OREANDA-NEWS. September 17, 2009. IDGC of North-West's General Director Alexander Kukhmay: "In order to prepare for transition to RAB since 2010, we must now work more actively with local authorities; a different impetus should be given to this process".

On 18 September, within the limits of a business meeting in Novgorod, top managers of the united company will discuss an action plan on transition to tariff regulation method of return on invested capital (RAB)

On 18 September, a business meeting of the IDGC of North-West's managers will take place in Novgorod, where the company's top managers will discuss a number of the most pressing issues: implementation of the cost management program, analysis of the reasons of growth of losses and actions on their decrease, status of relations with regional authorities on the issue of "dropping out" incomes from connection of preferential categories of applicants.

The main subject of the discussion of the forthcoming meeting is an issue of transition since January 2010 to tariff regulation for electric power transmission under the method of return on invested capital (RAB).

Let us remind that on 14 September, the Company's Board of Directors approved transition to a new system of tariff regulation and gave the corresponding assignment to the IDGC of North-West's General Director Alexander Kukhmay.

"For transition to the RAB, top managers of the executive body and directors of branches must work more actively with authorities in the constituent entities of the federation, regulating authorities, openly hold explanatory work,” said Alexander Kukhmay before the meeting. “We are already working in this direction, but a different impetus should be given to this process.”

One of Alexander Kuhmay's first public performances about advantages of transition to RAB was performance within the limits of the meeting of working groups of the Council for Coordination of Development of Fuel and Energy Complex under the Plenipotentiary of the President of the Russian Federation in the North-West Federal District on 9 June 2009, where he presented the detailed report and presentation on the subject.

Deputies heads of the federation's constituent entities for the fuel and energy complex, heads of local regulatory bodies, heads of constituent entities of electric power industry in the North-West Federal District, Deputy General Director for Economy and Finance of JSC "IDGC Holding", top managers of the Interregional Distribution Grid Company, Directors of IDGC of North-West's branches took part in the meeting.

According to Alexander Kukhmay "Interests of energy specialists and regions agree. They consist in stable power supply of consumers and infrastructural development of territories."

This strategy may be efficiently realized at active support of energy specialists by local authorities, and the RAB new method of tariff regulation, according to the united company's General Director, may be one of efficient tools.

All the subsequent meetings of the IDGC of North-West's head with the heads of the constituent entities of the federation, in some way concerned tariff policy and new system of tariff regulation under the principle of return on investment capital.


Thus, during his recent visit to Republic of Karelia, Alexander Kukhmay had long negotiations with the Head of the Republic of Karelia Sergey Katanandov.

Next day in Moscow, top managers of IDGC of North-West held consultations on RAB with representatives of 16 largest investment companies, among which are: Halcyon Advisors, Renaissance Investment Management, East Capital Investment Management, Troika Asset Management, Alfa Capital, Pharos Fund and others. Joint consultations in the format 1:1 and the general meeting were initiated by one of the leading investment banks - Renaissance Capital.

Now IDGC of North-West is engaged in an active process of preparation for transition since 2010 to a new system of tariff regulation. The corresponding order has been published, the working group has been created, presentations to be shown to the regulatory authorities are in the process of preparation, meetings with heads of the federation's constituent entities, analysts, and investors are held.

“We cooperate with investors in London, who have already purchased the IDGC of North-West's shares. There are also investors, which are still thinking this over: they need more information for decision-making,” the Executive Director, Head of Analytical Management for Electric Power Industry Renaissance Capital Derek Weaving said. The investors received very detailed answers at the meetings with the top managers of IDGC of North-West. It was interesting to hear about problems and how the company's top management solves them. The important information was provided by the publication of the financial reporting under IFRS.

The high interest of the business community and potential investors to an opportunity of transition of IDGC of North-West to the electric energy transmission tariff regulation under the method of the return on the invested capital since January 2010 is proven by the company's growing share quotes against the background of the general positive, and instant reaction of the leading investment companies to any public information on this subject.
Let us note that within an hour after the publication of the information on the decision of the company's Board of Directors which approved transition of IDGC of North-West to RAB, main analysts of the world's leading investment banks turned to the company for additional consultations. Among them are Russian Electric Utilities (JPMorgan) and VTB Capital.