International activities

INTERNATIONAL COOPERATION

In 2007, the managers and personnel of RAO "UES of Russia" carried out extensive international cooperation with foreign companies, international organizations, and took part in many international events and actions.

The strategic goals of international cooperation pursued by RAO "UES of Russia" remain unchanged:

• The Company becoming a full member of the key international non-governmental and intergovernmental organizations, national committees and commissions, etc.;
• The Company acting as "equal among equals" as one of the major energy companies capable of shaping the energy strategy principles on a global, regional, national and corporate scale.

The main goals of the Company's international cooperation are as follows:

• Identifying the goals, approaches and the necessary degree of the Company's involvement in developing the global energy policies and addressing sustainable development issues;
• Promoting integration of the energy systems of Russia, the CIS countries, the Baltic republics, Northern and Western Europe, as well as some Asian countries;
• Assisting in the creation and development of the pan-European electricity and capacity market;
• Assisting with the harmonization of the Russian and international regulatory framework for the sector reform and implementing a new regulatory structure in the electricity industry;
• Attracting foreign investments needed for the development and modernization of Russia's electricity industry;
• Promoting cooperation in the field of technical innovations and the use of energy efficient and environment-friendly technologies in Russia;
• Assisting the development of trading in electricity, power equipment, know-how, and related services;
• Selecting managers and experts to be involved in the activities of the administrative and technological bodies of international organizations, participate in international research programmes, work at international commissions on the development and implementation of energy projects.

RESULTS OF COOPERATION WITH INTERNATIONAL ORGANIZATIONS

In 2007, RAO "UES of Russia" participated in, as a full or associate member, and closely cooperated with the following international organizations:

• World Energy Council (WEC);
• Conseil Internationale des Grandes Reseaux Electriques a Haute Tension (CIGRE);
• World Economic Forum (WEF).
• Union of the Electricity Industry - EURELECTRIC;
• e8;
• BALTREL - Baltic Ring Electricity Co-operation Committee;
• International Chamber of Commerce (ICC);
• Russo-British Chamber of Commerce (RBCC);
• Electric Power Council of the Commonwealth of Independent States (EPC CIS);
• International Commission on Large Dams (ICOLD/Commission Internationale des Grandes Barrages, CIGB);
• International Energy Agency (IEA);
• Edison Electric Institute (EEI);
• Russian-Arab Business Council (RABC).

Within the framework of cooperation with international organizations, RAO UES entities initiated the conduct of scientific research and applied development, in particular, research within the WEC framework on such topics as development of the electricity and capacity market in Europe, the development prospects of the electricity industry in the Middle Asian countries, etc. The research results were presented at international conferences, were published in the WEC proceedings and are used both by RAO "UES of Russia" and all interested parties.

A project has been developed within e8 which seeks to develop small-scale hydro stations in Tajikistan; also, assistance in manpower training has been rendered to energy companies in Middle-Asian republics.

Great efforts were undertaken to generate publicity about the RAO UES Investment Programme and information on the final phase of the reform in RAO "UES of Russia" using the international organizations as forums. The Company pursued this goal by participating in international conferences and forums, as well as other global industry events. The list of key international events where presentations of the Russian electricity reform and investment process were made includes the WEF General Meeting, International Utility Conference in London organized by the Edison Electric Institute in cooperation with Eurelectric, Eurelectric Summit in Seville, e8 Summit in Osaka, Eurelectric Conferences in Antwerp and Barcelona, meeting of the Executive Committee of the CIGB in Saint Petersburg, international conferences organized and held in Russia by RAO UES companies under the auspices of the CIGRE, WEC World Energy Congress in Rome, and many other events.

One of the key international forums used to promote the interests of RAO "UES of Russia" in Europe is the EU-Russia Industrialists' Round Table. RAO "UES of Russia" is one of the key activists of the Round Table, and Anatoly Chubais has been its co-chairman on the Russian side for nearly ten years in a row. In 2007, the Round Table held its general meeting in Lisbon which adopted Joint Conclusions reflecting the desire of Russian and EU industrialists to conclude a new comprehensive agreement.

EU-RUSSIA ENERGY DIALOGUE

A key objective of the "Road Map" for the Common Economic Space is the intensification of cooperation in the energy area, including issues relating to sustainability and continued reliability of generation, distribution, and transportation, and efficient use of energy. The EU-Russia Energy Dialogue is viewed as a main instrument to achieve these objectives. In the Eighth Progress Report of the EU-Russia Energy Dialogue approved in October 2007, the parties noted that they positively view the results of in energy markets in developing projects of common interest for the EU and Russia. The parties "hail the work on integrating electricity markets of the EU and CIS, with the development of necessary elements and principles of trans-border trade in the region that encompasses Belarus, Moldova, Russia, Ukraine on the CIS side and Latvia, Lithuania, Estonia, and Finland on the EU side."

Apart from the work done in connection with the EU-Russia Energy Dialogue, the Company carried out research and practical work within the framework of CIS EPC, WEC, CIGRE, e8, and the EU-Russia Industrialists' Round Table aimed at integrating energy markets and promoting energy and environmental safety and security in Europe.

INTEGRATION OF EAST-WEST ENERGY SYSTEMS

The interconnection of the power systems of the CIS and Baltics (IPS/UPS) and the Union for the Co-ordination of Transmission of Electricity (UCTE) is the first important practical step towards the creation of a pan-European energy pool and is a "project of common interest" within the framework of the EU-Russia Energy Dialogue.

On the IPS/UPS side, the key player involved in the project is RAO "UES of Russia". In 2007, efforts were continued to produce a feasibility study on the synchronous interconnection of the power systems of IPS/UPS with UCTE. This study, which brings together over 80 researchers and engineers from 17 countries is to be completed in 2008. The study will answer the following three main questions: Is a full synchronous interconnection of IPS/UPS with UCTE feasible? What are the mandatory requirements on both sides? What are the associated costs?

In early 2007, the Project Status Summary Report was released summing up the work done and interim results as of December 2006. The Report stated that there are no fundamental technical barriers to the possible synchronous operation of the IPS/UPS and UCTE. Load flow analysis was completed with respect to the future energy pool, which made it possible to asses the possible electricity flows between the IPS/UPS and UCTE. For the purposes of analysing the dynamic behaviour, in particular cross-system frequency fluctuations and capacity flows in the energy pool, simulation models have been produced which have been verified using data acquired in actual processes. A procedure has been drafted for the interaction of system operators which ensure reliable joint operation, while ensuring, to the maximum extent possible, that each of the energy systems within the pool maintains its rules, standards, and management principles. The feasibility study results will be used as a basis for decisions on the further integration of the systems concerned.