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PRESENTATION

“ECONOMIC POLICY UNDER CONDITIONS OF REFORMING MARKET OF POWER AND

ELECTRIC ENERGY AND IMPLEMENTATION OF INVESTMENT PROGRAM”

Archangelskaya A.I.

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Market model (status) in 2010 Market model (status) in 2010

None

Operating NP P units in 2007

63%

37%

100%

R egulated power marketР С В

R egulated electricity market

S ales of all the NP P electricity Nрасп.

E lectricity sales be regulated contracts and

prices prescribed by F ederal tariff authority

E lectricity sales by deregulated prices

New NP P units built after 2007

100%100%

КОМ Р С В

Operational units as of 2007

New units built after 2007

Regulated powermarket

No power market

Risk hedging mechanism

No power market

Regulated electricity market

Electricity sold per regulated contracts at the price established

by RF Tariff Service

Electricity sold at market price

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I. Approaches to forecasting the revenues of Rosenergoatom OJSC for the period up to 2022I. Approaches to forecasting the revenues of Rosenergoatom OJSC for the period up to 2022

Forecasting REA revenues in 2010

Annual production program

Electricity generation

Level of next day market prices

Level of regulated tariffs

Electricity salesAvailable

capacity per month

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Market model after 2011Market model after 2011

Risk hedging mechanism

Р ынок электроэнергии

82%18%

S hare of liberalizatiopn

R egulated prices

imposed by the

Investment surcharge

Operational units as of 2007 New units constructed after 2007

P ower market

P rice cap

120 th. R UR ./

R egulated prices

18%

Р ы нок э лектричес кой мощнос ти

???

Safety surcharge

Electricity market Electricity market

Capacity marketCapacity market

Liberalization ratio (sales at free price

Price regulated by RF FTS

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I. Approaches to forecasting the revenues of Rosenergoatom OJSC for the period up to 2022I. Approaches to forecasting the revenues of Rosenergoatom OJSC for the period up to 2022

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Annual production programs

Level of market prices with allowance for deflators associated with gas price changes

Revenues from selling capacity of the operational NPP at capacity markets

Revenues from selling electricity at regulated prices

Revenues from selling capacity to ensure safe operation of NPP

Price for capacity of the new power units

Investment program of Rosenergoatom OJSC

Revenues from selling capacity to support construction (renovation, upgrades)

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Uncertainties of the forecastsUncertainties of the forecasts

The uncertainty areas of the forecasts starting from 2011:

deflator indexes;

ration of the electricity market liberalization:

Vision of the RF Ministry of economic development – 76%, Minenergo

estimates – 82%;

limiting growth of the regulated tariffs:From 14 to 26%;

funding of the investment program from the Federal budget.

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Forecasts of the revenues of Rosenergoatom OJSC for the period of 2011-2022

Forecasts of the revenues of Rosenergoatom OJSC for the period of 2011-2022

Year 2011 2012 2013 2014 2015 2016

Revenue forecast

293,5 303,8 330,4 327,0 381,0 445,7

Year 2017 2018 2019 2020 2021 2022

Revenue forecast

502,3 525,0 593,3 662,3 688,6 748,0

Mln.rub. (without VAT)REA revenues for 2011 – 2022

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Revenues from sales per regulated contract – for supplying public

26,9

Revenues from sales of electricity at the “next day market”

118,0

Revenues from capacity market 147,1

including:

Investment surcharge 86,8

Safety surcharge 30,3

Revenues from sale of Bil NPP 1,5

Total 293,5

Forecasts of the revenues of Rosenergoatom OJSC for the period of 2011-2022

Forecasts of the revenues of Rosenergoatom OJSC for the period of 2011-2022

REA revenues for 2011 – 2022Mln.rub.

