Priority Development Areas

Item No.

Business area

Date of the decision and number of the Minutes of the Company’s Board of Directors by which the business area is determined as priority

Report on Company’s measures taken in the priority business area in 2015

Ensuring the established reliability and quality level of the rendered services by the Company in accordance with regulations

Minutes No. 121/2011 of November 21, 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.


A number of measures aimed at reliability increase is implemented in order to achieve an index of reliability level. (For more details see section Results of operating activities / Reliable and effective operation of electrical power systems)

Implementation of the Company’s strategy in the sphere of information technology, automation and telecommunications for the period up to 2016.

Minutes No. 138/2011 of June 20, 2012

For more details see section Results of operating activities / Development of corporate and technological automated control systems

3

Implementation of Company’s Environmental Policy for 2008–2015.

Minutes No. 49/2008 of January 1, 2008

For more details see section Sustainable development / Environmental protection

Increase of anti-terrorist and anti-sabotage protection level of the Company’s electric grid facilities.

Minutes No. 94/2010 of August 5, 2010

PJSC Kubanenergo is guided by regulatory legal acts of the Russian Federation and Krasnodar Krai as well as by decisions of the Company’s corporate bodies when implementing measures aimed at the increase of anti-terrorist and anti-sabotage protection level of facilities.


In order to ensure the Company’s facilities protection, the following measures were implemented in 2015:

  • the Company’s local regulations on increase of anti-terrorist protection of facilities and actions of the personnel when detecting suspicious objects or signs of terrorist nature are published and executed in due time;
  • condition of technical means of Company’s technical security equipment is regularly examined, including Grids Control Center;
  • checks of facilities security are carried out in cooperation with representatives of law enforcement agencies;
  • unscheduled inspections of duties fulfillment by employees of the private security organizations protecting Company’s facilities are carried out;
  • measures aimed at the improvement of facilities anti-terrorist protection level are included into the Company’s long-term investment program for the period of 2016–2021;
  • briefings of duty operators and personnel of field services team on actions to be taken when detecting signs of terrorist nature at the Company’s facilities were carried weekly;
  • trainings on the employees’ actions to be taken when detecting foreign objects and unauthorized persons at facilities are carried out in all branches of the Company;
  • joint action plans of the Company and law enforcement agencies of the Krasnodar Krai and the Republic of Adygea if emergency arises are determined and are regularly coordinated, the corresponding plans and schemes of interaction are developed and approved;
  • access documents of the Company’s employees and vehicles are exchanged.
5

Development planning of OJSC Kubanenergo Distributive Grid Complex.

Minutes No. 116/2011 of September 7, 2011

In 2015, the Company implemented a complex of measures aimed at long-term development planning of the Company’s electric grids:

  • It directly participated in the development of the Scheme and the Program of Electricity Industry Prospective Development in the Krasnodar Krai for 2016–2020, as well as the Scheme and the Program of Electricity Industry Prospective Development in the Republic of Adygea for 2015–2019;
  • It made proposals for inclusion of activities on construction of new and reconstruction of the existing grid facilities into the Schemes and the Programs of Electricity Industry Prospective Development in the Krasnodar Krai and the Republic of Adygea for 2017–2021;
  • It participated in elaboration of programs of complex development of municipal infrastructure systems of 44 municipal entities of the Krasnodar Krai for 2015–2017 with an outlook until 2030.

In reporting year, upon the request of PJSC Kubanenergo, OJSC Institute ENERGOSETPROEKT elaborated the Comprehensive Program of Development of Electric Grids of 35 kV and above in the territory of the Krasnodar Krai and the Republic of Adygea for 2014–2019 with an outlook until 2024. This program is approved by the Technical Committee of PJSC Kubanenergo on February 25, 2016. The program is a basis for annual formation of proposals for inclusion of the measures into the Charts and the Programs of Electricity Industry Prospective Development in the Krasnodar Krai and the Republic of Adygea for the five-year period.

Consolidation of electric grid assets

Minutes No. 121/2011 of November 21, 2011

For more details see section Development strategy / Achievement of the milestones set by the Development Strategy of the Electric Grid Complex of the Russian Federation

Construction and operation of fiber-optic communication lines.

