Board of directors’ progress report
2.2.1

Network exploitation

2014-2016 timeline of the Company’s core production assets:

Assets M.u. 2014 2015 2016
6-220 kV substations pcs 31 103 31 716 32 068
Total capacity installed MVA 30 167 30 393 30 611
35-220 kV substations pcs 1 042 1 042 1 048
MVA 21 612 21 639 21 738
6-10(35)/0.4 kV transformer substations pcs 30 041 30 658 31 002
MVA 8 555 8 754 8 873
6-10 kV distribution stations pcs 20 16 18
0.4-10 kV aerial power lines km 117 943 119 251 120 206
220 kV and over 220 kV km 27 27 27
110-150 kV km 18 105 18 138 18 131
35 kV km 8 109 8 059 8 061
6-10 kV km 50 548 50 831 51 004
0.4 kV km 41 154 42 196 42 983
0.4-110 kV cable power lines km 6 103 6 365 6 476
220 kV and over 220 kV km - - -
110 kV km 68 76 77
35 kV km 109 110 110
6-10 kV km 3 500 3 662 3 736
0.4 kV km 2 426 2 517 2 553

Build-up of the Production Asset Management System (schedule period for implementation: 2016-2018)

The Production Asset Management System (PAMS) is a control system for asset management, liable for generation of management policy, goals and processes. The system regulates and coordinates performance of the Company, managing physical assets and performance profile in such a manner so as to find appropriate balance between costs and regulatory compliance and reach strategic targets.

Key goals are:

  • Integration of existing metering devices into the centralized system.
  • Intensification of production-related operating and investment expenses;
  • Securing a long-term transparent tariff mechanism, based on Reliability/Expenses ratio;
  • Control over achievement of a specified supply reliability.

Key objectives:

  • Development and alignment of organizational and regulatory base for production asset management;
  • Liberalization of regulatory and technical documentation regarding changes in facility repair and maintenance cycles depending on health of equipment and power lines;
  • Coherent transition from the plan-and-prevent system to the system of health-based asset management, with allowances made for breakage risks;
  • Automation of the PAMS core and supporting processes.

Target goal:

  • Rationalization of investment decisions, enhancement of return on investments and efficient enforcement of cost allocation, evaluation of risks, network development prospects, load and equipment life;
  • Cutdown of the Company’s material losses, driven by decreased recovery and unscheduled works, emergency destocking, optimization of the man-loading schedule;
  • Enforcement of operational transparency;
  • Increased fidelity of data on asset health, flexibility and availability of third-party information.

In 2016 we have launched the following functions of the “Repair and Maintenance” process control system:

  • Scheduling of repair program works and resources;
  • Calculation of repair program expenses;
  • Planning of physical quantity, expenses and resources for maintenance, diagnostics, expert examination and survey.

Repair orders for the 2017 repair program were generated in the “Repair and Maintenance” process control system with due regard to equipment health and breakage consequences. The share of the core equipment, covered by the 2017 repair program, totaled 100%. Repair programs of the branches are prepared with the aid of the single material and equipment guide. Motor vehicles, buildings and installations were classified in line with single classifiers and guides. Implementation of the “Repair and Maintenance” process control system enforces feasibility of decisions, quick access to sources information, enhanced planning quality, oversight of resource use, analysis of planning quality and expenditures.

System-to-system integration:

  1. Automation of digital certification of substations and power lines to be used by the geographical information system (GIS).
  2. Integration of the PAMS with “Incidents” software solution.
  3. Design of the equipment defect register, implemented in line with the Rosseti’s typical specification for defect register automation.

The integration enables:

  • a)to display data in the shared system;
  • b)to record technological disturbances and technical arrangements carried on the equipment, fostering better quality of the repair and maintenance program scheduling;
  • c)to form reports on investigation of technological disturbances, based on the PAMS data base and on-line information transmission;
  • d)to avoid manual data input and data redundancy in several information systems;
  • e)to minimize influence of human factors on data transfer.

Reports on weekly and quarterly repair and maintenance plans are generated automatically upon orders helping minimize human factors and burden and enhance data integrity. As of the year-end the automated reporting service has been running in a test mode.

