In order to gain profit and satisfy its own needs, JSC IDGC of the North-West has the right to carry out any activities allowed by the law, including:

• rendering of electric energy transmission services;
• operational and technological management;
• rendering of services for technological connection of power receiving devices (electrical installations) of legal entities and individuals to electric networks;
• performance of functions of collection, transfer and processing of technological information, including measurement and accounting data;
• control over safe maintenance of consumers' electrical installations connected to the Company's electric networks;
• activities related to electric networks operation.

Today the Company's main task is to ensure efficient management of the distribution grid system of the North-West, avoidance of networks wear and tear, energy shortage and unconstraint consumers' connection.

The main production activity of JSC IDGC of the North-West is rendering of electric energy transmission services.

Based on the results of JSC IDGC of the North-West activities in 2012 the volume of services rendered for energy transmission was 39,962 million kW/h, which is less than the 2010 indicator (40,471 million kW/h) by 560 million kW/h, or 1.38% and more than the 2011 indicator (39,686 million kW/h) by 225 million kW/h, or 0.57%.

The reason for reduction in the volumes of transmission services rendered compared to 2010 is the conclusion in 2011 of direct agreements with JSC FGC UES by consumers of LLC Rusenergoresurs, LLC Rusenergosbyt, JSC Russian Railways in Vologdaenergo, Arkhenergo, Karelenergo, Komienergo branches for connection points to UNPG ("last mile"). In general for JSC IDGC of the North-West this value in 2011 was 598.1 million kW/h.

The increase of this value compared to 2011 was due to the acquisition in February 2012 of two overhead lines 110 kV from ZAO Sh.Vorgashorskaya 2 (in 2010-2011 volumes of transmission through these lines were included in the direct agreement made between JSC FGC UES and CJSC Eurasian Energy Company), the growth of electric energy consumption by such large consumers as JSC Severstal, JSC Apatit, JSC SUAL KAZ-SUAL, JSC LUKoil-Komi, and the growth of electric energy consumption by the population and non-industrial consumers.

The actual loss of electric energy in electric grids of JSC IDGC of the North-West was 2,771.7 million kWh, or 6.41% of network supply. Compared to the corresponding period of 2010, with the reduction of network supply by 1.1%, the reduction of electric energy loss was 211.3 million kWh in absolute terms. The relevant energy loss in comparable conditions has reduced by 0.53%. In comparison to 2011 loss share remained at the same level.

In general for the Company revenue from electricity transmission services rendered in 2012 was RUB 29,276 million (exclusive of VAT). The share of revenue for electricity transmission services rendered to guaranteeing suppliers was 53% (RUB 15,645 million), to energy selling companies — 11% (RUB 3,227 million), territorial grid organizations — 14% (RUB 4,010 million), "direct" consumers — 22% (RUB 6,394 million).

Handling accounts receivable for electricity transmission services rendered

The amount of accounts receivable for electricity transmission services as of December 31, 2012 was RUB 5,844 million. During the period of 2010-2012 the amount of accounts receivable for electricity transmission services increased. During 2011 the growth amounted to RUB 181 million, during 2012 — RUB 1,956 million, which results from the increase in overdue indebtedness by RUB 1,532 million in 2012.

The increase in current indebtedness in 2012 was due to the growth of tariffs for electricity transmission services (actual one-rate tariff in 2012 grew by 11% compared to the last year).

As of December 31, 2012 overdue accounts receivable for electric energy transmission services were RUB 3,349 million, including disputed indebtedness in the amount of RUB 1,187 million.

The increase in overdue accounts receivable of the Company in 2012 resulted from the growth of overdue accounts receivable in the following four branches:

• Vologdaenergo — by RUB 712 million;
• Karelenergo — by RUB 753.0 million;
• Kolenergo — by RUB 384.4 million;
• Novgorodenergo — by RUB 371.0 million.

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

• Arkhenergo — by RUB 3.3 million;
• Komienergo — by RUB 44.5 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.

The number of debtors with overdue indebtedness as of January 1, 2013 is 60, or 27.9% of the total number of consumers of services (215). The main debtors as of January 1, 2013 are:

• JSC Severstal (overdue indebtedness in the amount of RUB 370 million);
• JSC Karelian Power Selling Company (overdue indebtedness in the amount of RUB 666 million);
• LLC Grid Company Tesla (overdue indebtedness in the amount of RUB 480 million);
• NAZ-SUAL branch of JSC SUAL (overdue indebtedness in the amount of RUB 383 million);
• JSC Kolenergosbyt (overdue indebtedness in the amount of RUB 446 million);
• JSC Novgorodoblenergosbyt (overdue indebtedness in the amount of RUB 313 million).

In 2012, 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 1,908.62 million. The share of claims sustained by court was 92.9%. Compared to the last year this indicator increased by 17.1%.

As of December 31, 2012 97.5% of overdue indebtedness were covered by actions aimed at its reduction:

0.6% — restructured;

84.4% — recovered through legal proceedings and enforcement orders obtained;

11.3% — processed using the complaint procedure (newly created overdue indebtedness);

0.2% — controlled within the bankruptcy proceedings initiated against consumers of services;

1.0% — subject to the write-off (reversing charges) on the basis of court decisions obtained.