Rendering of electricity transmission services

Dynamics of electric power supply to grid, supply from grid and losses

Comparable indicators

Supply to grid, mln kWh Supply from grid, mln kWh

2011

2012 

2013 

2011 

2012 

2013 

JSC Lenenergo

33,460

34,513

33,945

29,914

30,935

30,513

St. Petersburg

21,297

21,811

21,730

18,962

19,477

19,459

Leningrad Region

12,163

12,702

12,215

10,952

11,458

11,054

Comparable indicators Electric power losses, mln kWh Electric power losses, %

2011 

2012 

2013 

2011 

2012 

2013 

JSC Lenenergo

3,546

3,579

3,432

10.6

10.4

10.1

St. Petersburg

2,335

2,334

2,270

11.0

10.7

10.5

Leningrad Region

1,211

1,245

1,161

10.0

9.8

9.5

In 2013 33,945 mln kWh of electric power were supplied to JSC Lenenergo grid from networks of JSC FGC UES and producers of electric power. 30,513 mln kWh of electric power were transferred out of this volume to consumers and territorial network companies, thus electric power losses totaled 3,432 mln kWh, or 10.1% of the electric power supplied to JSC Lenenergo grid.

Dynamics of productive electricity supply, mln kWh
Dynamics of electricity consumption by consumers of “last mile” contracts, mln kWh

In comparison with the indicators of 2012 the volume of productive electricity supply decreased by 394 mln kWh, or 1.3%. The main drop was noted in the Leningrad Region and was caused by a withdrawal of some consumers from the “last mile” contracts. In 2012 the volume of services in electric power transmission rendered to this category of consumers amounted to 329.3 mln kWh, including JSC Russian Railroads –197.5 mln kWh and JSC Pikalevsky Cement –131.8 mln kWh. Withdrawal of these consumers was considered at formation of the tariff and balance decision for 2013 and did not lead to any emergence of lost income for JSC Lenenergo.

Breakdown of electricity consumption

Breakdown of supply from grid by categories of consumers, mln kWh

Category

2011

2012

2013

Change, 2013/12, %

Industrial consumers

8,827

8,981

7,892

– 12

Transport

607

711

625

– 12

Agriculture and food industry

378

378

362

– 4

Nonindustrial consumers

4,312

4,486

4,762

6

State (municipal) organizations and other budgetary consumers

123

137

261

91

Population and the equated groups of consumers

5,551

6,131

6,150

0

TGOs

10,116

10,111

10,460

3

Total

29,914

30,935

30,513

– 1

In 2013 electricity consumption volumes by industrial consumers dropped that was caused by the following reasons:

  • conclusion of direct contracts with JSC FGC UES by industrial consumers – 329.3 mln kWh;
  • redistribution of some consumers between the groups “Industrial consumers”, “Nonindustrial consumers” and “State (municipal) organizations and other budgetary consumers”;
  • increase in the volume of consumers connected to TGOs’ networks.

In the breakdown of electric power supply by groups of consumers the greatest specific weight makes supply from Lenenergo grid to TGOs’ networks – over JSC Lenenergo the indicator makes 33.3% from combined value of consumption, including 27.2% across St. Petersburg and 48.8% across the Leningrad Region. For the last five years the general tendency of increase in the share of electric power supply to TGOs’ networks in connection with formation of new TGOs – grid organizations submitting applications for their inclusion into the volume of joint operations productive supply is observed. Generally new TGOs are formed on the basis of large enterprises (industrial sites) transferring their own power network facilities for use by TGOs.

Dynamics of productive electricity supply by voltage levels, mln kWh

2011 

2012 

2013 

Change, 2013/12, %

HV

8,102

7,930

8,046

1

MV1

878

889

756

– 15

MV2

10,417

11,066

11,099

0

LV

9,578

10,121

9,712

– 4

Total

28,975

30,007

29,613

– 1

By results of 2013 a drop in consumption at a low voltage level is noted that is caused by reduced consumption by the group “Population and the equated groups of consumers”.

