Regulatory Base for Technological Connection

Technological connection activities are performed on the basis of effective federal, regional and municipal legal acts and regulations:

Governing performance of technological connection:

• Federal Law No.35-FZ of March 26, 2003 on Electric Energy;
• Resolution No.861 of the Government of the Russian Federation of December 27, 2004 on Rules of Technological Connection to Power Receiving Devices of Electricity Consumers, Energy Generating Facilities and Electric Grid Facilities Owned by Grid Organizations and Other Entities to Electric Grids;
• Federal Law No.51-FZ of November 30, 1994 Civil Code of the Russian Federation (part 1);
• Federal Law No.14-FZ of January 26, 1996 Civil Code of the Russian Federation (part 2).

Governing pricing for calculation of a technological connection fee:

• Order No.209-e/1 of the Federal Tariff Service (FTS) of the Russian Federation of September 11, 2012 on Approval of Methodical Instructions on Determination of the Amount of Fees for Technological Connection to Electric Grids;
• Resolution No.1178 of the Government of the Russian Federation of December 29, 2011 on Pricing in the Field of Regulated Prices (Tariffs) in Electric Energy Sector.
• Governing information disclosure by entities of electricity markets:
• Resolution No.24 of the Government of the Russian Federation of January 1, 2004 "Standard for Information Disclosure by Entities of Wholesale and Retail Electricity Markets".

Governing standardized tariff rates for fees for technological connection to electric grids of Joint-Stock Company Interregional Distribution Grid Company of the North-West:

• Resolution No.16-e/7 of the Tariff and Price Department of the Archangelsk Region of March 30, 2012 of Payment for Technological Connection to Electric Grids of Arkhenergo branch of JSC IDGC of the North-West;
• Resolution No.2 of the Regional Energy Committee of the Vologda Region of January 18, 2010 on Determination of the Amount of Fee for Technological Connection to the Electric Grids of Vologdaenergo branch of JSC IDGC of the North-West;
• Resolution No.70 of the Regional Energy Committee of the Vologda Region of April 30, 2010 on Determination of the Amount of Fee for Technological Connection to the Electric Grids;
• Resolution No.38 of the Regional Energy Committee of the Vologda Region of February 21, 2011 on Making Amendments to Resolution No.69 of the Regional Energy Committee of the Vologda Region of April 30, 2010;
• Resolution No.333 of the State Committee of the Republic of Karelia of December 30, 2011 on Determination of Standardized Fee Tariff Rates for Technological Connection to the Electric Networks of Karelenergo Branch of Open Joint-Stock Company Interregional Distribution Grid Company of the North-West (revision No.20 of February 28, 2012 №20);
• Resolution No.31/3 of the Tariff Regulation Directorate of the Murmansk Region of July 18, 2012 on Determination of the Amount of Fee for Technological Connection to the Electric Grids of JSC IDGC of the North-West;
• Resolution No.31/3 of the Tariff Regulation Directorate of the Murmansk Region of July 18, 2012 on Determination of the Amount of Fee for Technological Connection to the Electric Grids of JSC IDGC of the North-West;
• Resolution No.21 of the Price and Tariff Policy Committee of the Novgorod Region of April 24, 2012 on Determination of the Amount of Fee for Technological Connection to the Electric Grids of Open Joint-Stock Company Interregional Distribution Grid Company of the North-West (Novgorodenergo branch) (revision No.41 of July 27, 2012);
• Order No.3-e of the State Committee of the Pskov Region for Tariffs and Energy Industry of January 27, 2012; and
• other legal acts and regulations.

The key changes in the legislation relating to the technological connection procedure affected the following issues:

• In October 2012 the Rules of Technological Connection to Power Receiving Devices of Electricity Consumers, Energy Generating Facilities and Electric Grid Facilities Owned by Grid Organizations and Other Entities to Electric Grids approved by Resolution No.861 of the Government of the Russian Federation of December 27, 2004 were amended by Resolution No.1015 of the Government of the Russian Federation. In accordance with these changes the maximum capacity range for applicants who are willing to use an interest-free installment payment plan was increased from 100 kW to 150 kW, in particular:

"For applicants whose power receiving devices have maximum capacity from 15 to 150 kW inclusive (taking into account power receiving devices earlier connected to this connection point), the agreement (at request of such applicants) provides for an interest-free installment payment plan for 95 percent of the technological connection fee on the condition of making equal quarterly installments of the total amount for a period of three years of the date of signing by the parties the technological connection act".

