnes of equivalent fuel
Energy consumption by JSC RAO ES East Subgroup JSC RAO ES East Subgroup’s consumption per unit of equivalent Metric 2018 2019 2020 fuel 302–3
Electricity, mn kWh 3,908 3,910 3,488 385.9 388.7 383.7
Heat, ‘000 Gcal 624.9 621.9 619.8
Fuel consumption by JSC RAO ES East Subgroup 160.1 159.7 159.1
Metric 2018 2019 2020
Coal, mn tonnes 17.5 16.3 13.5
Fuel oil, ‘000 tonnes 110.0 159.3 201.5 2018 2019 2020 Natural gas, bn m3 5.1 5.6 5.6
Other fuel (including diesel fuel, 122,6 125,4 126,2 Consumption per unit of equivalent fuel kerosene, and firewood), for electricity generation, g/kWh ‘000 tonnes of equivalent fuel Consumption per unit of equivalent fuel for heat generation, kg/Gcal
114 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDIX THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
In 2020, RusHydro’s ESEEP helped Water use and the Company save 26,902,000 kWh 2,334 (RUB 6,962 mn) on own consumption RUB mn discharge SH and additionally generate 2,077,000 kWh the companies of JSC RAO ES East (RUB 238.2 mn). 302–4 Subgroup spent in 2020 under their RusHydro Group operates some respective ESEEP initiatives 70 hydropower generation facilities making it a major user of national Plans to improve energy water resources with a footprint efficiency all over Russia.
In 2021, RusHydro and its subsidiaries 361 (HPPs) plan to spend RUB 16,782 mn RUB mn on energy saving and energy efficiency annual economic benefits from initiatives, which are set to save ESEEP implementation ↗ RusHydro Group has 12,156,000 kWh during the first year. a dedicated webpage with updates on water level In 2021, the companies of JSC RAO ES in reservoirs of its HPPs East Subgroup plan to spend RUB 2,375 mn on energy efficiency initiatives, which are expected to bring Water consumption RUB 379 mn of annual benefits. RusHydro strictly adheres to the applicable Russian laws and timely Energy savings by JSC RAO ES East Subgroup 302–4 obtains all necessary permits and licenses for water use and protection of water Type of energy bodies from the authorized government resources saved 2018 2019 2020 2020/2019, % agencies. The Company’s water withdrawal activities have no significant Natural gas, ‘000 m3 4,328 877 1,073 22.4 impact on water sources. 303–2 Diesel fuel, tonnes 46 123 246 100.0 of natural fuel Water withdrawal, % 303–3 Other fuel, tonnes of 29,322 46,535 25,780 –44.6 equivalent fuel 14.7 Thermal power, Gcal 28,443 19,991 50,340 151.8
Electricity, ‘000 kWh 91,099 74,610 73,617 –1.3 3.0 728.1 mn m3
82.3
Surface water bodies, including wetlands, rivers, lakes, etc. Underground water bodies Municipal and other water supply systems
115 ANNUAL REPORT | 2020
Water consumption in circulating Water discharge SH 103–2 Waste water discharge into water water supply systems and recycling bodies by treatment method, water supply systems in 2020, % The Group discharges water in strict mn m3 per annum 306–1 compliance with the applicable Russian 0.6 601.4 594.9 laws. The rights to use water bodies for 9.7 9.2 545.5 such purposes are confirmed by relevant 5.2 permits and licenses issued by authorized government agencies. The same permits 353.6 348.6 and licenses set out the applicable 312.5 3,283 discharge limits. mn m3 22.6 10.8 In 2020, waste water discharges 33.7 totaled 545.46 mn m3, including 545.45 mn m3 discharged into water 215.5 203.4 217.0 bodies and 0.01 mn m3 underground, 99.4 down 9.11% y-o-y, reflecting lower 2018 2019 2020 water discharge volumes at some Far Circulating water supply Eastern power plants. No treatment Recycling water supply Insufficiently treated The bulk of RusHydro Group waste Clean under statutory requirements water (93%) includes waste water Treated as required at treatment 728.07 mn m3 of water was taken in 2020, produced after cooling the equipment facilities (biological, physical, chemical, mechanical treatment) down 4.0% y-o-y, with 97% of water used which requires no treatment due to for operational purposes. The decrease the specific nature of the technological was driven by lower water withdrawal process, as it is not contaminated when volumes at some Far Eastern power plants passing through the plant cooling loop. Waste water discharge by facing a reduction in electricity and heat Over 57% of its waste water is rated destination, mn m3 per annum generation. 303–5 as clean under statutory requirements 306–1 due to the use of the same water body 618.99 600.24 for withdrawal and discharge of waste 0.01 5.47 0.01 545.46 Water intake reduced by water, while 39.8% thereof is classified 5.29 0.01 as contaminated without treatment due to withdrawal of salt water for cooling 4% purposes and its discharge into a fresh 613.51 water body. Insufficiently treated waste 594.94 waters account for only 2.0% of total 545.45 waste waters.
2018 2019 2020
Water bodies Ground surface Subsurface
116 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDIX THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Air pollutant Greenhouse gas emissions Direct greenhouse gas emissions SH RSPP 103–2 by JSC RAO ES East Subgroup emissions (scope 1), mn tonnes 305–1 No greenhouse gas is directly emitted 35.08 35.27 when operating hydropower generation 0.01 0.02 30.13 Pollutant emissions facilities and those based on renewables. 0.12 0.12 The Group records CO emissions for 0.01 2 0.09 Air pollution is monitored at all JSC RAO ES East Subgroup using carbon production facilities of RusHydro Group feedstock. and is governed by relevant permits 34.94 35.14 and licenses. Still, emissions of greenhouse gas are 30.02 calculated in accordance with Order In 2020, significant air emissions totaled No. 300 issued by the Ministry of Natural 175,796.4 tonnes, down 24.1% y-o-y, Resources and the Environment of driven by the exit of Primorskaya GRES the Russian Federation on June 30, from the Group coupled with lower 2015, Guidelines for Calculation of Gross 2018 2019 2020 electricity generation and fuel Carbon Dioxide Emissions by TPPs and consumption and better fuel quality Boilers (RD 153-34.0-02.318-2001), and СО2 emissions at some Far Eastern power plants as data from the Carbon Fund. Greenhouse N2O emissions in CO2-eq. a result of efforts to reduce air pollutant gas emissions are calculated per facility CH4 emissions in CO2-eq. emissions. based on the fuel consumption of each facility.
Significant air emissions across In 2020, emissions of greenhouse gas Breakdown of JSC RAO ES RusHydro Group, ‘000 tonnes shrank by an exciting 14.6% as a result East Subgroup’s direct greenhouse 305–7 of the Luchegorsky coal strip mine and gas emissions by source type Primorskaya GRES technologically linked (scope 1), % 236.8 231.7 to it exiting RusHydro Group in June 2020. 102–10 95.3 87.6 175.8 28.9 30.1 34.6 The reporting year saw a 21.2% decline 2.1 2.5 66.5 in the aggregate greenhouse gas 3.2 emissions generated by solid fuel 81.5 81.1 combustion and a significant decrease 52.0 in N2O and СН4 emissions by 20.4% and 69.0 19.6% respectively. 67.4 62.2 60.0 63.0 57.3
2018 2019 2020 2018 2019 2020
NOX
SOX Natural gas combustion Solid emissions Fuel oil combustion Solid fuel combustion
117 ANNUAL REPORT | 2020
One of the key challenges accounted Artemovskaya CHPP-2, the second RusHydro Group is not involved in cross- for by RusHydro Group in its updated stage of Yakutskaya GRES-2, border waste flows. Accumulated waste is Environmental Policy is the global climate Vladivostokskaya CHPP-2, collected by specialized contractors duly change and need to adapt to global Komsomolskaya CHPP-2; licensed to collect, transport and treat warming effects threatening human life ↗ commissioning of new smaller HPPs; such waste. 306–4 and health, flora and fauna, and causing ↗ TPP efficiency improvement programs; changes in long-standing hydrological ↗ expansion of RES (solar and wind In terms of volumes, the ratio of hazard and meteorological patterns. generation) projects. classes I-V wastes disposed and decontaminated in 2020, including those Low-carbon development is therefore The Expansion of Installed Low-Carbon collected by third party contractors a primary objective for RusHydro Group. Capacity target is planned to be achieved for further treatment, to total hazard Its Environmental Policy sets a number with the Comprehensive Modernization classes I-V wastes generated during of 2025 targets, including the reduction Program (Long-Term Development the same year came in at 0.15x. 2020 saw of greenhouse gas emissions and Program for 2012-2020 with a prospect 20,532.8 tonnes waste disposed of, emission intensity and expansion of up to 2025) providing for retrofit of 37.4 tonnes decontaminated, and low-carbon installed capacity. RusHydro Group’s generating facilities. 265,032.3 tonnes collected by third party In addition, the Group consistently contractors. 306–2 implements and intends to continue its
Intensity of СО2 emissions renewable energy projects, including by JSC RAO ES East Subgroup,1 the construction of smaller HPPs Disposal of coal ashes from 2 tonnes CO2-eq. 305–4 305–5 currently underway in Northern Caucasus. RusHydro Group’s coal-fired TPPs 769.6 783.1 737.2 The aggregate ash and slag materials (ASM) accumulated by RusHydro Group’s Waste SH 103–2 TPPs in the Far Eastern Federal District total 121.5 mn tonnes, with about 366.9 366.4 366.9 In 2020, the aggregate waste generated 2 mn tonnes being accumulated per year. by RusHydro Group’s power facilities To reduce ASM accumulation, the Group totaled 1.9 mn tonnes, down 92.0% y-o-y. has developed technical specifications for using ASM as a by-product, thus Most wastes are those belonging to enhancing its appeal to, and facilitating hazard classes IV and V (low risks or its further use by, prospective
2018 2019 2020 practically no risks), such as bottom consumers. coal ashes and waste from construction From power generation and repairs. In the reporting period, RusHydro takes further steps to From heat production the aggregate waste reduction was increase ASM disposal volumes through attributable to a significant decline in cooperation with federal executive class V waste following the disposal of authorities aimed at amending laws Reduction of greenhouse gas emissions LUR (soil stripping operations). and regulations to provide government is expected to be achieved through: support for ASM processing activities, ↗ replacement of retiring TPP In the reporting period, waste reduction allow energy companies to retain savings capacities in the Far East with more was attributable to a significant decline from ASM utilization in their tariff-driven advanced and environmentally friendly in class V waste following the exit of LUR revenues, provide grants to consumers thermal power plants, now under from the RusHydro Group in 2020 102–10 using ASM-based construction products construction. The modernization Despite the fact that LUR’s assets were (for example, those participating in program provides for construction part of RusHydro Group until June 2020, the Far Eastern Hectare program), and and upgrade of five power plants, the indicator 306-2 does not include to ensure ASM usage in municipal and namely Khabarovskaya CHPP-4, the company’s waste for this period. 306–2 regional construction projects, whether
1 Net of Cascade of Viluysky HPPs and solar power plants producing no greenhouse gas emissions. 2 The СО2-equivalent emission intensity is calculated as a ratio of total emissions (tonnes СО2-eq.) to electric power (mn kWh) and heat (‘000 Gcal) produced.
118 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDIX THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Total waste, ‘000 tonnes 306–2
Hazard classes 2018 2019 2020 2020/2019, %
RusHydro Subgroup 23.2 20.7 23.3 12.7
Hazardous waste class I and II 0.018 0.021 0.018 –14.3
Hazardous waste class III, IV and V 23.2 20.7 23.3 12.8
RAO ES East Subgroup 29,597.0 23,807.8 1,894.5 –92.0
Hazardous waste class I and II 0.045 0.050 0.041 –18.0
Hazardous waste class III, IV and V 29,597.0 23,807.7 1,894.5 –92.0
RusHydro Group 29,620.2 23,828.5 1,917.8 –92.0
Hazardous waste class I and II 0.063 0.071 0.059 –16.9
Hazardous waste class III, IV and V 29,620.1 23,828.4 1,917.8 –92.0 residential or non-residential, and as Biodiversity and rivers in the Krasnoyarsk Territory, inert materials in road building and land the Samara Region and the Kabardino- leveling. conservation SH Balkarian Republic, with some 1.5 mn fry of valuable fish species released. The Group also considers implementing RAO ES East’s grid infrastructure pilot projects to manufacture ASM-based extends to specially protected natural Zhigulevskaya, Saratovskaya construction products with a view to areas, sharing them with rare plant and and Volzhskaya HPPs increased water generating direct revenues from ASM animal species. 304–1 However, none flows to provide for water impounding processing activities, with feasibility of the Company’s power generation at the Volga-Akhtuba Floodplain studies to be developed in 2021. facilities is located within such areas. and create a favorable environment Sakhalinskaya GRES-2 and the CHPP in Neither does it cause reduction for fish spawning runs. Some HPP dams Sovetskaya Gavan produce up to 60,000 of species, habitat conversion, or are equipped with fishways for free and 100,000 tonnes of ash and slag introduction of invasive species, passage to the spawning grounds. materials per year, respectively, which pests or pathogens. 304–2 makes them prospective targets for such Since 2017, Severtsov Institute of Ecology pilots. With most of the Company’s activities and Evolution (the Russian Academy of centered on rivers, much attention Sciences) has been relying on RusHydro’s is paid to the restoration of fish financial support to implement a joint populations. 304–4 2020 saw fish project focusing on the Persian leopard By 12.5 stocking events at water reservoirs reintroduction in North Ossetia. times In 2020, two species of the Persian reduced y-o-y leopard raised in the Sochi Breeding waste generation RusHydro’s Board Center were released in the Turmonsky of Directors determined Sanctuary with support from RusHydro. biodiversity conservation In 2020, scientists continued to monitor as one of the priority tasks in its Environmental the released animals using data from Policy.1 satellite collars, on-site research expeditions, photos and videos. EU13
1 Approved on August 9, 2018.
119 ANNUAL REPORT | 2020
The joint efforts of the Amur Tiger RusHydro Group supported 18 specially Protected species’ habitats Center and RusHydro helped increase protected areas with a view to raising affected by activities of the Siberian tiger population to environmental awareness among young RusHydro Group 304–4 600 animals. The Company assisted people, fostering an attitude of care the Amur Tiger Center in equipping towards nature, preserving biodiversity The habitat of the mandarin duck its field research stations, as well and saving natural habitats of rare (Aix galericulata) in the Amur Region is in as developing and deploying tiger and endangered plant and animal the area of the Nizhne-Bureyskaya HPP recognition software. In 2020, the Bikin species, and to promote domestic reservoir. As a rare species, the bird is National Park and the Lazovsky, tourism. As part of the Ecological on the Russian Red List and the 1996 Ussuriysk and Sikhote-Alin nature Paths project, seven nature trails IUCN Red List of Threatened Animals, reserves implemented major initiatives were renovated and upgraded in 2020 and mentioned in Appendix 2 to the Bonn on the Siberian tiger reintroduction in the Amur, Nizhny Novgorod and Convention and migratory bird protecting with support from RusHydro. Novosibirsk regions, the Karachay- appendices to bilateral agreements Cherkess and Chuvash republics. between Russia, Japan, the Republic As part of the Snow Leopard – A Living Three eco-zones were constructed in of Korea and the DPRK. Symbol of the Western Sayan Mountains the Primorye Territory, the Republic project, the Sayano-Shushensky of Khakassia, and the Amur Region. The reservoir area also covers a primary Nature Reserve continues to improve habitat of Aleuritopteris kuhnii, a rare its scientific monitoring system for For 16 years, RusHydro Group has been fern listed in Russia as a threatened plant the protection of snow leopards and promoting environmental education species. their habitats. The efforts by scientists and responsibility through oBEREGAi, proved to be efficient amid the rising a charitable volunteer project aimed The process of impounding the Nizhne- numbers of snow leopards. In October at cleaning up areas around rivers and Bureyskaya HPP reservoir also affected 2020, a female leopard brought from reservoirs, improving beaches and the habitats of local ungulates. Tajikistan was shot by a trail camera embankments, including landscaping to have given birth to two cubs. and planting of greenery. The total As part of the United Nations number of eco-marathon volunteers Development Program, the Global In 2020, with the support of RusHydro, in 2020 exceeded 3,000 people from Environmental Facility and activities to reintroduce the Red List 13 regions, including RusHydro Group’s the Ministry of Natural Resources bird species, such as red-crowned employees and local residents. and the Environment of the Russian and white-naped cranes, continued in Federation, RusHydro collaborated the Khingan Nature Reserve in the Amur In 2020, the Company provided financial on a unique project titled “Bureysky Region, and studies were conducted assistance to the Russian Geographical Compromise” seeking to preserve in the Kirzinsk Nature Reserve in Society’s grant fund designed to biodiversity during the construction the Novosibirsk Region to study migratory encourage research on natural of Nizhne-Bureyskaya HPP. concentrations of the common crane. phenomena and rare animal species, Other project participants included while also supporting the organization’s the Directorate for Wildlife Protection The Company assisted the Prioksko- publishing activities and environmental and Management and Specially Terrasny Nature Biosphere Reserve and geographical expeditions. Protected Natural Areas (state- and the Caucasus Nature Reserve financed entity, the Amur Region), in repairing self-feeding stations for JSC Nizhne-Bureiskaya HPP, research ↗ The water bodies affected by wastewater wisents and purchasing equipment, discharges of RusHydro Group 306–5, and environmental organizations components and supplies to study including their affiliation, volume and mass media. The project pulled and biodiversity value, are disclosed and monitor these animals. in Appendix 34 of the Appendices Book together a number of measures such
120 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDIX THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
as the establishment of the Bureysky RusHydro Group partners with nature ↗ Amur Region – red-crowned and Nature Park, installation of over reserves and non-governmental white-naped cranes; 25 self-feeding stations for ungulates organizations to arrange for excursions, ↗ Republic of North Ossetia (Alania) – with food enriched with minerals photo exhibitions devoted to flora and Persian leopard, wisent; and vitamins, placement of over fauna of protected areas, as well as quests, ↗ Kamchatka Territory – marine 100 nest boxes for mandarin ducks and festivals and environmental contests, mammals; replanting of over 400 endemic species. with a particular focus on saving rare and ↗ Novosibirsk region – common crane. Another rare species affected by endangered plant and animal species: the construction of Nizhne-Bureyskaya ↗ Primorye Territory – red-crowned crane HPP and activities of Far Eastern and Siberian tiger; Rehabilitation of disturbed Distribution Company is the Far Eastern ↗ Perm Territory – white-tailed eagle; lands stork (Ciconia boyciana). The bird is on ↗ Republic of Sakha (Yakutia) м wood bison; the Russian Red List and the 1996 IUCN ↗ Kabardino-Balkarian Republic – As RusHydro Group engages in Red List ofThreatened Animals, and Caucasian tur; the construction and operation of mentioned in Appendix 1 to the CITES ↗ Moscow Region – crane; energy facilities, it needs to implement and migratory bird protecting ↗ Republic of Khakassia – grus, mandatory compensatory measures in appendices to bilateral agreements Pallas’s cat; order to save affected natural habitats between Russia, Japan, the Republic ↗ Krasnoyarsk Territory – snow leopard, and rehabilitate disturbed lands. of Korea and the DPRK. Siberian musk deer;
Habitats preserved and rehabilitated by JSC RAO ES East Subgroup 304–3
Name JSC DGK1 PJSC Sakhalinenergo2 JSC Chukotenergo Total3 January 1, 2020
Total disturbed area, ha 1,495.3 432.1 173.9 2,101.3
Total post-construction area, ha 49.3 3.2 0.5 53.0
Topsoil stockpiled, ‘000 m3 167.3 0.0 0.0 167.3 Total in 2020 Total disturbed area, ha 0.0 0.0 28.6 28.6 Total post-construction area, ha 0.0 252.9 0.0 252.9 Total rehabilitated area, ha 52.6 0.0 0.0 52.6 December 31, 2020 Total disturbed area, ha 1,442.7 432.1 202.6 2,077.4 Total post-construction area, ha 45.2 256.1 0.5 301.8 Topsoil stockpiled, ‘000 m3 167.3 0.0 0.0 167.3
1 In the 2019 Annual Report, the indicator did not include data on the assets of CHPP in Sovetskaya Gavan operated by DGK under the lease agreement. 2 In the 2019 Annual Report the indicator did not include data on the assets of Sakhalinskaya GRES-2 operated by Sakhalinenergo under the lease agreement. 3 2020 data does not include JSC LUR, which ceased to be part of the Group in 2020 (4,173.6 ha of disturbed area, 24.4 ha of post-construction area, 578,800 m3 of stockpiled topsoil as at January 1, 2020).
121 ANNUAL REPORT | 2020
Development of Local
Communities 203–1 SH
The main objective of RusHydro’s charity programs is to set the stage for sustainable development in the Company’s regions of operation, foster a favorable social environment and help unlock Russia’s spiritual, scientific, technical and intellectual potential.
Documents regulating different aspects stir the interest of undergraduates and health workers, medications, and of sustainable development postgraduates of Russian technical ventilators. The Company also financed ↗ The Company’s Charity and universities in engineering and energy the construction of an infectious diseases Sponsorship Policy1; sector professions. Participants included hospital in Saratov, the Saratov Region, ↗ The Regulations on the Organization 211 students from 20 universities. to create additional capacities for of Management of Charitable and patients amid the difficult epidemiological Sponsorship Activities of RusHydro situation. In 2020, as part of the Energy Group2; Born charity event PJSC RusHydro ↗ PJSC RusHydro’s Charity and Environment donated medical equipment worth more Sponsorship Program approved by than RUB 11 mn to 18 maternity hospitals. the Board of Directors3. The project was implemented jointly with RusHydro Group supported 18 specially the Gulfstream Foundation. protected areas. It provides funding to Total amount spent on charity these areas to assist with the efforts to in 2020, RUB bn preserve biodiversity, conduct scientific research and promote environmental Sports PJSC RusHydro 1.69 friendliness. PJSC RusHydro’s financial aid also helps implement initiatives Subsidiaries 0.08 in these areas aimed at protecting In 2020, PJSC RusHydro provided RusHydro Group 1.77 ecosystems and natural habitats, and charitable assistance to the Russian total saving rare and endangered animal and Union of Martial Arts, the Russian bird species. Whitewater Slalom Federation, the Yenisei-STM Rugby Club, the Perm Territory’s Sports Foundation for ↗ For a detailed description of biodiversity Promotion of the Kyokushin, the Martial Education conservation projects, see the Environmental Protection section. Arts Foundation, and the Lev Yashin Football Academy of FC Dynamo Moscow. In 2020, PJSC RusHydro provided financial support to eight universities Healthcare More than 40 sports schools and football, to fund the purchase of laboratory basketball, hockey, ski, tennis, chess, equipment and the preparation of new water sports and martial arts clubs from training courses. The Company set up As a result of an outbreak of COVID-19 the Company’s regions of operation corporate information zones in Peter in April 2020, PJSC RusHydro’s Board of became eligible for financial support. the Great Saint Petersburg Polytechnic Directors resolved to provide RUB 155 mn The Group also sponsored sports University and Moscow State University to healthcare organizations across its events for people with special needs in of Civil Engineering. The Energy for footprint to purchase medical equipment, the Kabardino-Balkarian Republic and Development competition was held to personal protective equipment for the Perm Territory.