It should be noted that the greatest size of productive supply in the breakdown of productive supply in the volume of 37.5% is the share of MV2 level (6–10 kV), low voltage level (32.8%) and high voltage level (27.2%). The breakdown of electric power supply by voltage levels is similar to the breakdown by groups of consumers, i.e. The main volume of services rendered to industrial consumers is rated on HV level, to nonindustrial consumers – on MV2 level, to population – on LV level. As in structure of network equipment of JSC Lenenergo an insignificant share is occupied by equipment 20–35 kV, the smallest volume of productive supply of 2.6% is the share of voltage level MV1.

Electric power consumption from Lenenergo networks by the largest consumers in 2013, mln kWh

Consumer

Volume consumption, mln kWh

Share in productive supply, %

Productive supply of electric power in 2013

29,613

100

St. Petersburg

JSC PC Baltika

40

0.1

JSC Admiralty Shipyards

28

0.1

JSC PC Energy, AO JSC Kirov Plant

33

0.1

JSC Svetlana

33

0.1

JSC Shipbuilding Plant Severnaya Verf

49

0.2

JSC Power Machines LMP

84

0.3

JSC Nevsky Zavod

30

0.1

Leningrad Region

LLC Cement

147

0.5

LLC PG Fosforit

122

0.4

CJSC Metakhim

138

0.5

CJSC Pikalevsky Cement

203

0.7

CJSC SZIPK

82

0.3

CJSC Tikhvin Ferroalloy Plant

342

1.2

JSC Saint Petersburg cardboard-printing plant

137

0.5

Total on the largest consumers

1,468

5.0

Power consumption data are specified in the table only on the largest industrial consumers of St. Petersburg and the Leningrad Region. Overall, the number of consumers with installed capacity over 670 kW on the two regions is more than 1,300.

Electric power losses

Dynamics of electric power losses, mln kWh
2011  2012  2013  Change, 2013/12

mln kWh

%

mln kWh

%

mln kWh

%

%

p.p.

St. Petersburg

2,335

11.0

2,334

10.7

2,270

10.5

–2.7

–0.2

Leningrad Region

1,211

10.0

1,245

9.8

1,161

9.5

–6.7

–0.3

JSC Lenenergo, total

3,546

10.6

3,578

10.4

3,432

10.1

–4.1

–0.3

For 12 months 2013 losses in Lenenergo networks totaled 3,431.5 mln kWh, or 10.1% of supply to grid that is 146 mln kWh lower than the level of 2012 in absolute expression (–0.26 p.p. to relative level of losses in 2012)

By results of implementation of actions under the program of energy saving and increase of power efficiency of JSC Lenenergo: decrease in the electric power losses constituted 142.6 mln kWh under the planned size of 141.9 mln kWh

This allowed reducing electric power losses by 0.3 percentage points by results of 2013 concerning the level of losses in 2012.

Dynamics of actual electric power losses in comparison with planned indicators in 2011–2013

Indicator

2011 

2012 

2013 

Normative losses (electric power losses considered in the tariff and balance decision), mln kWh

3,573

3,698

3,471

Normative losses (electric power losses considered in the tariff and balance decision), %

10.8

10.4

10.2

Losses according to the business plan, %

10.8

10.4

10.2

Losses, fact, %

10.6

10.4

10.1

Deviation fact/plan, p.p.

–0.2

0.0

–0.1

Energy saving and increase of power efficiency

In 2013, the Board of Directors of JSC Lenenergo approved the Program of energy saving and increase of power efficiency for 2013–2018 within which a complex of measures aimed at optimization (reduction) of the level of losses is implemented. The main objectives of the program are introduction of the power management system in JSC Lenenergo, modernization and building of the new model of («smart») grid on the basis of innovative technologies and equipment, introduction of the systems of technological management and network operation. Volume of financing of the Program of energy saving and increase of power infrastructure is RUB  6,873 mln. The source is the investment program of JSC Lenenergo.

Program of energy saving and increase of power efficiency in 2013

Performance of target indicators under the energy saving program

Indicators

2011

2012

2013

Change in 2013 (plan/fact)

Plan

Fact

Plan

Fact

Plan

Fact

%

p.p. (unless otherwise noted)

Decrease in electric power losses, %

0.5

- 1.0

- 2.2

- 2.17

- 1.54

- 2.51

-

- 1.0

Decrease in consumption of energy resources for business needs, RUB mln

195

190

206

178

206

192

- 7.0

- 14.0 RUB mln

Equipment by modern electricity metering devices in the retail market, %

2

2

5

3

7

7

0

0

In 2013 due to implementation of the energy saving program losses were lowered by 2.5% relatively the basic year of 2012. In 2012 and 2011 the drop was 2.2% and 1.0%, respectively.

