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Russian Rosseti Networks

Company

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Open Joint-Stock Company Russian Networks (Rosseti OJSC, until 2013 IDGC Holding) is an energy company that provides electricity transmission and distribution.

Owners:
Federal Agency for State Property Management (Federal Property Management Agency) - 86,32%
Revenue and Net Profit millions Thousand rub

Number of employees

Assets

Owners

+ Russian networks (Rosseti, formerly IDGC Holding)
+ Federal Agency for State Property Management (Federal Property Management Agency)

PJSC Rosseti, the operator of Russia's energy networks, is one of the largest electric grid companies in the world. The company manages 2.30 million km of power lines, 490 thousand substations with a capacity of more than 761 GVA. The number of employees of the Rosseti Group of Companies is 216 thousand people. The property complex of PJSC Rosseti includes 37 subsidiaries and dependent companies. The largest shareholder of PJSC Rosseti is the state.

For 2013, the controlling shareholder is the state, which owns a stake in the authorized capital in the amount of 61.7%.

Subsidiaries

Rosseti is the single name of the electric grid complex of Russia

From June 2019, all companies of the main and distribution electric grid complex in corporate and marketing communications, as well as on all branded media, will use a new name containing the Rosseti trademark and regional or functional binding.

The introduction of a single brand architecture, approved by the Rosseti Board of Directors on April 29, 2019, provides for the phased replacement of branded elements as their depreciation dates end, without increasing existing budgets and within the framework of approved business plans of companies.

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"The Rosseti Group works in 80 constituent entities of the Federation, implements unified approaches to the management and development of the country's electric grid infrastructure, constantly improves the quality of services provided, expanding their list. The transition to a single brand architecture is a natural and logical step towards the development of the holding. It is important for consumers from different parts of our country to understand which company is responsible for reliable and high-quality electricity supply to them. Obviously, this company's name should be the same throughout the country, "said Pavel Livinsky, head of Rosseti.
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For 2013, the Rossetei property complex includes packages of 43 subsidiaries and affiliates, including stakes in 11 interregional, 5 regional network companies and a stake in a backbone network company.

As of May 2012, IDGC Holding's subsidiaries included IDGC of the Center IDGC of the North-West IDGC of the Center and Volga region IDGC Volga IDGC of the Urals:,,,,,,,,,,,, IDGC of Siberia IDGC South IDGC of the North Caucasus MOESK Lenenergo Tyumenenergo Yantarenergo

Assets

The Company's transmission lines are 2.3 million km long and the transformer capacity of 463 thousand substations is 726 gigawolt amperes. The number of employees of the Rosseti Group of Companies is 213 thousand people. The property complex of the Company includes packages of 43 subsidiaries and affiliates, including stakes of 11 interregional, 5 regional network companies and a stake in a backbone network company. The controlling shareholder is the state that owns a share in the authorized capital in the amount of 61.7%.

Performance indicators

At a meeting of shareholders of Rosseti in June 2019, the payment of 5 billion rubles of dividends for the first quarter of 2019 was approved. This is twice the amount allocated for dividends in 2018. About the same number of Rosseti paid the entire history of their existence. At the meeting, Chairman of the Board of Directors Novak said that over the past six months, the capitalization of Rosseti has grown by 90%. In turn, Livinsky noted that the company is finalizing a new development strategy. In addition, the holding is preparing changes to the provision on the dividend policy, as well as an option program aimed primarily at increasing total shareholder profitability.

2021: Revenue growth by 58% to 24.88 billion rubles

According to the results of 2021, Rosseti earned 24.88 billion rubles, which is 58% more than a year earlier. Net losses of the operator of electric networks in Russia amounted to 38.3 billion rubles, while in 2020 the net profit of the state-owned company was measured at 29.55 billion rubles. Such data in accordance with Russian accounting standards were released in March 2022.

According to TASS, citing a Rosseti report, the company's gross profit in 2021 reached 20.48 billion rubles, increasing 1.8 times compared to 2020. The loss before taxes amounted to 37.11 billion rubles against 30.07 billion rubles in profit a year earlier.

Rosseti revenue for the year soared 58%

The press release clarifies that the net losses are due to a revaluation of financial investments on the balance sheet of Rosseti. At the same time, revaluation is a non-monetary factor.

It is noted that the average number of employees of the Rosseti group at the end of 2021 was more than 210,000 people, the turnover rate was kept at a low level. Systematic work continued on the introduction of the Vision Zero injury concept, the professional development of employees, and the involvement of promising young specialists in the industry.

Given the remaining restrictions due to COVID-19, the development of online courses for employees continued in 2021. By the end of 2021, about 500 remote educational programs were operating in the training centers of the group's companies.

