Financial News and Economical Crisis

By order dated January 19, 2010 the Government approved a transition plan subsidiaries and affiliates of OAO “IDC Holding” in 2010 to regulate tariff of the electricity transmission based on the method of return on invested capital (the principle of RAB; Regulatory Asset Base - Adjustable base of invested capital) .

Ministry of Energy will monitor and coordinate efforts to implement the plan for the transition branches interregional distribution companies (IDCs) in the RAB-regulation of tariffs for the transmission of electricity.

According to the approved schedule, the process of transition to the RAB to be completed on Jan. 1, 2011.

By July 1, 2010 24 regions to complete the transition to a new method of tariff. At the same time on the RAB-regulation shall take over all branches of OAO “Center IDC”, OAO “IDC of the South” and JSC “MRSC of Volga”. By mid-2010 at RAB also will move branch of JSC “MRSC of North-West” ( “Vologdaenergo,” Komienergo “,” Pskovenergo “), OAO” Siberia IDC “(” Khakasenergo “,” Chitaenergo “) and JSC” MRSC of North Caucasus ” (Stavropolenergo “).

The remaining 28 regions in the zone of responsibility of SDC IDC Holding will be transferred to a promising method of tariff regulation on Jan. 1, 2011.

Earlier proposals by the regional governing bodies to move to a new system of tariffs have been agreed in the Vladimir and Ryazan regions, the Republic of Udmurtia (the zone of MRSK Center and Volga Region “), in the Kursk and Yaroslavl regions (” Center IDC “) in the Novgorod area ( “MRSC North-West”), in the Omsk and Tomsk regions and the Altai Republic ( “Siberia IDC”).

From 1 January 2009 a new system of tariff regulation went 8 branches DZO OAO “IDC Holding”: “Belgorodenergo”, “Tverenergo”, “Lipetskenergo” (OAO “Center IDC”), “Permenergo” (JSC “MRSC Urals), “Tulenergo”, “Ryazanenergo” (JSC “MRSC of Center and Volga Region”), “Astrakhan” and “Rostovenergo” (JSC “MRSC of the South”).

all affiliates to IDC, switched to a new method of tariffs since the beginning of 2010, FST of Russia established rate of return on existing capital is 6% in 2010, 9% in 2011, 12% in 2012. This rate of return on new invested capital was 12%, the period of return on invested capital - 35 years.

According to general director of OAO “IDC Holding” Nikolai Shvets, with a new system of tariff-holding could solve one of the main problems Electricity Distribution Complex - depreciation of fixed assets. Today the average physical deterioration of a power distribution equipment is 69%, so as one of the most important strategic objectives is to decrease to the level of 50-55%.
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