Annual report 2014

RU Go to Lenenergo

Investment activity

Long-term investment program

The long-term investment program of Lenenergo for 2014-2019 (hereinafter — the Program) was formed on behalf of the Ministry of Energy of Russia (Minutes #09-1183pr of 03.12.2013) taking into account the extension of the tariff regulation period until 2019 and approved by Order of the Ministry of Energy of Russia #562 of 29.08.2014. In April 2014, hearings on the draft long-term investment program were held at the Open Government of the Russian Federation, following which the Program was pre-approved and recommended for approval.

In accordance with the action Plan (“road map”) “Improving access to energy infrastructure” approved by Decree of the Government of the Russian Federation #1459-R of 17.08.2013, hearings were held in the Public Advisory Councils under Committees on tariffs of St. Petersburg and the Leningrad Region, during which the draft investment program for 2014-2019 received positive conclusions.

Main objectives of the investment program of Lenenergo

Ensuring the renovation of network assets


Performing the obligations on technological connectionAccording to the Concept of execution of the accrued obligations on technological connection approved by the Board of Directors. Execution of all accrued obligations is planned by 2017, including towards a preferential category of consumers of St. Petersburg and the Leningrad Region.


Implementing the Program of renovation of CL 6-110kV financed by the Federal funds


Introducing innovative projects and power efficiency programs


Creating technological infrastructure for functioning of the competitive market of electricity and capacity


The investment program was developed in accordance with the following documents:

  • The general scheme of placing power grid facilities till 2020 with a perspective until 2030 approved by the Government of the Russian Federation (extract from the Minutes of the meeting of the RF Government of 03.06.2010, #24);
  • The scheme and program of development of the regions in 2012-2018 approved by Order of the Ministry of Energy of Russia of 13.08.2012, #387;
  • The scheme and program of development of the power industry of St. Petersburg in 2012-2016 approved by Decree of the Government of St. Petersburg of 23.04.2012, #51;
  • The scheme and program of development of the power industry of the Leningrad Region in 2011-2015 approved by Decree of the Government the Leningrad Region of 28.12.2011, #466;
  • Decree of the Government of the Russian Federation of 20.06.2013, #518 “About the program of preparation for FIFA World Cup to be held in 2018 in the Russian Federation”;
  • The program of innovative development of Lenenergo for 2011-2017 approved by the Board of Directors, Minutes #8 of 27.08.2012.
Key parameters of the long-term investment program in dynamics
Indicator 2014 2015 2016 2017 2018 2019
St. Petersburg
CAPEX, RUB mln (w/o VAT) 18,207 21,987 19,876 16,525 18,241 18,241
Financing, RUB mln (with VAT) 23,088 24,644 23,786 19,816 22,541 22,198
Commissioning of fixed assets, RUB mln 20,323 22,173 21,567 17,157 19,075 19,575
Input of transformer capacity, MVA 1,235 1,912 2,018 1,822 1,148 1,341
Input of power lines, km 808 793 1,130 690 1,002 1,298
Leningrad Region
CAPEX, RUB mln (w/o VAT) 7,657 8,000 8,500 8,000 6,001 6,045
Financing, RUB mln (with VAT) 9,085 9,590 10,004 9,762 7,087 7,172
Commissioning of fixed assets, RUB mln 8,580 7,934 8,863 8,902 6,604 6,048
Input of transformer capacity, MVA 757 595 763 936 581 416
Input of power lines, km 1,796 1,798 2,002 1,260 1,319 1,645
Lenenergo, total
CAPEX, RUB mln (w/o VAT) 25,864 29,987 28,376 24,525 24,242 24,286
Financing, RUB mln (with VAT) 32,173 34,234 33,790 29,578 29,628 29,370
Commissioning of fixed assets, RUB mln 28,903 30,107 30,430 26,060 25,679 25,623
Input of transformer capacity, MVA 1,992 2,508 2,781 2,758 1,729 1,757
Input of power lines, km 2,604 2,591 3,133 1,949 2,320 2,943
Dynamics of CAPEX by areas
Indicator 2014 2015 2016 2017 2018 2019
St. Petersburg 18 207 21,987 19,876 16,525 18,241 18,241
Technical re-equipment and reconstruction 8,147 9,876 11,701 13,189 12,988 15,642
New construction 9,960 12,089 8,174 3,336 5,253 2,599
Other 99 22
Leningrad Region 7,657 8,000 8,500 8,000 6,001 6,045
Technical re-equipment and reconstruction 4,437 5,476 5,871 5,765 4,202 4,734
New construction 3,181 2,524 2,629 2,235 1,799 1,311
Other 39
Lenenergo, total 25,864 29,987 28,376 24,525 24,242 24,286
Technical re-equipment and reconstruction 12,584 15,353 17,572 18,954 17,190 20,375
New construction 13,141 14,612 10,804 5,571 7,052 3,911
Other 139 22