In 2021, Rosseti allocated more than 1 billion rubles for research and development (R&D). In total, the group in 2021 introduced 14 R&D results into industrial operation, 15 - transferred to experimental and industrial operation. More than 30 security documents were received, seven license agreements were concluded.[1]

Digital Transformation Program 2030

In 2019, the implementation of one of the largest digitalization programs of the federal scale began - in PJSC Rosseti. The program is very ambitious, both in cost - 1.3 trillion rubles, and in terms of the level of goals set (the creation of a fully digital network), as well as due to the enormous complexity of the problems that have accumulated for decades. The idea of ​ ​ using advanced digitalization technologies in order to jump most of the Russian electricity industry with one leap to a new stage of development is certainly attractive. However, practical implementation is an incredibly difficult task. It is no coincidence that the concept of "Digital Transformation 2030," which was approved by the Board of Directors of Rosseti PJSC on December 21, 2018, is sometimes called the "GOELRO Plan of the 21st Century." TAdviser understood the main parameters of this plan:

Information technology

Main article: Information technology in Rosseti

Company History

2021

Appointment of gas stations for electric vehicles in Russia by the operator

On October 7, 2021, it became known about this Ministry of Energy's order of Deputy Prime Minister Andrei Belousov to deal with the issue of creating a federal operator of charging infrastructure for electric vehicles in Russia. More details here.

Ryumin Andrei - the new general director of Rosseti

On February 15, 2021, Rosseti announced the appointment of Andrei Ryumin as CEO of the company. The corresponding decision was made by the board of directors three days earlier. More details here.

2020

Rossetei combined revenue - 8,322,249 rubles

Estimate of damage from the activities of "black" miners - 718 million rubles

On December 22, 2020, Rosseti reported a loss from the activities of black miners - people who extract cryptocurrency by illegally connecting to other people's power systems and, accordingly, paying for electricity.

According to the state-owned company, since 2017, it has lost more than 718 million rubles due to illegal mining. True, a significant part of the debt was collected through the court.

The group noted that Rosseti is conducting systematic work to combat illegal consumption by such "farms," a large practice has been developed to identify and suppress their activities. Materials are transferred to law enforcement agencies. Criminal proceedings are initiated under articles providing for punishment with a real term of imprisonment.

Rosseti estimated a loss of 718 million rubles from black miners since 2017
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The increase in the cost of cryptocurrencies is certainly associated with an increase in interest in mining. In this regard, it is possible to activate black miners, whose activities not only lead to economic damage (losses) to energy companies, but also pose a threat of network congestion and the risks of accidents, said the largest electric grid company in Russia, combining the main electric grid complex, interregional and regional distribution electric grid companies.
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December 21, 2020 updated the historical maximum, the value of cryptocurrency during trading rose above $24 thousand. For seven days, cryptocurrency has risen in price by 24%. The increase in the value of virtual currency occurred against the backdrop of the weakening dollar.

According to Eset experts, the rise in price of Bitcoin will lead to a sharp increase in the scale of hidden mining. By December 2020, the volume not only returns to the level of 2017 (when the capitalization of the crypto market reached a historical maximum), but soon will significantly exceed it.[2]

Loss of 600 million rubles due to gray miners for 4 years

From 2017 to October 2020, Rosseti lost about 600 million rubles due to the activities of illegal miners. The company announced this in its Telegram channel on October 23.

As told in Rosseti, there are a variety of sites for placing mining farms - from the former greenhouse complex in a small village in the Murmansk region to a residential building in a prestigious district of Moscow.

Rosseti mentioned the "builders" from Elista, who opened a farm on the basis of a plant of reinforced concrete structures. It consumed electricity on an industrial scale under the chosen site - by more than 109.7 million rubles.

Rosseti lost 600 million rubles in 4 years due to hidden mining

The second place in the anti-rating of the "black miners" was taken by a resident of Makhachkala, who created a farm of 518 miners, which required electricity for 34.3 million rubles. The third is miners from the Moscow region, who created an illegal farm on the basis of the New Way company and caused damage to the supplier by 32.2 million rubles.

According to Rosseti, Dagestan is the leader in black mining in the Russian Federation. The Caucasian republic accounts for about half of the cases of electricity theft by cryptocurrency business figures.

The company noted that in 2017, against the background of the growth of the cryptocurrency exchange rate, abnormal consumption jumps in different regions of the country began to be recorded. The activity of "black miners" not only leads to economic damage (losses) of energy companies, but also poses a threat of network congestion and the risks of accidents. In this regard, systematic work is being carried out to identify enterprises that illegally consume electricity, the company said.

It is noted that materials on all cases of detection of "black" mining farms are transferred to law enforcement agencies. Criminal proceedings are initiated under articles providing for punishment with a real term of imprisonment. A significant part of the debt has already been collected through the court.

Underground mining caused Rosseti damage of 450 million rubles in 3 years

Underground  mining  caused Rosseti damage of 450 million rubles in three years. More details here.