Minutes No. 133/2012 of May 30, 2012

To provide for the Company’s development in this priority direction, the building of FOCL is included in the plans of power facilities construction and reconstruction. 141 km of FOCL were constructed during the reconstruction and construction of power facilities in 2015.  Corporate network of data transfer in the direction of Timashevsk RES and Crimean RES, dispatch and technological communication channels, as well as channels of telecommunication transfer from 110 kV Krasnoarmeyskaya SS, 110 kV Terminal SS, 110 kV Svinokompleks SS, 110 kV Anapskaya SS, 110 kV Gemete SS is organized using these FOCL in accordance with modern requirements. Use of own FOCL makes it possible to optimize Company’s expenses for resources lease from communications provider, as well as to increase the Company’s communication network and data transmission reliability.

Introduction of Company’s Production Assets Management System;

Minutes No. 137/2012 of June 15, 2012

The Production Assets Management System (the “PAMS”) is used for the centralized maintenance of information related to electricity supply equipment, its static and dynamic parameters, defects, data on customers, assessment of technical state and consequences of electricity supply equipment failure, electricity supply equipment prioritization taking into account its technical state and consequences of failure for planning of PJSC Kubanenergo operations. The PAMS is a developing system with a number of separate and designed modules for the management of operation processes. The basis of the PAMS is standard reference information.


Introduction of the Company’s PAMS was completed in 2013. The system has been developing since 2014.


A number of measures aimed at developing the PAMS was implemented in 2015, namely:

  •  data on the equipment and customers of the main and distributive grid in the automated Production Assets Management System are updated;
  •  indices of the state and consequences of electricity supply equipment failure are calculated;
  •  proposals for adjustment of the Company’s Production Program for 2016 are formed and implemented based on the calculation of indices of the Company’s electricity supply equipment state and consequences of failure;
  •  programs of technical re-equipment and reconstruction taking into account consequences of failure and technical state of production assets are formed;
  •  calculation algorithms of electricity supply equipment technical condition are revised in cooperation;
  •  existing functionality of the Production Assets Management System are expanded in order to increase the effective work with a database of the Company’s electricity supply equipment.

Further development of the Company’s Production Assets Management System is scheduled for 2016–2018, including:

  • automation of functionality on planning and accounting of costs of repair program implementation;
  • automation of functionality with regard to formation of the execution plan for maintenance, diagnostics, technical certification and comprehensive inspection of production assets;
  • integration with the Company’s adjacent information systems;
  • carrying out of audits of the Company’s Production Assets Management System, assessment of efficiency and maturity level of the Production Assets Management System of PJSC Rosseti Group;
  • organization of training and professional development of the personnel;
  • formation of the production program using mechanisms of risk assessment.

Certification of equipment, materials and systems at the Company’s facilities

Minutes No. 190/2014 of June 4, 2014

In order to organize the work on certification of equipment, materials and systems, the Company issued the order in 2014 that:

  • brought into force internal documents “Methods of Carrying Out Certification of Equipment, Materials and Systems in Electric Grid Complex” and “Procedure for Carrying Out Certification of Equipment, Materials and Systems In Electric Grid Complex”;
  • appointed the Commission on admission of the Company’s equipment, materials and systems and approved its Rules and Regulations.
    No applications for carrying out of certification were submitted to the Commission in 2015. In view of application of the unified technical policy in PJSC Rosseti Group, certification of equipment, materials and systems used in the electric grid complex of PJSC Kubanenergo was carried out directly by PJSC Rosseti.
10 

Ensuring availability of the energy infrastructure and quality of technological connection to Company’s electric grids.

Minutes No. 196/2014 of September 12, 2014

Since 2014:

  • applicants have had a possibility to apply for technological connection to electric grid via the Company’s web-site, possibility of preliminary calculation of technological connection cost on the Company’s web-site (in accordance with set-up parameters);
  • data on the total transmission capacity of each electric grid area, the current operating margin for customers’ connection have been published on the Company’s web-site.

Decrease in standard implementation terms of technological connection for privileged categories of applicants, as well as decrease in cost of technological connection to the Company’s electric grid is scheduled for 2016.

11 

Improvement of internal control and risk management system, development of internal audit function.

Minutes No. 196/2014 of September 12, 2014

The Board of Directors of OJSC Rosseti (Minutes No. 143 of February 13, 2014) approved the Internal Control System Development and Improvement Strategy of OJSC Rosseti and its S&A (the “Strategy”).


