OREANDA-NEWS. October 31, 2012. RusHydro Group (ticker symbol: MICEX-RTS, LSE: HYDR; OTCQX: RSHYY) announces the operating results for the 3rd quarter and the 9 months of 2012.

The total electricity generation by the power plants of RusHydro and its subsidiaries amounted to 81,461 GWh, an increase of 1.1% compared to 2011. In the 3rd quarter of 2012, production decreased 5.9% до 24,085 GWh. Hydropower plants in January-September 2012 decreased electricity generation by 1% against the same period last year; in July-September their output fell by 8.4%

Electricity generation in 3Q and 9M 2011/2012, GWh

　

3Q/12

3Q/11

change

9M/12

9M/11

change

Far East

3,409

2,857

19.3%

9,722

9,271

4.9%

Siberia

3,886

5,804

-33%

14,851

16,530

-10.2%

incl. Sayano-Shushenkaya HPP

3,368

5,291

-36.3%

13,769

15,003

-8.2%

Center of Russia

8,622

8,727

-1.2%

28,238

27,431

2.9%

South of Russia and North Caucasus

3,368

5,291

-10.3%

5,225

5,378

-2.8%

Armenia

249

212

17.3%

586

600

-2.3%

RAO ES of the East

5,813

5,645

3%

22,839

21,347

7%

TOTAL

24,085

25,593

-5.9%

81,461

80,557

1.1%

TOTAL (excl. RAO ES of the East)

18,271

19,948

-8.4%

58,623

59,210

-1%

The underlying factors behind the change in production in January-September 2012 were:

normal water inflow to major reservoirs of Volga-Kama cascade;

abnormally low water inflow to major reservoirs in Siberia;

decrease in production of Zagorskaya pumped storage due to planned capacity outages to guarantee undisturbed construction of 840 MW Zagorskaya pumped storage no. 2;

a 9.4% boost in production of Far East Generation Company (the largest generation asset of RusHydro’s subsidiary RAO ES of the East) against last year;

heavy rainfall flood in basins of Zeyskaya and Bureyskaya hydropower plants in the 3rd quarter of 2012.

Center

The water inflow to major reservoirs of hydropower plants of Volga-Kama cascade in the 1st quarter was 18% higher than long-run average.

As a result of favorable development of spring flood and its late termination due to summer rains the water losses were minimal. The water inflow in the 2nd quarter was close to long-run average and amounted to 158 km3 (the average is 161 km3).

The total water inflow to reservoirs of the Volga-Kama cascade of hydropower plants in the 3rd quarter was 35.3 km3 against the long-run average of 37 km3. Despite that as of the end of the 3rd quarter the amount of water was 7.51 km3 or 12% higher than long-run average, an absolute maximum for the last 3 years.

The total electricity generation by hydropower plants of the Volga-Kama cascade and Zagorskaya pumped storage in January-September 2012 was 28,238 GWh, a 2.9% increase as compared to 2011. In the 3rd quarter, the production went down by 1.2% as a result of decrease in production of Zagorskaya pumped storage due to planned capacity outages to guarantee undisturbed construction of 840 MW Zagorskaya pumped storage no. 2. Excluding the results of Zagorskaya, the production by Volga-Kama cascade remained flat in the 3rd quarter.

According to the forecast of the Hydrometeorologic Center of Russia, the total water inflow to reservoirs of the Volga-Kama cascade in the 4th quarter is expected to be 35-43 km3 against the long-run average of 36.6 km3.

Siberia

The water inflow to Sayno-Shushenskoe reservoir in the 1st quarter of 2012 was 10% higher than long-run average; in the 2nd quarter it was 20% lower than long-run average.

The reservoir of the Novosibirskaya hydropower plant has been experiencing extremely low water inflow during the whole 1st half of the year: in the 1st quarter its was 25% lower than average, in the 2nd quarter – twice as low. The Novosibirskaya hydropower plant has been operating with minimal water discharges to allow for navigation. By the end of the 2nd quarter the reservoir was almost full.

In the 3rd quarter the water inflow to reservoirs on Ob’, Enisey, Angara rivers was 10-35% lower than the average. Due to low water levels the navigation was terminated. As of the start of the 4th quarter the reservoir level of Sayano-Shushenskoe was almost close to the normal level of 537.5 m. As of October water spills from Sayano-Shushenskoe were suspended.

