Moscow, 25 March 2005. At its regular meeting held today, the Board of Directors of RAO "UES of Russia" approved the agenda of the Annual General Meeting of the Company. The agenda has been prepared in accordance with the requirements of Article 47 of the Federal Law On Joint Stock Companies and shareholder proposals.

It includes the following items of business:

• Approval of the Annual Report of RAO "UES of Russia" for 2004, the annual financial statements, including the profit and loss account (income statement), and allocation of profit and loss based on the financial year results.
• Payment of dividends.
• Approval of amendments and additions to the Charter of RAO "UES of Russia".
• Approval of amendments to the Company's regulations governing the activities of its management bodies.
• Approval of the appointment of the Auditors of RAO "UES of Russia".
• Election of members of the Board of Directors of RAO "UES of Russia".
• Election of members of the Audit Commission of RAO "UES of Russia".

The Board of Directors of RAO "UES of Russia" also approved the venue, date, and time of the AGM.

Pursuant to Article 10.1 of the Charter of RAO "UES of Russia", with account taken of shareholder proposals, the Board set 29 June 2005 as the date for the AGM.

The AGM venue selected by the Board is the Zelenograd Palace of Culture, located in Zelenograd (Administrative District of Moscow), Russia.

This resolution was taken pursuant to the requirements of Article p.2.9. of the Regulation on Additional Requirements to the Procedure for Preparation, Convocation and Conduct of a General Meeting of Shareholders approved by the Resolution of the Federal Securities Market Commission of Russia dated 31 May 2002, and for reasons of fair price for good quality of the premises rented for the AGM. The Meeting starts at 11:00.

The Board fixed 10 May 2005 as the record date for making a list of persons entitled, under the laws of the Russian Federation, to take part in the AGM. Pursuant to Clauses 5.6. and 5.6.1. of Article 5 of the Charter of RAO "UES of Russia", holders of preferred shares are not entitled to vote at the Meeting.

The Board of Directors of RAO "UES of Russia" approved the structure of the 2004 Annual Report of RAO "UES of Russia" and gave the Management Board of RAO "UES of Russia" a task to prepare a draft of the Company's Annual Report and submit it for consideration by the Board of Directors at the Board meeting to be held on 27 May 2005.

* * *

The Board of Directors took a decision to create a Personnel and Remunerations Committee under the Board.

The Board of Directors elected Andrey Bugrov, Board member of RAO "UES of Russia" and Management Director of Interros Holding Company, as the Committee Chairman. The Board commissioned the Chairman of the Personnel and Remunerations Committee to nominate candidates to the Committee for approval by the Board of Directors.

The creation of the Personnel and Remunerations Committee under the Board of Directors of RAO "UES of Russia" was initiated by members of the Board of Directors. The Committee, created in accordance with the requirements of the Federal Service for Financial Markets of Russia, is to enhance the corporate governance standards at the Company. Pursuant to the order of the Federal Service for the Financial Markets On the Approval of the Regulation on the Organization of Trading on the Securities Market dated December 15, 2004, the establishment of such a Committee under the Board of Directors is a prerequisite for the Issuer's shares to be included in the "A" quotation lists of a stock exchange. If this requirement is not complied with, the Issuer's shares will be delisted.

The functions of the Personnel and Remunerations Committee will include working out the principles and criteria for determining the amount of remuneration and incentives to members of the Board of Directors, Chairman and members of the Management Board.

The Board commissioned the Committee Chairman Andrey Bugrov to submit for approval by the Board nominations for the Committee members, Committee Secretary, and the reviewed Regulation on the Personnel and Remunerations Committee.

* * *

The Board of Directors heard a report on the proposals made by the Company's management designed to address the issue of cross-subsidization.

The existing system of cross-subsidization is based on the fact that the consumers subsidizing and being subsidized within one region are served by one energy company (regional energo), which uses the funds received from large consumers to compensate the expenses on the supply of power to households. The regional energo provides an all-inclusive energy supply service, not broken down into the power grid, retail, and generation components.

