Results overview > Comments of the managment
  • Dmitry Andreevich Bukata Deputy Director General for Logistics and Material and Technical Procurement since September 05, 2011.

    The system of tender organization applied in JSC IDGC of the North-West provides for a substantial money saving. In 2012 over RUB 1.16 billion, or 7.9% of the annual purchasing plan, were saved in purchasing of works, equipment and materials.

    In 2012 the process of purchasing of goods, works and services for the Company’s needs was focused on assurance of the highest efficiency of production activities by creating an optimal competitive environment and ensuring the transparency of purchasing activities without increasing risks for the Company.

    It should be noted that the number of tender procedures held in 2012 grew 1.2 times compared to 2011. Due to such growth rates it is necessary to carry out works for improvement of the Company’s organizational structure with regard to the purchasing activities and to continue focusing on the centralization of purchasing for the needs of JSC IDGC of the North-West.

    The main tasks for 2013 in the field of purchasing activities will be the following: increase of the efficiency of purchasing procedures in order to reduce economically substantiated expenses on purchasing of goods, works and services for the Company’s needs without affecting the quality; achievement of the key performance indicators established.

    The actions taken in order to fulfill the President’s instruction for reduction of costs by 10% during the three-year period seem to be quite serious. The fulfillment of this task requires detailed analysis of activities performed during the last 2-3 years both with regard to the market and its tendencies and in respect to the analysis of the structure of purchasing activities, their feasibility and adequacy.

    In order to achieve maximum efficiency of the purchasing activities it is necessary to improve the normative and administrative base of JSC IDGC of the North-West, substantially increase the automation level of business process “Purchasing Activities”, expand the application of new tools for the conduct of tender procedures and open price tenders.

  • Andrey Yurievich Gorokhov Deputy Director General for Technical Issues and Chief Engineer of the Company since December 19, 2012.

    Summing up the results of work performed in 2012 I would, first of all, like to note that we all together have accomplished our main task and excluded any system failures in the operation of the grid infrastructure, having ensured the fulfillment of the key requirement — reliability of energy supply to consumers.

    In 2012 the complete set of organizational and technical measures aimed to ensure the preparation of the electric grid complex for the autumn-winter period 2012-2013 was taken in full. This allowed the Company to obtain the Readiness Passport, the main document confirming the ability of the Company to ensure a reliable energy supply to consumers under the conditions of a peak load, in due time with no critical notes on the part of the Ministry of Energy of the Russian Federation.

    Despite the difficult conditions arisen as a result of natural disasters in a number of areas of responsibility of the Company dynamic work of the grid complex was ensured with the minimum periods of energy supply restoration.

    The repair program for 2012 was over-fulfilled in actual values for almost all groups of equipment. The actual performance was from 102 to 113% of the target values. Timely and high-quality technical maintenance and repair of the Company’s grid complex facilities allowed maintaining them in a normal operational condition in compliance with all technical requirements.

    Considerable work was performed on entering coordinates of electric facilities (SS and OL 35-110 kV) into the Management System for Allocated Resources in Carrying out Rescue and Recovery Operations (MSAR RRO) which was introduced into a permanent operation by Order No. 11 of JSC IDGC of the North-West of January 15, 2013. In the normal mode of operation the MSAR RRO is used as a reference information system for a twenty-four-hour control over an operative situation in the branches. In case of incidents and emergency situations at the Company’s electric facilities the MSAR RRO is necessary for coordination of rescue and recovery works, visualization of operative information received from branches and reference and other information required for making relevant management decisions and control over the implementation thereof.

    Last year the system of displaying information on the basis of video cubes (video wall) of the control panel of network management center (NMC) of Pskovenergo branch of JSC IDGC of the North-West was assembled, which increased the speed of obtaining information from management facilities and, hence, the timeliness of decisions made in managing electric equipment.

    Starting from August 01, 2012 JSC IDGC of the North-West, by its order No.375 of July 20, 2012, introduced the Regulation on NMC which established the organizational and functional model and legal grounds for NMC activities of branches of JSC IDGC of the North-West. The network management center of a branch of the Company operates as an organizational and functional link in the process of organization and implementation of operational and technical management in the branch, unifying all procedures and functions of management, elements of the organizational structure and relevant powers and responsibilities.