• In November 2012 the Rules of Technological Connection to Power Receiving Devices of Electricity Consumers, Energy Generating Facilities and Electric Grid Facilities Owned by Grid Organizations and Other Entities to Electric Grids approved by Resolution No.861 of the Government of the Russian Federation of December 27, 2004 were amended by Resolution No.1209 of the Government of the Russian Federation approving:
  • the standard form of an agreement for technological connection to electric grids by redistribution of maximum capacity;
  • the standard form of technical conditions for connection to electric grids by redistribution of maximum capacity.
• In December 2012 the Rules of Technological Connection to Power Receiving Devices of Electricity Consumers, Energy Generating Facilities and Electric Grid Facilities Owned by Grid Organizations and Other Entities to Electric Grids approved by Resolution No.861 of the Government of the Russian Federation of December 27, 2004 were amended by Resolution No.1354 of the Government of the Russian Federation modifying the procedure for obtaining a permission from the federal energy supervision authority for admission to operation of connected objects and examination of connected power receiving devices of applicants of maximum capacity of up to 15 kW (inclusive) and up to 150 kW (inclusive).

For applicants performing technological connection of power receiving devices with capacity from 150 kW to 670 kW and connected to electric grids of the voltage class of up to 10 kV inclusive, a notification procedure for approval of admission to operation of connected objects by the federal energy supervision authority is applied.

• By Decree No.209-e/1 of the Federal Tariff Service of September 11, 2012 a new revision of the Methodical Guidelines on Determination of the Amount of Payment for Technological Connection to Electric Grids was approved (registered in the Ministry of Justice of Russia on November 28, 2012, registration number No.25948) instead of the Methodical Guidelines approved by Decree No.365-e/5 of the Federal Tariff Service of December 30, 2010.

In particular, the following amendments were made:
• the List of Measures for Construction of Electric Grid Facilities from Existing Electric Grid Facilities to Connected Power Receiving Devices ("last mile"), the cost of which is included in the fee for technological connection to a specific consumer based on the technical conditions of connection issued to such consumer, was significantly shortened. This List includes only construction of overhead and/or cable lines, transformer substations (if voltage transformation is required for connection of this consumer), construction of main substations and substations of the voltage class of 35kV and above. Measures for organization of automated electricity metering, organization of telemechanics (telecontrol, telemetering), relay protection devices and emergency control automatics, connection organization, capacitance current compensation were excluded due to the fact that they are mainly related with the assurance of reliable, uninterrupted electricity supply to all consumers connected to the grid, which is one of the primary tasks of a grid organization;
• in calculating a fee for a particular applicant expenses are accounted only for those "last mile" activities which are envisaged by the technical conditions provided by the grid organization, unlike the previously effective procedure where a fee for technological connection was calculated using a single rate (rubles/kW), which comprises expenses on a power unit on all "last mile" activities, including those not carried out for this particular applicant;
• income tax is excluded from the list of expenses included in a fee for technological connection to electric grids. Taxation will be determined for a grid organization taking into account the electricity transmission service rendered;
• mandatory approval by the regulator for the regulating period for each grid organization of standardized tariff rates and rates per maximum connected capacity unit (rubles/kW) is provided. The consumer is granted the right to choose a fee calculation method (using one of the rate types);
• the procedure for calculation of rates per maximum connected capacity unit (rubles/kW) for a regulating period is determined based on an average weighted volume of maximum capacity connected by the grid organization during the three preceding years and the average for three years actual length of constructed cable and overhead lines and approved standardized tariff rates.

Technological Connection to Networks

 

In 2012 JSC IDGC of the North-West received 31,116 applications for technological connection for the total capacity of 1,255.9 МВт, including 28,608 applications for technological connection of power receiving devices of applicants with capacity of up to 15 kW for the total capacity of 302.6 MW. In 2011 JSC IDGC of the North-West received 25,476 applications for technological connection for the total capacity of 951.5 MW, including 23,170 applications for technological connection of power receiving devices of applicants with capacity of up to 15 kW for the total capacity of 230.9MW. In 2010 JSC IDGC of the North-West received 18,574 applications for technological connection for the total capacity of 965.0MW, including 16,968 applications for technological connection of power receiving devices of applicants with capacity of up to 15 kW for the total capacity of 165.6 МВт.

The number of technological connection applications submitted in 2012 has increased by 6,640 compared to the corresponding period of 2011 and the capacity has increased by 304.4 MW.

