Acting as Guaranteed Supplier

In December 2012, amendments and addenda were made to Russian legislation pertaining to the functioning of retail electricity markets determined by Decree of the Government of the Russian Federation No. 442 dated May 04, 2012 regarding changes in the procedure for guaranteed supplier replacement. Therefore, it was established that should a company with the guaranteed supplier status be excluded from the register of wholesale market players this status is assigned to a territorial grid company until a winning bidder is determined. The Company was included in the Wholesale Market Players Register on January 23, 2013. A task force team was set up to support energy sale when undertaking the functions of a guaranteed supplier.

JSC IDGC of the North-West became a guaranteed supplier in 2013 for the Murmansk and Novgorod Regions to maintain the function throughout 2014 in the Murmansk Region and till September 30, 2014 in the Novgorod Region.

Interaction between JSC IDGC of the North-West acting as a guaranteed supplier with WEM and REM players

Wholesale electricity market (WEM)

JSC IDGC of the North-West as a player of the wholesale market, acting under an agreement for connection of the WEM trading system, purchases electricity on WEM to be sold to consumers (legal entities and individuals) in the coverage area of former guaranteed suppliers.

In 2014, JSC IDGC of the North-West purchased electricity on WEM under the following agreements:

• at regulated prices under electricity sale and purchase contracts (RC for electricity);
• at non-regulated prices based on competitive bidding on the day-ahead market (DAM);
• at non-regulated prices based on competitive bidding for system balancing (SB);
• regulated power sale and purchase contracts at regulated prices (RC power);
• power supply contracts for the generating facilities in the list determined by the Government of the Russian Federation which are required as part of UES of Russia based on their location, technical and other characteristics for the purpose of timely and complete electricity supply to WEM generating companies (PSC);
• power sale and purchase contracts for new nuclear and hydraulic power plants (NPP/HPP);
• sale and purchase contracts for power produced at generating facilities which is not supplied at competitive capacity auctions but which must function for process or other reasons that supply power in the forced mode (FM);
• power sale and purchase contracts based on competitive capacity auction results (CCA).

The Company receives services from the following infrastructure companies under a contract for connection to the WEM trading system:

• JSC ATS: organization of trading on WEM involving transactions related to transactions with electricity, power, and other commodities which can be traded on WEM.
• JSC CFS: financial settlements between WEM participants.

In order to act as a guaranteed supplier, the Company entered into an agreement with JSC SO UES for supervisory control services in the power sector.

Retail electricity market (REM)

In accordance with Russian legislation, the Company being a guaranteed supplier purchases electricity and power from REM electricity generating companies under sale and purchase contracts.

Electricity and power on REM is sold under electricity supply and sale and purchase contracts.

In order to compensate for loss, the Company entered in agreements with territorial grid companies.