(without VAT)

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Conditions for collecting revenues in 2011 Conditions for collecting revenues in 2011

In order to provide for the investment funds in the amount of 302,2 billion rubles, we need to have the following prices:

- electricity at the day ahead market – 890 rub/MW*h;

- for capacity of operational units – 120 rub/MW per month;

- electricity and capacity per regulated contracts (for public) –

214,3 rub/MW*h and 394 027 rub/MW per month;

- safety surcharge – 133 140 rub/MW per month;

- investment surcharge– 381 008 rub/MW per month;

- for capacity of new units – 211 568 rub/MW per month.

Corrections of the forecasts are performed by investment program based on the decisions of the RF regulatory bodies.

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II. Forecasts of the expenses of Rosenergoatom OJSC for the period up to 2022

II. Forecasts of the expenses of Rosenergoatom OJSC for the period up to 2022

Approaches to forecasting : anticipated expenses for FNF and SNF (assessment of the

demand for fresh fuel, forecast of the cost of FNF based on the assumption of convergence of the prices on the external and internal markets, transition to 18-months fuel cycle, new price forming rules for SNF);

anticipated expenses for fist core loads;

anticipated expenses for amortization and depreciation costs (commissioning plant and equipment, commissioning plant and equipment, modernization);

anticipated expenses for labor costs (growth of productivity, optimization of stuff, incentive system);

assessment of the dedicated reserves for security and decommissioning;

consolidated estimate of other conditionally-fixed expenses;

estimated profit.

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Forecast of operational costs Forecast of operational costs

Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Expenses, total 277,6 281,5 307,0 283,5 355, 408,0 474,0 483, 8 561, 7 627, 0 652, 5 694,8

Including:

Operational costs 56,0 64,6 73, 3 82, 8 100,2 108,1 122,9 127,6 139,9 144,1 147,9 152,2

Depreciation and amortization

17,2 22,7 29,1 36,3 47,8 52,0 64, 4 69 ,2 82,6 86, 4 98, 5 108, 2

Fuel 29,7 36, 0 45,1 54,9 68,2 85, 0 99,7 104,2 124 ,3 141,1 148,2 152,1

Dedicated reserves

174,6 158,3 159,5 109,5 138,9 162,6 186,1 182,8 215,5 252,4 257,8 282,2

Bln. rub. (without VAT)

Operational costs of Rosenergoatom OJSC (including dedicated reserves for security and decommissioning) for the period of 2011-2022.

Operational costs of Rosenergoatom OJSC (including dedicated reserves for security and decommissioning) for the period of 2011-2022.

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III. Assessment of the investment sources of Rosenergoatom OJSC for the period up to 2022.III. Assessment of the investment sources of Rosenergoatom OJSC for the period up to 2022.

-The purpose of the forecasts is to consistently:

establish the possibility for covering the investment demands of Rosenergoatom from its own earned funds;

identify any deficits of funding sources;

determine the possibilities of attracting and servicing credits.

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Year 2011 2012 2013 2014 2015 2016

Investment resource

251, 9 255,0 299,6 249,8 238,8 197,5

Investment demand

302,2 306,0 315,2 248,8 172,2 164,0

Balance -50,3 -51,0 -15,6 +1,0 +66,6 +33,5

Year 2017 2018 2019 2020 2021 2022

Investment resource

230,5 230,7 273,0 314,1 327,3 358,4

Investment demand

142,4 212,5 168,3 309,7 304,9 358,1

Balance +88,1 +18,2 +104,7 +4,4 +22,4 +0,3

Conclusion: In certain periods there is an imbalance of investment demands and investment capabilities of Rosenergoatom.

Bln.rub.

III. Assessment of the investment sources of Rosenergoatom OJSC for the period up to 2022.

III. Assessment of the investment sources of Rosenergoatom OJSC for the period up to 2022.

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Objectives of Rosenergoatom OJSCObjectives of Rosenergoatom OJSC

Search for new businesses and competencies, maximization of revenues

Improvement of the internal economic efficiency, reduction of relative costs

Increased economic efficiency of spending the investment resources and consequential optimization of the investment demands.

Thanks for your attention!

Thanks for your attention!