Conference “RAO “UES of Russia” is an Open Company. On the Threshold of the Reform”

1. Conference “RAO “UES of Russia” is an Open Company. On the Threshold of the Reform” Reforming the Russian Power Sector: Principles, Methodology and Priorities Vyacheslav Synyugin Vice-Chairman of the Management Board, RAO “UES of Russia” CEO 11 December,2001 Moscow

2. Reform stages in accordance with the Russian Government’s Decree #526 as of 11 July, 2001 July 2001 June 2004 2006-2007 2009-2010 1 этап 2 этап 3 этап Elaboration of fundamental laws Laws for the market’s functioning Refining the normative acts Creation and testing of the transition model of the competitive market Establishment of the competitive market (Europe + the Urals + Siberia) Development of the competitive market Setting up of the wholesale market’s infrastructure Development of the wholesale market infrastructure Setting up of the market players Introduction of the market players to the wholesale market Establishing independent sales and retail market Preparation of the retail market Attraction of large-scale investments Restructuring of daughter companies Restructuring of UES 2001 2002 2003 2004 2005 2006 2007 2008

3. New infrastructure, organisers and market players Generating companies Commercial infrastructure Consumers under the protection of the state Administrator of Trade System Genco 1 Trade platform Power Plant 1 Accounting system Power Plant 2 Payment Chamber / Bank-commissioner Power Plant 3 Genco 2 Power Plant 4 Payments system Power Plant 1 Guarantee system Power Plant 2 Sales companies Genco 3 Power Plant 3 Technological infrastructure Power Plant 4 System Operator Power Plant 1 Dispatching of the regimes Power Plant 2 Capacity reserve Power Plant 3 Power Plant 4 National Grid Company Regional grid companies Competing consumers Distribution networks Distribution networks

4. The System Operator and the National Grid Company When the federal law «On Power Sector» is adopted till March 1, 2004 till January 1, 2006 Property of dispatcher units SO The state has a stake in the charter capital SO - System Operator The feasibility is being discussed One organisation and daughter companies No less than 51% of shares RAO “UES of Russia” Russian Federation NGC - National Grid Company NGC Main power lines

5. Operational Dispatching Unit • Hierarchy if the structure • Personal responsibility of dispatchers • Economic efficiency of teams • Unconditional execution of instructions by all the power subjects • It is necessary to secure: • safe functioning of the power sector • controlling regimes of the Unified Energy System of Russia • capacity reserve and power quality • long-term and short-term volumes of power production and consumption System Operator Federal Authority Control Specialised subjects of the operational dispatching control Administrator of Trade System

6. “Rosenergoatom” Other suppliers and big consumers Establishment of the Administrator of Trade System(the founding meeting took place on 23 November, 2002) RAO “UES of Russia” NGC Are to be set up by 01.02.2002 Nuclear generating company Administrator of Trade System SO Generation companies

7. Preparation and approval procedure of AO-energo reform projects • AO-energo reform principles: • Setting apart the grid property • Setting up of big interregional companies • Introduction of guaranteeing supplier system Draft project Applicant Project Committee RAO “UES of Russia” Application Management Board RAO “UES of Russia” Project Board of Directors RAO “UES of Russia” Project Committee RAO “UES of Russia” Reform Committee

8. The greatest priorities in the year 2002 Administrator of Trade System Market legislature Generating Companies System Operator National Grid Company