Overview of macroeconomic factors

Factors that determine the state of the Russian economy in general and have an impact on the electric power industry:

GDP movement

The index of the physical volume of GDP relative to 2015 was 99,8%


At the end of 2016, inflation reached historical lows, mainly under the influence of the tight monetary policy of the Bank of Russia, and amounted to 5,4%

Interest rates to attract credit resources

In 2016, due to the gradual decrease in the key rate by the Bank of Russia, which was 10,0% as of 31.12.2016, there is a decrease in interest rates on loans attracted

The dynamics of the industry development is also determined by a number of specific factors:

Factors descending in significance

State regulation of tariffs


Electricity transmission and grid connection are regulated by the State. Regulatory approval of tariffs for services of the Company directly influences volumes of received proceeds

The current state

The Russian Government implements a tariff policy on the principle of "inflation minus". Establishment of tariffs below the economically feasible level will lead to underfunding with tariff sources of the Company’s current activity and investment program

Measures to minimize the consequences (if available)

1. Implementation of measures to ensure compensation for the "shortfall in income" of grid companies, due to the implementation of Federal Law No. 308-FZ, in conjunction with tariff regulation bodies of subjects of the Russian Federation and the Ministry of Energy of Russia, by providing an additional increase in tariffs for other consumers in addition to the forecast of the Ministry of Economic Development and granting subsidies from the federal budget.
2. Economic justification of costs included in tariffs, including the inclusion of economically justified costs in tariffs incurred in excess of those recorded in tariffs and incurred due to reasons beyond the Company’s control over previous periods.
3. System-wise work to reduce costs and optimize the investment program
4. Implementation jointly with PJSC Rosseti of measures to amend the legislation of the Russian Federation in the field of pricing for services of natural monopolies to take into account the interests of distribution grid companies in setting tariffs at the retail market

Dynamics of energy consumption


Change of energy consumption has a direct impact on the state of the industry

The current state

Actual electricity consumption in the Unified Energy System of Russia in 2016 amounted to 1 026,9 billion KWh, which is higher than the fact of 2015 by 18,6 billion KWh (1,85 %), excluding electricity consumption for 29 February of the leap year of 2016, the increase in the annual volume of electricity consumed was 15,6 billion KWh (1,55 %)
Growth of net supply from the Company’s grids in 2016 was 2,5% compared to 2015, which is largely due to the increase in energy consumption of mining and metallurgical enterprises, transportation of oil products, agro-industrial enterprises

Measures to minimize the consequences (if available)

A set of measures to diversify the package of services to compensate for drop in energy consumption in the medium term

The current state of the industry


The state of the industry has a direct impact on all aspects of the Company’s activity

The current state

Substantial depreciation of fixed assets
Acute lack of investment in the industry.
The problem of non-payment
The tariff policy, leading to both an underestimation of both financial performance (pricing on a "cost plus" basis), and the real loss making for a number of companies

Measures to minimize the consequences (if available)

The RAB tariff regulation system implementation
The cost management system implementation
Implementation of new management tools by the Company, automation of key functions to improve the efficiency of accepting administrative decisions