Moscow, 7 October 2006. An All-Russia meeting of General Directors of RAO UES companies was held on 6-7 October 2006 in Moscow to discuss the progress in the energy companies' preparations for the 2006/2007 autumn and winter period. The event was presided by Chairman of the Management Board of RAO "UES of Russia" Anatoly Chubais. The Meeting was attended by RAO UES top managers and companies' CEOs.

The items on the agenda included preparations for the forthcoming autumn and winter period and operation during the peak loads in 2007-2011 with electricity use rapidly growing in Russia. In the first 9 months of 2006 alone, electricity consumption grew by 4.6% to 697.4 billion kWh, which is more than double the energy balance targets approved by the Russian regulators for the entire 2006.

Currently, RAO UES entities are preparing for the 2006/2007 autumn and winter period in accordance with the schedule, which means that the equipment repair and maintenance and fuel stockpiling process is in line with the regulatory requirements. However, the situation is aggravated by the escalation of the fuel, materials and equipment prices, which grow at a faster rate compared to fixed electricity and heat tariffs.

The lower water inflow levels in the rivers of the European part of Russia has led to reduced hydro generation, which is why the bulk of electricity supply comes from the thermal power plants of RAO "UES of Russia". The TPPs generated 409.2 billion kWh in 9M 2006, up 7.4% compared to the same period the year before.

The targets for fuel stockpiling inventories have been raised for thermal power plants as a measure to ensure the plants' reliable operation during the autumn and winter period and meet the increasing energy use. The power plants are expected to procure an additional 29 million tonnes of coal of and 8.3 million tonnes of fuel oil. This will result in extra costs of RUB22.9 billion.

RAO "UES of Russia" pays special attention to the winter preparations at the 16 energy systems in the so-called "peak load areas" (PLAs)* as per the list approved by order of RAO "UES of Russia". These energy systems face the possibility of electricity capacity shortfalls during the morning and evening load peaks.

In order to prevent emergencies in the PLA energy systems, power supply may be restricted to some industrial consumers. The lists of facilities affected by such restrictions, as well as the scope of the restrictions, is to be agreed with the local authorities and managers of the business entities concerned. The restrictions will not affect residential consumers, hospitals, schools, kindergartens, social facilities, critical infrastructure and strategic enterprises.

As a measure to meet the powers shortages in the PLAs, RAO "UES of Russia" is reviewing its export-import strategy to prioritize electricity supplies within the country. In particular, electricity imports into the UES of Russia may be increased in Q4 2006 and Q1 2007 along with reductions of electricity exports during the periods of peak load in the UES. RAO "UES of Russia" has set up a Working Group responsible for negotiations with the electricity producers based in the countries whose energy systems operate in parallel with the UES of Russia.

Also, the event participants discussed the implementation of the RAO UES Investment Programme and the mechanisms for attracting investments needed to develop the electricity industry in Russia.

They reviewed the first results of the new liberalized model of the wholesale and retail electricity markets introduced on 1 September 2006.

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