For the purpose of the Strategy implementation, the Company’s Board of Directors defined the development and improvement of internal control and risk management system and the internal audit function as the priority area (Minutes No. 196/2014 of September 12, 2014) and approved the following:

  • the Internal Control Policy (amended);
  • the Risk Management Policy (amended);
  • Internal Audit Policy *.

Risk assessment was carried out in 2015 in accordance with the following registers:

  • key operational risks;
  • operational risks of the main business processes;
  • operational risks of other business processes.

The assessment of the revealed risks is regularly updated, measures aimed at their management are updated and executed; information on the Company’s risks is submitted for consideration and decision-making to:

  • the Company’s Management Board – quarterly;
  • the Audit Committee of the Company’s Board of Directors – following the results of the first half of the year and following the results of a year;
  • the Company’s Board of Directors – following the results of a year.

In order to increase predictability of the Company’s business plan execution and achievement of its key performance targets, integration of the risk management and business planning system is carried out in the Company. The risks of the business plan execution are considered by the Board of Directors.


In 2015, the Company introduced and updated a number of documents aimed at the development of the Internal Control System, Risk Management System, Internal Audit.


The Department of Internal Audit and Control annually assesses efficiency of the Internal Control and Risk Management Systems. The results of assessment are submitted to the Board of Directors (with preliminary consideration by the Audit Committee of the Board of Directors). Following the results of 2015, maturity level of the Internal Control and Risk Management System is determined by the Board of Directors as intermediate - between “satisfactory” and “moderate” with positive dynamics of development.


With regard to ensuring independence of the internal audit function, the following measures are implemented in 2015:

  • the changes aimed at increase of the internal audit independence are introduced in the Company’s Articles of Association;
  • The Audit Committee of the Board of Directors approved the structure of the Department of Internal Audit and Control that provides for establishment of the Internal Control and Risks Division and the Internal Audit Division in order to divide preventive and current control functions (creation of the Internal Control And Risk Management Systems) with functions of further control (assessment of the Internal Control System efficiency).

The following is planned for further improvement of preventive, current and further control:

  • implementation of measures aimed at the improvement of the internal control during accounting and reporting, tax bookkeeping, as well as in processes (business areas) having essential impact on formation of the Company’s accounting statements;
  • automation of the internal audit and risk management procedures;
  • carrying out of periodic audits on assessment of correlation of the Company’s goals, its structural units, and key employees among themselves and with the risks of the corresponding business areas, as well as achievement of objectives and KPIs;
  • assessment of the Company’s risks and adoption of measures aimed at prevention of their occurrence (minimization);
  • use of a classifier of violations with regard to the Company’s main business areas and, if necessary, updating of risk registers;
  • obligatory and regular professional development of the employees from the Department of Internal Audit and Control.

 (For more details see section Internal control and risk management. Anti-Corruption Policy)

12 

Implementation of measures aimed at centralization and automation of the treasury function.

Minutes No. 205/2015 of March 13, 2015

Applied 1C:Enterprise registration system of PJSC Kubanenergo was integrated into the unified IT system of Unified Treasury of PJSC Rosseti with regard to treasury operations registration. The Company improved the existing and developed new reference books “1C:Enterprise” used during preparation of templates for information loading into automated information system of treasury operations registration in order to organize information exchange between systems.


Integration of the 1C:Enterprise registration system of PJSC Kubanenergo into the unified IT system of Unified Treasury of PJSC Rosseti makes it possible to solve the following issues:

  • operational planning and optimization of cash flows;
  • control of budget performance, cash flow and the set limits;
  • financial risk management.
13 

implementation of measures aimed at the decrease in electricity losses using extra tariff funding sources (including energy service agreements).

Minutes No. 211/2015 of May 20, 2015

In order to enforce this decision of the Board of Directors, the Company signed 12 energy service agreements with total amount of more than RUB 2.2 bln in 2015.

 

The projects included in the agreements cover more than 82 thou metering points and are calculated for 4 years, the estimated benefit due to measures implementation is about 633 mln kWh.


Following the results of energy service agreements performance, the benefit of 2015 amounted to 19.6 mln kWh, including:

  • decrease in electricity losses – 11.1 mln kWh;
  • growth of net electricity supply – 8.5 mln kWh.

* Find on the Company’s web-site in the section About the Company / Constituent and in-house documents.