The number of applications for technological connection of power receiving devices of applicants with capacity of up to 15 kW submitted in 2012 has increased by 5,438 compared to the corresponding period of 2011 (by23.5%) and the capacity has increased by 71.7 MW (by 31.1%).

In 2012 the number of applications for technological connection of power receiving devices of applicants with capacity of up to 15 kW accounts for 91.9% of the total number of technological connection applications submitted. In 2011 this indicators was 90.9% and in 2010 — 91.3%.

The number of technological connection agreements made in 2012 was 25,078 for the total capacity of 526.0 MW. The number of technological connection agreements made in 2011 was 20,062 for the total capacity of 450.3 MW.

The number of technological connection agreements made in 2012 is by 5,016, or 25.0%, higher than in the corresponding period of 2011 and the capacity volume has increased by 75.7 MW, or 16.8%.

In 2012 JSC IDGC of the North-West fulfilled 16,701 technological connection agreements for the total capacity of 339.6 MW, out of which 15,839 agreements were for technological connection of power receiving devices of applicants with capacity of up to 15 kW for the total capacity of 154.9 MW. In 2011 JSC IDGC of the North-West fulfilled 12,745 technological connection agreements for the total capacity of 238.0 MW, out of which 12,109 agreements were for technological connection of power receiving devices of applicants with capacity of up to 15 kW for the total capacity of 113.7 MW. In 2010 JSC IDGC of the North-West fulfilled 8,229 technological connection agreements for the total capacity of 157.7 MW, out of which 7,607 agreements were for technological connection of power receiving devices of applicants with capacity of up to 15 kW for the total capacity of 62.3 МВт.

The number of technological connection agreements fulfilled in 2012 is 3,955 higher than in the corresponding period of 2011, with total capacity of 101.6 MW and the number of agreements for technological connection of power receiving devices of applicants with capacity of up to 15 kW 2012 was by 3,730 agreements (41.2 MW capacity) more than in the corresponding period of 2011.

In 2012 JSC IDGC of the North-West received 5 applications for technological connection of generating facilities for the total capacity of 35.8 MW. In 2011 JSC IDGC of the North-West received 3 applications for technological connection of generating facilities for the total capacity of 222.3 MW. In 2010 JSC IDGC of the North-West received 8 applications for technological connection of generating facilities for the total capacity of 221.9 MW.

In 2012 no agreements for technological connection of generating facilities were made. In 2011 3 agreements for technological connection of generating facilities were concluded for the total capacity of 18.0 MW. In 2010 2 agreements for technological connection of generating facilities were concluded for the total capacity of 193.6 MW.

In 2012 JSC IDGC of the North-West fulfilled 1 agreement for technological connection of generating facilities for the total capacity of 110.0 MW. In 2011 no agreements for technological connection of generating facilities were fulfilled. In 2010 JSC IDGC of the North-West fulfilled 1 agreement for technological connection of generating facilities for the total capacity of 40 MW was fulfilled partially (stage I).

Applications which have not been taken into account are the applications that were cancelled by JSC IDGC of the North-West if the applicant had failed to comply with the deadlines of the TC agreement offer signing; the applicant's refusal from the application or from signing the TC agreement sent as an offer.

Such applications account for 7.2% of the total number of applications received in 2012, 6.7% for 2011 and 7.7% for 2010.

In 2012 revenue from technological connection was RUB1,412.02 million exclusive of VAT. The overachievement of the target indicator for revenue from technological connection was 8.8%, in 2011 — 5.1% and in 2010 — 76.16%.

Improvement of the procedure for technological connection of consumers

In 2010 a technological connection software product TC AMS (Technological Connection Automated Management System) was put into commercial operation. This program enabled to automate the process of registration of all applications submitted and agreements made, fulfilled and terminated. All complaints received are also registered using this program.

Moreover, a support mechanism for technological connection agreements from the conclusion to the fulfillment is realized in TC AMS, including purchasing activities, conclusion and fulfillment of contracting agreements and capital investment accounting.

From July 1, 2012 an option to submit a preliminary application through the website of JSC IDGC of the North-West was provided.

Heads of regional electric grids in all branches undergo qualification upgrade training on technological connection on a regular basis. Such training enables, on the one hand, to upgrade qualification of employees engaged in the technological connection process and, on the other hand (which is not less important), to provide the so-called feedback with field specialists.

In certain branches, with the predominating number of consumers up to 15 kW, mobile crews for performance of such connections using own resources are created, which allows for reduction of the cost and time of such works.

Due to the changes in the effective laws regulating technological connection, standard forms of agreements (including annexes) used by the Company were updated (Order No.554 of JSC IDGC of the North-West of October 15, 2012).

