Board of directors’ progress report
2.2.7

Efficacy enhancement

Capital construction quality control

The Company supervises construction works with a view to implement the government decree (28). To enforce control procedures, stipulated by the Russian laws on capital construction, the Company has identified resources to be used for construction control. Besides, in furtherance of the Rosseti’s Long-Term Development Program (29), regarding coverage of 70% facilities constructed under the investment program with independent construction control to comply with specifications, design documentation, reliability and security requirements, the Company engaged the following watchdogs to evaluate the facilities:

Project Watchdogs Construction period Construction quality control period
Reconstruction of 110/35/6 kV “Chusovaya” substation NIITs MRSK (АО), leader of the joint tenderer (Moscow), PMK Sibiri (ООО), leader of the joint tenderer (Krasnoyarsk) 2010 - 2016 2016 - 2016
Reconstruction of 35/6 kV “AMZ” substation NIITs MRSK (АО), leader of the joint tenderer (Moscow), PMK Sibiri (ООО), leader of the joint tenderer (Krasnoyarsk) 2016 - 2017 2016 - 2017

Enhancement of energy efficiency

During 2016 IDGC of Urals (OAO) entrenched energy-saving and enhanced efficiency practices in line with federal (30-32) and regional laws (33-35), and bylaws of the Company (36-37). Target indicators for energy-saving and enhanced efficiency, in line with the program, are energy losses occurring during network transmission and consumption of power resources for economic needs. Target values of the program are approved for 2015-2019.

Target and actual values are presented in the figure below:*

Indicator Measurement units Target 2016 Actual 2016
1 Electricity losses Million kWh 5 474,97 5 336,55
RUB million net of VAT 10 621,01 9 710,88
% of supply 7,68 7,84
2 In-house load of substations Million kWh 103,19 81,60
3 Total consumption of energy resources for economic needs of administrative and production buildings, comprising: RUB million net of VAT 325,08 296,03
Thousand tfoe 19,77 17,63
3.1 Electricity Million kWh 84,83 80,02
Thousand tfoe 10,18 9,60
RUB million net of VAT 248,25 227,62
Million kWh/m2 0,00 0,00
3.2 Thermal energy (heating system) Gcal 65 169,37 54 972,86
Thousand tfoe 9,31 7,86
RUB million net of VAT 75,51 67,68
Gcal /m3 0,06 0,05
3.3 Natural gas (including liquid gas) Thousand m3 239,95 150,58
Thousand tfoe 0,28 0,17
RUB million net of VAT 1,32 0,73
4 Total consumption of natural resources for economic needs of administrative and production buildings, comprising: RUB million net of VAT 7,20 4,82
Thousand m3 219,88 146,29
4.1 Hot water supply Thousand m3 29,96 7,67
RUB million net of VAT 0,94 0,24
4.2 Cold water supply Thousand m3 189,92 138,62
RUB million net of VAT 6,26 4,58
5 Total fuel consumption by vehicles and machinery, comprising: Thousand liters 13 392,90 12 370,14
Thousand tfoe 15,80 14,60
RUB million net of VAT 410,66 347,90
5.1 gasoline Thousand liters 7 061,02 6 454,96
Thousand tfoe 8,00 7,31
RUB million net of VAT 209,14 177,99
Thousand liters /100 km 0,02 0,02
5.2 diesel Thousand liters 6 331,88 5 915,18
Thousand tfoe 7,80 7,29
RUB million net of VAT 201,52 169,91
Thousand liters /100 km 0,03 0,03
* No other energy resources were consumed by the Company during the reported period, except for the ones shown above.

Total area of administrative and production buildings in 2016 reached 498.1 thousand m2 (515.4 thousand m2 in 2015). The program consists of sections, target and supporting subprograms, dividing into loss-reducing activities during energy transmission and distribution as well as activities to reduce consumption of power resources for economic needs of administrative and production buildings, divided into administrative and technical measures. Target activities are activities, implemented to reduce consumption of power resources (including electricity) and/or water, with return on 80% of investments within 10 years (simple pay-back period). Supporting activities dealing with optimization of in-house load and economic needs and reduction of energy losses are activities with positive energy efficiency, non-compliant with target-activities criteria.