In early May 2012, the Boguchanskaya hydropower plant, a joint project by RusHydro and UC RISAL, started to replenish its reservoir. In late May, the dam started water discharges to allow for navigation, which slowed the process of reservoir replenishment. Currently, the reservoir level has reached 182.7 m, daily increase of the reservoir level in early 4th quarter average 20 cm. As soon as the reservoir level reaches 185 m the plant can start safe and sustainable operation of the first 3 hydro-units, launched in October without electricity output to the grid.

Against the backdrop of low water inflow in Siberia, RusHydro’s hydropower plants in Siberia in the 3rd quarter decreased their production by 33% to 3,886 GWh. In January-September 2012, the electricity generation fell by 10.2% to 14,851 GWh.

In the 4th quarter, the water inflow to Sayano-Shushenskoe and Novosibirskoe reservoirs is expected close to long-run average or lower.

South of Russia and North Caucasus

Due to the deficit of capacity in energy system of the South and low water inflow in the 2nd half of 2011, the water reserves in major reservoirs of the South of Russia and North Caucasus were low. The spring flood started earlier than usually. The water inflow in the 2nd quarter was close to long-run average.

In the 3rd quarter, water inflows to major southern hydropower plants were 10-30% lower than long-run average.

Electricity production by hydropower plants of the South of Russia and North Caucasus decreased 10.3% to 3 368 GWh; in January-September the production decreased 2.8% to 5,225 GWh.

The water inflow to major reservoirs in the region in the 4th quarter is expected close to long-run average.

Far East

Zeyskaya and Bureyskaya hydropower plants due to low water inflows in 2011 and ensuing low reservoir levels (24% lower than long-run average) have been operating under the regime of reservoir drawdown. By the end of the 1st quarter the water levels of Zeyskaya and Bureyskaya was 2.3 m and 1.9 m, respectively, lower than last year.

The water inflow to Zeyskoe reservoir in the 2nd quarter exceeded the long-run average by 10%. By the end of the quarter the water reserves in Zeyskoe have significantly improved.

In the 3rd quarter, Zeyskoe and Bureyskoe reservoirs were characterized by heavy rainfalls. In May-September the water inflow to Zeyskoe was 33.6 km3, one of the largest figures of all time. As of the 4th quarter, the replenishment of Zeyskoe reservoir was almost finished; the reservoir level was 317.5 m, or 2.5 m higher than normal level. Bureyskaya hydropower plant operated under the regime of constant water spills until mid-October to sustain a certain reservoir reserve margin that would allow excluding water spills during winter.

The electricity generation by RusHydro’s hydropower and geothermal plants in the Far East in the 3rd quarter rose 19.3% to 3,409 GWh; in the 9 months of 2012 the production increased by 4.9% to 9,722 GWh.

The water inflow to reservoirs in the Far East in the 3rd quarter is expected 35-70% higher than long-run average.

The generating assets of RAO ES of the East holding, a subsidiary of RusHydro, in the 3rd quarter generated 5,813 GWh, a 3% increase compared to the 3rd quarter 2011. In January-September 2012, the electricity generation rose 7% to 22,839 GWh. Of this total, ¾ was generated by Far East Generating Company, which boosted production by 9.4%. The generation by companies operating in isolated energy systems of the Far East in the 9 months of 2012 remained almost flat year-on-year.

The major factors of increase in generation by thermal power plants of the Far East Generating Company were:

increase in electricity consumption in the unified energy system of the Far East by 3.3% in the 9 months of 2012 as compared to last year on the back of high consumption by industrial consumers and Russian Railways;

decrease of production by Zeyskaya hydropower plant due to low water levels in the first half of 2012;

increase of export sales to China as a result of commissioning of high-voltage electricity line from Zeyskaya hydropower plant to the border with China.

In January-September 2012, heat output by thermal plants of RAO ES of the East rose 5.6% to 21,012 thousand GCal.

Armenia

Electricity generation by Sevan-Hrazdan cascade power plants in the 9 months of 2012 was 586 GWh, a 2.3% decrease compared to 2011. The power generation of these power plants is dependent on water inflows of Hrazdan river and water releases from lake Sevan.

Taking into account the 3rd quarter results and current hydrometeorologic situation, RusHydro keeps its forecast of a 1-1.5% increase in hydroelectricity generation in FY2012 as compared to 2011.

RAO ES of the East expects that its total electricity generation in 2012 will increase 5-7% compared to 2011, subject to electricity consumption trends and production volumes of Zeyskaya and Bureyskaya hydropower plants in the 4th quarter of 2012.