1 Approved by the Board of Directors, Minutes No. 280 of December 7, 2019. 2 Approved by Order No. 956 of December 11, 2018. 3 Approved by the Board of Directors, Minutes No. 304 of February 12, 2020, updated on the basis of Minutes No. 306 of April 3, 2020, No. 309 of May 29, 2020, No. 310 of June 10, 2020, No. 311 of July 2, 2020, No. 319 of December 24, 2020.
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Culture In 2020, charitable foundations benefiting In 2020, RusHydro’s from the Company’s financial assistance subsidiaries supported: included the Vera Hospice Charity Fund, In 2020, in partnership with Dom Detskoy Live Now, Joy in Old Age, Creation Knigi, a foundation promoting children’s and Gulfstream charity organizations, 72 literature and reading culture, RusHydro Russian Children’s Foundation, and educational projects; published 8,000 copies of ElectroPLAN, Illustrated Books for Little Blind Children. a science and fiction book for middle The financial allocations were used to lend and high schoolers. In 2021, books a helping hand to children and adults with were donated to libraries and children’s serious health conditions, people with educational institutions across its special needs, low-income households 13 footprint. Financing was also granted to and distressed families. cultural projects; the BDT Friends, a foundation supporting the Tovstonogov Bolshoi Drama Theater, In 2020, the Company also sponsored and the Dynamichnye Rebyata, a teenager the VCIOM Public Opinion Research musical group. Foundation, the Social Research Expert Institute, the Russia – Land 37 of Opportunity platform, the Far East sports projects; Development Information Support Support of social Foundation, and the Foundation for Public institutions and Initiatives. organizations 20 healthcare projects; Charitable activities In 2020, more than 20 social establishments received aid from of RusHydro’s the Group. The Company’s charitable subsidiaries SH RSPP assistance helped upgrade and refurbish 12 the institutions’ facilities, prepare orphan environmental projects. undergraduates for adult life, furnish In particular, they provided support playgrounds for children with special needs, to orphanages and asylums, boarding purchase special educational equipment, schools, rehabilitation centers for minors, set up rehabilitation courses, and organize educational and cultural institutions, educational excursions and sports children’s performance groups, sports competitions. clubs and societies, and veteran organizations, while also paying much attention to specially protected areas and other environmental initiatives. Support of charitable foundations and non-profit organizations
Funds were allocated to support more than 30 charitable foundations and non-profit organizations, including those involved in socially significant projects.
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Procurement RSPP
Procurement ↗ procurement regulation relies on procurement possessing the necessary rational use of special procedures to authority and responsibility. As a result, management make purchases on an arm’s length basis the customer enjoys: as closely as practicable and provides for ↗ benefits of a regulatory framework; Procurement operations in RusHydro mandatory procedures to be followed by ↗ effective platform for procurement Group are governed by the applicable the officers in charge of procurement. management and follow-up control; Russian laws1 and other internal These procedures ensure: ↗ qualified procurement professionals; regulations (by-laws) on procurement in → careful demand planning; ↗ well-established procurement RusHydro Group, including the Uniform → market research; infrastructure (information support, Regulations on RusHydro Group’s → procurement transparency; e-commerce tools, certification, Procurement Policy (the “Regulations → focus on equality and fairness, with professional consultants, etc.). on Procurement”)2, whereby: no discrimination or unreasonable ↗ the Company’s Board of Directors restrictions on competition among RusHydro publishes information on oversees procurement management, participants where possible, or, planned procurement activities and approves the annual comprehensive if impossible, enhanced internal places up-to-date official announcements procurement program and its progress control; describing the scope of procurement report; → intended and efficient use of funds (item name), material terms of ↗ the Central Procurement Commission allocated for purchasing goods, works the competitive procurement and other (CPC) acts as a permanent collective body and services (taking into account details in the Unified Information System and shapes and carries out the uniform their life cycle cost, where applicable), as well as on an electronic trading procurement policy as well as exercises and implementation of cost-cutting platform. Following the competitive control and coordination of procurement initiatives; procedure, the Company publishes activities. The CPC Chairman is → no restrictions on participation the procurement results specifying responsible for procurement management in the procurement in the form of the winning bidder and the respective within RusHydro. The CPC appoints non-measurable requirements for price. standing procurement commissions which participants; are directly authorized to arrange for → efficient and fair selection and carry out procurement procedures. of preferred suppliers following Depending on the scope of powers, there a comprehensive SWOT analysis are procurement commissions of level 1 (with price and quality being the key and level 2 as well as ad hoc commissions. factors); and ↗ Single electronic → follow-up on contracts and use of trading platform The Regulations on Procurement set out goods, works and services purchased. the following objectives and principles: ↗ procurement regulation aims to ensure Procurement regulation is based on timely and efficient supply of goods, works a systemic approach which ensures that and services to the customer as well as uniform corporate rules are administered ↗ Unified Information prudent use of the customer’s funds; and followed, with officers in charge of System
1 Including Federal Law No. 223-FZ On Procurement of Goods, Works and Services by Certain Types of Legal Entities of July 18, 2011. 2 Approved by resolution of RusHydro’s Board of Directors No. 277 of October 4, 2018 and amended by resolutions No. 292 of June 24, 2019, No. 300 of December 4, 2019 and No. 316 of October 1, 2020.
124 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDIX THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Implementation Procurement by method2, % of the annual comprehensive Procurement type 2018 2019 2020 procurement Competitive procurement, including: 51.03 52.89 36.813 program electronic procurement 99.50 99.55 99.88 Non-competitive procurement, including: 48.84 20.38 25.66
single-source procurement 98.43 96.19 95.09 In 2020, the total value of contracts awarded under procurement procedures Procurement from related parties4 0.13 26.73 37.53 at RusHydro Group amounted to Procurement through closed bidding 0.76 0.02 0.00 RUB 291.0 bn (net of VAT), down 18% y-o-y. At the same time, the number of procurement procedures rose by 2.51% to 20,400. Open bidding In money terms, the largest portion Following the competitive procurement accounts for over 36%1 of all procurement of procurement focuses on works and procedures, the total cost of coal procedures, of which 99.88% run on services related to repair and investment procurement by all of the RusHydro an electronic trading platform. 102–9 programs (upgrade, capital construction Group entities in 2020 stood at projects) of the companies within RUB 36.0 bn (net of VAT), a 9% reduction RusHydro Group. y-o-y. This was driven by lower volumes Volume of procurement (down by 2%) and lower weighted average by area2, RUB bn (net of VAT) The procurement items include goods procurement price (down by 7%). usually purchased by energy companies: 355 core equipment (boilers and turbines), DGK remains the largest purchaser of coal transformers, switchgear cells, package at RusHydro Group. In the reporting year, 90 291 transformer substations, isolation valves, it accounted for 81%5 of coal by value 241 control valves, line accessories, cable and 89%2 of coal by notional volume in 111 50 fittings, pipelines, steam pipelines and tonnes. The total cost of coal procurement spare parts, cabling and wiring, electrical for DGK in 2020 stood at RUB 24.2 bn2 appliances, metal goods, insulators, heat (net of VAT), a 6% reduction y-o-y as 265 insulators, etc. a result of a lower (by 10%) weighted 191 180 average price following competitive One of the Group’s most important procurement procedures (market strategic priorities in procurement is environment was favorable for buyers).
2018 2019 2020 timely and efficient competitive awarding In 2020, the volume of coal purchased by of contracts for fuel supplies. DGK increased by some 5%. Operating activities Investment activities
1 The share of procurement done through open bidding declined compared to previous periods after an electronic tender was announced in Q4 2020 to raise borrowed funding with a planned value of RUB 38 bn net of VAT, with the results not yet finalized as at the report date and the value not included in the report, and also due to two large purchases from related parties to acquire assets of Zaramagsky HPP Cascade and Vladivostokskaya CHPP-2 for a total value of RUB 48.7 bn net of VAT. 2 Data of the 2018 and 2019 annual reports adjusted for data net of VAT after RusHydro Group started reporting its procurement activities net of VAT. 3 The share of competitive procurement declined compared to previous periods after an electronic tender was announced in Q4 2020 to raise borrowed funding with a planned value of RUB 38 bn net of VAT, with the results not yet finalized as at the report date and the value not included in the report, and also due to two large purchases from related parties to acquire assets of Zaramagsky HPP Cascade and Vladivostokskaya CHPP-2 for a total value of RUB 48.7 bn net of VAT. 4 In 2018, the metric covered the period from November 1, 2018 to December 31, 2018. 5 Excluding procurement to meet the needs of Primorskaya GRES, which was transferred to SUEK Group in 2H 2020, CHPP in Sovetskaya Gavan, which was commissioned in late Q3 2020, and boiler houses near Sovetskaya Gavan operated under concession agreements.
125 ANNUAL REPORT | 2020
In 2020, total procurement of oil products Sustainable Procurement for internal needs of RusHydro Group stood at RUB 10.5 bn (net of VAT), which procurement RSPP through small and is an 8% reduction against 2019. Total medium-sized procurement volume increased by around As one of Russia’s largest purchasers 11%, with the weighted average price of goods, products, services and raw businesses going down by 17%. Breakdown by oil materials, RusHydro Group is fully product was as follows: aware of its responsibility to the regions RusHydro launched a partnership ↗ total cost of diesel fuel procurement where it operates, communities and program with small and medium-sized came in at RUB 6.7 bn (net of VAT), down environment, and therefore amended businesses1 (the “Partnership Program”) 13% y-o-y. The reduction was driven by its Uniform Regulations on RusHydro which was developed in accordance both lower volumes and lower weighted Group’s Procurement Policy. According with the Russian Ministry of Economic average price (down 10% and 3%, to the regulation, any design works Development’s guidelines2. respectively); (including pre-feasibility studies) for new ↗ total cost of fuel oil procurement hydropower and thermal power projects, The Partnership Program and the register came in at RUB 3.6 bn (net of VAT), their construction and modernization, of small and medium-sized businesses up 5% y-o-y. The increase was any core equipment and technical included in the Program are available due to the fuel mix reshuffling at specifications and the terms of contracts online. The register is updated as Kamchatskenergo, which started awarded under procurement procedures necessary. replacing natural gas with fuel oil as its must be aligned with the Customer’s supplier, Gazprom Mezhregiongaz Far approved internal sustainability East, was facing a decline in natural gas regulations to ensure: production. Also, the weighted average compliance with environmental ↗ ↗ The register of small and price was down by approximately 19%; requirements; medium-sized businesses included in the Partnership ↗ total cost of oil procurement was ↗ protection of cultural heritage sites; Program is published on RUB 0.2 bn (net of VAT), down 32% y-o-y. ↗ industrial and occupational safety; RusHydro’s official website (in Russian) ↗ protection of indigenous peoples and The cost of natural gas supplies socially vulnerable groups; for RusHydro Group’s operating ↗ control over negative footprint on purposes totaled around RUB 27.7 bn climate change and the environment; (net of VAT), down 2% y-o-y due to ↗ biodiversity conservation and ↗ The list of goods, works and services purchased the 4% lower consumption of natural restoration. from SMEs can be found on gas and the average price going up the website of the Unified Information System for by 2%. All natural gas supply contracts Procurement procedures based on Procurement (in Russian) are signed following single-source tenders or requests for bids may include procurement procedures. Facilities of relevant sustainability criteria. DGK account for more than half of all Procurement from SMEs3, natural gas consumption (62%), with 36% % of total value of gas volumes coming from Gazprom 81.4 Mezhregiongaz Far East and 64% from 77.9 77.9 the Sakhalin-1 Consortium. 66.1 60.1 59.2 291 RUB bn 20.0 the total value of contracts 18.0 18.0
2018 2019 2020
Target Actual Procurement, RUB bn (incl. VAT)
1 Approved by RusHydro’s Order No. 568 of July 16, 2014. 2 Letter No. 23941-EE/D28i of November 1, 2013. 3 Procurement from SMEs is calculated as a % of the year’s total purchases by RusHydro Group companies subject to the Russian Government’s Resolution No. 1352 of December 11, 2014 (39 companies in 2018, 38 in 2019, 36 in 2020). Actual shares and procurement are based on spending.
126 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDIX THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Procurement through internal regulations were updated to СтRusHydro Group’s imports procedures for SME bidders only, bring the preparation of procurement (large purchases) by country % of total value specifications in line with RusHydro and region in 2020, % Group’s Technical Policy. To facilitate 33.5 the migration to domestically developed Importing Share in the Group’s 28.0 27.5 software, the Board of Directors country procurement, % approved1 the 2019-2021 Action Plan 23.3 24.3 Austria 70.88 21.6 for RusHydro’s increased reliance 18.0 on domestically developed software. USA 9.98 15.0 15.0 The Company’s Management Board China 7.6 6 approved adjustments to the import substitution roadmap and corporate plan2. Germany 6.80
Switzerland 2.44 In 2020, RusHydro Group’s local procurement (from Russian suppliers) Japan 2.24 2018 2019 2020 amounted to RUB 291 bn (net of VAT),
Target or 99.997% of its entire procurement. Actual Procurement, RUB bn (incl. VAT) The Company continues cooperation with the Industrial Development Fund Procurement of the Russian Ministry of Industry and Trade to implement the defence improvement plans industry diversification roadmap for Import substitution the enhancement of the domestic RusHydro Group’s key procurement energy sector within the state industrial improvement initiatives for 2021 include: projects information system and with the Russian ↗ optimization of procurement processes; Energy Agency of the Russian Ministry of ↗ development and rollout of a distance As part of the Comprehensive Energy to coordinate import substitution learning system for Group employees Modernization Program of RusHydro’s initiatives with the defence industry. involved in procurement; generating facilities, the Company plans to ↗ further automation of the Group’s increase supplies from domestic machinery As part of efforts to gradually substitute procurement processes, including producers given that, among other purchases of foreign-made goods, the development of an automated things, certain types of equipment and works and services with those of Russian analytical reporting system; components will be produced in Russia. origin having similar specifications and ↗ development of a reference data usability, the Company amended its system; To increase supplies from local import substitution roadmap until 20252. ↗ fine-tuning of category management manufacturers in 2020, RusHydro Group’s tools in procurement. Technical Policy was amended to In 2020, the actual share of imported include the requirements for increased equipment under the TR&M program reliance on domestic solutions starting stood at 24%, which is in line with from the design phase. The Company’s the import substitution roadmap target.
Share of imported equipment, %
40 39 30 25 23 24 23 23 24 24 23 20 20 12 10
0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Actual Target3
1 Minutes of the Board of Directors No. 311 of July 2, 2020. 2 Resolution of the Management Board No. 1246pr of April 17, 2020. 3 Targets were approved by Resolution of the Management Board No. 1246pr of April 17, 2020, and take into account new external factors.
127 ANNUAL REPORT | 2020 5
128 Corporate Governance System 132 Compliance with Corporate Governance the Corporate Governance Code1 133 Governing Bodies System 153 Shareholders and Investors 158 Investor Relations RusHydro Group’s corporate governance seeks to make sure that 160 Audit and Control the rights and interests of its shareholders are protected and its 176 Report on Remuneration of the Governing and investor relations are based on mutual trust. The quality of corporate Control Bodies governance is the key driver behind growth of the Company’s value and dividend yields, contributing to a greater investment appeal.
RusHydro’s corporate governance Over the past five years, the Company’s system: corporate governance system has seen ↗ builds on compliance with progressive improvements triggered the applicable Russian laws, Listing by the implementation of the principles Rules of the London Stock Exchange and and guidelines set forth in the Bank of Moscow Exchange, and the U.S. OTCQX Russia’s Corporate Governance Code, rules for international companies; including through the adoption of ↗ takes into consideration RusHydro’s own Corporate Governance recommendations set out in Code2. the Corporate Governance Code of the Bank of Russia1; The Company’s corporate governance ↗ seeks to incorporate best global principles and procedures are laid out and domestic practices. in its Charter and internal regulations, while the corporate practices are Having the Federal Agency for State formalized in the Corporate Governance Property Management (on behalf Code. of the Russian government) as the Company’s controlling shareholder exerting significant influence on the corporate governance processes is a key distinctive feature of RusHydro’s governance framework. Certain procedures for the government to exercise its rights as a shareholder are stipulated by law and set out the proceedings ↗ All internal corporate governance through which the state can use its regulations adopted corporate rights to make and pursue by PJSC RusHydro are available on decisions with respect to the Company. the Company’s website
1 The Corporate Governance Code recommended for implementation by joint-stock companies with securities admitted to organized trading as per letter of the Bank of Russia No. 06-52/2463 of April 10, 2014. 2 Approved by the Board of Directors on June 19, 2015 (Minutes No. 218 of June 22, 2015 and amended
Corporate Corporate governance (Minutes No. 239 of June 23, 2016 and No. 263 of December 28, 2017). ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Key principles 102–16 Sustainable construction and project engineering, and unit of financial and corporate law development management; governance ↗ charity – Corporate Communications Department. Professionalism, responsibility and accountability of the Board of Directors The responsibility for providing control, Operation of RusHydro’s different to the Company’s shareholders methodology support and regulation of business units and affiliates is RusHydro Group’s sustainable low-carbon coordinated at regular meetings development, as well as preserving of the working group on sustainable cultural heritage sites and biological development to assess the efficiency diversity is assigned to the Deputy of implementing key tasks in this domain. Prevention of any shareholder actions Director General for Project Engineering aimed at causing harm to other and International Cooperation1. 102–19 Key sustainable development issues are shareholders or the Company reviewed at the meetings of the Board Sustainable development activities are of Directors and the Company’s carried out by the Company’s specialized Management Board. The Committee units within the area of their functional on Reliability, Energy Efficiency and responsibility2: 102–20 Innovation under RusHydro’s Board Equitable and fair treatment of all ↗ environmental responsibility – of Directors plays an important role shareholders project engineering and international in RusHydro’s sustainable development cooperation unit, operations unit; management and also previews ↗ human resources and social policy – matters of long-term development Personnel Management and of hydropower and energy based on Organizational Development Department; other renewables (“RES”), as well as Continuous improvement of corporate ↗ innovation and future development – development of functional policies governance practices strategy, innovation and future (technical, environmental, etc.), development unit; corporate standards in technical ↗ corporate governance – unit of financial regulation, etc. 102–31 and corporate law management; ↗ power generation, improvement Exercise by all shareholders, of energy efficiency – operations unit; For the list of internal regulations outlining the Company, its governing bodies, ↗ and governing the approach to sustainable officers and other stakeholders ↗ economic responsibility – unit of sales, development and corporate social responsibility, see Appendix 35 of the Appendices Book of their rights in good faith, economic planning and investments, prevention of abuse of rights operations unit, unit of capital
Transparency and accessibility of information about the Company
Effective system of internal control and risk management
1 Order No. 420 On Distribution of Tasks, Powers and Responsibilities among RusHydro’s Managers of June 15, 2018 (as amended by Order No. 90 of February 15, 2021). 2 Based on the Company's organizational structure approved by PJSC RusHydro Order No. 58 of February 5, 2021.
129 ANNUAL REPORT | 2020
Affiliate of Directors of PJSC RusHydro. management of corporate governance PJSC RusHydro’s position on other and control bodies, information disclosure, management important matters regarding corporate social responsibility, and affiliates (KPI approval (adjustment), sustainable development. PJSC RusHydro has stakes (including participation of the affiliate in non-energy indirectly through its affiliates) organizations, nomination of candidates The RID opinion emphasizes the role in the authorized capital of companies to the affiliate’s governance and of the Board of Directors in strengthening engaged in electricity and heat generation supervisory bodies, etc.) is established the financial profile of the Company and distribution, energy facilities design, by the Management Board. (review of transactions resulting in lower construction, repair, maintenance, leverage, strategy matters, such as rehabilitation and modernization, and In addition to that, the Company’s updates to the Innovative Development other activities. internal regulations formalize the right Program and the Long-Term Development of the members of RusHydro’s Board Program, and approval of measures RusHydro has, either directly or indirectly, of Directors to access documents and to streamline investment activities). 100% or majority (as the case may be) make inquiries on affiliates while also stakes in the authorized capital of most considering matters relating to material The experts gave a positive opinion of the Group’s affiliates, which helps aspects of their business. on the new revisions of the Charter, it pursue the Group’s strategy and the Internal Audit policy, the Inside corporate governance policies all across The regulations governing affiliate Information and the PJSC RusHydro the affiliates. relations include: Board of Directors’ Audit Committee ↗ Charter of PJSC RusHydro; regulations, while also giving credit The Company contributes to affiliates’ ↗ Procedure for Interacting to the Company’s stable dividend policy strategy delivery, stable economic growth with the Organizations Where and its commitment to enhancing and investment appeal, and protection PJSC RusHydro has an interest. the quality of its annual reports. of rights and interests of the shareholders of both the Company and its affiliates. In addition to the external assessment, the Company runs annual corporate The Company manages its affiliates Corporate governance quality assessments by by being represented at general meetings the Internal Audit Service. The overall of shareholders/participants and governance quality score for 2020 was 94 out of 100%, on boards of directors and supervisory assessment an improvement y-o-y (92% in 2019). bodies of the affiliates. The assessment of the components Deciding on matters reserved to supreme In the reporting period, PJSC RusHydro’s resulted in the Company’s corporate governing bodies of the affiliates where corporate governance was externally governance framework recognized as PJSC RusHydro exercises the rights assessed by the Russian Institute of effective, with a number of moderate of the sole shareholder (participant) Directors (RID), which in September 2020 deficiencies, though (including those falls within the remit of the Management affirmed the corporate governance ranking linked to the lockdown restrictions Board. Establishing the Company’s of 8 (“Advanced Corporate Governance of 2020), and with some room for position on key matters regarding Practice” according to the National improvement. affiliates (reorganization, liquidation, Corporate Governance Rating (NCGR) increase of the authorized capital, scale). The outcome of the external and internal approval of major transactions, assessments, and also that of the self- participation of the affiliate in other RusHydro’s corporate governance was assessment, was reviewed at the meeting energy organizations, disposal of energy assessed using 160 criteria, in particular, of the Board of Directors held in person assets) falls within the remit of the Board protection of shareholder rights, on September 30, 2020.