In the course of reorganization of RAO "UES of Russia", regional energos will be unbundled into generation, power grid, retail, and other companies with their own, transparent rates. Moreover, as the liberalized electricity market evolves, the subsidizing consumers will granted an opportunity for free access to the wholesale market, with energy retail companies emerging after the liberalization of the retail market. Because of the absence of a single energy supply company serving all consumers in the area, it will no longer be possible to use the current method of cross-subsidization.

However, a one-time removal of cross-subsidization may lead to an increase in electricity rates for households, as electricity prices for households in 2005 are on the average two times lower than the economically feasible level. In this connection, the energy rates for households should be gradually brought to the economically justified level, providing for measures to protect the socially vulnerable groups of the population.

The Board of Directors noted the conclusions on the need to preserve the existing cross-subsidization mechanism in 2005. This year, the existing mechanism should be preserved, in particular, through imposing limiting conditions for large consumers' access to the wholesale market, such as compensation of possible losses suffered by energy retail due to the need to sell electricity to households at lower prices.

At the same time, the Board of Directors agreed that it would be necessary (as preparatory measures for the launch of a new model of the wholesale electricity market in 2006, granting, in particular, major buyers a free access to the wholesale market) to implement the following decisions on the state level:

• introducing a social norm of electricity consumption, within which households will receive electricity at reduced rates, with the consumption in excess of such norm to be charged at economically justified rates;
• introducing a new mechanism for cross-subsidization which would ensure its "legitimisation" (currently, cross-subsidization is practically not covered by laws and regulations), identifying the new sources for cross-subsidization that take into account the changes in the sector structure and market model.

Higher electricity rates as a result of the removal of cross-subsidization should be compensated by government support targeting the most socially vulnerable households.

The Board of Directors noted the information on the possible ways of altering the cross-subsidization mechanism, stating that it would be more advisable to impose a special non-tax levy on participants of the wholesale electricity market, which would serve as a legitimate source of compensation to energy suppliers for the reduced rates charged to households.

* * *

Board of Directors of RAO "UES of Russia" approved the revised Dividend Policy Principles for subsidiaries and dependent companies (SDCs)—regional energos, AO-power plants, OAO "UES FGC", OAO "UES SO-CDA", and generation companies and grid companies established in the course of reorganization.

These changes are designed to equalize the dividend load on those SDCs of RAO "UES of Russia" that have preferred shares. The need for such changes is due to the fact that in 2004, when calculating the dividends to be paid by the SDCs of RAO "UES of Russia" in respect of 2003, the SDCs which have preferred shares had a higher dividend load than those SDCs that have only ordinary shares.

The amendments to the previous Dividend Policy Principles involve a change to the algorithm used in the calculation of the total dividend amount. Under the current Principles, RAO "UES of Russia" calculates the amount of dividends for ordinary shares depending on the amount of EBITDA’* and based on the analysis of the financial position of the SDC concerned. Then the amount of dividends on ordinary shares will be added to the amount of dividends on preferred shares calculated in accordance with the SDC's Charter. As a result—all other things being equal—the total amount of dividends paid by the SDCs of RAO "UES of Russia" that have preferred shares is much greater than the dividend amount paid by the SDCs which have only ordinary shares.

Under the revised Principles, RAO "UES of Russia" will make an initial calculation of the total amount of dividends depending on the EBITDA’, after analyzing the financial position of the SDC concerned. Then the dividend amount for preferred shares calculated in accordance with the SDC Charter will be subtracted from the total amount of dividends. The balance of funds will be used to pay dividends on ordinary shares.

The revised Dividend Policy Principles of RAO "UES of Russia" will be used to calculate dividend amounts not only for the reporting financial year, but also dividends for the first quarter, first half, and first nine months of the financial year. The calculation of interim dividends may take into account the forecast values of the indicators used in the Dividend Calculation Methodology at SDCs of RAO "UES of Russia". However, the amount of the interim dividends may not be higher than the net profit received in the reporting period.

The Board of Directors also approved the Dividend Policy Principles for the SDCs engaged in energy repairs, research and development, trading, and energy marketing.

