JSC FGC UES switches to 5-years period of tariff regulation

Thus, the necessary conditions were created for transition of FGC UES to 5-year period of RAB-regulation, the company has been preparing for it since the beginning of this year.
A Decree of FST becomes effective, it sets rate of return for FGC UES. In particular, the rate of return for new capital in 2013-2014 years is accepted at level of 10%. Rates of return for capital invested before the long-term regulation period (“old” capital) approved at level 7.8% in 2013 and 9.1% in 2014. Furthermore, the return of investment for first three years of regulation (2010-2012) hasn’t changed: 11% annually for the new capital, for old capital it is 3.9%, 5.2% and 6.5% for the first, second and third years respectively. In accordance with the approved parameters at the moment FGC UES is preparing an inquiry to set tariffs for 2013 and 2014.
As a part of transition to 5-year planning FGC UES has developed and passed for approval to Ministry of energy of Russia an investment program for 2010-2014 in amount of 954 bln. RUR. It assumes a large-scale modernization of backbone electric grid complex. On the whole 65 new substations shall be constructed as well as over 16 thousands km of power transmission lines. The main financing sources: own assets of the company and credit resources. In particular, for purposes of financing the investment program the company plans to increase lending amounts up to 300 bln RUR by 2014, at the same time the debt indicator Debt/EBITDA won’t increase the target value of 2x.
JSC FGC UES has switched to tariff regulation using a RAB method in 2010.