In monetary terms the economy for the Company in 2013 was RUB 498.2 mln, having exceeded the economic effect of 2012 by RUB 256.5 mln, or 106%, and in 2011 – by RUB 398.4 mln, or 399%.

Implementation of key actions to reduce electric power losses in 2013, mn kWh

Actions

Annual effect of decrease in losses at the expense of the performed actions, mln kWh

Measures, total

295.8

1. Organizational measures

167.2

Identification of unmetered consumption

19.6

Identification of non-contractual consumption

147.6

2. Technical measures

15.5

Shutdown in the modes of small loadings of transformers on substations with two and more transformers

1.6

Shutdown of transformers on substations with seasonal loading

0.3

Balancing of phases loadings in electric networks

0.4

Decrease in electric power consumption for own needs of substations

3.1

Installation and commissioning of devices for reactive capacity compensation in electric networks

0.0

Wire replacement by wires with larger cross-section on overloaded OTL

9.7

Replacement of overloaded transformers

0.1

Replacement of derivation in apartment houses by SIW

0.0

Optimization of working voltage in main substations of radial electric networks 110 kV and 35 kV

0.0

Redistribution of loading of the main network by switching

0.2

3. Measures to improve electric power metering

113.1

By implementing a set of measures to optimize losses in 2013 the volume of savings totaled 295.8 mln kWh (RUB 752.3 mln), including 167.2 mln kWh (RUB 497.9 mln) through organizational measures, 15.5 mln kWh (RUB 27.5 mln) through technical measures, and 113.1  mln kWh (RUB 226.9 mln) through measures to improve electric power metering.

Data on actual consumption by JSC Lenenergo of energy resources for production and business needs in 2013

Name

Unit

2013

Plan

Fact

1

energy resources delivered under take-off agreements (purchase and sale), total

RUB mln

206.3

192.1

1.1

electric power

RUB mln

74.0

61.5

Mln kWh

23.9

21.9

1.2

heat power

RUB mln

15.9

14.7

Gcal

12,793.6

12,169.1

1.3

cold water supply

RUB mln

6.4

5.9

thousand m³

276.0

263.4

1.4

other (diesel fuel, kerosene, gasoline, etc.)

RUB mln

110.0

110.0

thousand tons of standard fuel

4,526.3

4,526.3

Identification of illegal electricity consumption

In 2013 22,491 acts of non-contractual consumption for 512.6 mln kWh were issued. Under the exposed acts of non-contractual electricity consumption in 2013 payment in favor of JSC Lenenergo pursuant to requirements of the current legislation of the Russian Federation regarding collecting the cost of non-contractual consumption was
RUB 1,832 mln with VAT; charges totaled RUB 1,867 mln w/o VAT.

Tariffs. RAB regulation

Tariffs on electricity transmission services are established by regulators.

Tariffs on electricity transmission services for 2013 were approved within the levels coordinated by the Federal Tariff Service of the Russian Federation by a joint-operations method that is uniform in the territory of the whole subject of the Russian Federation.

Since 2008, single «joint operations» tariffs have been approved for the services in electric power transmission which are identical to all consumers irrespective of the connection point to distributive networks in the region (item 42 of the Rules of non-discriminatory access to services in electric power transmission and rendering of these services # 861 of 27.12.2004), and individual tariffs on transmission services for calculations between grid companies.

Tariffs on transmission services across the Leningrad Region are approved under a “cost plus” scheme. According to this scheme payments collected by sales companies arrive in the higher territorial network organization JSC Lenenergo which pays off with subordinate territorial network companies.

Tariffs on transmission services across St. Petersburg are approved under the scheme “mixed costs”. According to this scheme payments collected by sales companies arrive in the higher territorial network organization JSC Lenenergo which pays off with all subordinate territorial network companies, except CJSC KirovTEK and JSC Oboronenergo. An individual double-rate tariff under a “cost minus” scheme was set for CJSC KirovTEK and JSC Oboronenergo (these companies pay JSC Lenenergo for electricity transmission services).