CAPEX by areas in dynamics, RUB mln (w/o VAT)

CAPEX by areas in dynamics

Input of capacity in dynamics, MVA

Input of capacity in dynamics

Input of capacity in dynamics, km

Input of capacity in dynamics

According to the approved investment program, CAPEX in 2014-2019 will amount to RUB 157,280 mln w/o VAT. The volume of financing is approved in the amount of RUB 188,773 mln (VAT included).

Priority areas of investment are technical re-equipment and reconstruction of grid facilities due to the high percentage of wear of the capital equipment: this area accounts for more than 65% of the total investment. Remaining 35% of the investment will be spent on new construction.

Following the implementation of the investment program in 2014-2019, fixed assets will be increased by RUB 166,799 mln. Additional transformer capacity will be created in the amount of 7,573 MVA, the length of transmission lines will be expanded by 6,358 km, which will enable to increase capacity, to reduce accidents, to improve quality and reliability of the power supply system and to ensure technological connection to electrical networks.

in 2014–2019
157.28 RUB bn (w/o VAT)
CAPEX
in 2014–2019
7,573 MVA
input of transformer capacity
in 2014–2019
6,358 km
input of power lines

Implementation of the investment program in 2014

The investment program of Lenenergo for 2014 was approved in the structure of the innovative development program for 2014-2019 by Order #562 of the Ministry of Energy of Russia dated 29.08.2014 in accordance with Decree #977 of the Government of the Russian Federation dated 01.12.2009. CAPEX amounted to RUB 23.4 bn.

Execution of the investment program in dynamics
Indicator CAPEX Input of fixed assets Financing Capacity input Capacity gain
RUB mln w/o VAT RUB mln RUB mln with VAT MVA km MVA km
2014
St. Petersburg 15,608 16,042 16,858 753 836 660 636
Leningrad Region 7,803 8,272 8,320 697 1,654 314 797
Lenenergo, total 23,411 24,314 25,178 1,450 2,490 975 1,433
2013
St. Petersburg 13,158 14,355 13,940 603 764 529 620
Leningrad Region 5,570 4,299 5,405 304 1,082 181 539
Lenenergo, total 18,729 18,653 19,345 907 1,846 709 1,159
2012
St. Petersburg 11,515 12,424 12,337 1,409 716 951 657
Leningrad Region 3,377 3,651 3,663 502 864 314 355
Lenenergo, total 14,891 16,075 16,000 1,911 1,581 1,265 1,012
2014 г. к 2013 г., %
St. Petersburg 19 12 21 25 9 25 3
Leningrad Region 40 92 54 129 53 74 48
Lenenergo, total 25 30 30 60 35 37 24

Dynamics of CAPEX, RUB mln (w/o VAT)

Dynamics of CAPEX

Dynamics of capacity input, MVA

Dynamics of capacity input

Dynamics of capacity input, km

Dynamics of capacity input

In the reporting period, CAPEX increased by 25% up to RUB 23,411 mln. Commissioning of capacity into fixed assets in terms of money increased by 30%.

