Moscow, 14 December 2006. The Sverdlovsk Region Government and RAO "UES of Russia" have signed an Agreement on interaction in investment projects to build and upgrade the power facilities in the Sverdlovsk Region until 2011. The Agreement was signed by the Moscow Region Governor Eduard Rossel and Chairman of RAO UES Management Board Anatoly Chubais.

Electricity consumption in the Sverdlovsk region has been steadily increasing over the past few years, and is expected to grow further by 5.5% annually. During the first eleven months of this year, the energy use has grown almost 4.5% compared to the same period last year. This was due to the strong growth of the region's economy and social infrastructure development in the area.

The Agreement is designed to improve the reliability of electricity supply to customers, create the conditions for new user connections to power grids and increase the capacity for the users already connected, prevent power shortages as electricity consumption grows, and ensure stability and further development of the region's economy and social infrastructure.

The Agreement envisages overall development of the generation and grid facilities in the Sverdlovsk Region on through use of advanced technologies. In particular, it includes investment projects to build 3,195 MW of generating capacity by 2015, construct different voltage substations with 4,888 MVA of transformer capacity, about 900 km of bulk transmission lines and substations with 2,700 MVA of transformer capacity, and about 1,000 km of lines in the region's distribution networks.

Under the Agreement, OAO "WGC-1" is to bring on line a 330 MW generation unit with circulating fluidized bed combustion of coal at the Verkhnetagilskaya TPP; OAO "WGC-2" is to bring on line a 330 MW pulverized-coal fired generation unit at the Serovskaya TPP; OAO "WGC-5" is to bring on line a 410 MW combined-cycle generation unit at the Sredneuralskaya TPP; OAO "TGC-9" is to put into operation the Novo-Bogoslovskaya CHPP of 1000 MW and a 600 pulverized-coal fired generation unit at the Nizhneturinskaya TPP, increase the capacity of the Novo-Sverdlovskaya CHPP by 110 MW and install a 115 MW turbine at the Nizhneturinskaya TPP.

In order to expand the Unified National Energy Grid (UNEG) facilities in the Sverdlovsk Energy System of OAO "Federal Grid Company", it is planned to build a new high-voltage transmission line 500 kV in the Servovo-Bogoslovsky energy area between the Severnaya Substation and the Bogoslovsky Aluminum Plant (BAZ) Substation, linking the Serovo-Bogoslovsky and Bereznikovsko-Solikamsky energy areas (Perm Energy System), and expand the autotransformer capacity of 500/220 kV at the BAZ Substation. It is also planned to build the Sosva Substation (500 kV) with HV links to the Tagil Substation and BAZ Substation of 500 kV. The task of ensuring reliable energy supplies in the Vostochny and Pervouralsky energy areas of the Sverdlovsk Energy System will be addressed through enhancing the 220 kV grid and increasing the autotransformer capacity of 500/220 kV (construction of the Yemelino Substation of 500 kV with HV links to the Votkinskaya HPP Substation (500 kV) and the Yuzhnaya Substation.

The investment projects will be implemented with using, to the maximum extent possible, the design, R&M, construction and installation and power engineering enterprises in the Sverdlovsk Region which have the necessary resources.

The cost of the projects to be implemented under the Agreement is estimated at over RUB153 billion, of which RUB111.7 billion will be used to expand generation capacity and RUB41.6 billion will be invested in power grid facilities.

The projects will be financed with own and borrowed funds of RAO UES companies operating in the Sverdlovsk Region, including the proceeds from share offerings by generation companies, connection charges by grid companies, moneys from the federal budget and regional budgets, off-budget sources, and private investments. The project to build the 300 MW pulverized coal combustion unit at the Serovskaya TPP will be implemented using the investment guarantee mechanism, with investors to be selected through a tender process.

The Agreement between the Sverdlovsk Region Government and RAO "UES of Russia" provides for various forms of assistance within their competence in the investment process.

In order to ensure financing for projects in the region's distribution grids, the regional government intends to review the question of approving the economically justified connection charge for new users in the region.

The Sverdlovsk Region Government and RAO "UES of Russia" will produce a forecast of electricity consumption and load growth with a breakdown by network nodes in the region and the city of Yekaterinburg until 2020, including the available information on the place and timing of the expected connection of major energy users to the common power grid. This forecast will serve as a basis for drafting a new long-term general plan for the development of power grids and generation capacity, which is part of the Programme for the UES of Russia Development.

The Agreement also provides that the companies engaged in the investment projects in the Sverdlovsk Region will have the assistance of the regional authorities in approving decisions regarding the location of energy facilities.