Since 01.01.2011 regulation in JSC Lenenergo has been carried under the method of return on invested capital (RAB) according to which the Committee on tariffs of St. Petersburg and the Committee on tariffs and price policy of the Leningrad Region had set long-term parameters of tariff regulation for JSC Lenenergo till 2017.

Advantages of return on invested capital are as follows:

  • provision of incentives to attract investments;
  • increase in capitalization of regulated organizations;
  • improvement of the quality of strategic planning of company activities;
  • possibility to smooth tariff consequences of investment programs implementation for consumers;
  • creation of economic motivation on cutting costs, increase of reliability and quality of rendered services;
  • lack of «item-by-item» control on expenses from regulatory authorities.

In response to the Resolution of the Government of the Russian Federation # 1178 of 29.12.2011 (in the edition of the Resolution of the Government of the Russian Federation # 663 of 30.06.2012) parameters of the long-term tariff regulation approved earlier were reconsidered for JSC Lenenergo and the period of regulation was prolonged till 2017 (Order of the Committee on tariffs of St. Petersburg # 181-R of 13.07.2012, Order of the Committee on tariffs and price policy of the Leningrad Region # 88-p of 13.07.2012). These parameters were coordinated by FTS of Russia (Orders # 471-e, # 472-e, # 473-e and # 474-e of 12.07.2012) and have been applied since July 1, 2012.

Within the procedure of coordination of a tariff projection during RAB reboot JSC Lenenergo carried out much work with regional and federal executive authorities on justification of the need of coordination of individual long-term parameters of tariff regulation for JSC Lenenergo for the purpose of creation of funding sources of the investment program that allow performing accumulated obligations on grid connection and strengthening of reliability of the power network complex of the region.

By results of work the Resolution of the Government of the Russian Federation # 663 of 30.06.2012 and scenario conditions of Ministry of Economic Development of the Russian Federation defined individual conditions on the level of a gain of joint operations tariff for electric power transmission for St. Petersburg and the Leningrad Region in case they are caused by implementation of investment projects.

Key RAB parameters

Indicator

St. Petersburg

Leningrad Region

JSC Lenenergo

Invested capital (residual) as of 01.01.2013, RUB mln

59,353

24,787

84,140

CAPEX considered at tariff regulation, 2011–2017, RUB mln

63,846

20,616

84,463

Rate of return on invested capital – old capital, %

2011

6

6

6

2012–2016

1

1

1

2017

11

11

11

Rate of return on invested capital – new capital, %

2011 

12

12

12

2012 

12

12

12

2013  and further

11

11

11

Term of return of invested capital, years

35

35

35

Revenue from electric power transmission activities

Indicator

Unit

2011

2012

2013

Change,
2013F (fact) / 2013 (approved), %

Change,
2013F / 2012F, %

Fact

Fact

Approved by REC

Fact

Leningrad Region

RevenueW/o decrease on the size of load losses.

RUB mln

11,327

12,577

14,130

14,490

2.5

15.2

Productive electricity supply

mln kWh

10,755

11,142

12,384

11,815

– 4.6

6.0

Average tariff

kop./ kWh

105.3

112.9

114.1

122.6

7.5

8.6

St. Petersburg

RevenueW/o decrease on the size of load losses.

RUB mln

17,907

16,954

22,852

19,545

– 14.5

15.3

Useful holiday of the electric power

mln kWh

18,539

19,104

19,463

19,083

– 2.0

– 0.1

Productive electricity supply

kop./ kWh

96.6

88.7

117.4

102.4

– 12.8

15.4

JSC Lenenergo, total

RevenueW/o decrease on the size of load losses.

