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Tariff policy

Transmission of electric energy and technological connection to electric networks are core business lines of IDGC of Urals (OAO), subject to state regulation. The Company delivers services related to the transmission of electric energy and technological connection to electric networks in three regions: the Perm, Chelyabinsk and Sverdlovsk regions. Statutory and regulatory enactments are disclosed in Appendix “Regulatory Reference”No.19-29-ref.

Energy transmission tariffs

All Company branches use long-term tariff regulation methodology (RAB), with long-term regulation parameters approved till 2017 in consort with it: Permenergo operates as a pilot since 2009, Chelyabenergo and Sverdlovenergo joined RAB tariffs since 2011. Basic principles of RAB regulation are: i) firms, subject to regulation, raise huge credit resources; ii) return on investments guaranteed; iii) reliability and quality of service are aligned with tariffs.

Long-term regulation parameters are adopted by a bunch of regulatory instruments: PermenergosupNo.28,30-ref, SverdlovenergosupNo.27,33-ref, ChelyabenergosupNo.26,31,32-ref. The decreesupNo.32-ref reviewed basic opex and reduced it from RUB 2,831.71 thous. down to RUB 2,705.69 thous., followed by our reconciliation statement filed with the Russian Federal Tariff Service.

Uniform (boiler) tariffs comprise expenses of all grid companies operating in the region to be annually prescribed for the next year during the long-term regulation period. Pursuant to existing tariff regulation laws, a gross revenue requirement is subject to annual fine-tuning, adjusted for changed actual and target calculations, executed investment program and achieved indicators of service reliability and quality. Energy transmission tariffs are adopted by regional executive instrumentalities, liable for tariff regulation, on relevant territories of the Company’s service area.

2015 uniform (boiler) tariffs for energy transmission were adopted by tariff decisions of regional regulators: PermenergoNo.34-ref, ChelyabenergoNo.35-ref, SverdlovenergoNo.36-ref. In the Perm and Chelyabinsk regions the growth of 2015 uniform (boiler) energy transmission tariffs for other consumers exceeded set tariff ceiling due to the sizes of Permenergo and Chelyabenergo investment programs.

Pursuant to the federal lawNo.37-ref last-mile contracts were terminated since 2014, excluding several regions with prolonged last-mile contracts. The Chelyabinsk region is on the list of the regions with last-mile contracts prolonged till 01.07.2017 with regard to consumers that concluded transmission contracts, combined with last-mile rental contracts, in line with tariff decisions as of 01.09.2013. A standalone HV-1 tariff, calculated as FSK fee plus cross-subsidy fee, was introduced for such consumers. The cross-subsidy fee (RUB/thous.kWh) in the Chelyabinsk region totals RUB 440.0 (01.01.2015-30.06.2015), RUB 290.4 (01.07.2015-30.06.2016) and RUB 145.2 (01.07.2016-30.06.2017).

Pursuant to the decreeNo.38-ref during 2015 the regulators have reviewed tariff decisions for 2015 due to changes of consolidated forecast balance of energy production and supply for the period between Jul. 01, 2015 and Dec.31, 2015 inclusive, with regard to forecast energy consumption by residents and similar consumer categories. The review have led to RUB 723 mn uplift of Company’s gross revenue requirement for own needs. Information on the structure of 2015 actual energy transmission revenues (consumer group breakdown) is presented on the chart.

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Primary groups of consumers of Company’s energy transmission services are last-resort providers or LRPs (63.0% of revenues) and energy sales companies or ESCs (30.5% of revenues). The revenue structures of the branches are similar in terms of consumer groups. But it should be noted that Permenergo has significant revenues from other consumers with direct energy transmission contracts (10.4% of the total branch revenues) and last-resort providers (67.7% of the total branch revenues). Chelyabenergo, in its turn, also has a distinctive feature: the second “boiler” holder in the region is AES Invest (4.4% of the total branch revenues).

