2.2

2015 investments

Investment programs of our branches for 2015 were approved by:

Permenergo The Perm Ministry of Construction and Public Utilities on 23.09.2015.
Sverdlovenergo Decree of the Sverdlovsk Government dated as of 30.09.2015 No.1063-RP
Chelyabenergo Decree of the Chelyabinsk Ministry of Tariff Regulation and Energy Sector dated as of 25.09.2015 No.44/6.

Value and physical investing parameters of the reported period are presented in the table below:

Capex, RUB mn, excl. VAT Commissioning, RUB mn, excl. VAT Funding, RUB mn, incl. VAT Commissioned
MVA km
Sverdlovenergo 2,800 2,923 3,191 129 771
Permenergo 1,785 1,777 1,959 147 615
Chelyabenergo 1,679 1,778 1,881 107 687
HQ 10 10 11    
IDGC of Urals (OAO) 6,274 6,488 7,043 384 2,072

Total funding in 2015 declined 11% YoY, mirroring YoY reduction of the investment program slated for 2015.

The program was prepared and adopted on the back of:

  • capped transmission tariff ceiling;
  • draft pricing for transmission services to replace UNES facility lease contracts, once terminated;
  • prioritization of facilities;
  • adjusted value of facilities after finalized design and construction documents;
  • various scenarios.

In 2015 capital expenditures amounted to RUB 6,274 mn, excl. VAT, funding reaching RUB 7,043 mn, incl. VAT. Commissioning totaled RUB 6,488 mn, excl. VAT (in ruble terms) and 384 MVA and 2,072 km (in physical terms).

Investment breakdown in 2015 Funding breakdown in 2015
Facility upgrade and reconstruction (incl. technological connection) RUB 2,815 mn, excl. VAT RUB 3,108 mn, incl. VAT
Construction of new facilities and extension of existing facilities (incl. technological connection) RUB 3,436 mn, excl. VAT RUB 3,919 mn, incl. VAT
Other elements of the program (incl. acquisition, R&D) RUB 22 mn, excl. VAT RUB 16 mn, incl. VAT

In 2015 we concentrated on the following facilities:

Permenergo

Construction of 110/10 kV Kochkino substation, 2х16 MVA, 110 kV power line (3rd stage).

Located: Perm, the Perm region.
Goals and objectives: electricity transmission to settlements in the Perm district (Kochkino and Lobanovo) and settlements serviced by the Perm Municipal Grids.
Project duration: 2011-2015.
Commissioned: in 2015 г. – 8.114 km
2015 milestones:
  • a CIW contractor selected by the tender;
  • 3rd stage CIW contract conclusion;
  • two 10 kV cable power lines (8.114 km from Kochkino substation to Lobanovo substation) built and commissioned.
2015 capex: RUB 29 mn, excl. VAT.
2015 funding: RUB 61 mn, incl. VAT (carry-over payables).

Oct., 2015 – 3rd stage commissioned.

Reconstruction of 110/35/6 kV Chusovaya substation.

Located: Chusovoy, the Perm region.
Goals and objectives: improved electricity transmission to residential and industrial consumers.
Project duration: 2010-2016.
Output to be commissioned: 80 MVA.
2015 accomplishments:
  • four 110 kV power line segments dismantled and re-assembled;
  • two light poles and earth loop for new equipment installed;
  • power transformer No.2 (a group of single-phase Type 3×ОМТ 8333/110 transformers, YOM 1960), its oil receiver and beddings dismantled;
  • new bedding cast, new oil receiver, power transformer Type TDTN-40000/110 U1 and T-2 transformer bay installed; 75 m3 oil container and outcoming oil drainage pipes mounted;
  • 1st stage ACS for 110/35/6 kV Chusovaya substation installed
2015 capex: RUB 137 mn, excl. VAT
2015 funding: RUB 138 mn, incl. VAT

Commissioning slated for Oct., 2016.

Sverdlovenergo

Reconstruction of 35/6 kV Verkhnyaya Sysert substation (transfer to 110 kV voltage class).

