Handling Accounts Receivable for Electricity Supply

The amount of accounts receivable for electricity transmission services as of December 31, 2012 was RUB 11,862 million. In 2010-2014, the amount of accounts receivable for electricity transmission services increased.

In 2011, the increase amounted to RUB 181 million, in 2012, RUB 1,956 million, in 2013 RUB 4,307 million, and in 2014, RUB 1,711 million.

In 2014, the overdue accounts receivable for electricity transfer services increased by RUB 1,195 million amounted to RUB 9,201 million, including contested debts in the amount of RUB 1,228 million

As at the end of 2014, current debt amounted to RUB 2,661 million, which is RUB 516 million more than at the end of 2013 due to the greater amount of services provided in December 2014 in comparison with the same period in the previous year.

The increase in overdue accounts receivable of the Company in 2014 resulted from the growth of overdue accounts receivable in the following four branches:

• Vologdaenergo branch, by RUB 1,147 million
• Kolenergo, by RUB 116 million;
• Komienergo, by RUB 329 million.
• Novgorodenergo, by RUB 101 million.
• branch of Pskovenergo — by 131 million

The following two branches showed the reduction in the amount of overdue accounts receivable:

• Arkhenergo, by RUB 147 million;
• Karelenergo, by RUB 484 million.

The main reasons for the growth of overdue accounts receivable are violation by consumers of their contractual obligations with respect to payments and disputes regarding the volumes of services rendered and tariff options.

At the end of 2014, the number of debtors with overdue accounts receivable amounted to 116, which is 42% of the total number of service consumers (274).

The number of debtors with overdue accounts receivable exceeding RUB 50 million was 22 with a total debt of RUB 8,459 million, which is 92% of all the overdue debts.

At the end of 2014, the biggest debtors were as follows:

• JSC Arkhenergosbyt (Arkhenergo branch).

The accounts receivable amounted to RUB 2,392 million, the reduction since the beginning of the year was RUB 248 million. The reason for the debt was that the counterparty did not pay for the services rendered in January-December 2014. Recovery of overdue receivables through the court. The issue of withdrawing the guaranteed supplier status in the Arkhangelsk region is discussed regularly at meetings of the Supervisory Boards of Market Council NP, no decision on the status termination has been made until the prevent time.

• PJSC Severstal (Vologdaenergo branch).

The accounts receivable amounted to RUB 1,892 million, the increase since the beginning of the year was RUB 574 million

The reasons for the debt were as follows:

• contested part in the amount of RUB 981 million (disagreement in determination of the amount of power consumption and actual capacity in service delivery points in July-November 2012, January-February 2013, and June-December 2013). The debt is being recovered in court.
• non-contested part in the amount of RUB 911 million (disagreement for 2014 were settled to the benefit of JSC IDGC of the North-West by conclusion of a service contract for 2014 with debt restructuring until November 2015).

• SE VO Region Electric Grids (Vologdaenergo branch).

The accounts receivable amounted to RUB 913 million, the increase since the beginning of the year was RUB 617 million. All of the debt is being recovered in court. Enforcement orders for debt for the period from May 2013 to May 2014 amounting RUB 495 have been received and submitted to the bailiff service and banks where the debtors has accounts.

• JSC Vologda Sales Company (Vologdaenergo branch).

The accounts receivable amounted to RUB 910 million, the reduction since the beginning of the year was RUB 151 million. The reason for the debt was breach of the counterparty’s liabilities to pay for the actually rendered services in May-December 2014. Recovery of overdue receivables through the court.

• Tesla Grid Company LLC (Karelenergo branch).

The accounts receivable amounted to RUB 602 million, the reduction since the beginning of the year was RUB 80 million. The reason for the debt was non-payment for the actually rendered services. The debt for 2011-2013 in the amount of RUB 572 million is included on the list of creditors’ claims, and the rest is being recovered in court.

• JSC Karelian Energy Sales Company (Karelenergo branch).

The accounts receivable amounted to RUB 380 million, the reduction since the beginning of the year was RUB 294 million. The reason for the debt was breach of the counterparty’s liabilities to pay for the actually rendered services in 2011-2013. The debt is to be repaid by December 2018 pursuant to amicable agreements that have been made.

• JSC Novgorodoblenergosbyt (Novgorodenergo branch).

The accounts receivable amounted to RUB 311 million, the reduction since the beginning of the year was RUB 2 million. The reason for the debt was breach of the counterparty’s liabilities to pay for the actually rendered services. The debt is being recovered in the framework of the bankruptcy proceedings.

• JSC Kolenergosbyt (Kolenergo branch).

The accounts receivable amounted to RUB 309 million, the increase since the beginning of the year was + RUB 86 million. The reason for the debt was breach of the counterparty’s liabilities to pay for the actually rendered services. The debt is being recovered in the framework of the bankruptcy proceedings.

In 2014, as a result of claim-related activities for collection of overdue indebtedness, the Company obtained court decisions with respect to claims for the total amount of RUB 7,412 million. The share of claims sustained by court was 97.80%. Compared to the last year this indicator increased by 2.24%.

As at late 2012, 98.82% of overdue accounts receivable were covered by actions aimed at its reduction:

• 12.97% — restructured;
• 67.23% — recovered through legal proceedings and enforcement orders obtained;
• 6.69% — processed using the complaint procedure (newly created overdue indebtedness);
• 11.93% — controlled within the bankruptcy proceedings initiated against consumers of services.

The most efficient way to reduce accounts receivable is still claims and suits despite the long duration of trials.

In addition to claims, other measures are taken pursuant to the Regulations of Handling Accounts Receivable for Electricity Transfer Services, in particular:

• negotiations on extrajudicial settlement of disagreements;
• ‘direct’ contracts for electricity transfer services with end electricity consumers;
• agreements on debt restructuring;
• agreements on set-off of similar counterclaims, assignment of claim rights, etc.