    The Company also continued to take measures aimed at the creation of the Production Asset Management System (PAMS). In the current year of 2013 the Company plans to complete works for collecting data on equipment and consumers and calculation of indices of conditions and consequences of equipment failure. The analysis of all data will provide an opportunity to form the production program for repair and replacement of equipment for further years, taking into account the assessment of reliability and assessment of consequences of electric equipment failure. This will allow to optimize operating expenses of the Company in the future periods, provided that the unconditional requirement — reliability of functioning of the grid complex — is fulfilled.

    In order to improve key performance indicators of the Company the adjusted Innovative Development Program for 2012-2016 was developed and approved by resolution of the Board of Directors of JSC IDGC of the North-West.

    The Company’s activities are aimed at introduction of innovative equipment and innovative technologies, increase of energy efficiency and energy saving, improvement of the system of services. Research and development works for creation of innovative products are carried out and cooperation with scientific organizations and innovative companies is developed.

  • Dmitry Olegovich Guba Temporary Deputy Director General for Economy and Finance since September 10, 2012.

    In 2012, based on Resolution No. 1178 of the Government of the RF dated December 29, 2011, the previously approved long-term parameters of tariff regulation were revised. As a result, the Company’s branches Vologdaenergo, Novgorodenergo and Pskovenergo kept using the return on investment capital method (RAB) for tariff regulation. Karelenergo branch also switched to regulation using the RAB method in 2012. Long-term regulation parameters for these branches were approved for a period until 2017, inclusive. Regulation of tariffs of Arkhenergo, Kolenergo and Komienergo branches is at the moment also carried out on the basis of long-term parameters using a method of long-term indexation of necessary gross revenue.

    Based on the results of 2012 the Company received net profit in the amount of RUB 62 million, which exceeds the target value by RUB 48 million. The increase in profit compared to the target value was achieved due to the effective restriction of the growth of the Company’s expenses.

    The methods of financial management applied by JSC IDGC of the North-West in 2012 allow maintaining the liquidity values at a sufficiently high level. JSC IDGC of the North-West has a stable financial structure of own funds.

    In order to achieve goals set for effective use of own and borrowed capital and maintenance of its financial stability the Company carries out work in the following areas: borrowing funds in accordance with the approved limits of a debt position and creation of a steady and well-balanced system of budgetary management (management of cash flows).

    In 2012 the Company continued to apply the credit portfolio management policy aimed at raising long-term credits and loans.

    In the nearest future the Company plans to obtain a credit rating confirming the financial stability, reliability and long-term character of the Company’s goals. The availability of the credit rating will allow to reduce the cost of borrowed money and to place bonds of its own issue in a beneficial manner in the future. As seen from the practice of placement of bonded loans, the cost of borrowing in the capital market may be by a few percentage points lower than the bank loan rate. Moreover, as an alternative to bank loans the issue of bonds will allow to diversify the Company’s loan portfolio. The period and volume of further placement will be set based on the required volume of borrowed funds and a situation on financial markets.

    The total volume of accounts receivable as of January 1 of the current year was about RUB 6.0 billion. The main reason for such a considerable increase in indebtedness for services of electric energy transmission is still the consumer’s failure to fulfill their payment obligations under agreements made. At the same time, the growth of disputed debt is observed. At the moment we carry out works for collection of this indebtedness and the relevant litigation is in progress.

    The amount of accounts payable, without taking into account loans and credits, is about RUB 4.7 billion. The main source for covering the same is the accounts receivable from buyers and customers and its repayment directly depends on the payment discipline of the Company’s key consumers. Despite the considerable volume of overdue accounts receivable the Company applies the policy aimed at preventing the increase in amounts and terms of overdue accounts payable to suppliers and contractors. That is why almost the entire amount of accounts payable is current.

    The investment program in the last year was fulfilled in the amount of RUB 6.8 billion taking into account the priority areas of social and economic development of the regions and assurance of reliability of energy supply to consumers. There are two sources: own funds in the amount of RUB 3.7 billion (profit and amortization), and borrowed funds in the amount of RUB 3.1 billion.

