Achievement of the Milestones Set by the Development Strategy of the Electric Grid Complex of the Russian Federation

Milestones

Company’s activities on achievement of milestones in 2015

1 Increasing reliability and quality of energy supply to the level corresponding to customer needs including:

Ensuring the established level of reliability and quality of the rendered service by the Company according to regulations is recognized as priority area of activity by the decision of the Company’s Board of Directors of November 21, 2011 (Minutes No. 121/2011). According to Decree of the Government of the Russian Federation No. 1220 of December 31, 2009 “On Determination of Indices of Reliability and Quality of Supplied Goods and Rendered Services Applied During Setting of Long-Term Tariffs”, REC-PTD KT annually establishes the planned level of reliability and quality of services for the Company. It is the integrated index consisting of the levels of reliability and quality of services in energy supply and technological connection.


The planned index of reliability and quality level of the rendered services has been achieved by the Company in the reporting year.

1.1. Improvement of customer service quality (including reduction of the number of stages necessary for technological connection to electric grids from 10 to 6 by 2015 and to 3 by 2018 *).

In order to improve the customer service quality of PJSC Kubanenergo in 2015, the number of the stages necessary for technological connection to electric grids was reduced.
At the present time, the technological connection procedure consists of 4 stages:

  • filing of an application;
  • entering into an agreement;
  • performance of an agreement;
  • actual connection.

In 2015 PJSC Kubanenergo developed technical specification for expansion of Customer’s personal account functionality on the Company’s web-site regarding technological connection and customer service.
Implementation of technical specification for expansion of Customer’s personal account functionality is planned for 2016:

  • providing the customers with a possibility of sending statements related to specifications observance, applications and complaints, filling of questionnaires;
  • providing the customer with invoices under agreements for technological connection, scanned copies of draft agreement for technological connection, certificates of technological connection, certificates of delineation of balance sheet attribution and operational responsibilities.

1.2. Reduction in undersupply of electricity

In the reporting year, PJSC Kubanenergo generally fulfilled the primary goal of its operations, i. e. ensuring high-quality and uninterrupted electricity supply to customers.
According to the Rules of Investigation into the Causes of Power Accidents approved by Decree of the Government of the Russian Federation No. 846 of October 28, 2009, PJSC Kubanenergo investigates the causes of accidents.

 

Following the results of investigation in order to prevent similar emergency events, 2,736 events were followed up in 2015, 2,556 of them were executed, and 180 events were at the stage of execution. There are no events unexecuted within time limits.


Total undersupply of electricity to customers decreased in comparison with the previous year by 62.18 % and amounted to 6,502.327 thou kWh. Average duration of customers’ power supply interruption in comparison with the previous year also decreased by 9.5 % and amounted 4.57 h.


2 accidents were registered in 2015. According to Clause 4 of the Rules of Investigation into the Causes of Power Accidents approved by Decree of the Government of the Russian Federation No. 846 of October 28, 2009, their reasons were subject to investigation by the Federal State Power Supervisory Agency.


Reduction of accident rate in 2015 was reached both due to the decrease of contrary weather events and exertion of focused efforts aimed at increasing reliability of electricity supply equipment and the Company’s ETL. For more details see section Results of operating activities / Reliable and effective operation of electrical power systems.

2. Increasing energy supply safety, including decrease in total of accidents, as well as unaccounted accidents

In order to increase production discipline level, decrease injuries and wrong actions of the personnel at facilities of the unified grid complex, the Company has the Comprehensive Program to decrease employees’ and third parties’ injury risks at facilities of the Company’ unified grid complex for 2015–2017 approved by the decision of the Company’s Board of Directors (Minutes No. 201/2014 of December 30, 2014, Minutes No. 207/2015 as amended on April 17, 2015).


In order to take timely measures against the Company’s personnel injury, the following measures were implemented in the reporting year:

  • 25 real-time conferences were held, 11 of which were carried out by way of video conference with participation of first deputy heads (chief engineers and heads of units of Company’s branches).
  • Days of Occupational Safety were held monthly that made it possible to involve a large number of the Company’s employees in the process of self- and mutual control, as well as increase the employees’ level of knowledge and experience in the field of occupational safety and health.

