Operating results
The volume of services provided
In 2015, IDGC of Centre’s market share in the electric energy transmission market amounted to 86.0%The market share in 2015 is calculated based on the share of the required gross revenue of IDGC of Centre and regions. In annual reports from the previous periods, the calculation was made based on the share of revenues for the services provided.. The electric energy transmission services are state-regulated by setting tariffs.
| Indicator | 2013 | 2014 | 2015 | Variance 2015/2014 | |
|---|---|---|---|---|---|
| mln kWh | % | ||||
| Electricity supply to the grid | 63,646.4 | 62,802.4 | 62,556.3 | ||
| Net electricity supply (within the balance participation of the Company’s branches) | 57,814.3 | 57,045.1 | 56,706.0 | ||
| Electrical losses | 5,832.1 | 5,757.3 | 5,850.3 | 93.1 | 1.6 |
| Amount of electricity transmission services provided | 55,214.2 | 54,398.8 | 54,782.5 | 383.7 | 0.7 |
The amount of electricity transmission services provided by IDGC of Centre in 2015 increased by 383.7 mln kWh, or 0.7%, compared to 2014. The main reasons for the growth in the volume of services provided are a result of the growth of energy consumption by certain consumers in the Kurskenergo, Smolenskenergo and Yarenergo branches, and changes made to the “boiler” scheme in the branch of the Bryanskenergo region.
The amount of grid power supply to consumers and to related territorial grid companies within the balance and operational responsibility of IDGC of Centre in 2015 was 56,706 mln kWh, which is lower than the level of 2014 (57,045.1 mln kWh) by 339.1 mln kWh, or 0.6%. This decrease is a result of the termination of the agreements for “last mile” facilitiesDetailed information on the “last mile” contract is shown in the Company’s Annual Report for 2014., and a result of the reduction of power consumption volumes by Branches of Russian Railways JSC, Novolipetsk Metallurgical Works, Lipetskcement, Stoylensky GOK LLC, and Belgorodsky Cement. In addition to this, the elimination of power losses at Yargorelectroset in net power supply volumes occurred due to the integration of this subsidiary’s power grid assets, starting from January 1, 2015.
Most of the net electricity supply structure belongs to the supply of electricity to grids, 110 kV — accounting for 62.5% of the total net electricity supply from the grid. Industrial companies account for 50% of total net electricity supply, 110 kV. The supply of electricity to territorial grid companies amounted to 35.9%.
Electricity transmission indicators by the Company’s branches are shown in Appendix to the Annual Report.
Compared to 2014, there has been a 3.9% decrease in high voltage electricity consumption, particularly due to the exclusion of the amount of electricity transmitted to the “last mile” facilities from the balance sheet: from 36,831.5 mln kWh in 2014 to 35,411.7 mln kWh in 2015.
Moreover, this reduction is due to lowered production by the following large customers:
- Russian Railways, with 221.3 mln kWh, or 6.6%, net electricity supply decrease to branches of Russian Railways in IDGC of Centre’s areas of operation.
- Belgorodsky Cement, Belgorod Region, with 64.3 mln kWh, or 45.8%, electricity consumption decrease.
- OJSC Novolipetsk Metallurgical Works, Lipetsk region, with 42.9 mln kWh, or 1.4%, electricity consumption decrease.
Among customer categories, the majority of electricity is customarily supplied to industrial consumers (36.0%), to territorial grid companies (27.9%) and to the general population and equivalent consumer groups (12.5%).
Useful power supplies to the population grew continuously: from 6,399.5 mln kWh in 2014 to 7,095.5 mln kWh in 2015 (a 10.9% increase). This is mainly due to the integration of the Yargorelectroset subsidiary’s assets, with the growth resulting from the integration of at least 530 mln kWh. In comparable conditions of the balance, the growth of power consumption to the population amounted to 2.6%.
The volumes of TGC group decreased by 18.1%, from 19,327 mln kWh in 2014 to 15,828.0 mln kWh in 2015, due to the integration of Yargorelectroset’s power grid assets and due to the elimination of TGC’s status for KMA Electro LLC.