The dividend calculation for such companies will be based on the net profit for the reporting period, and not EBITDA’. The financial position calculation procedure has been simplified: it is determined through analysis of the quick ratio and equity ratio, while previously, it was calculated on the basis of 10 different indicators. The intervals of values of the equity ratio for SDCs engaged in trading and energy marketing will be reduced compared to the values of the equity ratio for R&D institutes and R&M companies. This can be explained by the fact that the activities of energy retail companies involve extensive use of borrowed funds, which results in a lower value of this ratio at energy retail companies compared to regional energos, given equally stable financial position.

Meanwhile, RAO "UES of Russia" uses uniform general principles for its dividend policy with regard to the SDCs.

* EBITDA’ is EBITDA minus interest and income tax. EBITDA means earnings before interest, taxes, depreciation and amortization.

* * *

The Board of Directors made some changes to its resolution of 28 September 2001 On Adjusting the Credit Policy Principles of RAO "UES of Russia" (as amended by the resolution of the Board of Directors dated 30 January 2004).

In connection with changes in the composition of the Management Board of RAO "UES of Russia", the Board of Directors included Yakov Urinson, Deputy Chairman of the Management Board, Head of the Corporate Center of RAO "UES of Russia", on the list of persons authorized to raise loans and grant surety for subsidiaries and dependent companies within the established limits, and removed from said list Leonid Melamed, ex-First Deputy Chairman of the Management Board of RAO "UES of Russia". Thus, pursuant to the decision of the Board of Directors, the authority relating to the credit policy of RAO "UES of Russia" is delegated to the Chairman of the Management Board Anatoly Chubais, Deputy Chairman of the Management Board, Head of the Corporate Center Yakov Urinson, and the member of the Management Board, Financial Director of RAO "UES of Russia" Dmitry Zhurba.

The Board of Directors extended the maximum term of the powers granted to the management relating to the implementation of the Company's credit policy to the extent of liabilities undertaken by the Company until 1 January 2007.

This is due to the fact that in 2005, it is planned to raise loans to finance the completion of some top priority energy projects (OAO "Bureyskaya HPP", OAO "Boguchanskaya HPP", OAO "Kaliningradskaya TPP-2", OAO "Sulakenergo", OAO "Zelenchukskie HPP", and OAO "Ivanovskie CCGTs"). These loans will mature in Q2-Q4 2006. The maturity dates are beyond the maximum term for the liabilities undertaken by the Company ( 1 April 2006) established by the previous decision of the Board of Directors.

* * *

The Board of Directors of RAO "UES of Russia" approved the plan for the rehabilitation and restructuring of OAO "Ingushenergo", OAO "Kabbalkenergo", OAO "Karachaevo-Cherkesskenergo", OAO "Sevkavkazenergo", which are run by OAO "Caucasian Energy Management Company" (OAO "CEMC").

The plan describes the mechanisms to be used for the financial restructuring of said regional energos. Its principal goal is to carry out legal procedures needed to unbundle electricity generation, transmission, and marketing activities of the regional energos managed by OAO "CEMC", to settle their debts owed to OAO "Stavropolskaya TPP", OAO "Nevinnomysskaya TPP", OAO "Novocherkasskaya TPP", and to carry out a simultaneous spin-off of the hydrogeneration assets of OAO "Kabbalkenergo", OAO "Karachaevo-Cherkesskenergo", OAO "Sevkavkazenergo"in order to ensure the subsequent transfer of these assets to the Wholesale Hydrogeneration Company (OAO "HydroWGC"). Besides, implementation of this project will help repay the debts owed by the above regional energos to Rosenergoatom.

* * *

The Board of Directors commissioned its representatives on the Boards of Directors and at shareholder meetings of OAO "Heat Energy Company" and OAO "Electricity Grid Company" to vote FOR the approval of all resolutions needed to implement the restructuring plan of the energy complex in Belgorod Region.

This project is being implemented pursuant to the Agreement between the Belgorod Region Administration and RAO "UES of Russia" dated 7 August 2003 and the resolutions of the Board of Directors of RAO "UES of Russia" dated 9 November 2001, 21 June 2002, and 26 September 2003, along the following two lines:

• restructuring of OAO "Belgorodenergo" relating to unbundling by lines of business;
• reform in the housing energy sector in Belgorod Region.