2019: Growth of net profit threefold in the first half of the year

In the first 6 months, the company tripled its net profit - in the first 6 months of 2019, it amounted to 123.1 billion rubles.

2018: Net profit 124.7 billion rubles

In 2018, the company's net profit compared to 2017 increased by more than 3.5 billion and amounted to 124.7 billion rubles.

2017

Rosseti, Skolkovo Foundation and Schneider Electric signed a tripartite agreement

On October 17, 2017, Rosseti PJSC, the Skolkovo Foundation and Schneider Electric signed a tripartite agreement on a strategic partnership in the field of localization, development and implementation of a software and technical complex of operational-technological control systems for new generation distribution electric networks. See Operating and Technological Control System of Distribution Electrical Networks.

Pavel Livinsky replaces Oleg Budargin as general director

In August 2017, it became known that the permanent general director of Rosseti since the creation of the holding in 2013, Oleg Budargin, has been resigning from his post, which was taken by the head of the department HOUSING AND PUBLIC UTILITIES Moscow , Pavel Livinsky, who worked for many years in electric grid companies.

Prime Minister Dmitry Medvedev announced to the head of the housing and communal services department of Moscow Pavel Livinsky that the government decided to recommend him for the post of general director of Rosseti.

Since the creation of Rosseti in 2013, they have been constantly led by Oleg Budargin. Almost from the moment of appointment to Rosseti, Oleg Budargin began to read an ambulance. In 2013-2014, Kommersant sources assumed that if he left, he would replace the ambassador to the North Caucasus Federal District, who was promoted Alexandra Khloponin (in 2017 - deputy prime minister) - his predecessor as head of Taimyr. Subsequently, Mr. Budargin's rumors were regularly predicted to the deputy prime minister's team, and his possible successors were called Andrey Murov either less often Deputy Minister of the Russian Federation power engineering specialists Vyacheslav Kravchenko. But Oleg Budargin invariably managed to keep the chair of the head of Rosseti.

Rumors of his resignation resumed by June 2017, when his candidacy did not fall into the government directive on the new composition of the Rosseti board of directors. Kommersant sources called him the successor to VEB's first deputy chairman Mikhail Poluboyarinov or the general director of the Russian Energy Agency (accountable to the Ministry of Energy) Anatoly Tikhonov. Oleg Budargin himself in an interview with Kommersant on June 30 denied these rumors, linked his absence from the list of candidates to the decision to increase the number of independent directors and claimed that he did not see "any risks in terms of his participation in the further management of Rosseti."

2013: IDGC Holding renamed Rosseti

The open joint-stock company Holding of Interregional Distribution Network Companies has been officially renamed the Open Joint-Stock Company Russian Networks (in English - Joint stock company Russian Grids). The corresponding amendments to the Company's Charter on April 4, 2013 were registered by the Interdistrict Inspectorate of the Federal Tax Service of Russia for Moscow No. 46 with the corresponding entry in the Unified State Register of Legal Entities (Unified State Register of Legal Entities).

The decision on modification and additions in the Charter of JSC IDGC Holding, regarding change of a trade name of Society, was accepted at Extraordinary General meeting of shareholders of JSC IDGC Holding of 23.03.2013 in pursuance of the Decree of the President of the Russian Federation of 22.11.2012 No. 1567 "About Russian Networks open joint stock company.

2012: Transfer of authority to FGC UES

In accordance with the Directive of the Government of the Russian Federation of May 8, 2012, on July 10, 2012, an agreement was signed with IDGC Holding OJSC (now Rosseti) on the transfer of powers of the sole executive body of the Open Joint-Stock Company Holding of Interregional Distribution Network Companies - the Federal Network Company (OJSC FGC C UES). Andrey Evgenyevich Murov was appointed executive director.

It was expected that this decision will ensure a unified approach to the implementation of technical policy and principles of managing the electric grid complex of Russia, conduct well-coordinated work on its effective development and modernization on an innovative and high-tech basis, conduct a unified investment, financial, economic and personnel policy, and systematically reduce costs. The creation of uniform rules will increase the level of reliability of electricity supply, as well as transparency and efficiency in matters of technological connection of consumers.

The formation of common requirements in the field of corporate management standards will increase the level of responsibility and independence of subsidiaries and affiliates, will create conditions for their more effective operation.

Combining the capacities of the two companies will accelerate the creation of the Network Code, which regulates the general principles and approaches to the activities of enterprises of the electric power complex.

The implementation of these measures will increase the economic efficiency of the Russian electricity industry as a whole and will positively affect consumers.

For 2012, IDGC holding combines interregional and regional distribution electric grid companies (IDGC/RSK), research and design institutes, construction and sales organizations. 97 branches of IDGC/RSK are located on the territory of 69 constituent entities of the Russian Federation.

2008: Creation of IDGC Holding LLC

On June 30, 2008, the reorganization process of RAO UES of Russia was completed. As a result of the reorganization of RAO UES of Russia by allocation, IDGC Holding OJSC was created.

On July 01, 2008, a record was made in the Unified State Register of Legal Entities on the creation of IDGC Holding OJSC by reorganization in the form of allocation.

The goal of creating the issuer, as outlined in the Strategy Concept of RAO UES of Russia "5 + 5," adopted by the Board of Directors of RAO UES of Russia on May 29, 2003, was to separate during the reorganization of RAO UES of Russia, the company to which the shares belonging to RAO UES of Russia were transferred.

2007: Separation of IDGC Holding from RAO UES

The open joint-stock company IDGC Holding (later renamed Rosseti OJSC) was created as a result of the reorganization in the form of separation from RAO UES of Russia on the basis of the decision of the extraordinary general meeting of shareholders of RAO UES of Russia of October 26, 2007.

The issuer's authorized capital during the reorganization was formed at the expense of additional capital and retained profit of previous years of RAO UES of Russia OJSC transferred under the dividing balance sheet.

In December 2007 - January 2008, the formation of the target structure of all thermal OGK and TGK was completed, the first stage of consolidation of RusHydro OJSC was completed.

Network company allocation process is complete. On the basis of the reorganized AO-energy, all 56 backbone network companies were created.

Energy industry structure in 2000

The main goal of reforming the Russian electricity industry is to increase the efficiency of industry enterprises, create conditions for its development on the basis of stimulating investment, and ensure reliable and uninterrupted energy supply to consumers.

In this regard, radical changes took place in the Russian electricity industry: the system of state regulation of the industry was changing, a competitive electricity market was formed, new companies were created.

Image:Структура отрасли электроэнергетики России в 2000-м году.png

During the reform, the structure of the industry changed: there was a separation of natural monopoly (electricity transmission, operational dispatch management) and potentially competitive (electricity production and marketing, repair and service) functions, and instead of the previous vertically integrated companies that performed all these functions, structures specializing in individual activities were created.

The companies formed during the reform are enterprises specialized in certain activities (generation, transmission of electricity and others) and control the relevant specialized assets. In terms of profile activity, the created companies exceed the previous monopolies of the regional level: new companies unite specialized enterprises of several regions, or are all-Russian.

Thus, conditions are created for the development of a competitive electricity market, the prices of which are not regulated by the state, but are formed on the basis of supply and demand, and its participants compete, reducing their costs.

The goals and objectives of the reform are determined by Government Decree No. 526 of July 11, 2001 "On Reforming the Electric Power Industry of the Russian Federation."

Taking into account subsequent changes in the regulatory framework, the goals and objectives of the reform were specified in the "Concept of the Strategy of RAO UES of Russia for 2005-2008 5 + 5."

Target Industry Structure

Backbone networks came under the control of the Federal Network Company, distribution networks were integrated into interregional distribution network companies (IDGC), the functions and assets of regional dispatch offices were transferred to the All-Russian System Operator.

Image:Целевая структура отрасли электроэнергетики России 2005.png

The generation assets are also combined into interregional companies, with two types of generating companies of the wholesale market (wholesale generating companies - OGK) and territorial generating companies (TGK). OGK combines power plants specialized in the production of almost exclusively electric energy. TGC mainly includes thermal power plants (CHP), which produce both electrical and thermal energy. Six of the seven OGK are formed on the basis of thermal power plants, and one (RusHydro) is formed on the basis of hydrogenerating assets. Thermal OGK are built on the extraterritorial principle, while TGK combines stations of neighboring regions.

1980-90s: Prerequisites for reforming the electric power industry

Back in the 1980s, the country's electricity industry began to show signs of stagnation: production capacities were updated noticeably slower than electricity consumption grew.

In the 1990s, during the general economic crisis in Russia, the volume of electricity consumption decreased significantly, while the process of updating capacities practically stopped.

The overall situation in the industry was characterized by the following indicators:

  • According to technological indicators (specific fuel consumption, average efficiency of equipment, operating capacity of stations, etc.), Russian energy companies lagged behind their counterparts in developed countries.

  • There were no incentives to increase efficiency, rational planning of electricity production and consumption regimes, and energy saving.

  • In some regions there were interruptions in energy supply, there was an energy crisis. There was a high probability of major accidents.

  • There was no payment discipline, non-payments were common.
  • Industry enterprises were informational and financially "not transparent."
  • Market access was closed to new, independent players.

All this led to the need for changes in the electricity industry that would create incentives to improve the efficiency of energy companies and allow a significant increase in investment in the industry. Otherwise, with the further expansion of foreign economic cooperation, Russian enterprises would lose the economic competition not only in foreign markets, but also in the domestic market of the country.

Notes