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

2 Reform stages in accordance with the Russian Government’s Decree #526 as of 11 July, July 2001June Establishment of the competitive market (Europe + the Urals + Siberia) Elaboration of fundamental laws Creation and testing of the transition model of the competitive market Restructuring of daughter companies Setting up of the market players Setting up of the wholesale market’s infrastructure Restructuring of UES Establishing independent sales and retail market Development of the wholesale market infrastructure Introduction of the market players to the wholesale market Attraction of large-scale investments 1 этап2 этап 3 этап Laws for the market’s functioning Refining the normative acts Development of the competitive market Preparation of the retail market

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

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

5 Specialised subjects of the operational dispatching control Operational Dispatching Unit System Operator 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 Administrator of Trade System Federal Authority Control

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

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

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