Financial Effect of Electric Energy Transmission Services
Revenues for the electricity transmission service
The structure of revenues by customer group in branch locations is shown in Appendix to the Annual Report.
In
In the revenues from electric energy transmission services, the majority consists of the group of last resort suppliers (70%), and the remaining revenues are allocated between power sales companies (18%) and other customers (11%). Territorial grid companies, which since 2014 have been made up of Bryanskelekro LLC, account for 1% of revenues.
Costs of electric energy transmission services
| Cost indicator | 2013 | 2014 | 2015 | Variance 2015/2014 | |
|---|---|---|---|---|---|
| RUB mln | % | ||||
| Electricity transmission production costsExpenses account for the production cost of services, including management and commercial expenses., total | 65,423.2 | 67,860.1 | 69,756.1 | 1,896.0 | 2.8 |
| Non—influenceable costs | 44,573.6 | 45,701.5 | 46,329.7 | 628.2 | 1.4 |
| Loss compensation expenses | 9,864.7 | 9,833.7 | 10,594.9 | 761.2 | 7.7 |
| PJSC FGC UES services | 14,729.5 | 15,351.5 | 15,259.8 | –91.7 | –0.6 |
| TGC services | 12,442.6 | 12,169.8 | 11,447.1 | –722.7 | –5.9 |
| Depreciation of fixed assets and intangible assets | 7,536.8 | 8,346.5 | 9,027.9 | 681.4 | 8.2 |
| Influenceable costs | 20,849.6 | 22,158.6 | 23,426.4 | 1,267.8 | 5.7 |
| Tangible expenses | 2,159.1 | 2,475.0 | 2,770.2 | 295.2 | 11.9 |
| Production expenses | 757.8 | 653.9 | 710.9 | 57.0 | 8.7 |
| Personnel expenses (payroll, insurance payments, payments to the national pension fund) | 13,287.4 | 14,536.7 | 15,781.9 | 1,245.2 | 8.6 |
| Other expenses | 4,645.3 | 4,493.0 | 4,163.4 | –329.6 | –7.3 |
The costs of electric energy transmission services in 2015 amounted to RUB 69,756.1 mln, and exceeded the 2014 total by RUB 1,896 mln, or 2.8%. This increase in costs is due to the following factors:
- The growth of average weighted non-regulated prices in the wholesale electricity and power market and the integration of OJSC Yargorelectroset’s power grid assets into the Company;
- The growth of the depreciation of payments by 8.2%, due to the commissioning of fixed assets within the framework of the investment programme;
- An 8.6% increase of HR costs, due to an increase in employees’ wages and changes made to the labour payment system for the categories of managers and specialists.
Net Profit
| Indicator | 2013 | 2014 | 2015 | Variance, 2015/2014 | |
|---|---|---|---|---|---|
| RUB mln | % | ||||
| Net profit from electricity transmission | –1,009.2 | 2,799.0 | 8.3 | –2,790.7 | –99.7 |
The main factors influencing the reduction of actual profit in 2015 versus 2014 were as follows:
- Growth of revenues by RUB 1,829.2 mln, or 2.4%.
- Growth of expenses by RUB 1,896 mln, or 2.8%, including:
- An increase in HR costs (salary funds, insurance payments, non-pension funds) amounted to RUB 1,245.2 mln, due to the indexation of salaries and changes made to the labour payment system;
- An increase in the loss compensation costs amounted to RUB 628.2 mln, due to the growth of average weighted non-regulated prices in the wholesale electricity and capacity market, and the integration of the subsidiary OJSC Yargorelectroset’s power grid assets;
- An increase in the depreciation of fixed assets and intangible costs by RUB 681.4 mln, due to the commissioning of fixed assets.
- An increase in the negative balance of other proceeds and costs by RUB 3,300 mln, or 86%.
- Growth of income tax by RUB 142.2 mln, or 20.7%.
Additional information on electricity transmission indicators is shown in Appendix to the Annual Report.