130 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Improving list of key matters requiring a qualified majority of votes. In 2020, the Company the corporate completed the introduction of the key Corporate governance governance Corporate Governance Code standards. quality assessment by TopCompetence framework The lockdown restrictions in 2020 did not have a material negative impact The National Corporate Governance The Company has been consistent in on the Company’s corporate governance. Index published annually by TopCompetence focuses on the initiatives to improve its corporate A negligible decrease in the number the companies with the best national governance. of the Board of Directors’ meetings corporate governance practices in person is offset by the changes and provides a benchmark for In 2016-2020, some of the best practices to the Regulations on the Board comparing a company’s corporate were implemented in the Company’s of Directors approved by the General governance framework against operations, such as electronic voting Meeting of Shareholders that envisage national and international policies at General Meetings of Shareholders, a wider use of software tools to increase and standards. It underlines the correlation between a commitment integrated annual reports, an updated the efficiency of the Board of Directors. to corporate governance principles dividend policy, annual assessment While preparing for the Annual General and companies’ market cap, and of the Board of Directors’ performance, Meeting of Shareholders in absentia, enables you to understand the an enhanced role of the Board the Board of Directors resolved to arrange investors’ perception of the status of Directors in improving the risk a set of shareholder communication and trends of corporate governance management framework, enhanced quality events using the Company’s website. development in Russia since and completeness of disclosure, with For this purpose, there was a forum for the Corporate Governance Code was effected. the shareholders (with a stake of 2% and shareholders to discuss the agenda above) given the right to call for the Board of the meeting and to forward questions As at December 2019, the National of Directors’ meeting, and the extended to the Company’s management. Corporate Governance Index became an official stock exchange indicator (RUCGI). increasing the number of meetings running an independent external held by the Board of Directors assessment of the Board of Directors Based on a 2020 research, in person and its committees PJSC RusHydro is among Russia’s Top 10 in corporate governance disclosure by the quality and completeness of the information releases. Key areas for improvement as regards the Company’s corporate governance in 2021 include the following:
improving quality and relevance improving corporate governance of the information disclosed performance in the ESG ratings
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Compliance with the Corporate Governance Code1
As a result of corporate governance improvement efforts and implementation of the standards set forth in the Code, the share of principles fully observed by RusHydro increased from 95% in 2019 to 96% in 2020.
ComplianceИсполнение with принципов the principles и рекомендаций of Compliance with the principles of the Corporate Кодекса корпоративного управления, % the Corporate Governance Code, % Governance Code2
1 4 1 2018 2019 2020 8 4 4 3 4 23 Shareholder rights and equitable 1 1 1 29 treatment of shareholders 12 12 12 13
3 1 1 96 1 1 92 95 1 73 63 32 34 34
The Company’s 2016 2017 2018 2019 2020 Board of Directors 36 Observed Partially observed The Company’s Corporate Secretary Not observed 2 2 2 2
The Company complies with all Remuneration of the Company’s directors, executive bodies the fundamental principles and and other key managers 10 10 10 10 recommendations of the Corporate Governance Code recommended by the Bank of Russia. In particular, Risk management and we strictly observe those set out internal control system 6 6 6 6 in the Listing Rules of the Moscow Exchange mandatory for the stock from Level 1 quotation list. Disclosures and the Company’s information policy 7 7 7 7 In 2020, compliance criteria for certain principles set out in the Code with respect Material corporate to convening and holding in-person 1 1 actions Observance of standards and principles the Code general meetings of shareholders were 4 4 5 5 not applicable as the Annual General Observed Meeting of Shareholders was held Partially observed in absentia due to the epidemiological Not observed situation.
1 For a detailed report on the Company’s compliance with principles and recommendations set out in the Bank of Russia's Corporate Governance Code, see the table in Appendix 1. 2 Compliance with the principles of the Corporate Governance Code was assessed based on the Bank of Russia’s methodology and reporting recommendations with respect to such compliance (annex to the Bank of Russia letter No. IN-06-52/8 of February 17, 2016).
132 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Governing Bodies
Corporate governance structure 102–18
General Meeting of Shareholders (over 400,000 shareholders)
Implementation Report on the accuracy Auditor's Approval of resolutions / Election of the Company’s Election Report accountability statements
Statutory Auditor Board of Directors Internal Audit PricewaterhouseCoopers Audit (13 members, 4 independent) Commission
Appointment Chairman of the Board of Directors Recommendations Yury Trutnev Appointment Corporate Secretary Company operations
Appointment Internal Audit Service Implementation Accountability of resolutions / Appointment, accountability supervision Administrative reporting
Management Board 1 (5 members) Appointment Internal Control and Risk Management since November 10, 2020 Director – Administrative and Chairman of functional reporting Chief Auditor Appointment the Management Board – General Director Committees under 2 the Board of Directors: Victor Khmarin before November 10, 2020 ↗ Strategy Committee Nikolay Shulginov ↗ Nomination and served as Chairman of Compensation Committee the Management Board – Decides on matters reserved ↗ Investment Committee General Director to supreme governing bodies ↗ Committee on Energy of the affiliates where PJSC RusHydro Development of the Far East exercises the rights of the sole ↗ Audit Committee shareholder (participant) / ↗ Committee on Reliability, The Company's position on other Energy Efficiency and matters position on key The Company’s important matters. Innovation Affiliates
1 As at 31.12.2020 2 From November 10, 2020 to January 28, 2021 – Acting Chairman of the Management Board – General Director.
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General Meeting Board companies listed on organized exchanges; have impeccable business and personal of Shareholders of Directors 102–24 reputation, sufficient skills, expertise and experience to make decisions falling The General Meeting of Shareholders The Board of Directors is the governing within the Board of Directors’ remit and is the supreme governing body of body responsible for overall management perform their responsibilities efficiently. the Company, which operates in of the Company, except for the matters accordance with the laws of the Russian reserved to the General Meeting When selecting candidates for the Board Federation, the Company’s Charter of Shareholders in accordance with of Directors, the Company is committed and the Regulations on the Procedure the Federal Law On Joint-Stock to promoting gender diversity – the new for Convocation and Holding of Companies. Board of Directors includes Natalia General Meetings of Shareholders of Filippova. PJSC RusHydro. Composition of the Board The balance of the Board of Directors The Annual General Meeting of of Directors is achieved through a high level of Shareholders took place on September professional knowledge and expertise, 30, 2020 as an in-absentia voting The Board of Directors consists sufficient time for performing the duties (Minutes No. 19 of October 2, 2020), with of 13 members and has an average of members of the Board of Directors, resolutions adopted on 14 agenda items, age of 53. and absence of a conflict of interest, which included approving the annual all of which contribute to effective report, the restated Charter, Regulations The current composition of the Board decision-making. on the Procedure for Convening and of Directors of PJSC RusHydro Holding Meetings of the Board of is well-balanced in terms of necessary In 2020, there were two line-ups of Directors, Regulations on the Procedure competencies and professional the Board of Directors: one elected for Convocation and Holding of experience. All members of the Board on June 28, 2019 (the previous line-up) General Meetings of Shareholders, of Directors have higher education and and the other on September 30, 2020 Regulations on the Management Board, are highly professional and qualified, (the current line-up). and the Regulations on Payment of and are recognized experts in energy, Remuneration and Compensation to finance (including the analysis, Ten out of 13 directors from the previous Members of RusHydro’s Internal Audit assessment, and audit of financial Board were re-elected. Commission, declaring 2019 dividends statements), law, strategic and corporate and electing the new Board of Directors governance, audit, risk management, and Internal Audit Commission. HR, innovation and investment, as well as production and R&D; have a track There were no Extraordinary General record of serving on boards of directors Meetings of Shareholders in 2020. or in senior positions at other joint-stock
↗ The Regulations on the Procedure for ↗ All information on ↗ The Regulations on Convocation and Holding the Annual General Meeting the Procedure for Convening of General Meetings of Shareholders, including and Holding Meetings of Shareholders of the Meeting materials and of the Board of Directors PJSC RusHydro are available minutes, is available PJSC RusHydro are available on the Company’s website on the Company’s website on the Company’s website
134 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Current composition of the Board of Directors
Committee membership
Year of Full name appointment Director status Nominated by AC NCC SC CEDFE CREEI IC
Maxim Bystrov 2013 Independent Russian Federation V V V
Pavel Grachev 2016 Independent Russian Federation V V V V
Lev Kuznetsov 2019 Independent Russian Federation V V
Non-executive Yury Manevich 2019 Russian Federation (public officer1)
Non-executive Alexey Kozlov 2020 LLC Avitrans (public officer)
Vyacheslav Pivovarov 2013 Independent Russian Federation V V V V
Nikolay Rogalev 2016 Non-executive Russian Federation V V V
Dmitry Snesar 2020 Non-executive Russian Federation V V
Non-executive Yury Trutnev 2015 Russian Federation (public officer)
Non-executive Natalia Filippova 2020 LLC Avitrans V (public officer)
Non-executive Alexei Chekunkov 20162 Russian Federation V (public officer)
Andrey Shishkin 2014 Non-executive LLC Avitrans
Non-executive Nikolay Shulginov3 2016 Russian Federation (public officer)
Members of the Board of Directors prior to September 30, 2020
Artem Avetisyan 2015 Non-executive Russian Federation
Pavel Livinsky 2018 Non-executive Russian Federation
Non-executive Mikhail Rasstrigin 2018 Russian Federation (public officer4)
AC – Audit Committee CEDFE – Committee on Energy Development IC – Investment Committee of the Far East NCC – Nomination and Compensation Committee V – member of the Committee CREEI – Committee on Reliability, Energy Efficiency SC – Strategy Committee and Innovation V – Chairman of the Committee
1 From April 11, 2019 until November 30, 2020. 2 Served on the Board of Directors from 2016 to 2018, and then starting from 2019. 3 Starting November 10, 2020. 4 Until June 10, 2020.
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Статус директоров Срок работы в Совете директоров Director status Years served on the Board of Directors, %
1
3 3 8
13 13 members members 2
4
5
Non-executive Less than 1 year Independent 1-3 years Executive1 4-5 years 6+ years
Experience and competencies of the Board of Directors2 102–20
Full name / Manage- area of expertise Energy Finance3 ment Production R&D Other competencies
Maxim Bystrov V V V V Global Economics
Pavel Grachev V V Law, Doctor of Law
Alexey Kozlov V V Management
Lev Kuznetsov V V V Investment
Yury Manevich V V V PhD in Economics
Vyacheslav Pivovarov V V Global Economics, Applied Economics, MBA
Nikolay Rogalev V V V V Doctoral degree in Technical Sciences, Professor
Dmitry Snesar V V Banking, Accounting, Business Analysis
Yury Trutnev V V V V V
Natalia Filippova V Law, Software and IT
Alexei Chekunkov V V V Finance and Investment, Economics
Andrey Shishkin V V V V
Nikolay Shulginov V V V V V PhD in Technical Sciences
Members of the Board of Directors prior to September 30, 2020
Artem Avetisyan V V
Pavel Livinsky V V
Mikhail Rasstrigin V V V
Total 8 14 17 6 3
1 Nikolay Shulginov served as an executive director until November 10, 2020, when he was appointed Minister of Energy of Russia. 2 Relevant experience of the candidates to the Board of Directors in various areas of activity, based on the data received from candidates to the Board of Directors, including education, professional track record and other publicly available information. 3 Including the analysis, assessment, and audit of financial statements.
136 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Board of Directors1
Yury Nikolay Nikolay Maxim Trutnev Rogalev Shulginov Bystrov
Chairman of the Board of Deputy Chairman of the Board Minister of Energy Independent Director Directors PJSC RusHydro of Directors PJSC RusHydro of the Russian Federation
Chairman of the Management Deputy Prime Minister of Dean of the Moscow Power Born in 1951 Board of NP Market Council, the Russian Federation and Engineering Institute, Head Chairman of the Management Presidential Plenipotentiary of Department at the Moscow Education: higher. Board of JSC ATS Envoy to the Far Eastern Power Engineering Institute Graduated from the Sergo Federal District (part-time), President of Ordzhonikidze Novocherkassk NP Scientific and Technical Polytechnic Institute with Born in 1964 Council of the Unified Energy a degree in Power Supply of Born in 1956 System Industrial Enterprises and Education: higher. Cities in 1973. Received a PhD Graduated from the National Education: higher. in Technical Sciences in 2007 Research Moscow State Graduated from the Perm Born in 1962 University of Civil Engineering National Research Polytechnic with a degree in Hydraulic University with a degree in Education: higher. Engineering and Power Mining Engineering in 1978 Graduated from the Moscow Plant Construction in 1986. Power Engineering Institute Graduated from the Russian with a degree in Heat Power Foreign Trade Academy with Stations in 1985. Doctoral a degree in International degree in Technical Sciences Economics in 1998
1 Elected by the Annual General Meeting of Shareholders held on September 30, 2020 (biographies as at December 31, 2020).
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Board of Directors1
Pavel Alexey Lev Yury Grachev Kozlov Kuznetsov Manevich
Independent Director Assistant to Deputy Prime Independent Director Born in 1972 Minister of the Russian Federation Education: higher. Chief Executive Officer of Chief Executive Officer, Graduated from Saint PJSC Polyus, General Director First Deputy Chairman Petersburg University of MC Polyus LLC Born in 1966 of the Board of Directors of Economics and Finance at Intergeo Management with a degree in Economics Education: higher. Company and Production Management Born in 1973 Graduated from in 1994 the International Institute Education: higher. of Management LINK Born in 1965 Graduated from Saint with a degree in Financial Petersburg University with Management in 1999. Education: higher. a degree in Law in 1998. Graduated from the UK Open Graduated from Moscow Graduated from the University University with a degree Financial Institute with of Trieste with a degree in Management in 2000. a degree in Economics in Law in 1997. Doctor of Law Received an MBA in 2002 in 1990
1 Elected by the Annual General Meeting of Shareholders held on September 30, 2020 (biographies as at December 31, 2020).
138 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Vyacheslav Dmitry Natalya Alexei Pivovarov Snesar Filippova Chekunkov
Independent Director Head of Department Deputy Head of Office Minister for the Development of Market Industry Customer of Deputy Prime Minister of the Russian Far East and Relations – Senior Vice of the Russian Federation and Arctic President of Altera Capital President of PJSC VTB Bank, Presidential Plenipotentiary Head of Corporate and Envoy to the Far Eastern Investment Department Federal District Born in 1980 Born in 1972 of JSC VTB Capital Education: higher. Education: higher. Born in 1973 Graduated from Moscow Graduated from the Sergo Born in 1972 State Institute of International Ordzhonikidze State Academy Education: higher. Relations with a degree of Management with a degree Education: higher. Graduated from Bauman in Economics in 2001 in International Economics Graduated from Moscow State Technical in 1995. Graduated from the the Plekhanov Russian University with a degree in American University of Paris University of Economics Software and Information with a degree in Applied with a degree in Accounting, Technology in 1997. Graduated Economics in 1995. Received Audit and Business Analysis from the Kutafin Moscow an MBA from Stanford in 1995 State Law University with University in 2002 a degree in Law in 2002
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Board of Directors prior to September 30, 2020
Andrey Artem Pavel Mikhail Shishkin Avetisyan Livinsky Rasstrigin
Vice President for Energy, Head of New Business General Director, Chairman First Vice President, Head Localization and Innovation at the Agency for Strategic of the Management Board of the Center for Economic at Rosneft, General Director Initiatives at Rosseti, President of Analysis and Forecasting at RN-Assets and FESRC the Sport Federation of at the Center for Strategic Firefighters and Rescuers Research Born in 1976 Born in 1959 Education: higher. Born in 1980 Born in 1983 Education: higher. Graduated from the Financial Graduated from the University under the Education: higher. Education: higher. Gubkin Moscow Institute Government of the Russian Graduated from Moscow Graduated from Ivanovo State of Petrochemical and Gas Federation with a degree State University with a degree Power Engineering University Industry with a degree in Finance and Lending in Economics in 2001. with a degree in Heat Power in Industrial Heat and Power in 1998. Postgraduate studies Graduated from Moscow Station Engineering in Engineering in 1985 at the Financial University State University with 2005. Received a Bachelor under the Government of a Master’s degree of Economics degree in 2005 the Russian Federation in Management in 2003 in Moscow. Audit retraining program at Moscow State University in 2001
For more information on the members of the Board of Directors, including their professional background and full list of positions held in collective governing bodies over the last five years, seequarterly reports of PJSC RusHydro for 2020.
140 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Independent directors Additional information on directors RusHydro Group Development Strategy There are four independent As at December 31, 2020, the directors and RusHydro Group’s Long-Term directors serving on the Company’s held (directly or indirectly) no shares Development Program; the Company’s Board of Directors: Maxim Bystrov, in the Company or shares/stakes in specifics as a joint-stock company with Pavel Grachev, Lev Kuznetsov the Company’s affiliates. In the reporting a majority government stake and other and Vyacheslav Pivovarov. year, members of the Board of Directors specific aspects; the software and technical did not buy or sell the Company’s shares. facilities used in the work of the Board Each year, in the run-up to of Directors; the legal implications of the Annual General Meeting of No loans were issued by the Company being a member of the Board of Directors Shareholders the Nomination and or RusHydro Group to any members that arise from the laws of the Russian Compensation Committee under of the Board of Directors. Federation or the Company’s obligations, the Board of Directors PJSC RusHydro including those arising from the fact reviews compliance of potential Duties of officials representing that the Company’s securities are candidates to the Board of Directors the Russian Federation are set forth publicly traded in Russia and abroad. with the independence criteria in Resolution No. 738 of the Russian and submits an opinion on their Government of December 3, 2004. Independent directors also acquaint independence to the shareholders themselves with additional rights as part of the meeting materials. The independence of the members and obligations of independent of the Board of Directors is defined directors, their functions and roles The compliance of independent in line with the independence criteria in the Company’s corporate practice. directors is assessed by the Nomination of the Moscow Exchange and and Compensation Committee as part the Corporate Governance Code In addition, Corporate Secretary of the procedure for confirming recommended by the Bank of Russia1. assists newly elected members of compliance with the Moscow the Company’s Board of Directors with Exchange listing requirements, with As at the date of appointment answers to their questions and sets up the directors’ details and regularly and during 2020, no conflicts of meetings with the Company’s officers. updated personal information used interest (including participation in as the basis for the assessment. the governing bodies of the Company’s competitors) of any member of Education and further Independent directors bring in the Board of Directors was reported. professional training well-balanced opinions and exercise unbiased judgment based solely To improve its overall performance, on their experience and expertise. Induction program the Board of Directors may decide Independent directors and their A newly elected member of the Board to send its members on training and input to the work of the Board of Directors of Directors takes an induction program, further professional development enhance the trust and confidence of including introduction to the members of programs at the Company’s expense. shareholders and a wide range the Management Board and familiarizing of investors, improve the quality with the Company’s internal regulations; The training and further professional of management decisions, and resolutions of the General Meeting of development programs for directors are promote compliance with corporate Shareholders and the Board of Directors; subject to approval by the Nomination governance principles. the Company’s key performance indicators; and Compensation Committee.
1 Recognition of director independence is fully in line with the criteria set out in the Listing Rules of the Moscow Exchange and the Company’s Corporate Governance Code, but partially contravenes the Corporate Governance Code recommended by the Bank of Russia as the latter does not allow for a director who has formal ties with the Government to be recognized as independent (Alexei Chekunkov).
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Board of Directors’ report ↗ approval of strategic and other internal Breakdown of items Структура рассмотренных Советом regulations (RusHydro Group’s Long-Term consideredдиректоров вопросов by the в 2020 году, Board % In 2020, the Board of Directors held Development Program for 2020-2024; of Directors in 2020, % 17 meetings and reviewed a total of the Company’s Business Plan (including 2.4 126 items. The average attendance the Investment Program) for 2021-2025; 7.1 rate stood at 96% of all meetings held RusHydro Group’s Technical Policy; 10.3 during the year. RusHydro Group’s Innovative 36.5 Development Program for 2020-2024
Количество заседаний Совета директоров, with a prospect up to 2029); Numberшт. of Board of Directors ↗ implementation of the Russian 126 meetings Government’s directives items (see Appendix 12); 20 ↗ corporate governance and control 18 17 (election of the General Director, progress 5.6 36.5 7 at Zagorskaya PSPP-2 and against 1.6 3 7 the Company’s Business Plan for 2019, Investment Program, and Comprehensive Modernization Program for RusHydro’s Strategy and strategic transactions generating facilities); approval of Business planning and investments 14 13 the annual KPIs for the Management Performance management and KPIs 11 Board and their target values for 2021 Corporate governance and KPI achievements of the Company Transactions (Management Board); divestment from Affiliate management 2018 2019 2020 JSC NIIES and investment in LLC SNRG). Other
Total meetings In 2020, the Company did not face In-person meetings the most complicated issues that would ПерсональноеAttendance участиеin 2020 в заседаниях by director, Совета % директоров в 2020 году need to be discussed by the Board of Directors. Artem Avetisyan* 9/14 64 The Board of Directors adopted Maxim Bystrov 17/17 100 resolutions on the following: ↗ For more information on resolutions Pavel Grachev 17/17 100 ↗ projects in the Russian Far East adopted by the Board of Directors in 2020, (progress of an investment project see Appendix 4 of the Appendices Book Alexey Kozlov** 3/3 100 to construct two single-circuit Lev Kuznetsov 17/17 100 110 kV Pevek-Bilibino power lines Pavel Livinsky* 13/14 93 (construction stage No. 1); approval Yury Manevich 17/17 100 of transactions to consolidate power Vyacheslav Pivovarov 17/17 100 assets in the Sakhalin Region; approval Minutes of the meetings ↗ Mikhail Rasstrigin* 14/14 100 of transactions related to the upgrade held by the Board of Directors are available Nikolay Rogalev 17/17 100 of Vladivostokskaya CHPP-2; on the Company’s website Dmitry Snesar** 3/3 100 Yury Trutnev 15/17 88 Natalia Filippova** 3/3 100 Alexei Chekunkov 17/17 100 Andrey Shishkin 16/17 94 Nikolay Shulginov 17/17 100
Attendance *until September 30, 2020 **starting September 30, 2020
142 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Liability insurance for the Board Assessment of the Board Self-assessment results of Directors of Directors performance ↗ the Company largely complies with Since 2007, RusHydro has provided liability 102–28 the principles and recommendations of insurance for the members of the Board Performance of the Company’s Board of both the Russian and British corporate of Directors and the Management Board, Directors is assessed in accordance with governance codes; as well as for the persons in the capacity the Regulations on the Assessment of ↗ one of the key strengths of its Board of sole executive bodies at the Company's the Activities of the Board of Directors of Directors is the set of competencies, affiliates and branches and for those and the Board of Director Committees of expertise, skills and leadership qualities managing the Company's units and PJSC RusHydro2 approved by the Board possessed by the directors and committee affiliates. of Directors and developed in line members5; with the applicable laws, the Charter, ↗ the Board of Directors represents In a tender to select a provider of directors the Corporate Governance Code of the main stakeholders of the Company; and officers (D&O) civil liability insurance the Bank of Russia, the UK Corporate ↗ the Board of Directors is a result of both for 2020, JSC SOGAZ was chosen based Governance Code, and the G20/OECD succession and systematically bringing in on its ability to provide the most reliable Principles of Corporate Governance. new members; and comprehensive coverage when ↗ the committees of the Board of Directors it comes to this type of insurance1. Assessment is performed as follows: review the agenda items in greater depth internal assessment (self-assessment) – and contribute to the overall efficiency of The amount of coverage is RUB 6.6 bn. annually; external independent assessment the Board of Directors. In addition, the independent directors’ (by an independent consultant) – once liability is insured for RUB 76.5 mn. every three years. Overall, the latest self-assessment results The insurance premium amounted showed correlation and consistency with to RUB 46.7 mn. Completed assessments: previous years' performance. ↗ 2018 / External independent The insurance policy covers: assessment by an external independent The self-assessment highlighted ↗ property interests of the insured related consultant (LLC Pricewaterhouse Coopers the following positive changes in to other persons’ claims for damages Advisory) the Board’s performance: arising from the insured person’s claimed ↗ 2019 / Self-assessment3 ↗ the Board maintained a well-balanced (alleged, supposed) wrongdoing (error, ↗ 2020 / Self-assessment4 composition; omission, improper performance, etc.); ↗ key matters are reviewed at in-person ↗ property interests of the Company and/ In 2020, the Board of Directors assessed meetings. The meetings are highly or any affiliate related to any claims made its performance by surveying individual productive and are characterized by by other persons that were initially brought directors and reviewing internal documents quality discussions. against the insured; and meeting minutes of the Board ↗ property interests of the Company of Directors and its committees, and To evaluate individual contributions of and/or any affiliate related to any claims other relevant materials. The scope each director elected as a representative in respect of securities brought against of the assessment included overall of the Russian Federation, RusHydro has the Company and/or any affiliate. assessment of the Board of Directors’ introduced a special annual procedure for performance; assessment of each the performance of the Board of Directors committee’s performance; performance to be assessed automatically based assessment for the Chairman of the Board on information sourced from director of Directors and Senior Independent questionnaires available in the Company's Director; individual assessment of personal account on Rosimushchestvo's the Board members. inter-agency portal6.