Analysis of changes in average energy transmission tariff in branches (incl. net supply on generator voltage level), average tariff was calculated in line with regulators’ decisions.

Kop./ kWh 2011 2012 2013 2014 2015
Permenergo 81.2 84.2 92.9 95.2 105.6
Sverdlovenergo 81.1 87.1 93.6 102.9 107.9
Chelyabenergo* 73.0 66.1 71.9 98.2 99.0
IDGC of Urals 78.9 79.6 87.2 99.6 104.9
Rise, % 8.8% 0.8% 9.6% 14.2% 5.4%
*within the boundaries of Chelyabenergo boiler

Analysis of average 2015 energy transmission tariff progression shows that:

  • 10.9% hike of average tariff in Permenergo resulted from 7.2% reduction of “boiler” net supply (commissioning of own generating facilities by Lukoil-PNOS) and 2.9% increase of “boiler” gross revenue requirement;
  • 4.9% uplift of average tariff in Sverdlovenergo was impacted by 0.4% cut of “boiler” net supply and 4.5% rise of “boiler” gross revenue requirement;
  • 0.8% increase of average tariff in Chelyabenergo was influenced by 3.9% decrease of “boiler” net supply and 3.1% cut of “boiler” gross revenue requirement (revision of Chelyabenergo boiler boundary by the regulator).

Movements of gross revenue requirement for energy transmission services is presented in the table with branch breakdown:

Branch 2011 2012 2013 2014 2015
total Own needs total Own needs total Own needs total Own needs total Own needs
Permenergo 13,781 4,636 14,237 4,884 15,724 5,533 15,303 5,967 15,740 6,467
Sverdlovenergo 27,915 6,600 28,561 7,882 30,124 8,309 28,877 8,162 30,183 8,065
Chelyabenergo 13,885 4,767 15,986 6,516 14,204 4,632 16,235 5,695 15,726 5,506
IDGC of Urals 55,582 16,003 58,784 19,282 60,052 18,473 60,415 19,824 61,648 20,038
Rise, % - - 5.8% 20.5% 2.2% -4.2% 0.6% 7.3% 2.0% 1.1%

Key factors that changed “boiler” gross revenue requirement in 2015 are:

Permenergo
2.9% uplift (RUB 437.0 mn)
  1. 1) 10.1% (RUB 218.9 mn) increase of expenses to pay for services rendered by regional grid operators, influenced by rise of their individual tariffs and absence of their GRR-smoothing instrument, since they use long-term GRR indexation tariff regulation.
  2. 2) 16.2% (RUB 570.1 mn) cut on payments to FSK due to 22.2% decrease of contracted capacity.
  3. 7.9% (RUB 288.7 mn) rise of expenses to pay for technological losses due to 11.2% increase of loss purchase prices.

Gross revenue requirement for own needs of the branch grew 8.4% or RUB 499.5 mn, negative GRR smoothing, applied by the regulator, amounting to RUB 2,144.6 mn.

Sverdlovenergo
4.5% uplift (RUB 1, 305.4 mn)
  1. 10.2% (RUB 987.2 mn) increase of expenses to pay for services rendered by regional grid operators, influenced by the rise of their individual tariffs and absence of their GRR-smoothing instrument, since they use long-term GRR indexation tariff regulation.
  2. 1.9% (RUB 146.8 mn) increase of expenses to pay for FSK services due to indexation of tariffs for energy transmission services rendered by FSK.
  3. 7.7% (RUB 267.6 mn) rise of expenses to pay for technological losses due to 15.5% increase of loss purchase prices.

Gross revenue requirement for own needs of the branch decreased 1.2% (RUB 96.3 mn), negative GRR smoothing, applied by the regulator, amounting to RUB 980.4 mn.