Located: Verkhnyaya Sysert, the Sverdlovsk region.
Goals and objectives: extension of required output capacity and satisfaction of residential demand in Verkhnyaya Sysert.
Project duration: 2007 -2020.
As of the year-end we completed 1st stage of construction:
  • 1*16MVA power transformer, 110 kV open switchgear and substation control modular building mounted;
  • four km of 110 kV power lines (V.Sysert – Malakhit, V.Sysert – Gydromash) constructed.
2015 capex: RUB 181.86 mn, excl. VAT
2015 funding: RUB 194.28 mn, incl. VAT

Reconstruction slated for the end of 2016.

Reconstruction of 110 kV power line (Sibirskaya-Yuzhnaya-1,2,3, Sibirskayya – Chkalovskaya, Sibirskaya – Aviator, feeders to Nadezhda substation).

Located: Ekaterinburg, the Sverdlovsk region.
Goals and objectives: Enhanced electricity transmission to consumers located in Octyabrskyi municipal district of Ekaterinburg.
Project duration: 2012-2017.
As of the year-end:
  • design and construction documents prepared, positive findings of state appraisal of D&C documentation and site investigation obtained;
  • public hearings arranged;
  • expert commission issued positive findings of ecological D&C documentation appraisal.
2015 capex: RUB 0.069 mn, excl. VAT
2015 funding: RUB 1.069 mn, incl. VAT

Completion slated for 2017.

110 kV power line feeders to Akademicheskaya CHPP (connection of 230 MW CCGT)

Located: Ekaterinburg, the Sverdlovsk region.
Goals and objectives: Connection of TGK-9 (OAO) in line with the request for connection, facilitation of power output from Akademicheskaya CHPP.
Project duration: 2013-2015.
As of the year-end:
  • 110 kV cable power lines constructed;
  • three 110 kV long-span supports with cable coupling sleeves and 110 kV surge arrester installed;
  • fiber optic line mounted;
  • disturbed land plots improved;
2015 capex: RUB 226.652 mn, excl
VAT, 2015 funding: RUB 281.852 mn, incl. VAT.

Chelyabenergo

Power Generating Unit No.2 (225 CCGT) of Fortum’s Chelyabinsk SDPP. Reconstruction of Chelyabenergo’s electric networks to connect CCGT of Chelyabinsk SDPP.

Located: Chelyabinsk, the Chelyabinsk region
Goals and objectives: reconstruction of Chelyabenergo’s electric networks to connect power generating unit No.2 (225 CCGT) of Chelyabinsk SDPP.
Project duration: 2014–2015

The facility was slated for reconstruction in line with the connection contract. Reconstruction of 110 kV power line feeders to Chelyabinsk SDPP is required due to replacement of 110 kV secondary distribution switchgear at Chelyabinsk SDPP. Design documentation regarding connection of power generating unit No.2 (225 CCGT) of Chelyabinsk SDPP was prepared under order of Fortum (OAO) and approved by our Chelyabenergo branch. Contractor was selected by the tender, contract concluded.
In 2015 we completed relaying of 110 kV power lines to new portals of 110 kV open switchgear of Chelyabinsk SDPP.
4Q 2015 – reconstruction completed, facility commissioned.

2015 capex: RUB 16.1 mn
2015 commissioning: RUB 18.2 mn

Construction of 110 kV power line (ChGRES – Massivnaya) and reconstruction of Massivnaya substation

Located: Chelyabinsk, the Chelyabinsk region
Goals and objectives: arrangement of 2nd source of energy for main stations located in the Sosnovskyi load node constructing 110 kv cable line through Central district of Chelyabinsk.
Project duration: 2012-2020
2015 capex: RUB 0.5 mn, excl. VAT
2015 funding: RUB 1.1 mn, incl. VAT

D&C documentation is ready. Due to capped funding the project is suspended.

Commissioning slated for 2020.

Construction of 110/35/10 kV Arkhipovskaya substation and 110 kV power line (Kuluevo – Arkhipovskaya), two 110 kV bays of Kuluevo substation, construction of 110 kV power line (Arkhipovskaya - Pirit) and 110 kV bay of Pirit substation.