Energy Loss Reduction
In 2015, energy losses at IDGC of Centre’s grids increased compared to the previous year (by 0.18 ppt) and amounted to 5,850.3 mln kWh, or 9.35%, of the grid’s power supplies. This change is due to the reduction of the grid’s power supply due to: the elimination of power supply volumes from the balance to the last mile facilities, a total of 119.4 mln kWh, a reduction of consumption volumes by large enterprises for total of 400 mln kWh, and the integration of power grid Yargorelectroset’s assets. In terms comparable to 2015, a reduction in energy losses amounted to 98.9 mln kWh, or 0.14 ppt, compared to 2014.
The Company traditionally implements a set of measures aimed at the optimisation (i.e., reduction) of electrical energy losses: by organisational technological measures and by measures for the improvement of electrical energy metering systems. In 2015, over 5 thousand metering points were modernised. The expenses for these works amounted to RUB 75 mln. The collection of remote data from 4.9 thousand points was arranged.
| Indicator | 2013 | 2014 | 2015 | Variance 2015/2014 |
|---|---|---|---|---|
| Loss, actual | 9.16 | 9.17 | 9.35 | 0.18 ppt |
| Loss, target | 9.43 | 9.18 | 9.44 | — |
| For reference: | ||||
| Electricity losses in relative conditions in 2015 | 9.59 | 9.49 | 9.35 | –0.14 ppt |
| Actions | mln kWh | RUB mln |
|---|---|---|
| Organisational activities | 104.8 | 322.0 |
| Technical activities | 9.7 | 19.3 |
| Activities to improve the electrical energy billing and metering systems | 49.8 | 114.0 |
| Total | 164.3 | 455.3 |
Information on energy losses by branch is shown in Appendix to the Annual Report.
Energy Saving and Energy Efficiency Improvement
In 2014, the Company approved the Programme for the Improvement of Energy Conservation and Energy Efficiency (hereinafter, the Programme) at IDGC of Centre through 2019. Detailed information about the structure of the Programme is shown in the Annual Report for 2014.
Within the framework of the Programme, the Company carried out activities to enhance energy saving and energy efficiency improvement management systems in 2015. In particular, managers responsible for control over its implementation were appointed, and working teams were created to analyse the Programme’s implementation. This energy management system was introduced in accordance with the national standard GOST R ISO
Pursuant to the Programme, the Company has set targets and target values for
- Energy losses during energy transmission and distribution over the grids;
- Energy consumption for utility needs;
- The application of up-to-date electrical metering devices in the retail market, implemented as part of the Programme’s targets in 2015.
| Indicator | Unit | 2015 | |
|---|---|---|---|
| Target | Actual | ||
| Energy losses, including: | mln kWh | 5,909.959 | 5,850.324 |
| % of FA | 9.44% | 9.35% | |
| Consumption for the indivudal needs of substations | mln kWh | 110.31 | 104.53 |
| Consumption of resources for utility needs by type of resource | RUB mln | 1,037 | 1,043 |
| Fuel and energy, including: | thousand trf | 82.133 | 82.895 |
| RUB mln | 1,029.89 | 1,039.18 | |
| trf per sq. m of area | 0.072 | 0.069 | |
| Electricity | mln kWh | 135.37 | 130.95 |
| RUB mln | 256.53 | 262.23 | |
| Heat | GCal | 50,166 | 49,704 |
| RUB mln | 68.45 | 67.7 | |
| Gas | thousand m3 | 1,320.1 | 1,131.9 |
| RUB mln | 7.78 | 5.93 | |
| Other (diesel fuel, kerosene, gasoline, etc.) | thousand trf | 26.52 | 29.09 |
| RUB mln | 696.2 | 698.1 | |
| Cold water supply | thousand m3 | 273.04 | 229.95 |
| RUB mln | 6.93 | 5.22 | |
| Application of up-to-date energy metering devices in the retail market | % | 91.8 | 91.8 |
Information on the consumption of energy resources in 2015 is shown in the Appendix to the Annual Report.
In order to reduce energy losses, IDGC of Centre carries out activities in all branches to identify the unlawful consumption of energy: energy consumed without metering devices and without agreements.