1 The insurer selection process complied with the requirements of the Company's internal regulations and Federal Law of the Russian Federation No. 223-FZ On Procurement of Goods, Works and Services by Certain Types of Legal Entities of July 18, 2011. 2 Minutes No. 283 of February 21, 2019. 3 Resolution of the Nomination and Compensation Committee (Minutes No. 78 of September 27, 2018). 4 Resolution of the Nomination and Compensation Committee (Minutes No. 93 of September 23, 2019). 5 The Board of Directors and the Audit Committee include a director with experience and expertise in preparation, analysis, assessment and audit of accounting (financial) statements. 6 The assessment is based on the methodology for the individual assessment of directors in joint-stock companies partially owned by the Government, as approved by the Federal Agency for State Property Management (Rosimuschestvo) (Order No. 71 of March 6, 2014).
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The individual efficiency of the Company’s ↗ expand the list of speakers invited to directors is assessed as follows: the meetings of the Board of Directors ↗ Objective assessment provides with members of the Company’s a baseline to evaluate individual management and external experts; contributions from directors elected ↗ hold comprehensive Board of Directors as representatives of the Russian discussions addressing the matters of risk Federation as regards their participation in appetite and key risk management as they corporate events, voting on items included pertain to the Company’s operations; in agendas of such corporate events, ↗ maintain and expand the practice of submission of performance reports to the Board of Directors members and the Company’s Board of Directors, etc. independent directors in particular ↗ Subjective assessment provides attending the most important investor a baseline to evaluate individual and analyst engagement events. contributions from directors elected as representatives of the Russian Federation as regards their involvement at meetings of Committees of the Board the Board of Directors, offer of advice and of Directors support to the Company’s management team, protection of shareholder interests, The committees are advisory bodies possession of the necessary professional helping the Board of Directors to 6 skills to work as a director, etc. effectively perform its general management committees duties. under the Board of Directors The assessment results are taken into of RusHydro consideration by the Government when RusHydro’s Board of Directors has six it decides on candidates to be nominated committees: Audit Committee, Nomination to the Board of Directors at the next and Compensation Committee, Strategy Annual General Meeting of Shareholders. Committee, Investment Committee, Committee on Energy Development of the Far East, and Committee on Reliability, Areas for the development Energy Efficiency and Innovation. of the Board’s activities
In order to continue improving its efficiency, the Board of Directors is going to take the following key actions based on the assessment results: ↗ hold a strategic session with external experts to discuss the strategy, its implementation and possible updates ↗ Regulations (including changes in the business on the committees, landscape since the approval of as well as meeting minutes, are available the strategy); on the Company’s website
144 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Audit Committee
Key performance results and recommendations issued Members of the Committee Competencies to the Board of Directors
In 2020, the Audit Committee held The Committee is ↗ recommended approving the Company’s annual financial 17 meetings (one of them in person), designed to assist statements and annual report; including: the Board of Directors ↗ recommended approving the report on the operation and ↗ 16 meetings before December 2, 20201 in exercising control internal assessment of the corporate system of internal ↗ 1 meeting on or after December 2, 2020. over the Company’s control and risk management. financial and business Full name Attendance operations, with its key The Committee: responsibilities including ↗ reviewed corporate governance assessment results with Independent members the oversight of the of the Board of Directors a focus on internal audit review; financial statements, ↗ reviewed the results of control activities of internal auditors Maxim Bystrov 16/17 internal controls, risk and assessed the efficiency of the internal audit system; (Chairman of management, corporate ↗ reviewed the report on the operation and internal the Committee governance, and assessment of RusHydro Group’s system of internal control before December 2, 2020) misconduct reporting and risk management; Pavel Grachev 17/17 systems, and ensuring ↗ assessed the efficiency of external audit; (since June 21, 2019) independence and ↗ reviewed the report on monitoring the progress of impartiality of the Vyacheslav Pivovarov 17/17 the management (risk owners) against the Plan for Managing internal and external the Risks of RusHydro’s Business Processes for six months (Chairman of audit functions. the Committee of 2020; approved the report on external independent assessment since December 2, 2020) ↗ of RusHydro’s internal audit function.
Nomination and Compensation Committee
Key performance results and recommendations issued Members of the Committee Competencies to the Board of Directors
In 2020, the Nomination and The Committee is ↗ recommended approving the report on achievement Compensation Committee held designed to provide of annual KPIs by the Management Board in 2019, and nine meetings (all of them in absentia), recommendations for the report on achievement of KPIs under the first cycle of including: the Board of Directors the Company’s Long-Term Incentive Plan for 2017-2019; ↗ 8 meetings before December 2, 2020; on the composition ↗ recommended approving the annual KPIs for the Company’s ↗ 1 meeting on or after December 2, 2020. and set of skills Management Board and their target values for 2021, of the Company’s as well as KPI targets under the fifth cycle of RusHydro’s Full name Attendance governing bodies, and Long-Term Incentive Plan for 2021-2023. recommend tools to Independent members enhance the efficiency The Committee: of the Board of Directors and transparency ↗ approved results of assessing nominees to RusHydro’s Board Maxim Bystrov 1/1 of the remuneration of Directors for compliance with the independence criteria; (since December 2, 2020) system. Its primary ↗ acknowledged Maxim Bystrov and Vyacheslav Pivovarov as Pavel Grachev 9/9 objective is to review independent directors pursuant to PJSC Moscow Exchange’s (Chairman of relevant items on Listing Rules; the Committee a preliminary basis and ↗ approved Pavel Grachev, an independent member since December 2, 2020) draft recommendations of the Company’s Board of Directors, as the Senior on matters reserved to Independent Director. Vyacheslav Pivovarov 9/9 the remit of the Board (Chairman of ↗ In addition, the Nomination and Compensation Committee of Directors. analyzed the qualifications of nominees to the Board the Committee of Directors and vetted them for potential conflicts of before December 2, 2020) interest; assessed nominees to the Board of Directors and Alexei Chekunkov 8/8 independent directors for compliance with the independence (before December 2, 2020) criteria.
1 Hereinafter, the data are provided for the Board of Director Committees in their new compositions as at December 2, 2020 as resolved by the Board of Directors of PJSC RusHydro on December 2, 2020 (Minutes No. 318 of December 3, 2020)
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Strategy Committee
Key performance results and recommendations issued Members of the Committee Competencies to the Board of Directors
In 2020, the Strategy Committee held The Committee is ↗ recommended adopting a resolution on the deal to five meetings (all of them in absentia), designed to ensure consolidate power assets in the Sakhalin Region around including: efficient performance PJSC Sakhalinenergo; ↗ 5 meetings before September 30, 2020; of the Board of ↗ recommended approving RusHydro Group’s Long-Term ↗ no meetings on or after December 2, Directors in strategic Development Program for 2020-2024; 2020. areas. The Committee ↗ recommended adopting a resolution to divest from determines the Group’s JSC NIIES and a resolution to invest in LLC SNRG; Full name Attendance strategic development ↗ recommended approving an addendum to the share pledge priorities, approves agreement signed between VEB.RF and the Company; Independent members the Company’s ↗ recommended approving the reports on performance of the Board of Directors development of the Strategy Committee of RusHydro’s Board of Directors Pavel Grachev 5/5 strategy and long- for 1H of the 2019-2020 corporate year and for the full Lev Kuznetsov 5/5 term development 2019-2020 corporate year; (independent director program (including ↗ recommended establishing the position of the Company since September 30, 2020) review of the strategy (the Company’s representatives) on the agenda of implementation the governing bodies in affiliates. Vyacheslav Pivovarov 5/5 reports), provides Members of the Board of Directors recommendations on The Committee took note of the Report on Progress against Nikolay Rogalev 5/5 the dividend policy, RusHydro Group’s Long-Term Development Program in 2019 Dmitry Snesar 0/0 makes decisions and recommended that the Headquarters include the Report (since December 2, 2020) on the Company’s in the Company’s annual report to be considered by the General investments in and Meeting of Shareholders as part of the 2019 review. Representatives of RusHydro divestments from Roman Berdnikov 0/0 other organizations, (since December 2, 2020) considers authorized Andrey Kazachenkov 5/5 capital increases and Committee members other share offering and purchase matters, Dmitriy Denisov 5/5 and reviews the Group’s (before September 30, 2020) financial and valuation Igor Zadvornov 5/5 models. (Chairman of the Committee) Ilya Karpov 0/0 (since December 2, 2020) Boris Livshits 5/5 Vasiliy Nikonov 5/5 Yevgeniy Olkhovich 4/5 (before September 30, 2020) George Rizhinashvili 0/5 (before September 30, 2020) Pavel Snikkars 5/5
146 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Investment Committee
Key performance results and recommendations issued Members of the Committee Competencies to the Board of Directors
In 2020, the Investment Committee held The Committee is ↗ proposed recommending that the Annual General Meeting eight meetings (one of them in person), designed to preview of Shareholders approve distribution of the Company’s profit including: new investment (loss) for 2019; ↗ 6 meetings before September 30, 2020; projects and programs, ↗ proposed recommending that the Annual General Meeting ↗ 2 meetings on or after December 2, and contribute of Shareholders pay dividends for 2019 at RUB 0.03568039 2020. to the enhancement per ordinary share; of the Company’s ↗ recommended pre-approving RusHydro’s draft investment program for 2021-2030 and draft amendments to RusHydro’s Full name Attendance investment policy. investment program for 2020-2029; Independent members ↗ recommended approving RusHydro’s business plan for 2021 of the Board of Directors and the Group’s Consolidated Business Plan for 2021-2025, Maxim Bystrov 8/8 including the investment program of PJSC RusHydro for (Chairman of 2021 and the consolidated investment program of RusHydro the Committee) Group for 2021-2025; Lev Kuznetsov 8/8 ↗ recommended approving amendments to the KPI targets (Chairman of under the third cycle of RusHydro’s Long-Term Incentive the Committee Plan for 2019-2021; ↗ recommended approving amendments to the KPI targets before September 30, 2020) under the fourth cycle of RusHydro’s Long-Term Incentive Vyacheslav Pivovarov 8/8 Plan for 2020-2022; Members of the Board of Directors ↗ recommended approving the KPI targets under the fifth Nikolay Rogalev 8/8 cycle of RusHydro’s Long-Term Incentive Plan for 2021-2023; Dmitry Snesar 2/2 ↗ recommended approving the annual KPIs for the Management Board and their target values for 2021. (since December 2, 2020) Natalia Filippova 2/2 (since December 2, 2020) Representatives of RusHydro Andrey Kazachenkov 8/8 Sergey Kirov 8/8 Victor Khmarin 6/6 (before September 30, 2020) Committee members Mikhail Bychko 6/6 (before September 30, 2020) Sergey Zhuravlev 8/8 Alexander Ilyenko 8/8 Alexei Kulagin 6/6 (before September 30, 2020) Denis Milyutin 8/8 Mikhail Sonin 6/6 (before September 30, 2020) Andrei Chulkin 2/2 (since December 2, 2020)
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Committee on Energy Development of the Far East
Key performance results and recommendations issued Members of the Committee Competencies to the Board of Directors
In 2020, the Committee held five meetings (all of them in person), The Committee is designed to ↗ recommended acknowledging including: ensure efficient performance the implementation status of ↗ 4 meetings before September 30, 2020; of the Board of Directors in priority construction projects ↗ 1 meeting on or after December 2, 2020. developing the power industry of in the Far East; the Far Eastern Federal District ↗ recommended approving Full name Attendance of Russia within the scope of the report on the Committee’s Members of the Board of Directors responsibility of the Company performance in the 2019-2020 and its affiliates. Among other corporate year; Pavel Grachev 5/5 things, the Committee is ↗ recommended establishing Yury Trutnev (Chairman of the Committee before 0/4 responsible for determining the Company’s position on September 30, 2020) the Company’s priority areas the following item included Alexei Chekunkov (Chairman of the Committee 5/5 in the Far East, including by in the agenda of the General since December 2, 2020) considering matters related Meeting of Shareholders Representatives of RusHydro to the consolidation of power at Sakhalinskaya GRES-2: assets in the Far Eastern Federal “Consent to Sakhalinskaya Roman Berdnikov (since December 2, 2020) 1/1 District, growth of energy GRES-2 entering into Sergey Vasilyev 5/5 exports to the Asia-Pacific, and the Addendum to the General Andrey Kazachenkov 5/5 power supply to the consumers in Contractor Agreement Committee members the Far Eastern Federal District. for the Construction of Sakhalinskaya GRES-2”. Dmitry Bulgakov 3/5 Andrey Gabov (before September 30, 2020) 2/4 Igor Zadvornov 5/5 Sergey Lebedev 4/5 Aleksey Molskiy (before September 30, 2020) 3/4 Vasiliy Nagibin (since December 2, 2020) 1/1 Leonid Petukhov (before September 30, 2020) 0/4 Denis Pileniyeks 1/5 Aleksandr Pyatigor (before September 30, 2020) 2/4 Sergey Tyrtsev (before September 30, 2020) 1/4
Committee on Reliability, Energy Efficiency and Innovation
Key performance results and recommendations issued Members of the Committee Competencies to the Board of Directors
In 2020, the Committee held six meetings (all of them in absentia), The Committee is designed ↗ recommended approving including: to ensure efficient performance the Technical Policy of ↗ 6 meetings before September 30, 2020; of the Board of Directors in RusHydro Group; ↗ no meetings on or after December 2, 2020. the realms of the Company’s ↗ recommended reviewing Technical Policy, reliable and safe progress against the Full name Attendance operation of hydraulic facilities, action plan developed for energy efficiency, innovation Zagorskaya PSPP-2; Members of the Board of Directors and environmental policies, and ↗ recommended approving Nikolay Rogalev (Chairman of the Committee) 6/6 other areas reserved to the remit the 2019 report on progress Representatives of RusHydro of the Committee. against the Innovative Roman Berdnikov (since December 2, 2020) 0/0 Development Program Boris Bogush (before September 30, 2020) 5/6 of RusHydro Group for 2016-2020 with a prospect Sergey Vasilyev (from December 2, 2020 0/0 up to 2025; to April 15, 2021) ↗ recommended approving Alexander Faustov (since December 2, 2020) 0/0 the Innovative Development Committee members Program of RusHydro Group Igor Baikov (before September 30, 2020) 3/6 for 2020-2024 with a prospect up to 2029. Oleg Barkin 6/6 Yuriy Vishnevskiy 6/6 Sergey Zhuravlev 6/6 Andrei Mayorov (before September 30, 2020) 4/6 ↗ For more information on meetings held George Rizhinashvili (before September 30, 2020) 0/6 by the committees of the Board of Directors, see Appendix 5 of the Appendices Book Alexander Fedorov (since December 2, 2020) 0/0 Mikhail Fedorov 6/6
148 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Corporate Secretary
Natalya Evgeniya Kovaleva Brusenina was the Corporate Secretary of PJSC RusHydro prior Since February 15, 2021, Evgeniya Brusenina has been to February 14, 2021. the Corporate Secretary of PJSC RusHydro.
Born in 1972 Born in 1987
Education, academic degree: Graduated from Irkutsk State Education, academic degree: Graduated from the National University with a degree in Law in 1996 Institute of Business with a degree in Accounting, Analysis and Audit in 2012 Professional experience over the last five years: ↗ 2016-2021: Corporate Secretary, PJSC RusHydro Professional experience over the last five years: ↗ 2016-2021: Deputy Head of Corporate Governance and ↗ February 15, 2021 – present: Corporate Secretary, Property Management, Advisor to the First Deputy General PJSC RusHydro Director, PJSC RusHydro ↗ 2013 – February 12, 2021: Chief Advisor to Yury Trutnev, ↗ 2021 – present1: Head of the Office of Corporate Governance Deputy Prime Minister of the Russian Federation and and Property Management Presidential Plenipotentiary Envoy to the Far Eastern Federal District, Russian Government’s Executive Office Positions held in collective governing bodies as at December 31, 2020: Positions held in collective governing bodies: ↗ Member of the Board of Directors / Deputy Chairperson of ↗ No positions held in the collective governing bodies of the Board of Directors at some of RusHydro Group companies: PJSC RusHydro and/or other organizations. → JSC Blagoveshchenskaya CHPP; → CJSC Boguchanskiy Aluminum Smelter; Evgeniya Brusenina has no stake in the authorized capital of → PJSC DEK; PJSC RusHydro. She does not hold, whether directly or indirectly, → JSC Malaya Dmitrovka; any ordinary shares of PJSC RusHydro and did not acquire or → JSC Chuvashskaya Electricity Sales Company. dispose of such shares during the reporting year. The Corporate Secretary holds no shares in RusHydro’s affiliates. Natalya Kovaleva has no stake in the authorized capital of PJSC RusHydro. She does not hold, whether directly or No loans were issued by PJSC RusHydro or RusHydro Group indirectly, any ordinary shares of PJSC RusHydro and did not companies to Evgeniya Brusenina, the Corporate Secretary of acquire or dispose of such shares during the reporting year. PJSC RusHydro. The Corporate Secretary holds no shares in RusHydro's affiliates. Evgeniya Brusenina, the Corporate Secretary of PJSC RusHydro, No loans were issued by PJSC RusHydro or RusHydro Group has no conflict of interest (including participation in the governing companies to Natalya Kovaleva, the Corporate Secretary of bodies of the Company’s competitors). PJSC RusHydro.
The Corporate Secretary has no conflict of interest (including participation in the governing bodies of the Company’s competitors).
1 As at the date of preliminary approval of the report.
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Management Information on members of the Management Board2 Board
The Management Board is a collective executive body responsible for the day-to-day management of the Company as prescribed by the scope of responsibilities set out in the Charter, Regulations on the Management Board, and resolutions adopted by the Company’s General Meeting of Shareholders and Board of Directors. Victor Andrey Sergey Khmarin Kazachenkov Kirov Composition of the Management Chairman of the Management Member of the Management Member of the Management Board Board – General Director3 Board, First Deputy General Board, First Deputy General Director (led the unit of Director (unit of sales, The number of members financial and corporate law economic planning and of the Management Board Born in 1978 management) investments) is determined by the Board of Directors. Education: higher. Graduated from Saint Born in 1980 Born in 1976 On August 20, 2020,1 Petersburg State University the Board of Directors resolved with a degree in Law in 2000 Education: higher. Education: higher. to terminate the powers Graduated from Saint Graduated from Perm of Boris Bogush as a member Year of the first election Petersburg State University State Agro-Technological of the Management to the Management Board: of Engineering and Economics University with a degree in Board starting from 2019 with a degree in Economics Economics and Agricultural September 1, 2020 due and Management Production Management to the voluntary retirement, at Mechanical Engineering in 1998; graduated from Following the appointment with the Management Board of Nikolay Shulginov as Enterprises in 2002; received the Regional Interdisciplinary restructured to consist the Minister of Energy of an MBA from the University Retraining Center of Perm of four members. the Russian Federation of Wisconsin (Madison, USA) National Research Polytechnic pursuant to the Russian in 2004 University with a degree in President’s Decree No. 692 On September 30, 2020, of November 10, 2020, the Economics and Management the Board of Directors Board of Directors resolved Year of the first election in 2004 extended the term on November 10, 20204 to to the Management Board: in office of Nikolay terminate the powers of 2016 Year of the first election Nikolay Shulginov as the Shulginov as the Chairman to the Management Board: Chairman of the Management of the Management Board – General Director Membership end date: 2015 Board – General Director PJSC RusHydro. Victor Khmarin February 15, 2021 PJSC RusHydro for two was appointed the Acting years, with the Management Chairman of the Management Board – General Director on Board restructured to November 11, 2020. consist of six members, including the newly elected members Sergey Vasilyev, Deputy General Director – Director of the Far East Division of PJSC RusHydro, and Bayrta Perveeva, Deputy General Director ↗ The Regulations on ↗ For more information on the professional background for Human Resources and the Management and positions held by the Management Board members Organizational Development Board are available in other companies’ governing bodies over the last five on the Company’s years, see the Company’s quarterly report for Q4 2020 of PJSC RusHydro. website available on the Company’s website
150 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Members elected to the Management Board after the reporting date5
Sergey Bayrta Roman Nikolay Vasilyev Perveeva Berdnikov Karpukhin
Member of the Management Member of the Management Member of the Management Member of the Management Board, Deputy General Board, Deputy General Board, First Deputy General Board, First Deputy General Director (led the Far East Director (led the personnel Director (strategy, innovation Director (unit of capital Division) management and and future development unit) construction and project organizational development engineering) unit) Born in 1975 Born in 1973 Born in 1984 Education: higher. Born in 1975 Education: higher. Graduated from Moscow Graduated from Moscow Education: higher. State University with a degree Education: higher. Power Engineering Institute Graduated from Moscow in Law in 1997; graduated from Graduated from Kalmyk State with a degree in Power State University of Civil the Russian School of Private University with a degree Plants (majoring in Electrical Engineering with a degree Law with a Master’s degree in in Accounting and Audit Engineering) in 1998; in Manufacturing Building Private Law in 1999; graduated in 1997; graduated from graduated from Moscow Materials, Products and from the HSE University with the HSE University having Power Engineering Institute Structures in 2006; graduated a degree in Finance and Credit completed the retraining with a degree in Economics from the Financial University in 2010 program for Organizational and Management at Power under the Government of and Legal Architecture of Generation Companies the Russian Federation having Year of the first election Human Resource Management (majoring in Engineering and completed the retraining to the Management Board: in 2017; received a PhD Economics) in 2002. program in Project 2020 in Economics in 2007. Management Tools in 2007 Year of the first election Membership end date: Year of the first election to the Management Board: Year of the first election February 15, 2021 to the Management Board: 2021 to the Management Board: 2020 2021
Membership end date: February 15, 2021
1 Minutes No. 312 of August 24, 2020. 2 Management Board as at December 31, 2020 3 From November 11, 2020 to January 28 2021 – Acting Chairman of the Management Board – General Director. 4 Minutes No. 317 of November 11, 2020. 5 The Management Board has four members.
