The Company's shareholder value growth is affected by factors of internal and external environment.

The Company is included in the list of natural monopolies which are regulated by the state in accordance with the Russian laws. In this respect federal and regional bodies of tariff regulation set and regulate tariffs for services rendered by the Company.

In order to constrain the growth of tariffs for electric power for end consumers the state has a possibility to limit tariff growth parameters and, hence, indicators of profitability of the Company's services. The switch to the RAB-regulation method decreases the shareholder value risk level, reducing the influence of judgmental factors on tariff decisions, however, it does not rules out these risk factors entirely. Compliance with long-term RAB-regulation parameters (including rate of return on invested capital) is a precondition for achievement shareholders' goals. In order to minimize this risk factors the Company implements cost management programs, ensures balanced planning of activities in accordance with approved tariff and balance decisions, controls realization of approved business plans, participates together with local authorities in development of programs for territorial development and coordinates financial volumes and sources under investment programs.

In addition, the key risk factor is the competition for tariff revenues with regional TGOs in each constituent entity of the Russian Federation. In order to minimize the above risk factors the Company planned actions for reducing existing tariff disproportions resulting in non-proportional increase in revenues of regional TGOs.

The significant risk factor is that the Company may be acknowledged violated the antimonopoly legislation. The Company's activities for technological connection of electric plants of consumers to electric grids of the Company are mostly exposed to antimonopoly regulating risks. Consumers' applications to territorial departments of the Federal Antimonopoly Service and further initiation by the antimonopoly authority of legal proceedings alleging violation by the Company of the laws on technical connections may result from violations of consumer rights. In particular, it may be caused by refusals from technological connection, failure to meet statutory deadlines for connection to electric grids and many other factors. An additional negative factor is the fact that the effective laws grant to the Federal Antimonopoly Service of Russia the right for extensive interpretation of the concept of the commodity market boundaries. Thus, a substantiated complaint of an applicant may result in a turnover-based fine calculated on the basis of total revenues gained in the entire territory of the Company's presence, not just the territory of the relevant branch.

In order to reduce the influence of the factors driving the above risk factor the Company improves its business processes of technological connection of consumers, simplifying its internal procedures, implementing new forms of servicing consumers, for instance, interactive servicing methods.

In order to minimize the said risks the Company, in reliance on provisions of the Corporate Code of Conduct approved by resolution of the Board of Directors of the Company, uses its best efforts to ensure the balance of shareholders' interests, including respect and protection of rights granted to all shareholders by the laws of the Russian Federation.