RUB mln

29,234

29,531

36,982

34,034

– 8.0

15.3

Productive electricity supply

mln kWh

29,294

30,246

31,848

30,897

– 3.0

2.2

Average tariff

kop./ kWh

99.8

97.6

116.1

110/2

– 5.1

12.8

Dynamics of revenue of JSC Lenenergo from rendering of electricity transmission services in 2011–2013, RUB mln

Drop in the revenue from electric power transmission activities relatively approved revenue on both subjects of the Russian Federation was RUB 2,947 mln that is caused by the following factors:

  • overestimate by the largest sales companies of St. Petersburg, JSC Petersburg Sales Company and LLC Energia holding, of the size of declared capacity of consumers in regard to purchased capacity in the wholesale and retail market, therefore inadequate single-rate and double-rate tariffs for services in electric power transmission are formed. This, in turn, leads to decrease in actually received revenue regarding the approved one;
  • increase in revenue due to tariff revision for the group of consumers «Population» across the Leningrad Region (Order of LenRTC # 40-p of 15.03.2013) regarding the tariff considered in the joint operations model of the region pursuant to the instruction of FTS of Russia;
  • non-uniform half-year distribution of declared capacity volumes in agreements with sales companies;
  • different structure of productive electricity supply by voltage levels developed upon 2013 in comparison with the approved one.
Structure of required gross revenue in 2011–2013, RUB mln

Indicator

2011

▲ , %

2012

▲ , %

2013

▲ , %

St. Petersburg

Revenue, total

17,907

19

16,954

–5

19,545

15

Own revenue of 
JSC Lenenergo

7,136

34

5,856

–18

7,105

21

JSC FGC UES

3,282

18

4,145

26

4,617

11

Other TGOs

3,445

29

3,363

–2

4,010

19

Losses in Lenenergo networks

4,044

–6

3,589

–11

3,813

6

Leningrad Region

Revenue, total

11,327

24

12,577

11

14,490

15

Own revenue of 
JSC Lenenergo

2,378

2

4,058

71

6,198

53

JSC FGC UES

2,404

13

1,974

–18

2,098

6

Other TGOs

4,524

62

4,666

3

3,764

–19

Losses in Lenenergo networks

2,021

9

1,879

–7

2,430

29

JSC Lenenergo, total

Revenue, total

29,234

21

29,531

1

34,034

15

Own revenue of 
JSC Lenenergo

9,514

25

9,914

4

13,303

34

JSC FGC UES

5,686

16

6,119

8

6,715

10

Other TGOs

7,969

46

8,029

1

7,774

–3

Losses in Lenenergo networks

6,065

–2

5,469

–10

6,243

14

Dynamics of RGR structure on electric power transmission, RUB mln (%)
Revenue from rendering services in electric power transmission broken down by groups of consumers, RUB mln

Indicator

2011

2012

2013

St. Petersburg

Other consumers

7.0

10.3

20.4

Third-party grid organizations

111.2

147.7

108.9

Energy supplying organization

84.6

258.9

753.9

Guaranteeing supplier

17,263.5

16,106.1

18,152.3

Leningrad Region

Other consumers

22.8

1,262.6

350.1

Third-party grid organizations

Energy supplying organization

1,065.6

1,103.8

2,129.7

Guaranteeing supplier

9,971.5

9,926.5

11,691.7

JSC Lenenergo

Other consumers

29.8

1,272.9

370.5

Third-party grid organizations

111.2

147.7

108.9

Energy supplying organization

1,150.2

1,362.7

2,883.6

Guaranteeing supplier

27,235.0

26,032.6

29,844.0

Cost of services in electric power transmission on networks for 2011–2013

The cost of services in electric power transmission in 2013 was RUB 35,903 mln and increased by RUB 3,559 mln, or 11.0%,in comparison with 2012. Controllable costs increased by RUB 826 mln, or 15%, and uncontrollable costs – by RUB 2,733 mln, or 10.2%, respectively. The share of controllable costs in the cost of services in electric power transmission in 2013 was 17.6%, and uncontrollable costs – 82.4%.

Cost of services in electric power transmission on networks, RUB mln

Indicators

2011

2012

2013

Change, 2013 / 2012, %

Controllable costs

5,223

5,502

6,329

15.0

Material inputs

414

464

497

7.2

Works and services of production character

940

1,121

1,367

21.9

Payroll fund

2,506

2,596

2,939

13.2

Other costs

1,362

1,321

1,525

15.4

Uncontrollable costs

25,233

26,842

29,575

10.2

Purchased energy on compensation of losses

5,357

4,754

5,415

13.9

Services in electric power transmission by networks of grid organizations

7,969

8,029

7,774

– 3.2

JSC FGC UES fee

5,686

6,119

6,715

9.7

Amortization of fixed assets and intangible assets

5,095

6,270

8,254

31.6

Lease payments

288

803

123

– 84.6

Other costs

839

867

1,294

49.2

Total costs

30,456

32,344

35,903

11.0

Dynamics of controllable and uncontrollable costs on electric power transmission, RUB mln