151 ANNUAL REPORT | 2020
Additional information on members The Management Board also approved Assessment of the Management of the Management Board a number of internal regulations and Board’s performance 102–28 Members of the Management Board adopted resolutions on the progress The Board of Directors evaluates do not hold, whether directly against the Long-Term Development the performance of the Management or indirectly, any of shares of Program of RusHydro Group; power Board and its Chairman by reviewing PJSC RusHydro or own shares in asset consolidation in the Sakhalin the following matters: any affiliates of PJSC RusHydro. Region; implementation of the Roadmap ↗ the Company’s business plan on expanding the Group’s EV charging implementation; In the reporting period, no deals network; changes in the management ↗ the Company’s Consolidated Business were made to acquire or dispose framework of RusHydro branches; Plan implementation; of the Company’s shares. and some other items related ↗ KPI achievement; to production, sales and finance. ↗ corporate governance assessment; The executive bodies of PJCS RusHydro ↗ the report on the Management Board's had no conflict of interest (including In addition, the Management Board performance. participation in the governing bodies reviews on a quarterly basis of the Company’s competitors) the performance of Headquarters In 2020, RusHydro's corporate in the reporting year. (excluding members of governance system was assessed, the Management Board) and branch including the executive bodies' In the reporting period, members employees against their KPIs. performance. A report was drafted based of the Management Board received on the assessment findings, with some no loans from the Company or Вопросы, рассмотренные Правлением в recommendations included. RusHydro Group. 2020 году,Items reviewed % by the Management Board in 2020, % Newly elected members of 19.5 the Management Board sign employment contracts. The terms 28.9 of such employment contracts are 370 determined by the Company’s sole items executive body. Their effective 9.7 on the day-to-day operations period may not exceed three years. of the Company reviewed by the Management Board in 2020
Report on the Management 9.5 Board’s performance 1.6 30.8 In 2020, the Management Board held 80 meetings, including 18 in person, Implementation of the Company’s projects and reviewed 370 items on the day- Business planning and investments to-day operations of the Company, Performance management and KPI including preliminary consideration Approval of internal regulations of recommendations submitted for Subsidiary management review by the Board of Directors. Other
152 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Shareholders and Investors
Share capital and Information on shares Changes in the group of persons withИзменения the right в составе to exercise, лиц, которые имеют securities The total number of voting shares directlyправо прямо or или косвенноindirectly, at распоряжаться least 2% не менее чем 2% голосов, приходящихся на is 439,288,905,849 ordinary shares. of the voting rights attached голосующие акции Общества, % The Company did not issue preferred or to the Company’s voting shares, % Authorized capital ordinary shares with differing par values. as at December 31, 2020 20 20 20 In accordance with Article 38 of Federal ↗ Capital: Law No. 178-FZ On the Privatization 6 6 5 RUB 439,288,905,849 of State and Municipal Property of 13 13 13 ↗ Number of ordinary shares1: December 21, 2001, the Russian 439,288,905,849 Federation has no special right to ↗ Par value of shares: participate in the management of RUB 1 PJSC RusHydro (the “golden share”). 61 61 62
According to the statement by executive bodies, there is no available
Additional share issuance information on any share capital As at As at As at interests of over 5%, apart from the data December 31, December 31, December 31, 2018 2019 2020 From 2019 to 2020, RusHydro placed already disclosed by the Company. 13,000,092,298 additional ordinary Federal Agency for State Property 2 shares among its shareholders Management (including 13,000,000,000 shares VTB Bank (PJSC) purchased by the Federal Agency LLC Avitrans for State Property Management on Other shareholders behalf of the Russian Federation), ↗ Full text of the statement by executive bodies is available each with a par value of RUB 1. on the Company’s website
Following the additional share Free float3, % issuance, the interest of the Russian 19 Federation in the Company’s share Shareholders 102–22 102–23 capital increased to 61.73%.
RusHydro’s Additional Issuance PJSC RusHydro’s shares are held by Report was registered by the Bank more than 400,000 Russian and foreign of Russia on September 14, 2020. investors. The Russian Federation owns Amendments to the Company’s the controlling stake of 271,161,535,606 Charter reflecting the authorized shares, or 61.73% of the Company’s capital increase and the reduction in total number of outstanding shares. the number of authorized shares were 81 registered on November 12, 2020. State-owned shares are held by the Federal Agency for State Property Management (271,161,535,606 Free-float shares) and ITAR-TASS News Agency (248,527 shares). 102–5
1 State registration number of the issue: 1-01-55038-Е, of February 22, 2005. 2 On June 21, 2018, the Board of Directors of the Company resolved to increase the authorized capital by RUB 14,013,888,828 through the placement of additional shares by public subscription. The resolution on the additional share issue was registered by the Bank of Russia on August 27, 2018, the issue was assigned registration number 1-01-55038-E-043D. The proceeds from the additional issuance will be invested in the stage No. 1 of a project to construct two single-circuit 110 kV Pevek-Bilibino power lines in Chukotka in the context of the upcoming refurbishment of the Chaun and Bilibino energy hub following the decommissioning of power units at Bilibino NPP, which has reached the end of its service life. 3 In accordance with the Moscow Exchange’s methodology for calculating the free-float factor published at https://fs.moex.com/files/6722.
153 ANNUAL REPORT | 2020
Changes in the shareholding structure by shareholder category, % Shareholder
Share in the Share in the Share in the agreements authorized authorized authorized capital as at capital as at capital as at RusHydro’s shareholders can enter December 31, December 31, December 31, into shareholder agreements that Name of the registered entity 2018 2019 2020 determine PJSC RusHydro’s corporate The Russian Federation 60.561 61.197 61.727 governance and shareholding procedures. as represented The Company did not issue preferred or by the Federal Agency for ordinary shares with differing par values. State Property Management
Legal entities, including: 38.115 37.509 37.008 Notifications on concluded Resident 38.093 37.495 36.995 shareholder agreements Non-resident 0.022 0.014 0.013 received by RusHydro
Individuals, including: 1.324 1.294 1.265 Date of Parties to Resident 1.322 1.292 1.263 the shareholder the shareholder agreement agreement Non-resident 0.002 0.002 0.002 March 7, 2017 The Russian Federation as represented by The Company’s affiliates hold The Company does not hold any of its the Federal Agency 3,852,259,324 shares, or 0.88% of own shares. for State Property the Company’s authorized capital. Management VTB Bank (PJSC)
June 23, 2016 The Russian The number of shares held by the Company’s affiliates Federation as represented by the Federal Agency Share in for State Property Number the authorized Management Name of shares capital, % RusHydro’s affiliates: JSC Hydroinvest 3,430,091,314 0.780828 Hydroinvest1, EZOP, Energy JSC Zaramagskiye HPPs 271,302,097 0.061759 Index – HydroOGK PJSC DEK 73,093,031 0.016639
JSC RAO ES East 48,511,631 0.011043 ↗ For information on the ability of certain JSC ChirkeyGESstroy 29,205,310 0.006648 shareholders to obtain, or actual cases of them obtaining, an extent of control disproportionate to their contribution to the authorized capital, PJSC Yakutskenergo 55,941 0.000013 including through shareholder agreements or based on them holding ordinary and preferred shares with differing par values, please see Appendix 38 of the Appendices Book
The Company did not issue preferred or ordinary shares with differing par values.
1 As at March 7, 2017, Hydroinvest was no longer the Company’s shareholder, while the aggregate stake of EZOP and Energy Index – HydroOGK in the Company’s authorized capital went down to 0.8% due to the sale of shares to VTB Bank (PJSC). As at September 28, 2018, Hydroinvest held 0.8% in RusHydro’s authorized capital following the incorporation of EZOP and Energy Index – HydroOGK into Hydroinvest.
154 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Котировки акций на Московской бирже Outstanding Share performance on the Moscow Exchange shares 20 1.2
Moscow Exchange listing 15 1.0
The Company’s shares have been trading on the Moscow Exchange since February 10 0.8 4, 2008 (ticker: HYDR). The securities are included in Level 1, the exchange's top quotation list. 5 0.6
Index inclusion: 0 0.4 30.12.2015 30.12.2016 30.12.2017 30.12.2018 30.12.2019 30.12.2020 IMOEX MOEX Russia Index Trading volume, bn shares (left scale) Share price, RUB (right scale) (previous name – MICEX Index) Сопоставление котировок акций и ключевых индексов Московской биржи Shares vs key indices of the Moscow Exchange, % MOEXEU 250 Electric Utilities Index
200
MOEXBMI 150 Broad Market Index 100
MOEX SCI 50 State-Owned Companies Index 0
AWALLE -50 31.12.2015 31.12.2016 31.12.2017 31.12.2018 31.12.2019 31.12.2020 FTSE Emerging Index
MICEXPWR Moscow Exchange RusHydro
AWORLDS FTSE All-World Index Сведения о торгах акциями на Московской Рыночная капитализация ПАО «РусГидро», биржеMoscow Exchange trading RusHydro’sмлрд руб. market information, RUB capitalization1, RUB bn RSHYY 0.833 350 FTSE4Good Emerging Index 345.8 0.782
NQRU 300 NASDAQ Russia 368 0.810 0.622
NQDXEM 132 0.555 136 250 Nasdaq AlphaDEX Emerging Markets 0.486 236.7 0.487 0.476 0.476 207.1
TCRUP 200 2018 2019 2020 STOXX Russia Total Market 2018 2019 2020
Maximum trade price
Minimum trade price 1 EEORGT The data are presented as at the last trading STOXX Optimized Russia Year-end trade price date in the relevant reporting period. Source: Trading volume, bn shares the official website of the securities market operator PJSC Moscow Exchange. Market capitalization is calculated as the number of shares of the respective category (type) multiplied by the market price of one share as disclosed by the market operator, as at December 31, 2020.
155 ANNUAL REPORT | 2020
Share performance over five years 2018 the U.S. Department of the Treasury 2016 The MOEX Russia Index was up 7.8% y-o-y, lifting sanctions imposed on UC RUSAL, The MICEX Russia Index added 27%, while the MOEX Electric Utilities Index EN+ and EuroSibEnergo on April 6, 2018. the MICEX Power Index – 110%, was down 11.4%, with shares in RusHydro RusHydro’s shares rallied on the back and RusHydro shares grew by 36%. losing 33.4%. In 2018, the market value of a new dividend policy approved by The domestic market was buoyed by of RusHydro shares decreased against the Board of Directors, strong financial the expected recovery of the Russian a backdrop of the general lack of and operating results for 2018, inclusion economy and rouble appreciation in investor interest in the electric power of four of the Company’s Far Eastern the second half of the year. RusHydro industry. In Q1 2018, RusHydro’s shares projects in a state-sponsored TPP shares grew on the back of high dividend traded in line with the market. From Q2 modernization program with a guaranteed payments, full liberalization of the HPP 2018 onwards, the Russian market and rate of return, and the generally capacity market in Siberia, as well as RusHydro shares were under pressure favorable market environment. overall strong hydro performance thanks from sanctions on RUSAL Group, to higher water levels. An additional boost the biggest power consumer in Siberia to shares was provided by measures and the Group’s partner on the BEMO 2020 to optimize operating and investment project, geopolitical risks, including talks The MOEX Russia Index added 14.0%, expenses, decisions on refinancing on introducing new sanctions by the US the MOEX Electric Utilities Index – 8.0%, the debt of RAO ES East Subgroup by (DASKA, August 2018), as well as lower with RusHydro shares gaining 40.9%. signing a forward contract for RUB 55 bn interest in emerging market companies The performance of the Russian stock in equity capital with VTB Bank (PJSC), with no USD-denominated export market was mixed. At the beginning of and full consolidation of the RAO ES East revenue on the part of global investors the year, it grew in line with the overall shares for 100% ownership. The shares while the US was tightening its monetary upswing. In March, the pandemic caused also benefited from the disposal of policy. Starting mid-October, RusHydro’s a plunge in the global exchange markets major assets by the Company for shares began dropping in price due to comparable to the 2008 meltdown. In late a total amount of over RUB 15 bn. investor and analyst expectation of MSCI May, the market began to recover driven deleting the Company from its Russia by the growth in the global stock markets, index, which it did in late November 2018. the Bank of Russia’s fiscal and monetary 2017 policy and oil price upturn. As at the end The MOEX Russia Index was down 6%, of 2020, the Bank of Russia’s key rate the MOEX Electric Utilities Index – 2019 was at a historical low of 4.25%. RusHydro 8%, and RusHydro shares lost 21%. The MOEX Russia Index was up shares grew on the back of record high The Russian market faced headwinds 28.6% y-o-y, the MOEX Electric Utilities operating and financial results, improved in the form of geopolitical risks, which Index – 25.0%, and RusHydro shares dividend yield for 2020 and an increase included talks on new US sanctions grew by 14.3%. The domestic share market in dividend payout, which was made as well as lower interest in Russian was buoyed by a favorable external possible after the Company secured companies on the part of global investors sentiment as global central bankers were a guaranteed rate of return for each of given the stricter monetary policy in embracing the monetary stimulus, while its Far Eastern projects in the mid-term. the US and oil price volatility. For most Russia’s country risks kept diminishing of the year, RusHydro’s shares traded and its macroeconomic stability was in line with the market. At the end of improving endorsed by the Bank the year, the share price was driven of Russia’s progressive monetary down by the news of RusHydro’s Board loosening. Early in the year, the Russian of Directors resolving to suspend stock market got a major boost from the construction of Zagorskaya PSPP-2. the mitigation of sanction risks, with
156 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Shares traded on the global market
As at December 31, 2020, the number of shares traded outside of the Russian Federation in the form of ADRs and GDRs stood at 5,837,781,200, or 1.33% of the registered authorized capital of the Company.
GDR and ADR program structure as at December 31, 2020
Quantity as at Depositary December 31, Trading Type Start of trading bank Ratio Ticker 2020, pcs. platforms
Rule 144А GDRs June 17, 2008 The Bank of 1 GDR = 100 HYDR 78,273 London Stock New York Mellon ordinary shares Exchange (Main Market – IOB)
Level I ADRs August 7, 2009 The Bank of 1 ADR = 100 RSHYY HYDR 58,299,539 OTCQX London New York Mellon ordinary shares Stock Exchange
Котировки ADR на Лондонской фондовой Сведения о торгах ADR на Лондонской бирже ADRфондовой performance бирже on the London ADR trading on the London Stock Exchange Stock Exchange, USD
12 2.0 1.37
10
8 1.5 195 0.93 1.142 6 1.080 0.84 4 1.0 68 91 0.66 2 0.64 0.67 0.600 0 0.5 31.12.2015 31.12.2016 31.12.2017 31.12.2018 31.12.2019 31.12.2020 2018 2019 2020
ADR price, USD (right scale) Trading volume, mn shares (left scale) Maximum trade price Minimum trade price Year-end trade price Trading volume, mn shares
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Investor Relations
During the reporting period, the Company Number of inquiries from In 2020, the Company also closely focused closely on maximizing engagement RusHydro’s shareholders recorded engaged with the leading global analytical with participants of the exchange by VTB Registrar in 2020 agencies seeking to enforce compliance market and other stakeholders, while with the sustainable development criteria. 3,136 also improving efficiency of information Those agencies included: 39 disclosures. As part of the investor engagement exercise, the Company: 525 ↗ took part in leading online conferences; CDP (Carbon Disclosure Project) ↗ held more than 25 conference calls with the managers of major international and Russian investment funds; 463 Sustainalytics ↗ arranged four quarterly management 2,121 conference calls for analysts, investors, 212 FTSE Russell rating agencies and business mass media. 106 212 The meetings focused on discussing 106 Vigeo Eiris RusHydro Group’s strategic priorities and plans, including those related to 1,191 paying higher dividends, extending 1,792 S&P Global the current dividend policy, improving the Company's ESG profile, implementing Far Eastern investment projects with 1,028 1,485 Trucost a guaranteed rate of return, and absence of plans to issue additional 27 shares over the coming years. 25 Energy Intelligence 65 80 287 121 29 15 The Company engages with shareholders 30 17 26 through various communication RAEX Personal Registered E-mail Phone channels such as personal meetings, visit to the mail calls conferences, call center, post Registrar’s office office and e-mail messages. Dividend distribution Inheritance registration Dividends Changes in account details Purchase / sale / gratuitous transfer of shares RusHydro’s dividend policy is focused Inquiries about the number on supporting the Company’s strategic of securities development for the benefit of its Inquiries from notaries (to register inheritance deeds) shareholders by striking an optimal balance between dividend payouts and profit capitalization.
↗ The details of material shareholder and investor The Development Strategy of RusHydro events are available For details on assessment of the Company Group until 2020 with an outlook in the IR Calendar by Russian and international analytical agencies, on the Company’s website ↗ see Events for 2025 sets out the dividend payout ratio of at least 50% of net profit, and the Company is always going to target the maximum level of dividend yield for its shareholders. 102–44
158 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
In order to enhance the transparency Information on payment of Total shareholder return and predictability of dividend payouts, dividends on the Company’s on April 19, 2019, RusHydro’s Board of shares in 2019 In 2017, RusHydro adopted a Long-Term Directors approved an updated version Incentive Plan (LTIP) for the Company’s of the Regulations on the Dividend As at December 31, 2020, the Company senior management, with a three-year Policy (Minutes No. 287 of April 22, had paid out RUB 15.62 bn in dividends, total shareholder return (TSR) as the key 2019), which sets out 50% of RusHydro with unpaid dividends amounting to KPI. In line with the approved LTIP Group’s IFRS net profit for the respective RUB 49.66 mn. The latter was due to methodology, TSR is calculated as a sum reporting period as the base rate for reasons beyond the Company’s control: of changes in the market price of shares calculating dividends. Additionally, the Company or the Registrar (nominal and the dividend yield for the reporting the minimum dividend (lower threshold) holder) did not have the exact and period. The target value is considered is set at the level of average dividend necessary address details or bank details. achieved if the estimated actual indicator payout for the previous three years1. grew faster than the Electric Utilities The Company made the dividend Index over a three-year reporting period. Nominal holders and trustees registered payments to the federal budget in in the shareholder register and acting as full, in the amount of RUB 9.68 bn. In 2018-2020, the TSR was 12.6%, professional participants of the securities The Company has no dividends to while the Electric Utilities Index grew market shall be paid dividends within the federal budget that are in arrears. by 20.4% over the same period. ten (10) business days, and other persons registered in the shareholder register – within twenty five (25) Dividend history for the five years preceding the reporting year business days after the record date2. Reporting period Total amount of declared Amount of dividends The Company’s Board of Directors for which the dividends (accrued) dividends, declared per share, shall provide its dividend payout were paid RUB ‘000 RUB recommendations to be approved by 2015 15,011,046 0.038863 the General Meeting of Shareholders based on the Company’s IFRS net 2016 19,875,503 0.0466245 profit and the minimum dividend 2017 11,225,676 0.0263335 payout obligation, while also taking into consideration investments in the Group’s 2018 15,918,514 0.0367388 strategic development and Investment 2019 15,673,999 0.03568039 Program, the maximum permissible debt ratio, and recommendations of the Russian Government. Дивидендная доходность акций Dividend yield3 Having considered RusHydro’s 6.81 performance in 2019, the Annual General 4.94 3.67 Meeting of Shareholders resolved on September 30, 2020 as per the updated 15.9 15.7 dividend policy to pay out dividends in the amount of no less than the average 11.2 for three previous years, or RUB 15.7 bn.
Over the past three years, the Group distributed a total of RUB 43 bn in dividends.
2018 2019 2020
Dividend amount4, RUB bn Dividend yield, % ↗ Regulations on the Dividend Policy of PJSC RusHydro
1 Average dividend payout for the previous three years is calculated as follows: Divthreshold = (Div-year 3+ Div-year 2 +Div-year 1) / 3. 2 According to Article 42 of Federal Law No. 208-FZ On Joint-Stock Companies of December 26, 1995. 3 The dividend yield is calculated after the recommended annual dividend had been announced prior to the Annual General Meeting of Shareholders by dividing the recommended dividend per share by that share’s closing price as at the end of the trading day. 4 In 2017-2018, 50% of IFRS net profit was allocated for dividends. According to the Regulations on the Dividend Policy, the 2019 distribution was equal to the average declared dividend for three previous years. This dividend calculation mechanism was applied as 50% of IFRS net profit for 2019 was below the average declared dividend for three previous years.
159 ANNUAL REPORT | 2020
Audit and Control
PJSC RusHydro runs a control framework to oversee the Company’s financial and business operations. This system embraces a wide range of organizational efforts, methodologies, procedures, corporate culture principles and actions taken by the Company to strike an optimal balance between the growing value, profitability, and risks to the Company’s financial stability, efficient business operations, safeguarding of its assets, compliance with the applicable laws, Charter, and the Company’s internal regulations, as well as timely preparation of accurate reporting.