The taken measures resulted in decrease of injury level from three cases in 2014 to one case in 2015.


No cases of occupational diseases among employees of PJSC Kubanenergo were registered in 2015.

3. Improving efficiency of the electric grid complex, including:

 

3.1. Capacity utilization increase (as percentage of transformer installed capacity by all voltage levels with the deduction of mandatory reservation)

As of now, the reserve (unutilized capacity) of transformers in the mode n-1 ** with regard to 731 35–110 kV substations of PJSC Kubanenergo with a total capacity of 9,446 MVA amounts to 1,201.85 MVA (i. e. 12.7 %) that is by 6.92 % lower than the index in the previous reporting period. 


Moreover, the electrical power system demonstrates a steady load growth. Thus, in August, 2015, the Kuban electrical power system achieved the historical maximum of power consumption at the level of 4,348 MW that exceeded the previous registered maximum by 5.3 %.


Besides, connection of new customers leads to additional increase in total capacity utilization of power stations of PJSC Kubanenergo.


In general, investments in PJSC Kubanenergo promote reliability enhancement, industry performance improvement, and electric power losses decrease. Alongside with that, the growth of investments leads to higher prices of electric grid services if the exploited capacities remain unloaded. In this regard, the purpose of the electric grid complex regulation is ensuring high load of re-exploited capacities.

3.2. Decrease in specific investment costs by 30 % against the level of 2012

In order to achieve this purpose, the Company constantly works with contractors on entering into agreements at a cost below the prescribed summary estimates taking into account tender reduction of agreement prices.


The actual volume of decrease in specific investment costs from that established for a planning period as a result of the applied methods for planning of the investment costs reduction according to the Development Strategy of the Electric Grid Complex of the Russian Federation. Following the results of 2015, the benefit amounted to RUB 2,145.8 mln (or 17 %).


The investment program of the Company for 2016–2021 provides for the cost reduction of investment projects by RUB 5.47 bln, including by years:

 

Year

Expected cost reduction of investment projects, RUB mln.

2016

385.78

2017

2,450.49

2018

603.01

2019

418.63

2020

1,029.29

2021

585.94

Total

5,473.14

3.3. Decrease in operating expenses by 15 % by year 2017 taking into account inflation against the level of 2012 per maintenance unit of electrical equipment.

In order to decrease expenses, the Company, from 2014 onwards, implements the Performance Management Program (the “PMP”) for 2014–2018 on achievement of benefit due to the maintenance cost reduction per unit of the Company’s electrical equipment.


In order to execute Directive of the Government of the Russian Federation No. 2303-P13 of April 16, 2015, following the results of work in 2015, decrease in specific operating expenses against the level of 2014 amounted to RUB 207 mln (3.50 %) while the planned decrease was RUB 204 mln (3.46 %).


In order to execute the Development Strategy of the Electric Grid Complex of the Russian Federation approved by Executive Order of the Government of the Russian Federation No. 511-p of April 3, 2013, the decrease in the managed operating expenses in 2015 against 2012 amounted to RUB 418 mln or 10 % that corresponds to the target level of decrease in the managed expenses. Measures implementation results in achievement of a target index on maintenance cost reduction per unit of the electrical equipment at 2012 values in the amount of RUB 6.48 thou per c.u.


As part of expense optimization, the Company scheduled an action plan aimed at decrease in constant operating expenses per 1 conventional unit by 15 % by year 2019 against 2012. Main directions of achieving key efficiency indicators of PJSC Kubanenergo:

  • measures in the sphere of energy conservation and energy efficiency;
  • measures aimed at the increase of operating activities efficiency;
  • measures aimed at the increase of investment activity and procurement procedures efficiency;
  • measures in the sphere of job performance increase;
  • measures related to other (non-core) activity.

3.4. Decrease in loss rate by 11 % by year 2017 against the level of 2012

In order to decrease relative loss rate of the electric power by 11 % by year 2017 against the actual indicators of 2012, PJSC Kubanenergo schedules to implement measures aimed at the decrease in technological electricity losses during transmission on the terms of energy service agreements.


