General Information on the Company

• 1.1 Key indicators in 2010
• 1.2 General information
• 1.3 Mission and Strategy
• 1.4 Important Milestones in 2010

General information

Open Joint-Stock Company of Power Industry and Electrification "Lenenergo" is one of the largest distribution grid companies in Russia.

JSC "Lenenergo" was founded according to the Decrees of the President of the Russian Federation No.992 (as of August 14, 1992), No.923 (as of August 15, 1992), and No.1334 (dated November 05,1992), and registered by Decision of the Registration Chamber of the Administration of St. Petersburg dated January 22, 1993 No.2518. The Company is the legal successor of the State Enterprise of Power Industry and Electrification "Lenenergo".

Main types of activity:

• rendering services of electric power transmission and other services related to electric power supply to consumers;
• technological connection to power consumption equipment (power stations) of legal entities and individuals to electric networks.

Tariffs for services rendered by the Company are established by State or regional regulators within the frameworks of the decision approved by the Federal Tariff Service.

According to the Resolution of the Federal Energy Commission of Russia dated December 19, 1997 No.127/8 JSC "Lenenergo" is included in the Register of Subjects of Natural Economy regulated and controlled by the Government under Section I "Electric and (or) heat power transmission services".

The management bodies of the Company are comprised of the General Meeting of Shareholders, the Board of Directors, the Management Board, and the Director General.

The Audit Commission and the Auditor perform control over the Company’s financial and economic activity.

The amount of payment of the Company’s Auditor for conducting the audit of the accounting reporting of the Company for 2010 is determined by Decision of the Board of Directors of the Company (Minutes No.1 dated July 20, 2010) and constitutes RUR 2,200,000, including VAT (18 %) —RUR 335,593.

The Auditor did not render any non-audit services to the Company in the reporting year.

As of December 31, 2010 JSC "Lenenergo" Group of Companies comprises the following branches and legal entities:

The organizational structure of JSC "Lenenergo" as of December 31, 2010 is given in Appendix 14.16.

At present, JSC "Lenenergo" serves a capacious market – the territory of St. -Petersburg and the Leningrad Region with a total area of 86,739 sq. km inhabited by 6,251 thousand people (4.4% of the total Russian population).

Along with JSC "Lenenergo", the following companies perform activity for electric power transmission and connection of consumers on the territory of St. Petersburg and the Leningrad region:

• JSC "St. Petersburg Electric Networks";
• JSC "Leningrad Regional Managing Electro Network Company" (JSC "LOESK");
• JSC "Power Managing Company";
• MES of the North-West - a branch of JSC "FGC UES";
• A number of adjacent network companies whose spheres of responsibility are fixed by resolutions of the governments of the corresponding constituent entities of the Russian Federation: JSC "Lenteplosnab", JSC "Petrodvortsovaya Electric Network", etc.

Short history of the Company

JSC "Lenenergo" was founded in the 19^th century. On July 16, 1886, Emperor Alexander III approved the Charter of the Electric Lighting Company, founded by Karl Siemens. This day is considered the beginning of the "electric" era, the foundation date of JSC "Lenenergo".

On December 29 (December 16^th in the Old Style), 1917, the Company of 1886 was nationalized. In 1919 it joined the United State Electric Stations (USES). In 1922 it was reformed into the Petrotok trust. In 1924 the trust was renamed the Electrotok trust. In 1932 it was renamed Lenenergo, which has been the Company’s name ever since.

JSC "Lenenergo" has always been one of the country’s most progressive power companies. In 1897–1898 Russia’s first stationary power stations appeared in St. Petersburg on the Obvodnoy Canal (constructed by The Electric Lighting Company of 1886), in Novgorod Street (by Helios from Cologne) and on the Fontanka Embankment (by the Belgian Anonymous Company). In 1907, the renowned Russian scientist Heinrich Graftio designed and commissioned the Streetcar power station.