Key stakeholders exercising control over Board of Directors Internal Audit the Company’s financial and business (Audit Committee) operations include: Commission ↗ Board of Directors (Audit Committee); ↗ Internal Audit Commission; According to the Company’s Charter, The Internal Audit Commission is ↗ Internal Audit Service; the Board of Directors’ remit includes a permanent body of the Company ↗ Internal Control and Risk Management approval of internal control elected annually by the General Meeting Director – Chief Auditor, Control and Risk and risk management policies, as well of Shareholders, which it reports to. Management Department. as those of internal audit, approval It is responsible for the monitoring of of reports on the performance the Company’s financial and business The key principles, goals, objectives, assessment of the internal control operations. The Company’s Internal Audit methods, and processes of the control and risk management system, approval Commission consists of five members. framework are set forth in the following of the appointment, or termination documents approved by RusHydro's of the appointment, of the Head of As per the Regulations on General Meeting of Shareholders and Internal Audit Service, and approval the Internal Audit Commission of Board of Directors: of the terms and conditions of PJSC RusHydro,1 the key goals, ↗ Corporate Governance Code; the employment agreement therewith, objectives and remit of the Internal ↗ Code of Corporate Ethics; and review of the limits of the Internal Audit Commission are as follows: ↗ Anti-Corruption Policy; Audit Service authority or other ↗ confirming the accuracy of data ↗ Internal Control and Risk restrictions which may have a negative contained in the annual report, annual Management Policy; impact on the internal audit process. accounting (financial) statements and ↗ Internal Audit Policy; report on interested-party transactions; ↗ Regulations on the Audit Committee All the matters above undergo ↗ analyzing the Company’s under the Board of Directors of a preliminary review of the Board of financial position, identifying areas PJSC RusHydro; Directors’ Audit Committee, which for financial improvement and ↗ Regulations on the Internal Audit on behalf of the Board of Directors developing recommendations for Commission. engages in ongoing interaction the Company’s governing bodies; with key stakeholders exercising ↗ organizing and running checks (audit) control over the Company’s financial on the Company’s financial and business and business operations and ensures operations (review of the Company’s adequate functional management documents to confirm its compliance of the Internal Audit Service, including with the Russian laws, RusHydro’s ↗ All of the above documents approval of the annual schedule of Charter and internal regulations). are available on the Company’s website control activities.
1 As approved by a resolution of the Annual General Meeting of Shareholders (Minutes No. 18 of July 2, 2019).
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The audit confirmed that the data Members of the Internal Audit Commission1 contained in the reports and financial documents of the Company were Date of the reliable, the accounting and financial first election reporting functions were performed in to the compliance with applicable laws and Company’s internal regulations, and financial and Internal Audit 2 business operations were conducted Full name Position Nominated by Commission in the best interests of the Company Internal Audit Commission members as at September 30, 2020 and its shareholders. The opinion also Tatyana Zobkova Russian Ministry of The Russian June 26, 2017 confirms the accuracy of data contained (Chair) Energy, Federation as in the Company’s Annual Report Deputy Director of represented by and the report on interested-party the Department of the Federal Agency transactions consummated in 2020. Corporate Policy and for State Property Property Relations in Management The Internal Audit Commission’s opinion the Energy Sector is submitted to the Audit Committee Natalia Annikova Gnesin Russian Academy The Russian June 26, 2015 of the Board of Directors of RusHydro. of Music (Gnesin RAM), Federation as The Internal Audit Commission’s opinion Head of Planning and represented by issued after the audit of the annual Financial Accounting the Federal Agency report, RAS financial statements, and for State Property report on the Company’s interested- Management party transactions is a mandatory Andrey Gabov Ministry of Economic The Russian September 30, document to be submitted to the Development of Federation as 2020 General Meeting of Shareholders. the Russian Federation, represented by Deputy Director of the Federal Agency Key decisions made by the Internal the Department of for State Property Government Regulation of Management Audit Commission in 2020: Tariffs and Infrastructural ↗ The Company’s Internal Audit Reforms Commission elected the Chair and the Secretary of the Internal Audit Yakub Malsagov Federal Agency for State The Russian September 30, Commission, approved the action plan Property Management, Federation as 2020 chief specialist expert represented by of the Company’s Internal Audit of the Department the Federal Agency Commission for the 2020-2021 corporate of Management of for State Property year, to audit the Company’s financial the Federal Agency Management and business operations for 2020. for State Property Management
Igor Repin Association of Professional The Russian June 27, 2014 Investors (non-government Federation as organization), represented by Deputy Executive Director the Federal Agency for State Property ↗ The Regulations Management on the Internal Audit Commission of Internal Audit Commission members, membership ceased on September 30, 2020 PJSC RusHydro are available on the Company’s website Denis Ministry of Economic The Company’s June 28, 2019 Konstantinov Development of Board of Directors the Russian Federation, Expert, Department of the Russian Ministry For the full text of Internal Audit Commission’s opinion on the audit of financial and business of Economic Development ↗ operations in 2020, see Appendix 17 of the Appendices Book Dmitry Simochkin Federal Agency for State The Russian June 26, 2017 Property Management, Federation as Head of the Department of represented by Management the Federal Agency For information on the remuneration of the Internal Audit Commission members, for State Property ↗ see the report on remuneration of Management the governing and control bodies
1 The mentioned Internal Audit Commission members have no shares of the Company in their holding. 2 The positions held by members of the Internal Audit Commission are stated as at the nomination date.
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Internal Audit Service The Internal Audit Service has Following the amendments effected the following core objectives and to the Federal Law on Joint-Stock functions: Companies, and also based on The Internal Audit Service is RusHydro's ↗ organizing and holding internal the recommendations on internal audit standalone business unit that reports to audits of the Company’s structural by an external independent entity the Board of Directors through the Audit units, branches and affiliates, (LLC Ernst & Young Assurance & Committee and has an administrative RusHydro Group’s processes and Consulting Services, EY), RusHydro’s reporting line to the Chairman of priority areas; Internal Audit Policy and Regulations the Management Board – General ↗ methodological support to internal on the Audit Committee were updated Director PJSC RusHydro. audits at RusHydro Group and other in 20201. internal audit activities; The Internal Audit Service is in charge ↗ organizing the work of audit In 2020, the Internal Audit Service worked of assisting the governing bodies in committees under the Company’s and on improvements of the internal audit enhancing the Group’s management its affiliates’ boards of directors within methodology, with some of the results efficiency and improving its operations, the Internal Audit Service’s remit; listed below: among other things, by means of ↗ organizing the interaction between ↗ the “Chart (map) of interactions a systematic and consistent analysis the Company’s structural units between the RusHydro Group’s internal and evaluation of the risk management, and the Company’s Internal Audit control entities and other stakeholders internal control and corporate Commission; monitoring and assessing the internal governance systems. ↗ organizing the interaction between control system across various lines the Company’s units and affiliates, and of business” was updated in line with the Accounts Chamber of the Russian the international Institute of Internal Structure of PJSC RusHydro's Federation and the Prosecutor General’s Auditors (IIA)’s Three Lines Model; Internal Audit Service Office in the course of their audits, ↗ the methodological guidelines on and also the Ministry of Energy in planning and carrying out control Head of the Internal the course of checking the progress of activities, and delivering results Audit Service the Company’s investment projects; thereof (including those to determine ↗ providing for the development the procedure, rules and methods of of corrective action plans following documenting, planning and carrying out, the internal and external audits across as well as formalizing the outcomes and Deputy Head of the Service – RusHydro’s Group, their approval and delivering results of control activities to Head of the Audit Office for progress monitoring. stakeholders) were updated; the Central Region ↗ the methodological guidelines on As at December 31, 2020, the Internal the preparation and implementation of Audit Service’s headcount was corrective action plans, as well as on 15 employees. following up on recommendations issued Audit Audit post control, were developed. Office for Office for the Central the Far East Corporate internal audit Region regulations Outcome of activities carried out in the reporting year The general principles of, and approaches Analytical Center to organizing the Company’s internal Subejct to approval by the Board of audit function are set forth in the Internal Directors, a schedule of control activities Audit Policy approved by RusHydro’s defines the priorities of the Company’s Board of Directors. internal audit efforts subject to RusHydro
1 Minutes of the Company’s Board of Directors No. 308 of April 30, 2020.
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Group’s objectives, resources available, External independent External auditor and a risk-based approach to control assessment of the Internal activities. Audit Service Each year the General Meeting of In 2020, despite the restrictions resulting In 2020, LLC Ernst & Young Assurance Shareholders approves an auditor to from the COVID-19 outbreak, the Internal & Consulting Services (EY) provided review and confirm the Company’s Audit Service managed to fully meet an external independent assessment annual accounting (financial) statements. the schedule of control activities, and of the Internal Audit Service quality, The auditor reviews the Company’s also complete all the unscheduled according to IIA’s methodology of financial and business operations assignments from the Board of Directors external independent assessment of in accordance with the applicable (Audit Committee) and the Chairman internal audit1. Following the assessment, Russian laws and its service agreement. of the Management Board – General PJSC RusHydro’s Internal Audit Service The auditor’s opinion is an integral Director of RusHydro. was deemed largely compliant (the best part of the Company’s annual possible result) with the International accounting (financial) statements. In 2020, the Internal Audit Service Professional Standards of Internal Audit assessed the Company’s system of and the IIA’s Code of Ethics. The auditor’s opinion is submitted internal control, risk management, to the Board of Directors’ Audit corporate governance, and non-core Committee and to the Internal Audit asset management, and provided Internal audit development plans Commission. The Audit Committee also recommendations on their improvement. reviews the plan and reports following The assessment and recommendations In 2021, further steps will be taken to the audit of PJSC RusHydro’s RAS were reviewed by the Company’s Board enhance the Company’s internal audit financial statements and RusHydro of Directors. function such as: Group’s IFRS financial statements. ↗ developing and implementing Following the external and internal the internal audit development strategy; In order to ensure that the Company’s control activities, the management ↗ ensuring further automation of auditor is impartial and independent of RusHydro Group companies is the internal audit, enhancing the current and to approve it in a more developing and implementing corrective and introducing new data analysis tools; transparent manner, RusHydro has action plans to remedy the breaches ↗ providing for upskilling of Internal adopted a Policy on Rotation of and deficiencies (and to eliminate their Audit Service employees and Auditors (the “Policy”) (approved by reasons and consequences), to improve an independent assessment of their the Company’s Board of Directors, the internal control system efficiency qualifications for conformance with Minutes No. 275 of August 9, 2018). and make sure there are no repeated the professional standard requirements; deficiencies. ↗ increasing the share of the Internal The Policy establishes the regulatory Audit Service employees certified as framework for approving and changing In order to enhance the efficiency of internal auditors (CIA); RusHydro’s auditor and audit team follow-up on the development and ↗ reducing the volume of documents leaders and members and outlines implementation of corrective activities, resulting from control activities, while the rotation procedure, including the Internal Audit Service created making them more informative and helpful tenders for audit services. a dedicated monitoring framework, which for the Company’s governing bodies; was fully automated in 2020. The system ↗ formalizing liaison procedures and RusHydro’s auditor was selected through supports an ongoing comprehensive consolidating the results of control an open tender process pursuant to assessment of corrective activities activities of internal and external Article 5 of Federal Law No. 307-FZ implemented by the management after guarantee providers as per best practices On Auditing of December 30, 2018, the audits to confirm that they are timely and recommendations of the international Federal Law No. 44-FZ On the Contract and efficient. Institute of Internal Auditors. System in the Federal and Municipal Procurement of Goods, Works and Services of April 5, 2013, the Charter, and internal regulations of RusHydro.
1 The Quality Assessment Manual for the Internal Audit Activity of the Institute of Internal Auditors.
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Following the tender procedures, Throughout the reporting year, external audit. The Company’s auditor PricewaterhouseCoopers Audit the auditor regularly reported to the Audit is unbiased and independent from (JSC PwC Audit, 10 Butyrsky Val, 125047, Committee of the Board of Directors on RusHydro, has no conflict of interest Moscow) was declared the preferred plans and results of the audits, shared or any circumstances that might bidder and approved by resolution its vision on important qualitative challenge its independence. Materials of RusHydro’s General Meeting of aspects of RusHydro’s accounting that the external auditor prepares and Shareholders of September 30, 2020. practices, including its accounting policy, presents to the Audit Committee are estimates, and disclosures in financial informative and help assess the quality JSC PwC Audit is a member of the self- statements, and raised matters that of the auditor’s performance. regulatory organization of auditors based on the auditor’s professional Sodruzhestvo Association (SRO AAS). judgement are important for the oversight Principal entry number in the Register over the financial reporting process. Cooperation with state of Auditors: 12006020338. regulatory bodies and law In accordance with the Company’s Internal enforcement authorities No consulting services were rendered Audit Quality Assurance and Improvement in the course of audits by the auditor to the Company. Program, the Audit Committee reviewed the internal audit performance to establish RusHydro works in close cooperation whether it was in line with RusHydro’s with state regulatory bodies and law For information on the independent auditor’s remuneration, see the report on remuneration Internal Audit Policy and the Code of enforcement authorities and provides ↗ of the governing and control bodies Ethics, took into account the International assistance to them in case of audit and Standards for the Professional Practice inspections, as well as in the preparation of Internal Auditing, specifics of of information and documents upon Internal and external the Company’s operations, and its their request on an ongoing basis. audit assessment resource constraints, helped improve governance for RusHydro’s Board During 2020, RusHydro cooperated RusHydro’s Audit Committee reviews of Directors (Audit Committee) and with supervisory bodies (Accounts the report on implementing executive bodies, was efficient and Chamber of the Russian Federation the schedule of control activities robust and on a continuous improvement (four auditees), Ministry of Energy of prepared by the Head of the Internal path, and involved the identification of Russia (14 auditees), the Prosecutor Audit Service on a quarterly basis. opportunities for better internal audit, General’s Office and others) The report summarizes material improving the competencies of internal in the course of planned audits violations, flaws and gaps identified auditors, and ensuring compliance with of RusHydro Group. in the operations of RusHydro and best internal audit practices. Among its affiliates, includes information other things, the Audit Committee To eliminate violations/gaps revealed on substantial risks and issues related considered the results of an internal through inspections, the Company’s to controls and corporate governance, audit self-assessment carried out by management ensures the development and provides recommendations on the Internal Audit Service in 2020. and implementation of the necessary remedial actions and improvement corrective activities monitored of internal controls. On top of that, The Committee concluded that by the Internal Audit Service. the report submitted by the Head of the Internal Audit Service performed the Internal Audit Service provides effectively in the reporting year. Information on the results of an overview (in the part dedicated audits and management reports on to corrective action plans) of In 2020, the Audit Committee assessed the implementation of the approved the management team’s progress on the performance of the Company’s corrective action plans during 2020 were bridging the gaps identified as part external auditor (including the auditor’s considered by the Audit Committee and of the internal and external checks. opinions) and the overall efficiency of the Board of Directors of the Company.
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Internal control Key stakeholders of the internal control and risk management and risk management system 102–30 system Goal setting, General Meeting of Shareholders approval of System principles and RusHydro Group has put in place an approaches The Boards of Directors of internal control and risk management the Company and its subsidiaries system (the “System”).
The System focuses on providing Audit Committees of the Boards reasonable assurance that the Group will of Directors of the Company and be able to attain its goals and objectives its subsidiaries in the following categories: level Strategic ↗ RusHydro Group’s mission; ↗ strategic goals; Operation of Chairman of the Management ↗ operating targets related to the internal control Board – General Director the efficiency of RusHydro Group’s and risk management financial and business operations and system safeguarding of its assets; Management Board ↗ goals related to the Company’s compliance with the applicable laws and internal regulations (by-laws) of Executive bodies of subsidiaries the Company and its subsidiaries; ↗ goals related to the timely preparation of accurate financial and non-financial Risk management Management team of internal and/or external reports. and compliance the Company and its subsidiaries with control To achieve these goals, the System procedures and seeks primarily to ensure the efficiency activities Employees of the Company of financial and business operations. and its subsidiaries For this purpose, it uses internal controls that help maintain effective business processes and implement projects by Coordination Internal Control and Risk Management Director – reducing related risks. and methodological support of the System Chief Auditor
Key stakeholders of the internal Control and Risk Management control and risk management Department system Operational level
The roles of the internal control and risk Internal Audit Service management system stakeholders differ Independent assessment in their involvement in operating and of the System implementing the System and monitoring performance
its performance. Control
165 ANNUAL REPORT | 2020
Control and Risk Management In the reporting year, the Group finished control and risk management system Department developing/updating guidelines on by independent third-party experts. internal control and risk management No such assessment was carried out The Control and Risk Management processes, and approved two key in 2020 (to be held in 2021). Department is responsible for supervising regulations to put into action the Internal and providing methodological support to Control and Risk Management Policy: the System. The Department sets forth ↗ Regulations on the Internal Control Internal assessment the following objectives: System of RusHydro Group: The internal assessment of the corporate ↗ ensuring general coordination of internal → The Regulations set out applicable system of internal control and risk control and risk management processes; internal control guidelines. management is performed annually by ↗ developing guidelines on internal The document provides a detailed the Company’s Internal Audit Service to control and risk management processes; description of the internal control provide the Company’s Board of Directors ↗ organizing training in internal control system and its elements, and sets forth and executive bodies with independent and risk management for employees of requirements on key internal control and objective information about the Company and its affiliates; procedures, types of monitoring to be the system's current state and to identify ↗ analyzing the risk portfolio of RusHydro used, coordination of efforts between areas for its improvement. The assessment Group and suggesting potential responses the stakeholders of the Group’s internal relies on the methodology agreed with and reallocation of resources to manage control and risk management system, the Audit Committee of the Board of specific risks; and reports on the internal control Directors to analyze the system's current ↗ drafting consolidated risk management system status and improvements. state against the target. reports; ↗ Risk Management Regulations: ↗ exercising ongoing control over internal → The Regulations define The reporting year saw two assessments of control and risk management processes the methodological framework for internal control and risk management – across the business units of the Company regulating risk management setup in for 2019 and 9M 2020 after most of and its affiliates as prescribed by the Group. The document provides scheduled improvement activities the relevant procedure; a detailed description of the risk were completed. The Company’s Board ↗ providing training and briefing management system and its elements, of Directors reviewed and approved the Board of Directors and executive and sets forth requirements on key a report on the performance of bodies of the Company on risk procedures, types of monitoring the corporate system of internal control management and internal controls. to be used, coordination of efforts and risk management and the results between the stakeholders of of its assessment conducted by As at December 31, 2020, the Department’s the Group’s Internal Control and Risk the Internal Audit Service following headcount included 34 employees. Management System, and reports 2019. Based on the 2019 assessment, on the risk management status and the Company drafted an Internal improvements. Control and Risk Management System Related internal regulations Improvement Plan for 2019-2020 listing the development opportunities identified The key regulation defining the goals, Assessment of the Company's by the auditors. objectives and principles of the corporate internal control and risk system of internal control and risk management system Following the completion of key management is RusHydro’s Internal Control improvement measures scheduled for and Risk Management Policy (the “Policy”)1. External assessment 2020, an interim assessment (for 9M 2020) The Audit Committee of the Board conducted by the Internal Audit Service The Group put in place the Guidelines of Directors or the Chairman of revealed the internal control and risk on RusHydro Group’s Risk Appetite2 the Management Board – General Director management system had become more aiming to integrate its risk and strategic may seek an external independent mature. management. assessment of the Company's internal According to the assessment of the system’s reliability and efficiency in 9M 2020, the risk management and internal control components averaged ↗ The documents regulating the internal control 4.9 and 5.2 points out of 6, respectively, and risk management which corresponds to the Optimal ↗ RusHydro Internal Control and system are available Risk Management Policy on the Company’s website maturity level3.
1 In June 2019, the Audit Committee and the Board of Directors of RusHydro approved a new version of the Internal Control and Risk Management Policy (Minutes No. 291 of the Company’s Board of Directors of June 21, 2019). 2 In June 2019, the Audit Committee and the Board of Directors of RusHydro approved the Guidelines on RusHydro Group’s Risk Appetite (Minutes No. 291 of the Company’s Board of Directors of June 21, 2019). 3 According to PJSC Rushydro’s Internal Control and Risk Management Assessment Methodology.
166 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Improving the internal control and risk management system
The Company drafts and approves the Internal Control and Risk Management System Improvement Plan on an annual basis.