The launch of the system and transition to scheduling of equipment impacts factoring health of equipment and consequences of breakage will intensify technical impacts and maintain equipment on the back of optimal spending. As of 01.01.2017:
  • 2,258,392 core equipment units have been digitally certified;
  • HIC (Health Index Calculation) service for substations and relevant equipment has been launched, the index being applied to 72,325 equipment units;
  • Network topology has been formed;
  • Prioritizing registers on 10,725 equipment units have been formed;
  • Breakage Consequences Evaluation Methodology have been implemented;
  • The 2017 repair program has been formed by the “Repair and Maintenance” process control system.

Repair program

RUB million Target value Real value Percentage completion
Permenergo branch 681 719 106%
Sverdlovenergo branch 572 582 102%
Chelyabenergo branch 456 473 104%
The repair target value for 2016 was RUB 1,711 million. Real expenses in 2016 totaled RUB 1,779 million or 104% on the targets. The overrun was mainly influenced by recovery and unscheduled works.

Total repair costs of the Company’s branches in 2016 totaled RUB 379 million or 21% (outsourcing) and RUB 1,400 million or 79% (in-house).

Description 2012 2013 2014 2015 2016
Power line overhaul, km 10 400 11 300 10 582 10 420 10 201
Power line corridor clearing, ha 7 178 7 407 11 625 11 414 10 825
Transformer overhaul, pcs. 54 55 40 33 41
Switching unit overhaul, pcs 3 370 3 462 3 216 3 125 2 966

Repair scope was impacted by habitual activities based on repair cycles. We intensified power line corridor clearing since 2014 to end up with 5.5-year clearing cycle. The repair target value for 2017 is RUB 1,809 million or +2% YoY, with RUB 1,401 million (77%) to be spent on in-house works and RUB 408 million (23%) to be spent on outsourcing.

Adaption to special period operations

With a view to provide stable operations of the grid facilities during the thunderstorm season the Company issued the decree (6) stipulating a package of compulsory and supportive measures to be enforced. The decree covered 9 organizational measures, 11 technical arrangements and 16 measures to increase lightning-surge proofness of the grid facilities to be implemented during the year. To ease negative impacts of thunder strokes on substations and consumer equipment our plans were to continue clearing and widening of the corridors, to replace defective ground wires, porcelain and defective insulators, bare cable (for SIP), valve-type arresters (for surge suppressors) and to conduct thermovision and ultraviolet inspections of suspended insulation. All scheduled compulsory and supportive measures were completed.

With a view to provide stable operations of the grid facilities during the flood period the Company issued the decree (7) and prepared registers of 35-110kV substations, sections of 6-110 kV aerial and cable power lines transformers, located in flood hazard zones, and grid facilities to be potentially cut off by the flood water from the road infrastructure.

30 substations, 16 distribution stations, 98 transformer substations, 2 buildings, 10 cable power lines (3 cable power lines and 7 cable ducts), 765 0.4-10 kV aerial power lines, 265 35-110 kV aerial power lines were registered as equipment under extreme danger. We enhanced monitoring of these facilities until the flood water subsided. We scheduled 28 compulsory measures and 741 supportive measures to provide stable operations of the grid facilities during the flood period. All measures were completed on time.

With a view to provide stable operations of the grid facilities during the fire season the Company issued the decree (8) stipulating 88 organizational and technical arrangements to enforce fire safety. All measures were completed. During the fire season our branches have not introduced special fire-related modes of operations. Analysis of incidents, compared YoY, demonstrates plateauing of fire events covered by incident investigation reports.

2016/2017 autumn-winter operations mirrored the previous periods, all systems operated within the normal organizational and technical range. The weather conditions were stable and had no serious impact on operations of the Company’s grid facilities. The Company’s personnel showed excellent abilities and skills to recover damaged facilities within the minimum period of time.

All resources and means of the Company’s recovery subsystem were used to provide stable 2015/2016 autumn-winter operations. All material resources were used to achieve the set objectives. Control bodies, recovery forces, equipped with vehicles, equipment and telecommunication means have coped with the tasks. Technical disturbances of 2015/2016 autumn-winter operations decreased 34.1% YoY. All branches of the Company and EESK reported disturbance quantity reduction, with maximum technological disturbance decrease of 40.5% in our Chelyabenergo branch.

During the reported period every operating employee had quarterly emergency response drills. All scheduled drills were conducted. Alongside with this, backup power stations underwent equipment operation tests.

