Board of directors’ progress report
2.2.7

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.

2012 actual, RUB thousand, net of VAT (km/MVA) Actual 2017
Physical parameters, km/MVA Commissioning, RUB thousand, net of VAT Per-unit indicator, RUB thousand, net of VAT (km/MVA)
Gr. 4/Gr. 3
2012 per-unit, RUB thousand, net of VAT (km/MVA) (Gr.5/1.06/1.049/
1.143/1.063/1.053)
2017/2012, %
(1‑gr.6/gr.2)
Aerial power lines
220 kV power lines (HV) - - - - - -
110 kV power lines (HV) 6,972.56 - - - - -
35 kV power lines (MV1) 2,163.07 - - - - -
1-20 kV power lines (MV2) 1,381.53 50.68 58,715.00 1,158.54 821.39 59.46%
0.4 kV power lines (LV) 1,087.00 224.44 227,502.12 1,013.66 718.67 66.11%
Cable power lines
220 kV power lines (HV) - - - - - -
110 kV power lines (HV) - - - - - -
20-35 kV power lines (MV1) - - - - - -
3-10 kV power lines (MV2) 4,635.55 28.77 107,068.00 3,721.52 2,638.51 56.92%
0-1 kV power lines (LV) 2,070.39 3.22 6,976.39 2,167.93 1,537.03 74.24%
Substations
110-220 kV substations (HV) 5,730.76 - - - - -
35 kV substations (MV1) 4,734.11 - - - - -

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*

No. Indicators Measurement units 2017
Target Actual
1 Electricity losses Million kWh 5,347.89 5,148.45
RUB million net of VAT 11,171.74 10,920.39
% of supply 7.66 7.65
2 In-house load of substations Million kWh 102.29 77.44
% of losses 1.91 1.50
3 Total consumption of energy resources for economic needs of administrative and production buildings, comprising: RUB million net of VAT 324.03 315.57
Thousand tfoe 18.29 17.01
3.1 Electricity Million kWh 80.14 77.97
Thousand tfoe 9.62 9.36
RUB million net of VAT 251.10 250.48
Million kWh/m2 0.00 0.00
3.2 Thermal energy (heating system) Gcal 58.79 50.99
Thousand tfoe 8.40 7.29
RUB million net of VAT 71.55 63.54
Gcal/m3 0.05 0.04
3.3 Natural gas (including liquid gas) Thousand m3 239.95 322.50
Thousand tfoe 0.28 0.37
RUB million net of VAT 1.39 1.54
4 Total consumption of natural resources for economic needs of administrative and production buildings, comprising: RUB million net of VAT 7.13 3.79
Thousand m3 206.12 122.68
4.1 Hot water supply Thousand m3 16.20 7.49
RUB million net of VAT 0.59 0.28
4.2 Cold water supply Thousand m3 189.92 115.19
RUB million net of VAT 6.55 3.52
5 Total fuel consumption by vehicles and machinery, comprising: Thousand liters 13,278.90 12,111.81
Thousand tfoe 15.69 14.28
RUB million net of VAT 428.21 379.52
5.1 Gasoline, incl.: Thousand liters 6,776.02 6,450.43
Thousand tfoe 7.67 7.30
RUB million net of VAT 210.79 196.35
Thousand liters/100 km 0.02 0.02
5.1.1 Motorized vehicles Thousand liters - 5,929.46
Thousand tfoe - 6.71
RUB million net of VAT - 180.29
Thousand liters/100 km - 0.02
5.1.2 Special-purpose vehicles Thousand liters - 520.97
Thousand tfoe - 0.59
RUB million net of VAT - 16.06
Thousand liters/100 km - 0.03
Thousand liters/motor hour - 0.01
5.2 Diesel, incl.: Thousand liters 6,502.88 5,661.38
Thousand tfoe 8.01 6.98
RUB million net of VAT 217.42 183.17
Thousand liters/100 km 0.03 0.03
5.2.1 Motorized vehicles Thousand liters - 2,220.04
Thousand tfoe - 2.74
RUB million net of VAT - 71.67
Thousand liters/100 km - 0.03
5.2.2 Special-purpose vehicles Thousand liters - 3,441.35
Thousand tfoe - 4.24
RUB million net of VAT - 111.50
Thousand liters/100 km - 0.03
Thousand liters /motor hour - 0.01
6 Equipment with LED energy-saving lighting facilities** % - 8.6
Lighting facilities used, incl.: pcs - 75,832
With energy-saving lamps (net of LED lamps) pcs - 39,056
LED lamps pcs - 6,537
* No other energy resources were consumed by the Company during the reported period, except for the ones shown above.
** only actual values are shown, since the target indicator was introduced in 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:

  1. Intensification of the process liable for control over maintenance and repair of equipment, buildings and facilities. Implementation of breakthrough technologies and innovations;
  2. Intensification of control over working capital (optimization of overdue receivables, inventories and current liabilities);
  3. Intensification of control over fixed assets.
  4. 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);
  5. Improvement of organizational and functional structure, optimization of headcount, personnel incentive and remuneration systems;
  6. Enhancement of energy efficiency (reduction of electricity losses; motorized vehicles fuel conservation);
  7. 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).

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Full report or any of its chapters can be downloaded as pdf files on this page.
1About company
1.1Mission and strategic goals
1.2Market share
1.3Management systems
1.4Key 2017 events
2Board of directors’ progress report
2.1Letter to stockholders
2.2Production capital formation
2.2.1Network exploitation
2.2.2Electricity transmission
2.2.3Technological connection
2.2.4Development of telecommunications and IT systems
2.2.5Investments
2.2.6Innovations
2.2.7Efficacy enhancement
2.3Financial capital formation
2.3.1Description of tariff policy
2.3.2Analysis of revenues and expenses
2.3.3Analysis of receivables and payables
2.3.4Credit ratings and bonds
3Corporate governance
3.1Corporate governance practices
3.2Corporate governance system
3.2.1General meeting of stockholders
3.2.2Board of Directors
3.2.3Board of directors’ committees
3.2.4General director and executive board
3.2.5Remuneration and compensation policy
3.3Oversight system
3.3.1Board of internal auditors
3.3.2Independent auditor
3.3.3Internal control
3.3.4Security and anti-corruption
3.3.5Risk management
3.4Investor and stockholder relations
3.4.1Shareholder capital structure
3.4.2 Shareholder rights
3.4.3The company and stock market
3.4.4Communications with market participants
3.4.5FAQ
3.4.6Allocation of profit
3.4.7Contact information
4Stakeholder
4.1Human resources management
4.2Customer support
4.3Supplier relationship management
4.4Public and goverment relations
4.5Company’s transactions
4.6Subsidiaries and financial investments
4.7Environment protection
5Appendices
5.1Prepared under Russian accounting standards
5.2Prepared under international financial reporting standards
5.3Corporate governance code compliance report
5.4References
5.5Abbreviations and acronyms
5.6Sitemap