Key 2020 initiatives to improve the internal control and risk management system
Coordination The performance of internal controls over RusHydro’s key business processes was and methodological monitored on a systematic basis, with affiliates submitting proposed remedial action support plans and improvements
Affiliates regularly discussed and reviewed risks as part of preparing risk management plans for 2020-2021, and the actual progress against the plans was monitored on an ongoing basis
Development of internal The Risk Management Regulations of RusHydro Group were developed and approved regulations and training of employees In 2020, the Group finished developing/updating internal regulations governing the internal control and risk management system and the interaction of the Control and Risk Management Department and affiliates
To standardize the approach to internal control and risk management, all of the Group’s affiliates adopted relevant regulations
Development of the risk The strategic and business process risk registers and rankings were updated management and internal on an annual basis, with the implementation of risk management initiatives monitored control process in the and the materialized risk database kept up to date Company
Business process controls were developed, implemented and harmonized, including as a follow-up to the self-assessment performed by risk owners
Automation of the risk The Company launched an automated risk management system (ARMS) with processes management and internal fully reliant on uniform reference books including RusHydro Group’s risk classifier control process
In 2020-2021 the Company plans to further develop and roll out the system across its affiliates
The Company is piloting ModelRisk, a risk modelling tool
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Risk management: methods ↗ RusHydro is in the process of ↗ RusHydro Group fosters a risk-focused and approaches developing a unified corporate organizational culture. classification of risks, a database of The Internal Control and Risk typical risks, risk categories and other Management Policy of PJSC RusHydro tools required to improve efficiency; specifies the following set of risk management methods and approaches: Elements of a risk-focused culture ↗ risk management is an integral part of all organizational processes: it is not segregated from the Company’s key business activities and processes; ↗ risk management is an integral part A set of standards, processes Active involvement of the and units in the Company and Company’s managers in the risk of decision-making: it helps the relevant its affiliates management process, including bodies to make informed choices, decision-making prioritize initiatives and find the best solutions among alternatives; ↗ risk management is essential to the continuous improvement of the Company and its affiliates. RusHydro Group keeps refining and enhancing Integrating risk management Setting up a center for supervising practices into current operations and providing methodological its system of internal control and risk to achieve the Group’s goals support to the internal control and management to achieve greater risk risk management system management maturity;
Risk management framework
Internal Control and Risk Application area, environment Updated register of Management Policy and criteria the Group’s prioritized strategic risks
Report on risk management Risk identification performance in the Company and its affiliates Risk assessment (analysis and prioritization) Risk management Updated register of materialized plans of the Company Risk formalization Risk formalization reportsin dedicated strategic risks Risk monitoring Risk mitigation and its affiliates
Generating a final report Link between procedures
Risks may arise at various organizational Every year, the Company and its on October 7, 2019 and revised it levels or in any business processes, affiliates draft and approve risk in April 2020 to factor in the COVID-19 following the achievement of management plans, with progress pandemic. the Group’s strategic goals or as part monitored semi-annually. of the Company’s or affiliates’ projects. As part of its efforts to control Strategic risks are subject to annual the reliability and effectiveness A sequence of risk management update (review) based on the risk of the internal control and risk procedures applies to project profile linked to the Group’s targets, management system, the Control management (project risks), historical data on risk analysis, and and Risk Management Department including investments, and operating the assessment of external and internal regularly interacts with the Audit activities (business process risks), factors affecting the Group’s operations. Committee of the Board of Directors. aggregating at the top level (strategic risks) based on their impact on The Management Board adopted achieving strategic goals. the 2020 strategic risk register
168 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Risk appetite Risk appetite
Risk appetite is a quantitative or Risk appetite limit (risk level) qualitative measure of risk the Group Risk categories Target indicator is ready to assume in achieving its strategic goals and objectives. Major accident risk Reliable and safe operation Number of major accidents of RusHydro Group’s The Group’s approach with respect facilities to the Risk Appetite Statement builds on the integrated risk and strategic Risks affecting Operational efficiency Return on equity (ROE), management. Approved by the Board operational efficiency labor productivity of Directors in June 2019, the Risk Risk of losing Investment appeal EBITDA Appetite Statement reflects the Group’s investment appeal position on the level of risks acceptable when implementing its Strategy. Investment risks Investment activities Adherence to the capacity commissioning schedules, The document is taken into account funding and spending plan when making decisions regarding RusHydro Group's operations. 102–33 Corruption risk Zero tolerance towards Number of actions lodged corruption against Group companies for illegal gratification offered on behalf of legal entities under Article 19.28 of Administrative Code of the Russian Federation No. 195-FZ of December 30, 2001
↗ Details on risk management Reputational risks Good corporate reputation Share of negative news in total are available on the media coverage Company’s website
Strategic risk management strategic risks to the Board of Directors Information security and the Audit Committee of the Board of Risks and opportunities are prioritized Directors. Beside metrics, the Group plans In 2020, the Group’s information security according to their impact on key to introduce indicators from 2021. These efforts focused on compliance with financial, environmental and social will serve to analyze and assess changes, federal laws on critical infrastructure aspects of the Company’s operations, forecast strategic risk events, and make security and strengthening its information with the strategic targets, development managerial decisions on developing/ protection mechanisms. priorities and the Company’s mission introducing additional risk / risk factor factored in. Strategic risks are mitigants. RusHydro categorized its critical decomposed to business process risks. infrastructure facilities and embarked on Plans to manage business process risks Analysis and assessment using risk creating a dedicated security system. at the Company and its affiliates help factor indicators represents a proactive minimize active risks. approach to risk management in line with The corporate center for identifying, the best practices in this domain. preventing and responding to cyber- Materialization indicators serve to formalize In 2020-2021, the Company is piloting attacks was put into operation: strategic risk events. The Management proposed indicators subject to ↗ the critical facilities were connected to Board and the Audit Committee of subsequent update. the center’s technical infrastructure, and the Board of Directors reviewed the metrics the center made arrangements to monitor for assessing strategic risks materialization information security of these facilities. in 2020-2021 and their evolution to be able For more information on the strategic risk ↗ RusHydro and the National Computer register and monitoring in 2020, to monitor and forecast these risks. Risk ↗ see the Strategy section Incident Response and Coordination metrics are instrumental in setting clear Center signed an agreement. uniform thresholds, including acceptable deviations, to achieve strategic targets For the strategic risk management report for 2020 and climate risks, see Appendix 28 and timely communicate changes in ↗ of the Appendices Book
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Anti-corruption Anti-corruption activities structure 103–2 efforts Board of Directors (Audit Committee of the Board of Directors) Anti-corruption regulations ↗ Establishes the key goals, objectives and principles of the Anti-Corruption Policy and monitors the results of its implementation.
RusHydro Group’s anti-corruption framework is aligned with the relevant laws of the Russian Federation. Chairman of the Management Board – General Director ↗ Manages goals, objectives and principles of the Anti-Corruption Policy and RusHydro and its affiliates use a system selects business units responsible for developing, implementing and monitoring of corporate policies and standards the anti-corruption procedures. to regulate anti-corruption measures and define the main objectives, goals and focus areas of activities aimed at preventing and combating Control and Risk Management Department corruption. These documents include: ↗ Develops anti-corruption activities and organizes and controls their ↗ Code of Corporate Ethics; implementation. ↗ Anti-Corruption Policy; ↗ Coordinates activities aimed at preventing corruption. ↗ Regulations on the Prevention and ↗ Conducts control measures and develops activities to assess and minimize Management of Conflicts of Interest; corruption risks. ↗ Regulations on the Procedure ↗ Oversees legal compliance of anti-corruption efforts of RusHydro and its affiliates. to Report Presents Received by RusHydro’s Employees; ↗ Regulations on the Committees for Compliance with the Corporate Ethics Standards and Management Units of RusHydro and affiliates (departments of security, HR, procurement, of Conflicts of Interest; Ethics Committee, etc.) ↗ Implement activities aimed at corruption prevention within the scope of each ↗ Rules of RusHydro’s Line of Trust department’s operations. Operation.
↗ The full list of external and ↗ showing good faith, impartiality and The following requirements also apply internal regulations, including professionalism in discharging duties to the governing bodies: their contents, is available on the Company’s website and responsibilities for the benefit ↗ showing an example of professionalism of the Company, its employees and and impeccable reputation to shareholders; subordinates in the Company and Code of Corporate Ethics ↗ observing the standards of labor promoting a healthy moral and and professional ethics and rules of psychological environment at work; The Code of Corporate Ethics of business conduct in communicating with ↗ taking all necessary measures to PJSC RusHydro (the "Code") is approved colleagues, counterparties and other prevent and settle any conflicts of by the Company's Board of Directors1. stakeholders; interest; ↗ remaining impartial and independent ↗ taking all necessary measures to The Code of Corporate Ethics sets out in relations with counterparties, political prevent unlawful actions by subordinates key standards, principles of professional parties, non-government associations which may be intended to harm ethics and ethics rules to be observed by and other stakeholders and refraining the Company’s interests; the Company, including its employees and from actions, situations or conduct ↗ not coercing the Company employees governing bodies: with respect to the latter influenced by to participate in the activities of political ↗ compliance with the Constitution personal, property/financial or other parties and private associations; of the Russian Federation, federal interests which make it impossible to ↗ showing a personal example of constitutional laws and federal laws, other discharge professional duties in good integrity, impartiality, and justness. regulations of the Russian Federation and faith and can damage employees' or internal regulations of the Company; the Company's reputation.
1 Minutes No. 235 of April 8, 2016 as amended (Minutes No. 281 of December 27, 2018).
170 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
RusHydro Group takes the following steps The rating of 50 major Expert 400 Comprehensive Program to implement the Code: companies relied on the independent of Anti-Corruption Activities ↗ drafts uniform internal regulations assessment of compliance with specifying standards, requirements and ISO 37001:2016 Anti-Bribery In 2020, the Company rolled out a number limitations related to the implementation Management Systems (Requirements of initiatives to combat and prevent of the Code of Corporate Ethics. These with Guidance for Use) and the Anti- corruption in accordance with the relevant are subject to approval at each Group Corruption Charter of the Russian comprehensive program. company; Business. 102–12 ↗ familiarizes all employees with the above standards, rules and The Company received the top Developing and updating requirements, and provides advice as A1 ranking as the business with the Company’s anti-corruption to their observance; the strongest anti-corruption practices regulations ↗ sets up ethics committees at and a minimum corruption risk In 2020, the Company introduced RusHydro and its affiliates, which help and related threat to investors, the following changes: ensure compliance with corporate ethics creditors, business partners and other ↗ amended the Regulations on rules by employees and managers, stakeholders2. the Procedure for Reporting and among other things, by reviewing Verifying the Data on Income, Property identified breaches, issuing corrective and Property-related Liabilities at recommendations and monitoring their Improvements to RusHydro Group3 by updating the model implementation. the anti-corruption for the business process “Management framework in 2020 of reporting and verifying the data on In their decisions, the governing bodies income, property and property-related of PJSC RusHydro and its affiliates In 2020, the Company completed a project liabilities”; strictly abide by the principles and to automate the system for receiving, ↗ amended the Regulations on standards championed by the Code to processing and handling reports sent the Committees for Compliance with promote the interests of the Company through the Group’s Line of Trust. the Corporate Ethics Standards and and avoid conflicts of interest. Following the launch, the system has Management of Conflicts of Interest4 been running as usual. as regards the possibility for the ethics With a view to preventing, among other committees to use a digital signature and things, a conflict of interest, the Audit The Company updated its corporate electronic documents due to the Group's Committee of RusHydro’s Board of distance learning course on the anti- transitioning to electronic signing; Directors reviews, on a preliminary basis, corruption policy, which describes ↗ amended the Regulations on the Company’s transactions1 with persons both the legal framework and the Complete Disclosure of the Ownership affiliated with substantial shareholders the Company's key focus areas in Chain Including Beneficiaries by of RusHydro (other than the Russian combating corruption: the Group's Counterparties5. Federation) and makes sure that there is ↗ corruption: definition, types and no conflict of interest involved. responsibilities; To harmonize anti-corruption framework ↗ RusHydro's anti-corruption framework: approaches across RusHydro Group, regulatory framework, structure, the Company continued to oversee Anti-corruption rating principles, goals and objectives; the adoption of internal anti-corruption of the Russian business ↗ RusHydro's anti-corruption program regulations (by-laws) by its affiliates in line and implementation tools; with the Company's regulations. The key anti-corruption milestone in ↗ conflicts of interest: definition and 2020 was the Company's participation prevention; As at January 31, 2021, out of in the first anti-corruption rating of ↗ RusHydro's Line of Trust: rules for 60 affiliates6, 7 : the Russian business launched by report acceptance and processing; ↗ Anti-Corruption Policy is adopted the Russian Union of Industrialists ↗ Ethics Committee: structure, goals and by 56 affiliates (93%); and Entrepreneurs in accordance with objectives; ↗ Regulations on the Committees the National Anti-corruption Plan for ↗ bans, limitations and regulatory for Compliance with the Corporate 2018-2020. requirements. Ethics Standards and Management
1 Transactions involving a conflict of interest are the Company’s transactions with persons affiliated with (related to) substantial shareholders of RusHydro (other than the Russian Federation) aimed at receiving unjustified profit (enrichment) at the Company’s expense. 2 http://against-corruption.ru/rating/itogi-2020/. 3 Order No. 355 of May 13, 2020. 4 Order No. 580 of July 28, 2020. 5 Order No. 598 of August 3, 2020. 6 According to the Company’s financial register as at December 31, 2020, the Group comprises 73 affiliates, excluding foreign entities and companies going through liquidation and bankruptcy. 7 Some affiliates did not adopt internal regulations (by-laws) similar to the Company’s due to organizational specifics (small headcount, planned reorganization, etc.) or changes (newly incorporated affiliate, reorganization, etc.). The affiliates that did not adopt the internal anti-corruption regulations (by-laws) as at the reporting date are guided by relevant regulations approved by their controlling companies of RusHydro Group.
171 ANNUAL REPORT | 2020
of Conflicts of Interest, as well as Ethics regulations and methodologies, and Providing for investigations Committees’ composition are approved links to the Group's Line of Trust and key into any reports of wrongdoings at 51 subsidiaries (85%); relevant forms. The Line of Trust is the Company's ↗ Regulations on the Procedure for permanent confidential communication Reporting and Verifying the Data on In keeping with the business transparency channel established so that all Income, Property and Property-related principle, RusHydro Group communicates of RusHydro Group’s employees, Liabilities are adopted at 50 affiliates its anti-corruption standards to its counterparties and third parties (83%); counterparties and business partners. (including anonymous) could report ↗ Regulations on the Procedure In the course of procurement and issues in an effort to combat fraud for Reporting Presents Received contracting, the Company adds anti- and corruption, embezzlement and by Employees is put into effect corruption clauses to draft contracts with unauthorized use of property and assets, at 48 subsidiaries (80%). information about its Anti-Corruption conflicts of interest involving employees Policy and Line of Trust (a communication and counterparties of the Company, channel for reporting actual or potential violations of the rules on the procurement Providing for transparency and violations) 102–17. In 2020, RusHydro of goods, works and services, as well availability of information Group communicated its anti-corruption as other violations of Russian laws and To ensure the transparency and integrity principles to 18,021 business partners, RusHydro Group’s internal regulations. of its operations, the Company provides including suppliers and contractors, maximum disclosure on its anti-corruption banks, financial and credit institutions, Line of Trust channels for submitting activities. and insurance companies. reports (available 24/7): ↗ e-mail: [email protected]; The following information is published ↗ online feedback form on the Company’s on RusHydro’s website and intranet Cooperation with state regulatory website and intranet portal; portal and updated on a timely bodies and law enforcement ↗ hotline answerphone +7 495 785 0937; basis: authorities ↗ Line of Trust boxes placed in ↗ internal regulations on combating RusHydro works in close cooperation the offices of RusHydro Group; corruption and preventing wrongdoings with the law enforcement authorities and ↗ Russian Post service; and conflicts of interest; supervisory bodies and provides assistance ↗ an in-person meeting with the Internal ↗ action plans and reports on to them in case of audit and inspections, Control and Risk Management Director – the implementation of the Comprehensive requests of information on the Company’s Chief Auditor. Program of Anti-Corruption Activities; anti-corruption compliance (including ↗ information, effective laws and with respect to storage and transfer to The Control and Risk Management regulations, and guidance on combating the authorities of the information and Department is in charge of receiving, corruption. documents in case of investigations of recording, reviewing and responding to corruption cases and inspections seeking reports. In 2020, we published around to check how the Company prevents and 30 articles and press-releases on combats corruption, etc.). The Line of Trust provides for impartial improvements of the current systems consideration of reported issues by for preventing and combating In 2020, the areas of the Company’s officers not involved in the cases, corruption, internal controls cooperation with government authorities meaning they remain unbiased and and audit, corporate governance, (the Ministry of Energy of Russia, independent while checking the facts and procurement transparency. the Government of the Russian and drawing conclusions, which they Federation, etc.) to prevent and combat do in full compliance with Russian laws To keep the employees fully informed on corruption included: and internal regulations of the Company/ our anti-corruption efforts and relevant ↗ disclosure of information upon affiliates. legal requirements, the Our Company an authorized request; section of the Company's intranet portal ↗ reporting on the Company’s now features the updated Anti-corruption anti-corruption practices as part of Efforts subsection. the National Anti-corruption Plan for 2018-2020; The subsection offers data on effective ↗ formulating and submitting proposals internal regulations on preventing and to be included in the draft National ↗ More details on RusHydro’s Line of Trust are available combating corruption, underlying laws, Anti-corruption Plan for 2021-2023. on the Company’s website
172 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
RusHydro does the following to promote Reports by topic the Company’s local internal documents the Line of Trust among its employees on combating corruption. The testing 228 and counterparties: covered 346 Group employees (managers regularly updates the information about and specialists) exposed to corruption ↗ 195 198 31 the Line of Trust on its official website and risks. intranet portal; 24 38 32 ↗ shows educating videos and places roll- 19 26 ups in the halls of the Group companies’ 13 16 EmployeeОбучение работников training политикам и методам 21 противодействия коррупции offices; 27 in the existing anti-corruption ↗ includes the information about 38 68 policies, % 205–2 the Line of Trust in anti-corruption clauses added to contracts signed by 29.9 25.6 the Company and its affiliates with 112 85 counterparties. 71
The Company also publishes semi-annual 586 reports on the Line of Trust performance 2018 2019 2020 people on its website and provides a summary in Sales1 10.8 the corporate newsletter. Procurement Labor/payroll Information contained in 48 (21%) out of Conflicts of interest 33.8 228 reviewed reports was confirmed to be Other true and involve violations of rights and/ or other wrongdoings. The Company took Top management measures to eliminate all verified violations Middle management and impose sanctions on the wrongdoers Wrongdoing prevention by Junior management (employees/managers), including: 205–2 the Company’s employees White-collar employees ↗ disciplinary action (reprimand, RusHydro Group consistently informs censure) was taken against 13 employees its employees and business partners (managers) of RusHydro Group who on anti-corruption practices. committed violations; For a breakdown by region of employees ↗ three reports resulted in eight All new employees of RusHydro are trained on corruption prevention policies ↗ and practices, see Appendix 27 of employees and managers being stripped required to read the Code of Corporate the Appendices Book of their bonuses; Ethics, Anti-Corruption Policy and other ↗ organizational measures, including: internal anti-corruption regulations → preventive discussions on zero of the Company. The information on In 2020, as part of a yearly reporting tolerance for violations; newly approved internal regulations procedure, RusHydro collected → necessary employee training on is communicated to the Company’s and analyzed income records reported matters/issues; employees via the corporate document of 342 employees (managers) of → payment adjustments; management system. In 2020, 16,965 the Group that held positions exposed → additional accruals of wages; RusHydro Group employees were to corruption risks. RusHydro’s Central → interaction with whistle-blowers informed as part of the awareness Ethics Committee met to review to settle claims and clarify program. the results of the 2019 reporting the operation of relevant services campaign. In response to 47 cases (charging stations, energy bills, The Group regularly improves training where indications of conflicts of interest use of personal accounts, reporting programs dedicated to ethics compliance and/or other violations/gaps had of utility meter readings, etc.) and preventing and combating corruption. been revealed, the Committee issued ↗ other measures aimed at eliminating recommendations on their resolution and identified gaps and violations. In 2020, we updated our distance prevention. learning course on the anti-corruption No corruption cases were confirmed at policy and conducted annual staff In 2020, the Company checked and RusHydro Group during the reporting testing to check their knowledge of approved 100 candidates for the positions period. 205–3 Russian anti-corruption laws and exposed to corruption risks.
1 Including reports in relation to settlements for the consumption of electricity and heat.
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As part of the approval procedure Control over corruption risks ↗ For further information on the interested-party for draft contracts and addenda, and economic security transactions, including their subject, interested 1,021 contractors were checked for parties involved and approval details, see Appendix 2 of the Appendices Book conflicts of interest and had their In its efforts to ensure economic security business reputation and financial position and control corruption risks, the Company assessed. As a result of the check, emphasizes measures to promptly Preventing the use of insider no conflicts of interest or signs thereof identify, neutralize and prevent risks and information between the managers (founders) of threats to RusHydro Group’s interests the potential contractors and RusHydro’s posed by unreliable contractors, RusHydro has put in place Regulations employees were revealed. minimizing potential repercussions on Insider Information to secure of illegal actions, compensation for compliance with laws and regulations damages, internal inspections, and of the Russian Federation in terms of Enhancing internal control system investigations on actual or potential prevention of unauthorized use of insider To improve the internal control system infringement on the Company’s interests. information and market manipulation. and mitigate risks of corruption and fraud The Regulations account for international in the Company’s activities, RusHydro In 2020, to provide for better economic corporate governance practices, took a number of actions in the reporting security, as well as to mitigate corruption including Regulation (EU) No. 596/2014 period, including: risks and safeguard RusHydro Group’s of the European Parliament and of ↗ approving the Risk Management economic interests, the work on the Council on market abuse (market Regulations of RusHydro Group1; an Automated System for Contractor abuse regulation) and repealing Directive ↗ approving the Regulations for Checks and Monitoring was initiated, 2003/6/EC of the European Parliament Interaction on the Internal Control and currently in its design and development and of the Council and Commission Risk Management System between stages. The commissioning of the system Directives 2003/124/EC, 2003/125/EC RusHydro and its affiliates2; is planned for 2021. and 2004/72/EC, as well as Disclosure ↗ approving the Plan for Managing and Transparency Rules of the Financial the Risks of RusHydro’s Business Conduct Authority. Processes for 20203; Control over major transactions ↗ completing an e-learning course and and interested-party The Regulations specify: using it to teach Company and affiliate transactions ↗ persons included in the Company’s employees engaged in risk management list of insiders; as part of the Basics of Risk Management RusHydro has a transaction control ↗ rules of access to the insider and Internal Controls at RusHydro Group system in place to ensure that every information and its confidentiality program’s business processes. draft contract is checked for meeting protection; the criteria of major, interested-party and ↗ restrictions on the use of insider other transactions that require the Board information in transactions with Anti-corruption program roadmap of Directors’ approval (Regulations on the Company’s financial instruments and In 2021, the Company will continue rolling Contracts and Agreements). disclosure thereof to third parties; out the Comprehensive Program of Anti- ↗ procedure and deadlines for Corruption Activities. Depending on transaction value, the disclosure of the Company’s insider the review is done by legal departments information, and the rules for transactions In particular, RusHydro plans to focus on of the Company’s branches or at with the Company’s financial instruments. improving the existing automated systems the Company’s Headquarters. for preventing and combating corruption The list of insider information is made in and increasing the level of awareness and In 2020, RusHydro concluded several Russian and English and published on knowledge of anti-corruption practices of interested-party transactions and the Company’s website. In October 2019, RusHydro Group employees. no transactions that would be deemed the Company approved a new revised list major under Russian laws. of insider information.
1 RusHydro’s Order No. 251 of March 27, 2020. 2 RusHydro’s Order No. 464 of June 18, 2020. 3 RusHydro’s Order No. 64 of January 30, 2020, as amended by Order No. 544 of July 10, 2020.