Target and supporting activities to reduce electricity losses:

Activity type Physical effect, million kWh Economic effect, RUB million Activity-related expenses, RUB million
Target Actual Target Actual Target Actual
Target activities 34,81 79,04 87,86 161,38 3,49 5,90
Supporting activities 78,29 60,76 167,70 111,50 0,00 0,00

Core target activities to reduce electricity losses:

Activity Physical effect, million kWh Economic effect, RUB million Activity-related expenses, RUB million
Actual Actual Actual
Inclusion of unrecorded consumption of electricity into net supply 78,14 159,58 0,00
Substation heating activities: automation 0,73 1,44 5,01
Check of heating elements and disclosure of deviations of installed capacity 0,15 0,33 0,71
Substation illumination activities: replacement of lamps, installation of automated systems 0,01 0,02 0,17

As of the year-end the effect from the target activities performed to reduce electricity losses totaled 79.0 million kWh and RUB 161.4 million (net of supporting activities). The effect from the supporting activities totaled 60.8 million kWh and RUB 111.5 million. The total effect amounted to 139.8 million kWh and RUB 272.9 million.

The core target activities enforcing reduction of consumption for economic and production needs:

Physical effect, tfoe/ thousand m3 Economic effect, RUB million Activity-related expenses, RUB million
Target Actual Target Actual Target Actual
Target activities 202,82/- 841,97/14,69 4,15 14,54 94,77 18,53
Analysis of contracts dealing with public utilities services -/- 177,34/7,04 - 1,97 - -
Mounting of fiscal metering units used to record heating power and heating medium -/- 117,84/- - 1,10 - -
Enhancement of consumption discipline -/- 128,35/4,16 - 2,25 - -
Mounting of automated heating supply regulating system -/- 28,41/- - 0,25 7,68 -
Valve regulation of consumption -/- -/2,74 - 0,20 - -
Reduction of expenses on combustibles and lubricants -/- 376,06/- - 8,75 - -
Supporting activities 5,65/- 22,28/5,19 0,04 0,60 0,00 0,00

In 2016 the effect from target activities performed to reduce resources spent on economic and production needs totaled 842.0 tfoe (14.7 thousand m3 of water) worth RUB 14.5 million against RUB 202.8 tfoe worth RUB 4.2 million. Expenses on target activities totaled RUB 24.4 million net of VAT. The program was funded by the investment and repair programs (RUB 14.5 million and RUB 9.9 million respectively).

Operating efficiency and cost cutting

The Company’s enhanced operating efficiency and cost cutting program has been developed in furtherance of the Strategy for Development of the Russian Electric Grid Complex (1), Government Directive (38), stipulating 2-3% annual cuts of operating expenses as well as Strategy of Long-term Social and Economic Development of the Urals regions (the Sverdlovsk, Chelyabinsk and Perm regions). The Company’s program has been prepared factoring the IDGC of Urals’ Regulations on Enhanced Performance Efficiency and Expense Reduction (39).

The primary goal of the program is to enforce a non-stop process enhancing supply reliability and quality of services on the back of reduced operating expenses and enhanced performance efficiency. The program includes the following activities:

  • Intensification of the process liable for control over maintenance and repair of equipment, buildings and facilities;
  • Intensification of control over working capital;
  • Intensification of control over fixed assets;
  • Intensification of control over purchases and supply chains;
  • Implementation of breakthrough technologies and innovations;
  • Optimization of personnel incentive and remuneration systems;
  • Improvement of organizational and functional structure, optimization of headcount;
  • Enhancement of energy efficiency.

Under the program controlled expenses were reduced in the following aspects: rational use of fuel (RUB 20.9 million or 745 thousand liters saved) and optimization of remunerations through improved system of financial and moral encouragement and job management (RUB 64 million saved). The program also impacts uncontrollable expenses, firstly, expenses to compensate energy losses. Thus, the effect of activities under the loss reducing program totaled 133.8 million kWh or RUB 363 million. Controllable operating expenses of 2016, in furtherance of the Strategy 1 were reduced on 2012 to reach RUB 2,098 million or 21.22%. In line with the Directive (40) we updated the package of measures focusing on achievement of 2016 opex reduction indicator at -10% factoring measures stipulated by the directives (40). Actual YoY reduction of operating expenses totaled 18.6%.