As a result of the reorganization of OAO "Belgorodenergo", two companies have been spun off and registered with the authorities: OAO "Heat Energy Company" and OAO "Belgorod Retail Company".

As of today, all measures have been completed that are aimed at reforming the housing utilities energy sector in Belgorod Region, except for the integration of companies working in the housing energy sector with the companies spun off from OAO "Belgorodenergo".

In this connection, the Board of Directors of RAO "UES of Russia" resolved to convert shares of OAO "Belgorod Heat Energy Company" (OAO "BelTEK") into shares of OAO "Heat Energy Company", and shares of OAO "Belgorod Electricity Grid Company" (OAO "BelESK") into shares of OAO "Electricity Grid Company".

At the second stage of the project, it is planned that decisions are to be taken by shareholder meetings of OAO "Heat Energy Company", OAO "Electricity Grid Company", OAO "BelESK", and OAO "BelTEK" to merge OAO "BelTEK" with and into OAO "Heat Energy Company", and to merge OAO "BelESK" with and into OAO "Electricity Grid Company".

At the third stage, OAO "BelESK" and OAO "BelTEK" will discontinue their operations. General meetings of shareholders of OAO "Heat Energy Company" and OAO "Electricity Grid Company" will take resolutions on early termination of the powers of members of the management and control bodies, and on the election of members of the Board of Directors and Auditing Commission.

The Board of Directors of RAO "UES of Russia" also instructed its representatives on the Board of Directors of OAO "Heat Energy Company" to vote FOR approval of the item of business "On Agreements of Pledge of Property of OAO "Heat Energy Company", Including the Pledge of Property Relating to its Core Business". The terms and conditions of said Agreements are as follows:

• book value of the property being pledged: RUB694,048,352.2;
• market value of the property being pledged, as determined by an independent appraiser: RUB944,659,400;
• loan contracts shall be made for a term of up to 7 years;
• loans are raised to finance the project to build Luch GTU-CHPP in the city of Belgorod.

The Board of Directors of RAO "UES of Russia" instructed its representatives on the Board of Directors of OAO "Cheboksarskaya HPP"* to vote FOR the approval of the following item of business to be included on the agenda of the EGM of the Company:

• Early termination of the powers and election of [new] members of the Board of Directors of the Company.

In order to organize the corporate events at OAO "Cheboksarskaya HPP" and ensure that the tasks set before the Hydrogeneration Business Unit by Order of RAO "UES of Russia" No. 200 dated 28 April 2004 are carried out efficiently, it is proposed that the Board of Directors of OAO "Cheboksarskaya HPP" should include representatives of the Hydrogeneration Business Unit.

The Board of Directors of RAO "UES of Russia" also instructed its representatives on the Board of Directors of OAO "Federal Hydrogeneration Company" (OAO "HydroWGC")** to vote FOR the approval of the following agenda of the EGM of the Company:

• Approval of internal regulations governing the activities of the Company's [management and control] bodies;
• Election of members of the Auditing Commission of the Company;
• Approval of the appointment of the Company Auditor.

The Board of Directors of RAO "UES of Russia" also noted the report on the work of OOO "ENEL ESN Energo", the management company running OAO "Severo-Zapadnaya CHPP" and the performance of its obligations to make proposals regarding the financing of the construction of the second generation unit at the power plant.

The management company, OOO "ENEL ESN Energo", submitted for consideration by the Board of Directors of RAO "UES of Russia" two proposals regarding the financing of the project to complete the second generation unit of the power plant: The management company proposed arrangements to finance the project through raising long-term loans secured with the Company's export receipts and property of the power plant (Generation Unit No. 1).

The Board of Directors also heard proposals made by ZAO "Inter RAO UES" regarding the financing of the project to complete the second generation unit at Severo-Zapadnaya CHPP.

The Board of Directors of RAO "UES of Russia" commissioned the Management Board of the Company to analyze the proposed arrangements and submit, taking into account the results of the discussion, the plan to finance the power plant's second generation unit for approval by the Board of Directors at the next Board meeting.

