2014 Annual report
RU

Cost Management

The Efficiency Management Program (EMP) is a key tool for raising the internal efficiency of operations of the Company by implementing a cost program process aiming to minimize the controlled losses and at the same to maximize their yield.

The target for operating cost reduction by 15% by 2017 including inflation in relation to 2012 per electric equipment maintenance unit (as adopted by the Development Strategy of the Russian Electric Grid System pursuant to the Russian Government Order dated April 03, 2013 No. 511r). The economic effect from EMP implementation at JSC IDGC of the North-West shall reduce the operating costs of the Company by 2017 (in the prices of 2012) by 16.5% as compared to the costs of 2012.

Cost Management Program
Indicator Measurement unit 2012 actual 2013 actual 2014 target 2014 actual 2015 forecast 2016 forecast 2017 forecast
Number of conventional units thousand of conventional units 1,021,214 1,081,247 1,087,959 1,099,672 1,101,376 1,104,263 1,118,575
CPI % 0 1.068 1.060 1.078 1.067 1.044 1.043
Total costs including management costs, in particular RUB million 29,057 30,824 31,397 31,674 36,109 37,353 38,269
controlled costs RUB million 10,803 11,566 11,518 11,636 12,549 12,635 13,217
uncontrolled costs RUB million 18,255 19,258 19,879 20,038 23,560 24,717 25,052
EFFECT FROM EMP % 0 –5.32 –11.26 –13.11 –12.32 –15.66 –16.49
Target level of controlled cost reduction % –2.00 –5.00 –5.00 –10.00 –15.00 –15.00
Effect from EMP
Название графика

The effect of implementation of the cost management program at JSC IDGC of the North-West on the results of 2014 was 13.11%, which improved the effect stipulated by the Company’s business plan by 1.9%, and the target value was exceeded by 8.1%. Therefore, the implementation of the EMP at the Company is taking place faster than it had been planned, of which the dynamics of reduction of the share of controlled costs in the production cost is another evidence.

This effect was achieved by measures taken to reduce the cost of maintenance per equipment unit, in particular: