Strategy

After restructuring in April 2005 OAO MOSENERGO is one of the largest territorial generating companies and third largest in terms of electricity generation in Russia after OAO Federal Hydogeneration Company [HydroOGK] and also Rosenergoatom [Russia's Nuclear Power Industry]. The generating company OAO MOSENERGO consists of 17 power plants with 10,600 MW in installed electricity capacity and 34,200 Gcal/hr of thermal power capacity.

Following the intensive growth in energy consumption and attainment of a new historical maximum load in 2006, OAO MOSENERGO must now ensure large-scale development of the energy system. Furthermore, the reliable supply of power to Moscow region is dependent on the ability of the company's own generating capacities located in Moscow and Moscow region to cover most of the energy consumption requirements in the region.

The reform of OAO MOSENERGO enabled the Company to focus on developing new generation capacity – the basis of the region's energy system - and consequently start increasing installed capacity and the reliability of Moscow's energy system.

At the end of 2005 – 1st quarter of 2006 the start of construction work on new power units PGU-450-Т at CHP-27 and CHP-21 of OAO MOSENERGO launched the implementation of the Programme for Development and Re-equipment of the Energy System for 2006-2010, based on state-of-the-art gas-steam technologies.

The Programme for Development and Re-equipment of the Moscow Energy System for 2006-2020, developed by the Company, contains a forecast of power consumption growth in the region and outlines the adequacy of new generating capacity commissioning projects.

The technical development strategy of OAO MOSENERGO, which seeks to meet forecast demand for electricity, is based on the commissioning of highly-efficient combined-cycle power generating units (PGU) with an efficiency factor in the condensation cycle of 57-59%. It is also based on the replacement of combined heat and power equipment with 90 atmospheres and below, which has come to the end of its service life, with gas-steam cycle equipment. Highly efficient gas-steam power units will make it possible to use 25% less gas and at the same time reduce by a third hazardous emissions into the atmosphere.

Steam-gas power units will be built at CHP-9, CHP-12, CHP-16, CHP-20, CHP-21, CHP-25, CHP-26 and CHP-27 of OAO MOSENERGO. The planned construction of the Petrovskaya GRES with 4,000 MW capacity, is still at development stage. The Company is also performing large scale technical re-equipment of existing capacities to increase the efficiency and reliability of their use.

To establish the requisite groundwork for the additional distribution of capacity from the power plants of OAO MOSENERGO located in districts where housing development projects are planned, the Company is implementing a programme to build the requisite switch gears at a number of CHP.

OAO MOSENERGO's investment programme stipulates the investment of RUB 63 billion in the construction and technical re-equipment of the energy system by 2010 through internal funds and borrowing, and also through an additional share issue.

By 2010 OAO MOSENERGO will commission over 2,300 MW. By 2020 the generating company plans to double installed capacity of the capital's energy system and fully transform the region from an area experiencing electricity shortages into a region with balance energy supplies.

On 24 May 2006 agreements between RAO UES of Russia and the Moscow Town Hall on the development of the capital's energy system were signed in the offices of MOSENERGO.

MOSENERGO's development programme became an important component of the understandings reached by the power holding company with the city's authorities.