Decrease of per-unit investment expenses

RUB million net of VAT 2016 target 2016 actual 2016 actual 2016 target 98 million 93 million 22,5% 22,5%
To intensify investment activities and enforce the decree (41), the Company has completed measures aimed at reduction of per-unit investment expenditures. Target effect of 2016 activities totaled RUB 93 million net of VAT (22.5%), actual effect reaching RUB 98 million net of VAT (22.5%).

Besides, as a part of control over investment program pricing and reporting analysis, the Company also enforces compliance with per-unit construction costs.

Reduction of 2016 per-unit costs on construction of aerial and cable power lines and substations against 2012 numbers are presented in the figure below:

Facility 2012 Actual (RUB thousand/km, MVA). Target 2016 Actual 2016
Physical parameters (km/MVA) Commissioning (RUB thousand, net of VAT) Per-unit indicator (RUB thousand/km, MVA) 2012 Per-unit indicator (RUB thousand/km, MVA) 2016/2012 (%) Physical parameters (km/MVA) Commissioning (RUB thousand, net of VAT) Per-unit indicator (RUB thousand/km, MVA) 2012 Per-unit indicator (RUB thousand/km, MVA) 2016/2012 (%)
1 2 3 4 5 6 7 8 9 10 11 12
Aerial power lines 3109,13 1,628 1949,0 1197,17 888,64 71% 6,35 6269,88 987,38 732,91 76%
1-20 kV power lines (MV2) 1382 1.5383 1860 1210 898.16 35.0% 6,06 5994.82 989,24 734.29 46,9%
0.4 kV power lines (LV) 1087 0,09 89 985 731,14 32.7% 0,29 275,06 948,48 704,04 35,2%
Cable power lines 4512,28 8,0 26966 3370.75 2502.03 44,6% 9,95 19335,47 1943,26 1442,44 68%
3-10 kV power lines (MV2) 4636 7,46 26095 3498 2596,49 44.0% 9,95 19335,47 1943,26 1442,44 68,0%
kV power lines (LV) 2070 0.54 871 1621 1203.23 41.9% - - - - -
Substations 5645,29 - - - - - 0,25 497,57 1990,28 1477,34 74%

Reduction of per-unit construction costs, compared to 2012 numbers (RUB thousand/ km, MVA)

6,0005,0004,0003,0002,0001,0000 Cable power lines Aerial power lines V substations 3,109.13 732.91 4,512.28 1,442.44 5,645.29 1,477.34 -76% -68% -74% 2012 actual 2016 actual
ЦЕНТР ЗАГРУЗКИ
Здесь вы можете скачать полный отчет 2016, отдельные главы в формате PDF и наиболее важные таблицы в формате Excel.
1About company
1.1Mission and strategic goals
1.2Market share
1.3Key 2016 events
2Board of directors’ progress report
2.1Letter to stockholders
2.2Production capital formation
2.2.1Network exploitation
2.2.2Electricity transmission
2.2.3Technological connection
2.2.4Development of telecommunications and IT systems
2.2.5Investments
2.2.6Innovations
2.2.7Efficacy enhancement
2.3Financial capital formation
2.3.1Analysis of revenues and expenses
2.3.2Analysis of financial standing
2.3.3Analysis of receivables and payables
2.3.4Analysis of credit portfolio
2.3.5Description of tariff policy
3Corporate governance
3.1Corporate governance practices
3.2Corporate governance system
3.2.1General meeting of stockholders
3.2.2Board of Directors
3.2.3Board of directors’ committees
3.2.4General director and executive board
3.2.5Remuneration and compensation policy
3.3Oversight system
3.3.1Board of internal auditors
3.3.2Independent auditor
3.3.3Internal control
3.3.4Risk management
3.3.5Security and anti-corruption
3.4Investor and stockholder relations
3.4.1Shareholder capital structure
3.4.2 Shareholder rights
3.4.3The company and stock market
3.4.4Communications with market participants
3.4.5FAQ
3.4.6Allocation of profit
4Stakeholder
4.1Human resources management
4.2Customer support
4.3Supplier relationship management
4.4Public and goverment relations
4.5Environment protection
5Appendices
5.1Prepared under Russian accounting standards
5.2Prepared under international financial reporting standards
5.3Related-party transaction report
5.4Corporate governance code compliance report
5.5References
5.6Abbreviations and acronyms