The list of projects in the sphere of energy conservation and economic efficiency increase, that are feasible on the terms of the concluded energy service agreements (contracts), is approved by the Company’s Board of Directors on December 10, 2013 (amended on October 15, 2014).


Following the results of 2015, the benefit due to implementation of the measures aimed at the decrease in electricity losses during transmission in total amounted to 69.3 mln kWh (RUB 259.3 mln), including due to:

  • organizational measures: 53.7 mln kWh (RUB 212.9 mln);
  • technical measures: 2.6 mln kWh (RUB 13.2 mln);
  • improvement of electric power accounting: 13.0 mln kWh (RUB 33.3 mln).

This work is supposed to be continued.

4. Decrease in the number of territorial grid companies by 50 % by year 2017 against the level of 2012 and by 50 % by year 2030 against the level of 2017

The Company is interested in creation of the unified center of responsibility for high-quality and reliable energy supply to customers, elimination of “fragmentarity” of the grid in the Krasnodar Krai and the Republic of Adygea.  In order to implement the strategy, the Company carries out consolidation of electric grid assets. The Company’s Board of Directors (Minutes No. 121/2011 of November 21, 2011) determined the consolidation of electric grid assets as a priority area of the Company’s activity.


In order to increase a market share of electric grid services in the customer basin of PJSC Kubanenergo and reduction of the number of TGC, the Company:

  • implements the long–term Electric Grid Assets Consolidation Program approved by the Decision of the Board of Directors (Minutes No. 121/2011 of November 21, 2011);
  • takes measures to “pick-up” TGC not corresponding to the criteria established by Decree of the Government of the Russian Federation No. 184 of February 28, 2015 “On Designation of Electric Grid Facilities Owners as Territorial Grid Companies” (the feasibility study of these power facilities consolidation was carried out in the reporting year, relevant proposals were sent to TGC);
  • initiated meetings with representatives of the Krasnodar Krai and Sochi authorities and Sochi prosecutor’s office in 2015, sent proposals on consolidation of grid assets to the authorities of the Republic of Adygea;
  • prepared the “Road map” on consolidation of the grid complex in the Krasnodar Krai (at the present time, awaiting signature at the Administration of the Krasnodar Krai);
  • in pursuance of the decisions adopted in the meeting chaired by the Deputy Head of Administration of the Krasnodar Krai of December 2, 2015, carries out inventory of unowned power facilities, consolidation of municipal property at PJSC Kubanenergo;
  • prepared the Liaison Protocol for PJSC Kubanenergo and the authorized executive bodies of the Republic of Adygea, local authorities, and TGC with regard to synchronization and implementation of prospective development documents, territorial planning and investment programs of the electric grid companies (at the present time, awaiting signature at the Administration of the Republic of Adygea);
  • published its proposals in the sphere of mass media consolidation (information and analytical magazine “TEK Kubani”, newspaper “Volnaya Kuban”, etc.) 

Implementation of the Electric Grid Assets Consolidation Program in the Company in 2013–2015:

2013

2014

2015

MVA

Km

C.u.

MVA

Km

C.u.

MVA

Km

C.u.

Total:

34

198

1,357

37

504

1,165

11

138

443

Acquisition of electric grid facilities

0

0

6

4

39

40

2

6

9

Leasing of electric grid facilities

25

182

1,204

33

465

1,124

8

109

351

Other (permanent rights of possession and use)

0

0

0

0

0

0

0

0

0

Other (temporary rights of possession and use)

9

16

147

0

0

0

2

22

83

The main difficulties of implementation of the Electric Grid Assets Consolidation Program are failure to achieve a consent of facilities owners to participation in consolidation and lack of measures funding source.


* According to Executive Order of the Government of the Russian Federation No. 1249-р of June 30, 2015 that approves “Changes in Action Plan (“Road Map”) “Improvement of Energy Infrastructure Availability”.

* In case of emergency shutdown of any element of an electric grid, f. ex. a line (one circuit of double-circuit line), transformer, etc. in a normal circuit layout.