IDGC of Centre operates in 11 regions of Central Russia, providing power to the public, commercial enterprises, agricultural enterprises, and transport. The Company is the leader in the power transmission market (83.4%); the Company’s share on this market together with its subsidiary JSC Yargorelektroset amounts to 84.3%.
Joint operation tariffs for power supply in all 11 regions of operation were introduced in 2008. Under this system, uniform joint operation tariffs are set for consumers (suppliers of last resort, utilities, and consumers with “direct contracts”) in each region.
IDGC of Centre branches in all regions share the function of joint operation owner and collect centralized payments for power transmission from all consumers at the unified rates regardless of which grid is actually used to deliver power to the consumers. The Company branches in each region conduct mutual settlements with TGC for the power actually supplied in TGC grids based on separate tariffs set with the specific TGC.
This system provides us information both on the amount of electricity supplied by IDGC of Centre directly (in other words, for the end consumers or for the joint operation grid) and on the amount of electricity supplied within the service area of the Company’s branches. This, in turn, makes it possible for us to precisely evaluate the Company’s market share.
57.8 bln kWh
Net power supply in 2013
55.2 bln kWh
“Joint operation” supply in 2013
The amount of electric power supplied to the grid of IDGC of Centre in 2013 equaled 63.6 bln kWh. Meanwhile, the Company transmitted 57.8 bln kWh of energy to its consumers and neighboring territorial grid companies (net electricity supply). Power losses from the grid equaled 5.8 bln kWh (9.16%) of the amount of power supplied to the grid.
The reduction in the amount of net electricity supply in the reporting year vs. 2012 is primarily connected with the termination of the last mile contracts in 2013, as a result of which certain major consumers started to receive power transmission services directly from JSC FGC UES.
The volume of “joint operation” services rendered by the Company in 2013 amounted to 55.2 bln kWh with a 0.2% growth vs. 2012.
POWER TRANSMISSION SERVICES IN NATURAL TERMS, bln kWh:
|Power supply to the grid||62.9||64.0||63.6||– 0.4||– 0.6|
|Net power supply (amount of electricity supplied within the service area of the Company’s branches)||56.7||57.9||57.8||–0.1||–0.2|
|Power losses||6.2||6.1||5.8||– 0.3||– 4.9|
|Amount of electricity transmitted through the points of delivery to end customers (“joint operation” supply)||54.1||55.1||55.2||0.1||0.2|
The Central Federal District of Russia, where the Company operates, is an economically promising and growing region.
The amount of services grew primarily due to the increased energy consumption in the most economically developed regions of IDGC of Centre operation: +1.9% in the Kursk Region, +1.0% in the Belgorod Region and +1.3% in the Tver Region. The principal growth in the amount of services rendered was stipulated by the increased consumption of the metallurgical and chemical industry, agricultural enterprises, and by the growth in energy consumption of the small and medium-size businesses.
POWER TRANSMISSION SERVICES RENDERED ON THE “JOINT OPERATION” BASIS BY BRANCHES OF IDGC OF CENTRE IN 2013,bln kWh / %:
Increasing of energy consumption in the most economically developed regions
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ENERGY CONSUMPTION FROM IDGC OF CENTRE GRIDS FOR TEN BIGGEST CONSUMERS IN 2013, bln kWh:
|No||Branch name||Consumer||Power use, bln kWh||Share in net supply, %|
|Net power supply for 2013||57.8||100|
|1||Belgorodenergo||Oskol Electrometallurgical Works||3.3||5.7|
|2||Lipetskenergo||Novolipetsk Metallurgical Works||2.9||5.0|
|3||Kurskenergo||Mikhailovsky Mining and Metal Works||2.4||4.2|
|4||Voronezhenergo||Voronezh Municipal Power Grid||1.5||2.6|
|5||Belgorodenergo||Stoilensky Mining and Metal Works||1.3||2.2|
|8||Lipetskenergo||Lipetsk City Power Company||1.1||1.9|
|10||Voronezhenergo||South-Eastern Railways (branch of JSC RZD)||1||1.7|
|Total for 10 biggest consumers||16.9||29.2|
As IDGC of Centre took on the functions of a supplier of last resort in 2013, it is incorrect to compare Company revenues received in the reporting year from power transmission services with the revenues received in 2011-2012. This is stipulated by the fact that a certain part of revenues from power transmission is included in the income from power sales in the accounts.