The increase in CAPEX and commissioning of fixed assets in 2014 was caused by:

  • works under contracts on technological connection according under accumulated obligations, including towards a preferential category of applicants;
  • implementation of measures to ensure the renovation of network assets;
  • preparations for the autumn-winter period 2013-2014.
The actual implementation of the investment program in comparison with the plan
Indicator 2012 Change, % 2013 Change, % 2014 Change, %
Plan Fact Plan Fact Plan Fact
CAPEX, RUB mln (w/o VAT) 14,100 14,891 6 13,039 18,729 44 25,864 23,411 –9
Commissioning of fixed assets, RUB mln 16,023 16,075 0 13,934 18,653 34 28,903 24,314 –16
Financing, RUB mln (with VAT) 16,327 16,000 –2 15,954 19,345 21 32,173 25,178 –22
Input of fixed assets
transformer capacity, MVA 1,297 1,911 47 1,051 907 –14 1,992 1,450 –27
transmission lines, km 1,363 1,581 16 696 1,846 165 2,604 2,490 –4

Plans for the investment program of Lenenergo in 2014 were executed for 91% on the volume of investment, for 84% — on commissioning of fixed assets, and for 78% — in terms of funding. The Company introduced 1,450 MVA of transformer capacity at the plan of 1,992 MVA and 2,490 km of transmission lines at the plan of 2,604 km.

The deviation of actual indicators from the plan was due to the early implementation and financing of works on a number of directions in 2013, a change of work schedule with regard to the issuance of permits, and a shift in timing of works at subscribers under the contracts for technological connection and the specification of physical parameters of the objects of distribution networks 0.4–10 kV. Besides, negative influence on implementation of the program was rendered by the deterioration of macroeconomic conditions and emergence of deficiency of liquidity at the Company’s basic bank.

Funding sources of the investment program, RUB mln (with VAT)
Indicator 2012 2013 2014
Sources of investments (on financing), total 16,000 19,345 25,178
Own sources of financing 7,535 7,525 6,115
Depreciation 2,826 1,903 100
Additional issue of shares 1,204 1,770 672
Other own sources (calculations by property, lost income) 1,386 1,318 1,412
VAT refund 2,119 2,533 3,930
Attracted sources of financing 8,465 11,820 19,063
Debt funds (loans and credits) 5,174 7,032 13 391
Payment for technological connection (advances) 3,290 4,788 5,672

Funding sources of CAPEX in 2014, %

Funding sources of CAPEX in 2014

Debt funds, additional issue of shares, payment for technological connection and calculations by property were the main funding sources of CAPEX of Lenenergo in 2014.

The structure of financing of the investment program in key areas, RUB mln (with VAT)
Indicator 2012 2013 2014
major projects 2,400 734 3,252
Retrofitting and reconstruction 1,413 187 2,164
New construction 987 547 1,088
Programs of special importance 1,052 2,162 1,947
Retrofitting and reconstruction
New construction 1,052 2,162 1,947
Programs 734 1,912 2,667
Retrofitting and reconstruction 672 1,266 2,575
New construction 62 645 92
Technological connection (TC) Including TC facilities of 8,771 11,556 12,103
over 670 kW (HV, MV1) 3,350 5,554 6,250
100-670 kW (MV2) 1,913 3,992 2,459
15-100 kW 2,255 479 1,097
below 15 kW 1,254 1,531 2,298
Generation
Distribution networks 841 1,284 1,430
Process management automation (except for Automatic system for commercial accounting of power consumption) 628 740 881
Tools for accounting of electric power 115 134 285
Security programs 90 250 387
Acquisition of grid assets, land plots and other facilities 1,002 2 2
Other programs and measures 367 570 2,223
For reference:
Retrofitting and reconstruction 5,879 6,358 12,478
New construction 9,059 12,935 12,650
Other 1,061 51 50

Technological connection accounted for the largest share of financing of the investment program in 2014 — 48.1%. The costs of retrofitting and reconstruction amounted to 18.8%, 7.7% of total funding was spent on the programs of special importance, and on new construction — 4.7%. The share of other programs was 20.7% of all funds.

