Moscow, 29 June 2007. To date, three new interregional distribution companies (IDC) have completed their registration with the authorities. OAO "Volga IDC" was registered with Saratov Region Interdistrict Inspectorate No. 8 of the Russian Federal Tax Service on 29 June, and OAO "South IDC" and OAO "Center and Privolzhye IDC" were registered on 28 June with the Leninsky District Inspectorate of the Federal Tax Service for Rostov-na-Donu and Nizhegorodsky District Inspectorate of the Federal Tax Service for Nizhny Novgorod, respectively.*

The resolution to establish the above IDCs was taken by the Board of Directors of RAO "UES of Russia" on 27 April 2007, when the Board of Directors approved the new IDC configuration providing for an increase in the number of IDCs from 4 to 11. This configuration was supported by the key minority shareholders of the distribution companies (DCs).

The new IDCs will be created based on the principle of territorial adjacency and the comparable size of assets of the distribution companies within the IDCs. Moreover, the new configuration will help preserve the existing technological links among DCs within the IDC concerned.

The new IDCs are wholly-owned subsidiaries of RAO "UES of Russia" and each IDC has the authorized capital of RUB10 million. After the registration of the new IDCs, the existing IDCs will change their names: OAO "Center and North Caucasus IDC" will change its name to OAO "Center IDC", OAO "Urals and Volga IDC" to OAO "Urals IDC", and OAO "Southern Grid Company" to OAO "North Caucasus IDC".

Currently, the IDCs operate as management companies of the DCs which belong to their configuration. The intended corporate structure of the IDCs (except for OAO "Tyumenenergo", OAO "Lenenergo" and the IDC on the basis of the Moscow City and Moscow Region grid facilities**) is expected to be achieved after the DCs merge with the respective IDCs and DC shareholders exchange their shares for shares in the IDC.

As a result of the reorganization, the IDCs will be structured as unified operating companies with a comparable market assets value, about RUB30 billion. RAO "UES of Russia" will hold at least 50% plus one share in each IDC, so as to maintain its control over the distribution companies.

The change of the IDC configuration will help create a sufficient number of large distribution companies which will compete for investment capital in the development of Russia's grid facilities.

* OAO "Volga IDC" comprises the following distribution companies: ??? "Mordovenergo", ??? "Orenburgenergo", ??? "Penzaenergo", ??? "Volga DC", and ??? "Chuvashenergo". The Company's authorized capital is RUB10 million and is divided into 100 million ordinary shares of RUB0.1. Volga IDC is headed by Director General Dmitry Ryabov.

OAO "South IDC" comprises OAO "Astrakhanenergo", OAO "Volgogradenergo", OAO "Kubanenergo", OAO "Rostovenergo", and OAO "Kalmenergo". The Company's Director General is Alexander Gavrilov.

The configuration of OAO "Center and Privolzhye IDC" includes OAO "Vladimirenergo", OAO "Ivenergo", OAO "Kalugaenergo", OAO "Kirovenergo", OAO "Marienergo", OAO "Nizhnovenergo", OAO "Ryazanenergo", OAO "Tulenergo", and OAO "Udmurtenergo". The Company's Director General is Yevgeny Ushakov.

** The decisions regarding the configuration of the IDC to be formed on the basis of the Moscow City and Moscow Region distribution grids, and the question of which IDC OAO "Yantarenergo" should belong to, are expected to be taken by the Board of Directors of RAO "UES of Russia" no later than Q3 2007.