Implementation of the famous GOELRO plan also started in Leningrad. In 1922, the first thermal power station, "Utkina Zavod’", was constructed. In 1924 the first heat line was built from the power station No.3 on the Fontanka Embankment to a residential house, which gave the start to construction of heating networks across the country. December 19, 1926 saw the commissioning of Volkhovskaya Hydroelectric Plant, the country’s first and then most powerful. In those years, Lenenergo created the first 110 kV power line in the USSR. In early 1929, Elektrotok’s Management moved to the former Pavlovsky regiment barracks, where the first control room of the Leningrad power system was installed. On December 19, 1933, the Nizhne-Svirskaya hydroelectric plant, the world’s first power plant constructed on floating Devonian clays, was commissioned with a ceremony. The facilities were constructed on a massive continuous concrete slab to avoid possible deformation. Such an engineering solution was used for the first time in world practice. Energy from the hydroelectric plant was transmitted to the Chesmenskaya Leningrad substation via a 240 km 220 kV power line, the first in the USSR. Dubrovskaya State District Power Station was the first power station to be constructed without foreign specialists and furnished with equipment produced by domestic manufacturers.

In 1941, the system of Lenenergo comprised 20 elements, including 6 thermal power plants, 3 hydroelectric plants, as well as networking and overhaul facilities with a total capacity of 758.5 megawatts, and energy output of more than 30 mln kWh. During World War II Lenenergo suffered significant damage and lost two thirds of its power system capacities. On September 8, 1941, Leningrad fell under blockade. However, thanks in no small part to the selfless labor and courage of Leningrad’s power engineers, the city withstood it. In the winter of 1942 Lenenergo proposed to restore and partially reconstruct the Volkhov 110 kV and 35 kV power lines, and to lay a 10 kV four-wire cable on the bottom of Lake Ladoga. Stretching for more than 100 km, that cable was assembled by hand. The unique technical solution helped to break the power blockade in September 1942. Leningrad endured.

The power network of the Leningrad Region was substantially reorganized in 1964. A total of 28 regional agriculture energy operation divisions were liquidated to be reorganized into 8 Lenenergo power network divisions and agriculture electrification and distribution network services. Thus, Vyborg, Gatchina, Kingisepp, Lodeynoe Pole, Luga, Novaya Ladoga, Suburban and Tikhvin Power networks were created. The new companies provided power supply to agriculture, industry and the general population of Leningrad region. A total of 53,098 km of 10 kV and 6 kV overhead power lines and 31,822 km of 0.5 kV networks were constructed over the first 20 years, which doubled the spread of networks received from regional JSC "Lenenergo". All collective and state farms had been electrified by 1967, and all settlements had been electrified by 1975.

In 1965, the Company started to create the main 330 kV power network. Vostochnaya, Chudovo, and Yuzhnaya substations with 330 kV lines were commissioned, providing for the connection of the Lenenergo power system to the United Central Power System. Developments included construction of a 750 kV high-voltage line, adoption of 10 kV and 220 kV oil-filled cables, construction of 1,400 mm heating lines, complex automation of production processes, adoption of management telemechanics and many other things.

In 1980, a unique transformation complex comprising a transformation substation and two 400 kV lines was built in Vyborg to increase power export to Finland. The unique project allowed transmission of up to 4 bln kW/h annually for 10 years with primary power of 600 megawatt, the highest in Europe at that time.

In 1992, the Company was privatized to become Open Joint-Stock Company of Power Industry and Electrification "Lenenergo", successor to the Leningrad Power Industry and Electrification Production Association "Lenenergo". The damages of the 1980–90s to the power system are felt even now. Payment default, debt offsetting and the following cancellation of overhaul and construction programs dramatically affected the industry.

The year 2000 was a critical year for the Company. From 2000 up to 2005, 5 new major 110 kV substations were constructed, and more than 120 kilometers of heating lines and dozens of kilometers of power networks were reconstructed in St. Petersburg.

On April 08, 2005 an extraordinary General Meeting of Shareholders of JSC "Lenenergo" resolved to reorganize JSC "Lenenergo" by separating the following companies:

• JSC "Petersburg Generating Company",
• JSC "North-West Power Management Company",
• JSC "Petersburg Power Sales Company",
• JSC "Petersburg Power Transmission Networks".

The distribution grid company kept the "Lenenergo" brand.

In 2007, JSC "Lenenergo" received the status of an independent IDGC within the frameworks of activities for change of configuration of the interregional distribution grid companies (IDGCs).

In 2008, the authorized capital of JSC "Lenenergo" was increased from RUR 785 mln to RUR 1,019 mln at the expense of carrying out an additional issue in favor of the city of St. Petersburg, represented by the State Property Management Committee. As a result, the city of St. Petersburg acquired a blocking stake in the Company’s authorized capital.