Located: The Argayash District, the Chelyabinsk region
Goals and objectives: reduction of energy deficit at North load node of the Chelyabinsk region
Project duration: 2012 -2024

No works in 2015. Due to capped funding the project is suspended.

Commissioning slated for 2024.

Reconstruction of 110 kV power line (Emanzhelinka – Korkino), 1-2 circuits (replacement of wires and poles).

Located: The Emanzhelinskyi district, the Chelyabinsk region
Goals and objectives:
  • improvement of electricity transmission to consumers;
  • adjustment of a power line with the rules of operational and technical maintenance;
  • enhancement of network availability for new consumers in the Emanzhelinskyi district of the Chelyabinsk region and market expansion;

The project comprises reconstruction of two-circuit 110 kV power line (Emanzhelinka - Korkino) and replacement of wood poles, wires, overhead protection cable, insulators and line hardware, accompanied by construction of two new single-circuit 110 kV power lines.

Project duration: 2008 - 2021

No works in 2015. Due to capped funding the project is suspended.

Commissioning slated for 2021.

Reconstruction of 110 kV power line (Shagol – Sosnovskaya – Isakovo, 1-2 circuits), 4th and 5th stages, 110 kV passages, reconstruction of substation):

Located: Chelyabinsk, the Chelyabinsk region
Goals and objectives:
  • improvement of electricity transmission to consumers residing in Chelyabinsk and Chelyabinsk region;
  • enhanced reliable operability of substation equipment;
  • reduction of possible incidents;
  • expansion of 110 kV power line transit (Shagol – Sosnovskaya – Isakovo);

The project comprises reconstruction of existing transit power line (Shagol – Sosnovskaya – Isakovo, replacement of AS-185 wire for AS-240 wire) and reconstruction of Novogradskaya, Sheshnevskaya, Sportivnaya and Sosnovskaya substations.

Project duration: 2008-2016
2015 capex: RUB 20.1 mn (target – RUB 22.4 mn). Due to capped funding the project is suspended. Commissioning slated for 2017.

Due to capped funding the project is suspended.

Commissioning slated for 2017.

Reconstruction of 35/6 kV AMZ substation (upgrading to 110 kV) D&C documentation is ready and subject to approval. The construction of the facility is slated for 2Q 2016 Commissioning slated for 2017.

D&C documentation is ready and subject to approval. The construction of the facility is slated for 2Q 2016.

Commissioning slated for 2017.

Located: Chelyabinsk, the Chelyabinsk region
Goals and objectives: enhanced reliable electricity transmission to social facilities and public amenities in Chelyabinsk
The project comprises:
  • reconstruction of 35/6 kV AMZ substation;
  • replacement of 35/6 10 MVA power transformers for 110/6/6 kV transformers (output 2х25 MVA)
  • construction of new 110 kV open switchgear
  • onstruction of 6 kV indoor switchgear to connect facilities upon filed requests and rearrangement of load from existing 6 kV indoor switchgear to designed power transformers
Project duration: 2015–2017
2015 capex: RUB 4.8 mn, excl. VAT
2015 funding: RUB 5.6 mn, incl. VAT

Funding structure in terms of investments, RUB mn, incl. VAT:

IDGC of Urals 2013
2014
2015
Total 10,088 7,956 7,043
Important facilities, incl. 2,091 651 403
Upgrade and reconstruction 410 233 341
Construction of new facilities 1,681 418 62
Facilities of vital importance 0 7 1
Upgrade and reconstruction 0 0 0
Construction of new facilities 0 7 1
Programs, incl. 1,717 1,249 930
Upgrade and reconstruction 1,210 1,243 927
Construction of new facilities 507 6 3
Connection, incl.: 3,751 5,016 4,899
- Facilities with over 670 kW output 995 1,290 1,525
- Facilities with 150-670 kW output 643 833 557
- Facilities with 15-150 kW output 241 545 326
- Facilities with 0-15 kW output 1,658 2,348 2,421
- Generation 213 1 70
Distributive grids 575 222 283
Upgrade and reconstruction 321 198 243
Construction of new facilities 254 24 40
IT 92 0 6
Computerized management (excl. Automated system of commercial metering) 336 149 71
Metering and control devices 414 106 84
Safety software 75 15 29
Acquisition of grid assets, land plots and other facilities 170 15 16
Other programs and measures 866 527 322
For reference:      
Upgrade and reconstruction 4,096 3,354 3,108
Construction of new facilities 5,822 4,588 3,919
Acquisitions, R&D 170 15 16
///

The table above shows that in 2015 key funding areas were facilities, built under connection contracts. The bulk of funding also covers construction of new facilities and development of Company’s grid infrastructure.