The main activities targeted at reducing of the consumption of resources for utility needs are the replacement of lighting by energy efficiency, and the heating and sealing of buildings. In 2015, the effect of these activities amounted to 154.6 mln kWh, a total of RUB 436 mln. Economising resources for utility needs amounted to 396 trf, a total of RUB 2.33 mln.
Grid connection is a comprehensive service provided by IDGC of Centre to new customers and to the existing customers who need to increase their power consumption. Grid connection activities are state-regulated by the Grid Connection Rules and when setting the payment amount for grid connection.
The most important issue today is the reduction of the period of time it takes to execute grid connection contracts. In 2015, IDGC of Centre continued operations in this field and reduced the connection period to 145 days, a reduction of 6 days compared to 2014.
Volume of services provided
In 2015, over 60.5 thou. grid connection applications were received, which is a 3.2% decrease in comparison to 2014. The capacity requested was at the same level in 2014, since grid connection was in high demand by legal entities with large connection capacities.
КIn 2015, the number of contracts executed decreased by 4.7%, when compared to the previous period and the capacity connected under executed contracts increased by 3.7%.
In 2015, the number of connections increased by 25.8% when compared to 2014. Despite this, the volume of connected capacity only increased by 1.8% — up to 1,137 MW. These changes are due to the significant increase of consumer preference for a connection with a requested capacity under 15 kW.
| Indicator | 2013 | 2014 | 2015 |
|---|---|---|---|
| Under 15 kW (preferential category) | 607.6 | 580.9 | 580.1 |
| 183.5 | 215.1 | 220.2 | |
| 444.3 | 479 | 402.2 | |
| Over 670 kW | 1,707.5 | 1,622.7 | 1,595.2 |
| Generation | 393.7 | 543.1 | 652.6 |
| Total | 3,336.6 | 3,440.8 | 3,450.3 |
| Indicator | 2013 | 2014 | 2015 |
|---|---|---|---|
| Under 15 kW (preferential category) | 404.9 | 490.7 | 643.6 |
| 90.6 | 96.6 | 103.3 | |
| 181.4 | 161.8 | 161.6 | |
| Over 670 kW | 285.6 | 359.9 | 216.5 |
| Generation | 55.9 | 7.6 | 11.5 |
| Total | 1,018.4 | 1,116.6 | 1,136.5 |
In 2015, consumers “under 15 kW” and “over 670 kW” account for the majority of connected capacity, amounting to 56.6% and 19.1% respectively.
The structure for connection capacity changed in the reporting year when compared to the previous periods. The share of “Under 15 kW inclusive” applicants increased from 43.9% in 2014 to 56.6% in 2015. On the contrary, the share of “Over 670 kW” applicants declined from 32.2% in 2014 to 19.1% in 2015.
Individual applicants accounted for over 50% of all connections in 2015 (52.3%). Among other applicants, construction and agricultural companies prevail, at 9.7% and 6.4%, respectively.
| In 2015, the largest and the most significant facilities connected to IDGC of Centre’s grids were | |
| NOV Kostroma LLC, with maximum capacity of 5.4 MW | Capital Construction Customer Office of Russia’s Ministry of Defense, with maximum capacity of 3.8 MW |
Financial effects of grid connection services
Revenue from services on technological connection
Compared to 2014, revenues from grid connection in 2015 decreased by 22.5%, a result of the implementation of large connection contracts in 2014. Grid connection revenues from “Under 15 kW inclusive” customers increased by 54.7%, compared to a similar period in the previous year.