Recovery resources of the Company are presented below:

  1. Mobile recovery teams, able to travel long distances (up to 1,500 km) to neighboring production units, branches, EESK, IDGCs, energy systems: 51 teams (287 workers and 106 vehicles and machinery).
  2. Own recovery teams in production units:
    • 662 teams (3,350 workers, 1,451 vehicle and machinery);
    • 190 “on duty” teams (630 workers, 185 vehicle and machinery);
  3. Outsourcing teams:
    • 125 teams (1,251 workers, 245 vehicle and machinery).
  4. Backup power stations owned by the Company: 56 stations with capacity of ≥ 30 kW.
  5. Emergency supply: fully stocked, overall value of RUB 268.236 million. We have all required equipment and materials to restore power lines of any voltage class, substations, transformers, RPA and DOCS devices.

Property portfolio management:

Physical terms: Aerial and cable power lines (km); substations and other facilities (pcs) Book (residual) value as of 01.01.2016 (RUB thousand) In 01.01.2016 -31.12.2016 (RUB thousand) Out 01.01.2016 - 31.12.2016 (RUB thousand) Charged amortization 01.01.2016 - 31.12.2016 (RUB thousand) Book (residual) value as of 31.12.2016 (RUB thousand)
Assets, classified as grid facilities, namely: - 43 005 358 6 360 160 78 275 5 092 494 44 194 749
220 kV and above aerial power lines 49 221 591 0 0 50 177 171 414
110 kV aerial power lines 25 976 8 981 514 510 844 2 201 825 470 8 664 687
35 kV aerial power lines 9 228 1 238 382 71 953 138 117 455 1 192 742
10 Kv and below aerial power lines 94 138 7 874 753 2 615 995 24 942 2 028 822 8 436 984
220 kV and above substations 3 293 376 0 0 46 768 246 608
110 kV substations 636 5 055 903 389 630 10 456 613 514 4 821 563
35 kV substations 409 824 232 114 321 270 113 854 824 429
10 kV and below substations 30 749 5 978 750 2 139 398 17 028 718 658 7 382 462
Cable power lines (all voltage classes) 6 476 6 438 898 122 629 7 636 237 287 6 316 604
Cable power lines (all voltage classes) - 6 097 959 395 390 15 604 340 489 6 137 256
Non-core assets enlisted in the non-core asset register 44 136 672 6 295 4 044 3 991 134 933
Other assets, namely: - 4 860 156 573 974 51 765 1 019 830 4 362 534
Owned land plots 465 79 352 568 0 0 79 920
Fixed assets (line in the balance sheet) - 48 002 186 6 940 429 134 084 6 116 315 48 692 216
Rented assets, classified as grid facilities, namely: - 1 602 014 2 564 368 1 111 793 1 300 3 053 289
220 kV and above aerial power lines 3 1 254 0 0 0 1 254
110 kV aerial power lines 93 7 815 27 910 7 678 0 28 047
35 kV aerial power lines 46 2 076 0 0 20 2 056
10 Kv and below aerial power lines 4 776 248 557 60 999 35 266 353 273 937
220 kV and above substations 1 26 116 123 0 0 116 149
110 kV substations 19 31 418 101 833 0 0 133 251
35 kV substations 7 369 0 0 21 348
10 kV and below substations 2 124 888 355 1 894 501 959 713 582 1 822 561
Cable power lines (all voltage classes) 2 577 312 621 140 964 87 450 206 365 929
Other rented assets, designed for electric connection - 109 522 222 038 21 686 118 309 756
Other rented assets, namely: - 4 219 268 860 427 369 615 0 4 710 080
Land plots 23 762 3 484 267 831 998 324 508 0 3 991 757
Assets, used under leasing agreements, classified as grid facilities, namely: - 0 0 0 0 0
220 kV and above aerial power lines - - - - - 0
110 kV aerial power lines - - - - - 0
35 kV aerial power lines - - - - - 0
10 Kv and below aerial power lines - - - - - 0
220 kV and above substations - - - - - 0
110 kV substations - - - - - 0
35 kV substations - - - - - 0
10 kV and below substations - - - - - 0
Cable power lines (all voltage classes) - - - - - 0
Other assets, used under leasing agreements, designed for electric connection - - - - - 0
Other assets, used under leasing agreements - - - - - 0
Total rented assets, including those used under leasing agreements - 5 821 282 3 424 795 1 481 408 1 300 7 763 369

Sale of non-core assets:

