2014 Annual report
RU

Tariff Policy

The basic types of business of JSC IDGC of the North-West that are subject to government regulation are electricity transfer services and services of grid connection to electric grids. In 2014, the Company also was engaged in energy sales in the Murmansk and Novgorod Regions.

In 2014, there were changes in legal regulations concerning the government regulation of tariffs, which predetermined the tariff decisions for 2015, and the most significant changes were as follows:

The Russian Government Order of July 31, 2014 No. 750 On the Amendment of Some Acts of the Russian Government on Issues of Reducing Cross Subsidizing in the Electric Grid System obliged the regulatory authorities to review the basic rates of controlled costs and the index of efficiency of controlled operating costs including use the method of comparison of similar values. The results of review of the long-term regulation parameters in 2014 were taken into account in the making of tariff decisions for 2015.

By the Order of the Federal Tariff Service of August, 01, 2014 No. 1198-e, amendments were made to the Systemic Guidelines for Determining the Fee for Grid Connection to Electric Grids as adopted by the Order of the Federal Tariff Service of September 11, 2012 No. 209-e/1, which stipulate the following:

At that, the costs of construction of electric grid facilities of ‘the last mile’, which cannot be included in the fee for grid connection of energy-receiving facilities with a maximum capacity not exceeding 150 kW from October 01, 2015, shall be included in the grid company’s costs that are taken into account for the establishment of tariffs of electricity transfer services.

By the Order of the Federal Tariff Service of September 11, 2014 No. 215-e/1, Systemic Guidelines for Determining Lost Earnings with Regard to Grid connection to Electric Grids were adopted, which specify the mechanism of calculation of lost earnings, which shall be included for the establishment of tariffs of electricity transfer services.

In the reported year, the tariff policy of JSC IDGC of the North-West aimed to provide for the functioning of the Company.

A special feature of the regulation of the electricity transfer service prices in 2014 was a moratorium imposed by the Russian government for the scheduled indexation of the electricity transfer service prices. The tariffs remained unchanged since 2013 save for the regions of the Russian Federation where from January 01, 2014 a 7% indexation of the electricity transfer service prices was scheduled in the framework of ‘the last mile’ measures. In the business area of JSC IDGC of the North-West, the regulatory authorities of the Vologda Region and the Republic of Karelia used a legal mechanism to raise the single (boiler) tariffs from January 01, 2014.

In 2014, the established tariffs enabled the Company to make a revenue of RUB 35 billion for its services. The data on its structure are shown below in the report.

Structure of tariff proceeds of JSC IDGC of the North-West
2010 2011 2012 2013 2014 Growth rate, %
2011/2010 2012/2011 2013/2012 2014/2013
Tariff revenues, RUB mln, including 26,620.50 30,982.32 31,735.96 34,337.26 34,752.05 116.39 102.43 108.20 101.21
Own tariff revenues, RUB mln 14,100.79 15,740.73 16,275.04 19,181.21 19,322.84 111.63 103.39 117.86 100.74
Share of own tariff revenues, % 52.97 50.81 51.28 55.86 55.6
Tariff revenues from TGOs, RUB mln 1,283.06 1,434.51 1,076.08 916.44 9308 111.80 75.01 –14.84 101.57
Share of tariff revenues from TGOs, % 4.82 4.63 3.4 2.67 2.68
Payment for FGC services, RUB mln 7,246.35 9,016.39 9,537.14 9,362.29 9,519.34 124.43 105.78 –1.83 101.68
Share of FGC expenses, % 27.22 29.10 30.05 27.27 27.39
Expenses to cover losses, RUB mln 3,990.29 4,790.70 4,847.69 4,877.32 4,979.06 120.06 101.19 100.61 102.09
Share of expenses on losses, % 14.99 15.46 15.27 14.20 14.33
TOTAL
Regional factors, RUB mln 15,383.86 17,175.23 17,351.12 20,097.65 20,253.64 111.64 101.02 115.83 100.78
Share of regional factors, % 57.79 55.44 54.67 58.53 58.28
Federal factors, RUB mln 11,236.64 13,807.09 14,384.83 14,239.61 14,498.41 122.88 104.18 –1.01 101.82
Share of federal factors, % 42.21 44.56 45.33 41.47 41.71

The approved tariffs provided for the aggregate growth of tariff revenues by 1.2% up to RUB 35 billion. Federal factors accounted for 41.71% or RUB 14.5 billion of the required gross revenue (hereinafter referred to as RGR), and regional factors, 58.28% or RUB 20.3 billion of RGR, of which 4.6% or RUB 0.9 billion were the costs of services of territorial grid companies. The insignificant growth of the federal sectors was due to the increase of tariffs of services of JSC FGC UES and the loss purchase tariff.

The impact of the federal sectors on the Company’s RGR in 2015 will also be due to continued effect of ‘the last mile’ contracts at Vologdaenergo and Karelenergo in 2015.

Dynamics of RGR in 2010-2014, RUB mln
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Handling accounts receivable for electricity transmission services rendered in 2014 by consumer groups
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The greatest share of private individuals among consumers is at the branches of Pskovenergo (19.34%), Arkhenergo (5.21%), and Komienergo (4.25%). In 2014, the share of territorial grid companies in the structure of the Company’s revenue reached its maximum values at Karelenergo (40.81%), Vologdaenergo (30.97%), and Kolenergo (18.71%), which is due to the features of establishment of the regional boiler tariff for electricity transfer services. Most of the Company’s revenue comes from the Other consumers group (75%), which includes energy sale companies of regions and major industrial consumers, the biggest of which in the Other consumers group are JSC Severstal (23% of the revenue of Vologdaenergo), JSC Akron (30% of the revenue of Novgorodenergo), and JSC Karelsky Okatysh (43% of the revenue of Karelenergo).

Handling accounts receivable for electricity transmission services rendered in 2014 to consumer groups by branches
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