* OAO "Cheboksarskaya HPP" was established as a result of reorganization of OAO "Chuvashenergo". The Company is a wholly-owned subsidiary of RAO "UES of Russia".

** OAO "Hydro-WGC" is being established pursuant to Order of the Russian Government No. 1254-r dated 01 September 2003 (as amended on 25 October 2004). At the meeting held 24 December 2004, the Board of Directors of RAO "UES of Russia" approved the resolution to establish OAO "HydroWGC" as a wholly-owned subsidiary of RAO "UES of Russia". OAO "Hydro-WGC" was registered with the regulatory authorities on 26 December 2004 in the city of Krasnoyarsk.

* * *

The Board of Directors of RAO "UES of Russia" approved the restructuring plan of OAO "Kamchatskenergo".

OAO "Kamchatskenergo" will be reorganized in accordance with an individual restructuring plan, different from the basic plan. This is due to the fact that the energy company belongs to the so-called isolated regional energos, which places significant limitations on the reorganization scenario.

The project is designed to ensure financial recovery of OAO "Kamchatskenergo", eliminate interregional cross-subsidization, optimize the loads on generation facilities, increase the investment attractiveness of Kamchatskenergo energy companies.

The restructuring plan provides for the establishment by OAO "Kamchatskenergo" of the following wholly-owned subsidiaries:

• OAO "Kamchatskie CHPPs" based on the generating facilities of the Company's branches, "CHPP-1" and "CHPP-2";
• OAO "Central Electricity Grids" based on the Company's branch, "Central Electricity Grids";
• OAO "Southern Electricity Grids of Kamchatka" based on the Company's branch, "Southern Electricity Grids";
• OAO "Pauzhetskaya GeoPP" based on the Company's branch, "Geothermal Energy";
• OAO "Auto Transport Enterprise" based on the Company's branch, "Kamchatskenergospetsremont";
• OAO "Kamchatskaya Heat Transportation Company" based on the heating networks of the Company's branch, "CHPP-2".

The Board of Directors also approved the merger of OAO "Southern Electricity Grids"* with and into OAO "Southern Electricity Grids of Kamchatka".

The Board of Directors resolved to transfer the shareholdings in the above companies and shares of OAO "Southern Electricity Grids" into trust management of OAO "Far Eastern Energy Management Company"**, which will also be authorized to act as the CEO of these companies, except for OAO "Auto Transport Enterprise".

The Board of Directors of RAO "UES of Russia" approved the lease of the property of OAO "Central Electricity Grids" to OAO "Kamchatskenergo" at the first stage of the reorganization. As the energy system is isolated from the UES of Russia, the Regional Dispatch Administration is to remain part of the regional energo.

Representatives of RAO "UES of Russia" were instructed to vote for the approval of resolutions on the items of business to be considered by Board meetings and shareholder meetings of OAO "Kamchatskenergo" required to ensure the Company's reorganization.

** OAO "Far Eastern Energy Management Company" (OAO "DVUEK") performs the functions of the CEOs at OAO "Dalenergo", ZAO "LuTEK", OAO "Sakhalinenergo", OAO "Kamchatskenergo", and OAO "Geotherm". OAO "DVUEK" is carrying out a series of measures intended to increase the investment attractiveness of all five companies under management, and making preparations for the restructuring of the energy sector in the Far East of Russia as a whole.

* * *

On the proposal by the Chairman of the Management Board of OAO "UES FGC" Andrey Rappoport, the Board of Directors of RAO "UES of Russia" approved early termination of the powers of Pavel Gorelov, member of the Management Board of OAO "UES FGC", in connection with the change of employment.

Pursuant to the Charters of RAO "UES of Russia" and OAO "UES FGC", the matters pertaining to the appointment of members of the executive body of OAO "UES FGC" are submitted for approval of the Board of Directors of RAO "UES of Russia".

The Board of Directors of RAO "UES of Russia" also approved its work plan for Q2 2005.

* * *

The Board of Directors of RAO "UES of Russia" approved the Company's participation in the establishment of OAO "Norilsk-Taymyr Energy Company" (OAO "NTEC").

