JSC " Territorial Generating Company #2" (TGC-2) have finished shaping its Target Structure by including in it JSC "Arkhangelsk Generating Company" (AGC). On May 3, 2007 Yaroslavl Inspection of Federal Tax Service have made an entry in the Single State Register for Legal Persons about the termination of "Arkhangelsk Generating Company" activities as a result of reorganization process which took the form of AGC merger with and into TGC. Hence, AGC was transformed into Arkhangelsk TGC Central Administrative Board.

We remind that Kostroma, Novgorod, Tver generating and Yaroslavl energy companies, as well as Vologda TPP have been included in TGC-2 structure on July 1, 2006. The merger with "Arkhangelsk Generating Company" was postponed due to certain financial issues that arose within the company at that time caused by the upsurge in fuel oil prices and the discrepancy between the actual increased fuel prices and the prices envisaged in the power rates.

In order to rectify the situation, Management Boards of TGC-2 and RAO "UES of Russia" have developed the action plan and the Investment Program, which helped significantly reduce the fuel price and stabilize the fuel price for "Arkhangelsk Generating Company" power plants, bring the cost of electricity generated in line with the average wholesale market price and ensure a steady long-term position on the energy market.

The Arkhangelsk TGC Administrative Board Investment Program presupposes a planned switching of Arkhangelsk and Sverdlovsk TPP from using the expensive fuel oil for energy production to a more affordable coal already by the year 2009. Currently, the fuel oil share in the Arkhangelsk TGC Administrative Board fuel balance constitutes 65%, while by 2009 it will have dropped down to 4%. Furthermore, in 2007 Federal Tariffs Service have established heat and electricity tariffs for Arkhangelsk generating company which fully cover the increase in fuel prices. This will allow the Arkhangelsk TGC Administrative Board to become profitable already in 2007.

The creation of a unified company by means of reorganization in the form of a merger, as the company specialists believe, will help to increase the scope of TGC-2 operational activities, secure its financial stability, ensure higher credit rating and lower the cost of debt service.

Presently TGC-2 has to register the additional share issue report and also changes in its Articles of Association, entailed by the increase in the amount of authorized capital. All procedures are planned to be finalized by the mid June of the current year.
Company Profile.

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 capacity of 6 regions - Arkhangelsk, Vologda, Kostroma, Novgorod, Tver and Yaroslavl.

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 installed thermal capacity constitutes 12 471 Gcal/h.

The Authorized Capital of JSC "TGC-2" amounts to 7 117 127 045 rub. and is spread over 700 328 533 458 ordinary shares and 11 384 171 043 preferred shares with the face value of 1 kopec. The main shareholder of the company is RAO "UES of Russia" which owns 49,18% of shares.