+30 %
25,178 RUB mln (with VAT)
The volume of financing of the investment program in 2014

Areas and structure of CAPEX

Structure of CAPEX of Lenenergo, RUB mln (w/o VAT)
Indicator 2012 2013 2014
St. Petersburg 11,515 13,158 15,608
Retrofitting and reconstruction 3,156 3,430 6,949
New construction 7,344 9,704 8,605
Other 1,015 25 54
Leningrad Region 3,377 5,570 7,803
Retrofitting and reconstruction 2,141 3,084 4,980
New construction 1,213 2,463 2,791
Other 23 23 32
Lenenergo, total 14,891 18,729 23,411
Retrofitting and reconstruction 5,297 6,513 11,929
New construction 8,557 12,167 11,396
Other 1,037 48 86
Including under the programs
Technological connection 10,417 11,860 13,761
Renovation of basic equipment and auxiliaries 6,320 4,899 11,299
Energy saving and increase of power efficiency 3,523 6,873 6,868
Creation of the systems of emergency and regime automation 68 89 60
Creation of the systems of telemechanics and communication 580 532 612
Installation of devices for regulation of voltage and compensation of jet capacity 12
Application of innovative technologies and equipment 1,408 2,833 1,981
Measures of antiterrorist security of facilities 55 125 326
Replenishment of emergency reserves 79 42 181

Expenses on retrofitting and reconstruction of facilities in the structure of CAPEX in 2014 amounted to 50.9%, on new construction — 48.7%, on other costs — 0.4% of factually deployed CAPEX.

The prevalence of reconstruction in the structure of CAPEX was related to the implementation of measures to ensure the renovation of network assets.

During the reporting period, CAPEX of new construction was reduced by 6% (RUB 771 mln), which was associated with the transition to the final stage of the target program “Renovation of cable lines 6-110 kV”.

The reduction of expenses on application of innovative technologies and equipment was due to the exclusion of R&D activities from the investment program by the decision of Rosseti, and with the adjusted schedule of production under AIMS CEM of the retail market due to the restriction of access of contractors’ electrical installations for works of public utilities and homeowners.

On to the directions of investment in 2014, technological connection accounted for the greatest weight in the total volume of CAPEX (51%) — one of the main directions of investment activity of the Company, the purpose of which is the execution of accumulated obligations on technological connection, including towards a preferential category of applicants of St. Petersburg and the Leningrad Region.

The volume of investments on the programs of special importance in 2014 amounted to RUB 1,446 mln, or 6%. The programs of special importance are as follows:

  • the program of renovation of cable lines 6-110 kV, funded using Federal funds;
  • the project of construction of cable line 110 kV Krestovskaya — Vasileostrovskaya within the Program of preparation for the FIFA World Cup 2018 in Russia.

Retrofitting and reconstruction of facilities 35-110 kV in 2014 amounted to RUB 4,079 mln (17%), new construction of facilities 35-110 kV — RUB 1,002 mln (4%), development of distribution networks 0.4–10 kV — RUB 1,527 mln (7%), the program of process management automation — RUB 606 mln (3%), the program for implementation of the automated system — RUB 289 mln (1%).

Dynamics of CAPEX by areas, RUB mln

Dynamics of CAPEX by areas

The structure of the executed investment program in 2014, %

The structure of the executed investment program in 2014, %

The program of Renovation of cable networks 6-110 kV in St. Petersburg

The program of priority actions on the renovation of cable lines 6-110 kV, financed with budgetary funds, has been developed with a view of reliability augmentation of work of cable networks in St. Petersburg and ensuring uninterrupted power supply of the city’s districts.