The founders of OAO "NTEC" will be RAO "UES of Russia" and OAO "Norilsk Nickel Mining and Metallurgical Company" (OAO "Norilsk Nickel MMC"). The authorized capital of the Company at the time of establishment will be RUB1 million and will be divided into 1,000 ordinary shares. All shares are to be paid for in cash within three months after the state registration of OAO "NTEC".

The Board of Directors of RAO "UES of Russia" approved the lease of the assets of RAO UES wholly-owned subsidiary, OAO "Taymyrenergo", to OAO "NTEC" for a term of 10 years. Also, the assets of PO "Norilskenergo" (branch of OAO "Norilsk Nickel MMC" engaged in heat and electricity generation) will be leased to OAO "NTEC".

The Board of Directors resolved that RAO "UES of Russia" will hold a 49% interest in the authorized capital of OAO "NTEC", and OAO "Norilsk Nickel MMC" will hold a 51% stake. Such allocation of shares is based on the comparison of various indicators of OAO "Taymyrenergo" and PO "Norilskenergo". Thus, the installed capacity of OAO "Taymyrenergo" is 1,041 MW, whereas that of PO "Norilskenergo" is 1,205 MW. Besides, 45% of the electricity transit in the area is handled by the entities of OAO "UES FGC" (wholly-owned subsidiary of RAO "UES of Russia"), and 55% through the power grid infrastructure owned by PO "Norilskenergo".

The Board of Directors of RAO "UES of Russia" approved the principles for determining the amount of lease payment under the Agreement on Lease of Assets of OAO "Taymyrenergo". The amount of the annual lease payment which will be received by the energy company from OAO "NTEC" will take into account the depreciation of the leased property, operating expenditure of OAO "Taymyrenergo", property tax and other taxes (except for the income tax), payment for the use of plots of land, and a fixed amount of RUB120 million.

Although RAO "UES of Russia" will be a minority shareholder, it will be able to retain its control over the operations of OAO "NTEC". A special Commission will oversee the performance of the Lease Agreement and the proper use by OAO "NTEC" of Taymyrenergo's property.

The Board resolution also provides for the possibility of early termination of the Lease Agreement in the event that the Board of Directors takes a decision to sell shares or assets of OAO "Taymyrenergo".

The Board of Directors of RAO "UES of Russia" gave the Company's Management Board the task to prepare and submit for consideration by the Board of Directors, by the end of 2005, its proposals on the sale of OAO "Taymyrenergo". The Board also backed the proposal by the Strategy and Reform Committee to commission the Management Board to develop a mechanism for the distribution of shares in OAO "Taymyrenergo" among the shareholders of RAO "UES of Russia" and the procedure for the transfer of Taymyrenergo assets to the hydrogenation company, OAO "HydroWGC". The Board of Directors of RAO "UES of Russia" resolved, on the proposal of the Strategy and Reform Committee, that the Board of Directors of OAO "Taymyrenergo" should include representatives of minority shareholders of RAO "UES of Russia". Progress reports on this project will be heard at meetings of the Board of Directors of RAO "UES of Russia" on an annual basis.

Pursuant to the resolution of the Board of Directors of RAO "UES of Russia" dated 25 June 2004, OAO "Taymyrenergo" is classified as an energy system with limited competition. Such energy systems may be reorganized using scenarios different from the "basic" restructuring plan. This is due to the specifics of the isolated Norilsk energy area: the local energy system does not have any links to the country's power grid; another factor is that OAO "Norilsk Nickel MMC" consumes 97% of the electricity generated by OAO "Taymyrenergo". Besides, OAO "Norilsk Nickel MMC" has its own generation and power grid facilities. The situation where two production cycles are controlled by two different owners may jeopardize safe and economically efficient energy production.

Participation of OAO "Taymyrenergo" in the joint operating company will make it possible to receive additional income from lease payments, which will help avoid extra costs of servicing the loans raised to cover the energy company's cash deficits. This, in its turn, will allow the Company to implement an investment project to modernize the hydrogenation and power equipment of OAO "Taymyrenergo".