Mission and strategy of the company

Mission of JSC Lenenergo – ensuring reliable and uninterrupted supply of consumers with high-quality and green electric power and satisfaction of the increasing demand for electric energy and capacity.

The directions of branch development are defined by the development strategy of the power grid complex of the Russian Federation approved by the Resolution of the Government of the Russian Federation # 511-R of 04.03.2013.

Pursuant to the strategy the main objective (mission) of activity of the power grid complex is long-term ensuring of reliable, high-quality and available power supply of consumers of the Russian Federation. The branch strategy is focused on organization of network infrastructure most effective and corresponding to the international standards. Thus tariffs for electric power transmission should provide acceptable level of expenses for electric power for the Russian economy and investment appeal of the branch through adequate return on equity.

The number of key task of state policy in the field of power grid economy includes creation of economic methods of stimulation of network organizations efficiency, providing conditions for stabilization of tariffs, and attraction of new capital into the power grid complex in the volume sufficient for modernization and reconstruction of electric networks for ensuring power supply reliability.

To achieve its strategic goals the Company applies the instruments of HR, financial, corporate, investment and production policies.

Strategic tasks of the power grid complex of the Russian Federation are:

  • – competitive tariffs for electric power for industry development;
  • – ROE attractive for investors ROE;
  • – maintenance of high level of organizational, operational and investment efficiency;
  • – ensuring reliability of power supply of consumers;
  • – ensuring quality of service of consumers;
  • – development of scientific and innovative potential of the power grid complex, including for stimulation of the development of related industries;
  • – infrastructure development for maintenance of the growth of economy of Russia.

Implementation of the program on simplification of the procedure of technological connection to power supply networks of JSC Lenenergo

In compliance with the governmental road map in 2012–2013 JSC Lenenergo implemented a series of measures for simplification of technological connection procedures, development of internal, correspondence and interactive services. Among priority directions of work in the field of simplification of technological connection are:

  • regulation of business processes associated with technological connection;
  • creation of electronic archive on technological connection;
  • opening of the new client center with a qualitatively new level of service;
  • improvement of mechanisms for submitting applications for technological connection via Internet;
  • creation of the geo information system (GIS) simplifying technological connection of new facilities;
  • creation and improvement of the modern automated control system of technological connection, introduction of electronic project management systems;
  • opening of the uniform contact center, including for addresses on technological connection;
  • creation of the council of consumers of JSC Lenenergo for discussion and solution of various questions associated with technological connection;
  • approval of internal regulatory legal acts, modification of internal documents pursuant to requirements of the road map.

Road map “Increase of power infrastructure availability”

In 2012 the Government of the Russian Federation set a task in the field of improvement of conditions for business activity: to provide essential reduction of the terms of passing procedures in the areas of state regulation (including connection to networks) of the subjects of entrepreneurial activity and the cost of these procedures, including the implementation of the road maps for improvement of the investment climate in Russia.

Within the Resolution # 1144-R of 30.06.2012 the plan of measures “Increase of availability of power infrastructure” (further – the road map) which contains the actions urged to facilitate the conditions of connection of users to power infrastructure in Russia and is approved and provides:

  • – improvement of the rules of technological connection to power networks and creation of conditions of reduction of the terms and stages of technological connection;
  • – improvement of a legal mechanism of redistribution of free capacity;
  • – decrease in tariffs for technological connection;
  • – introduction of uniform standards of information disclosure on technological connection;
  • – increase of efficiency of the use of existing resources of network organizations.

By results of the executed actions in 2013 Russia managed to rise considerably in the international rating “Doing Business” on availability of power infrastructure: Russia moved from the 188th on the 117th place.

Strategy in operation

Ensuring reliable, high-quality and available power supply of consumers, ensuring non-discriminatory access of consumers to networks

Tasks

  • Decrease in the indicator of specific breakdown rate.
  • Reduction of average time of elimination of technological violations.
  • Development and implementation of the repair program.
  • Increase of serviceability of the equipment.
  • Increase of availability of network infrastructure.
  • Simplification of mechanisms of technological connection.
  • Increase of grid efficiency and controllability.

Outcomes

Ensuring reliability:
  • Implementation of the repair program since 2010 grew by 95% from RUB 770.6 mln to RUB 1,500.5 mln in 2013.
  • Cumulative financing of the repair program and the program of supplementary actions in 2013 in comparison with 2012 grew by 20%, and in comparison with 2010 financing was increased practically twice.
  • Average time of elimination of technological violations in St. Petersburg was lowered from 50.4 minutes in 2010 to 43.2 minutes in 2013.
  • The Company reduces the number of damaged cable lines. In three years the Company managed to lower this indicator from 2,100 to 600 that increased essentially reliability of power supply in St. Petersburg.
  • In 2013 JSC Lenenergo became the first company of the Rosseti holding in which the new division, the situational and analytical center for organization of effective interaction in emergency situations, was created.
Development of sales of services:
  • Productive supply of electric power (in comparable conditions without “last mile” consumers) increased since 2010 by 4%, the indicator of electric power losses was reduced by 0.85 p.p.
  • The number of applications for technological connection in 2013 increased in comparison with 2010 almost twice: by 94%, to 28,444 pieces.
  • The number of signed contracts on technological connection in 2013 increased in comparison with 2010 by 62%, to 18,066 pieces, thus the number of executed contracts grew by 77%.
  • According to the governmental road map in 2012–2013 JSC Lenenergo implemented a series of measures for simplification of procedures of technological connection
  • In 2013 JSC Lenenergo launched the project «8-800» in the Leningrad region providing technological connection without any visit of the network company.
Programs of the Company development were approved:
  • Plans of execution by JSC Lenenergo of current, accumulated and delayed obligations on technological connection towards applicants of St. Petersburg and the Leningrad Region.
  • The plan of measures on bringing the system of client service in compliance with the standard requirements “The system of centralized customer service” in the new edition.
Development of scientific and innovative capacity of the Company, contribution to innovative branch development of the power industry

Tasks

  • Introduction of new technologies, innovative products and services
  • Implementation of R&D programs.