Target program Implementation period Total cost of construction, RUB mln The cost of implementation by years, RUB mln
2010 2011 2012 2013 2014 2010–2014
Renovation of CL 6-110 kV 2010–2014 6,445 168.9 1,152.3 1,007.7 2,217.2 1,442.1 5,905.4

By the end of 2014, the implementation of the CAPEX plan under the program of renovation of cable lines 6-110 kV was 105%. The deviation from planned targets was caused by the increasing cost of cables due to the increase in foreign currency exchange rates.

In 2014, within implementation of the program of Renovation of cable lines 6-110 kV input of CL 110 kV K-128, K-129, CL 35 kV K-29, K-30 (CL 110 kV substation 18A — TPS1), CL 35 kV KS-3, KS-4, KS-5, substation #86 — substation #21 for the total length of 38.75 km was carried out in the districts of St. Petersburg.

Performance of the projects has strengthened the reliability of power supply of the central part of St. Petersburg, Vasileostrovsky, Kirov, Moscow districts of the city, socially significant objects (SPB SUE Gorelektrotrans, SUE Petersburg Subway), and the city’s medical institutions, objects of power structures, office buildings, kindergartens, schools and hospitals in Kronstadt and in St. Petersburg, and allowed to create the conditions for connection of additional load. The share of equipment with service life above permitted standard after implementation of the projects accounted for 0% at the indicator before implementation of the project of 100%.

The most significant objects

New distribution substation 110kV with OTL-110 kV for connection of new substations 110kV of Kamennogorsk-tyagovaya, 12 km, 29 km, 46 km of FSUE Joint Customer Group of the Federal Agency of Railway Transport

Reconstruction of external power supply networks of the sea trade port Ust-Luga

Reconstruction of substation 110 kV #294

Reconstruction of outdoor switchgear 110 kV at substation #89 (replacement of the block circuit of OS 110 kV on bridge circuit with side-tracking of the existing OTL-110 kV) in the part (Reorganization of OTL-110 kV of PRU-3)

Substation #124A with CL 110kV

Reconstruction of CL 6-110 kV in part of CL 35 kV K-29, K-30 (CL 110kV of substation 18A-TPS1)

Reconstruction of CL 6–110 kV in part of CL 110 kV K-128, K-129

Reconstruction of CL 6-110 kV in part of CL 35 kV KS-5, KS-3, KS-4, construction of new CL 35 kV substation #86 — substation #21 instead of CL 35 kV KU-1, KU-2, KU-3


Results of the investment program in 2014

Following the implementation of the investment program in 2014 the following targets were achieved:

  • decrease in specific cost in comparison with 2011:

    substations 110 kV (HV) by 4.7%;

    CL 110 kV (HV) by 8.9%;

    CL 3-10 kV by 8%;

    OTL 0.4 kV by 19.6%;

  • decrease in the share of equipment with service life above permitted standard in 2014 compared to 2013 by 1.6% (in 2014 — 56.4%, in 2013 — 58%);
  • decrease in specific breakdown rate in 2014 compared to 2013 by 44%: from 13.59% to 7.62%;
  • growth of losses in electric networks by 1% to the beginning of 2015 (in absolute value — 11.06% versus 10.11%) due to changes in the method for determining the amount of supply in the grid in the section Lenenergo — FGC UES;
  • the level of physical depreciation of fixed assets in 2014 compared to 2013 decreased and amounted to 61% for the whole Company, in 2013 — 62%;
  • the load of capacity in 2014 amounted to 28% (4,191 MVA from installed capacity of 14,895 MVA), the growth of outdoor power centers — 1 unit (substation Ust-Luga);
  • the number of completed contracts for technological connection in 2014 totaled 14,953, including 10,691 contracts towards a preferential category of applicants;
  • the volume of completed contracts for technological connection in 2014 totaled 0.7 GW, including 0.13 GW towards a preferential category of applicants.