Chelyabenergo
3.1% reduction (RUB 509.7 mn)
  1. 1) 13.1% (RUB 211.6 mn) cut of expenses to pay for services rendered by regional grid operators, since the regulator revised the boundaries of Chelyabenergo “boiler”.
  2. 2) 2.8% (RUB 161.3 mn) increase of expenses to pay for FSK services due to indexation of tariffs for energy transmission services rendered by FSK.
  3. 3) 8.4% (RUB 270.7 mn) reduction of expenses to pay for technological losses due to 9.29% decrease of loss purchase prices.

Gross revenue requirement for own needs of the branch decreased 3.3% (RUB 188.7 mn), negative GRR smoothing, applied by the regulator, amounting to RUB 318.0 mn.

Changes of gross revenue requirement with regard to energy transmission is presented in the chart.

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Connection fees

Pursuant to the 2015 Guidelines, the regulators of the Perm, Sverdlovsk and Chelyabinsk regions have adopted standardized rates for the Company’s branches in line with Section IV of the Guidelines, max capacity rate in line with Appendix No.2 to the Guidelines, calculated under Section III of the Guidelines as well as connection fee formula.

The regulators have established a RUB 550.0 (incl. VAT) connection fee in all Company’s branches for filers, requesting connection of equipment with capacity of 0-15 kW inclusive (incl. previously connected capacity at the point) during connection of 3rd reliability category, provided that the distance between the boundaries of a filer’s land plot and Company’s facilities at 20 kV inclusive does not exceed 300 m in cities and small towns and 500 m in rural areas.

The decreeNo.39-refapproved the following rates for Permenergo:

  • С1 standardized rate divided into activities stipulated in clause 16 (except b and c) of the Guidelines;
  • С2 standardized rate С3 standardized rate (construction of cable power lines) and С4 standardized rate (construction of substations), differentiated by voltage class, wire section and equipment type;
  • Fee for connecting max capacitydivided into last-mile activities (construction of aerial and cable power lines, sectionalization units, transformers), differentiated by voltage class;
  • Connection fee formula.

The decreeNo.40-ref approved the following rates for Sverdlovenergo:

  • С1 standardized rate, divided into activities stipulated in clause 16 (except b and c) of the Guidelines, differentiated by voltage class and max capacity;
  • Fee for connecting max capacity, divided into last-mile activities (construction of aerial and cable power lines), differentiated by voltage class.

The decreeNo.41-ref approved:

  • С2 standardized rate to cover expenses of grid companies in the Sverdlovsk region (construction of aerial power lines), С3 standardized rate (construction of cable power lines) and С4 standardized rate (construction of substations), differentiated by voltage class, wire tagging, section and category, pole types, laying method and equipment type;
  • Connection fee formula.

The decree No.42-ref approved the following rates for Chelyabenergo:

  • С1 standardized rate, divided into activities stipulated in clause 16 (except b and c) of the Guidelines, differentiated by voltage class and max capacity;
  • С24 standardized rates, differentiated by voltage class, wire tagging and section, laying method, pole and equipment types;
  • Fee for connecting max capacity, to calculate connection fees to be differentiated by voltage class and max capacity;
  • Connection fee formula

The regulator also establishes an individual fee for technological connection to United National (All-Russia) Electric Networks for a filer, subject to perform activities stated in Appendix No.1 of the Guidelines.

Aggregate tariff rates of branches in 2015 are presented in the table below:

Type of standardized rates Permenergo Sverdlovenergo Chelyabenergo
С1 standardized rate, RUB/kW (excl. VAT) 607.83 452.62 79.66
Incl.:
С1.1 – a grid company prepares and issues specifications to a filer, RUB/kW 161.82 70.61 32.37
С1.2 – a grid company oversees whether a filer complies with the specs, RUB/kW 41.48 92.03 20.4
С1.3 – a grid company participates in inspection of connected equipment, conducted by a federal official of state energy supervision, RUB/kW 67.4 6.22 -
С1.4 – connection of filer’s equipment to electric networks by a grid company and setting of a switcher at “ON” position, RUB/kW 337.13 283.76 26.9
С2 rate to cover expenses incurred by a grid company to construct aerial power lines, RUB/km 291,861.2 273,829.19 179,201.93
С3 rate to cover expenses incurred by a grid company to construct cable power lines, RUB/km 825,010.45 1,261,266.94 1,401,156.33
С4 rate to cover expenses incurred by a grid company to construct substations, RUB/kW 2,567.56 1,598.1 1,346.95

