Regulatory Base for Perspective Development

The perspective development activities are carried out on the basis of the effective federal, regional and municipal legal acts and regulations:

• the Civil Code of the Russian Federation;
• Federal Law No. 35-FZ of March 26, 2003 on Electric Energy Industry (http://www.mrsksevzap.ru/files/clients/35.doc);
• Resolution No.861 of the Government of the Russian Federation of December 27, 2004 on Approval of Regulations for Free Access to Electric Energy Transmission Services and Rendering of These Services, Regulations for Free Access to the Operational Dispatch Management Services in the Electric Energy Industry and Rendering of These Services, Regulations for Free Access to the Wholesale Market Trading System Administrator's Services and Rendering of These Services and Regulations of Technological Connection of Power Receiving Devices (Electrical Installations) of Legal Entities and Individuals to Electric Grids (http://www.mrsksevzap.ru/files/clients/861.rtf);
• Resolution No.24 of the Government of the Russian Federation of January 21, 2004 on Establishment of Standards of Information Disclosure by the Entities of Wholesale and Retail Electric Capacity Markets (as subsequently amended);
• Resolution No.823 of the Government of the Russian Federation of October 17, 2009 on Plans and Programs for Electric Power Industry Development;
• Order No.281 of the Ministry of Energy of Russia of June 30, 2003 on Approval of Methodical Instructions for Development Project Planning of Electric Grids;
• Order No.229 of the Ministry of Energy of Russia of June 19, 2003 on Approval of Rules for Technical Operation of Electric Power Plants and Grids in the Russian Federation;
• Order No.20-e/2 of the Federal Tariff Service (FTS) of the Russian Federation of August 6, 2004 on Approval of Methodical Instructions on Calculation of Regulated Tariffs and Prices for Electric (Thermal) Power in the Retail (Consumer) Market;
• SO-001-2007 Standard for Making and Adjusting Plans and Programs for Development of Electric Networks of DGC approved by Order No.68 of IDGC of the North-West of March 3, 2008;
• Organization Standard STO 01.B1.01-2009 Forecast of Perspective Change of Loads and Power Consumption in the Territory of the Constituent Entity of the Russian Federation Serviced by JSC IDGC of the North-West approved by Order No.472 of JSC IDGC of the North-West of October 5, 2010.

Information on availability of Agreements made with Administrations of constituent entities of the Russian Federation

In order to implement measures for development of the electric energy complex and to ensure a reliable electric supply to consumers, Agreements with Administrations of constituent entities of the Russian Federation were made.

In the Vologda region, Republic of Karelia and Republic of Komi Agreements were made with the Governments of the said constituent entities of the RF and JSC RAO UES of Russia. These Agreements were effective until December 31, 2012.

Nonetheless, the Interaction Agreement with the Government of the Republic of Komi did not provide for any plans of activities for construction and reconstruction of electric grid facilities of Komienergo branch in 2012.

It should be noted that the Agreements approved by the regions have more extensive plans than those included in the investment program. Time displacement of realization and exclusion of the objects of Agreements from the branches' investment programs are connected with the fact that the Administrations of constituent entities do not provide allocation of funds for implementation of measures stipulated in the programs of priority order measures for construction and reconstruction of electric network facilities in full.

Besides the consumers refuses from connection to electric grids and the works by facilities financed at the expense of charge for technological connection are not executed.

Taking all the foregoing into account, the Agreements made need to be corrected.

Earlier in 2011 the Agreements were signed between the Government of the Vologda Region and JSC IDGC Holding (March 28, 2011), Administration of the Novgorod Region and JSC IDGC of the North-West (June 13, 2011) and the Government of the Republic of Karelia and JSC IDGC of the North-West (July 26, 2011). The Agreements represent framework contracts with an obligation for performance of measures determined in the investment program of JSC IDGC of the North-West approved in accordance with the established procedure.

Perspective development systems and programs

In accordance with Resolution No.823 of the Government of the Russian Federation of October 17, 2009 on Plans and Programs for Electric Power Industry Development, the plans and programs for electric power industry development of constituent entities of the Russian Federation are developed by executive governmental authorities of the constituent entities of the Russian Federation with participation of the system operator and grid organization for a five-year period with regard to the plan and program for development of the Unified Energy System of Russia.

The main goals of formation of plans and programs for electric power industry development are the development of grid infrastructure and generating facilities, assurance of meeting long- and medium-term demand for electric energy and capacity, creation of stable and favorable conditions for attraction of investments in construction of electric energy facilities.

In JSC IDGC of the North-West Standard STO 01.B1.01-2009 Forecast of Perspective Change of Loads and Power Consumption in the Territory of the Constituent Entity of the Russian Federation Serviced by JSC IDGC of the North-West regulating prospective development activities was approved.

The JSC IDGC of the North-West forecast campaign for 2014-2018 was completed on February 1, 2013. Forecasts of load change for main substations 35-110 kV were created, overloaded main substations were identified (Annex 21 to the Annual Report), the forecast of potential demand for electric energy and capacity was formed, development plans and programs were created in all regions of the Company's presence.

JSC IDGC of the North-West develops and approves investment programs taking into account activities reflected in the plans and programs for development of the electric energy industry in the regions.

The alignment of the investment programs with the plans and programs for development of the electric energy industry is illustrated in the table below. The main reason for non-fulfillment of the plans and programs for development of electric energy industry is the absence of required financing.