In order to adjust the comparison, below we have stated two figures for 2013 – the first one calculated under the RAS reports and the second in relative numbers.
REVENUES FROM POWER TRANSMISSION SERVICES IN 2011-2013, bln RUB:
|Change, 2013/2012, %||2013
|Change, 2013/2012, %|
|Revenues from power transmission||65.7||67.5||61.4||– 9||75.2||11.4|
|Rep. – the amount calculated under the RAS reports
Rel. – the amount in the relative conditions, 2011-2012
STRUCTURE OF REVENUE FROM POWER TRANSMISSION SERVICES IN 2011-2013, RUB bln and %:
|Revenues from power transmission||65.7||67.5||75.2||11.4|
|Company own revenue||54.5||55.8||62.7||12.4|
|Share of Company own revenue, %||82.9||82.6||83.4||0.8 ppt|
|Revenue of the other TGC||11.2||11.7||12.4||6.2|
|Rel. – the amount in the relative conditions, 2011-2012|
Growth of the actual revenue in 2013
The share of specific revenue in 2013
The actual revenue of the Company from power transmission in 2013 grew by 11.4% vs. 2012.
The primary reason for the positive dynamics is the increase of the average tariff by 141 RUB/thous. kWh, which led to an increase of the Company’s revenues by 7.8 bln RUB. An insignificant increase in the cost of capacity losses accounted for in the equilibrium prices on electrical energy was revealed, the fact resulting in the reduction of revenues by 0.2 bln RUB, however, taking into account the growth in net power supply by 0.07 bln kWh, the total revenue growth amounted to 7.7 bln RUB.
The share of specific revenue of IDGC of Centre (i.e. for the “joint operation” services) in 2013 increased as well, the figure coming to 83.4% (62.7 bln RUB). The increase of own revenues by 12.4% vs. 2012 is connected with the growth in consumption volumes.
NET PROFIT FROM POWER TRANSMISSION IN 2011 – 2013, bln RUB:
|Indicator||2011||2012||2013||Change, 2013/2012, %|
|Net profit from power transmission services||3.7||2.4||– 1.0||–41.7|
In 2013, IDGC of Centre incurred losses from power transmission in the amount of 1 bln RUB. The primary reason for this negative financial result is the creation of a bad debt provision relating to the transmission of electrical energy of the power sales companies deprived of the status of a supplier of last resort.
The cost of IDGC of Centre power transmission services in 2013 (in relative conditions) amounted to 63.3 bln RUB and exceeded the figure of 2012 by 10.4%. The cost of core operations grew due to the following factors:
- Growth of depreciation payments after commissioning a significant amount of facilities comprising fixed assets under the IDGC of Centre investment program implementation in 2013.
- Growth of power purchase price acquired in order to compensate for the losses in the Company’s grids.
- Growth of tariffs on power transmission services under the Unified National Power System (UNPS) rendered by JSC FGC UES.
- The growth of individual tariffs for the territorial grid companies on the operation territory of the IDGC of Centre branches led to a 6.2% increase in payments for the power transmission on third-party grids.
COST DYNAMICS OF POWER TRANSMISSION IN 2011-2013, mln RUB:
|2011||2012||2013 (Rep.)||Change, 2013/2012, %||2013 (Rep.)||Change, 2013/2012, %|
|Cost of core operations||54 912||57,315||62,949||10 %||63,283||10 %|
|Non-controllable costs||37,987||39,576||44,560||13 %||44,560||13 %|
|Loss compensation expenses||8,717||8,251||9,865||20 %||9,865||20 %|
|JSC FGC UES services||12,835||13,340||14,730||10 %||14,730||10 %|
|TGC services||11,223||11,713||12,443||6 %||12,443||6 %|
|Depreciation of fixed assets and intangible assets||5,212||6,271||7,523||20 %||7,523||20 %|
|Controllable costs||16,925||17,740||18,389||4 %||18,723||6 %|
|Tangible expenses||2,325||2,402||2,456||2 %||2,456||2 %|
|Production services||884||905||775||– 14 %||775||– 14 %|
|Personnel expenses (payroll, insurance payments, payments to the national pension fund)||10,355||11,153||11,993||8 %||11,993||8 %|
|Other expenses||3,362||3,280||3,165||– 3 %||3,499||7 %|