On July 1st, 2006 JSC " Territorial Generating Company #2" ("TGC-2") started its operational activities as a unified Company. Vologda, Kostroma, Novgorod, Tver generating and Yaroslavl energy Company have joined "TGC-2" together with Vologda TPP. On May 3rd, 2007 Arkhangelsk generating Company was also included in "TGC" structure.

Therefore, during the past year the shaping of the Company Target Structure was finished. Another important event was the ratification by the TGC Board of Directors of the Development Strategy and the Investment Program for a medium term perspective. Considering the latest adjustments made to the cumulative amount of investment program of "TGC-2" till 2011 is evaluated to be 38 billion rubles. Over this period the Company is intending to launch in all 1145 MW of generating capacities.

The Company Investment Program is an integral part of the corporate plan for modernization and development of Russian energy sector (plan of GOELRO-2 or State Commission for electrification of Russia (SCER-2)) and was aimed at raising competitiveness
and strengthening the Company position on the heat and electricity markets. Furthermore, it takes full consideration of the energy and fuel market tendencies. The implementation of this Program will alow the Company to increase its profitability, ensure investment appeal and the increase in capitalization.

The Program implementation has already been started throughout all regions of the Company presence. In March of the current year the first of the planned launches was successfully accomplished - the new 115 MW capacity generating set was put in operation at Yaroslavl TPP-2.

The Company is intending to occupy the leading position on the heat markets in the regions of its presence, as well as to compete successfully on the electricity and capacity wholesale market. These goals can be reached by means of actively expanding the heat markets, developing cogeneration practices, introducing balanced policy on fuel markets, establishing long-term partner relations with energy consumers and resource suppliers. Realization of these goals will be facilitated by increasing the effectiveness of fuel consumption, managing value chain in order to control the price which energy consumers face, introducing modern technologies in production and management.

Reference
JSC "Territorial Generating Company # 2" (JSC "TGC-2") was established in February 2005. The Company"s Director General is Andrey Vagner. "TGC-2"comprises generating capacities of 6 regions - Arkhangelsk, Vologda, Kostroma, Novgorod, Tver andYaroslavl regions.
Since July 1st 2006 "TGC-2" functions as a unified Company. "TGC-2" operates 16 heat power stations, 8 boiler-houses, 4 enterprises of thermal networks. The aggregate electric capacity of "TGC-2" enterprises is 2 582,5 MW, the established thermal capacity constitutes 12 471 Gcal/h.