Outcomes

  • In 2013 RUB 2,782.1 mln were directed on innovative activities in the field of power efficiency increase, actions in the field of development of innovative technologies and R&D that is by 66% higher than in the previous year.
  • The total amount of financing of R&D in 2013 totaled RUB 40.2 mln.
  • In 2013 JSC Lenenergo implemented a series of priority programs in the field of R&D, including programs “Method of laser aero-scanning of OTL 35–110 kV”, “Signaling device of relay protective automation”, “Mode of resistive grounding of a neutral of the power transformer”, “Introduction of Smart Grid”.
Formation and development of the power grid infrastructure meeting needs of the region of presence

Tasks

  • Implementation of the investment program providing development of infrastructure.
  • Implementation of programs of renovation of equipment.
  • Implementation of projects of networks development.

Outcomes

  • The volume of capital investments in 2013 in comparison with 2010 increased by 18%, thus volumes of incomplete construction decreased for 17%.
  • The plan on input of OTL and transformer capacity during 2010–2013 is exceeded on 2,059 km (827 MVA).
  • From 2010 6,647 km of OTL, 4,746 MVA were commissioned by the Company.
  • The volume of capital investments during 2010–2013 totaled RUB 64 bn.
  • The program of Renovation of CL 6–110 kV in St. Petersburg regarding commissioning of objects in operation in 2013 is executed in full.
  • In 201 the project of development of network 35 kV in the Petrograd district that is one of the largest ever project in the history of the Company was launched.
  • Regulations on investment activity of JSC Lenenergo in the new edition, and scenario conditions of formation of the investment program of JSC Lenenergo were approved.
Increase of investment appeal of the Company, promotion of the image, improvement of interaction with all stakeholders

Tasks

  • Implementation of the program of public loans.
  • Work with rating agencies.
  • Implementation of effective dividend policy.
  • Observance of principles of openness and transparency of business.

Outcomes

  • In 2013 the Company placed exchange bonds of a series BO-01 in the volume of RUB 3 bn with a maturity term of three years and registered four issues of exchange bonds of series BO-02– BO-05 in the total amount of RUB 20 bn with a maturity term of 10 years. Besides, there is the issue of a series 04 registered in 2012. The Company has proved itself as a good borrower always meeting its obligations in due time and in full.
  • In 2009 the rating agency Moody’s appropriated JSC Lenenergo with a long-term credit rating at Ba2 on the international scale. In 2013 and 2014 the rating was affirmed.
  • The Company annually pays dividends on preferred shares.
    For the first time since 2005 in 2013 dividends on ordinary shares were paid. The total size of dividends paid for 2012 amounted to 25% of the Company’s net profit calculated under RAS.
  • The Company pursues a policy of openness and transparency: in addition to mandatory information disclosure in accordance with Russian legislation the Company regularly publishes additional materials for shareholders, potential investors and all interested persons on its website.
  • The Company conducts active work for ensuring transparency of its activities, including in the field of procurements, investment activity, and technological connection
  • The following internal documents were approved and operate in the Company: the Code of Corporate Governance of JSC Lenenergo in the new edition; the Code of Corporate Conduct of JSC Lenenergo; Regulations on insider information of JSC Lenenergo in the new edition; Regulations on information policy of JSC Lenenergo in the new edition.
Maintenance of high level of operational, organizational and investment efficiency

Tasks

  • Decrease in operational expenses.
  • Reduction of investment expenses.
  • Maintenance of a comfortable level of profitability of primary activity.

Outcomes

Decrease in operational expenses:
  • The effect from implementation of the program of costs management regarding operational expenses in 2010–2013 amounted for RUB 2.1 bn.
  • In 2013 decrease in the given operational expenses in comparison with 2010 was 10.8%.
Decrease in investment expenses:
  • Specific cost of construction in 2013 decreased (CK 110 kV (HV) – by 17% in relation to 2009, in 2010 of CL 110 kV was not entered; CL 3–10 kV – by 14% in comparison with 2010; CL 0.4 kV by 35% in relation to 2009).
  • The Company supports a high level of operational efficiency: EBITDA margin for 2013 constituted 28.3% (26.8% – in 2012, 23.1% – in 2011)
  • Within introduction of the control system of production assets in 2013 the basis for Enterprise resource planning creation on the SAP platform on automation of management by processes of maintenance and repair of equipment was put which will enable to raise the urgency of data on actual state of equipment, increase efficiency of use of the funds of repair programs, and the program of modernization and reconstruction.
  • Work on increase of grid controllability proceeds, including the program of telemechanization of substations: JSC Lenenergo creates the system of online translation of all processes in the grid.
  • The following internal documents directed on ensuring high efficiency are approved and operate in the company: Regulations of JSC Lenenergo about uniform technical policy in the power grid complex; the Program of perspective development of the systems of accounting of electric power in the retail market of electric power in JSC Lenenergo networks for the period till 2017; the Program of energy saving and increase of power efficiency of JSC Lenenergo for 2013–2018; the Target Program of development of the automated system of technological management of JSC Lenenergo.

In its activity JSC Lenenergo aspires to satisfy interests of all stakeholders, including third-party grid organizations, staff, consumers, public authorities, and investment community.

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