Key factors of changes of the cost of services on electric power transmission

Controllable costs increased by RUB 826 mln (15%) due to the gain of components:
  • Material inputs increased by RUB 34 mln, or 7.2%. The greatest influence on their growth was rendered by increase in expenses on materials for repair by economic way in connection with performance of additional repair actions during preparation for the autumn and winter period of 2013–14, on materials for labor protection by results of approval of new norms of given-out means of individual protection from 01.01.2013 and extension of the list of categories of employees equipped with means of individual protection;
  • Works and services of production character were up by RUB 246 mln, or 21.9%. The greatest influence was rendered by increase in expenses on repair in connection with growth of expenses on ensuring reliable power supply of consumers for successful passing of the autumn and winter period of 2013–14.
  • Payroll fund increased by RUB 343 mln, or 13.2% due to indexation of official salaries in connection with performance of obligations of the employer under the collective agreement, increase in official salaries by key professions, and motivation of the personnel involved in elimination of consequences of accidents on power lines;
  • Other costs increased by RUB 204 mln, or 15.4%, due to acquisition of new software products and growth of expenses for information service caused by increase in the quantity of facilities.
Uncontrollable costs increased by RUB 2,733 mln (10.2%), thus:
  • Purchased energy on compensation of losses increased by RUB 662 mln, or 13.9% due to increase in the non-regulated tariff of purchase of losses at the expense of growth of the actual price of ATC in 2013 in comparison with 2012 and at the expense of increase in the sales extra charge across the Leningrad Region from 2H 2013;
  • JSC FGC UES fee increased by RUB 596 mln, or 9.7% that is caused by increase in rates for networks maintenance and payment of losses in ENEG networks in 2013;
  • Amortization of fixed assets and intangible assets increased by RUB 1,984 mln, or 31.6% due to increase in book value as a result of implementation of the investment program on input of fixed assets and revaluation made as of 31.12.2012;
  • Other costs increased by RUB 426 mln, or 49.2%, in connection with growth of expenses on property tax caused by increase in cost of fixed assets, made revaluation of power network equipment for the end of 2012, and cancellation of privilege on the power network equipment tax pursuant to the Federal Law of 29.11.2012 # 202-FZ “About modification of the second part of the Tax code of the Russian Federation”;
  • There was a decrease in electric power transmission services by networks of third-party grid organizations by RUB 255 mln, or 3.2%. JSC Lenenergo as a consumer of services of third-party grid organizations selected a single-rate tariff for calculations of the cost of services for electric power transmission for the majority of grid organizations that at simultaneous decrease in supply to network provided essential savings of expenses;
  • Lease payments decreased by RUB 679 mln, or 84.6% that is caused by termination of the validity period under lease agreements.

Financial result
Indicators for 2011-2012 are given according to the annual accounting reporting for 2013 taking into account retrospective data reflection.from electricity transmission activities

Results of financial and business activity on electricity transmission in 2011–2013, RUB mln

Indicators

2011

2012 

2013 

Change,
2013/2012, %

Revenue from electric power transmission on networks

28,475

28,816

33,207

15.2

Cost of electric power transmission on networks

30,456

32,344

35,903

11.0

Gross profit on electric power transmission on networks

– 1,981

– 3,529

– 2,696

– 23.6

Interest payable

1,167

1,788

2,217

24.0

Other expenses

1,081

830

887

6.8

Profit (loss) before tax from electric power transmission on networks

– 4,229

– 6,146

– 5,800

– 5.6

Profit tax attributed to transmission activity

383

427

646

51.5

Net profit (loss) from electric power transmission on networks

– 4,611

– 6,573

– 6,446

– 1.9

Loss on transmission in 2013

As of the end of 2013 the Company’s activities on electric power transmission are unprofitable. Since 2011 the Company has carried out transition to regulation on the method of return on invested capital (RAB regulation). Taking into account the incomplete account by the regulator of necessary expenses (generally on federal factors: JSC FGC UES fee, purchased electric power on compensation of losses), and due to application of a smoothing mechanism since 2011, the loss for 2011 on electric power transmission was higher that the loss put at regulation and totaled RUB 4,560 mln, and for 2012 the loss reached RUB 6,573 mln.

