Efficacy enhancement
Capital construction quality control
With a view to implement the government decree[30] and evaluate compliance with project documentation, technical regulations, land plot development plan, site investigation outcomes, the Company supervises construction, reconstruction and refurbishment of capital construction facilities. Coverage of facilities constructed under the investment program with independent construction control totaled 25% in 2017.

Reduction of per-unit construction costs for facilities commissioned in 2017.
Enhancement of energy efficiency
During 2017 OAO IDGC of Urals entrenched energy-saving and enhanced efficiency practices in line with the federal law[31], decrees of the Russian Ministry of Energy, Regulations on the Formation of Energy-saving and Enhanced Energy Efficiency Programs of PAO Rosseti’s subsidiaries and affiliates[32], and OAO IDGC of Urals Energy-saving and Enhanced Energy Efficiency Program for 2015-2019, adopted by the OAO IDGC of Urals Board of Directors on 09.12.2014[33]. To implement the program in the Company’s HQ and branches, we issued the decree[34] that assigned directors liable for program’s progress supervision and created a working group on energy-saving and enhanced energy efficiency[35].
Program’s target indicators are:
- Reduction of electricity losses during transmission and distribution of electricity through the networks;
- Consumption of energy resources for economic and production needs;
- Equipment with energy-saving lighting facilities (since 2017).
Target and actual values of the target indicators for 2017*
Key (important) target activities of 2017: detection of unmetered consumption of electricity, upgrade of heating systems (incl. conversion to gas fuel), upgrade of lighting systems (incl. replacement of obsolete lighting facilities for LED ones), installation of fuel gauge units on motorized vehicles. Effect from the target activities under energy-saving program, programs on loss reduction and other accompanying activities totaled 28,240.4 tfoe or RUB 499.7 million. To promote energy-saving OAO IDGC of Urals has presented a software and hardware system of smart metering and electricity consumption management “Smart Consumer School” at Yekaterinburg “Innoprom-2017” global exhibition and Moscow “Russian Energy Week” global energy-saving forum. Besides, the Company arranged an activity for schoolchildren, as a part of All-Russia “Brighter Together” Festival, conducted under the auspices of the Russian Ministry of Energy. Visit Sections “Innovations” and “Exhibition Activities” for further details.
Operating efficiency and cost cutting
The Company’s enhanced operating efficiency and cost cutting program for 2017-2021 has been developed in furtherance of the Strategy[1], Government Directive[36], stipulating 2-3% annual cuts of operating expenses as well as Strategy of Long-term Social and Economic Development of the Urals regions (the Sverdlovsk, Chelyabinsk and Perm regions) and IDGC of Urals’ Regulations on Enhanced Performance Efficiency and Expense Reduction[37].
Key directions of the program that ensure opex reduction:
- Intensification of the process liable for control over maintenance and repair of equipment, buildings and facilities. Implementation of breakthrough technologies and innovations;
- Intensification of control over working capital (optimization of overdue receivables, inventories and current liabilities);
- Intensification of control over fixed assets.
- Intensification of control over purchases and supply chains (reduction of purchase prices for all types of procurements; minimization of the share of imported equipment and materials; optimization of supply costs with regard to operating and investing activities);
- Improvement of organizational and functional structure, optimization of headcount, personnel incentive and remuneration systems;
- Enhancement of energy efficiency (reduction of electricity losses; motorized vehicles fuel conservation);
- Investment and connection (reduction of per-unit investing costs per 1 km, 1 MVA; cost-cutting of privileged connection).
Cuts of actual per-unit operating expenses, compliant with the Government Directive [36] (stipulating 2-3% cuts YoY), totaled RUB 539.1 million or 3.4%. As a part of the program, controllable expenses were reduced by the following activities:
- fuel conservation: RUB 7.2 million or 255 thousand liter economy;
- optimization of labor costs by upgrading material and non-material incentive system and labor management (salary growth/actual CPI): RUB 67.1 million economy.
As for inventories, reduction of emergency reserve by analyzing and updating norms for acquisition/depletion of reserves totaled 5% (target – 1%) or RUB 15.4 million.
Program’s activities also cover uncontrollable expenses, primarily, expenses to compensate network electricity losses. Thus, activities from the loss reduction program resulted in 176.5 million kWh or RUB 376 million savings effect. As for enhancement of efficiency in connection, setting of average expense ceiling for one privileged connection accounted for the drop of average expenses for one privileged connection down to RUB 99 thousand, -53% on 2014 (RUB 214 thousand) and -21% on 2015 (RUB 126 thousand).