Production Results

- 71 companies engaged in electricity sales, including 62 energy retail companies and 9 regional energos which were not unbundled;

- 30 companies engaged in heat sales, including 6 WGCs, 14 TGCs and 10 other companies.

The level of payments for the electricity supplied by the RAO UES retail units in 2006 was 100 percent. Compared to 2005, there was an increase in electricity sales to industrial consumers and utilities organizations. As of 1 January 2007, the consumers' arrearage amounted to RUB21.9 billion.

The level of payments for heat by Holding Company's customers in 2006 amounted to 99.8 percent, with the debt owed by customers for the heat consumed standing at RUB22.0 billion as of 1 January 2007.

In 2006, the RAO UES energy retail companies had contractual relationships with over 700 thousand industrial consumers (legal entities) and 30 million individual customers (households).

After the Rules for the Functioning of Retail Electricity Markets During the Transitional Period of the Electricity Reform (the Retail Market Rules) were adopted, the Holding Company's energy retail units have been translating the free (unregulated) prices to the retail market. Pursuant to the requirements of the Retail Market Rules, the RAO UES energy retail companies took steps in 2006 to renew the electricity supply contracts with customers.

In order to raise the quality of services provided, the energy retailers were working to improve the systems for settlement with consumers. In the Belgorod Region, Perm Region, the cities of Moscow and Saint Petersburg, and other regions of Russia, the energy retail companies installed electronic terminals to receive payments from household customers. In some regions, the energy retail companies created call centers to handle customer relations.

In connection with the upcoming reorganization of OAO RAO "UES of Russia" and the transfer of its functions, inter alia, to SROs, a decision was taken in 2006 to establish Non-profit Partnership of Guarantee Suppliers and Energy Retail Companies (including the SDCs of RAO "UES of Russia" and independent market participants).

The RAO UES energy retail units have been given the following tasks on the retail electricity market for 2007:

• to preserve the customer base and increase electricity sales;
• complete the campaigns to bring the existing power supply agreements into line with the new pricing rules which provide for the translation of unregulated prices from the wholesale market;
• to ensure successful participation in tenders scheduled for June - September 2007 to obtain the status of a guaranteeing supplier, which will come into effect beginning in 2008;
• to increase the market value of energy retail companies.