Asset Book value, RUB thousand Real sales value, RUB thousand Spread, RUB thousand Factors of the spread between the real sales value and book value of the asset
Apartment located at: 6-38 Ulitsa Bankovskaya, Artemovsky, the Sverdlovsk region 481,53 363,60 -117,93 The sales value was determined with allowances for discounts, compliant with the Company’s Regulations on Management of Housing and Utilities Facilities
Karat motor vessel 3 562,00 2 161,78 -1 400,22 The sales value was defined as a result of the sale arranged as a public offer.
1-story all-brick garage located at Kizel 0,00 270,18 270,18 The sales value was defined as a result of the sale arranged as a public offer.
Energy Service Company of the Urals (100% of the charter capital) 5 000,00 0,00 -5 000,00 The asset was struck off the Company’s balance sheet as it completed its voluntary liquidation and expulsion from the USRLE
Insurance Company “The Ring of the Urals” (7.4% interest) 0,00 0,00 0,00 The asset was struck off the Company’s balance sheet as it completed its voluntary liquidation and expulsion from the USRLE

Consolidation of grid assets:

The 2016-2018 Grid Asset Consolidation Program of the Company was adopted by the Board of Directors (9). The aim of the program is to shape a united grid area on the territory of the Company’s operations and create single point of responsibility for reliable and high quality electricity supply and connection of new consumers to the consolidated networks. Rental contracts, voluntary transfer of ownership or free use and other kinds of consolidation were primary means of grid asset consolidation in 2016.

Implementation of the program is presented by the figure below:

2014 г. 2015 г. 2016 г.
Consolidation of grid assets Consolidation of grid assets Consolidation of grid assets
MVA Km c.u. MVA Km c.u. MVA Km c.u.
IDGC of Urals, namely: 1 557 4 321 28 728 1 684 4 806 31 321 2 158 5 666 38 232
Acquisition of grid facilities 40 22 305 6 29 183 34 40 352
Rented grid facilities 1 482 3 345 23 776 1 649 3 832 26 587 2 103 5 397 37 243
Other (permanent rights of ownership and use) 6 41 112 0 3 9 13 103 329
Other (temporary rights of ownership and use) 29 913 4 535 29 942 4 543 8 126 308
Sverdlovenergo branch 607 1 698 12 976 560 1 711 12 712 526 2 236 16 491
Acquisition of grid facilities 40 22 305 5 28 123 32 0 279
Rented grid facilities 567 1 653 12 620 555 1 683 12 589 489 2 205 16 109
Other (permanent rights of ownership and use) - 23 51 - - - 5 20 78
Other (temporary rights of ownership and use) - - - - - - 0 11 25
Permenergo branch 916 1 797 13 339 1 095 2 267 16 154 1 284 2 408 18 138
Acquisition of grid facilities - - - 1,3 1,1 60,0 0 37 48
Rented grid facilities 887 883 8 799 1 065 1 324 11 552 1 281 2 319 17 953
Other (permanent rights of ownership and use) 0,4 1,0 5,2 - - - 3 52 137
Other (temporary rights of ownership and use) 29 913 4 535 29 942 4 543 0 0 0
Chelyabenergo branch 34 826 2 412 28 828 2 455 348 1 022 3 603
Acquisition of grid facilities - - - - - - 2 3 25
Rented grid facilities 28 809 2 356 28 825 2 446 333 873 3 181
Other (permanent rights of ownership and use) 5 17 56 0,04 3 9 5 31 114
Other (temporary rights of ownership and use) - - - - - - 8 115 283
NOTES:
Acquisition – all grid assets acquired during the reported period;
Rentals – all grid assets, rented as of the year-end (i.e. all running contracts, incl. contracts concluded earlier, transactions in force as of the year-end);
Other (permanent rights of ownership and use) - all property acquired during the calendar period;
Other (temporary rights of ownership and use) – all running contracts as of the year-end, incl. contracts concluded earlier.

During the reported period we have closed a number of deals to improve operability of grid facilities and to lessen future connection costs. In the course of interaction with proprietors or other legal owners of network facilities, inconsistent with the RGO criteria embodied by the government decree (10) (with regard to the transfer of grid asset management functions), we analyzed consolidation of these assets in terms of feasibility, found a range of network assets attractive to us and negotiated consolidation prospects with the owners. Some of the assets owned by the RGOs were consolidated. Prevailing part of proprietors intends to reap benefits as RGOs further on, presenting inconsistent conditions for asset transfer.

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