Requests with max capacity and small arrangement costs dominate the structure of requests, used for fee calculation, to result in a low С1 aggregate rate in Chelyabenergo.

С2 standardized rate is approved to be differentiated by voltage class (0.4 and 6-10 kV), wire section and tagging (AC, SIW) for Permenergo; by voltage class (0.4 and 6-10 kV), wire section and category (1&2 circuits), pole types (wooden poles with reinforced concrete beam and reinforced poles) for Sverdlovenergo; by voltage class (0.4 and 6-10 kV), wire section and tagging (AC, SIW) for Chelyabenergo.

С3 standardized rate is approved to be differentiated by voltage class (0.4 and 6-10 kV), wire section and tagging (AVBbShV, SPE), laying method (new or existing wire ducts) for Permenergo; by voltage class (0.4, 6-10 and 20 kV), wire section and category (1&2 circuits), wire tagging (AVBbShv, APvBBShv, VBbShv, PvBbShv, AABl, APvPg, PvPg), laying method (duct trench and directional drilling) for Sverdlovenergo; by voltage class (0.4 and 6-10 kV), wire section and category (1&2 circuits), cable core (aluminum or copper conductor), laying method (duct trench and motorway/railway crossover) for Chelyabenergo.

С4 standardized rate is approved to be differentiated by transformer type (TP, KTP, 2KTP, sandwich-type KTP, sandwich-type 2KTP, 2BKTP, no-TM BKRP), transformer power for Permenergo; by voltage class (10(6)/0.4 kV and 20/10(6)/0.4 kV), transformer type (TP, KTP, 2KTP, KTP-TV, KTP-PV, KTP-B, BKTP, 2BKTP, 3BKTP, BKRP, 4BKRP, 5BKRP, MTP), transformer power and bays for Sverdovenergo; by substation type (kiosk-type, pole-mounted, box-type, unit-type), transformer power for Chelyabenergo.

Besides, there were also approved recloser construction rates for Permenergo and Sverdlovenergo, sectionalization unit construction rates for Sverdlovenergo and 110 kV substation construction rates for Chelyabenergo.

Shortfall in revenue from connection services to be added to energy transmission tariff and economically justified tariff rates are presented for reference in the table.

Permenergo Sverdlovenergo Chelyabenergo  
Shortfall in revenue, RUB thous. 102,002.6 223,378.32 38,741.4
Fee for 1 connection, RUB 36,858.99 42,149 -

Max capacity rates to cover expenses incurred by IDGC of Urals (OAO) to connect filers’ equipment, demanding 3rd supply reliability category, to its networks, excl. last-mile activities, are set for the regulation period at С1 standardized rates. Changes of average max capacity fee of the Company is presented in the chart.

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С1 rate YoY reduction was impacted by: i) decreased overhead expenses due to changed accounting policy with regard to overhead reapportionment by types of activity; ii) regulator’s adjustments of duration of operations upon average data from grid companies with similar structure and grid facilities.

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Analysis of connection contracts1, executed during 2015, demonstrates that 62% of filers selected the max capacity rate, most commonly used in Sverdlovenergo (83%) and Chelyabenergo (59%). Permenergo filers showed a vice versa behavior, 73% of filers choosing standardized rates. Company average with regard to contracts stipulating individual fees is 9%. 2015 executed contracts in terms of connection fee selection were analyzed without privilege-category contracts and С1 rate contracts.