    The Company will endeavor to ensure that the approved tariffs comply with the legislation governing the tariff regulation and are economically reasonable, the credit policy is effectively implemented, the Company’s resources are used in a rational manner, thus ensuring loss-free and stable functioning of the electric grid complex of the Northwestern region.

  • Dmitry Konstantinovich Krautman Deputy Director General, Head of Apparatus of JSC IDGC of the North-West since September 24, 2012.

    JSC IDGC of the North-West is one of the largest employers of the Northwestern Federal District. The most important value of our Company is the human capital assets: fifteen thousand highly qualified specialists ensuring a reliable energy supply to seven constituent entities of the Federation.

    The priority of the HR policy of the Company is the formation of the system of personnel management combining the creation of favorable labor conditions and economic efficiency. The Company’s management resolves the task of the human capital assets development for the purpose of more efficient functioning of the Company.

    Our employees not only fulfill tasks set for them but directly participate in the process of improvement of the HR and social policy of the Company.

    For this purpose in 2012 the foundation of such processes as regular feedback from employees with regard to their satisfaction with labor conditions and proposals on improvement of production activities and social policy was laid.

    The Company by its own effort and at its own cost conducted research of the factors contributing to and preventing the reliability and safety of work performance. Obviously, one of these factors is the level of personnel qualification that is why in 2012 expenses on training grew by almost 17% compared to 2011 and amounted to RUB 50,263 thousand.

    In 2012 JSC IDGC of the North-West became the leading partner of international project “Cooperation between the North-West of Russia and Northern Countries in the Area of Corporate Social Responsibility Including Anti-Corruption Measures”. Having studied the international standards of corporate social responsibility, experience of implementation of social responsibility principles of the largest Russian and European enterprises, we established goals relating to implementation of best practices into the daily work with personnel.

    The Company’s management and personnel deal with labor safety issues in a responsible manner and comply to the fullest extent with the existing and new requirements of the legislation. This resulted in the absence of professional disease cases in 2012. Labor safety costs per employee in 2012 amounted to RUB 21.1 thousand.

    In 2012 the Company effectively built relations with the Primary Trade-Union Organizations (PTUO) and PTUO representatives’ council, solving shared problems of information support of the group, of cultural and sports events organization, fulfillment of the uniform Collective Agreement and uniform provision on labor remuneration of the Company’s employees.

    The subject of prevention of child electric traumatism still remains of great importance to us. Not only did we continue traditional work with high-school students and orphans but also published a children’s book in which electric safety rules are laid out in an entertaining manner.

    The high results of the functioning of the Company’s quality management system, its compliance with effective requirements and constant improvement of processes and procedures in 2012 were confirmed in the course of certification audit of the Company’s QMS.

    The Company’s work with the youth deserves a high estimate. In 2012 the Youth Council of the Executive Apparatus of JSC IDGC of the North-West became a winner in the nomination “Commune of Young Workers” of the all-city Award in the area of the youth policy “PRIZVANIE” (“CALLING”).

    We can confidently say that the task of the Company’s positioning as one of the most preferable employers of the region which performs its social and HR responsibilities to the fullest extent is being successfully resolved and the Company’s management sets objectives for further development of the human capital assets of JSC IDGC of the North-West.

  • Anatoly Valerievich Kushnerov Deputy Director General for Corporate Governance since June 01, 2005.

    Corporate governance was recognized by the professional community, business circles and governmental authorities as one of the key components of any company’s management system. Hence, we think that it is highly important not only to keep the positive potential but also lay the basis for further development of corporate governance in the Company.

    The key features of corporate governance practice in JSC IDGC of the North-West is the high level of competence of members of the Board of Directors, the Company’s transparency and readiness to promptly response to changes in the environment in which the business is conducted.

    I think that it is very important for JSC IDGC of the North-West not to stop where it is now but continue to move forward — to better corporate practices. We continue to conduct an annual evaluation of the Board of Directors and corporate governance practice in the Company.

  • Dmitry Lvovich Matrosov Deputy Director General for Security since August 20, 2012.

    The security service of JSC IDGC of the North-West plays a key role in the implementation of a comprehensive approach to ensuring economic, technical and information security of the Company taking into account differentiated rights and powers granted.