| Indicator | 2013 | 2014 | 2015 | Variance 2015/2014, | |
|---|---|---|---|---|---|
| RUB mln | % | ||||
| Revenues | 923.2 | 1,495.5 | 1,159.7 | –335.8 | –22.5 |
| Including: | |||||
| Under 15 kW inclusive, total | 37.6 | 43.3 | 67.0 | 23.7 | 54.7 |
| Over 15 and up to150 kW inclusive | 173.9 | 196.6 | 275.7 | 79.1 | 40.3 |
| Over 150 and below 670 kW inclusive | 350.6 | 366.9 | 344.3 | –22.6 | –6.2 |
| 670 kW and above | 358.2 | 886.9 | 463.7 | –423.2 | –47.7 |
| Energy generation facilities | 2.8 | 1.8 | 8.9 | 7.1 | 400.4 |
The cost of grid connection
In 2015, expenses increased by 20.2% when compared to 2014, due to the following factors:
- The growth of personnel wages due to the indexation of wages and changes to the labour payment system;
- An increase of tangible expenses, mainly due to changes in prices and the volumes of works;
- The growth of the depreciation of payments due to the commissioning of fixed assets.
| Cost | 2013 | 2014 | 2015 | Variance 2015/2014 | |
|---|---|---|---|---|---|
| RUB mln | % | ||||
| Grid connection costs, totalCosts include all production expenses, including management and commercial expenses. | 285.8 | 357.1 | 429.4 | 72.3 | 20.2 |
| Including: | |||||
| Tangible expenses | 28.5 | 32.3 | 49.2 | 16.9 | 52.3 |
| Production expenses | 4.5 | 3.4 | 4.0 | 0.6 | 17.6 |
| Depreciation of fixed assets and intangible assets | 9.7 | 10.6 | 14.2 | 3.6 | 34.0 |
| Personnel expenses (payroll, insurance payments, payments to the national pension fund) | 187.6 | 245.5 | 289.0 | 43.5 | 17.7 |
| Other expenses | 55.5 | 65.3 | 73.0 | 7.7 | 11.8 |
Net profit from technological connection
Net profit decreased by RUB 326.6 mln, resulting from a reduction of revenues and the growth of expenses for grid connection services. The growth of income taxes by RUB 2.1 mln, or 1.5%, also influenced the net profit in the reporting year.
To diversify its business, IDGC of Centre develops additional services not directly related to its core activities. Additional services are paid and are not subject to mandatory government regulation.
The main directions of the additional services provided by IDGC of Centre are as follow:
- Organisation of outdoor lighting systems.
- Operational and technical maintenance and repair of electrical grids and electrical equipment.
- Reconstruction of power grid facilities for the benefit of customers.
- The provision of technical resources.
- Testing and diagnostics for equipment.
- Installation and replacement of metering equipment.
- Performing activities within the competence of customers in the course of grid connection.
- Energy audits and energy services.
- The design and construction of energy facilities.
In 2015, demand for the Company’s additional services increased by 2.5% when compared to 2014, with the Company receiving over 169 thousand applications.
| 2013 | 2014 | 2015 | Deviation 2015/2014,% |
|---|---|---|---|
| 187.0 | 164.8 | 169.0 | 2.5 |
Development of Additional Services
In 2015, the pilot project for the development of “Performing activities within the competence of clients in the procedure of grid connection” (Grid Connection Support) was carried out at the Voronezhenergo and Kurskenergo branches. The Company provides these services within a framework of support for small and medium businesses, who are the main customers of grid connection to power facilities under 150 kW and are covered by this new service. The service is provided on a “single window” basis, wherein the client receives the scope of all works for documentation preparation and facility connection to the grid on a turnkey basis.
Within the implementation of the pilot project in 2015, the following activities were carried out by the Company in particular: the development of algorithms and sales, defining employees’ key competences for client service offices, training in client-oriented service and efficient sales methods, the implementation of an additional employee motivation system, etc.
As a result of the implementation of this project, the number of contracts for Grid Connection Support concluded by the Voronezhenergo and Kurskenergo branches in 2015 doubled when compared to 2014. Total revenues amounted to RUB 50.8 mln, which is a
In 2016, the Company is planning to focus on the following activities:
- The implementation of the project for developing the “Performing activities within the competence of clients in the procedure of grid connection” service in the Lipetskenergo and Smolenskenergo branches;
- Developing a client-oriented maintenance approach in the process of the provision of services by the Voronezhenergo and Kurskenergo branches.