Investing metrics in 2012-2015 are presented in the table below:

Indicator Measurement unit 2012 actual 2013 actual 2014 actual 2015 actual
TOTAL IDGC of Urals
Capital expenditures RUB mn, excl. VAT 7,037 9,079 7,166 6,274
Funding RUB mn, incl. VAT 7,898 10,088 7,956 7,043
Commissioning RUB mn, excl. VAT 6,863 9,078 7,339 6,488
Commissioning km 1,242 1,854 2,060 2,072
MVA 621 644 426 384
Incl.:
PERMENERGO
Capital expenditures RUB mn, excl. VAT 2,573 3,436 2,239 1,785
Funding RUB mn, incl. VAT 2,960 3,821 2,590 1,959
Commissioning RUB mn, excl. VAT 2,604 3,484 2,389 1,777
Commissioning km 422 598 742 615
MVA 248 168 141 147
SVERDLOVENERGO
Capital expenditures RUB mn, excl. VAT 2,571 3,503 3,006 2,800
Funding RUB mn, incl. VAT 2,693 4,000 3,199 3,191
Commissioning RUB mn, excl. VAT 2,358 3,582 2,924 2,923
Commissioning km 497 783 758 771
MVA 124 308 155 129
CHELYABENERGO
Capital expenditures RUB mn, excl. VAT 1,884 2,130 1,911 1,679
Funding RUB mn, incl. VAT 2,237 2,251 2,155 1,881
Commissioning RUB mn, excl. VAT 1,891 2,000 2,017 1,778
Commissioning km 324 473 560 687
MVA 249 167 130 107
HEADQUARTERS
Capital expenditures RUB mn, excl. VAT 10 11 11 10
Funding RUB mn, incl. VAT 8 16 13 11
Commissioning RUB mn, excl. VAT 10 11 10 10
Commissioning km 0 0 0 0
MVA 0 0 0 0

To reduce per-unit investment costs the following steps were taken in 2015:

follow-up of Company’s decree No.275 dated as of 24.07.2014 with regard to target indicators of per-unit construction costs;

preparation of the investment program and estimation of procurement costs in line with the Guidelines slating 30% reduction of investment expenditures on 2012 figures, approved by decree No.69r dd. 12.09.2013

Execution of connection contracts as a part of investment program is presented in the following table:

Reported period Connection of consumers
Execution of connection contracts Incl. privileged connection (up to 15 kW)
pcs MW pcs MW
2013 9,497 398 9,062 101
2014 15,178 460 14,412 181
2015 16,674 702 15,905 213

Check runs at the end of 2015 exposed 84 closed main substations (45 110 kV substations and 39 35 kV substations). Total capacity utilization rate was 27% during the reported period.

Name 2013 IP actual 2014 IP actual 2015 IP actual
Number of closed main substations as of the year-end 142 130 84
Execution of the Company’s investment program in 2015 has lifted connection restrictions at 110/10 kV Loginovo and Miasskaya substations worth 3.91 MVA. The rest of main substations lifted restrictions due to reduced consumer capacity utilization rate.

Share of equipment with limit-exceeding service life hinges on the amount of newly-commissioned facilities (connected, newly-constructed or updated), recently acquired grid facilities and deactivated fixed assets (most commonly second-hand).

Indicator 2013 2014 2015
Depreciation of fixed assets 57% 60% 58%
Share of equipment with limit-exceeding service life 59% 52% 49%

30% reduction of investment expenditures in the course of the 2015 investment program resulted in RUB 39 mn effect (incl. VAT).