Pursuant to Order of the Government of the Russian Federation No. 1178 dated 29 December 2011 “On pricing in regulated prices (tariffs) in the electric power industry”, a tariff-setting procedure with calendar break-down was introduced from 2012, based on the principle of non-exceedance of the prices (tariffs) value and their limits in the first half of the next annual regulatory period over the value of corresponding prices (tariffs) and their limits in the second half of the previous annual regulatory period. When setting tariffs, growth indices were applied according to the socio-economic development forecast approved by the Ministry of Economic Development of the Russian Federation.
The bulk of the Company's production is sold in the free sectors of the electric power and capacity markets. Within its own power hubs, the main competitors of Unipro PJSC’s power plants are similar generating capacities: other state district power plants, which do not have a significant share of heat power output.
The demand for the Company’s power plants also depends on the characteristics of the service areas where they are located:
- The structure of the electric power produced depending on the type of power plant (thermal, steam-turbine, nuclear, and hydroelectric power plants);
- The reliability of the system’s conditions (grid and system limitations);
- Repair operations for generating and electrical grid equipment, carried out between the autumn and winter periods.
Seasonal factors have a considerable influence on the performance of Unipro PJSC. Thus, spring floods which increase the electric power production at the hydroelectric power plants located in the region where Berezovskaya GRES is located have an impact on the level of demand for its production capacities.
In recent years, the impact of the repairs factor for electrical grid equipment has on the demand for electric power has increased significantly. In the case where there is an excess of generating capacity in certain regions of the power system, repairs to power grids can significantly restrict the transmission of electric power to the regions in short supply and bring down the market price for regions with excess energy supplies.
In 2018, Unipro PJSC power plants had electricity sales that amounted to 49.6 bln kWh, which is 2.3% lower than in 2017.
The capacity sales decreased by 1.1% and amounted to 9,889 MW per month.
49.6
bln kWh
electricity sales
9,889
MW
capacity sales per month
Regulated contracts for electricity sales in 2018 accounted for 22.7%, for capacity sales were 25.3%.
Revenue generated from sales of electric power and capacity in the regulated market sector was RUB 11.9 bln (15% of the total revenue from sales of electric power and capacity of Unipro PJSC).
The entire sales margin from electric power was obtained from work in the competitive sectors of the wholesale market. The Company is constantly improving the strategy of how it does business in the competitive sectors of the market in order to gain maximum profit.
The sale of heat energy in accordance with the legislation of the Russian Federation is a fully regulated type of activity.
Heat tariffs are set by executive authorities of Russia’s constituent entities that deal with state tariff regulation. The price of heat power is a significant public concern in the regions where power plants are located. That is why affordability of this product and the consumers’ solvency are taken into account in the regulation process.
Heat generation and sales are not the key business area for Unipro PJSC. Following the results of 2018, revenue from heat power sales was about 1.7% of the Company’s total revenue. Nevertheless, Unipro PJSC devotes a lot of attention to ensuring the reliability and continuity of the heat power supply, as this is essential to support local consumers living in the nearby communities.
Consumers of heat power produced at the branches of Unipro PJSC are the general population, local industry, as well as enterprises and entities funded from budgets at all levels. The material terms and conditions of contracts with consumers are specified on the corporate website of the Company at http://www.unipro.energy/en.
The amount of heat supplied to consumers in 2018 was 5.1% greater than in 2017. The increase in net output was related to weather conditions.
1,861
th. Gcal
heat power supplied to consumers
In 2018, all branches of Unipro PJSC (except for Surgutskaya GRES-2) supplied heat power directly to consumers under direct contracts or through entities providing housing and utility services. Surgutskaya GRES-2 supplies heat power to Surgut City Grid LLC.
To supply consumers with adequate quality heat, the Company regularly repairs and upgrades its heat supply systems.
System services market
Since the beginning of 2011, the market for services that provide system reliability (the system services market) has been operating in the Unified Energy System of Russia; its goal is to maintain the required level of reliability and operational quality for Russia’s UES.
Unipro PJSC has been a participant in the system services market since it was launched, rendering the service of rated primary frequency control (RPFC).
Primary frequency control is provided by varying the power of generators with a minimum unbalance in the production and consumption of electricity in the power system using automatic control systems that have more advanced characteristics.
The service provided involves maintaining the rated magnitude of electric current frequency with the required speed and accuracy.
Surgutskaya GRES-2, Shaturskaya GRES and Berezovskaya GRES are participants in the RPFC system services market. The System Operator deploys the primary control reserve at these power plants. In 2018, the Company increased its presence in the market: Shaturskaya GRES Power Unit No. 4 and Berezovskaya GRES Power Unit No. 2 joined the ranks of units providing RPFC services.
Unipro PJSC carries out its activities within a regulatory environment that is constantly changing, predicated by federal laws, Government decrees, the orders of federal executive bodies, and the Trading System Connection Contract with its numerous regulations, etc.
It is the regulatory documents that determine the framework, rules and how the organisation operates in both the external and internal environment. The Company understands how important this area is, which is why it devotes a great deal of time to keeping track of regulatory changes at the earliest stage when regulatory legal acts (RLA) are being drafted, and provides a timely response within the tools it has available.
Timely and proper elaboration of RLA adopted depends not only on work of relevant specialists, but also on the Company's lawyers. A comprehensive legal review of the legal unit makes it possible to take a fresh look at the existing regulation, see disputable issues, understand the operating principle of amendments or a new law and timely adjust it.
Unipro PJSC actively engages in public and social debates in compliance with legal requirements*:
- public debates when drafting an opinion on regulatory impact;
- independent anti-corruption expertise;
- meetings held by ministries and government agencies;
- working groups and expert councils.
In 2018, the Company was involved in one of the most important RLA projects for the power sector — developing the Resolution of the Government of the Russian Federation “On Selections of Modernisation Projects for Generation Units of Thermal Power Plants”.
Unipro PJSC also publishes its comments and recommendations in relation to further development of RLA directly on regulation.gov.ru or by sending letters to the developer.
Moreover, the Company has established the Regulatory Committee in order to find a common position, coordinate interactions with external companies and draft recommendations on strategic issues in regulating the electric power industry. The Committee is comprised of heads and representatives of the Company’s leading business units, who are in charge of operational and financial activities, as well as liaising with infrastructural organisations of the wholesale market and specialised ministries and institutions.
The following are the most notable RLA in the electric power industry adopted in 2018, which were also drafted with contributions from experts at Unipro PJSC:
- Order of the Ministry of Economic Development of Russia No. 116 dated 12 March 2018 “On approval of the procedure for defining the average return on long-term public liabilities, used to calculate the capacity price for capacity suppliers”.
- Federal Law No. 59 dated 3 April 2018 “On Amendments to the Housing Code of the Russian Federation”.
- Federal Law No. 303 dated 3 August 2018 “On Amendments to Certain Legislative Acts of the Russian Federation on Taxes and Fees”.
- Decree of the Government of the Russian Federation No. 937 dated 13 August 2018 “On Approval of the Rules for the Technological Operation of Electric Power Systems and on Amendments to Certain Acts of the Government of the Russian Federation”.
- Decree of the Government of the Russian Federation No. 1246 dated 19 October 2018 “On Amendments to Certain Acts of the Government of the Russian Federation on the Issues of State Regulation of Prices (Tariffs)”.