    Security assurance is aimed, primarily, at uninterrupted functioning of the electric grid complex. For this purpose measures for implementation of key provisions of the security concept are developed and improved, taking into account all aspects of the Company’s security.

    Assurance of the Company’s economic security, including mechanisms of protection of its economic interests, is aimed at ensuring transparency of business processes, prevention and minimization of damage.

    As to the technological security and protection of the Company’s facilities the Company takes actions for prevention of possibility of access of unauthorized persons to the facilities with illegal purposes.

    In ensuring of information security special attention is paid to a systematic protection of all information assets of the Company: prevention of a leak of different types of information subject to protection, willful violation of data integrity.

    The Company’s and its management’s commitment to high ethical standards of conduct of open and honest business, following best practices of corporate governance and maintaining business reputation at a proper level is reflected in the anti-corruption policy applied by the Company.

    In 2012 measures were taken for improvement of legal regulation of anti-corruption activities of JSC IDGC of the North-West: a number of organizational and administrative documents in the field of combating corruption were developed; a system for anti-corruption inspection of documents and anti-corruption monitoring was created; measures for legal informing and interaction with legal entities and natural persons were taken.

  • Alexander Vladimirovich Mikhalkov Deputy Director General for Services Development and Selling since July 01, 2005.

    Obviously, the key priority of JSC IDGC of the North-West is the increase of the quality of services provided by the Company.

    Based on the results of 2012 net supply through the grids of JSC IDGC of the North-West grew by 0.6% compared to the previous year and reached 40,468 million kW/h. The volume of total loss did not exceed the set normative value amounting to 6.4%, total electric energy supply to the grid reached 43,239 million kW/h in 2012. The highest growth in the volume of services for electric energy transmission was observed in the branches of the Pskov Region (+4.6%), the Republic of Komi (+3.44%), Novgorod Region (+2.6%), Vologda Region (+1.2%).

    Energy loss is a serious problem for any electric grid company. For 2012 we established a top-priority task to reduce loss using all available methods.

    The effect of loss reduction as a result of implementation of measures provided by the Energy Saving and Energy Efficiency Enhancement Program amounted to 61 million kW/h.

    The implementation of measures provided by the Program of Perspective Development of Electricity Metering System in the Retail Electricity Market in distribution grids resulted in the effect of 11 million kW/h in 2012.

    In order to comply with the provisions of Federal Law No. 261-FZ on Energy Saving and Energy Efficiency Enhancement and Amending Certain Legislative Acts of the Russian Federation of November 23, 2011 the developed Plan of Actions required for carrying out the mandatory energy inspection of production and business facilities as well as electric grid facilities of JSC IDGC of the North-West was implemented.

    Based on the results of work performed the Company obtained an energy passport with a potential to increase energy efficiency of 184 thousand ton of reference fuel (RUB 1,316 million), including reduction of electric energy loss of 520 million kW/h (RUB 1,246 million).

    Another important key performance indicator for the electric grid complex is a simple and clear procedure for technological connection to electric grids.

    In summer 2012 the Government of Russia adopted the so called “road map” to facilitate the access to the energy infrastructure (Decree No.1144-r of the RF Government). The document contains instructions until 2018 and provides for stage-by-stage introduction of changes aimed at reduction of a time period required for undergoing procedures for obtaining access to the grid (from 281 to 40 days) and expenses relating to these procedures.

    The main result to be achieved in the course of implementation of the “road map” is the long-term planning providing for understanding of the way of territories development by enterprises, the population, regional and municipal authorities and grid companies.

    Today, an interactive map of utilization of main substations, which is updated on a quarterly basis, already works on the website of JSC IDGC of the North-West. It provides for an opportunity to view free capacities for connection in any of the seven regions in which the Company operates.

    The problem of non-payment by selling companies in the wholesale market becomes more and more topical. Certain guaranteeing suppliers (GS) have accumulated billion-worth debts to generators. Interregional grid organizations face the same problems.

    On December 30, 2012 the RF Government adopted Regulation No.1482 on divesting non-paying energy selling companies of the status of a wholesale market entity and a guaranteeing supplier and granting this status to the largest territorial electric grid companies. These functions are close to inter-regional distribution electric grid companies and branches of IDGC because they have always worked with end consumers and selling activities are a logical consequence of performance of an electric grid function.