In 2013 the sum of loss on electric power transmission decreased concerning the level of previous fiscal year by RUB 127 mln. Decrease in loss on transmission is caused by revenue growth in a bigger volume than prime cost growth due to the growth of average tariff by 16.8% at decrease in transmission volumes by 394 mln kWh (1.3%). Thus expenses from profit were up due to the growth of interest payable and profit tax growth in a smaller volume than the growth of gross profit.

The reasons for loss formation from electricity transmission activities in 2013

Proceeding from the approved tariffs for 2013 losses from electricity transmission activities in the amount of RUB 1,727 mln are formed in the Company.

Financial result on the solution of regulators, RUB mln

Indicator

Leningrad Region

St. Petersburg

JSC Lenenergo, total

Own funds for investments and expenses from profit

2,879

5,629

8,508

Expenses from profit (interest on credits, social payments, dividends, other expenses)

1,281

1,811

3,092

Amortization

2,005

4,621

6,626

Own funds for investments (item 1 – item 2 – item 3)

– 407

– 803

– 1,210

Smoothing

– 245

– 1,852

– 2,096

Dropping out

177

1,403

1,579

Total loss on transmission put by regulators

– 475

– 1,252

– 1,727

Deviation of the actual indicators from the indicators considered at regulation

Indicator name

Decision deviation from the regulator, RUB mln

Leningrad Region

St. Petersburg

JSC Lenenergo, total

Revenue

360

– 3,307

– 2,947

Controllable costs

326

292

618

Uncontrollable costs

94

– 1,060

– 965

Profit tax

248

232

480

Expenses from profit

– 35

46

11

Amortization

1,186

442

1,628

Total loss gain

– 1,459

– 3,260

– 4,719

The reasons of deviations:

Decrease in sales revenue from the one considered by regulators was RUB 2,947 mln.

The main reasons are application by the Committee on tariffs of St. Petersburg in tariff rates calculations of the overestimated volume of declared capacity, deviation of the actual structure of consumption by voltage levels from the structure considered by committees at formation of the balance of electric power and capacity, change of the actual productive electricity supply relatively supply considered by committees and its half-year redistribution in 2013. Across the Leningrad Region there was an increase in revenue from the one considered by the regulator in connection with change of tariffs for electric power transmission on the group of consumers «Population» regarding an exception of a preferential type of tariff for electric power transmission pursuant to the instruction of FTS of Russia.

Growth of controllable costs as compared to those considered by regulators was RUB 618 mln.

The greatest influence was rendered by increase in repair expenses due to the growth of expenses on ensuring reliable power supply of consumers for successful passing of the autumn and winter period of 2013–14. Coordination on increase in the volume of repair work provided by regional bodies of regulation of electricity transmission tariff under condition of providing documents confirming the cost and the fact of performance of actions is received. These expenses will be considered in the subsequent periods as dropping-out unrecorded expenses.

Decrease in uncontrollable costs totaled RUB 965 mln.

The main influence was rendered by decrease in electric power transmission services by networks of third-party grid organizations for the following reasons: selection of single-rate tariffs on many network companies, disagreements regarding application of actual or declared capacity in calculations. Thus there was an increase in expenses on property tax in connection with legislation change regarding privilege cancellation on property tax.

Growth of profit tax was RUB 480 mln.

The deviation on profit tax is connected with different calculating procedures of profit tax. The regulator does not consider features of tax accounting.

Growth of expenses from profit was RUB 11 mln.

The greatest influence was rendered by formation of the reserve under conditional obligations on disagreements with third-party grid organizations.

Depreciation charges

Depreciation charges upon 2013 were RUB 1,628 mln higher than amortization considered by the regulator since at formation of a tariff projection revaluation of fixed assets for the end of 2012 carried out according to accounting policies of JSC Lenenergo was not considered, and as a result of excess of the actual input of fixed assets over the planned ones are considered reached that was a consequence of implementation of a client-focused approach.

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