Furthermore, in order to optimize and unify documents executed in the course of performing operations of technological connection to the grids of JSC FGC UES, standard forms of technological connection agreements were approved (Order No.466 of JSC IDGC of the North-West of September 6, 2012).

A working group for optimization of technological connection activities was created. Based on the decisions made by this group, the logistics and material and technical support unit implemented the decision on the transfer of the right to carry out purchasing activities within the framework of works for implementation of technological connection agreements for the "privileged" group of consumers (connecting the capacity of up to 15 kW and the agreement cost of 550 rubles) in branches, without referring the same for review to the executive apparatus. This decision was made to speed up purchasing activities and, hence, to meet deadlines specified in the agreement (Order No.545 of JSC IDGC of the North-West of October 11, 2012).

In 2012 the regulation on remuneration of employees of JSC IDGC of the North-West for technological connection activities using own resources was developed and implemented (Order No.697 of JSC IDGC of the North-West of December 27, 2012).

In 2012 the effective technological connection agreements under which applicants failed to fulfill their obligations were updated or closed. Based on the results of such activities 4,542 acts on completion of technological connections, 1,693 supplementary agreements on extension of the period for technological connection activities and 647 termination agreements were signed. In 2013 these activities will continue and in order to control the performance of agreements for technological connection to electric grids of JSC IDGC of the North-West, the Company approved the Order on Organization of Activities for Fulfillment and Closing of Agreements for Technological Connection of Power Receiving Devices of Applicants of the Capacity of up to 670 kW (inclusive) to Electric Grids of JSC IDGC of the North-West.

JSC IDGC of the North-West has just developed and approved a new revision of the Regulation on the Procedure for Drafting and Approving Technological Connection Agreements Made in the Executive Apparatus of JSC IDGC of the North-West. In the nearest future this regulation will be approved and brought into force by an order of JSC IDGC of the North-West.

In addition, in order to bring the forms of documents approved by Order No.554 of JSC IDGC of the North-West of October 15, 2012 into compliance with the amendments made to the Rules of Technological Connection to Power Receiving Devices of Electricity Consumers, Energy Generating Facilities and Electric Grid Facilities Owned by Grid Organizations and Other Entities to Electric Grids approved by Resolution No.861 of the Government of the Russian Federation of December 27, 2004 and to Decree No.209-e/1 of the Federal Tariff Service of September 11, 2012 on Approval of Methodical Guidelines on Determination of the Amount of a Fee for Technological Connection to Electric Grids, JSC IDGC of the North-West amended standard forms of documents. In the nearest future these forms will be approved and brought into force by an order of JSC IDGC of the North-West.

In performing technological connection operations JSC IDGC of the North-West faces the following problems:

• Non-readiness of a part of applicants to perform technological connection of their energy installations to electric grids of the grid organization upon expiration of the agreement. Due to the above, there is no possibility to perform technological connection of the applicant's energy installations to electric grids of the grid organization within the period set forth by law and to terminate the technological connection agreement with this applicant. At the same time, JSC IDGC of the North-West has no possibility to submit to the authorized executive body governing tariff regulation its capital costs on connection of the above applicants for the purpose of compensation of income loss.
• Absence of a two-rate tariff (for consumed and reserved capacity volume) for applicants of up to 15 kW. Due to the above, the grid company is obliged to perform technological connection operations for every applicant submitted a request while the applicant is not obliged to consume. At the moment, the effective laws of the RF provide only for compensation of expenses incurred for technological connection but do not provide for compensation of costs relating to maintaining the grids in the case there is no consumption.
• Activities specified in individual technical conditions, or any part thereof, may be performed both by the grid company and the applicant (at the applicant's option). There should be a mechanism to regulate this process (for example, if the applicant is not a grid organization, there should be a limitation on technical characteristics). Performance by the applicant of technical arrangements from the border of its plot to the connection point increases the "patched" structure of the grids, which has a negative effect on management of the grid complex in general.
• At the moment, information on the possibility of technological connection to electric grids is not required for the performance of works relating to allocation of a land plot. Due to the above, the administrations do not always notify grid companies on their plans for land allocation, future construction and results of tenders for selection of a potential investor. Hence, the grid company has no possibility for timely receipt of information on the region development plans and schedules.
• Applicants' abuse of the right for "privileged" technological connection, disaggregation of land plots and submission of several applications for technological connection for the purpose of implementation of large projects.
• Time-consuming process for obtaining permissions and authorizations.