Financial effects of additional services
In 2015, due to an increase of the number of applications for additional services, the revenues from other operations declined by 8.3%. These dynamics are a result of the planned reduction in revenues from “Organisation of outdoor lighting systems,” caused by the division of electric energy transmission services and maintenance services in the municipal contract concluded with the Smolenskenergo branch.
The analysis of revenues from additional services over the
Interaction with IDGC of Centre’s customers is carried out in accordance with a Customer Service Quality Standard (Minutes of the Board of Directors No.13/15 of June 24, 2015).
The document is available on the Company’s Website.
The values and principles of customer relations are defined according to the Company mission: the identification and implementation of justified customer (consumers) requirements, the continuous monitoring of their expectations and satisfaction, and ensuring the reliable and failure-free supply of electricity to the diligent customers (consumers) of the Company’s services.
| Territorial availability and universality of services |  |
Even in the most remote regions, the stable supply of electricity to customers, high quality service and timely consideration of applications shall be ensured. |
| Organisational availability | |
The Company’s service rules shall be transparent, public and executable. Consistent and accurate information about all relations shall be available to the customers in clear form. |
| Information availability | |
The Company shall duly inform the customers about the cost of services, the procedure of tariff development and the amount of tariffs for services, the payment for the connection to distribution power grids, and, if required, about the procedure of price formation in the retail electricity market. |
IDGC of Centre follows a customer-oriented approach, one that is based on systematic cooperation with our customers, the monitoring and analysis of their needs, and the study of our customer’s opinions about the quality of services. Such an approach includes: risk analysis, the search for mutually profitable solutions, and the constructive settlement and prevention of conflicts. This feedback principle means that appropriate changes to the Company’s operations are carried out according customer needs and expectations.
The Company’s customers are provided with the objective and consistent consideration of their applications and claims within the established time periods, and have the possibility to appeal.
The requirement of an individual approach to consumers and the consideration of specific features of each client group are applied to all categories of consumers, meaning individuals working with large clients, and the special servicing of veterans and socially vulnerable categories of the population.
Forms of Customer Service
The Company has three types of client service: personal service, absentee service and interactive service. Information from clients is received via dedicated and especially equipped communication channels.
Types of application
- Application
- Claim
- Consultation
- Review
| Customer service centre | |
|
| Division of the Company | |
|
| Call centre | |
|
| Internet reception | |
|
| Russian Post, Customer box | |
|
Statistics of Customer Applications
Complaints by communication channel
Complaints for electrical energy interruptions account for almost 45% of all customer complaints made to the Company. In addition this, a significant share of complaints concerns additional services offered by the Company (16.6%) and grid connection (13.7%).
Assessment of the Reliability and the Quality of Services Provided
Assessment of the reliability and quality of services provided is an indicator of the Company’s efficiency in customer relations. Electricity transmission services and grid connection services are evaluated.
Quality indicator comprises evaluations are assessed according to the following criteria:
- Information consistency;
- Execution;
- Feedback effectiveness.
Target values are set for each the Company’s branches on an annual basis by executive authorities of the RF’s constituent entities, which are responsible for state regulation of tariffs. Actual evaluation carried out by the Company’s employees is based on the results of customer interviews by phone or in writing (including interactive questionnaires). Customers can also assess the quality of the Company by completing an online questionnaire about the quality of IDGC of Centre’s services.
In 2015, the indicators of quality of service provided did not exceed target values and were achieved by all branches.
Detailed information about the branches’ evaluation of the achievement of reliability is shown in Appendix of the Annual Report.
Improvement of the Quality of Customer Relations
In 2015, IDGC of Centre focused on the following activities to improve the quality of its customer service:
- An appointment feature for consumers visiting customer service offices was implemented.
- An online knowledge base for customer service office employees was developed and implemented.
- Scenarios of processing customer complaints were amended to provide more consistent information requested by the customer at the stage of application reception.
- Notification via SMS about the execution of applications for grid connection, as well as notification about planned and emergency repair work, including power outages and the need to replace metering devices, was introduced.
- The improvement of skills and training for employees directly working with customers was carried out. Training was carried out in the Voronezhenergo and Kurskenergo branches in sales skills, and a customer-oriented approach to the provision of services.