    Moreover, JSC Pskovenergosbyt, a subsidiary of JSC IDGC of the North-West acting as a guaranteeing supplier, continued its operation in the territory of the Pskov Region. Guaranteed revenue from consumers remained in the region and were used in full for financing region development programs (investment component) and support of reliability of electricity supply (repair program). In 2012 in the Pskov Region there was no indebtedness for electric energy to the wholesale market and for electric energy transmission services through the grids.

    Thus, in addition to provision of services for electricity transportation and technological connection JSC IDGC of the North-West will continue to perform the whole set of activities for selling electric energy to enterprises, organizations and residents of the Pskov region and in the regions in which the Company will obtain the status of a guaranteeing supplier.

  • Dmitry Petrovich Tiron Deputy Director General for Capital Construction since August 23, 2012.

    Today, the key task of JSC IDGC of the North-West is to ensure the most effective use of allocated funds under the conditions of a limited financing source. For this purpose the Company developed the Scenario Conditions of Formation of Investment Program of JSC IDGC of the North-West, which combine conditions of filling the investment program, conditions relating to the assurance of technological connection, financial and economic conditions and all rules, limitations and legal requirements with respect to the electric grid complex.

    In 2012 the Regulation on the Investment Activity of the Company was formed which not only determines the participants of investment activities but also clearly allocates functions and responsibilities within their competence. This will allow to optimize the process of interaction between the structural subdivisions of the Company in formation and realization of investment programs in JSC IDGC of the North-West and to increase the quality of investment planning in general. It is planned to adopt the Regulation for execution in 2013. By this time a unified method for calculation of economic efficiency of investment projects providing for a detailed analysis of the influence of each investment project on the Company’s investment portfolio will have been completed and introduced.

    Already now, in the course of creating investment portfolios the expediency of investing capital in a project is analyzed in terms of its income component and the cost of ownership, which allows achieving transparency and objectivity of assessment of investment activities for regions and investors.

    Moreover, the issue of implementation of technological connection on privileged terms remains topical. It is necessary to ensure technological connection in full, at the same time maintaining economic expediency of the actions taken.

    In order to increase the quality of fulfillment of requirements established by the investment program with regard to time, cost and conformance of the results of the project realization to technical and other characteristics approved in the project documents in 2012 the Company implemented the project management system.

    In 2013 we will continue working in this direction because the share of capital investments of the major investment projects is growing and is now one fourth of the long-term investment program.

  • Tatyana Victorovna Maximova Chief Accountant — Head of the Accounting and Tax and Financial Reporting Department since January 09, 2008

    Starting from 2008 and since the moment of the Company’s reorganization by affiliation of seven regional JSC-Energo the Company has developed and is constantly improving the system of accounting, tax accounting and preparation of financial statements in accordance with the IFRS which meets the requirements of unification of methodology, application of progressive methods of organization of the accounting process, minimization of a period between the end of the reporting period and obtaining of reporting data, flexibility of the tax policy and constant growth of a professional level of specialists.

    The plans for further development of the system of accounting, tax accounting and financial reporting may be realized in an essential interaction with related functional areas of reduction of periods for preparation of statements, document flow, creation of an internal outsourcing process, inter-connection between databases relating to the Company’s activities and improvement of visualization of reporting information. Development of these spheres will allow moving to a new level of collecting and processing information, expansion of the data range for management under the conditions of a principal reduction of expenses relating to work with a data unit and possible reduction of the cost of the process in general.

    The key performance indicators in this area are the quality and timeliness of preparation of the Company’s accounting, tax and financial statements in accordance with IFRS, effective management of tax obligations.

    The Company’s accounting statements and financial statements prepared in accordance with IFRS are annually certified by audit reports of leading audit organizations of a national and international level. The periods for publication of annual statements are reduced annually.

    The periods of 2008-2009 were covered by tax inspections. Additional tax assessments based on the results of the inspections of the Company were insignificant.

    Due to application of legal methods of deferral of tax payments for 2012 the tax burden of the Company was reduced by RUB 366 million (RUB 156 million in 2011), in which the amount of tax obligations as a result of the creation of a reserve for doubtful debts for the purpose of tax accounting was RUB 87 million.