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In April 2020, the Company approved In 2020, RusHydro did not send ↗The data that constitutes Methodology for Countering the Misuse the insiders on its list requests for the Company’s insider information is published of RusHydro’s Insider Information1. information on their transactions with in Russian in the news feed of the Company’s financial instruments, the authorized news agency Interfax Corporate Information RusHydro’s list of insiders is updated upon and received no notifications regarding Disclosure Center inclusion or exclusion of the Company’s the sale of its shares by any of its insiders. insiders. As at December 31, 2020, the Company’s list of insiders included In 2020, in order to account for 19 legal entities and 112 individuals. changes in the relevant legislation and In 2020, three legal entities and 25 prevent conflicts of interest, matters individuals were added to the list, while of compliance with the laws on insider ↗ In English in the London Stock Exchange’s News Monitoring five legal entities and 21 individuals information were included in the remit Service were excluded. RusHydro sends proper of Yelena Shchyogoleva, Internal inclusion/exclusion notifications Control and Risk Management Director – to the insiders. In 2020, 54 notifications Chief Auditor. were sent. Based on a Bank of Russia ordinance2, In response to the requests of the security in August 2020 the Company approved market operator (PJSC Moscow Exchange), Internal Control Methodology for RusHydro provided it with eight lists of Identifying, Neutralizing and Preventing insiders as at the respective dates of the Misuse of Insider Information and the requests. Market Manipulation3.
1 Order No. 310 of April 17, 2020. 2 Bank of Russia Ordinance No. 5222-U of August 1, 2019 “On Requirements for Internal Control Rules on Preventing, Detecting, and Stopping the Unlawful Use of Insider Information and/or Market Manipulation...” 3 Order No. 647 of August 20, 2019.
175 ANNUAL REPORT | 2020
Report on Remuneration of the Governing and Control
Bodies 102–35
Remuneration ↗ remuneration is paid to the members in presentia. Compensation is paid by the Board of Directors for the period the Company in cash (Russian rubles) of the Board of from their appointment as members of within 30 (thirty) business days after Directors and Board the Board of Directors to the election of submission of the application and a new Board of Directors; original documents. No applications for committees ↗ remuneration depends on the number reimbursement of expenses were received of meetings attended; from members of the Board of Directors The Company adopted a short-term ↗ base remuneration of a member of during the reporting period. incentive system for the Board the Board of Directors is RUB 3.51 mn; of Directors (see the Regulations ↗ remuneration is increased if the member The Company has no long-term incentive on Payment of Remuneration and of the Board of Directors is Chairman of and stock option plans for the members Compensation to Members the Board of Directors (by 30%), Chairman of the Board of Directors in place. of RusHydro's Board of Directors). of a Board committee (by 20%), Senior The system relies on the following Independent Director (by 15%), or member The Remuneration Regulations define remuneration principles: of a Board committee (by 10%). the amount of remuneration for ↗ the Regulations are not applicable directors who are members of the Board to the members of the Board of Directors The Board of Directors annually adopts committees and set out the procedure for who act (during their term in office as a resolution on the Recommendations payment of such remuneration. members of the Board of Directors to the Annual General Meeting of whether partial or entire) as members Shareholders Regarding Payment of On September 30, 2020, RusHydro's of the Company’s collective executive Remuneration to Members of the Board General Meeting of Shareholders body or as the Company’s sole executive of Directors Who are Not Public Officers resolved to pay remuneration to body; in the Amount Set by the Internal the members of the Board of Directors ↗ remuneration is not accrued or paid Regulations. for their services for the period from to the members of the Board of Directors June 28, 2019 to September 30, 2020 for the period during their term in office The Regulations also provide for in the amount, within the timeframes, and as members of the Board of Directors the possibility of reimbursing members in accordance with the procedure set out when they were subject to restrictions of the Board of Directors for actual in the Remuneration Regulations.1 or bans on receiving any payments from expenses related to participation in business entities in accordance with meetings of the Board of Directors the applicable Russian laws; and General Meetings of Shareholders
Board of Directors’ remuneration2, ‘000 RUB
Type of remuneration 2018 2019 2020
Remuneration for membership 27,945.0 24,840.0 27,264.4 in governing bodies
Salary 0 0 0
Bonus 0 0 0
Commissions 0 0 0 ↗ The Regulations on Payment of Remuneration and Other types of remuneration 0 0 0 Compensation to Members of RusHydro’s Board Total 27,945.0 24,840.0 27,264.4 of Directors are available on the Company’s website
1 Minutes No. 19 of October 2, 2020. 2 Excluding personal income tax.
176 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Personal remuneration of the Board of Directors in the reporting year, ‘000 RUB
Senior Member Total Remune- Meetings Meetings Independent of a Board Aggregate Remune- remune- ration Full name held attended Director committee bonus ration Bonus ration payablе1
Maxim 24 21 0 30% 30% 2,362.5 708.8 3,071.3 2,672.0 Bystrov
Pavel 24 24 15% 40% 55% 2,700.0 1,485.0 4,185.0 3,640.9 Grachev
Lev 24 24 0 30% 30% 2,700.0 810.0 3,510.0 3,053.7 Kuznetsov
Pavel 24 22 0 0% 0% 2,475.0 0.0 2,475.0 2,153.3 Livinsky
Vyacheslav 24 23 0 50% 50% 2,587.5 1,293.8 3,881.3 3,376.7 Pivovarov
Mikhail 24 23 0 0% 0% 2,587.5 0.0 646.9 562.8 Rasstrigin2
Nikolay 24 24 0 40% 40% 2,700.0 1,080.0 3,780.0 3,288.6 Rogalev
Alexei 24 24 0 20% 20% 2,700.0 540.0 3,240.0 2,818.8 Chekunkov
Andrey 24 22 0 0% 0% 2,475.0 0.0 2,475.0 2,153.3 Shishkin
Total 23,287.5 5,917.6 27,264.4 23,720.1
Remuneration results were used to revise the incentive the growth in share price and achievement system for the Management Board. of KPIs set by the Company's Board of the Management of Directors. The Plan aims to ensure Board Since January 1, 2017, the remuneration closer alignment of interests of system has become more transparent and the management and shareholders is now directly linked to the achievement in delivering consistent growth of Remuneration to members of of the Company’s short- and long-term the Company's value and developing the Management Board, including KPIs as recommended by the Nomination the business. The key objectives and Chairman of the Management and Compensation Committee and principles underpinning the Plan are to Board – General Director, is paid in approved by the Board of Directors. motivate the Company’s management accordance with the employment to achieve strategic objectives and contracts and the Regulations on The new incentive system relies on pursue openness to shareholders Payment of Remuneration and the following principles: as remuneration is dependent on Compensation to Members of ↗ transparency, balanced approach the achievement of the KPIs, is calculated RusHydro's Management Board3. (interests of shareholders are aligned using the unified methodology and is with the management's interests in based on equal payment conditions. In 2016, the Company engaged Ernst achieving the Company’s long- and & Young (CIS) B.V. (Moscow branch), short-term goals); The amount and terms of payment a global consultancy firm, to develop ↗ impartiality (the remuneration depends of remuneration to the members of recommendations on remuneration on the RusHydro's performance and the Management Board upon early for the collective executive and outcomes from the implementation of termination of employment are sole executive bodies in line with significant projects). determined in the regulation on payment the best Russian practices. Market of remuneration and compensation benchmarking of the remuneration The current remuneration system to RusHydro's Management Board structure and amount focused on includes a Long-Term Incentive Plan approved by the Board of Directors. major peer companies. The research for the Management Board linked to The Company does not make “golden
1 Excluding personal income tax. 2 Remuneration paid pro rata to the time served in the capacity of a public officer. 3 Approved by the Company’s Board of Directors (Minutes No. 243 of November 14, 2016), amended as per Minutes No. 283 of February 21, 2019.
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parachute” payouts for early termination. Remuneration of the Management Board1, ‘000 RUB The maximum compensation paid to members of the Management Board upon Type of remuneration 2018 2019 2020 early termination of employment is limited to three average monthly salaries as Remuneration for membership 0 0 0 provided for by the Russian legislation. in governing bodies Salary 157,616.6 172,190.2 181,072.6
Bonus 244,368.6 260,281.3 242,290.3 ↗ For more information on the Management Board’s KPIs and performance, see the Key Performance Indicators section. Commissions 0 0 0 Other types of remuneration 0 0 0
Pursuant to the Regulations on Payment Total 401,985.2 432,471.5 423,362.9 of Remuneration and Compensation to Compensations 861.6 638.1 118.2 Members of RusHydro’s Management Board, members of the Management Board are reimbursed for: ↗ hotel booking and accommodation Remuneration and Compensation to If any such restriction or ban costs, return tickets on business trips and Members of RusHydro’s Internal Audit is lifted on the grounds specified in other expenses associated with business Commission2 (the “Regulations”): the applicable Russian legislation, trip assignments; ↗ the remuneration and compensation the remuneration shall be calculated ↗ representation expenditures. are paid to members of the Internal from the date on which the Company’s Audit Commission for a corporate year Board of Directors is notified in writing The members of the Management Board (the period from the appointment of of any such restriction or ban being may receive other compensations new members of the Internal Audit lifted as per the Regulations; associated with performing their job duties Commission at the General Meeting ↗ remuneration is not paid to members to the extent and in manner prescribed of Shareholders until the next General of the Internal Audit Commission who by the Company’s internal regulations. Meeting of Shareholders charged with attended less than 50% of meetings considering election of new members held during their term in office. to the Internal Audit Commission); ↗ base remuneration is set at 15% of There are no agreements in place on Remuneration of the average annual remuneration for the amount of remuneration to members a member of the Board of Directors; of the Internal Audit Commission. the Internal Audit ↗ remuneration is not accrued Commission or paid to the members of the Internal Audit Commission for the period during their term in office when they Remuneration to members of were subject to restrictions or bans ↗ The Regulations on Payment of Remuneration and the Internal Audit Commission is based on receiving any payments from Compensation to Members on the following principles approved business entities in accordance of RusHydro’s Internal Audit Commission are available by the Regulations on Payment of with the applicable Russian laws. on the Company’s website
1 Including personal income tax. 2 The current version of the Regulations was approved by resolution of the Annual General Meeting of Shareholders (Minutes No. 19 of October 2, 2020).
178 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Remuneration of the Internal Audit Commission1, ‘000 RUB
Type of remuneration 2018 2019 2020
Remuneration for membership in a control 370.8 550.5 1,005.9 body overseeing the Company’s financial and business activities
Expenses related to duties in the control 0 0 0 body overseeing the Company’s financial and business activities and compensated by the Company
Individual remuneration packages for work in the Internal Audit Commission in 2020, ‘000 RUB
Member of the Internal Audit Commission Remuneration amount
Natalia Annikova 330.3
Tatyana Zobkova – (Chair of the Internal Audit Commission)2
Denis Konstantinov 315.3 Igor Repin 360.3 82.2 RUB mn Dmitry Simochkin2 – auditor’s fee
Auditor’s fee
The auditor’s fee is determined by the Board of Directors based on the results of competitive bidding and after prior consideration of the matter by the Audit Committee under the Board of Directors of PJSC RusHydro.
Auditor’s fee, RUB mn (incl. VAT)
Type of remuneration 2018 2019 2020
Audit of the annual RAS financial 84.2 83.4 82.2 (accounting) statements and IFRS consolidated statements
Non-audit services – – –
1 Excluding personal income tax. 2 Remuneration was not paid as the member of the Internal Audit Commission is a public officer.
179 185 Contacts 183 180 Appendices Book Abbreviations and Glossary APPENDICES 5 Abbreviations and Glossary Glossary ANNUAL REPORT | 2020 REPORT ANNUAL Installed capacity facilities Hydrotechnical plant Hydroelectric power Gigacalorie-hour Gigacalorie market electricity andcapacity (OGKs) ofthe wholesale Generating companies Energy efficiency Day-ahead market Term plants which are part ofthe Group’splants whicharepart structure Total nominalactive capacityofgenerators atelectricpower effects ofwater andliquidwaste designed to usewater resources andprevent the harmful washing-away inchannels,aswellotherstructures industrial andagriculturalorganizations;facilitiesagainst structures (dams) enclosingliquidwaste storage facilitiesof banksandthe bottom ofriver beds; the banks ofreservoirs, designed to protect against floodsanddestruction of pumping stations, shippinglocks,shipelevators; structures discharge, drainageandoutletstructures, tunnels,channels, Dams, buildingsofhydroelectric powerstations, water power plants noted, HPPs andPSPPs arealso classifiedashydroelectric electrical energy. unlessotherwise Inthe annualreport, mechanicalenergyofwaterequipment thatconverts into complex, includingwaterworks/hydrotechnical facilitiesand A powerplantasasingleproductionandtechnological A unitofmeasurementfor heatingpower A unitofmeasurementfor heatingenergy the agreement onjoiningthe wholesalemarket tradingsystem electricity andcapacitymarket inaccordance with have taken otheractionsrequiredto tradeinthe wholesale and forcontracts wholesalemarket participants mandatory entered intothe status ofwholesalemarket participants, Electricity andcapacitysuppliersthathave received level ofenergy to provide buildingsorproductionprocesses withthe same Effective (rational)useofenergyresources; usinglessenergy each hourofthe day volumeswith the determination for ofprices anddelivery bids byJSCATS ofelectricity adaybefore the actualdelivery The competitive selectionofsuppliersandconsumers price Definition ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Term Definition
Kilowatt-hour A unit of measurement of generated electrical energy
Controlling person A person who is entitled, directly or indirectly (through persons under his control), by virtue of participation in a controlled entity and/or on the basis of a fiduciary management agreement and/or simple partnership agreement and/or agency agreement and/or shareholder agreement and/or any other agreement providing for the exercise of rights certified by shares (interest) of a controlled entity, to control more than 50% of the votes in the supreme governing body of the controlled entity, or the right to appoint (elect) the chief executive officer of the controlled entity and/or more than 50% of the members of the collegial management body of the controlled entity
Megawatt A unit of measurement of electrical capacity
Net electricity delivered Electricity received by consumers
Net heat delivered Heat energy delivered to the consumer (consumers) at the boundary of operational responsibility (balance sheet attribution)
Pumped storage power Power plant working by transforming electricity from other power plants into the potential energy of water; plant during reverse transformation, accumulated energy is contributed to the energy system primarily to cover deficits that may occur during peak load periods
Renewables Renewables include all renewable energy sources defined in Art. 3 of Federal Law No. 35-FZ of March 26, 2003 On Electric Power Industry, except for HPPs with an installed capacity of more than 30 MW
Subsidiary A legal entity that is under the direct or indirect control of a controlling person
Unified Energy System The combination of industrial and other property facilities of electric power industry interconnected through a single process of generation (including the combined generation of electric and heat energy) and transmission of electric energy under centralized operational dispatch management in electric power industry
Wholesale electricity Sphere for the circulation of electric energy and capacity under Russia’s Unified Energy System within and capacity market the country’s unified economic space with the participation of large electricity producers and consumers that have the status of wholesale market entities, confirmed in full accordance with the Russian Federal Law on Electric Power Industry (by the Russian Government). The criteria for including electricity producers and consumers in the category of large producers and large consumers are also established by the Russian Government
Wind power plant A power plant consisting of two or more wind power installations designed to convert wind energy into electrical energy and transmit it to the consumer
181 ANNUAL REPORT | 2020
List of abbreviations
BEMO Boguchansk Energy and Gcal/h Gigacalorie-hour REM Retail electricity market Metallurgical Association project GeoPP Geothermal power plant RES Renewable energy sources
CHPP Central heating and power GRES State district power plant ROE Return on equity plant GW Gigawatt SPP Solar power plant COVID-19 Coronavirus disease 2019 HPP Hydroelectric power plant STC Scientific and Technical Council CPC Central Procurement IFRS International Financial Commission Reporting Standards TPP Thermal power plant DAM Day-ahead market KOM Capacity auction TR&M Rehabilitation and DPM Capacity supply agreement KPI Key performance indicator modernization
DPP Diesel power plant kWh Kilowatt-hour TSR Total shareholder return
EBITDA Earnings before interest, LTIFR Lost time injury frequency UES Unified Energy System taxes, depreciation and rate amortization VHI Voluntary health insurance MW Megawatt ESEEP Programs for energy saving VNIIG All-Russian Hydraulic and increased energy PSPP Pumped storage Engineering Research efficiency power plant Institute
FIFR Fatal incident frequency R&D Research and development WECM Wholesale electricity and rate capacity market RAS Russian Accounting Gcal Gigacalorie Standards WPP Wind power plant
182 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Appendices Book
Appendix 1. Information on Compliance with the Russian Appendix 12. Information on the Actual Results of Corporate Governance Code the Implementation of Executive Orders and Instructions issued by the President of the Russian Federation and by Appendix 2. Information (Report) on Related-Party the Government of the Russian Federation in 2020 Transactions Concluded by PJSC RusHydro in 2020 Appendix 13. Information about Legal Entities Controlled by Appendix 3. Information on Shareholding in Other the Company that are of Material Significance Organizations 102–13 Appendix 14. List of the Most Significant Transactions Carried Appendix 4. Information on the Decisions Adopted by out by the Company and other Major Controlled Legal Entities RusHydro’s Board of Directors in 2020 for the last year
Appendix 5. Information on the Meetings of the Committees Appendix 15. Accounting statements and the Independent under the Board of Directors Auditor’s audit report as of December 31, 2020
Appendix 6. Information on the Disposal of Non-Core Assets Appendix 16. Consolidated financial statements prepared in of PJSC RusHydro for 2020 accordance with IFRS and an audit opinion for the year ended December 31, 2020 and as of that date Appendix 7. Information on Pending Legal Proceedings Appendix 17. Opinion of the Internal Audit Commission of Appendix 8. Information Concerning the State Support Public Joint-Stock Company Federal Hydro-generating Received by the Company in the Reporting Year, Including Company RusHydro (PJSC RusHydro) following RusHydro’s Information on the Subsidies Granted (in Rubles), Aim of Use, 2020 financial and business performance audit Information on the Use of Funds as at the End of the Reporting Period Appendix 18. Taking into Account the Recommendations of Stakeholders Expressed in 2021 (draft Report for 2020) Appendix 9. Progress Report on the Long-Term Development Program of RusHydro Group for 2020 Appendix 19. Consideration of stakeholders’ recommendations given at the Public Hearings in 2020 Appendix 10. Independent Assurance Report on (Draft Report for 2019) the Fulfillment of the Long-Term Development Program of RusHydro Group for 2020 Appendix 20. Organizational structure of PJSC RusHydro
Appendix 11. Information Concerning Establishment Appendix 21. Consolidation Boundaries of GRI Indicators of Unified Treasuries in the Head Companies, Subsidiaries, and Affiliates Appendix 22. Independent Limited Assurance Report 102–56
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Appendix 23. Information on Determining Materiality 102–49 Appendix 34. Ownership, Volume and Biodiversity Value of Water Bodies RusHydro Group Makes Discharges into 306–5 Appendix 24. GRI content index 102–55 Appendix 35. Documents Containing Sustainable Appendix 25. FTSE Russell Disclosure Index in EU Development and Corporate Social Responsibility Standards
Appendix 26. Dynamics of changes in tariffs in the main Appendix 36. Stakeholder Engagement 102–40 102–42 102–21 markets 103–2 102–44
Appendix 27. List of controlled and other organizations with Appendix 37. Report of the Internal Audit of PJSC RusHydro the participation of the RusHydro Group 102–45 Appendix 38. Information that Certain Shareholders Appendix 28. Report on Strategic Risk Management Might Acquire or Acquired an Amount of Controlling in 2020 102–33 Interest that is Disproportionate to their Participation in the Authorized Capital of the Company, including Appendix 29. Performance Results of RusHydro Group’s on the basis of Shareholder Agreements or by virtue of Design and Research Institutes in 2020 the Presence of Ordinary and Preferred Shares with Different Appendix 30. Information on Employees who Received Training Par Values in Anti-Corruption Policies and Methods, by Region 205–2
Appendix 31. Brief SWOT and PEST Analysis of RusHydro Group’s Activities in the Markets
Appendix 32. Taxes across Subjects of the Russian Federation by Places of Presence for 2018-2020, RUB mn
Appendix 33. Report on the Impact of Climate Changes on the Activities of RusHydro Group (TCFD) ↗ THE APPENDICES BOOK is available here
184 ABOUT COMPANY STRATEGIC PERFORMANCE CORPORATE APPENDICES THE REPORT PROFILE REVIEW OVERVIEW GOVERNANCE
Contacts
Full name Public Joint-Stock Company Federal Hydro-Generating Company RusHydro 102–1 102–5
Abbreviated name PJSC RusHydro
Number and date of issue of 1042401810494 the certificate of state registration of a legal entit 26.12.2004
Location (legal address) 43 Dubrovinskogo Street, Bldg 1, Krasnoyarsk, the Krasnoyarsk Region, Russia, 660017 102–3
Mailing address (main office) 7 Malaya Dmitrovka Street, Moscow, Russia, 127006
Telephone +7 (800) 333-80-00
Fax +7 (495) 225-37-37
E-mail [email protected]
Internet address in English www.eng.rushydro.ru
Contact persons on the preparation of the report 102–53 Full name Novgorodtsev Anton
Position Head of the Equity and Disclosure Department of the Corporate Governance and Property Management Department
Telephone +7 (800) 333-80-00
E-mail [email protected]
Shareholder relations Full name Novgorodtsev Anton
Position Head of the Equity and Disclosure Department of the Corporate Governance and Property Management Department
Telephone +7 (800) 333-80-00
E-mail [email protected]
Full name Brusenina Evgeniya
Position Corporate Secretary
Telephone + 7 (800) 333-80-00
E-mail [email protected]
Investor relations Full name Yakovlev Dmitry
Position Chief Expert of Investor Relations, Corporate Finance Department
Telephone +7 (800) 333-80-00
E-mail [email protected]
Media and charity organizations relations Full name Nagoga Margarita
Position Director of the Corporate Communications Department
Telephone +7 (800) 333-80-00
E-mail [email protected]
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Registrar Full name Joint-Stock Company VTB Registrar
Abbreviated name VTB Registrar
Mailing address PO Box 54, Moscow, 127137
Telephone +7 (495) 787-44-83
Fax +7 (495) 257-17-00
E-mail [email protected]
Hotline telephone +7 (800) 200-61-12
Dividend payment e-mail [email protected]
Internet address www.vtbreg.ru
Depository (bonds) Full name National Settlement Depository
Abbreviated name NSD
Mailing address 12 Spartakovskaya St., Moscow, Russia, 105066
Telephone +7 (495) 234-48-27
Fax +7 (495) 956-09-38
E-mail [email protected]
Internet address www.nsd.ru
Depository Bank (Depositary Receipt) Full name The Bank of New York Mellon (New York City)
Contact person Baichorova Irina
Telephone +7 (495) 721-71-55
E-mail [email protected]
Auditor Full name AO PricewaterhouseCoopers Audit
Abbreviated name PwC Audit
Mailing address 10 Butyrsky Val Street, Moscow, Russia, 125047
Telephone +7 (495) 967-60-00
Fax +7 (495) 967-60-01
E-mail [email protected]
Internet address www.pwc.ru
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