Pavel Livinsky Discusses Top Priority Issues of the Siberian Power Grids' Development with the Russian President's Authorized Representative in the Siberian Federal District and Regional Heads

Pavel Livinsky Discusses Top Priority Issues of the Siberian Power Grids' Development with the Russian President's Authorized Representative in the Siberian Federal District and Regional Heads 25.01.2018

Mr. Pavel Livinsky, Rosseti's CEO, discussed the top priority areas of the power grids' development in Siberian regions with Mr. Sergey Menyaylo, the Russian President's Authorized Representative in the Siberian Federal District. The meeting was held on January 25 as part of the visit of Rosseti's CEO to the Novosibirsk Region.

Mr. Vitaly Korolev, Deputy CEO of the Federal Anti-Trust Service of the Russian Federation, heads of the Siberian Federal District constituent entities, Mr. Dmitry Veselov, Head of the Federal Service for Environmental, Technological, and Nuclear Supervision Siberian Department, management of MRSK of Siberia PJSC (a subsidiary of Rosseti PJSC) and other territorial grid companies.

The development strategy for the power grids in the Siberian Federal District regions as concens consolidation of the power grid assets became one of the focal topics under discussion. Over 270 local grid operators whose power grids are often unsatisfactory operate in Siberian regions. The participants stated that most of territorial power grid operators do not invest in repairs and upgrading of the networks and do not have long-term asset development programs, which results in annual increase in accidents and reduction in quality of power supply consumers. The negotiations resulted in entering by the parties into the agreement on joint stock-taking of power grid facilities in the Siberian Federal District to determine the state of municipal grids and to identify abandoned facilities. In addition, Sergey Menyaylo initiated the development of the scheme for annual licensing of territorial power grids, by inviting heads of the Siberian Federal District constituents and top management of Rosseti PJSC subsidiaries in this work.

"Grid companies should deliver reliable, quality and affordable power supply to consumers. Small local grid operators are not ready for emergency response. The certificate of readiness for operation in autumn/ winter 2017/2018 was not issued to many of them. However, availability of special equipment and necessary emergency stocks of materials, independent backup sources of power supply enables Rosseti to upgrade technological readiness significantly," said Sergey Menyaylo. "Thus, the consolidation of power grids on Rosseti's balance sheet is one of the key efforts that enables to enhance reliability of power supply to households.

In his speech, Pavel Livinsky drew the attention of those present to the underutilization (10%-15%) of the capacities provided to consumers under discounted technical connection was a significant obstacles to the development of Siberian power grids. The commissioned grids, to which much money was invested, remain without connected consumers for many years. Thus, the meeting participants agreed to implement efforts to make applicants more accountable. This would curtail the unutilized capacities and costs of their operation significantly, reduce the load on the grid tariff for consumers and create the conditions for development of the power grids in the regions.

The meeting participants noted that entering into regulatory agreements between regions and the major territorial grid companies is an efficient tool of raising investments into the power grids' development.  For instance, in 2017, MRSK of Siberia PJSC concluded regulatory agreements with senior executives of the Krasnoyarsk and Zabaikalsk Areas as well as the Kemerovo Region, thus enabling implementation of large-scale projects to deliver reliable power supply to households and to prepara the power grids to the 29th World Winter University Games 2019 in the regions. The Parties noted they would continue entering into long-term regulatory contracts.

Sergey Menyaylo stated that the development of power grids is restrained by inadequate payment discipline in companies, in particular, in the budget sector. The Russian President's Authorized Representative in the Siberian Federal District called on the constituents' senior executives to proactively cooperate with Rosseti top management to reschedule and repay the earlier accumulated debts.

"I am grateful to Sergey Ivanovich for setting a fruitful and detailed dialogue. We focus on reliable and efficient power supply to consumers. The questions we touched upon during discussion today aligned the company's standpoints with those of the governments of the Siberian Federal District constituent entities", Pavel Livinsky noted. "Long-term planning, in particular, the predictability of tariff and balance decision, are the important success drivers of our cooperation. The practice of entering into regulatory agreements contributes to that. Bridging the gap between the municipal local grid operators' costs and those incurred by Rosseti subsidiaries that prove their production and financial efficiency on an annual basis  is of equal significance. Consumer costs may be slashed in this way. Timely payments for electricity should also be monitored. Overall, I believe we have made one more step towards addressing the top priority objectives the power industry in the Siberian Federal District faces.

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